Old Wizard

Five Reasons the Market Could Crash This Fall

Maybe this is too simple-minded, but isn't the country's problem a matter of cash flow. The conjecturing about what is happening and going to happen with the market seems never to address our underlying problem. The country's operating cash flow is increasingly negative and has been since 1991. We simply are not producing enough goods and sevices that either our population or the rest of the world wants to buy. All the regulation and financial trading tricks in the world don't address this issue. Borrowing by our Government to balance our domestic budget just keeps making the cash flow problem worse. Of course, there will always be some who can amass wealth in this circumstance by clever or deceptive short term actions but only production of the goods, commodities and services that drive the country's operating cash flow to 0 or higher will "fix" our economy .Every investment and regulatory action action the government takes should be subjected to the operating cash flow litmus test as a major measure of performance. I was surprised to read and very dismayed that the country's cash flow was only peripherally addressed in the macro economic model upon which our government relies which includes upwards of 150 variables. From my vantage point, this is a dramatic example of emphasis on the wrong sylAble.

Will the Geithner Plan Work? Let's Hope Not!

Why won't the insiders play the invest in the buy in "toxic assets'" game. They put up 7cents on the dollar, the people put up 93 cents. The assets are probably yielding close to 7% a year. After a year, if these assets are worth even 10 cents on the dollar, it's a windfall profit. What a deal. If it turns out that the toxic assets are worth zero after a year the investor is close to even, the people lost their shirt[again].

Welcome to Desolation Row

The Clinton years were wonderful. Let's see who was the fed chairman under Clinton. Wasn't the tech bubble something like the housing bubble where people were irrationally investing in companies that had little or no real assets and weren't the same financial organizations making carloads of money in new issues? What makes this crises even worse is that the same financial wizards figured an even better way to leverage little or no assets called derivatives. The irony of the drama is that now those institutions are looking for the government rescue lifeline because it's hurting them. the tragedy of this drama is that the working public is left at the end of the ponsi deal and they are probably owners of money markets, accounts in failed investment and other banks, mutal funds and houses whose value is impacted dramatically downward. All this while the people who received big bonuses and sanctioned the Ponsi schemes received high pay and bonuses and are relatively unscathed.

Is the U.S. Banking System Safe?

Bravo Janice! This guy has obviously believed the cool aid drinkers who think america[ with a "c" ]is the bad guy. I guess he doesn't know that hundreds of thousands of Cuban-americans would much rather live here than there and that even illegal aliens in this country receive better medical care than the average person living in Cuba. By the way most of those people working multiple jobs in the US can afford to buy a cell phone and have the freedom to use it.

Is the U.S. Banking System Safe?

Muley, I have a different list of obstacles to overcome. Here goes: 1] Greed of the house speculators and many financial managers who pursued the quick get rich schemes that gave birth to the ponsi schemes of derivatives and no money down house specualating.
2] A religious but very unscientific belief in global warming in spite of a decreasing average global temperature over tha last four years.
3] Massive disinformation concerning any comprehensive energy policy.
4] A blatent disregard for the drastic effects on our economy of the impact of importing 12.2m barrels of oil/day@$150/barrel. I believe that a country with a negative cash flow of over $800b/year cannot sustain itself.
5] The almost facetious premise that a country that could go to the moon in 8 years can't drill for new oil in less than ten years and that using what amounts to roughly 60 days worth of our imported oil in the strategic oil reserve will solve the problem.
6] That only non-nuclear, non-fossil fuel sources of new energy will address the most important question concerning our energy problem soon enough to avoid an economic disaster.
7] That before G.W. the world loved us and because of him they don't. Let's recap, in the 90's we considered Pakistan a potential enemy. Libya was developing nuclear weapons, so was N KOREA, France, Russia and China were working against us at every turn and Iran and Syria were causing trouble in the mid-east. Reading Comarade J., A biographical account of a high level russian post cold war spy who defected is an eye-opener. The book is written by a former Washington Post reporter.
8] The misconception that our domestic oil companies can actually be controlled by the actions of the US congress when 75% of their operations are in countries over half of which are contolled by state entities.
9] The constant negative drumbeat of much of our media and sites such as this that the sky is falling, the solutions of which are sell short, buy gold, buy euros, blame it on Bush or dig a hole in the back yard and fill it with a year's worth of survival commodities. All very constructive.
10] Last but not least, the concept that it is Ameica's duty and for sure its obligation, to accept all the folks the rest of the world would like to get rid of, solve the aids epidemic in Africa, stop any genocide that is going on anywhere in the world, come to the aid of any natural disaster anywhere in the world and let any wide-eyed radical philosophic group blow up a govenment building, a skyscraper or one of our embassies whenever they choose and have a discussion about their motives so we can better understand them.

Is the U.S. Banking System Safe?

Too complex for me. I'd like to know when there wasn't a "banking crises" what the cash on hand position relative to non-performing loans was. Isn't it axiomatic that even in good times if the the depositors were to make a run on 2000 banks simultaneously there would not be enough cash for depositors to recover their money. Isn't the real problem that because of derivatives the real amount of non-performing laons wasn't and maybe still isn't known. Beyond that if panic and fear sets in, it will create a run on many banks which will certainly lead to a depression. Let's all yell the sky is falling and race each other to the nearest bank.