Christmas has passed and we approach the New Year, so it is time for some resolutions.
Not for me. For Uncle Sam.
Mine are the same old ones: lose weight and avoid going broke.
Uncle Sam needs a lot more than that, so here goes with what I think they should be (in part):
1. BALANCE THE BUDGET!
Now. Not 10 years from now; not 5 years from now. Do it NOW!
How to do it? Cut spending. How about cutting the budget to where it was on September 1, 2008? That was before the bailouts started. A good start. But not enough.
Restore Federal employment to the level of September 1, 2008, then cut it 10% across the board, except for the uniformed military.
Taxes? Tax rates don't need to be raised. Just do away with all of the tax shelters that the very wealthy use to avoid paying taxes.
No more tax subsidies for anything. If it is not profitable without tax breaks, then let the resources go to something that is. (this would include the oil and gas depletion allowance, something dear to my heart, among other things).
Stop subsidies as well, for the same reason. (this would include farm subsidies, and the ethanol subsidy, also very dear to close friends).
If that has not insulted everyone, I could continue. The point is that nothing should be sacred except preserving our economy and our freedom. Everyone will have to pay up. It has to be an equal opportunity cutting contest, with no sacred cows. Everything must be on the table.
It has to be done, so get started..
2. Pass a Balanced Budget Amendment to the Constitution that would require a balanced budget every year unless a super majority of Congress and the President declared a national emergency. There needs to be teeth in it so the politicains can't ignore it. 'Nuff said.
3. Do away with Too Big to Fail.
If a financial institution or large corporation is that big, the law should require that they be broken up. Think Teddy Roosevelt.
A corollary to that would be to reenact the Glass-Steagall Act, or something that accomplishes the same thing.
The big banks and bankers are getting fatter and fatter, while our middle class shrinks.
Go back and strengthen the extraordinarily weak regulation of financial institutions that was passed last year. Congress let the perps write their own rules. Ridiculous!
With the above, outlaw bailouts of corporations (and states, and municipalities) that go broke.
4. Enact a Sunset Act which would subject every Federal agency and program to expiration if not renewed every 10 years. No exceptions.
Texas has one that is pretty good. Model it on theirs, but stronger.
5. Reform Social Security.
Gosh, where to start? Begin by extending the age of eligibility to 70 years gradually, like it was previously extended to 67. Then index the eligibility age to life expectancy in the US.
Remove the Social Security tax from the general revenue budget, and restore the trust fund ( really too late. That horse is out of the barn.).
Establish a way to begin changing Social Security to a defined contribution plan rather than a defined benefit plan, like the private sector is doing.
6. Reform Medicare and Medicaid.
I have to admit that I do not have a clue about these.
Obviously, the benefits will have to be reduced. There just have to be limits, particularly on end of life payments. Tough choices there, but they have to be made. It needs to be made the right way, by doctors, patients, and families, not bureaucrats. Although the right is critical of Medicare supporting end of life counselling, my view is that it is necessary to encourage families to plan ahead for that eventuality. My family has. We have medical powers of attorney, living wills, and the like. Everyone should.
Premiums and deductibles for Medicare will have to be raised. The same for Medicaid.
While we are on health care, Obamacare needs to be replaced with something less intrusive. Some reform was needed, but the bill went WAY too far.
Other suggestions are quite welcome.
7. Bring the boys (and girls) home.
No great power has ever pacified Afghanistan, and we can't do it now. If we did, what would we accomplish? There is nothing there that is worth the expenditure of lives and money that is required. Declare victory soon, and bring them home.
Keep the carrier strike groups in the Persian Gulf, however. We will need them when Iran makes their first nuclear weapons. That could be another resolution, but I will resist.
8. Secure the borders now.
When that is accomplished, and only then, we can make some strides on a humane way to deal with the illegal immigrants that have been here for a good while. But there should be no blanket amnesty.
We can also then reform our immigration policies to make immigration more available to other than those who come illegally. Our current rules are way too restrictive. We need to be a bit picky about who we let in as well, but based upon skills and education, not race.
Before anything else the borders must be well secured first. And soon.
This is just a few of many things that are needed. Both political parties have contributed to a terrible situation that is a real threat to our country in many ways.
