President Obama’s auto task force has reported that if GM goes into bankruptcy, then the bondholders would need to take a 10% stake in the restructured company in exchange for their $27B they hold in GM corporate bonds. The re-emerged downsized GM could acquire another $40 billion in loans, which would be in addition to the already nearly $20 billion they have already received. It appears that the bondholders have been squawking over their deal. I say, too bad. Suck it up or loose it! Where is their “shared sacrifice?” as President Obama has demanded from the workers, and all those peripherally connected to the auto industry? Didn’t anyone tell the bondholders that investment is a risk and not a guarantee; and, that this is a bankruptcy unraveling? The UAW health care group will receive 17.5% ownership stake in exchange for the $20B owed them by GM. The U.S government will take a 60% stake in the company, while Canada will own a 12% piece of the pie.
And then there is the bankruptcy of Visteon Corporation, and Metaldyne Corporation both of which supply parts and chassis respectively for Ford Motor Company.
Automaker sales have plunged 37% this year through April, according to Bloomberg News.
The auto task force wants to see the newly-government owned GM company manufacture future cars in China. This sounds like more of the same strategy of outsourcing American jobs. Ship good paying manufacturing jobs overseas where they can be made cheaply, adding to our trade deficit, unemployment problems, further erosion of wages, and a diminished domestic tax base. This is more of the failed Reaganomics-style policies that failed the nation in the past. Haven’t Democrats woken up yet? Oh, I forgot, many are a part of this problem. Aren’t they?
Robert Reich pointed out in “What Industrial Policy Should Be”, 5-19-09, “So tucked into the latest version of climate legislation unveiled this week by the House Energy and Commerce Committee is a provision that doubles to $50 billion loans to help auto makers comply [to fuel economy targets].” Will such research and development, as well as design and manufacturing be done domestically? Or, will that be outsourced, too?
Ralph Nader and Robert Weissman wrote a letter addressed to both Senators Dodd, and Frank strongly suggesting that the Congress exercise their oversight powers regarding Obama’s consideration of bankruptcy for Chrysler and GM, “or other irreversible moves until after the task force plan has been subjected to close and careful review via thorough Congressional hearings.” It does not appear that such considerations will be honored. Just get rid of middle class jobs altogether appears to be the mantra of the nation’s elite. The richest 400 Americans, who have a net worth of $1.7 trillion, based on 2008 figures, which is around 10% of our GDP, want the welfare state kept in place just for themselves. Remember, they got this rich based on shoddy regulation of the financial industry, and the government’s allowance of over-leveraged mortgage-backed securities, as well as the credit default swap scam that kept the high roller financial bankstas, who had been betting against gains, even richer.
According to Les Leopold, in his piece “Fear and Looting in America…” in 1982, the top 400 of America’s richest, their net worth was $604 million; but, by 2008, this net worth had grown to $1.56 trillion!
It seems that the White House has grown so far removed from the collapse of the economy that there won’t be a recovery strong enough to buy even cheap foreign-made GM cars. What we have heard from the media bobbleheads is how the economy has picked up in May. “Hurray! Has a recovery begun? Will consumers continue to spend money they cannot afford to part with? Let us sure hope so! They better stop saving 4% of their incomes and go back to a zero savings rate. Maybe they will start borrowing again, too.”
Bomlat.blogspot.com wrote that “Personal savings as a percentage of personal income was 5.7% in April, compared with 4.5% in March.” Americans are now getting it. They better save more and spend less.
The bobbleheaded media pundits cannot see the forest through the trees. What happened in May? Well, there were graduations: college and high school. People bought gifts for the graduates. They traveled to college communities to attend these events. They ate in restaurants and bars. High schoolers bought prom dresses, and accessories. College graduates went to department stores and purchased, probably on credit, a few outfits for their interviews. There may even have been a few house parties. OH NO. WE CANNOT HAVE THAT NOW!
I believe such spending can boost the economy a few percentage points. The AP news service reported that the Consumer Confidence Index rose from 40.8 to 54.9. Macy’s Inc., Apple, and Best Buy Co. saw an increase in sales. Such data makes temporary sense. Families may actually spend money they don’t have on short, and local vacations in the coming weeks. Watch credit card debt increase over the next few months. Has anyone noticed creeping gas prices?
Wages have remained stagnant for many. Foreclosures seem not to be taking a rest during this rise in consumer spending. The private economy continues to shrink shedding jobs at a pace of more than 600,000 a month over the last half-year. Where will all these new college graduates find jobs? Will they earn enough to pay down their student loan debts or will they declare bankruptcy? If some are lucky, they will find work in the public sector getting experience from jobs funded through the U.S. government stimulus package. The private sector surely will not be expanding anytime soon in order to bring on new employees. Households have seen their net worth fall down the well at a cost of $13 trillion.
Also found on Bomlat’s blog, “Real gross domestic product-the output of goods and services produced by labor and property located in the United States—decreased at an annual rate of 5.7% in the first quarter of 2009…estimates released by the Bureau of Economic Analysis.” We have seen GDP over the last 2 quarter fluctuate between 5.7— 6.3%. Other economists have stated that our real GDP is actually in negative to zero ranges.
Bomlat also reported that “intermodal volume of trailers or containers was off 19.1% from last year, with container volume down 14.2% and trailer traffic off 37.2%.” This data is not very reassuring that a recover is soon at hand. Can someone call Ben Bernanke and tell him so?
The stock market knows that it has no legs. That game is only for those who can jump in and jump out. It has its own rules separate from reality. It has no long term sustainability.
Fed Chairman Ben Bernanke will be finding $1.7 trillion worth of treasuries coming due. He is printing up $1.75 more treasuries to pay for additional deficit spending. Who is going to buy these bonds? It will be the Fed themselves, more than likely. Will there be a point when foreign central banks and currency buyers stop believing in the continued erosion of the US dollar through debt expansion? Will the price of these bonds be driven down, while interest rates move upward? Will this build a wall in the path of home mortgage lenders and new house builders? Both Bernanke and Geithner already know that business-fixed investment, and non-residential fixed investment, which makes up most of all business investment, is collapsing at an annual rate of 40%. Does this sound like the private sector will be growing? The Bernanke fantasy that our national recovery will realize a 3% growth rate next year, 4% in 2011, and 4.6% in 2012 is just gobbligook. Currently, our GDP is basically negative. He drinks too much Psycho Kool-Aid at lunch.
Economist Niall Ferguson has stated that our 2009 deficit will move above 12% of GDP. He also stated that the Fed will likely be buying $300 billion worth of treasuries this year, but they will probably find themselves having to open up their balance sheet to buy more than that. Economist Paul Krugman claims that the US is currently in debt about 60% of GDP. Will the rest of the world back away from financing our growing debt by purchasing virtually zero percent interest bonds? The U.S is basically producing nothing of tangible value to export in order to bring down the deficits.
China is very happy to see all of our manufacturing going over to their side, so we can keep buying their cheap stuff. But at some point, most Americans will not have any money to keep that going. And, if our debt exceeds our GDP, we no longer are a viable economy. Our currency could become worthless through hyperinflation. If we ship our auto industry overseas, then many jobs, which would be interconnect to it, would disappear, too.
The economist Peter Morici recently wrote that “unless the economists are wrong, this key forward looking indicator of economic health [Durable goods orders in March were down 0.8% and the consensus forecast calls for another 0.3% drop.] would likely indicate that the recession has some to time to run. Until consumers have the confidence to purchase big ticket items and businesses put cash into new technology, the economic recovery is not at hand.”
Michael Whitney stated it beautifully. “The current downturn is not really a recession at all; it’s more like a self-inflicted wound perpetrated by avaricious speculators who put a gun to the economy’s head and blew its brains out. The banks and Wall Street have created a capital hole so vast that the entire economy is being sucked into the abyss. And it all could have been avoided. Credit production is too important and too lethal to entrust it to profit-driven vipers whose only motivation is self-enrichment. The whole system needs rethinking and public input before Bernanke wastes trillions more trying to revive the same crisis-prone business model. If “credit is the economy’s life’s blood”, as Obama says, then it should be distributed through a government-controlled public utility. The real lesson of the financial crisis is that privatizing credit has been a disaster.” (The Real Lesson of the Financial Crisis, Counterpunch.org, 5-19-09).
Thanks for reading, Jerry
Showing posts with label recession. Show all posts
Showing posts with label recession. Show all posts
Tuesday, June 2, 2009
Wednesday, April 1, 2009
The Great American Swindle Is Obama's Big Mistake!
There were 116,011,000 households in the United States, in 2006. Of this figure, 2% exceeded $250,000. 12.3% fell below the poverty line. 20% were living at the bottom of the income ladder with $19,178. Median income was $50,233. No doubt, these figures have worsened. The top 6.37% earned 1/3 of all income. Median income per household member was $26,036, in 2006.
The top 2 quintiles of income earners earned over $91,000, which was 77%, in 2006. The 2 mid-quintiles earned between $36,000 to $57,000. The lowest quintile earners earned $19,000 or lower. A quintile equals 20% of a given amount.
The Chinese middle class population has 100 million to 247 million people. There exports dropped 25.7% in February YoY, for the fourth straight month as the world demand began to shrink. The Chinese imported less, as well. They bought 24.1% less stuff. Professor Michael Pettis reported on his blog, an article printed in the Financial Times quoting the Commerce Minister Chen Deming that “China will reduce export taxes to zero and give more financial support to exporters as it tries to increase its share of global trade in the current crisis.” It went on to say that China would “use all possible measures to ensure the stable growth of our exports and prevent a large drop in external demand.” Chen Deming went on to say, “We should increase our share of the global market…We must transform ourselves from a big export nation to a strong export nation.” So, how come President Obama is not saying the same thing? Oh, I forgot, he is saying that about zombie banks.
