flow5

Time for the U.S. Economy to Reindustrialize

Try the Cannabis Café in Portland, Oregon. I'm sure they allow alarmists and cranks.

Time for the U.S. Economy to Reindustrialize

More MISDIRECTION: "Gretchen Morgenson at the NY Times writes about the tax loss carry-forward "gift" for home builders in the recently signed "Worker, Homeownership and Business Assistance Act of 2009": Home Builders (You Heard That Right) Get a Gift "

Time for the U.S. Economy to Reindustrialize

And the TRADE WAR continues: "BEIJING — China’s top bank regulator said Sunday the weakening U.S. dollar and low interest rates are spurring speculation in stocks and property, distorting global asset prices and threatening the global economic recovery"

Time for the U.S. Economy to Reindustrialize

Past due. We need comprehensive incentives (investment tax credits, and accelerated depreciation on research & development), from our Federal Government: to help reinvigorate our industrial manufacturing base (to produce higher quality & lower cost, goods & services), not the redirection and albatross of $8,000 tax breaks for “new” home buyers, & $6,500 for repeat home speculators (The Worker, Homeownership, and Business Assistance Act of 2009). Not commercial real estate (strip malls, etc.).

We need real economic business investment to be targeted in new technology (in machinery, equipment, & software). We need the Federal Government as the “playing field” has been historically, increasingly competitive, and even more imbalanced (because of dumping, subsidies, tariffs, currency pegs, etc.).

E.g., the “idiosyncratic” Corporate Income Tax (gathered from “Corporate financial statements”), in China is 25%, in Hong Kong is 16%, in Japan is 30%, in Mexico is 25%, in Russia is 20%, but it is a combined Federal & State 39.1% in the U.S. (2nd highest among OCED countries).

These figures are not strictly comparable (equally weighted); but the results are corroborated using the tax revenue as a % of GDP metric):SEE: www.taxfoundation.org/...
SEE also PriceWaterHouseCoopers study where the U.S. is higher than 101 other countries, out of 178: www.doingbusiness.org/...

Bank Lending Stays on the Sidelines

The FOMC can make these banks lend, maybe not in the private sector but they can, and have been, in the public sector. Excess reserves, or predominately, the bank's equivalent (cash assets), represent higher reserve ratios - period.

Lower the renumeration rate on required, excess, and supplemental, reserves and the banks would be forced, or would seek out new loans, and purchase additional securities.

This of course, the FOMC's exit strategy (raise renumeration rates), or likewise, raise reserve ratios, and monetize whatever the FED decides.

It's Time Banks Broke Up and Moved On

Maybe someone should find out how much money the FED paid on their "interest on reserves" regime.

It's Time Banks Broke Up and Moved On

We live in a predatory society...thus we have regulated capitalism. Even so, the bankers have never lost a single battle in Congress (maybe because the bankers donated more money to legislators than any other constituency in the last 10 years (this has probably always been true).

It should then come as no surprise that the FED's research is politically coordinated, targeted to justify its monetary policy objectives - those that appease the banking community.

Monetary policy is not conducted based on regulatory efficiency nor nor the (system's) cost structure, but it is the "patch work" of the banker's profit proclivities.

That is, bankers pay for what they already own. The banks (collectively) would be more profitable if the FED prohibited the banks for paying interest on their deposits (as anyone who has applied double entry booking on a national scale should know). In otherwords, money flowing to the non-banks actually never leaves the member banking (system).

The only workable prescription is to nationalize the banks. Take Continental Illinois as an example:

Without the Fed’s involvement in 1984, Continental Illinois Bank (the 7th largest bank) would have failed. The FDIC’s reserves were inadequate to meet the challenge of a wholesale run on the Bank, and the probability of runs on other banks. Foreign corporations had billions of dollars on deposit. The Bank’s failure could have eliminated the dollar as the principal reserve and transactions currency of the world.

Newly created interbank demand deposits can be put at the disposal of any bank in the System through the “discount window”. Continental Illinois was advanced over $6b (11% of the system’s legal reserves). These deposits are not only money to the recipient bank, they also become a part of the legal reserves of the System.

The dimension of Continental Illinois’ rescue operation had to be limited, and of short duration. When the credit of the Fed was substituted for that of Continental Illinois, depositors knew their money was safe. Consequently, the “run” on the Bank was reduced to management proportions, and runs on other banks were forestalled.

The FDIC purchased bad loans from Continental Illinois, injected new capital, and covered all deposits without limits. It fired the existing management, as well as the board of directors, who were responsible for its failure.

"The FDIC took an 80% stockholder position, but took time to unwind its ownership, thereby minimizing the “sell stops” in the market, by selling its shares between 1986 until 1991. The taxpayers lost 1.1b."