They have both sold out to the big money folks and the big labor unions. Campaign contributions are far more important to our elected officials than doing the right thing.
The big banks, labor unions, and politicians are thriving, while the middle class and the lower class is suffering.
It is time for a change, but for the RIGHT change.
This is not a complete list of what I think should be done, and I am not married to all the details. But the overall resolutions are quite necessary, in my opinion.
Clearly, the economy is not singled out for a resolution. The government just needs to get out of the way of the economy, and the other resolutions will help that quite a bit.
Other suggestions are welcome, either on this site or on Facebook.
Fire away. Let the conversations begin.
Showing posts with label Bailouts. Show all posts
Showing posts with label Bailouts. Show all posts
Saturday, December 25, 2010
Thursday, October 1, 2009
Thoughts on a return to blogging
It has been a long and busy three weeks, and I have not been able to even gather thoughts in order to blog. Sorry.
There was some time to keep up with email, and to read some articles. Given what is happening in our world, there is a lot to blog about. I will try to do so with a bit more regularity than lately.
Looking about, one sees the United States, once respected, if disliked, has changed to being disrespected and still disliked.
All of that in a period of eight months.
This is because of the deliberate policies of our current government. It has sucked up to our enemies and offended and abandoned our friends. Intentionally.
Iran has just been given another pass, in spite of its threat. North Korea is ignored, to do whatever nuke development they wish.
Castro and Chavez to our south are being helped, rather than isolated, while Honduras and Colombia, our allies, are treated quite poorly.
The situation in Afghanistan is eroding, and the government is holding "meetings." There seems to be no sense of urgency, even though the President accorded Afghanistan important status when running for office.
Domestically, the economy is in the tank while the "stimulus" is spent to shore up supporters and arms of the Democratic Party. The big banking and financial institutions have been bailed out with nearly three trillion dollars of taxpayers' money, but the government entities refuse to account to the people for the money.
The majority party is trying to cram health "reform" down the throat of the 85% of the people who are satisfied with their health insurance, in order to make coverage available to an additional 11% of the people (and, of course, 12 million illegal aliens).
They are also trying to pass a "cap and trade" regime, which will enrich a few, but will constitute a huge energy tax on everyone else, even the poor. This is being done in a time of deep recession and increasing unemployment.
In the media, I notice that the New York Times has as the lead article a story about Senator John Ensign (R-Nev) and his affair, but there is not a mention anywhere of Charles Rangel (D-NY) and his series of felonies, nor of the bastard child of John Edwards, the Democratic presidential candidate, even though there is some here on Politico.
Enough.
A couple of weeks ago, as I sat out on my patio enjoying the evening with my puppy dog and an adult beverage, I had something of a premonition. Nothing specific at all, just a thought that something bad might happen. A friend that I told about it said he was having somewhat similar thoughts.
I think that when one considers the above, along with everything else, there is good reason to worry.
Perhaps that can be covered a bit in succeeding posts.
There was some time to keep up with email, and to read some articles. Given what is happening in our world, there is a lot to blog about. I will try to do so with a bit more regularity than lately.
Looking about, one sees the United States, once respected, if disliked, has changed to being disrespected and still disliked.
All of that in a period of eight months.
This is because of the deliberate policies of our current government. It has sucked up to our enemies and offended and abandoned our friends. Intentionally.
Iran has just been given another pass, in spite of its threat. North Korea is ignored, to do whatever nuke development they wish.
Castro and Chavez to our south are being helped, rather than isolated, while Honduras and Colombia, our allies, are treated quite poorly.
The situation in Afghanistan is eroding, and the government is holding "meetings." There seems to be no sense of urgency, even though the President accorded Afghanistan important status when running for office.
Domestically, the economy is in the tank while the "stimulus" is spent to shore up supporters and arms of the Democratic Party. The big banking and financial institutions have been bailed out with nearly three trillion dollars of taxpayers' money, but the government entities refuse to account to the people for the money.
The majority party is trying to cram health "reform" down the throat of the 85% of the people who are satisfied with their health insurance, in order to make coverage available to an additional 11% of the people (and, of course, 12 million illegal aliens).
