Tag: Financial Crisis

Road To Ruin

Here we go again…..and again…….

By now we all have had enough of the crap that Congress spreads……we can debate who is to blame…..but the truth is ………..WE ARE TO BLAME!  By we I mean us voters that keep electing the same morons year after year and then we cannot understand what went wrong….

But while we are scratching our heads and bitching about those damn Dems or Repubs or the Tea Partyers the economy is losing ground quickly….and that cannot be a good thing no matter where you stand or who you listen to on the radio……

(Newser) – As lawmakers scramble to strike a last-minute deal that would allow the government to keep borrowing money, Fitch Ratings issued a shot across the bow this afternoon: It put the nation’s AAA on a “negative” watch, reports MarketWatch, meaning a downgrade is possible unless things get resolved soon. “The prolonged negotiations over raising the debt ceiling (following the episode in August 2011) risks undermining confidence in the role of the US dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the US.” (Full text here.) The nation hits its debt-ceiling limit on Thursday. For the record, Fitch and Moody’s still have the US at the highest AAA rating, though Standard & Poor’s downgraded its rating during the 2011 crisis, notes Business Insider.

Pat yourself on the back….you have f*cked the country……and GOOD!

What Are They Really Saying?

We have heard all the hoopla about the economy…..it looks slow but steady….it looks like a piece of bovine fecal matter….tax cuts will save us all…..without demand there is NO recovery….on and on….everybody has an opinion on the direction of the economy in the next year, maybe 5…….but what are the economic experts really saying about what is going to happen?

Michael Synder of blacklisted news.com has put together 17 quotes of what we can expect in the future……

The following are 17 quotes about the coming global financial collapse that will make your hair stand up….

#1 Credit Suisse’s Fixed Income Research unit: “We seem to have entered the last days of the euro as we currently know it. That doesn’t make a break-up very likely, but it does mean some extraordinary things will almost certainly need to happen – probably by mid-January – to prevent the progressive closure of all the euro zone sovereign bond markets, potentially accompanied by escalating runs on even the strongest banks.”

#2 Willem Buiter, chief economist at Citigroup: “Time is running out fast.  I think we have maybe a few months — it could be weeks, it could be days — before there is a material risk of a fundamentally unnecessary default by a country like Spain or Italy which would be a financial catastrophe dragging the European banking system and North America with it.”

#3 Jim Reid of Deutsche Bank: “If you don’t think Merkel’s tone will change then our investment advice is to dig a hole in the ground and hide.”

#4 David Rosenberg, a senior economist at Gluskin Sheff in Toronto: “Lenders are finding it difficult to finance their day-to-day operations with short-term funding. This is a lot like 2008 but with more twists.”

#5 Christian Stracke, the head of credit research for Pimco: “This is just a repeat of what we saw in 2008, when everyone wanted to see toxic assets off the banks’ balance sheets”

#6 Paul Krugman of the New York Times: “At this point I’d guess soaring rates on Italian debt leading to a gigantic bank run, both because of solvency fears about Italian banks given a default and because of fear that Italy will end up leaving the euro. This then leads to emergency bank closing, and once that happens, a decision to drop the euro and install the new lira. Next stop, France.”

#7 Paul Hickey of Bespoke Investment Group: “More and more, we are hearing anecdotal comments from individual and professionals that this is the most difficult environment they have ever experienced as the market is like a fish flopping around after being taken out of the water.”

#8 Bob Janjuah of Nomura International: “Germany appears to be adamant that full political and fiscal integration over the next decade (nothing substantive will happen over the short term, in my view) is the only option, and ECB monetisation is no longer possible. I really think it is that clear and simple. And if I am wrong, and the ECB does a U-turn and agrees to unlimited monetisation, I will simply wait for the inevitable knee-jerk rally to fade before reloading my short risk positions. Even if Germany and the ECB somehow agree to unlimited monetisation I believe it will do nothing to fix the insolvency and lack of growth in the eurozone. It will just result in a major destruction of the ECB‟s balance sheet which will force an ECB recap. At that point, I think Germany and its northern partners would walk away. Markets always want short, sharp, simple solutions.”

#9 Dan Akerson, CEO of General Motors: “The ’08 recession, which was a credit bubble that manifested itself through primarily the real estate market, that was a serious stress….This is much more serious.”

#10 Francesco Garzarelli of Goldman Sachs: “Pressures on Euro area sovereign bond markets have progressively intensified and spread like a wildfire.”