Professor Pettis wrote the following, “It’s probably not a good idea to announce a drive to increase China’s share of the global market, especially since for the last several months, while the world has suffered a collapse in demand, China’s share of exports has risen dramatically, but this may have been said primarily for domestic consumption.” Mr. Chen realizes that China is facing tough times ahead with their foreign trade business. This will mean that China may likely find their trade surplus falling quickly to a reported amount of $4.8B. We haven’t seen a trade surplus for a very long time. Professor Pettis stated that there are many who feel that the days of massive monthly trade surpluses are over.
President Obama and you Knights of the Roundtable, if massive trade surpluses are likely to come to an end, then which countries will continue to fund our budget deficits? Professor Pettis sends out a warning. “There is a real need for an adjustment consumption in the U.S, and I don’t think it makes sense for the U.S. to attempt to replace excess household consumption with excess government consumption. One way or the other the U.S, along with China and most other countries that have contributed to one side or the other of the global imbalances, is going to have to accept a demand contraction….Trade friction is an issue that will not easily go away.” He concludes his intelligent and insightful writing with this, “…China would be able to keep its growth at about 8 percent this year, a growth rate long believed to be minimum to create enough jobs and maintain social stability….China’s economy accounted for only five percent of the world’s total.” China alone cannot revive the world.”
U.S. manufacturing has declined over the last 12 consecutive months. And, these top ten red state hypocrites received the most per dollar spent in federal spending:
New Mexico=$2.03, Mississippi=$2.02; Alaska=$1.84; Louisiana=$1.78, West Virginia=$1.76, North Dakota=$1.68, Alabama=$1.53; South Dakota=$1.53, Kentucky=$1.51, Virginia=$1.51. So much for rejecting socialism!
President Obama and Team, what amount of growth does the U.S. need to create enough jobs and maintain social stability? It seems you are more concerned in stabilizing the balance sheets of the uber-richest people, and banksta thieves. Is the People’s Republic of China on to something we are missing in the home of the brave and land of the free?
One in five homeowners are underwater, which means that the value of the home is more than what the home actually is. This means that the home is not as valuable as the mortgage and the house is not worth what the owner is paying for the mortgage. This is when the owner might actually consider walking away from what might be considered a lost cause. Such homeowners are typically those who are able to pay on their overpriced mortgage, but instead, might think of packing up and walking away from it. If an unfortunate life situation occurs that would cause economic pressures to bear down on their expenses creating undue financial stresses, the owner might just give the keys over to the bank.
If your house is worth more than your mortgage, you can often refinance, but it won’t work the other way around. When the mortgage is worth more than the current value and the payments, the payments are not paying the house off. This is called negative equity. Often the homeowner is paying on a mortgage in excess of the value of the house and is not paying anything on the house and not getting closer to any ownership of the house.
When the mortgage is bigger than the house value no bank will refinance. It locks the owners into their own home without ever getting a chance to sell at a break-even or profit price.
1 in 10 homeowners are in default or in foreclosure. 10,000 Americans enter foreclosure everyday. 2.3 million homeowners were in foreclosure in 2008.
42,000 companies closed in 2008, up 45% from 2007. It is predicted that 62,000 companies will close in 2009. So what happens? Workers lose their jobs. Then they realize they can no longer keep paying on their mortgages, credit cards, cars, or whatever else, and walk away from those specific debt burdens, since the government is not helping them, but only the mega-banks with $11T in commitments. For example, Citi, which is only worth $5.4B has been given $75B in taxpayer bailouts. AIG, which has a total market value of only $1B, has been given $180B in taxpayer bailout funds. Yet the taxpayer is left hanging to blow in the wind!
The FDIC placed 20 banks into receivership in 2009.
When one looks at unemployment, underemployment, those no longer looking for work, no longer in the data bases, and working a part-time job instead of a full-time job, or a part-time job that pays less than the last one they lost, the figure is 15-19% un/underemployed. This number rises to over 22 million people. During the Great Depression, at its peak we had 20-25% unemployment.
50 million jobs have been lost worldwide just in 2009. We are shedding jobs at a rate of 23,000 jobs everyday! 4.4 million jobs have been lost since the crisis began last year, and 6.8 million underemployed. The recession began in 2007, and already has stolen over 4.4 million jobs away from the real economy and sent 12.5 million in search of work. The economy contracted at 6.2% in the final three months of 2008, and the worst we have seen in the last 25 years. The economy will see further contraction throughout this year, possibly at the same rate.
In the world of banking, and found in the article by Bill Dedman, 3-17-09, MSNBC.com, U.S. Banks Suffer 149% Rise In Bad Loans, “Out of 8,198 banks for which we have two years of data, 5,784—or 71%--had a higher troubled asset ratio at the end of 2008 than a year earlier”. “The picture was worse for the largest 100 banks: 90 showed declining strength. Only seven improved, and one maintained the same ratio.” Data taken by the American University group that had created the website, Bank Tracker.
On March 23, 2009, the DOW climbed back up to its January 2009 level—7775, which was the lowest it had ever been prior to that same all-time 5-year low back in October-November 2008. Prior to that it was 2002-03, then prior to that was 1997-98, which was the all-time high up to that point in time.
U.S. bank’s toxic assets, the ugly stuff that needed to be removed from the bank balance sheets before the economy can recover, amounts to between 5 and 30 cents on the dollar. To remain solvent, however, the banks say they need a valuation of 50-60 cents on the dollar. Translation: as much as another $2T taxpayer bailout, was written by Mike Whitney, Counterpunch.org, “Time for Geithner and Bernanke to Go”. Mr. Whitney also quoted from the Financial Times, “The U.S. firms include investment giants Goldman Sachs and Merrill Lynch, with each receiving 100 cents on the dollar for their collateral debt obligations, although market value was only 47 cents on the dollar.” He went on to report that around March 3, 2009, “Within days after Obama announced plans to slightly reduce tax rates on deductions for the wealthiest 1.2% of taxpayers (from $35 to $28 for every $100 of deductions), Geithner quickly suggested that the Obama administration would be willing to drop or reduce the tax hike.” So much for helping the struggling working American.
$314 billion has been handed out to foreign central banks, while $600 billion was transferred to those same banks in December 2008. Bernanke and Geithner are printing up $2T for the latest scam called TALF, or Term Asset-Backed Loan Facility, in order to create more loans from auto, student, credit card loans, and business and corporate loans.
Since Reagan, US growth has only been 3% or less per year! Once the Commodity Futures Trading Corporation was put into play, in 2000, $62T in derivative trading grew by 2008.
It is said, with all the government obligations and debts, it is $60T in debt. Zbignew Brzezinski, former national security advisor under President Carter, told Joe Scarborough (Economic Crisis=USA Riots, 3-10-09, Ampedstatus.com) that there is the possibility of class warfare in the United States. “I was worrying about it because we’re going to have millions and millions of unemployed people in dire straits. And at the same time there is public awareness of this extraordinary wealth that was transferred to a few individuals at levels without historical precedent in America…”
One in 50 children are homeless! California, the 10th largest population in the United States had nearly 300,000 two years before the last stock market high in 2007. Sacramento leadership is now talking about government controlled and legal tent cities where the homeless can be taken and held. It is estimated that there are 1.5 million homeless children across the country. California ranked 40 out of 50 states with Texas being number 50, The State That Breeds Presidents. They don’t call it Lone Star for nothin’!!!!!! Is this the type of nation we want to pass on to future generations?
Yet we continue to spend $500B in the Middle East wars, and more billions in maintaining military domination with our 1000 worldwide bases in 200 countries. This military budget is more than the world’s entire military budgets put together! Yet, we have watched 23,000 jobs disappear everyday, and homelessness gather momentum. Is this the kind of nation YOU want? Is the type of country YOU want to pass on to others? Are YOU proud of this?
U.S. air cargo declined 21.3% in January 2009. In the March 6, 2009 online version of The Journal of Commerce, it was written that cargo traffic for U.S. airlines fell at the steepest rate since 9-01, in January. Carriers saw their worst month for cargo in nearly seven years. Domestic business tumbled 16.6% in January 2009 compared to a year ago. “The 838.3 million cargo ton miles the airlines reported was the lightest monthly domestic traffic measure since September 2001, and before that since February 1995.”
The Journal of Commerce-online continued to indicate that KLM air cargo business fell 18% from a year ago. British Air’s air cargo fell 20.7%. Asia/Pacific shipments dropped 17.7%. U.S. air traffic dropped 13.9% in February 2009.
Asian air cargo slumped 23.6% in January, and passenger numbers fell 7.8% as was reported in the Association of Asia Pacific Airlines, said on 3-6-09.
Container port traffic for February, found on bomlat.blogspot.com, stated that the traffic was down for another month. The February Chinese trade surplus was only $4.84B, which was 25% lower than the same period in 2008, and even lower than January, 2009 surplus. “The containerized exports in February were down 27.6% in Los Angeles, and 37% in Long Beach. The decline in imports was even greater, 35.3% in L.A. and 43.3% in Long Beach.” “The First Container Terminal in St. Petersburg, Russia’s biggest box terminal, reported traffic in February plunged 27.3 percent from a year ago as imports collapsed.” “Dutch foreign trade was hit hard in the global economic crisis with exports tumbling 21 percent in January from a year earlier, the biggest drop since the records were kept in 1990, the Dutch central statistics bureau (CBS) said on Friday. The value of goods exports fell to 24.4 billion euros (31.5 billion U.S. dollars), the CBS said. The volume of exports fell 14percent, according to figures corrected for working days. Imports also plummeted 22 percent to 21.6 billion euros, while the volume of imports decreased 14 percent.”
From what I have read the Truck Mileage Index of the U.S., in January 2009, has declined by more than 10%, as well as the truck inventory by 50%, which means that the investment in trucks has dropped.
73,000 retail enterprises have closed in 2009. 237,000 are projected to fail.
