"George Washington's Blog." This channel is automatically updated! http://myprops.org/channels/Washingtons-Blog/ Sat, 21 Nov 2009 01:28:14 GMT http://backend.userland.com/rss RSS.NET: http://www.rssdotnet.com/ The American people are starting to stand up to Wall Street. Shareholder Revolt Some of Goldman Sach's biggest shareholders are demanding that execute compensation be reduced. As the Wall Street Journal notes: Their complaints in private conversations with the company and at analyst meetings show how anger over its big-money culture is spilling into the ranks of investors who typically shy away from debates over Wall Street pay. Protests There were the protests outside of the ... http://myprops.org/content/America-Stands-Up-To-Wall-Street/ Sat, 21 Nov 2009 01:03:09 GMT In an example of the collapsing real estate market, the Detroit Silverdome - which was almost sold last year for $20 million dollars - was just sold for $583K. Taxpayers paid $55.7 million to build the Silverdome in the 1975, the Pistons played there between 1978 and 1988, and the Lions played there from 1975-2001. The Daily Finance points out that $583k sounds more like the price for a New York Studio than a giant sports arena. Print this post http://myprops.org/content/Example-of-the-Commercial-Real-Estate-Crash-Silverdome-Sells-for-583K/ Fri, 20 Nov 2009 22:28:38 GMT Congressman Watt tried to de-rail the bill to audit the Federal Reserve (H.R. 1207) with a fake alternate bill. See this, this, this and this. Fortunately, the House Financial Services Committee approved H.R. 1207 by 43-26, and rejected Watt's bill. In addition, Congressmen Grayson and Paul's bill requiring written concurrence by the Treasury Secretary prior to the Federal Reserve engaging in a foreign currency swap passed the House Financial Services Committee by a voice vote today. If ... http://myprops.org/content/House-Financial-Services-Committee-APPROVES-Bill-to-Audit-the-Fed-REJECTING-Watts-Fake-Alternate-and-to-Rein-In-Foreign-Currency-Swaps/ Fri, 20 Nov 2009 05:36:47 GMT Congressman DeFazio said yesterday: We think it is time, maybe, that we turn our focus to Main Street ... Unfortunately, the President has an adviser from Wall Street, Larry Summers, and a Treasury Secretary from Wall Street, Timmy Geithner, who don't like that idea. They want to keep the TARP money either to continue to bail out Wall Street...or to pay down the deficit. That's absurd... "[Obama] is being failed by his economic team ... We may have to sacrifice just two more jobs ... http://myprops.org/content/Congressman-DeFazio-We-May-Have-To-Sacrifice-Just-Two-More-Jobs-Summers-and-Geithner-To-Get-Millions-Back-For-Americans/ Thu, 19 Nov 2009 16:50:03 GMT Emailed to me by a contact in Congress. November 18, 2009 The Honorable Barney Frank Chairman, House Financial Services Committee 2129 Rayburn House Office Building Washington, DC 20515 The Honorable Christopher Dodd Chairman, Senate Committee on Banking, Housing, & Urban Affairs 534 Dirksen Senate Office Building Washington, DC 20510 Dear Chairman Frank and Chairman Dodd: In light of Tuesday's report released by the Special Inspector General for the Troubled Assets ... http://myprops.org/content/6-Members-of-Congress-Cals-for-Complete-Audit-of-Fed-in-Light-of-AIG-Counterparty-Fiasco/ Wed, 18 Nov 2009 21:10:05 GMT President Obama, Vice President Biden and Attorney General Holder have all made some very hard-hitting statements over the last two days. Obama told Fox news that the United States' climbing national debt could drag the country into a double-dip recession: "I think it is important, though, to recognize if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a ... http://myprops.org/content/Obama-More-Debt-Could-Push-U.S.-Into-Double-Dip-Recession-Biden-Socialism-For-The-Rich-And-Capitalism-For-The-Poor-Holder-Prosecute-Fraud/ Wed, 18 Nov 2009 17:42:17 GMT A number of unions and consumer groups have signed a letter endorsing Ron Paul and Alan Grayson's call to audit the Federal Reserve. Here's their letter: House Financial Services Committee 2129 Rayburn House Office Building Washington, D.C. 20515 November 18, 2009 Dear Chairman Frank, Ranking Member Bachus, and Members of the Committee, As members of Americans for Financial Reform, a coalition of nearly 200 consumer, employee, investor, community and civil rights groups, we ... http://myprops.org/content/Unions-and-Consumer-Groups-Support-Bill-to-Audit-the-Fed-Call-Congress-To-Support-The-Effort/ Wed, 18 Nov 2009 17:15:30 GMT In response to an article I wrote, Carol says: We need is someone to set the agenda, to Name a