#11 Jim Rogers: “In 2002 it was bad, in 2008 it was worse and 2012 or 2013 is going to be worse still – be careful”

#12 Dr. Pippa Malmgren, the President and founder of Principalis Asset Management who once worked in the White House as an adviser to President Bush: “Market forces are increasingly determining what the options are and foreclosing on options policymakers thought they had. One option which is now under discussion involves permitting a country to temporarily leave the Euro, return to its native currency, devalue, commit to returning to the Euro at a better debt to GDP ratio, a better exchange rate and a better growth trajectory and yet not sacrifice its EU membership. I would like to say for the record that this is precisely the thought process that I expected to evolve,but when I proposed this possibility back in 2009, and again in September 2010, I had a 100% response from clients and others that this was “impossible” and many felt it was “ridiculous”. They may be right but this is the current state of the discussion. The Handelsblatt in Germany has reported this conversation, but wrongly assumes that the country that will exit is Germany. I think that Germany will have to exit if the Southern European states do not. Germany’s preference is to stay in the Euro and have the others drop out. The problem has been the Germans could not convince the others to walk away. But, now, market pressures are forcing someone to leave. Germany is pushing for that someone to be Italy. They hope that this would be a one off exception, not to be repeated by any other country. Obviously, though, if Italy leaves the Euro and reverts to Lira then the markets will immediately and forcefully attack Spain, Portugal and even whatever is left  of the already savaged Greeks. These countries will not be able to compete against a devalued Greece or Italy when it come to tourism or even infrastructure. But, the principal target will be France. The three largest French banks have roughly 450 billion Euros of exposure to Italian debt. So, further sovereign defaults are certainly inevitable, but that is true under any scenario. Growth and austerity will not do the trick, as ZeroHedge rightly points out. Ultimately, I will not be at all surprised to see Europe’s banking system shut for days while the losses and payments issues are worked out. People forget that the term “bank holiday” was invented in the 1930’s when the banks were shut for exactly the same reason.”

#13 Daniel Clifton, a policy strategist with Strategas Research Partners on the potential for more downgrades of U.S. debt: “We would expect further downgrades, a first downgrade from Moody’s and Fitch and possibly a second downgrade from S&P.”

#14 Warren Buffett on the problems in the eurozone: “The system as presently designed has revealed a major flaw. And that flaw won’t be corrected just by words. Europe will either have to come closer together or there will have to be some other rearrangement because this system is not working”

#15 David Kostin, equity strategist for Goldman Sachs: “The wide range of possible outcomes on both the super committee process and the unstable political economy in Europe drives our view that investors should assume the worst while hoping for the best.”

#16 Mark Mobius, the head of the emerging markets desk at Templeton Asset Management: “There is definitely going to be another financial crisis around the corner”

#17 Gerald Celente, founder of The Trends Research Institute: “The whole system is going down. Pull your money out your Fidelity account, your Scwhab accout, and your ETFs.”

So basically, what are these experts really saying (the simplified version)……

They are telling us that “time is running out”.

They are telling us that “there is definitely going to be another financial crisis”.

They are telling us that this “is going to be worse” than 2008.

They are telling us that “the whole system is going down”.

The time is NOW to remove your head from the sand….there is very little in the economic world that is GOOD news…..

Can Y’all Hear Me Now?

I have been one of those people that have been blaming Clinton and his Boyz and banks for the economic crisis we are in now…..some say it is NOT justified…..but I say….WAKE UP!

In a recent report from the Financial Crisis Inquiry Commission the findings just add to my disgust with what politicians allowed to happen to our country…..

“The crisis was the result of human action and inaction, not of Mother Nature or models gone haywire,” the report said.

“The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand and manage evolving risks within a system essential to the well-being of the American public.

The damning report criticised the extent of the financial deregulation overseen by the former chairman of the Federal Reserve, Alan Greenspan.

It concluded that the crisis was caused by a number of factors:

  • Failures in financial regulation, including the Federal Reserve’s failure “to stem the tide of toxic mortgages”
  • A breakdown in corporate governance that led to “reckless” actions and excessive risk taking by financial institutions
  • Households taking on too much debt
  • A lack of understanding of the financial system on behalf of policymakers
  • Fundamental breaches in accountability and ethics “at all levels”.

