^ When was this speech? Fekin hypocrite.
^ When was this speech? Fekin hypocrite.
Thanks for the vids on Barney Frank.
Here is an Op-Ed from the Asian Times. Comments and opinions. Some of the same notions raised, but what will be the fallout of all of this borrowing (running up deficits) and trying to get Americans to....borrow to spend, again. This was the problem, correct?
The US has decidedly embarked on the most expansionary fiscal and monetary policy in its history and has completely abandoned any notion of financial and fiscal discipline. These demand expansion policies are predicated on the wrong diagnosis by US policymakers, namely that the economic crisis is due to an excess of savings and therefore a lack of demand, thus completely ignoring the large US fiscal and external deficits and food and energy inflation.
The US household savings rate was practically at zero in 2003-2007, and US national savings rate was negative during the same period. The Barack Obama economic team, including National Economic Council director Lawrence Summers, Federal Reserve chairman Ben Bernanke, and Treasury Secretary Timothy Geithner, does not recognize that the financial crisis has been triggered by the inability of over-indebted households to pay mortgages and consumer [COLOR=green ! important][COLOR=green ! important]loans[/COLOR] and that banks have gone bankrupt because of excesses in credit and demand.
Unconscious of prevailing external deficits, they seem to believe that the crisis was due to an abundance in consumer goods, including food and petroleum.
[/COLOR]
Most US policymakers are university professors; they think in terms of classroom models and have little understanding or grasp of markets, economic reality and facts. US policymakers are puzzled by the rising unemployment and do not appreciate its monetary cause. With core inflation stacked at 1-2%, US policymakers see total price stability and do not see an impact of inflation on rising unemployment.
They believe US unemployment is a Keynesian phenomenon that can be simply eradicated through fiscal and monetary expansion. Accordingly, Bernanke and Summers predict full recovery by the end of 2009. But with external deficits rising to excessive levels in the last decade, the US economy has simply lost its capacity to save and grow. Our prediction of over six months ago of double-digit unemployment in the US will come to pass, but we still may have a chance to deflect years of stagflation if we act now.
Despite unsustainable fiscal deficits and household indebtedness, the Obama team has dwarfed George W Bush's financial disorder and has launched a US$787 billion stimulus package, a $275 billion housing subsidy, and created a budget with a deficit of $1.85 trillion, or 13% of gross domestic product. US government bailouts are reported at $12 trillion. Geithner announced a public-private bank with a capital of $1 trillion to buy toxic assets, called by economist Joseph Stiglitz as "cash for trash" and by fellow economist Jeffrey Sachs as "a robbery bank". It is a plan that will favor Wall Street at the expense of Maine Street, socializing losses and privatizing gains.
Bernanke has put in place a $1 trillion lending facility for consumers, allocated $600 billion for housing, and purchase programs of government debt. Taken together, Bernanke's unorthodox measures are projected to inject an additional $3.5 trillion in liquidity in 2009.
Because of extraordinary borrowing demands by the Treasury and the announcement of Treasury purchases by the Fed, Bernanke can no longer reverse any of his liquidity increase. The Fed's purchase of long-term government debt is reminiscent of the period just before the Federal Reserve-Treasury Accord of 1951 when the Fed had lost its independence and was forced to keep extremely low interest rates. Those low rates eroded savings and growth and kept inflation high.
Hyperinflation is in the works - not today, but it will come, just you wait. The incredible US fiscal and monetary expansion will tax the rest of the world heavily, a world that uses the dollar as a reserve currency. The US government will extract a huge seignorage benefit for its currency as a reserve asset. It will shift the cost of [COLOR=green ! important][COLOR=green ! important]bankruptcies[/COLOR][/COLOR]
and bailouts to dollar holders. In case of a stampede out of the dollar, the real value of dollar holdings could simply evaporate in real terms.