These numbers indicate that there is a worldwide consumer slowdown, so why are stock market numbers going up? It is all a head-fake!!!
Professor Joseph Stiglitz, Nobel Laureate in Economics, wrote in the Nation magazine, in his piece titled “A Bank Bailout That Works”, said that the banks are $2-3 trillion or more undercapitalized!
The IMF stated in a BBC report “there is now $2.2 trillion of toxic bank debt worldwide, and $500 billion more than it was estimated a few months ago.”
When workers lose their jobs, they cannot repay their debts, or afford to borrow, and when underemployed, their debts may exceed their income and/or assets. Also, the debt interest rates or borrowing costs on the debts could be too high making the payment process non-payable.
The vicious downward spiral begins. When workers lose jobs, businesses downsize and might have trouble paying their own debts. When workers lose jobs, they stop being consumers, then more businesses close and Pink Slip workers. Strip malls lose tenants, and close up. Developers seek bankruptcy protection. The economy slips further into its black hole toward depression. It ends up that all the money thrown at the mega-monopoly financial institutions, which are already insolvent, cannot issue credit. Credit becomes a moot point because there are fewer borrowers, yet these banks are filled with taxpayer dollars jacking up their “liquided-up” balance sheets. Yet these insolvent institutions continue to look the other way at their toxic debt-assets burning up all that we taxpayers have given them. Yet Citi claimed a profit, while not factoring in all their toxic debt into the supposed profit, as well as the fact that the taxpayer owns 80% of their stock. It is all a bad joke played on Americans!!! And, the administration is not calling them out.
Matt Taibbi, wrote in Rollingstone.com, in “The Big Takeover”, “In the final three months of last year, the company [AIG] lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).
So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street…” (This article will explain the financial Ponzi scheme.)
The “Big Mistake” ends up glaring in the face of President Obama and the angry Americans that the bailout went to the wrong places, and the wrong people. Instead of rescuing mortgages, retirement funds, and jobs stabilizing the economy and easing troubled minds, we got a failed top down bailout plan. Does this look to you a little bit like Reagan’s failed trickle down economics theory, which delivered us into this economic tsunami?
thanks for reading, jerry
The top 2 quintiles of income earners earned over $91,000, which was 77%, in 2006. The 2 mid-quintiles earned between $36,000 to $57,000. The lowest quintile earners earned $19,000 or lower. A quintile equals 20% of a given amount.
The Chinese middle class population has 100 million to 247 million people. There exports dropped 25.7% in February YoY, for the fourth straight month as the world demand began to shrink. The Chinese imported less, as well. They bought 24.1% less stuff. Professor Michael Pettis reported on his blog, an article printed in the Financial Times quoting the Commerce Minister Chen Deming that “China will reduce export taxes to zero and give more financial support to exporters as it tries to increase its share of global trade in the current crisis.” It went on to say that China would “use all possible measures to ensure the stable growth of our exports and prevent a large drop in external demand.” Chen Deming went on to say, “We should increase our share of the global market…We must transform ourselves from a big export nation to a strong export nation.” So, how come President Obama is not saying the same thing? Oh, I forgot, he is saying that about zombie banks.
Professor Pettis wrote the following, “It’s probably not a good idea to announce a drive to increase China’s share of the global market, especially since for the last several months, while the world has suffered a collapse in demand, China’s share of exports has risen dramatically, but this may have been said primarily for domestic consumption.” Mr. Chen realizes that China is facing tough times ahead with their foreign trade business. This will mean that China may likely find their trade surplus falling quickly to a reported amount of $4.8B. We haven’t seen a trade surplus for a very long time. Professor Pettis stated that there are many who feel that the days of massive monthly trade surpluses are over.
President Obama and you Knights of the Roundtable, if massive trade surpluses are likely to come to an end, then which countries will continue to fund our budget deficits? Professor Pettis sends out a warning. “There is a real need for an adjustment consumption in the U.S, and I don’t think it makes sense for the U.S. to attempt to replace excess household consumption with excess government consumption. One way or the other the U.S, along with China and most other countries that have contributed to one side or the other of the global imbalances, is going to have to accept a demand contraction….Trade friction is an issue that will not easily go away.” He concludes his intelligent and insightful writing with this, “…China would be able to keep its growth at about 8 percent this year, a growth rate long believed to be minimum to create enough jobs and maintain social stability….China’s economy accounted for only five percent of the world’s total.” China alone cannot revive the world.”
U.S. manufacturing has declined over the last 12 consecutive months. And, these top ten red state hypocrites received the most per dollar spent in federal spending:
New Mexico=$2.03, Mississippi=$2.02; Alaska=$1.84; Louisiana=$1.78, West Virginia=$1.76, North Dakota=$1.68, Alabama=$1.53; South Dakota=$1.53, Kentucky=$1.51, Virginia=$1.51. So much for rejecting socialism!
President Obama and Team, what amount of growth does the U.S. need to create enough jobs and maintain social stability? It seems you are more concerned in stabilizing the balance sheets of the uber-richest people, and banksta thieves. Is the People’s Republic of China on to something we are missing in the home of the brave and land of the free?
One in five homeowners are underwater, which means that the value of the home is more than what the home actually is. This means that the home is not as valuable as the mortgage and the house is not worth what the owner is paying for the mortgage. This is when the owner might actually consider walking away from what might be considered a lost cause. Such homeowners are typically those who are able to pay on their overpriced mortgage, but instead, might think of packing up and walking away from it. If an unfortunate life situation occurs that would cause economic pressures to bear down on their expenses creating undue financial stresses, the owner might just give the keys over to the bank.
If your house is worth more than your mortgage, you can often refinance, but it won’t work the other way around. When the mortgage is worth more than the current value and the payments, the payments are not paying the house off. This is called negative equity. Often the homeowner is paying on a mortgage in excess of the value of the house and is not paying anything on the house and not getting closer to any ownership of the house.
When the mortgage is bigger than the house value no bank will refinance. It locks the owners into their own home without ever getting a chance to sell at a break-even or profit price.
1 in 10 homeowners are in default or in foreclosure. 10,000 Americans enter foreclosure everyday. 2.3 million homeowners were in foreclosure in 2008.
42,000 companies closed in 2008, up 45% from 2007. It is predicted that 62,000 companies will close in 2009. So what happens? Workers lose their jobs. Then they realize they can no longer keep paying on their mortgages, credit cards, cars, or whatever else, and walk away from those specific debt burdens, since the government is not helping them, but only the mega-banks with $11T in commitments. For example, Citi, which is only worth $5.4B has been given $75B in taxpayer bailouts. AIG, which has a total market value of only $1B, has been given $180B in taxpayer bailout funds. Yet the taxpayer is left hanging to blow in the wind!
The FDIC placed 20 banks into receivership in 2009.
When one looks at unemployment, underemployment, those no longer looking for work, no longer in the data bases, and working a part-time job instead of a full-time job, or a part-time job that pays less than the last one they lost, the figure is 15-19% un/underemployed. This number rises to over 22 million people. During the Great Depression, at its peak we had 20-25% unemployment.
50 million jobs have been lost worldwide just in 2009. We are shedding jobs at a rate of 23,000 jobs everyday! 4.4 million jobs have been lost since the crisis began last year, and 6.8 million underemployed. The recession began in 2007, and already has stolen over 4.4 million jobs away from the real economy and sent 12.5 million in search of work. The economy contracted at 6.2% in the final three months of 2008, and the worst we have seen in the last 25 years. The economy will see further contraction throughout this year, possibly at the same rate.
In the world of banking, and found in the article by Bill Dedman, 3-17-09, MSNBC.com, U.S. Banks Suffer 149% Rise In Bad Loans, “Out of 8,198 banks for which we have two years of data, 5,784—or 71%--had a higher troubled asset ratio at the end of 2008 than a year earlier”. “The picture was worse for the largest 100 banks: 90 showed declining strength. Only seven improved, and one maintained the same ratio.” Data taken by the American University group that had created the website, Bank Tracker.
On March 23, 2009, the DOW climbed back up to its January 2009 level—7775, which was the lowest it had ever been prior to that same all-time 5-year low back in October-November 2008. Prior to that it was 2002-03, then prior to that was 1997-98, which was the all-time high up to that point in time.
U.S. bank’s toxic assets, the ugly stuff that needed to be removed from the bank balance sheets before the economy can recover, amounts to between 5 and 30 cents on the dollar. To remain solvent, however, the banks say they need a valuation of 50-60 cents on the dollar. Translation: as much as another $2T taxpayer bailout, was written by Mike Whitney, Counterpunch.org, “Time for Geithner and Bernanke to Go”. Mr. Whitney also quoted from the Financial Times, “The U.S. firms include investment giants Goldman Sachs and Merrill Lynch, with each receiving 100 cents on the dollar for their collateral debt obligations, although market value was only 47 cents on the dollar.” He went on to report that around March 3, 2009, “Within days after Obama announced plans to slightly reduce tax rates on deductions for the wealthiest 1.2% of taxpayers (from $35 to $28 for every $100 of deductions), Geithner quickly suggested that the Obama administration would be willing to drop or reduce the tax hike.” So much for helping the struggling working American.
$314 billion has been handed out to foreign central banks, while $600 billion was transferred to those same banks in December 2008. Bernanke and Geithner are printing up $2T for the latest scam called TALF, or Term Asset-Backed Loan Facility, in order to create more loans from auto, student, credit card loans, and business and corporate loans.
Since Reagan, US growth has only been 3% or less per year! Once the Commodity Futures Trading Corporation was put into play, in 2000, $62T in derivative trading grew by 2008.