Day for the country's disenfranchised to show up in Washington. And I believe we're all disenfranchised at the moment. Alright, unless somebody has a better idea ... I'm declaring January 9th National Citizens Day. National Citizens Day will be a day to: (1) Honor and celebrate the power of the American Citizen (2) The fact that the American Citizen is the ultimate boss to whom the ... http://myprops.org/content/January-9th-National-Citizens-Day/ Wed, 18 Nov 2009 01:28:26 GMT The New York Federal published a report in July entitled "The Shadow Banking System: Implications for Financial Regulation". One of the main conclusions of the report is that leverage undermines financial instability: Securitization was intended as a way to transfer credit risk to those better able to absorb losses, but instead it increased the fragility of the entire financial system by allowing banks and other intermediaries to "leverage up" by buying one another's securities. In ... http://myprops.org/content/The-Fed-Talking-About-Reducing-Leverage-Is-Like-A-Crack-Cocaine-Dealer-Handing-Out-Just-Say-No-Stickers/ Tue, 17 Nov 2009 19:41:11 GMT My first reaction at seeing the headlines that the Japanese economy grew more than expected in July-Sept was excitement. After all, the main news coming out of Japan has been gloom and doom recently (and see this). But as Bloomberg points out: The acceleration of Japan's economy to the fastest growth pace in more than two years masked a slide in prices of goods and services that threatens to temper the nation's recovery... Sustained price declines threaten to curtail a corporate- ... http://myprops.org/content/Japan-Not-Out-of-the-Woods/ Tue, 17 Nov 2009 18:47:11 GMT I received an advance copy of the Special Inspector General for Tarp's Report called "Factors Affecting Efforts to Limit Payments to AIG Counterparties", which will be released tomorrow. (It will be posted tomorrow for your review) The report reveals that at least one counterparty indicated that it was willing to take a reduced payout on its credit default swaps. In other words, then-head of the Federal Reserve Bank of New York - Tim Geithner - wouldn't have had to even play ... http://myprops.org/content/Special-Inspector-AIG-Counterparty-VOLUNTEERED-to-Take-a-Haircut-But-Geithner-Refused/ Tue, 17 Nov 2009 01:10:46 GMT Predators ... Who become too cocky ... Can become prey ... http://myprops.org/content/When-the-Predator-Becomes-the-Prey/ Tue, 17 Nov 2009 00:29:07 GMT As I have repeatedly written, unemployment will worsen because the too big to fails aren't lending. See this. Bernanke just said the same thing: Federal Reserve Chairman Ben Bernanke on Monday blamed banks for slowing the recovery and keeping unemployment high. Despite hundreds of billions in dollars in taxpayer bailouts, the nation's banks have dramatically reduced their lending this year. "Banks' reluctance to lend will limit the ability of some businesses to expand and ... http://myprops.org/content/Bernanke-Blames-Banks-For-Slow-Recovery-and-High-Unemployment-.-.-.-Then-Gives-Them-a-Pat-on-the-Back-and-a-Wink/ Mon, 16 Nov 2009 22:34:06 GMT Rob Kirby seems like a fairly respectable fellow. But I am thoroughly agnostic about Kirby's claim that a large portion of the world's gold has been cut with tungsten. Big claims require big evidence, and I haven't seen it yet. However, we do know that at least some gold held by central banks is fake. For example, as the BBC noted last year, some 90kg of gold held by Ethiopia's central bank was really gold-plated steel. Obviously, this is not a first world country or banking center ... http://myprops.org/content/At-Least-One-Central-Bank-Held-Fake-Gold/ Mon, 16 Nov 2009 21:33:23 GMT How come the Wall Street robber barons who brought on the financial crisis are still calling the shots and pillaging the economy? Sure, Congress is bought and paid for, and the fox is guarding the chicken coop in the Executive Branch, with Summers and Geithner calling the shots. The American people are furious at the giant banksters who have picked their pockets so they can make huge bonuses. But - so far - the American people have for the most part kept their volcanic anger to ... http://myprops.org/content/Why-Are-the-Bad-Guys-Winning/ Mon, 16 Nov 2009 18:19:33 GMT Famed short trader Jim Chanos thinks that China's economy has real problems and is overvalued. He's therefore shorting China. As Politico writes. Now, Chanos says he has found another "trust me" story: China. And he is moving to short the entire nation's economy. Washington policymakers would do well to understand his argument, because