The IMF has been oblivious to the fact that global real economic growth reached 5-6% in 2004-2007 because of a fast expansion in demand that created pressure on food, oil and most other commodities. The IMF refuses to recognize that the financial crisis is a bankruptcy crisis, that debtors are mainly households and that most loans have either been totally lost or their collateral has depreciated substantially.Link & Entire: Asia Times Online :: Asian news and current affairs
They will rob millions of workers and pensioners of their real and hard won gains and spread misery around the world. Their monetary injection is a pure tax on holders of money and amounts to a redistribution of wealth in favor of debtors. The more they inflate the economy, the more they will deflate real activity and spread unemployment and despair.
obnoxious is a subjective term, so i'll not quarrel with you there, but what was hypocritical and disingenuous about what frank said?Originally Posted by venturalaw
the bush administration and the republican controlled congress were all about trumpeting the 'ownership society'. this is well documented and irrefutable.
secondly, the harsh reality is that not everyone is going to be able to own their own home. it would be nice to think it's true, but it's simply not true.
This pretty much lays it out the way it happened. Bush tried to regulate, and ran up against Frank and Dodd who were in bed (Frank literally) with the 2 largest lenders.
Thursday, October 09, 2008
Barney Frank and Christopher Dodd deserve blame for Fannie and Freddie
The Independent, a British newspaper, blames the Democrats for the failure of Fannie Mae and Freddie Mac:
What is the proximate cause of the collapse of confidence in the world's banks? Millions of improvident loans to American housebuyers. Which organisations were on their own responsible for guaranteeing half of this $12 trillion market? Freddie Mac and Fannie Mae, the so-called Government Sponsored Enterprises which last month were formally nationalised to prevent their immediate and catastrophic collapse. Now, who do you think were among the leading figures blocking all the earlier attempts by President Bush — and other Republicans — to bring these lending behemoths under greater regulatory control? Step forward, Barney Frank and Chris Dodd.
In September 2003 the Bush administration launched a measure to bring Fannie Mae and Freddie Mac under stricter regulatory control, after a report by outside investigators established that they were not adequately hedging against risks and that Fannie Mae in particular had scandalously mis-stated its accounts. In 2006, it was revealed that Fannie Mae had overstated its earnings — to which its senior executives' bonuses were linked — by a stunning $9.3billion. Between 1998 and 2003, Fannie Mae's executive chairman, Franklin Raines, picked up over $90m in bonuses and stock options.
Yet Barney Frank and his chums blocked all Bush's attempts to put a rein on Raines. During the House Financial Services Committee hearing following Bush's initiative, Frank declared: "The more people exaggerate a threat of safety and soundness [at Freddie Mac and Fannie Mae], the more people conjure up the possibility of serious financial losses to the Treasury which I do not see. I think we see entities that are fundamentally sound financially." His colleague on the committee, the California Democrat Maxine Walters, said: "There were nearly a dozen hearings where we were trying to fix something that wasn't broke. Mr Chairman, we do not have a crisis at Freddie Mac and particularly at Fannie Mae under the outstanding leadership of Mr Franklin Raines."
When Mr Raines himself was challenged by the Republican Christopher Shays, to the effect that his ratio of capital to assets (that is, mortgages) of 3 per cent was dangerously low, the Fannie Mae boss retorted that "our assets are so riskless, we could have a capital ratio of under 2 per cent".
Agree that Frank and Dodd screw things up. And so did, GWB and the whole system.
Look at the big picture.
GWB signed the ADDA - The American Dream Down payment Act.
Many players involved in this.
The bottom line is that the US government and the muppets in office know fvck all about being fiscally responsible... Doesn't matter which side of the aisle they sit or their partisan proclivity..
Some information:
Roubini: economic growth still a year away
The bottom of the economy is not going to be in three months, but rather toward the beginning or middle of next year.
Link: AMERICAblog News| A great nation deserves the truth: Roubini: economic growth still a year away
^ I agree from everything I've read from Larry Summer, Roubini to other economists.
Commercial real estate in the US is now taking a beating and expected to be bad for at least 2 years.
I think all of 2010 will have flat growth.
^ Gee, I thought Obama's group said different.
News on the First Quarter.
First Q of 2009 was rough.