It is said, with all the government obligations and debts, it is $60T in debt. Zbignew Brzezinski, former national security advisor under President Carter, told Joe Scarborough (Economic Crisis=USA Riots, 3-10-09, Ampedstatus.com) that there is the possibility of class warfare in the United States. “I was worrying about it because we’re going to have millions and millions of unemployed people in dire straits. And at the same time there is public awareness of this extraordinary wealth that was transferred to a few individuals at levels without historical precedent in America…”
One in 50 children are homeless! California, the 10th largest population in the United States had nearly 300,000 two years before the last stock market high in 2007. Sacramento leadership is now talking about government controlled and legal tent cities where the homeless can be taken and held. It is estimated that there are 1.5 million homeless children across the country. California ranked 40 out of 50 states with Texas being number 50, The State That Breeds Presidents. They don’t call it Lone Star for nothin’!!!!!! Is this the type of nation we want to pass on to future generations?
Yet we continue to spend $500B in the Middle East wars, and more billions in maintaining military domination with our 1000 worldwide bases in 200 countries. This military budget is more than the world’s entire military budgets put together! Yet, we have watched 23,000 jobs disappear everyday, and homelessness gather momentum. Is this the kind of nation YOU want? Is the type of country YOU want to pass on to others? Are YOU proud of this?
U.S. air cargo declined 21.3% in January 2009. In the March 6, 2009 online version of The Journal of Commerce, it was written that cargo traffic for U.S. airlines fell at the steepest rate since 9-01, in January. Carriers saw their worst month for cargo in nearly seven years. Domestic business tumbled 16.6% in January 2009 compared to a year ago. “The 838.3 million cargo ton miles the airlines reported was the lightest monthly domestic traffic measure since September 2001, and before that since February 1995.”
The Journal of Commerce-online continued to indicate that KLM air cargo business fell 18% from a year ago. British Air’s air cargo fell 20.7%. Asia/Pacific shipments dropped 17.7%. U.S. air traffic dropped 13.9% in February 2009.
Asian air cargo slumped 23.6% in January, and passenger numbers fell 7.8% as was reported in the Association of Asia Pacific Airlines, said on 3-6-09.
Container port traffic for February, found on bomlat.blogspot.com, stated that the traffic was down for another month. The February Chinese trade surplus was only $4.84B, which was 25% lower than the same period in 2008, and even lower than January, 2009 surplus. “The containerized exports in February were down 27.6% in Los Angeles, and 37% in Long Beach. The decline in imports was even greater, 35.3% in L.A. and 43.3% in Long Beach.” “The First Container Terminal in St. Petersburg, Russia’s biggest box terminal, reported traffic in February plunged 27.3 percent from a year ago as imports collapsed.” “Dutch foreign trade was hit hard in the global economic crisis with exports tumbling 21 percent in January from a year earlier, the biggest drop since the records were kept in 1990, the Dutch central statistics bureau (CBS) said on Friday. The value of goods exports fell to 24.4 billion euros (31.5 billion U.S. dollars), the CBS said. The volume of exports fell 14percent, according to figures corrected for working days. Imports also plummeted 22 percent to 21.6 billion euros, while the volume of imports decreased 14 percent.”
From what I have read the Truck Mileage Index of the U.S., in January 2009, has declined by more than 10%, as well as the truck inventory by 50%, which means that the investment in trucks has dropped.
73,000 retail enterprises have closed in 2009. 237,000 are projected to fail.
These numbers indicate that there is a worldwide consumer slowdown, so why are stock market numbers going up? It is all a head-fake!!!
Professor Joseph Stiglitz, Nobel Laureate in Economics, wrote in the Nation magazine, in his piece titled “A Bank Bailout That Works”, said that the banks are $2-3 trillion or more undercapitalized!
The IMF stated in a BBC report “there is now $2.2 trillion of toxic bank debt worldwide, and $500 billion more than it was estimated a few months ago.”
When workers lose their jobs, they cannot repay their debts, or afford to borrow, and when underemployed, their debts may exceed their income and/or assets. Also, the debt interest rates or borrowing costs on the debts could be too high making the payment process non-payable.
The vicious downward spiral begins. When workers lose jobs, businesses downsize and might have trouble paying their own debts. When workers lose jobs, they stop being consumers, then more businesses close and Pink Slip workers. Strip malls lose tenants, and close up. Developers seek bankruptcy protection. The economy slips further into its black hole toward depression. It ends up that all the money thrown at the mega-monopoly financial institutions, which are already insolvent, cannot issue credit. Credit becomes a moot point because there are fewer borrowers, yet these banks are filled with taxpayer dollars jacking up their “liquided-up” balance sheets. Yet these insolvent institutions continue to look the other way at their toxic debt-assets burning up all that we taxpayers have given them. Yet Citi claimed a profit, while not factoring in all their toxic debt into the supposed profit, as well as the fact that the taxpayer owns 80% of their stock. It is all a bad joke played on Americans!!! And, the administration is not calling them out.
Matt Taibbi, wrote in Rollingstone.com, in “The Big Takeover”, “In the final three months of last year, the company [AIG] lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).
So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street…” (This article will explain the financial Ponzi scheme.)
The “Big Mistake” ends up glaring in the face of President Obama and the angry Americans that the bailout went to the wrong places, and the wrong people. Instead of rescuing mortgages, retirement funds, and jobs stabilizing the economy and easing troubled minds, we got a failed top down bailout plan. Does this look to you a little bit like Reagan’s failed trickle down economics theory, which delivered us into this economic tsunami?
thanks for reading, jerry
Postscript: This article can also be read at Economicrot, as well, thanks to Randy posting there!
Bill Moyers speaks with William Black, economist and former regulator about the banking fraud beginning back to Reagan. Mr. Black speaks about the current fraud, the cover-up, and that Geithner and Summers are deep within the fraud and cover-up. Watch it.
Thursday, February 26, 2009
The Treasury's Stimulus Plan of 2009
Today we are being asked to place our trust in the banker-predators who wiped out the nation's capital during their 30-year long gambling addiction spree spending their manufactured, and now found worthless, collateralized debt obligations and securities the public has been asked to take ownership of.
We are being asked to place our trust in the very financial institutions and their greedy senior operating officers who are to be the overseers of a Phoenix that will rise from the recession borne ashes created by the very pyro-manical bankers who magically will reverse the decapitating forces of their financial capitalism and transform the nation back into a prosperous and productive Garden-of-Eden through their born-again revelatory change-of-heart baptism in the pool of Change that has brought them back into the fold of humanity.
We are asked to believe this. We are told by Ben Bernanke and Tim Geithner that through their economic empowerment to take trillions of borrowed funds from other nations and the sacrifice of middle income Americans who have already seen $8T of their wealth turn into dust that through the art of economic embalming these virtually bankrupt mega-banks will be returned to health through Kryptonetic injections of Treasury fundraising hocus-pocus Americans will find enough Tooth-fairy money in their paychecks to borrow more on top of their already huge indebtedness to buy a car, go on nice family vacation, purchase a slew of household goodies, refinance their depreciating home, and still find enough to replenish their evaporated retirement fund, while helping their kids with the next tuition payment.
We should all be impressed, amazed and dumbstruck that that is all it will take!!!! To trust it! To just believe hard enough, and it will be! To see that the river's flow can change course. And that through the magic and wonder of Enlightenment those who spent decades destroying the very fabric of this country built upon labor and the making of things will repent and rise above their wrong-doings so as to make it right once again.
Tell me, is there anybody out there who believes this?
thanks for reading, jerry
Friday, November 14, 2008
The US Depression
Christopher Laird had written an article called, “Tough Sledding Ahead, Surviving a Coming US Dollar Collapse”, on his site Prudentsquirrel.com. It was posted on the blogspot -- Economicrot.blogspot.com. Mr. Laird says that there are only 2-4 years before the US dollar collapses. He presented reasons why the dollar has been rallying, which were flight to cash during market liquidations, the hoarding of cash because businesses cannot roll over the short term credit they used for payrolls and ongoing operations, the usual end of the year cash surge for businesses and financial institutions, the flight to the US dollar for safety, and then finally, other national currencies adjusting to the slowing world economy, and the cooling of the once hot foreign markets. And, in addition, there has been a lot of money moving out of the “emerging” markets to the U.S.
He goes on to say that we are about to face two significant problems never seen before. The world is going to see a severe recession bordering on an economic depression, and the collapse of the US dollar. He says that what is holding the US dollar up in spite of the worsening US trade and budget deficits, which add up to around $1 trillion, is that the US economy was an exporter's dream customer-come-true. As long as we kept buying stuff, a lot of stuff, our trade partners would buy our debt, as well as buy up our assets.
Now that the consumer is tapped out, and in debt so much that they have to cut back on their own consumer purchases and binge buying addictions, foreign investors of the US dollar, and US Treasuries are likely rethinking if the dollar and Treasuries are good investments, or if they should be reconsidered as such. Mr. Laird states that, at that point, the US dollar will rapidly fall into a devaluation crisis. He predicts that the first crisis will be an economic depression, and the second will be the demise of the dollar, or at the very least, a severe devaluation likely around 70% or more (at first).
He claims that this depression would last 5 years, with unemployment reaching 20%.
He also discusses the crisis in China, and once their economy severely slows, to what he claims to be 8% growth, the country will experience political unrest and massive unemployment. The China Daily newspaper, dated October 20, 2008 read as follows:
He goes on to say that we are about to face two significant problems never seen before. The world is going to see a severe recession bordering on an economic depression, and the collapse of the US dollar. He says that what is holding the US dollar up in spite of the worsening US trade and budget deficits, which add up to around $1 trillion, is that the US economy was an exporter's dream customer-come-true. As long as we kept buying stuff, a lot of stuff, our trade partners would buy our debt, as well as buy up our assets.