They are also trying to pass a "cap and trade" regime, which will enrich a few, but will constitute a huge energy tax on everyone else, even the poor. This is being done in a time of deep recession and increasing unemployment.
In the media, I notice that the New York Times has as the lead article a story about Senator John Ensign (R-Nev) and his affair, but there is not a mention anywhere of Charles Rangel (D-NY) and his series of felonies, nor of the bastard child of John Edwards, the Democratic presidential candidate, even though there is some here on Politico.
Enough.
A couple of weeks ago, as I sat out on my patio enjoying the evening with my puppy dog and an adult beverage, I had something of a premonition. Nothing specific at all, just a thought that something bad might happen. A friend that I told about it said he was having somewhat similar thoughts.
I think that when one considers the above, along with everything else, there is good reason to worry.
Perhaps that can be covered a bit in succeeding posts.
Wednesday, September 9, 2009
The Next Financial Crisis
Its already coming. And, if the trends remain the same, it will be even worse than this one has been.
There is an excellent article in The New Republic with this title, written by Peter Boone and Simon Johnson.
The past crisis was certainly mitigated by the actions of the Federal Reserve and the Treasury, but what they did sowed the seeds of the next crisis. And what they continue to do will make it worse.
This has happened many times before:
" We have seen this spectacle--the Fed saving us from one crisis only to instigate another--many times before. And, over the past few decades, the problem has become significantly more dire. The fault, to be sure, doesn’t lie entirely with the Fed. Bernanke is a prisoner of a financial system with serious built-in flaws. The decisions he made during the recent crisis weren’t necessarily the wrong decisions; indeed, they were, in many respects, the decisions he had to make. But these decisions, however necessary in the moment, are almost guaranteed to hurt our economy in the long run--which, in turn, means that more necessary but harmful measures will be needed in the future. It is a debilitating, vicious cycle. And at the center of this cycle is the Fed."
Back in the "old days" before the Federal Reserve was created, if you ran a bank and lost your depositors' money, the bankers' personal assets and income could be taken to help cover the losses.
"In the United States, there was great experimentation with banking during the 1800s, but those involved in the enterprise typically made a substantial commitment of their own capital. For example, there was a well-established tradition of “double liability,” in which stockholders were responsible for twice the original value of their shares in a bank. This encouraged stockholders to carefully monitor bank executives and employees. And, in turn, it placed a lot of pressure on those who managed banks. If they fared poorly, they typically faced personal and professional ruin. The idea that a bank executive would retain wealth and social status in the event of a self-induced calamity would have struck everyone--including bank executives themselves--as ludicrous."
In 1913 the Federal Reserve was created, and it went to work using liquidity loans and low interest rates to cushion banks in difficulty by reducing their costs.
"But, by insulating banks from the terrible consequences of their own blunders, these measures would also encourage them to keep taking unwise risks, and thereby lay the groundwork for future crises."
The Fed has made many errors with this. In the summer of 1927 it lowered interest rates, fueling the boom that crashed in the fall of 1929. It had belatedly raised rates in 1928, but that did not stop the frenzy. After the crash, it then kept interest too high into 1933, causing many banks to fail.
During the Great Depression, banking came under increasing regulation, and the rules were tightened so that risk taking was more difficult.
But:
"....eventually, banks would learn how to play the new game. They would spend serious money lobbying to keep regulations lax, hiring lawyers and accountants to find methods to minimize or avoid regulations, and incentivizing employees to hide risk from regulators. While the banking sector became more risky, creditors to banks (such as depositors and lenders) knew they could count on the Fed to engineer bailouts via lower interest rates and access to credit if times got tough--so banks had no trouble raising funding from creditors, and our financial system grew rapidly."
As time went on, the Fed continued to protect the banks. In the 1980s, Volcker lowered interest rates during the Latin American debt crisis [and simply ignored it when some banks were technically insolvent]. That caused a real estate boom that resulted in the S&L debacle of 1987. So interest rates were lowered again creating problems in real estate again, and then in the Asian markets. They crashed, then the Long Term Capital Management hedge fund created a "systemic risk" and rates were lowered again, fueling the Hi-tech bubble, also treated with low interest rates. which created the current burst bubble. You get the idea.