Link & Entire: Economy gripped tight in recession's talons - Stocks & economy- msnbc.comEconomy gripped tight in recession's talons
First-quarter GDP drops a worse-than-expected 6.1 percent
April 29, 2009
WASHINGTON - The economy shrank at a worse-than-expected 6.1 percent pace at the start of this year as sharp cutbacks by businesses and the biggest drop in U.S. exports in 40 years overwhelmed a rebound in consumer spending.
The Commerce Department's report, released Wednesday, dashed hopes that the recession's grip on the country loosened in the first quarter. Economists surveyed by Thomson Reuters expected a 5 percent annualized decline.
Instead, the economy ended up performing nearly as bad as it had in the final three months of last year when it logged the worst slide in a quarter-century, contracting at a 6.3 percent pace. Nervous consumers played a prominent role in that dismal showing as they ratcheted back spending in the face of rising unemployment, falling home values and shrinking nest eggs.
In addition to Larry Summers, who is BO's economic advisor stating this, here are more econoists saying:
Link & Entire: Economy gripped tight in recession's talons - Stocks & economy- msnbc.comApril, 29, 2009The national jobless rate is now at a quarter-century high of 8.5 percent and is expected to hit 10 percent by the end of this year. It will probably rise a bit higher in early 2010 before starting to slowly drift downward. Still, the Fed predicts unemployment will stay elevated into 2011, and economists don't think it will return to normal — around a 5 percent jobless rate — until 2013.
I expect more goal posts to be moved. In which direction I cannot predict, but I am biased in favor of pushing the goal posts back, as I think it will be slow for a while, for many reasons.
Politicians move with the wind, and also attempt to placate. Economists often cannot predict the future very well at all.
China bought less Treasuries in January and February. Start of a trend? I think so.
http://rawstory.com/news/afp/China_h..._04302009.htmlChina, wary of the troubled US economy, has already "canceled America's credit card" by cutting down purchases of debt, a US congressman said Thursday.
China has the world's largest foreign reserves, believed to be mostly in dollars, along with around 800 billion dollars in US Treasury bonds, more than any other country.
But Treasury Department data shows that investors in China have sharply curtailed their purchases of bonds in January and February.
Representative Mark Kirk, a member of the House Appropriations Committee and co-chair of a group of lawmakers promoting relations with Beijing, said China had "very legitimate" concerns about its investments.
"It would appear, quietly and with deference and politeness, that China has canceled America's credit card," Kirk told the Committee of 100, a Chinese-American group.
"I'm not sure too many people on Capitol Hill realize that this is now happening," he said.
The Republican lawmaker said that China was justified in concerns about returns from finance giants Fannie Mae and Freddie Mac, which were bailed out by the US government due to the financial crisis.
Kirk said he was the first member of Congress to tour the Bureau of Public Debt, which trades bonds, and was alarmed at how much debt was being bought by the US Federal Reserve due to absence of foreign investors.
"There will come a time where the lack of Chinese participation may have a significant impact," Kirk said.
"We should track that, because up until last month they were the number one provider of currency to the United States and now they're gone."
With China's economy also hit by the global economic crisis, Premier Wen Jiabao has openly voiced concern about the status of his country's investments in the United States.
China has also floated replacing the dollar as the key international currency with a basket of units bringing in the euro, sterling and yen.
^ Of course. Would you bankroll Obama's spending bill for welfare of the state? There ain't no payback.
^ US was the main buyer of Chinese goods, MM. And spent alot.
Here's an Op-Ed on declining wages. I haven't followed the issue of "wages," in the last year. The point of this article: The Paradox of Thrift. And how this PoT affects the US economy.
Here's is an interest phenomenon: employers cutting wages can cause, higher unemployment:Op-Ed Columnist
Falling Wage Syndrome
By PAUL KRUGMAN
Published: May 3, 2009
Wages are falling all across America.
Skip to next paragraph Fred R. Conrad/The New York Times
Paul Krugman
Some of the wage cuts, like the givebacks by Chrysler workers, are the price of federal aid. Others, like the tentative agreement on a salary cut here at The Times, are the result of discussions between employers and their union employees. Still others reflect the brute fact of a weak labor market: workers don’t dare protest when their wages are cut, because they don’t think they can find other jobs.