Now that the consumer is tapped out, and in debt so much that they have to cut back on their own consumer purchases and binge buying addictions, foreign investors of the US dollar, and US Treasuries are likely rethinking if the dollar and Treasuries are good investments, or if they should be reconsidered as such. Mr. Laird states that, at that point, the US dollar will rapidly fall into a devaluation crisis. He predicts that the first crisis will be an economic depression, and the second will be the demise of the dollar, or at the very least, a severe devaluation likely around 70% or more (at first).
He claims that this depression would last 5 years, with unemployment reaching 20%.
He also discusses the crisis in China, and once their economy severely slows, to what he claims to be 8% growth, the country will experience political unrest and massive unemployment. The China Daily newspaper, dated October 20, 2008 read as follows:
“China's economy, one of the fastest-growing economies in the world and the biggest contributor to global growth, grew 9.9 percent year-on-year in the first three quarters of this year, according to official figures released on Monday, showing a trend of a slowdown amid the current global financial crisis.
In the third quarter, the gross domestic product (GDP) growth rate slowed down to 9 percent, the lowest in five years, from 10.6 percent in the first quarter, 10.1 percent for the second quarter and 10.4 percent in the first half of 2008.”
In the third quarter, the gross domestic product (GDP) growth rate slowed down to 9 percent, the lowest in five years, from 10.6 percent in the first quarter, 10.1 percent for the second quarter and 10.4 percent in the first half of 2008.”
Mr. Laird says that China must add 15 million jobs per year merely to keep up with the population growth, since it has a total population of 1.3 billion. China continues to have 800 million poor, rural citizens trying to vet for the limited city jobs.
He does not feel that the economy will stop contracting. Without credit the world economies will continue to contract. Everything is credit based. The only other option is a pay-as-you-go system and businesses are not structured to operate in that way. Businesses are accustom to credit and if this way of doing business does not return quickly, a world economic depression will come. Mr. Laird does not feel that credit will becoming back.
This spells doom for the dollar. Lower interest rates, and the Bush economic stimulus package handed to the citizens did not work.
This spells doom for the dollar. Lower interest rates, and the Bush economic stimulus package handed to the citizens did not work.
There are two critical problems leading to an economic depression, as explained by Mr. Laird. The first is deleveraging. It cannot be stopped. The financial bubble beginning in 1945 and, which has now ended in 2008 has been broken. He estimates that there is, at least, a $1000 trillion worth of world financial markets in the process of deleveraging. The biggest deleveraging comes from derivatives, which were basically bets. He writes that the Bank of International Settlements states that world derivatives amount to over $1000 trillion or $1 quadrillion in value!!!!!!
What has been handed out to slow the banking crisis is nothing when it has not opened up credit. And then, who will borrow under such uncertain conditions?
Mr. Laird has solutions. His first is to repeal Social Security and Medicare obligations. The second is debt forgiveness. By doing this, the world would recover, but he realistically sees this as never happening for many reasons. He foresees the two entitlements going bankrupt in 30 years, but in my opinion, 30 years is a long way away. A great deal of change will likely occur over that period of time to correct the weaknesses in these entitlement obligations.
I agree with Mr. Laird’s predictions, at some level, but I feel that if the Obama administration does not directly inject this economy with the right fixes, then what Mr. Laird predicts might actually happen! I have stated my fixes in previous posts, but will repeat them along with others.
The economy needs a major works and services Marshall Plan type of intervention. Many of our roads, bridges, schools, sewers, water delivery systems, public transportation network, airports and public buildings need repair and renovation. A priority list of the most needy projects must begin on January 21, 2009. Fallow agricultural lands, both in rural and urban areas need to be planted with “green” and healthy crops for people instead of livestock. Local planting and distribution needs to occur to help reduce fuel and shipping costs during in-season growing periods. Public transportation subsidies must go out to communities to increase ridership and reduce costs as a lure to commuters to ride public transportation to and from work.
The federal government needs to give grants and rent the roofs of homeowners, business owners, corporate owners, and public buildings to install solar panels that can connect into the existing energy grids all across the nation. When available, more wind generators should be built to also tap into the grid. A new and more efficient electric grid should be created.
The government, if they are to subsidize the auto industry, should mandate that any cash infusions would come at a cost. All corporations willing to take government tax dollars must allow for worker ownership stake in the companies. In addition, the downsizing of brands would likely be necessary, and merging all three American car companies into one reasonably sized auto manufacturer makes the most sense. The building of electric hybrids and full electric vehicles must be a requirement. Also, grants should be made available for individuals to convert their own gas vehicles into full electric cars. Also, force the oil and gas companies that hold land leases to either explore those sites, or give them up. It is believed that wind power generation machines could go up very quickly and hooked into the grid with little down time.
What has been handed out to slow the banking crisis is nothing when it has not opened up credit. And then, who will borrow under such uncertain conditions?
Mr. Laird has solutions. His first is to repeal Social Security and Medicare obligations. The second is debt forgiveness. By doing this, the world would recover, but he realistically sees this as never happening for many reasons. He foresees the two entitlements going bankrupt in 30 years, but in my opinion, 30 years is a long way away. A great deal of change will likely occur over that period of time to correct the weaknesses in these entitlement obligations.
I agree with Mr. Laird’s predictions, at some level, but I feel that if the Obama administration does not directly inject this economy with the right fixes, then what Mr. Laird predicts might actually happen! I have stated my fixes in previous posts, but will repeat them along with others.
The economy needs a major works and services Marshall Plan type of intervention. Many of our roads, bridges, schools, sewers, water delivery systems, public transportation network, airports and public buildings need repair and renovation. A priority list of the most needy projects must begin on January 21, 2009. Fallow agricultural lands, both in rural and urban areas need to be planted with “green” and healthy crops for people instead of livestock. Local planting and distribution needs to occur to help reduce fuel and shipping costs during in-season growing periods. Public transportation subsidies must go out to communities to increase ridership and reduce costs as a lure to commuters to ride public transportation to and from work.
The federal government needs to give grants and rent the roofs of homeowners, business owners, corporate owners, and public buildings to install solar panels that can connect into the existing energy grids all across the nation. When available, more wind generators should be built to also tap into the grid. A new and more efficient electric grid should be created.
The government, if they are to subsidize the auto industry, should mandate that any cash infusions would come at a cost. All corporations willing to take government tax dollars must allow for worker ownership stake in the companies. In addition, the downsizing of brands would likely be necessary, and merging all three American car companies into one reasonably sized auto manufacturer makes the most sense. The building of electric hybrids and full electric vehicles must be a requirement. Also, grants should be made available for individuals to convert their own gas vehicles into full electric cars. Also, force the oil and gas companies that hold land leases to either explore those sites, or give them up. It is believed that wind power generation machines could go up very quickly and hooked into the grid with little down time.
(See our video library for electric conversions.) (Read Peter Morici.)
Dr. Peter Morici has written that the Chinese Yuan has been valued too low in relation to that nation's productivity. The Chinese have tried to keep their currency pegged close to the Dollar in order to keep their exports to the U.S. cheap. He feels that must be changed. That change would positively effect the U.S. trade deficit imbalance.
Robert Kuttner supports some of these interventions, as well as “professionalizing” many jobs, which are not considered so, but are necessary for a society to function properly. By making training certificate programs mandatory for day care providers, nursing aides, nursing home care providers, and others it would increase their pay and level of competence.
Robert Kuttner supports some of these interventions, as well as “professionalizing” many jobs, which are not considered so, but are necessary for a society to function properly. By making training certificate programs mandatory for day care providers, nursing aides, nursing home care providers, and others it would increase their pay and level of competence.
And finally,there is a need to address a national type of health care program for all Americans, with the government taking ownership of all drug research and development, which would also include the patents on drugs. By doing so, the drug companies no longer can claim that the high price of drugs is due to research and develop. Drug companies would only be responsible for the manufacturing of the drugs. (Dr. Dean Baker explains this idea in further detail.)
All these interventions would reduce the trade deficit, put people back to work, allow for small businesses to blossom without the worry of family health care costs, and would create a new export market for new and advanced Green technology products. We would, once again, increase our industrialization from 17% of GDP, to higher percentages.
All these interventions would reduce the trade deficit, put people back to work, allow for small businesses to blossom without the worry of family health care costs, and would create a new export market for new and advanced Green technology products. We would, once again, increase our industrialization from 17% of GDP, to higher percentages.
In addition, significant tax rate hikes would have to be raised on the top-tier income earners, just as it had been done during other times throughout the 20th century. For example, between 1936-1982 the rates ranged between 70 to 92%. Suspension of capital gains and inheritance taxes on the top-tier might also have to considered. (Read Larry Beinhart.)
Another very important initiative required, which would improve our energy usage would be to develop greater energy efficiency and conservation technologies. This would allow us to use energy in a smarter way. Efficiency and conservation technologies would make the delivery and use of energy more effective. It could be looked at its lower end level, such as turning down the thermostat and turning off of lights, but at the higher end, it would be better engines, motors, switches, controls, electrical grids, etc.
I feel that the future would see a more stable, prosperous and secure nation with these initiatives. The debt would increase, of course, but the alternative would be much worse. There is no question that without these interventions, the nation would be destined for a long lasting depression. A recession cannot be avoided, but hopefully, it would be short-lived with interventions discussed here.
Thank you for reading, jerry
I feel that the future would see a more stable, prosperous and secure nation with these initiatives. The debt would increase, of course, but the alternative would be much worse. There is no question that without these interventions, the nation would be destined for a long lasting depression. A recession cannot be avoided, but hopefully, it would be short-lived with interventions discussed here.
Thank you for reading, jerry
Tuesday, November 11, 2008
The Privatization of Retirement Accounts
The latest fear stirred by Republicans is the implementation of Guaranteed Retirement Accounts. What has been discussed by Democratic House congressional members was to take personal retirement accounts, including 401Ks and IRAs, and convert them to accounts managed by the Social Security Administration and create what would be called a Guaranteed Retirement Account (GRE). GREs would guarantee a fixed 3% annual rate of return. In place of tax breaks workers now receive for contributions and thus a lower tax rate, they would receive $600 annually from the government, inflation-adjusted, as outlined by Teresa Ghilarducci, a professor of economic policy analysis at the New School for Social Research in New York, while testifying before the House Committee on Education and Labor, on October 7, 2008.