Saving the big banks from themselves is getting far more expensive than it used to be:
"Based on what we have seen over the past two decades, the cost of the next collapse will invariably be steep. Since the early 1980s, the Fed has gone back to its origins as the bailout machine for the financial sector. The only difference is that this sector has become much larger since 1907 or 1913. Back then, it accounted for around one percent of GDP. Now it is closer to 8 percent. The cost of bailouts--the current one and those to come--has skyrocketed as a result."
So, what do the big banks get from all of this? Its very simple:
"Consider the lessons learned in the past twelve months by our major banks. If they again get into serious financial trouble, the Fed can be counted on to lend them essentially unlimited amounts at effectively zero interest rates. What would you do with free money? You’d pay off all your old debts, then you’d find something to invest in that would yield a decent return. But then you’d reckon--why not take more risk? After all, if things go badly, you’ll get more free money."
They propose some solutions that might work, but may not be tough enough.
First, banks should have more capital to cover loan losses than is now permitted. Now, it is about 8%, which is ridiculously low.
Second, they propose that banks and their officers, directors and shareholders be at least partly responsible financially when their banks go broke [I would make them fully responsible].
Third, they say we should stop the merry-go-round from the banks to the government and back to the banks. My thought is that right now, because of this, we have the actual perpetrators of the crisis involved in bailing out their former companies. This is simply atrocious.
Last, they say the Fed should take more of a leadership role in regulation the system. My thought is that we should at least consider doing away with the Fed, or curtailing its powers to prevent this continual boom and bust cycle.
At least we should audit the Fed on a frequent basis. There is far too much secrecy there.
They conclude that if the Fed doesn't take the lead in better regulation, it will continue to be the "handmaiden to repeated bailouts." And that the peril to our system becomes even worse with each one.
This is a great article. I somewhat disagree with them in that they treat the Federal Reserve as something different from the banks. The Federal Reserve is owned by its member banks, and with the exception of the Chairman, now Mr. Bernanke, the banks elect the members. We therefore have the foxes guarding the hen house.
I highly recommend you go read the whole article here.
In addition, the two authors blog at The Baseline Scenario.
There is an excellent article in The New Republic with this title, written by Peter Boone and Simon Johnson.
The past crisis was certainly mitigated by the actions of the Federal Reserve and the Treasury, but what they did sowed the seeds of the next crisis. And what they continue to do will make it worse.
This has happened many times before:
" We have seen this spectacle--the Fed saving us from one crisis only to instigate another--many times before. And, over the past few decades, the problem has become significantly more dire. The fault, to be sure, doesn’t lie entirely with the Fed. Bernanke is a prisoner of a financial system with serious built-in flaws. The decisions he made during the recent crisis weren’t necessarily the wrong decisions; indeed, they were, in many respects, the decisions he had to make. But these decisions, however necessary in the moment, are almost guaranteed to hurt our economy in the long run--which, in turn, means that more necessary but harmful measures will be needed in the future. It is a debilitating, vicious cycle. And at the center of this cycle is the Fed."
Back in the "old days" before the Federal Reserve was created, if you ran a bank and lost your depositors' money, the bankers' personal assets and income could be taken to help cover the losses.
"In the United States, there was great experimentation with banking during the 1800s, but those involved in the enterprise typically made a substantial commitment of their own capital. For example, there was a well-established tradition of “double liability,” in which stockholders were responsible for twice the original value of their shares in a bank. This encouraged stockholders to carefully monitor bank executives and employees. And, in turn, it placed a lot of pressure on those who managed banks. If they fared poorly, they typically faced personal and professional ruin. The idea that a bank executive would retain wealth and social status in the event of a self-induced calamity would have struck everyone--including bank executives themselves--as ludicrous."
In 1913 the Federal Reserve was created, and it went to work using liquidity loans and low interest rates to cushion banks in difficulty by reducing their costs.
"But, by insulating banks from the terrible consequences of their own blunders, these measures would also encourage them to keep taking unwise risks, and thereby lay the groundwork for future crises."
The Fed has made many errors with this. In the summer of 1927 it lowered interest rates, fueling the boom that crashed in the fall of 1929. It had belatedly raised rates in 1928, but that did not stop the frenzy. After the crash, it then kept interest too high into 1933, causing many banks to fail.
