Tag Archives: bailout

Broken Fences | Bruce Krasting / Zero Hedge

When I (and others) book a job three months in advance, the contractor can hire more workers knowing when checks will be coming in. My visibility creates the contractors visibility. The predictability of revenue creates the opportunity for economic expansion and job creation.

The Federal Reserve is operating monetary policy using a simple formula:

Lower interest rates across all maturities ALWAYS increases economic growth.

My personal example proves this formula to be flawed. I think the formula is more complicated:

Lowering interest rates across all maturities has both positive and negative consequences. As interest rates approach zero, (with the prospect that they will remain so for years to come) the negative consequences outweigh any benefits.

The idea that lower interest rates are hurting savers is an old one. The question is, “How significant are the negative consequences of low interest rates?” The multi-decade efforts in Japan to reflate an economy with low interest rates is a shining example of policy that has not worked.

Read this article, you will have, in nutshell, exactly our economic situation. Read at least some of the comments. If you filter out the hyperbole of a few, the comments form a kind of crystal ball, with some sobering predictions.

JPMorgan has $2 billion trading loss, reputation hit | Reuters

JPMorgan Chase & Co said on Thursday that it suffered a $2 billion trading loss from a failed hedging strategy, a disclosure that hit financial stocks and the reputation of the bank and its prominent CEO, Jamie Dimon.

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Dexia’s Belgian Bank To Be 100% Nationalized | ZeroHedge

We are waiting for more details but with that we have Belgium-Dexia CDS compression, an imminent Belgian rating downgrade, and the unleashing of the completely unpredictable domino effect.

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Lords of the shadow inventory | Dr. Housing Bubble Blog

Yet the market we currently have is really a large benefit to investment banks and the government with a smaller impact on the rest of Americans. At this point the banks and government are largely fused into one. The typical American is simply squeezed in the middle.

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How the Deficit Got This Big | NYTimes.com

Despite what antigovernment conservatives say, non-defense discretionary spending on areas like foreign aid, education and food safety was not a driving factor in creating the deficits. In fact, such spending, accounting for only 15 percent of the budget, has been basically flat as a share of the economy for decades. Cutting it simply will not fill the deficit hole.

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‘Anonymous’ Allegedly Demands Resignation Of Fed Chair Bernanke

In the video, uploaded on Saturday, the anonymous group, self-described as loosely connected and Internet based, allegedly claims that the Federal Reserve is guilty of “crimes against humanity” and calls for the resignation of Ben Bernanke. In addition, the group would seem to demand the break up of the Federal Reserve and other major banking institutions

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The Obama Deception: Why Cornel West Went Ballistic – Chris Hedges | Truthdig

“He makes a bee line to me right after the talk, in front of everybody,” West says. “He just lets me have it. He says, ‘You ought to be ashamed of yourself, saying I’m not a progressive. Is that the best you can do? Who do you think you are?’ I smiled. I shook his hand. And a sister hollered in the back, ‘You can’t talk to professor West. That’s Dr. Cornel West. Who do you think you are?’

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Karma Matters | Peter Mehit

Karma is the concept that what you do is done to you. You do dirt, you get dirt. You do good, good comes to you. The problem is that a lot of people want to specify their karmic reward. It doesn’t work like that. The good you do today is not instantly rewarded, or placed on account like frequent flier miles. It is distributed based on forces unknown and unseen to us. Your karmic good may not come back to you in ways you recognize, but that does not change your duty to do it. It is more faith than science but it is real and it is in operation all the time.

Recently, I’ve witnessed tea party enthusiasts recoiling in horror when Jerry Brown had the temerity to do what they say they want done, slash spending. “It’s okay to kill other people’s programs, just not mine,” they exclaim. I’ve seen progressives dismiss those concerned about the massive debt as knuckle dragging throwbacks in an attempt to keep the money flowing. What I don’t see very often is truth or constructive conversation. Budgets will be cut, pain will be felt.  It will be exquisitely bi-partisan.

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Paul Ryan’s Budget Arithmetic Makes No Sense | zero hedge

How is lowering the corporate tax rate going to change that exactly? Uh, it’s not. What it would do, is create a wider budget gap and send more politicians scratching their heads over why. So, it’s really just a super-bad and dumb idea.

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The Testimony of Simon Johnson | Congressional Oversight Committee

“…Powerful people at the heart of our financial system still have the incentive and ability to take on large amounts of reckless risk – through borrowing large amounts relative to their equity.

There is an insularity and arrogance to policymakers around capital requirements that is distinctly reminiscent of the Treasury-Fed-Wall Street consensus regarding derivatives in the late 1990s – i.e., officials are so convinced by the arguments of big banks that they dismiss out of hand any attempt to even open a serious debate.

Next time, when our largest banks get into trouble, they may be beyond “too big to fail”. As seen recently in Ireland, banks that are very big relative to an economy can become “too big to save” …

…what the Bank of England refers to as a doom loop“.

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