It has sure roused more finger pointing at those socialized Democrats. The Republicans are afraid of a part of this proposal that would limit anyone inheriting the GSA savings of a loved one, who would die before retirement, to only half of the account balance. If that loved one were to die after retirement, they would only be allowed to pass on the part of the GSE that they paid into, as well as the interest acquired, but not the employer’s part of the contribution.
Here are some facts about retirement ages. The average white male American will live to 5.7 years past the retirement of 65, which is 70.7 years. Another statistic showed that the average white male will live to 74.8 years. The average black male American will not live to that age, but to 68.2 years. 88% currently received their retirement income only from Social Security. 19% currently received income from private pensions and annuities, as well. 29% received income from assets, too. This example showed that black Americans do not benefit as much as white Americans from retirement benefits of any sort. Older African Americans, on average, received more than 44 percent of their total income from Social Security. African American women over the age of 65, on average, relied on Social Security for 56.8 percent of their income. Social Security has been the only source of income for one in three African Americans over the age of 65.
Here are some facts about retirement ages. The average white male American will live to 5.7 years past the retirement of 65, which is 70.7 years. Another statistic showed that the average white male will live to 74.8 years. The average black male American will not live to that age, but to 68.2 years. 88% currently received their retirement income only from Social Security. 19% currently received income from private pensions and annuities, as well. 29% received income from assets, too. This example showed that black Americans do not benefit as much as white Americans from retirement benefits of any sort. Older African Americans, on average, received more than 44 percent of their total income from Social Security. African American women over the age of 65, on average, relied on Social Security for 56.8 percent of their income. Social Security has been the only source of income for one in three African Americans over the age of 65.
Today, most retiring Americans will not have enough money to actually retire. Most equity-based accounts have lost nearly 45% of their un-guaranteed value. People have been pulling their investments out of 401K accounts with penalties, and suffering the losses further crushing the stock market and their savings. People are justly afraid of losing their life savings.
As many have debated, the stock market could see a DOW of 6000, which would be another 25%, totaling a projected loss of a whopping 65% loss in the portfolio of many hardworking Americans. By having a GSA program, it might keep top-tier taxpayers from taking their 401K accounts outside the country reducing America’s budget deficit and national debt because it would encourage foreign investors to buy US bonds and Treasuries boosting the value of the dollar. America would grow overall because such accounts could be used as investment instruments for technology for the 21st century and, once again, help America become more of an exporter of finished goods, and improve our nation's self-sufficiency.
As many have debated, the stock market could see a DOW of 6000, which would be another 25%, totaling a projected loss of a whopping 65% loss in the portfolio of many hardworking Americans. By having a GSA program, it might keep top-tier taxpayers from taking their 401K accounts outside the country reducing America’s budget deficit and national debt because it would encourage foreign investors to buy US bonds and Treasuries boosting the value of the dollar. America would grow overall because such accounts could be used as investment instruments for technology for the 21st century and, once again, help America become more of an exporter of finished goods, and improve our nation's self-sufficiency.
Yet, there are red-flag wavers throughout the Republican regressive movement warning against such a move. We have the Heritage Foundation warning Congress against raising taxes on their wealthy constituents, or increasing regulations, which the lack-thereof was the cause of much of our economic problems. I guess, they like what their regressive philosophy has done to the nation. For most, the Heritage Foundation is a dinosaur, and regressive to the national security of the nation.
None of what the Heritage Foundation warned the Congress against doing did not work over the last 30 years to sustain this economy, jobs, retirement accounts, control of the debt, stimulate the economy for sustainability and improve wages for workers. Corporations already pay the lowest taxes due to right-offs, and loopholes. In addition, Bush’s tax cuts did not stimulate the economy at all.
Now, we get this great piece of advice from Jerry Bramlett, president and CEO of BenefitStreet, Inc, and independent 401K plan administrator, which was found in Karen McMahan’s, Carolina Journal article, “Democratic Leaders in the U.S. House Discuss Confiscating 401(K)s, IRAs.” He said, “one of the best ways to ensure retirement security would be to have the U.S. Department of Labor develop educational materials for workers so they could make better investment decisions, not exchange equity investments in retirement accounts for Treasury bills, as proposed in the GSAs.” What is this guy talking about? Does he mean they he, and others, do not provide such handouts to their clients, nor outline for them good and sound invest advice strategies before taking their money? That is what it sounded like to me. Is he saying that does not want to see investors, who have been losing their 401ks, which are being managed by investment firms that are still taking out management fees from dwindling uninsured retirement funds, transferred to insured investments? Maybe Mr. Bramlett should have warned his colleagues that they needed to have been warning their clients about the signs of a market collapse, instead of scolding the investors who were afraid of losing their life savings when they pulled out and ran to safer ground.
These supporters of investment companies who have been managers of investment plans, taking fees and commissions, but not acting on behalf of their clients swiftly enough, or at all, while the retirement plans of hardworking Americans swirled down into the disappearing stock market sink hole, should wake up and take responsibility. These retirement/investment managers, and their companies still made their fees and commissions even as the portfolios went down the drain. Now these guys (and gals) who were supposed to be the stewards of our investment-retirement portfolios are crying and whining about a newly considered Guaranteed Retirement Account program, which might actually protect retirement accounts from disappearing, since they would have every American contributing into this guaranteed powerful investment account.
Hey 401K administrators in the private financial sector, where were you when we needed you the most? Where were you when we needed you to act swiftly, and with precision to save falling accounts? Were you asleep, or dilly-dallying around? So much for your keen professional judgment and skills. The reason you are paid is not when everything is moving smoothly, but when it appears that there is a brick wall ahead and your client is about to crash into it.
GSAs would be a boom for the country, and retirees. It would not prevent anyone to take their after-tax incomes and invest in un-insured and riskier investment vehicles of their choice. There would no restrictions on inheritance, for most, or where one would choose to invest. Minority retirees, and whites who might not live to appreciate a long retired life might benefit from such a program. Also, middle Americans, who are spending most of their incomes on everyday essentials, such as rent/mortgage, insurance, utilities, health care, food, gas, clothing, taking care of elderly or sick family members, and have a difficult time saving would greatly benefit from a government directed guaranteed retirement account, too.
Thanks for reading, jerry
Friday, June 27, 2008
Trillion dollar waterboarding
Would you sit down and talk with enemies of the U.S.? President Bush used a speech to the Israeli Parliament to liken those who would negotiate with “terrorists and radicals” to appeasers of the Nazis — a remark widely interpreted as a rebuke to Senator Barack Obama, who has advocated greater engagement with countries like Iran and Syria.
The truth about Barack on forgien policy is that he takes an intelligent and pragmatic approach to foreign relations. The same tact that most of the non knuckle dragging world takes. Lets hope going forward that the United States learns that talk truly is cheap and a whole lot less expensive and bloody.
The most important lesson to be learned during these last days of darkness is this, Bush's foreign policy has failed because of corporate greed. He has allowed forces of profit to not only make a fool of him domestically but also destroy the once semi-good name of the United States through-out the world.
Bush has traveled hemispherically with his daisy cutters in hand to combat only certain parts of his so called axis of evil. He has waterboarded not for democracy but for profit in the name of capitalism. Bush continues to spend trillions of dollars in Iraq to plunder valuable oil fields using American lives. Lives lost not in the name of democracy, but in the name of corporate profits.
Interestingly, according to American media, the Bush administration has also put together one of the most incredible diplomatic accomplishments in history. The Bush state department has brought that evil film buff and coward Kim Jong Ill down a peg, through, get this, Obamaesque diplomacy. Under Bush it seems some evil gets a pass through diplomacy and appeasement while others get the trillion dollar water-boarding treatment.
In the mainstream American media Bush's State department officials are being lauded as heros and dynamic chit chatters whom have brought that dictator with the crazy cool haircut Kim Jong Ill to his nuclear knees. Supposedly just by using the very diplomatic concepts of engaging our enemies that candidate Barrack Obama has suggested and the republican party mocked.
But not so fast, while acknowledging what a fantastic accomplishment has taken place with the North Koreans and Mr Kim jong ill, we must look closer at this so called success . Lets not forget China's role in this historic Bush moment. Knowing now what General Macarthur and Harry Truman learned the hard way, North Korea is part of China. So, lets give credit where credit is due, China's efforts in North Korea made this diplomatic event happen. Regardless of what the media and U.S history books may say and read, the U.S. owes The Peoples Republic of China a big thank you on this one. Thank you's said, if China didn't offer so much economic opportunity for corporate America gangsters and present an overwhelming military presence we probably wouldn't have wasted time talking to Kim Jong iLL and would have been mixing North Koreans and Muslims together as an even more surreal cocktail known as Guantanimo.
Bush may be a fool but with all do respect to Harry Truman, I will quote give em hell Harry in this context , "Goddamn it, you don't attack China." So, don't buy the medias spew on this one. Bush is still a failure beyond all imaginable thought both globally and domestically.
Friday, May 9, 2008
The Economic Expansion is Over!!!
Contrary to the belief of Republican neo-cons, the reason there are fewer middle class Americans today then there was 8 years ago is not because they have been lifted up into a higher income stratosphere, but because their wealth and income has been disappearing. The regressive-minded economic zombie Republicans brought to be by drinking a type of Kool-Aid that induces psychotic episodes triggered by listening to too much Rush and O'Reilly droning, has finally been found to be the cause of our nation's decline. (Read the Neo-con comment written in response to my last posting. You will find it under "comments" attached to the blog posting below this one.)
