Sober Realist

When Things Got Tough, Hank Paulson Went Skiing

So that's why Paulson lashed out at Ken Lewis -- interruption of his ski time. Sorry to ruin your R&R with this problem that you and the rest of your kind created, but can you help us fix it so you can continue to suck the lifeblood out of our economy.

Surprise, Surprise, Surprise: Positive Economic News Everywhere

Shazam! Look at all them thar green shoots! Be careful not to step on 'em.

Wall Street Breakfast: Must-Know News

"Foreclosures reach new high.
"Despite everybody's best efforts to date we're not really making any headway against the problem," said Rick Sharga, senior vice president at RealtyTrac."

I'm still sticking to 2015 for a recovery as stated here:
seekingalpha.com/user/...

America: The Land of the Fleece Scam

Here's an interesting article explaining in detail 6 major ways the taxpayer is being taken to the cleaner:

1. By overpaying for its TARP investments, the Treasury Department provided bailout recipients with generous subsidies at the taxpayer's expense.

2. As the government has no real oversight over bailout funds, taxpayers remain in the dark about how their money has been used and if it has made any difference.

3. The bailout's newer programs heavily favor the private sector, giving investors an opportunity to earn lucrative profits and leaving taxpayers with most of the risk.

4. The government has no coherent plan for returning failing financial institutions to profitability and maximizing returns on taxpayers' investments.

5. The bailout's focus on Wall Street mega-banks ignores smaller banks serving millions of American taxpayers that face an equally uncertain future.

6. The bailout encourages the very behaviors that created the economic crisis in the first place instead of overhauling our broken financial system and helping the individuals most affected by the crisis.

www.alternet.org/modul...

USA Today: What Happens When Investment Bankers Run a Country

Ettu,
They won't bring about any change at all. Read the link in the article:
www.buffalobeast.com/1...

USA Today: What Happens When Investment Bankers Run a Country

The IMF says that if you covered up the name of the country in question (USA), then our current situation could be mistaken for one often seen in an emerging market --- private sector oligarchs who get in bed with the political system of the country, overleverage themselves, and bring down the country's economy. In our case, it's the financial oligarchs who have perpetrated a coup on our government.

Housing's Big Picture Isn't Pretty

"Look for a monster housing rally around the corner as the government announces a the Mandatory Second Home Purchase Program for Americans deemed to be carrying insufficient levels of debt." --- Dean M.

Simply put, when the price of a house far exceeds the average annual income of the mainstream buyer, then that price must drop to a wage-sustainable level.

Excellent point by LilBob:
"One thing I find interesting is that if you look at the writings of some early 20th century economists such as Pigou and Hobson, conditions that required urban workers to spend more than 20% of their disposable income on housing were considered significant contributors to poverty. Nowadays, someone who only spends 20% of their salary on housing is considered to be doing relatively well."

Wall Street Breakfast: Must-Know News

Nice analogy. I'm toying with the idea of writing an article for SA that shows how government intervention has caused our current debacle in health care....and now they want to buy the whole enchilada.


On May 21 09:18 AM mac123449 wrote:

> Before the green shoots can start popping up the forest has to burn
> I wish the government would stop manipulating the market let it burn
> down conpletely Dow 3000 then we can build it back up what there
> doing now is only adding future wood for a bigger fire.

Wall Street Breakfast: Must-Know News

Backtoreality:
"trickle down economics".-- another uselss euphemism created by those at the top that actually translates into "crumbs and scraps for the teeming masses."

Wall Street Breakfast: Must-Know News

Everyone should check out the latest article by TraderMark to see how we are all being taken for a ride by the powers that be:
seekingalpha.com/artic...

Absolute power corrupts absolutely.

Wall Street Breakfast: Must-Know News

I think a new name or phrase needs to be coined to better describe the insidious corruption of our present system. "Socialism" suggests some sort of "equality for all individuals, with an egalitarian method of compensation." That doesn't really describe the wholesale transfer of wealth from America to the financial elite that is happening now. "Crony capitalsim" is more apt but still doesn't fully describe the massive expansion of government that is swallowing up the private sector economy. Fascism is too general of a term.
Statist capitalism sounds best.

"... it really doesn't matter much whether the rulers call themselves capitalist or socialist, whether they plunder by concessions and taxation through crony firms or straight-out theft from nationalized industries....
Alvaro Vargas Llosa's five "principles of oppression" are
-corporatism
-state mercantilism
-privilege
-wealth transfer
-political law.
"...the ideological professions of the ruling caste are not very relevant to the real problems. The critical factor is basic liberty for the people, not the favorite economic flavor of the rulers' intellectuals."