It added that “collapsing mortgage-lending standards” and the packaging-up of mortgage-related debt into investment vehicles “lit and spread the flame of contagion”.

Points one and two were covered by Glass-Steagall aand the last one was a screw up by the people that were in Washington…..

And then there is a very predictable reaction to the report…….Only the six Democrat members of the 10-strong commission, set up in May 2009, endorsed the report’s findings.  Kinda like saying …”it is not our fault”….where is the responsibility?  Oh sorry….that pertains to us humans…not our politicians……some of the causes according to the dissenting GOPers…..

The GOP report said: “All these factors were supplemented by government policies … that subsidized homeownership but created hidden costs to taxpayers and the economy. Elected officials of both parties pushed housing subsidies too far.”

CREDIT BUBBLE. A credit bubble caused by global capital flows into the United States and Europe from China and other developing nations reduced interest rates and encouraged risky lending. “U.S. monetary policy may have contributed to the credit bubble but did not cause it,” says the dissent.

HOUSING BUBBLE. A housing bubble emerged that was caused by “many factors,” including population growth in “Sand States” such as Arizona, Florida, Nevada and California.

SUBPRIME LENDING. Subprime mortgage lending exploded and was often deceptive and confusing, fueled by cheap credit. Leading lenders were Countrywide, Washington Mutual, Ameriquest and HSBC Financial. This amplified the housing bubble.

And I have a flash for y’all….it will happen again…..the reform that the prez is so proud of has NOT addressed the problems that were the cause of our financial grief…….keep in mind….I WILL say…”I Told You So”……

Land Of The Lost (Decade, That Is)

I am sure when the word “Lost” is mentioned we will have a wealth of people that will tear up at the mere mention of the now defunct TV show……thanks to say this is NOT about a bunch of fictional people lost on the island of Manhattan…..but rather…..

Back in the 1990’s I was a frequent player on the stock exchange…made some money…lost even more….but I recall the days of my adventurism……Japan was a shining light of capitalism especially in the later 80’s….but that was about to change…..

The economic miracle ended abruptly at the very start of the 1990s. In the late 1980s, abnormalities within the Japanese economic system had fueled a massive wave of speculation by Japanese companies, banks and securities companies. Briefly, a combination of incredibly high land values and incredibly low interest rates led to a position in which credit was both easily available and extremely cheap. This led to massive borrowing, the proceeds of which were invested mostly in domestic and foreign stocks and securities.

This popped the bubble in spectacular fashion, leading to a massive crash in the stock market. It also led to a debt crisis; a large proportion of the huge debts that had been run up turned bad, which in turn led to a crisis in the banking sector, with many banks having to be bailed out by the government.

Overall, this has led to the phenomenon known as the “lost decade”; economic expansion came to a total halt in Japan during the 1990s. The impact on everyday life has been rather muted, however. Unemployment runs reasonably high, but not at crisis levels (the official figure is a little under 5%, but this is a considerable underestimate – the real level is probably around twice that).

I will bet you wonder why I mention this……does it sound familiar?  It should or you are not paying attention to your life.

I gave you a little economic history because I see this happening in the US and I am not alone….Paul Krugman writes:

It’s not that nobody understands the risk. I strongly suspect that some officials at the Fed see the Japan parallels all too clearly and wish they could do more to support the economy. But in practice it’s all they can do to contain the tightening impulses of their colleagues, who (like central bankers in the 1930s) remain desperately afraid of inflation despite the absence of any evidence of rising prices. I also suspect that Obama administration economists would very much like to see another stimulus plan. But they know that such a plan would have no chance of getting through a Congress that has been spooked by the deficit hawks.

We hear daily that the US could become the next Greece because of the growing deficit….which seems to be the call of most conservatives these days,,,,,,,but I see it differently….I see the possibility of the US becoming another Japan with a “Lost Decade” and many years of suffering for the working majority of the country.  Slow growth, high unemployment and a rise in the inflation rate.

It’s All Greek To Me

Oh my God!  So much has been said about the crisis in Europe and most verbally the situation in Greece.  Gloom and doom is predicted…..if Greece then on to the others in P.I.G.S. and then if that why not the US going down the drain?

