'End the Fed' Author Ron Paul's NY Victory Lap [View article]
I have a feeling the Fed knows very well that a full audit of the Fed is essentially a death knell for them. For one things the liability and losses they accrued buying up every manner of strange asset and backstopping every loan probably would make AIG blanche. In effect, a Federal Reserve backstop is essentially a derivative just like AIG underwrote.
Although the Fed says it doesn't want to disclose its positions to protect other banks solvency, I think it probably means themselves (since they are a bank). If their job is to monitor and control (preferrably break up) too big to fail institutions that pose a systemic risk, then I think they should start with themselves.
The banks need your money for free so they can loan it to people who are not credit worthy or to loan it to the Fed to engage in QE. One makes money the other doesn't. But both don't do a lot of good for the economy. Well, on the other hand you could always deposit with Goldman or JP Morgan who play with stocks and commodities to make a fat profit off of 0% interest deposits.
I am sure if you ask Bernake he would tell you it's all good for the country. Perhaps he might go so far as to say, "To oppose the Fed's will is being selfish." That's how morally backwards we have become.
For me the issue is not the profit Goldman made from the government but the fact the government is trying to help financial companies from tanking by letting them make profit so they can bolster their balance sheet. Rather than do this GS and others spit in the taxpayers face, refuse it by paying back TARP funds saying they never needed it (a baldface lie) and then use all their profit not to make loans or improve their VaR by adding it to their balance sheet but to pay out billions to their executives.
How does this help justify bailing them out or saving them. The amount of risk Goldman is taking is still not acceptable according to Fed standards. Thus they still pose a systemic risk by not being able to adhere to VaR or proper leverage. Rather than improving their balance sheet they did 3 things this quarter. #1) they begged the FDIC to waive their capital requirements because they don't have enough assets 2) Announced that they were paying huge record bonuses, 3) Announced that they were planning on leveraging themselves even more in the market in the future.
This obviously doesn't sit well with me and shouldn't sit well with anyone else either. What Goldman is doing violates the spirit and intent of taxpayer bailouts.
It is sad to say, but I like Toronto Dominion better than any US bank. Although you may be right about Bill Gross always being wrong you buy long term treasuries at your own perl.
The US will never really go bankrupt. But that doesn't mean that the US won't have to break the back of inflation by reversing the ridiculous monetary laxness we see today through austerity programs and high interest rates (or at least normalized ones). This is bad for Treasury bonds.
Social Security: Bankrupt System Will Impact Markets Sooner than Expected [View article]
Capitalist Hero is on the mark. Don't expect any help form social security and worry about your assets when the government starts foraging for money to plug the hole.
As for Medicare, hopefully Obama is going to address this. Healthcare needs a major overhaul all the way around. More is spent shuffling papers around, and paying for insurance and lawsuits that the cost for the doctor's labor these days. We are all suffering and most likely getting inadequate treatment because of it.
Everyone has known the social security system is broke. Unless every elderly person dies in the next 10 years or we allow 25% more working people to become taxpaying citizens in the next 10 years, closing our eyes and acting like nothing is wrong is going to get us into a world of trouble.
I have known since I was in High School Social Security is broken. It doesn't even take algebra to do the math and figure out the numbers don't add up.
Be-BOP: Sudden Stop of Capital Flows into the U.S. [View article]
Agreed the US is in bad shape. So is China as their demand "which happens to be the US" dries up. As is Europe, who is eating the US derivatives excess because their bankers were the greater fools in a liar's poker game. As is Asia which implemented the mark bank real estate to whatever price prevents you from recognizing a loss a decade or more ago.
As is real gold demand which is drying up. As is copper and raw materials which are used for building houses and commercial properties. What we are seeing is de-leveraging and should see deflation that would help bottom out the market.
There is no safe or better place to hide really.
The best we can hope for is that countries take their lumps and let the market fall back to equilibrium so they can put a floor down and rise up again. If they don't, all you can see is brief respites as the economies continue to tilt towards collapse. One can lie about bank solvency all you want but that won't keep banks from trying to cover their losses even if they don't publicly acknowledge them. All that does is prolong the downturn.
The US is not alone in this fiasco. A US default will leave us scrambling for lifeboats. However, at least the US will have some. #rd world countries will drown first followed shortly by Europe and Asia. Thus, no matter how bad it gets in the US, I don't recommend dumping dollars anytime soon.
Market Outlook: September Will Make Or Break The Market [View article]
My guess is it will break the market until the end when magically the government and Federal Reserve come in to save the day proving that they can still cover up reality and reward their friends with value stolen from everyone else.