During the Great Depression, banking came under increasing regulation, and the rules were tightened so that risk taking was more difficult.
But:
"....eventually, banks would learn how to play the new game. They would spend serious money lobbying to keep regulations lax, hiring lawyers and accountants to find methods to minimize or avoid regulations, and incentivizing employees to hide risk from regulators. While the banking sector became more risky, creditors to banks (such as depositors and lenders) knew they could count on the Fed to engineer bailouts via lower interest rates and access to credit if times got tough--so banks had no trouble raising funding from creditors, and our financial system grew rapidly."
As time went on, the Fed continued to protect the banks. In the 1980s, Volcker lowered interest rates during the Latin American debt crisis [and simply ignored it when some banks were technically insolvent]. That caused a real estate boom that resulted in the S&L debacle of 1987. So interest rates were lowered again creating problems in real estate again, and then in the Asian markets. They crashed, then the Long Term Capital Management hedge fund created a "systemic risk" and rates were lowered again, fueling the Hi-tech bubble, also treated with low interest rates. which created the current burst bubble. You get the idea.
Saving the big banks from themselves is getting far more expensive than it used to be:
"Based on what we have seen over the past two decades, the cost of the next collapse will invariably be steep. Since the early 1980s, the Fed has gone back to its origins as the bailout machine for the financial sector. The only difference is that this sector has become much larger since 1907 or 1913. Back then, it accounted for around one percent of GDP. Now it is closer to 8 percent. The cost of bailouts--the current one and those to come--has skyrocketed as a result."
So, what do the big banks get from all of this? Its very simple:
"Consider the lessons learned in the past twelve months by our major banks. If they again get into serious financial trouble, the Fed can be counted on to lend them essentially unlimited amounts at effectively zero interest rates. What would you do with free money? You’d pay off all your old debts, then you’d find something to invest in that would yield a decent return. But then you’d reckon--why not take more risk? After all, if things go badly, you’ll get more free money."
They propose some solutions that might work, but may not be tough enough.
First, banks should have more capital to cover loan losses than is now permitted. Now, it is about 8%, which is ridiculously low.
Second, they propose that banks and their officers, directors and shareholders be at least partly responsible financially when their banks go broke [I would make them fully responsible].
Third, they say we should stop the merry-go-round from the banks to the government and back to the banks. My thought is that right now, because of this, we have the actual perpetrators of the crisis involved in bailing out their former companies. This is simply atrocious.
Last, they say the Fed should take more of a leadership role in regulation the system. My thought is that we should at least consider doing away with the Fed, or curtailing its powers to prevent this continual boom and bust cycle.
At least we should audit the Fed on a frequent basis. There is far too much secrecy there.
They conclude that if the Fed doesn't take the lead in better regulation, it will continue to be the "handmaiden to repeated bailouts." And that the peril to our system becomes even worse with each one.
This is a great article. I somewhat disagree with them in that they treat the Federal Reserve as something different from the banks. The Federal Reserve is owned by its member banks, and with the exception of the Chairman, now Mr. Bernanke, the banks elect the members. We therefore have the foxes guarding the hen house.
I highly recommend you go read the whole article here.
In addition, the two authors blog at The Baseline Scenario.
Tuesday, July 21, 2009
Public Enemies
We went to the movies today. I don't usually go, but this one was about John Dillinger, the bank robber active back during the Great Depression.
Good movie. I recommend it for those that like action.
It occurred to me during the movie how much things had changed since then. Back then, guys like Dillinger, "Baby Face" Nelson and "Pretty Boy" Floyd were the bad guys, robbing and killing folks.
Today, its entirely the opposite. Now the banks and financial institutions, particularly the great big ones on Wall Street, are the ones doing the robbing and pillaging.
Just think. They had that huge bubble that blew up courtesy of the Federal Reserve and the helpful politicians of both parties in Washington. Those banks and financial institutions sold all kinds of paper, all represented to be good, while at the same time, they and the government were encouraging the public to borrow more and more.
Huge bonuses piled on huge bonuses for the perpetrators of all of this. They all got tremendously wealthy.