But what if?  What if the crisis in Greece could ultimately benefit the US?  In an article written by Derek Thompson for the Atlantic Business:

But what if Europe’s debt disaster actually works out for the United States … kind of? Tim Duy finds three reasons:

1. Capital Gains for the U.S. Scared investors are running from peripheral EU states that look like they could follow Greece into the abyss. (It’s called the contagion effect: explanation here.) Running from Europe, investors might seek shelter in US investments, driving down our interest rates and giving companies looking to hire more access to capital. Duy concludes, “the odds of sustainable recovery look better every day.”

2. No Tightening from the Federal Reserve. Some liberals and moderates are concerned that the Federal Reserve might try to prematurely tighten its monetary policy by selling assets to squeeze inflation before we’ve achieved sustainable recovery and consistent job gains. But the crisis in Europe makes it more likely that the Federal Reserve will sit tight and keep money easy. After all, a Greece default — which is all but certain — could shock high-debt, low-growth states like Portugal and Spain and send jitters throughout the global economy. The Fed, nervous about feeding those fears, will probably keep interest rates low for an extended period of time with the European debt bomb ticking.

3. Cheap Oil. A weak Euro and a stop-start European economy means cheap oil, relief at the pump for the re-emerging American consumer, and marginally higher demand for cars. An exogenous oil shock helped to pop the housing bubble in the mid-2000s. Cheap gas is an economic lubricant.

What is the possibility that the US could see some minor benefit from the crisis in Greece and possibly the rest of the EU?  What are the possibilities of other countries seeing the same?

Millionaires Policing Millionaires

There was lots of speculation on just what the Pres. was going to say about the regulation of Wall Street and now it is official.

As reported by the AP:

Obama’s plan would do little to streamline the alphabet soup of agencies that oversee the financial sector. But it calls for fundamental shifts in authority that would eliminate one regulatory agency, create another and both enhance and undercut the authority of the powerful Federal Reserve.

The new agency, a consumer protection office, would specifically take over oversight of mortgages, requiring that lenders give customers the option of “plain vanilla” plans with straightforward and affordable terms. Lenders who repackage loans and sell them to investors as securities would be required to retain 5 percent of the credit risk — a figure some analysts believe is too low.

Obama’s proposal would require the Federal Reserve, which now can independently use emergency powers to bail out failing banks, to first obtain Treasury Department approval before extending credit to institutions in “unusual and exigent circumstances,” a change designed to mollify critics who say the Fed should be more accountable in exercising its powers as a lender of last resort.

But the proposal also would do away with a restriction imposed on the Fed in 1999 when Congress lifted Depression-era restrictions that allowed banks to get into securities and insurance businesses. The Fed, as the regulator for the larger financial holding companies, had been prohibited from examining or imposing restrictions on those firms’ subsidiaries. Obama’s proposal specifically lifts that restriction, giving the Fed the ability to duplicate and even overrule other regulators. At the same time, the new consumer agency would take away some of the Fed’s authority.

The regulatory overhaul ended up eliminating only one agency, the Office of Thrift Supervision, generally considered a weak link among current banking regulators. The OTS oversaw the American International Group, whose business insuring exotic securities blew up last fall, prompting a $182 billion federal bailout.

The failure to merge all four current banking agencies into one super regulator could open the door for big banks to continue to exploit weak links in the current system. Sen. Charles Schumer of New York, a leading Democratic voice on Wall Street issues, praised the administration’s plan but said he would consider further consolidation.

Basically as always it is all about Wall Street…..millionaires policing millionaires……To give the Fed more power is just idiotic…..the Fed is anything but rational.  Keep in mind that the Fed was a prime player in the crisis we have now…..do we need them having more power to do it all over again?

What Causes Poverty?

We can point at several causes to the question asked of what causes poverty?  Loss of a job, social injustices, education and the list can go on and on.  But can one factor be named as the cause of poverty?

Back in the late 1800’s an economist named Henry George stated that involuntary poverty and unemployment is the direct result of land speculation.  Speculators hold land out of use waiting for higher prices.  This means that land would not be readily available to labor and capital.  Thus, unemployment is the result because the land is not being used for production.

This withholding of the land leads to depressions and recessions in the business cycle.  Land speculation leads to higher prices in boom times that makes it too expensive for business to use.  And in turn labor suffers, production suffers.  In deflated times land values drop to a point where it stimulates investment and business.  Labor and production improves.  Unfortunately, this “good” times does not last.  For with the lower prices in land speculation returns and the cycle begins again of boom and bust.

According to this example the speculation in land prices leads to and is a direct cause of poverty.