Sadly the public sector has mixed pension ponzi schemes with investment lies, deceit, and gambling mentalities. It makes an explosive concoction that can only do one thing, hurt you and me through higher taxes and a complete collapse of State and local budgets. The illusionary concept of pensions paying for themselves must be banished along with public sector pensions themselves.
Why Market Aftershocks Will Continue [View article]
Japan is a good example why governments shouldn't spend themselves into massive deficits (200% of GDP in Japan's case) when there is no real crisis. It really ties their hands when a real catastrophe occurs. Certainly Japan's situation would be a lot less dire if it was able to temporarily boost deficit spending in the face of this disaster. Rather, it is now being forced to consider additional taxation because its debt load is already crippling its ability to do anything.
The US should consider the ramifications as well. It's ability to deal with any more shocks to its system is also narrowing due not because of its high GDP to government debt as much as its scale. Simply put, there is a limit on how many US treasuries foreign countries can absorb. After that funding any more US debt requires the US to compete with the private sector domestically to raise cash or by simply raising taxes. In both cases, this denies the real economy desperately needed cash.
Here's How to Take 20 Years to Build a Retirement Fund That Lasts Forever [View article]
A few things:
1) Borrowing to invest is not good since often the interest exceeds the profit and you incur risk.
2) "After a full year of investing you will add $5,000. Do not forget to increase your contributions by 3% every year to meet inflation. This should not be too hard as your wages will hopefully increase by inflation levels as well.", The simple fact is that although sometimes your wages rise, most people's wages don't even keep up with inflation. Thus, Americans have been getting a lower and lower standard of living the last 2 decades.
3) Constant stock market gains are a fantasy. If you want a retirement fund that lasts forever I suggest not going all stock. Of course not going all stock makes it even more impossible to generate 14% + gains. Claiming Buffet can beat 14% consistently is not a good argument. 90% of all fund managers can't achieve this.
4) People for the most part should not play options and often any hedging done by them takes into account a premium + time premium so your hedge costs more than the positive value. If it were otherwise no one would write the contracts.
5) The fist rule of making your money last forever is not losing it! That means buying safe investments that can cover in most cases stock losses.
6) You must beat inflation and taxes. And if you want to tap out of it make more than you remove too.
7) Thankfully we aren't all vampires (maybe there are some haha.) There is no need to build a retirement fund that lasts forever. If you save $1 million and invest somewhat wisely you can usually happily tap your $50,000 until you die without running out of $ unless you're around the age of Justin Beiber.
Please talk to a real advisor before planning for retirement...
Brace, Brace, Brace: It's Not Clear Who's Driving This Market [View article]
I disagree, the policy makers are driving the market into the ground. Fears of country bond defaults are a function of government overspending and out of control behavior which is affecting the stock and bond market. The failure of a recovery is due to government being too big of a component of GDP and taxation being too high to encourage business. Increasing government spending only raises the red flag of even worse taxation in the future.
In fact, what is in question is not whether a capitalist economy can ever recover. It is whether a overly socialized America can recover and whether a moribund Europe will ever be honest with itself and realize they are spending what they do not have and destroying their economy with too much fiat money and too much government spending and taxation. What the world needs to recover is less government and less taxes.
I dare say, if TARP and all stimulus went to give a tax cut to businesses we would have seen a recovery by now. And if governments were better at not spending way more than they should we would not be seeing this recent bout of Euro panic. Thus, it is policy makers fault they don't know how to run government. And it is their central banks that lie to them in order tpo gain more power at the expense of the taxpayer.
More Than Half a Million Job Losses Coming [View article]
We will see the adverse impacts of stimulus by 2011. Stimulus by its own definition implies short term spending. When it is put into short term employment the adverse impacts to a reversal in spending is amplified. Census workers will only end up increasing of deficit and will melt away into negative employment numbers. It is a bad policy.
What Can We Learn From Japan's Past for the U.S. Future? [View article]
Japan's government, like the US now spent tons of money and ran itself into debt to the point their citizen's couldn't stomach it anymore with little to nothing to show for it. Likewise, their central bank compounded the problem with QE which could never be reversed and the central bank eventually kept rates low which happens to keep it from losing money on the low interest bonds it bought.
Thus you have a systemic problem with the economy set on permanent stall and the government unable to execute a true Keynsian recovery at the trough because they spent it all beforehand.