According to the Economic Policy Institute (Bivens, and Irons) Briefing Paper #214, the U.S. has had the worst expansion since World War 2. The unemployment rate rose from 4.4% in March 2007 to 5.1% in March 2008. The only aspect of this business cycle that shined was the huge growth in corporate profits; the highest since 1949!!! How does that happen? The worst expansion brings about the second biggest profit taking since 1949? Read on.
Economic output spiraled downward in the fourth quarter of 2007 to a 0.6% annual rate and has continued into 2008. Payroll enrollment growth matched the weak economic output figure of 0.6%.
The EPI report looked at macroeconomic cycles, which consisted of 27 quarter durations, with 10 business cycles, since 1949.
John Bivens, in his EPI article, "GDP Growth Anemic Again. Since When Is 0.6% Growth Good News?", wrote that to have had three straight months of negative job growth totaling 232,000 jobs lost just this year is recessionary. Any GDP growth below 25% negatively effects employment and wage growth.
Employment must rise by 1.1% annually to absorb newly available workers. We are seeing a 0.5% difference when compared to payroll enrollment growth. This means that there has been a drop in hires.
The EPI report (#214) said that GDP growth in the latest expansion was a full 40% slower than the post-World War 2 average.
It is clear that the so-called "expansion" claimed by BushCo is over. We have financial market turmoil, housing price declines, and higher energy costs. Plus, "there are declines in consumption, spending, investment in equipment and software, residential and non-residential construction, exports, and imports. Residential investment fell for the 9th straight quarter, and its 26.7% drop was the largest quarterly change since the decline began." (Josh Bivens-EPI).
The recessionary pressures are effected by 2 factors: "slower hourly wage growth and fewer average hours worked per week." (Jared Bernstein, "Nation's Payroll Decline Again, and Hours, Wages and Incomes Feel the Squeeze,"EPI, 5-2-08). He went on to write, "At 5.2 million, this indicator of under-employment is up 850,000 over the past year."
With these reports, anyone believing that the middle class is becoming richer is foolishly ill-informed. I guess, the Kool-Aid drinkers have become addicted to the drug and need rehab immediately. The opportunity for our economy to turn around under these conditions will be a huge struggle, and very likely to not happen until there are major progressive reforms that must be addressed by a competent president and not by a stupid one. And that includes McCain't, oh, I mean McCain.
It has gotten so bad that Bugsy Bernanke has allowed banks, and financial institutions, to cough up student, auto, and credit card loan bonds as collateral for injections of clean Treasury capital at a low, low interest rate of 2%. So, why not? Bugsy continues to liquify a very liquid global market where banks are afraid to loan creating a freezing cold credit environment. Banks are not lending to one another, which is what they often do, because they don't know who else is hold the hot potato called junk bonds (collateralized debt obligations, and credit default swaps), or what is often called Monopoly money, hiding deep within their balance sheets. These banks are thick and knee deep in our Treasury dollars as they swapped away their junk for the good stuff. They are swimming in liquidity. Yet they don't loan it to one another or use it to stimulate our drowning economy, but loan it out to the ultra rich. More money is channeled to the ultra rich investor class through unregulated private equity and hedge funds, while the middle class loses jobs, benefits, assets, and confidence in the government.
Bugsy, and Paulie Paulson (Treasury secretary) keep shootin' up the banks with the bad-credit-swap narcotic exchanging their riskiest junk bonds (student, auto, and credit card bonds) through their bi-weekly Term Auction Facility to the tune of $75 billion per pop. In addition, these two banksta gangstas have lifted the cash give-away, by 50%, as they swap with the European Central Bank and Swiss National Bank purging any subprime stuff the Europeans were stuck holding from the financial Wall-Street shysters.
Spain, France, Germany and other European economies are doing well, as they did not get caught up in the subprime web (except for Britain) of lies, deception, and fraud to the extent that the Americans did. Also, they are not trapped in the buy-Chinese-cheap-stuff quick sand in which we are heavily sinking deep within. They respect livable wages, unions, and worker stability, which is paying off. The neo-con regressives took us in the opposite direction and look where we are today. The regressives were willing to destroy our economy so the ultra rich could become richer!!!
Robert Kuttner (5-5-08, Prospect.org) quoted Germany's Gunter Verheugen, the vice-president of the EU, "We need a strong and competitive industrial base in order to have a strong service economy. Don't try to be cheaper. Try to be better. Don't try to compete on low social standards." Now, that makes sense. Although, McCain't and BushCo don't believe in such thinking. The countries within the EU are running trade and/or budget surpluses!! Is that not a novel outcome?
It is clear to me that BushCo faked the economic expansion to sell a second term as he boasted about a booming economy throughout a completely failed presidency of 8 years. He built his lies upon a known but beautifully covered hole until the weight of a pervasive and burdensome debt load, accompanied by significant and widespread foreclosures sunk his fabricated illusive house-of-mirrors masterpiece.
He faked the economic expansion by performing two moves-one being the massive boosting up of housing prices and values (housing bubble), and the other by creating an extra $1 trillion in deficit spending handed over to the richest people in America through tax cuts.
Through the housing bubble, households took out approximately $6 trillion in home equity giving disposable income a 5% injection. But now, the high-flyin' spending Americans, from suburbs to cities, have lost their loft and are free-falling, along with Humpty-Dumpty, right to the ground.
All of this validates my theory that the plan all along was to allow the wealthiest Americans, by allowing laissez-faire regulatory standards, and oversight, as well as the reduction of paid government workers to do the regulating, and tax rules favoring the rich, and through high salaries, bonuses, commissions, fees and perks resulting in terrific corporate profits, the opportunity to profit further off of the misfortunes of middle and lower income Americans. The privileged elite within those corporations benefiting from such thievery by cashing in on the planned BushCo housing bubble (Greenspan believed in blowing bubbles) by investing in the sale of subprime and other mortgages, through an unregulated resale market, furthered their wealth at the expense of the nation's economic well-being. This should be investigated by the justice department and prosecuted to the highest levels and penalties.
It was never about increasing the strength of the nation. It was only about greed, while manipulating the economics of the country toward its most devastating peril since the 1928 Great Depression. Nothing else mattered to these greedy neo-con regressive Republicans more than increasing the wealth of the "haves and have mores"--as Bush refers to his base of supporters and contributors. They have created nothing but our nation's greatest national security risk. This risk outweighs everything else that they have used to scare us into believing that the boogieman is not them. The truth is---they are the boogieman. No terrorist group could ever harm this nation as they have so calculatively done.
Friday, May 2, 2008
The Rich Get Richer off of Government Contract, ie. the Taxpayers
Last week I wrote about how the private equity groups, the richest people in America, and possibly, the world are making huge gains from investments made by those managers. Now, who are those contributors to the private equity groups? They are the CEOs, CFOs, vice presidents of corporations and divisions of corporations, lawyers leading departments of legal services within those corporations, and more. They need to find places to invest their huge payloads and private equity groups are just that kinda place.
We have to ask ourselves if this recession is adversely affecting the spending of middle and lower income Americans? And, where do many of these corporations go to make up their loss of sales from the downturn in consumer spending? The Pentagon sucks up over 33% of our national yearly budget; and that total national yearly budget is around $13 trillion. The Pentagon is funded via the taxpayers, as well as through foreigners buying up American assets, such as bonds and Treasury Bills. And, consumer spending has begun to significantly slow down due to the fiscal policy brought to you by the Bernanke-Bush-McCain regressive party politics.
So, as the richest Americans working for these huge multinational corporations make profits from their business contracts off of the people's Pentagon, they walk away with taxpayer subsidized expense accounts, retirement bonuses, salaries, and more. Much of what these employees "earn" comes from our tax contributions.
You can look at this as the biggest welfare program in the history of the planet!!!! This is what Dean Baker calls the Nanny State. The rich getting richer off the government programs, established rules, and policies that permit such a feeding frenzy.
This government subsidy of the rich by the taxpayers has been going on for generations, but now, it is becoming more apparent. The internet blogging world has exposed this scam. The subprime housing bubble and all that has been written about it has helped many of us to assemble a mental-visual picture of how all these pieces have fit together in order to allow the "privileged class" to avoid any of the economic suffering that the rest of us are dealing with every day. The Republican regressives have made sure of that.
Keep the worker bees working, gathering honey by swarming the country for the greenback pollen so the "privileged class" hive queens can benefit from all our hard work.
George W. Bush was born into the world of privilege through his grandfather and father's oil wealth and connections. His grandfather, Prescott Bush, brought these connections and wealth privileges to the Bush Boy. Dumb W. never figured out how to use intellect and acquired skill sets to create wealth on his own. He was always given his opportunities, and always failed. He was never smart enough to do it on his own. Whenever he failed, daddy's friends and colleagues bailed the Dummy W. out of his economic woes. He failed with every oil business he ever got his fool-hearty hands into.
Dummy W. never earned an honest dollar in his life. The political regressives saw a patsy fool with an appealing shot n' beer Texas swagger to set up in the Texas governor's mansion, and later, on into the White House only after sealing the election through thievery and the ultra right wing majority (regressive) Supreme Court.
This is how the well-connected rich get richer. The plan has always been in place to take the wealth of the middle class and transfer it into the hands of the very rich. We saw it with the Bush tax cuts. The very ones that McCain voted against but now supports with full embrace. He wants to make the tax cuts that took money from the Social Security trust fund and transfer those public dollars, specifically set aside for supporting middle and lower income workers, on into the hands of the ultra rich. McCain wants to continue this transference of wealth to the tune of $325,000 per year for the millionaires and billionaires through permanent tax cuts.
How do many of our wealthiest employees get their money? In Nick Turse's article "The Real Matrix: The Pentagon Invades Your Life", found on TomDispatch.com, 4-24-08, he writes about the one trillion dollar per year Pentagon contract budget. The Pentagon contracts with, at least, 100 top multi-national and national corporations. These corporations are armed with top brass executives making big bucks, and they look for places to invest their money. One spot is the private equity group funds, which include hedge funds. One trillion Treasury dollars--public dollars--trickling down into the accounts of the richest people in the nation.