In Bernanke’s speech: “If a federal agency did have such tools on Sept. 16, they could have been used to put AIG into conservatorship or receivership, unwind it slowly, protect policyholders, and impose haircuts on creditors, and counterparties as appropriate".

Without the gov’t, there would be no bad bank “takeovers”, though receivership may involve eliminating the bank’s common stock, preferred stock, and bonds. Bernanke should follow his own prescription, and do it without the taxpayer’s money.

This charade is even more wicked. It is mathematically impossible to miss an economic forecasts. The only long and variable lag is one of ignorance and arrogance.

Blaming Bankers When Government Is Really at Fault

Man are you crazy? The bankers are the government.

How Will Payday Lenders Be Affected by New Bill in Congress?

(1) "Sen. Durbin's bill would create a federal rate cap of 36% on all forms of short term credit"
(2) "almost 100,000 people will be put out of work!"
(3) They use these loans of their own free will, all fees and terms are clearly disclosed

36% is still too high, higher than usury laws imposed prior to that moron Paul Volcker.

England had to address bounced check fees. They were lowered. The same would happen here

drug addicts use drugs on their own free will as well knowing the consquences of their actions

you should work on the illegal immigrants problem which displaces millions of U.S. workers

people like you should find anthor country to live in. you as are most others, completely ignorant of the circumstances upon which these lower income borrowers ask for money, borrowed money that leaves them much worse off financially

Nationalize U.S. Banks

The government would manage the banks more conservatively than the bankers ever have or ever will. Carnage will always confront us.

Increased Government Investment in Banks?

MichaelZZ - who creates jobs...the poor? Disincentives for the rich don't work. And I don't remember where the rich actually pay that large of a percentage anyway...i.e., increases in their taxes will not produce substantial revenues, but are likely to result in fewer jobs.

Everyone pays too much tax. Governments should be smaller. Spending should be smaller. Unilateral transfers to foreigners can be almost completely eliminated. The only item in the Federal Budget Deficit that can't be reduced is interest (from an economic standpoint).

We need to reduce our dependence on foreign oil, increase our competitiveness in world markets (sell higher quality & lower cost, goods & services), etc.

The Credit Bubble: Deregulation Gone Wild

(socialize the risk) The Depression program: Home Owner's Refinancing Act (or HOLC), was passed in June 1933 and liquidated in June 1936. At closure HOLC returned a profit (returned $14m in 1951). The agency was authorized to acquire defaulted residential mortgages, from lenders/investors, & provide government bonds to replace & refinance,the defaulted mortgages, at lower interest rates, and for longer maturities (15 years). HOLC bailed out both banks and homeowners (50% of all homeowners were in default).

Originators frequently realized losses on the principle, through acceptance & substitution, based on the terms of a new loan (maximum of 80% of appraised value). The scope of operations translated into current figures, would be loans to 10 million homeowners, for $1.4 trillion (equal to all existing subprime mortgages).

The Credit Bubble: Deregulation Gone Wild

WeezieBenobi: "Socialize the risk, but privatize the profits" – apropos: take the RFC " Between 1933 and 1935, the RFC (socialize) purchased more than $1.7 billion in preferred stock in individual banks.

To gauge the significant size of this agency's activity, in 1935 the total book value of equity capital (including the RFC investment) for all commercial banks was $3.6 billion. New RFC bank investment effectively ended by late 1935, and banks gradually REPURCHASES the government's stock out of their earnings (privatize) when the banks subsequently returned to profitability...& others.

This article opened up "pandora's box". Keynes & his desciples maintained that commercial banks were financial intermediaries. So this Keynesian interpretation inspired the enactment of the DIDMCA of March 31st 1980.

This act provided the legal basis to convert 38,000 financial intermediaries into 38,000 commercial banks. Lending by commercial banks is inflationary. Lending by financial intermediaries is not.

But the "show stopper" is that today, legal reserves are no longer binding. But the obstruction is bigger.

The Act didn't provide direct control over the volume of legal reserves & reserve ratios of all money creating institutions, e.g., pass-thru's: Interbank demand deposits (IBDDs) owned by the repondent banks, held by correspondent banks, and redeposited with the Reserve banks. In order to prevent the PYRAMIDING of reserves, a 100% reserve ratio would have to be applied to these accounts.

In due course, under this Act, our means-of-payment money supply will swell, until it approximates M-3. I.e, since 1942, money creation is a system process. I.e., no bank, or minority group of banks (from an asset standpoint), can expand credit (create money), significantly faster than the majority banks expand. This is the process by which the primary money supply is evolving.