On May 15 08:44 AM BlueOkie wrote:

> TARP is the right word. It is the gov't blanket that is beginning
> to cover most economic activity. Banks, Autos, Mortgages, Insurers,
> Credit Cards (coming), unions., schools, health care. Sounds like
> socialism to me. Don't forget Cap and Trade to cover all use of energy.
> Our gov't is like kids in the cookie jar with parents not at home.

The Ultimate Risk of Government Influence Over the Private Sector (Part 2)

Good article. You have shown how the system is fundamentally broken. Sadly, the status quo will be upheld at all costs and this dysfunctional system will slumber along to its own demise. When our standard of living has gone completely down the tube, then people will finally wake up to what has happened. As pointed out above, the "slack in the system" is taut right now and will eventually break.

Global Markets in Review: Risky Assets Surge

Dondon,
The bulls are not seeing the forest for the trees:

"The list of U.S. companies able to report better-than-expected results for the most recent quarter because aggressive cost cuts offset falling sales is a long one.
It includes appliance maker Whirlpool Corp, advertising powerhouse Omnicom Group Inc, specialty glass maker Corning Inc, wireless telephone service provider Sprint Nextel Corp, drug maker Pfizer Inc tool maker Black & Decker Corp, and Kraft Foods Inc."
www.reuters.com/articl...

A Bull Market That Few Are Buying

This article is actually the best and most detailed I've read explaining the inexplicable V-shaped rise from the ashes of the stock market. Peter Schiff reflects these sentiments in a recent article (seekingalpha.com/artic...) , but suggests the stimulus-fed rally could last 2 years before the floor falls out.

Stress Tests Were Never a Serious Exercise

The financial sector debt of our economy is currently $17.2 trillion and going vertical on the charts. That's 151% of national income. Back in 1957, the financial sector debt was only 5% of the economy's national income. It has now zoomed to 140% of today's economy - a debt ratio growth rate 28 times faster than general economic growth. The financial sector has clearly grown out of balance with the real economy and has become a blood-sucking leach upon it. Financial institutions dominated the S&P 500 by 2002, and peaked at 21% of the index in 2007. Even after the crash in the banking industry, the financial sector still constitutes most of the stocks in the index and 16% of the market value.
The financial sector depends on and feeds on a nation addicted to exponentially growing debt. This debt dependent economy of ours that has evolved over the last 3 decades has been organized and dictated by the omnipotent central planning monopoly called the Federal Reserve. Look at the following graph to see how the Fed's long-term declining federal fund interest rates was the impetus and catalyst for fueling ever-increasing consumption with ever-increasing debt. This was not an interest rate dictated by a free market but by the market-intervening, central planning Federal Reserve.
mwhodges.home.att.net/...
Since 1981 -- at the same time when the Fed started it decades-long lowering of the interest rate, America's Total Debt ratio (to national income) of all sectors started exploding upward and outstripped actual economic growth many times over.

We can attribute the current economic collapse directly to the Federal Reserve. The current crisis has us borrowing from the Federal Reserve so we can pay it to “bail out” their member banks and which we then get to pay back to them with interest! They created these artificial boom cycles by increasing credit and the money supply. A true free market would have dictated a much higher interest rate that would have prevented the catastrophic housing bubble. A basic tenet of the Austrian School of Economics is that any government interference with markets will lead to distortions and inefficiencies in an economy. They also believe that the price of current consumption versus future consumption, that is, the interest rate, also must be allowed to be determined in a market free of government influence. Our current system does not allow this to happen. In other words, we don't have a true interest rate which gives the market a clear and true picture of supply and demand. A capitalist market cannot function properly if there is no true interest rate to direct it.
We have a financial sector that controls our government. The securities and investment industry contributed $53 million to congressional and presidential candidates in 2008, according to the Center for Responsive Politics. Is it any wonder that even after the overwhelming public outcry against the first proposed bailout in Sept 2008 and initial defeat by the House, the bailout eventually was rammed down our throat. Those Congressmen who had initially voted for the first bailout had received 54% more money in campaign contributions from banks and securities firms than had those who voted against it.
Our government and the Fed have worked in unison to produce this centrally planned, debt-based, market-manipulated economy with abnormal boom/bust cycles which has allowed the U.S. government to grow ever bigger and more intrusive by raising taxes ever higher and funding all sorts of conceits like wars and wasteful public projects. The U.S. government is now the largest it's ever been in history. Now the U.S. government and the Federal Reserve are busy trying to reinflate this corrupt system.

So you see, we are hostage to this current system that serves the politicians and the financial elite, but not the people of this country. "The government that governs least governs best." - Thomas Jefferson







On Apr 29 07:49 AM Speedspirit wrote:

> The banks should not be nationalized but declared bankrupt along
> with the Fereral Reserve and put into recievership. Painful but who
> is liking the direction this is going. Rip the band aid off and disinfect
> the wound. Or we will die of blood poisoning.
> Our President isnt smart enough to handle this job. He has to go.
>