Here are some of these contracts. Procter and Gamble received $362,461,808; GE raked in $2.3 billion in 2006; Danskin received over $1 million over two years; NASCAR posters were printed to the tune of $38 million of taxpayer dollars; Tyco International, including ADT alarms, came in at $187 million; GM agreed to build a $100 million test track for the military; Goodyear received $357 million; Verizon got $128 million from the Pentagon and $50 million from HLS; Motorola phones came in at $308 million; In 2004, Bectel received $1.7 billion; Shell's parent company received $1.15 billion in 2006.
Here are many other names you recognize that received contracts from our tax dollars. ExxonMobil $1.17 billion in 2006; Ford; Kodak; Olympus; 3-M Post-It Notes; Microsoft Windows software; Budweiser; Lexmark printers; Canon photocopiers; AT&T telephones; Maxwell House coffee; Kidde fire extinquishers; Xerox fax machines; IBM servers; paper from International Paper; Duracell batteries; an LG Electronic refrigerator; paper towels from Marcal Paper Mills; Wolverine boots; Oakley sunglasses; American Optical Company goggles; Apple; Starbucks; Google; Breakaway Games; National Football League jerseys and caps partnered with the Pentagon; Marvel Comics partnership; HP; Hilton; Marriott; Columbia TriStar Films; Sony; Pfizer; Sara Lee ($68 million in 2006); M&M Mars and Hershey; Nestle; ESPN; Walt Disney; Bank of America; Johnson and Johnson; FedEx; Dell; Samsung; Harris Pillow Supply; Thomasville Furniture; Sears; Charmin; New Balance; True Fitness Technology (treadmills); Hanes Her Way; Home Depot; and, of course, Lockheed Martin.
The article went on to point out that in 1959, during Eisenhower's presidency, the Pentagon contracted out at a cost of $23 billion. In 2007, the direct procurement of combat related goods went up to $600 billion per year!
In the article "The Myths and Harsh Effects of Bush's Economic Class War" found on Alternet.org, 4-28-08, the author wrote that the recession of 2001 never ended, at least, not for ordinary Americans.
Ordinary Americans found their incomes declining. From 2001-2007, median family income declined somewhere between $500-$1000. Median individual income declined by, at least, $1000.
The yearly average number of new private sector jobs created from 2001-2008 was just 369,000, not even keeping up with the growth in population. In 1992-2000, private sector jobs increased by 1,760,000 per year.
The number of people in manufacturing jobs declined by over 3 million.
The number who got health care at work went down from 64.2 million to 59.7 million. The number of people without health care went up from 38.4 million to 46.9 million.
The list goes on!
The middle class is disappearing. The writer went on to say that "The growth in the U.S. economy is a bubble. It consists of debt. Can it be true the growth in the U.S. economy in the last seven years, such as it is, consists entirely of debt?"
From that same article, here are the numbers:
The U.S. economy grew by about $4 trillion. The national debt in January 2008 was $9.2 trillion. An increase of $3.5 trillion. Total consumer credit debt in 2008 will likely be $1.8 trillion. Total consumer credit debt in 2001 was $7.65 trillion, which is an increase of $5.25 trillion.
In the course of achieving growth of $4 trillion, we took on $8.75 trillion in debt, combining what we owe as a nation and as individuals.
This is the Bush-McCain-Republican Party legacy. The cowardly Democrats, led by the Blue Dog (I call these capitulators- Yella Dog)Democrats who failed to stand up to Bush in the last 2 years. Yet, one must remember, this all began with Reagan, and now, overwhelms the nation because of this current president.
The economy cannot grow with this huge amount of debt, but it is clear, the rich are getting richer. With such lucrative Pentagon, Homeland Security, National Security, CIA, FBI, and other government contracts, those within those corporations, while living large at the top of the pyramid, are investing their money with private equity funds, which are buying foreign currencies, commodities, and various types of precious and industrial metals increasing inflation among working Americans as they go about paying for their daily needs, while expanding the 2001 recession to most of the nation. The rich folk holding the government contract "ATM" card to the Treasury are getting wealthy off our backs.
Banks are hardly lending to consumers, but are developing major lending relationships with private equity fund groups who then borrow to speculate (gamble) against a declining dollar. What we are witnessing are banks lending to equity group funds that are not choosing to speculate on the building of a new American economy and future, with solidly paid workers, but to go outside America to advance their wealth. Unfortunately, such behavior does not help pull the nation away from its economic recession, but only fuels it. The reality is they are leveraging against a declining America. Therefore, the Fed is encouraging the banks that will now receive even cheaper government money, 2%, to work against the national security interests of our country.
Why would Bernanke, Paulson, and Bush do this?
They do it to make sure the richest Americans don't suffer ANY wealth losses. As the subsidized rich investor class within the private equity groups speculate in Europe, and in Euros, they stabilize the European economies keeping their food and oil prices down, as our prices go up at home.
This should be a crime!
Is their plan to force European exports, with their higher labor costs resulting from speculators boosting foreign currency values through their investment, away from the American markets? By doing so, those European products cost more here at home. If this is the case, their plan could help our disappearing industrial sector (only 10% of our economy) export what little they can because of our shrinking dollar? Regardless of such a plan, our 10% industrial sector is no longer big enough to pull our huge economy out of recession and into a recovery. Any plan to devalue our dollar by betting, oh, I mean investing Treasury subsidized dollars outside of America will not help our economy, but will only damage it further.
Have we had enough yet?
Friday, March 28, 2008
Bush, Beanie Bernanke and The Bailout
This giddy false exuberant belief that a rising stock market, lower oil prices and falling gold prices to only be temporary, will likely be proven wrong. So, be prepared for the reverse to reoccur and hit you on the back of the head like the day when you were walking home from school, and from out of nowhere came that icy packed snowball. Wham!!
The market has climbed not because of increased productivity, or the delight of a retreating recession, but because the Federal Reserve is handing out newly minted Greenbacks in exchange for worthless garbage cyber-dollars that cannot be sold to anyone with a brain other than Beanie Bernanke and his Federalies. Single payer loan dealer Wall-Street bankers.
This is a bailout. Let us admit it now! If I gave you real money for Monopoly money, that would be a bailout. I would be saving you from looking stupid and from sure disaster.
The Wall Street banks gambled on making money from bundled debt securities in order to cover loans and deposits hoping to make billions from gullible suckers. This was all done off the bank's balance sheets and from the back rooms of a quiet, shadow banking system that would make Tony Soprano proud. These risky sales were made away from the public's eye. These deals were out of view from the handful of Bush regulators still on the job, and not hanging out at the local unemployment office. Unfortunately, these risky pieces of paper went up in flames as subprime loans went south taking down those home values and related over-extended personal unpaid debt.
So, Ben "Bailout" Bernanke could not have his rich, greedy banker pals lose their upper crusty lifestyles and end up in the pit with us middle-classites. Oh no; anything but that, Ben!! They have worked way too hard scamming working America to be knocked off their elitist pedestals.
Bernanke does not care to make any of these greed-lusting socialists accountable and responsible for their pre-planned fraud upon the American worker. The Fed holds only $709 billion in Treasury bills to pay for the bailouts and junk collateral exchanges at the Primary Dealer Credit Facilities discount window. Drive by and pick up your fat 2.5% government subsidy. So far, he has visibly given away $230 billion of the $709 billion in only one week. What a spending spree! Once that is gone, Beanie will head down to the basement printing press to pull an all-nighter rolling dollars off the copier.
The facts are that in spite of these "exchanges", there has been an $8 trillion housing bubble and foreclosures pile up. As home values fall further, some are scooping up bargains; yet, the question still remains, will those bargains lose more value over the coming weeks/months/year? Jobs continue to be lost. (Two consecutive months of actual job losses.) Prices continue to eat away at expendable incomes. And, for most Americans, they cannot afford to go into further debt. These giddy bankers really don't want to loan out money. It just is too risky. Instead, they take OUR Federal Reserve T-bills and rush over to Europe and buy Euro-backed bonds because they are worth more than the dollar. Back To The Greedy Future.
Is the Justice Department concerned? Are they going after these "gambling swindlers" with billions in their trust funds and beach houses? No.
Dean Baker, a smart progressive economist, with great ideas, suggested that the Fed should just take over such failed banks, kick out the top brass and restructure the operation with more
competent managers with a goal to sell the thing once they make it solvent again. Why cannot we do it, to? Oh, I forgot, Bush is still president and Reed and Pelosi run Congress. Oh, silly me!
What will the giddy Stock Marketeers, from Bernanke Brothers Studios, do when they realize that we are really in a credit crunch, and maxed out on it, too? If Americans will not, or cannot borrow another dime, then the flow of credit stalls, the nation's economy grinds down, the dollar falls further, and gold prices increase along with consumer prices causing a deepening recession and inflation. Remember, the developing world, such as India and China, are in great need of what we need, too.
We can thank decades of Regressive (credit to David Michael Green for the term) policies shipping away jobs, gutting our manufacturing sector and bringing about an approaching $9 trillion national debt, a $700 billion trade deficit, and a $500 billion budget deficit. And don't forget a $2000/second war budget.
The Bush Regressives want our economy and standard of living to fall so far down that labor costs are par with China and India instead of stabilizing our standard of living and building it back to a place close to where it once had been. Instead of reinventing America into the World's Greatest Green Show on Earth, they want to bring us the "more wars" Regressives, who want to perpetuate the war machine, while, at the same time, raising the national debt by borrowing more to make it run, and subsidizing their corporate cronies who produced the war machine with OUR tax dollars. When will America say enough is enough?
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