if he's right, the consequences will be felt here. Chanos and the other bears point to several key pieces of evidence that China is heading for a ... http://myprops.org/content/Chanos-Shorts-China/ Mon, 16 Nov 2009 17:58:49 GMT PhD economist Marc Faber predicts that the U.S. will launch a war to distract people from the bad economy. China's largest media outlets - Sohu.com - wrote in October 2008 that the leading U.S. military advisor, the Rand corporation, lobbied the Pentagon for a war to be started with a major foreign power in an attempt to stimulate the American economy: According to French media, well-known U.S. think tank RAND Corporation, the Ministry of Defense has submitted an evaluation report ... http://myprops.org/content/War-ALWAYS-Causes-Recession/ Sun, 15 Nov 2009 23:24:57 GMT Newsweek has a one year retrospective on the Tarp bailouts which contains the following important quotes: "It hasn't done what [Paulson] said it would," says Jerry O'Driscoll, a former vice president of the Dallas Federal Reserve and a senior fellow at the Cato Institute. "Yes, it saved some banks from going under, but did it restore the health of the banking system? Absolutely not." *** "They didn't extract sensible terms," says Simon Johnson, former chief ... http://myprops.org/content/Former-Vice-President-of-Dallas-Fed-Tarp-Didnt-Restore-Health-of-Banking-System/ Sat, 14 Nov 2009 17:38:18 GMT I've written two essays attempting to disprove "military Keynesianism" - the idea that military spending is the best stimulus. See this and this. In response, a reader challenged me to prove that anyone would advocate military spending or war as a fiscal stimulus. In fact, the concept of military Keynesianism is so widespread that there are some half million web pages discussing the topic. And many leading economists and political pundits sing its praises. For example, ... http://myprops.org/content/Would-Government-Really-Start-a-War-to-Try-to-Stimulate-the-Economy/ Sat, 14 Nov 2009 07:35:16 GMT Well-known Austrian economist Friedrich von Hayek wrote: "Emergencies" have always been the pretext on which the safeguards of individual liberty have eroded. Rahm Emanuel famously said: Never let a serious crisis go to waste. What I mean by that is it's an opportunity to do things you couldn't do before. Naomi Klein documented in the Shock Doctrine that the Neoliberals and Chicago school followers advocated a kind of "disaster capitalism". Specifically, whenever a ... http://myprops.org/content/Hayek-Emergencies-Have-Always-Been-the-Pretext-on-Which-the-Safeguards-of-Individual-Liberty-Have-Eroded/ Sat, 14 Nov 2009 01:15:38 GMT As I have repeatedly written (see this and this), the new derivatives legislation is so bad that it probably increases - rather than decreases - the risk to the financial system. William Greider has a great piece in The Nation pointing out: Who drafted this dubious piece of legislation? Bankers (or their lawyers) did. The leading sellers of derivatives are an exclusive club of five very large financial institutions--Citigroup, JPMorgan Chase, Bank of America, Morgan Stanley and Goldman ... http://myprops.org/content/New-Derivatives-Legislation-Was-Probably-Written-by-JPMorgan-and-Goldman-Sachs/ Fri, 13 Nov 2009 20:56:57 GMT Former international merchant banker and Money Morning contributing author Martin Hutchinson notes that South Korea: Grew at an annual rate of 11% in the second quarterWill report a second-consecutive double-digit advance when it reports on MondayKorea's current account balance once again shows a healthy surplus, and Fitch's said that a downgrade would be unnecessary, and that Korea could expect to run a budget surplus in 2011The Korea Composite Stock Price Index (KOSPI) is up 65% from its ... http://myprops.org/content/South-Korean-Economy-Grew-at-an-11-percent-Annual-Rate-in-Q2/ Fri, 13 Nov 2009 18:55:48 GMT AlixPartners provides an interesting fact concerning Mexico. As Keith Fitz-Gerald - chief investment strategist for Money Morning and The Money Map Report - notes: According to corporate consultant AlixParnters, Mexico has leapfrogged China to be ranked as the cheapest country in the world for companies looking to manufacture products for the U.S. market. India is now No. 2, followed by China and then Brazil. In fact, Mexico's [has such big] cost advantages and has become so cheap that ... http://myprops.org/content/Mexico-Becomes-Worlds-Cheapest-Country-for-Manufacturing-U.S.