While recovering from another illness I read an interesting piece on Daily Kos. I originally was writing this up as a response to Billmon's excellent article today, Chocolate Covered Cotton. For the record, he makes some very valid points. The whole system is now burnt, and we the average citizen has to pay for what really is fraud on a massive scale. Saying all this, I have to take issue on the idea on the concept of CDOs, Swaps and the entire idea of securitization of loans being total junk. That isn't to say that whats out there isn't toxic, but I'm looking forward.
There is a limited window of opportunity, when an economic crisis evolves from a manageable event to an out-of-control monster. The current economic crisis is getting rather long in the tooth, and yet the global political and economic leaders still show no ability to fully grasp the depth and complexity of the situation.
As of this moment there are two evolving problems that are only a few months away from being out of anyone's control. One of the problems is domestic, the other lies on the other side of the Atlantic. Both of them have the potential for catastrophic consequences.
Bailing out banks can be very costly. Suddenly Britain has a public debt ratio comparable to Japan's, but without the trade surpluses and high savings rate.
The government's rescue of some of Britain's biggest banks will more than double the national debt at a stroke after government statisticians decided to classify Lloyds and Royal Bank of Scotland as public corporations. Their liabilities – up to £1.5tn – will be added to the taxpayer's balance sheet.
That could push the country's debt levels up to 150% of national income, from a three-decade high of 48% now. The public sector net debt has already been swollen by £90bn of Northern Rock liabilities and, as of yesterday, £50bn of Bradford & Bingley's liabilities. But the two latest additions, which the ONS estimates could total between £1tn and £1.5tn, would dwarf those.
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by Zach Carter, Media Consortium MediaWire Blogger
President Barack Obama unveiled his administration's plan to fight foreclosures on Wednesday. Unfortunately, the most important element of the program will require Congressional action—and the banking and business lobbies are already on the attack. The Homeowner Affordability and Stability Plan has three chief components:
At last someone states the obvious. ex-Clinton Labor Secretary Robert Reich wrote on his blog:
Whether it’s stimulus or bailout, policy makers must remember that American companies aren’t the same as American workers – and our first responsibility is to the latter.
I have felt like a lone drummer, pounding, over and over again that any government expenditures should be tied to U.S. citizens, U.S. workers. That's the whole point, to generate income, to stimulate through Keynesian economics. In Buy American, I pointed out how, due to global labor arbitrage and multinational corporations, very easily the United States could be stimulating it's trade deficit, other nation's GDP and not U.S. domestic income.
The bank’s Swiss advisers traveled to the U.S. a few times a year to solicit customers at art shows, as well as yachting and other sporting events, the SEC said. To conceal their activities, advisers carried encrypted laptop computers and got training from the bank on avoiding detection, the agency said.
UBS settled the probes after a series of disclosures that followed the guilty plea last June of a former private banker, Bradley Birkenfeld.
Isn't this one a reality check. Business week points out we have hit another milestone, the stock market decline of 10 year S&P 500 investments are now worth 50% and that happens to be the Great Depression losses.
During the darkest 10 years of the Great Depression, from September 1929 to September 1939, the stock market dropped roughly 50%, adjusted for inflation. With today's drop in the stock market, the U.S. has now matched that unfortunate milestone. The Standard & Poor's 500-stock index, adjusted for inflation, is now down about 50% over the past 10 years from Feb. 17, 1999 to Feb. 17, 2009
Of course we're looking at the dot con bubble as a starting point...but didn't we have a series of bubbles in 1929 as well?
The article continues on how you have still made a 30% gain on home prices...
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