Economists too day talk about a Keynsian economic theory but they know nothing about it. You are not suppose to spend money keeping the economic cycle from a downturn and you are suppose to keep enough reserves to heavily stimulate if the economy stalls at the bottom. What we are doing is premature deficit spending similar to the Great Depression.
Likewise, those economists (laugh) like Greenspan and Bernanke who praise Keynes and think of them as modern saviors know nothing about it. If they did they would have raised interest rates long before they did and deride government for not saving for the oncoming and inevitable down cycle. Instead Greenspan talked about the end of economic cycles all together. What a way to inspire government officials to be prudent and save lol.
If you ask me, they are not Keynsian or any other logical economic theorists. They are blind fools trying to explain their illogical actions and trying to justify their failed existence. Whether we end up like Japan or end up in a double dip recession is both still very plausible. Hopefully we don't end up with both, although it looks like the government and Federal Reserve these days are trying as hard as they can to create a new definition of economic hopelessness.
Walker: Drastic Action Needed to Maintain U.S. Standard of Living [View article]
In the end don't blame a party, blame all politicians Republicans and Democrats and elect only fiscally conservative officials be it from whatever political party. Clinton was much more a fiscal conservative than Bush Jr. and Obama is much less a fiscal conservative save Bush Jr. (please add on TARP to his giant record of fiscal waste even though he didn't record it as an expenditure).The sad fact is that finding one is hard work. Our system favors those out to see what they can get for themselves and their friends. That means squandering money that comes from "serving" the public they presumably are supposed to serve. Spending taxpayers money without anything to show for it and then borrowing on the assets on their country is not doing the public good.
Richard Russell: Downturn Will Be 'Vicious' [View article]
I would tend to believe the author. In all probablility the Treasury, administration, and Federal Reserve will not acknowledge failure and will treat a renewed downturn with more of the same: more stimulus, more QE, and more easy money policies. It may not stop the slide and in fact worsen things, but I feel to them it's much better to make you suffer than their pride.
'End the Fed' Author Ron Paul's NY Victory Lap [View article]
Although the Fed says it doesn't want to disclose its positions to protect other banks solvency, I think it probably means themselves (since they are a bank). If their job is to monitor and control (preferrably break up) too big to fail institutions that pose a systemic risk, then I think they should start with themselves.
The Federal Reserve Is Immoral [View article]
I am sure if you ask Bernake he would tell you it's all good for the country. Perhaps he might go so far as to say, "To oppose the Fed's will is being selfish." That's how morally backwards we have become.
When Goldman Might Have Failed [View article]
How does this help justify bailing them out or saving them. The amount of risk Goldman is taking is still not acceptable according to Fed standards. Thus they still pose a systemic risk by not being able to adhere to VaR or proper leverage. Rather than improving their balance sheet they did 3 things this quarter. #1) they begged the FDIC to waive their capital requirements because they don't have enough assets 2) Announced that they were paying huge record bonuses, 3) Announced that they were planning on leveraging themselves even more in the market in the future.
This obviously doesn't sit well with me and shouldn't sit well with anyone else either. What Goldman is doing violates the spirit and intent of taxpayer bailouts.
National Bankruptcy? Not Quite Yet [View article]
The US will never really go bankrupt. But that doesn't mean that the US won't have to break the back of inflation by reversing the ridiculous monetary laxness we see today through austerity programs and high interest rates (or at least normalized ones). This is bad for Treasury bonds.
Social Security: Bankrupt System Will Impact Markets Sooner than Expected [View article]
As for Medicare, hopefully Obama is going to address this. Healthcare needs a major overhaul all the way around. More is spent shuffling papers around, and paying for insurance and lawsuits that the cost for the doctor's labor these days. We are all suffering and most likely getting inadequate treatment because of it.
Everyone has known the social security system is broke. Unless every elderly person dies in the next 10 years or we allow 25% more working people to become taxpaying citizens in the next 10 years, closing our eyes and acting like nothing is wrong is going to get us into a world of trouble.
I have known since I was in High School Social Security is broken. It doesn't even take algebra to do the math and figure out the numbers don't add up.
Be-BOP: Sudden Stop of Capital Flows into the U.S. [View article]
As is real gold demand which is drying up. As is copper and raw materials which are used for building houses and commercial properties. What we are seeing is de-leveraging and should see deflation that would help bottom out the market.
There is no safe or better place to hide really.