Then the house of cards crashed down.
Retribution for their excesses? Of course not. Their enablers in the government decided to bail the perps out with money that will have to be taken from the victims of all of this, namely the US taxpayer.
Instead of ending up like Dillinger, at least figuratively, most of them are going to get even richer off of the bailouts.
I understand from Mr. Barofsky, who is the authoritative person in this issue, that the US taxpayer may get stuck for as much as 23.7 TRILLION DOLLARS.
We need to throw out all of the pols in the government that were, and continue to be, behind this.
Quickly.
Good movie. I recommend it for those that like action.
It occurred to me during the movie how much things had changed since then. Back then, guys like Dillinger, "Baby Face" Nelson and "Pretty Boy" Floyd were the bad guys, robbing and killing folks.
Today, its entirely the opposite. Now the banks and financial institutions, particularly the great big ones on Wall Street, are the ones doing the robbing and pillaging.
Just think. They had that huge bubble that blew up courtesy of the Federal Reserve and the helpful politicians of both parties in Washington. Those banks and financial institutions sold all kinds of paper, all represented to be good, while at the same time, they and the government were encouraging the public to borrow more and more.
Huge bonuses piled on huge bonuses for the perpetrators of all of this. They all got tremendously wealthy.
Then the house of cards crashed down.
Retribution for their excesses? Of course not. Their enablers in the government decided to bail the perps out with money that will have to be taken from the victims of all of this, namely the US taxpayer.
Instead of ending up like Dillinger, at least figuratively, most of them are going to get even richer off of the bailouts.
I understand from Mr. Barofsky, who is the authoritative person in this issue, that the US taxpayer may get stuck for as much as 23.7 TRILLION DOLLARS.
We need to throw out all of the pols in the government that were, and continue to be, behind this.
Quickly.
Thursday, July 9, 2009
Brown Manure, Not Green Shoots
That is the title of a column over at Forbes by Nouriel Roubini, the economics guru from New York University who has probably been the most right so far on the current financial crisis.
His comments are on the June unemployment report, which, of course, was pretty grim at 9.5% unemployment.
He says its not the end:
" With the current rate of job losses, it is very clear that the unemployment rate could reach 10% by later this summer--around August or September--and will be closer to 10.5%, if not 11%, by year-end. I expect the unemployment rate is going to peak at around 11% at some point in 2010, well above historical standards for even severe recessions."
He may well be too optimistic. This is by far the worst recession since the Great Depression, and if anything goes wrong....well, another Great Depression could occur.
And the jobs report is not all there is to it:
"The job market report is essentially the tip of the iceberg. It's a significant signal of the weaknesses in the economy. It affects consumer confidence. It affects labor income. It affects consumption. It affects the willingness of firms to start increasing production. It has significant consequences of the housing market. And it has significant consequences, of course, on the banking system."
Does this latter mean that the government is going to feel like it has to pour a lot more money into the bottomless pit that is our banking system? Just think that for every trillion dollars that goes to the banks every household of four could get $130,000 in cash. There has been several trillion, and much of it has been added to the national debt. So instead of getting the cash, each household has, in effect, given it to the banks.
Roubini does not have an optimistic outlook:
"....large budget deficits and their monetization are going to lead--toward the end of next year and in 2011--to an increase in expected inflation that may lead to a further increase in 10-year treasuries and other long-term government bond yields, and thus mortgage and private-market rates. Together with higher oil prices driven up by this wall of liquidity rather than fundamentals alone, this could be the double whammy that could push the economy into a double-dip or W-shaped recession by late 2010 or 2011. "
My take is that the outlook is grim for another year or two, and that the government is going to try another round of bank bailouts, along with having severe pressures put on to bail out profligate state and local governments. Don't look for anything for the people, though. This government is more interested in taking care of the politicians and the banks. I do suspect, however, that ACORN will get its "share."
His comments are on the June unemployment report, which, of course, was pretty grim at 9.5% unemployment.
He says its not the end:
" With the current rate of job losses, it is very clear that the unemployment rate could reach 10% by later this summer--around August or September--and will be closer to 10.5%, if not 11%, by year-end. I expect the unemployment rate is going to peak at around 11% at some point in 2010, well above historical standards for even severe recessions."