Whatever the specifics, however, falling wages are a symptom of a sick economy. And they’re a symptom that can make the economy even sicker.
First things first: anecdotes about falling wages are proliferating, but how broad is the phenomenon? The answer is, very.
It’s true that many workers are still getting pay increases. But there are enough pay cuts out there that, according to the Bureau of Labor Statistics, the average cost of employing workers in the private sector rose only two-tenths of a percent in the first quarter of this year — the lowest increase on record. Since the job market is still getting worse, it wouldn’t be at all surprising if overall wages started falling later this year.
But why is that a bad thing? After all, many workers are accepting pay cuts in order to save jobs. What’s wrong with that?
The answer lies in one of those paradoxes that plague our economy right now. We’re suffering from the paradox of thrift: saving is a virtue, but when everyone tries to sharply increase saving at the same time, the effect is a depressed economy. We’re suffering from the paradox of deleveraging: reducing debt and cleaning up balance sheets is good, but when everyone tries to sell off assets and pay down debt at the same time, the result is a financial crisis.
Link & Entire: http://www.nytimes.com/2009/05/04/op...rugman.html?emAnd soon we may be facing the paradox of wages: workers at any one company can help save their jobs by accepting lower wages, but when employers across the economy cut wages at the same time, the result is higher unemployment.
Here’s how the paradox works. Suppose that workers at the XYZ Corporation accept a pay cut. That lets XYZ management cut prices, making its products more competitive. Sales rise, and more workers can keep their jobs. So you might think that wage cuts raise employment — which they do at the level of the individual employer.
But if everyone takes a pay cut, nobody gains a competitive advantage. So there’s no benefit to the economy from lower wages. Meanwhile, the fall in wages can worsen the economy’s problems on other fronts.
In particular, falling wages, and hence falling incomes, worsen the problem of excessive debt: your monthly mortgage payments don’t go down with your paycheck. America came into this crisis with household debt as a percentage of income at its highest level since the 1930s. Families are trying to work that debt down by saving more than they have in a decade — but as wages fall, they’re chasing a moving target. And the rising burden of debt will put downward pressure on consumer spending, keeping the economy depressed.
Things get even worse if businesses and consumers expect wages to fall further in the future. John Maynard Keynes put it clearly, more than 70 years ago: “The effect of an expectation that wages are going to sag by, say, 2 percent in the coming year will be roughly equivalent to the effect of a rise of 2 percent in the amount of interest payable for the same period.” And a rise in the effective interest rate is the last thing this economy needs.
Concern about falling wages isn’t just theory. Japan — where private-sector wages fell an average of more than 1 percent a year from 1997 to 2003 — is an object lesson in how wage deflation can contribute to economic stagnation
Last edited by barbaro; 04-05-2009 at 10:56 PM.
"Quantative Easing" sounds big, but in my ignorance it sounds like things are worse then we're told:
FOMC announces further quantitative easing
19th March 2009
The Federal Reserve on Wednesday embarked further on a quantitative easing approach to monetary policy, announcing a plan to buy an additional $300 billion of long-term US Treasuries as its stepped up its efforts to inject liquidity into its financial system. The move surprised investors who had expected the Central Bank to wait and see how the effects of previously announced measures would filter through to the wider economy.
Concluding its two-day policy meeting, the Fed said it would buy up to $300 billion of long-dated Treasuries over the next six months, its first large-scale purchases of government debt since the 1960’s. In addition to purchasing Treasury debt, the Fed also announced that it would expand an existing programme to buy debt and securities issued by mortgage finance agencies by $850 billion to $1.45 trillion in an effort to bring down mortgage rates.
The FOMC unanimously decided to keep its target for overnight interest rates in a zero to 0.25% range, unchanged since December 2008. The Fed added that rates would remain low for an “extended period”, a more explicit message to hold borrowing costs steady for a prolonged period of time than it had offered in recent months.
Link: FOMC announces further quantitative easing : HiFX Plc
aint hindsight wonderfull
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