The best we can hope for is that countries take their lumps and let the market fall back to equilibrium so they can put a floor down and rise up again. If they don't, all you can see is brief respites as the economies continue to tilt towards collapse. One can lie about bank solvency all you want but that won't keep banks from trying to cover their losses even if they don't publicly acknowledge them. All that does is prolong the downturn.
The US is not alone in this fiasco. A US default will leave us scrambling for lifeboats. However, at least the US will have some. #rd world countries will drown first followed shortly by Europe and Asia. Thus, no matter how bad it gets in the US, I don't recommend dumping dollars anytime soon.
Market Outlook: September Will Make Or Break The Market [View article]
Pension Funds and the Zero Bubble [View article]
Why Market Aftershocks Will Continue [View article]
The US should consider the ramifications as well. It's ability to deal with any more shocks to its system is also narrowing due not because of its high GDP to government debt as much as its scale. Simply put, there is a limit on how many US treasuries foreign countries can absorb. After that funding any more US debt requires the US to compete with the private sector domestically to raise cash or by simply raising taxes. In both cases, this denies the real economy desperately needed cash.
Here's How to Take 20 Years to Build a Retirement Fund That Lasts Forever [View article]
1) Borrowing to invest is not good since often the interest exceeds the profit and you incur risk.
2) "After a full year of investing you will add $5,000. Do not forget to increase your contributions by 3% every year to meet inflation. This should not be too hard as your wages will hopefully increase by inflation levels as well.", The simple fact is that although sometimes your wages rise, most people's wages don't even keep up with inflation. Thus, Americans have been getting a lower and lower standard of living the last 2 decades.
3) Constant stock market gains are a fantasy. If you want a retirement fund that lasts forever I suggest not going all stock. Of course not going all stock makes it even more impossible to generate 14% + gains. Claiming Buffet can beat 14% consistently is not a good argument. 90% of all fund managers can't achieve this.
4) People for the most part should not play options and often any hedging done by them takes into account a premium + time premium so your hedge costs more than the positive value. If it were otherwise no one would write the contracts.
5) The fist rule of making your money last forever is not losing it! That means buying safe investments that can cover in most cases stock losses.
6) You must beat inflation and taxes. And if you want to tap out of it make more than you remove too.
7) Thankfully we aren't all vampires (maybe there are some haha.) There is no need to build a retirement fund that lasts forever. If you save $1 million and invest somewhat wisely you can usually happily tap your $50,000 until you die without running out of $ unless you're around the age of Justin Beiber.
Please talk to a real advisor before planning for retirement...
Brace, Brace, Brace: It's Not Clear Who's Driving This Market [View article]
In fact, what is in question is not whether a capitalist economy can ever recover. It is whether a overly socialized America can recover and whether a moribund Europe will ever be honest with itself and realize they are spending what they do not have and destroying their economy with too much fiat money and too much government spending and taxation. What the world needs to recover is less government and less taxes.
I dare say, if TARP and all stimulus went to give a tax cut to businesses we would have seen a recovery by now. And if governments were better at not spending way more than they should we would not be seeing this recent bout of Euro panic. Thus, it is policy makers fault they don't know how to run government. And it is their central banks that lie to them in order tpo gain more power at the expense of the taxpayer.
More Than Half a Million Job Losses Coming [View article]
What Can We Learn From Japan's Past for the U.S. Future? [View article]
Thus you have a systemic problem with the economy set on permanent stall and the government unable to execute a true Keynsian recovery at the trough because they spent it all beforehand.
Economists too day talk about a Keynsian economic theory but they know nothing about it. You are not suppose to spend money keeping the economic cycle from a downturn and you are suppose to keep enough reserves to heavily stimulate if the economy stalls at the bottom. What we are doing is premature deficit spending similar to the Great Depression.
Likewise, those economists (laugh) like Greenspan and Bernanke who praise Keynes and think of them as modern saviors know nothing about it. If they did they would have raised interest rates long before they did and deride government for not saving for the oncoming and inevitable down cycle. Instead Greenspan talked about the end of economic cycles all together. What a way to inspire government officials to be prudent and save lol.
If you ask me, they are not Keynsian or any other logical economic theorists. They are blind fools trying to explain their illogical actions and trying to justify their failed existence. Whether we end up like Japan or end up in a double dip recession is both still very plausible. Hopefully we don't end up with both, although it looks like the government and Federal Reserve these days are trying as hard as they can to create a new definition of economic hopelessness.
Walker: Drastic Action Needed to Maintain U.S. Standard of Living [View article]
Richard Russell: Downturn Will Be 'Vicious' [View article]