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Posts by Themes
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US Government: The Cat in the Hat
Most of us should remember the story of the Cat in the Hat. The kid (Wall Street and the banking industry) makes a mess and creates a stain and the Cat in the Hat (The US Government) tries one thing after another but can get rid of the problem. The cat simply transfers the stain from one article to another actually making it far worse in the process. Morale of the story: One can't run from or hide from problems to deal with them.
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This describes the economic mess we are in and have been for the last two plus years. Consider the deep systemic problems we have with toxic assets, still overleveraged banks, under regulated and under restricted financial institutions, too big to fail firms, an American consumer with a disseminated balance sheet, a dysfunctional credit market, horrendous job and housing markets.
It would be nice to think we just had the worst recession in 100 years (excluding the depression) and we have quickly bounced back and will enjoy a typical "V" recovery. Only this downturn was far worse than a garden variety recession so the recovery should not be typical. I know we would all hope it would be but it won't be.
To make matters far worse, consider what the US government has actually done to fix the underlying problems.
Nothing
In fact the government has put the same punch bowl out that got us into the mess in the first place. More debt and consumption and don't worry about paying it back.
*****
In our case the US Government has deposited the stain on the taxpayers. Some of us don't see it becasue we are wearing it. But it is there, just repackaged.
Problem substitution is not economic resolution.
Short Financials
Sophie's Choice: People or Profits
ABC Confidence Poll: Bad news ahead
Today's ABC poll shows American consumers are digging in and we should expect a continued contraction of debt and retail sales. As I have posted in recent articles, we have a touch of the 30's creeping into people's spending habits and it is the type of restraint that will be long lasting.
Take this excerpt for example from the confidence poll:
More »Disconnected actions: Watching the new super regulator in action with TARP repayments
Lies, lies and more lies - our government at work
Our government as is working the biggest scheme ever with all the cheerleading and green shoots talk. One only needs to step back observe conditions and their subsequent actions to assess if they really know how to manage the economic crisis that is upon us.
Take for example the FDIC. Late last year, Sheila Bair stated the following in an interview on 7/25/08 on the Nightly Business Journalwww.pbs.org/nbr/site/o...:
DHUE: So how strong is the FDI insurance fund? Can it withstand the stress of a major bank failure?
More »Clarity of our economy at the household level
Much attention has been given to the plights of Wall Street and the woes of Detroit. Trillions are being spent to prop up failed businesses. We all are waiting for the economy to bottom but few are examining this tough economy at a household level.
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