I will understand it if Wall Street economists do not agree with this model.  But they are hiding their heads; they are wrong or they are just stupid.  Many seem afraid of this simple answer, they want to turn the science of economics into something it is not.  Many noted economists have won a many ward by inventing graphs and stats….but in reality it is not that complex….it boils down to speculation.

I know can it be as simple as that…and the answer is yes.  Look at the current economic situation–it began in the housing sector then moved on to the others.  The housing sector is most effected by speculation and that is what lead to this point in our economic history.  The prices kept climbing and financial wizards kept finding ways to put people onto land and it reached a point that it broke.  Speculation lead to this point and now it is on the down turn and eventually production will return when the price of land reaches a point that stimulates the business cycle.

By reading this one should get the understanding of what is happening in the world of economics.  I hope it helps.

Treasury Gets Criticized

My first impulse was to yell, “YA THINK?”

Lawmakers criticized the Treasury Department’s handling of its $700 billion financial-industry rescue program, saying the effort had been mismanaged, and warned that no additional money would be forthcoming barring significant improvements.

In a hearing Wednesday, members of the House Financial Services Committee questioned Treasury Assistant Secretary Neel Kashkari over his agency’s handling of the Troubled Asset Relief Program, citing critical reports by the Government Accountability Office and an oversight panel appointed by Congress.

Lawmakers faulted Treasury for what they said was its failure to address the record numbers of foreclosures that continue to weigh on financial institutions and the broader economy after TARP was implemented in October in response to a credit crisis sparked by woes in the housing market. They also criticized what they described as the agency’s reluctance to ensure that banks are using billions of dollars in federal funds to lend to consumers and businesses.

Treasury has used or committed most of the money available in the first tranche of funds under TARP, with $15 billion remaining out of an original $350 billion. With financial markets still weak and the broader economy in recession, Treasury Secretary Henry Paulson has been trying to decide whether to seek access to the second half of the funds.

Geez, where were these people when the bailout was being pushed through Congress?  It is a little late to worry about how the money is being spent.  These guys were inept at handling the crisis which was predicted almost a year ahead of the fact.  If they could not see it coming, why would we trust them to fix it once it was broke.

The Roof Is On Fire–Warning: Post May Be offensive!

Before I begin I would like to apologize to any readers that this post may offend.  I am angry and I have about had enough, so if four letter words disturb you–DO NOT READ THIS POST!

The roof is on fire–Let the mother fucker burn!

Am I the only person that is this angry at the way the government is playing this damn stupid bailout?  $700 billion and who has it fucking helped?  Goldman Sachs, AIG, the rest of the big corporate cocksuckers.  American people are fucking stupid!  They allow this shit to continue and they still believe that the governm,ent is working in their best interest.  Wake up stupid!  If you are not a CEO or a large financial institution, you are getting NOTHING except a good fucking and since we are so meek about it–WE DESERVE THE FUCKING WE GET!

Look at the news–AIG gets another bailout on to the one they have–AIG has another luxury week trip to a resort in Phoenix, this time.  American Express is becoming a bank so they can rip off some of the taxpayers fucking money.  The shit sucking banks, the large ones, are milking the taxpayer of everything they are worth, literally and physically.  And the best fucking part, is they, the taxpayer, know they are fucked and they smile and give them more money.

Just how fucking stupid do you have to be?  The goddamn bailout was NEVER about helping Main Street it was always about what is good for Wall Street and FUCK THE PEOPLE!  In the rush to save a parasitic system the government is acting as an agent of Wall Street not the representative of the people.  Is this what those “Founding Fathers” had in mind?  Probably since all those cocksuckers were rich assholes from the “colonies”.

Do you feel like a cheap whore?  You should!

The American people ever find their spine, they should demand that the government back off and let the mother fuckers crash and burn.  Fuck the assholes–they made their own beds–Let them lie in them for awhile.  But first Americans must find if they have the balls to stand up for what is right–My guess is they are fucking wimps and will allow this shit to continue.  You will confront some asshole that scratches you car, but are a pussy at confronting a government that is butt fucking you silly.  One person cannot do it!  It must be the people that decide when enough is enough.  Personally that time has long past!

So you think I am being a prick?  That is cool, but name me one individual family that has been helped out by the bailout……(I will give you a moment for reflection)……Nothing, huh?

If the reader is offended, I apologize, but you know the old saying, “The truth hurts”.  If your feelings are hurt–then good–YOU WERE WARNED!