"He who has the gold, makes the rules" ~Lyndon Forman
First it was millions, then billions and now trillions of dollars. The mind just becomes numb looking at all those zeros.
I heard an analogy the other day by Gerald Celente regarding just how much a trillion dollars is.
Gerald said. "If you were to spend One Million dollars a day, a day, since the time that Christ was born until today, you still would not have spent a trillion dollars."
So I did the math, and you know what? He was right. In fact you would not have spent 3/4 of a trillion dollars. Yet the Washington elite have decided they can do it in less than a year.
Why do I bring this up? My biggest fear that comes from this crises are the solutions put forth by Washington. I fear that in order to save Capitalism they will destroy the currency, and all those benefits that come from being the world’s reserve currency.
This is how financial conglomerates used Qualified Special Purpose Entities:
Lenders recorded profits before the U.S. subprime mortgage market collapsed in 2007 by selling pooled loans to off-balance- sheet trusts, which repackaged the pools into mortgage-backed securities. Banks then sold those securities to other off- balance-sheet vehicles they sponsored, concealing from investors that the securities were backed by deteriorating mortgages.
New York Attorney General Andrew Cuomo and the SEC are investigating Pension Placement Agents:
New York Attorney General Andrew Cuomo and the SEC say they’re investigating agents and money managers who used ties to public officials and kickbacks to buy and sell access to pension funds.
Placement agents call on institutions and wealthy individuals to sell investments on behalf of hedge, private- equity and venture-capital funds. Their targets go beyond public pensions, which held $2.23 trillion at the end of 2008, the U.S. Census Bureau said. They include corporate retirement plans, foundations, insurers and endowments. Such institutions held $27.1 trillion in assets at the end of 2006, according to the New York-based Conference Board’s latest annual tally.
In my recent series, Economic Indicators during the Roaring Twenties and Great Depression, I concluded that the indicators that were studied from the Deflationary period of 1920-1950 suggested that this recession might bottom out in about Q3 2009. But with anemic wage growth to say the least, such a weakly based recovery might be doomed at birth to be short-lived.
All the deflationary recessions from 1920 - 1950 followed a pattern. The CPI declined from the beginning of the recession and its YoY rate of decline bottomed immediately before the recession's end. M1 money supply followed a similar pattern, sometimes coincidentally, sometimes leading slightly. In all 6 of the deflationary recessions during the period of 1920-50, once M1 and CPI both declined at a decreasing rate, the recession was about to end.
The Economist has an in depth article on why California is so dysfunctional
ON MAY 19th Californians will go to the polls to vote on six ballot measures that are as important as they are confusing. If these measures fail, America’s biggest state will enter a full-blown financial crisis that will require excruciating cuts in public services. If the measures succeed, the crisis will be only a little less acute. Recent polls suggest that voters are planning to vote most of them down.
Regardless of when this recession ends, the malaise of working and middle class America will not be relieved until wages increase, and employment rates return to a robust level. Since unemployment is a lagging indicator, the news on that score is grim. Almost every analyst believes that there will be another "jobless recovery" such as those that followed the 1990 and 2001 recessions. Even after GDP bottomed and those recessions technically ended, there was an average 17 month increase in unemployment of .9% (or a 15% percent increase in the rate) followed by a 13.5 month decrease back to the rate at the "bottom" of the recession. If that pattern holds true again, then even if this recession bottoms shortly, unemployment will be 10.1% by July, rise to 11.3% by December 2010, and take until at least early 2012 to decrease back under 10%, looking like this graph:
Note this is U3 unemployment, so U6 unemployment will be correspondingly worse.
The truth is that we can fix Social Security for literally pennies a day per worker and don't need to pay attention to hysterical Henny Penny's. Social Security is mostly not broken and the part that kinda is (DI) is fixable. And we have (or will shortly) numbers to prove it.
Oh those socialists! The New York Times has a profile of Norway and their fiscal responsibility. Their economy grew while other shrank.
With a quirky contrariness as deeply etched in the national character as the fjords carved into its rugged landscape, Norway has thrived by going its own way. When others splurged, it saved. When others sought to limit the role of government, Norway strengthened its cradle-to-grave welfare state.
And in the midst of the worst global downturn since the Depression, Norway’s economy grew last year by just under 3 percent. The government enjoys a budget surplus of 11 percent and its ledger is entirely free of debt.
Maybe we can get off of the philosophies and move onto common sense, efficient, prudent fiscal and financial management.
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