He may well be too optimistic. This is by far the worst recession since the Great Depression, and if anything goes wrong....well, another Great Depression could occur.
And the jobs report is not all there is to it:
"The job market report is essentially the tip of the iceberg. It's a significant signal of the weaknesses in the economy. It affects consumer confidence. It affects labor income. It affects consumption. It affects the willingness of firms to start increasing production. It has significant consequences of the housing market. And it has significant consequences, of course, on the banking system."
Does this latter mean that the government is going to feel like it has to pour a lot more money into the bottomless pit that is our banking system? Just think that for every trillion dollars that goes to the banks every household of four could get $130,000 in cash. There has been several trillion, and much of it has been added to the national debt. So instead of getting the cash, each household has, in effect, given it to the banks.
Roubini does not have an optimistic outlook:
"....large budget deficits and their monetization are going to lead--toward the end of next year and in 2011--to an increase in expected inflation that may lead to a further increase in 10-year treasuries and other long-term government bond yields, and thus mortgage and private-market rates. Together with higher oil prices driven up by this wall of liquidity rather than fundamentals alone, this could be the double whammy that could push the economy into a double-dip or W-shaped recession by late 2010 or 2011. "
My take is that the outlook is grim for another year or two, and that the government is going to try another round of bank bailouts, along with having severe pressures put on to bail out profligate state and local governments. Don't look for anything for the people, though. This government is more interested in taking care of the politicians and the banks. I do suspect, however, that ACORN will get its "share."
Tuesday, March 10, 2009
Musings
Just musing today after reading all of the frightening economic and political news.
The stock market is up good today on the news that Citi made a profit. I will bet it is not net of all the taxpayer dollars that have been and will be poured into it. Absurd.
There is news that the Democrats have introduced the "Employee Freedom of Choice Act." This is one that actually does away with freedom of employees to have a secret ballot when deciding whether or not to unionize. Typically of Democrats, its all a lie.
I note that some people are saying that the next shoe to fall on the banks will be huge credit card losses. Not a surprise. Banks were sending out many cards for years, not only to adult people, but to children, dogs, cats and canaries. Without regard to credit ratings. Now we are going to have to bail the banks out for that, too.
Does anybody know how many trillions of dollars all this bailout business is going to cost?
No?
Didn't think so.
Does anybody know who is going to pay for it?
Your children and grandchildren, that's who.
Sigh.
The stock market is up good today on the news that Citi made a profit. I will bet it is not net of all the taxpayer dollars that have been and will be poured into it. Absurd.
There is news that the Democrats have introduced the "Employee Freedom of Choice Act." This is one that actually does away with freedom of employees to have a secret ballot when deciding whether or not to unionize. Typically of Democrats, its all a lie.
I note that some people are saying that the next shoe to fall on the banks will be huge credit card losses. Not a surprise. Banks were sending out many cards for years, not only to adult people, but to children, dogs, cats and canaries. Without regard to credit ratings. Now we are going to have to bail the banks out for that, too.
Does anybody know how many trillions of dollars all this bailout business is going to cost?
No?
Didn't think so.
Does anybody know who is going to pay for it?
Your children and grandchildren, that's who.
Sigh.
Saturday, January 3, 2009
"The World Turned Upside Down"
That is the title of the song played by the English band as the troops under Lord Cornwallis marched out to lay down their arms outside Yorktown on October 19, 1781. Indeed, the world was upside down in English eyes that day. After over six years of bloody rebellion and very hard times for the people of America, victory was at hand, although it took another two years before the signing of the Treaty of Paris.
It was amazing how Americans undertook every hardship, risked their lives and fortunes, to throw off the yoke of repressive government and bring freedom and liberty to their country.
Of course, it was not a country, yet. It was not until eight years after Yorktown that a new Constitution was hammered out and adopted, creating the United States of America.
It was not easy to get there, of course. Then, like now, there were factions in the body politic, and they fought fiercely for their points of view.
One faction wanted a very strong central government, perhaps even a monarchy; another did not trust government at all, and wanted a very weak central government.
