Starve the beast.
Rant du jour:
Culinary Accounting, or Cookin’ the Books!
by Mike Folkerth
Greg Easterbrook said, “Torture numbers and they will confess to anything.” Barrack Obama said, “Americans don’t torture.” Either Barrack Obama doesn’t count number-torturing as a crime or his nose is growing.
Let’s talk about unemployment numbers. . . real unemployment numbers. The announcement that the unemployment rate declined slightly to 9.4 percent in July while only 247,000 additional jobs were lost has been greeted as good news. Really?
How is it possible for the unemployment rate to essentially remain unchanged when 247,000 jobs have been lost? The reason is simple — the number of people who stopped looking for work rose dramatically. Six hundred thirty-seven thousand additional people no longer consider themselves looking for work.
If we include the normally counted number of unemployed as well as those who have recently given up looking for work and those who have taken a part-time low paying job because they can’t find full-time work, the implication is that the unemployment rate for July would be at 16.3 percent! And our president stood in his cocky stern manner and announced that employment is getting better on his watch?
What about the cash for clunkers program? To begin with, what right does the federal government have to give $4500 of our tax money to each person who has a junk car to trade in? What? You say the federal government owns the car business and is using our money to subsidize their business!
Why would we ever accept such a ridiculous expenditure of our precious tax dollars as cash for clunkers? So is it really a good program for anyone other than the federal government? No! Most of these people trading in their clunkers for your tax money owned their older cars outright and now they own a big old hairy car payment, higher taxes, higher insurance costs, higher license costs, and an asset that is depreciating faster than Barrack Obama’s ratings.
What about our government giving new home buyers $8000 as down payment assistance? What right do they have to dole out our tax money for broke people to buy new homes? I have had two of my real estate friends say that if you aren’t in the first-time-home-buyer loop, you are out of the loop altogether as the federal assistance program represents the balance of home buyers today. But then, the federal government also now owns the mortgage companies.
Wasn’t the housing bubble created by loaning people a 100% or more on their home purchases? Isn’t this a re-run of that same program? Well, not exactly, the $8000 is a gift from the federal government that won’t have to be paid back. Interestingly enough, the federal government doesn’t have any money to give out as gifts without taking it from someone else.
Even more interesting is that most of those taking advantage of our newest housing scam are in an income bracket where they pay little to no federal taxes. This newest give away is insane! Talk about torturing numbers, if it were a real crime Obama would get life without the possibility of parole!
So what about the reports that real GDP losses are slowing? And that our economy is getting better every day under the steady hand of Barrack Obama and company. Please read this excellent article by fellow blogger Pete Murphy to shed a little light on that subject.
The current government daylight heist is our healthcare. The definition of Communism is, “A system of government in which the state plans and controls the economy and a single, often authoritarian party holds power, claiming to make progress toward a higher social order in which all goods are equally shared by the people.” You decide how or if that definition fits our young president.
It’s all smoke and mirrors aimed at an ulterior motive, directed, produced, and copy written by the best government that money can buy. Its time to make some changes and I’m not talking about the changes that Obama promised.
[ Housing Doom ]
“The banks have wanted to avoid price discovery on their ‘legacy assets’ by all means possible. They do not want the world knowing how many toxic assets they really have on their books. They most certainly do not want to illuminate the scale of these losses (which might show them to be effectively insolvent), as this would expose the TARP recipients to receivership and restructuring via the FDIC, thereby breaking up their power once and for all.” -Marshall Auerback
There is no recession: It’s a Planned Demolition
by Mike Whitney
What a mess. The Fed has assumed near-dictatorial powers to fight a monster of its own making, and achieved nothing.
Bernanke is in a pickle: If he stops printing; interest rates will skyrocket, stocks will crash and housing prices will tumble. But if he continues, China will dump their Treasurys and there will be a run on the dollar. What to do? Either way, the malaise in the credit markets will persist and personal consumption will continue to sputter.
Want some advice? Learn Mandarin.
Working people are not being crushed by accident, but according to plan. It is the way the system is designed to work. Bernanke knows that sustained demand requires higher wages and a vital middle class. But Bernanke works for the banks, which is why the Fed’s monetary policies reflect the goals of the investor class. Bubblenomics is not the way to a strong/sustainable economy, but it is an effective tool for shifting wealth from one class to another. The Fed’s job is to facilitate that objective, which is why the economy is headed for the rocks
The financial meltdown is the logical outcome of the Fed’s amonetary policies. That’s why it’s a mistake to call the current slump a “recession”. It’s not. It’s a planned demolition.
[ Counterpunch ]
“What a mess. The Fed has assumed near-dictatorial powers to fight a monster of its own making, and achieved nothing. ” -Mike Whitney
Better get it together, ‘cos the USofA is repeating the fall of Rome.
The essence of freedom is the proper limitation of government.
David Leonhardt wants to congratulate the gang that led us into the worse economic downturn in more than 70 years because it will not be as bad as the Great Depression. Yes, the downturn could be worse, but let’s be serious.
This crash was 100 percent preventable to anyone watching the economy and capable of doing 3rd grade arithmetic. The housing bubble was easy to see and it should have been obvious that its collapse would devastate the economy.
The “good” story is that we will have tens of millions of people unemployed or underemployed for years because of this gang’s incompetence. Millions of people will lose their homes. The country will needlessly lose more than $6 trillion ($40,000 per family) of output.
This is a complete disaster. Any custodian, dishwasher or shoe salesperson who showed the same degree of incompetence on their job would be fired instantly. There is no reason that the country should engage in this soft bigotry of low expectations when it comes to economic policy. This crew blew it just about as badly as anyone conceivably could. Saying that you didn’t give us another great depression is not exactly a winning re-election slogan.
–Dean Baker, What If the Captain of the Titanic Managed to Get Three Quarters of the Passengers on Life Boats?
Matt Taibbi has rightly directed our attention towards the talent, organization, and power that together produce damaging (for us) yet profitable (for a few) bubbles. Most of Taibbi’s best points are about market microstructure – not the technological variety usually studied in mainstream finance, but more the politics of how you construct a multi-billion dollar opportunity so that you can get in, pull others after you, and then get out before it all collapses. (This is also, by the way, how things work in Pakistan.)
In addition, of course, all good bubble-blowing needs ideology. Someone needs to persuade policymakers and the investing public that we are looking at a change in fundamentals, rather than an unsustainable and dangerous surge in the price of some assets.
It used to be that the Federal Reserve was the bubble-maker-in-chief. In the Big Housing Boom/Bust, Alan Greenspan was ably assisted by Ben Bernanke – culminating in the latter’s argument to cut interest rates to zero in August 2003 and to state that interest rates would be held low for “a considerable period”. (David Wessel’s new book is very good on this period and the Bernanke-Greenspan relationship.)
Much faster growth than expected is, of course, in today’s context a good thing. But it also brings complications. If you keep monetary policy this loose for much longer, you will feed bubbles. And if you encourage even looser monetary and fiscal policy, there will be a costly reckoning not too far down the road.
Monetary policy orthodoxy under Greenspan did not care about bubbles in the least. Now we (led by Greenspan) have massively damaged our financial system, our real economy, and our job prospects, this view is under revision.
-Simon Johnson, How To Blow A Bubble