The result came down on the side of a central government that was strong enough to regulate commerce between the states and with foreigners, and to provide for national defense, but with very detailed limitations on the exercise of other powers. The real story is that the Constitution would not have been adopted without the first ten amendments that were added. All of those placed very specific restrictions upon the government, and reserved all those powers not specified in the Constitution to the states and to the People.
Through the years, disputes have continued, with some wanting to expand the powers of the central government far beyond the limitations of the Constitution, and others fighting to maintain appropriate limitations as provided by the Constitution. In spite of the tendencies of the courts to tinker with the limitations over the years, we still have had limited government to a large extent.
Until now.
Now we see the Treasury of the United States, in league with the Federal Reserve, engaged in distributing trillions of dollars to private institutions, mostly financial, without a shred of legal basis either in the Constitution or laws of the United States. Worse, they won't even tell the people or the Congress the specifics of how much and to whom.
George W. Bush, the lame duck President of the United States, who was elected supposedly supporting limited government, is now authorizing acts that go far beyond what is allowed by the Constitution. The Congress seems to be acquiescing, although it has certainly not passed any legislation permitting what they are doing.
It seems like the President and the Congress cannot just say "No" when the expenditure of large sums of money is concerned. Mr. Bush never has. The Congress gets its campaign funds with the ability to pass out taxpayers' money, so there is no hope there.
If one looks at where the money is going, one can immediately see that it is going to the big contributors to our politicians. Just check out the contributions by all those institutions to our politicians. Hundreds of millions of dollars have gone into political campaigns the last few years from those companies and their employees. Now we see what they have bought.
The most outrageous part of all of this bailout business is that the people who did everything wrong, who created this economic mess, who profited from it, who ought to be the big losers, are the ones getting all of this Federal money.
Who pays you might ask?
Everyone who did the right thing, that's who will pay.
"The World Turned Upside Down," indeed.
It was amazing how Americans undertook every hardship, risked their lives and fortunes, to throw off the yoke of repressive government and bring freedom and liberty to their country.
Of course, it was not a country, yet. It was not until eight years after Yorktown that a new Constitution was hammered out and adopted, creating the United States of America.
It was not easy to get there, of course. Then, like now, there were factions in the body politic, and they fought fiercely for their points of view.
One faction wanted a very strong central government, perhaps even a monarchy; another did not trust government at all, and wanted a very weak central government.
The result came down on the side of a central government that was strong enough to regulate commerce between the states and with foreigners, and to provide for national defense, but with very detailed limitations on the exercise of other powers. The real story is that the Constitution would not have been adopted without the first ten amendments that were added. All of those placed very specific restrictions upon the government, and reserved all those powers not specified in the Constitution to the states and to the People.
Through the years, disputes have continued, with some wanting to expand the powers of the central government far beyond the limitations of the Constitution, and others fighting to maintain appropriate limitations as provided by the Constitution. In spite of the tendencies of the courts to tinker with the limitations over the years, we still have had limited government to a large extent.
Until now.
Now we see the Treasury of the United States, in league with the Federal Reserve, engaged in distributing trillions of dollars to private institutions, mostly financial, without a shred of legal basis either in the Constitution or laws of the United States. Worse, they won't even tell the people or the Congress the specifics of how much and to whom.
George W. Bush, the lame duck President of the United States, who was elected supposedly supporting limited government, is now authorizing acts that go far beyond what is allowed by the Constitution. The Congress seems to be acquiescing, although it has certainly not passed any legislation permitting what they are doing.
It seems like the President and the Congress cannot just say "No" when the expenditure of large sums of money is concerned. Mr. Bush never has. The Congress gets its campaign funds with the ability to pass out taxpayers' money, so there is no hope there.
If one looks at where the money is going, one can immediately see that it is going to the big contributors to our politicians. Just check out the contributions by all those institutions to our politicians. Hundreds of millions of dollars have gone into political campaigns the last few years from those companies and their employees. Now we see what they have bought.
The most outrageous part of all of this bailout business is that the people who did everything wrong, who created this economic mess, who profited from it, who ought to be the big losers, are the ones getting all of this Federal money.
Who pays you might ask?
Everyone who did the right thing, that's who will pay.
"The World Turned Upside Down," indeed.
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