-Goods/ Fri, 13 Nov 2009 18:43:53 GMT Former chief IMF economist Simon Johnson points out that the U.S. is intentionally weakening the dollar in order to bail out the too big to fails: To bail out our banks, we need cheap money, and this implies some inflation. To finance our current account deficit, investors need to think they are buying inexpensive assets from us. Everything points to a cheaper dollar... Short-term rates (controlled by the Fed) will stay low, while long-term rates (market-determined and affected by trust in ... http://myprops.org/content/The-Treasurys-...-Close-Connections-to-Goldman-Sachs-Citigroup-and-Other-Major-Investment-Banks-Illustrate-How-Our-Own-Doom-Machine-Functions/ Fri, 13 Nov 2009 18:28:27 GMT Senator Byron Dorgan had some harsh words for the too big to fails: It's one of the most frustrating things. We essentially have had modern-day bank robbers -- except that they wore gray suits and not masks -- and there's been no accountability for it ... Every day we see energy speculators, war profiteers, managed health-care providers, media propagandists, and/or financiers given some unfair advantage over the average consumers and taxpayers, and the cumulative effect of the American ... http://myprops.org/content/Senator-Dorgan-We-Essentially-Have-Had-Modern-Day-Bank-Robbers-...-and-Theres-Been-No-Accountability-...-Theres-No-Question-the-System-Is-Rigged/ Fri, 13 Nov 2009 18:15:34 GMT Yesterday, I pointed out that a study by one of the leading economic modeling companies shows that military spending increases unemployment and decreases economic growth. Indeed, an economic paper published in 2007 by The Political Economy Research Institute at the University of Massachusetts, Amherst - entitled "The U.S. Employment Effects of Military and Domestic Spending Priorities" - concludes: We present in Table 1 our estimate of the relative effects of spending $1 billion ... http://myprops.org/content/Confirmed-Defense-Spending-Creates-Fewer-Jobs-Than-Other-Types-of-Spending/ Thu, 12 Nov 2009 07:10:54 GMT As I pointed out in September, there are strong arguments that we have "peak gold" - in other words, that the relatively easy-to-reach gold supplies are gone, and so supplies are getting more and more expensive to locate and extract. Now, the world's biggest gold producer - Barrick - is saying the same thing: Aaron Regent, president of the Canadian gold giant [Barrick], said that global output has been falling by roughly 1m ounces a year since the start of the decade. Total mine ... http://myprops.org/content/Barrick-Confirms-that-We-Have-Peak-Gold/ Thu, 12 Nov 2009 07:01:38 GMT As I have previously noted, Japan's population is rapidly aging, and the U.S. age pyramid - while not as bad - is not nearly as young as that of Brazil or : Which countries have the best demographics? Let's start by looking at the "age pyramid" for the United States. The following 2 charts from the National Institutes of Health shows that the population is aging: This graphic (courtesy of Ed Stephan) shows the U.S. age pyramid from from 1950 through 2050: male ... http://myprops.org/content/SPs-Chief-Economist-Confirms-the-Importance-of-Age-Demographics/ Thu, 12 Nov 2009 01:27:19 GMT I have written extensively on the fact that unemployment will continue rising in America for some time, which will make a real, sustainable recovery very difficult. The heads of two Federal Reserve banks are now saying the same thing: Janet Yellen, president of the Federal Reserve Bank of San Francisco, and Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, warned that rising unemployment could crimp consumers, restraining the recovery. Consumer spending accounts for about 70 ... http://myprops.org/content/Military-Spending-is-INCREASING-Unemployment-and-REDUCING-GDP/ Wed, 11 Nov 2009 17:44:11 GMT In response to Senator Dodd's proposed bill - which uses a lot of buzzwords that sound like reform, but really just maintains the status quo - several writers have forcefully argued that we need to focus on the actual purpose of banking. As a number of people have pointed out, any bill which is 1,136 pages long will contain loopholes big enough to drive a truck through and more holes than swiss cheese. Almost no one will actually read the bloody thing, those that do will see that it is rife ... http://myprops.org/content/Lets-Simplify-the-Debate-on-Financial-Reform/ Wed, 11 Nov 2009 17:43:49 GMT Karl Denninger - who is always worth reading - shares 2 stunning charts which show the inverse correlation between the dollar and the Dow: That is an overlaid chart (as close as I can easily get them to register) on the dollar and The S&P 500 from the March lows to today. Notice the near-perfect inverse correlation. The Dollar goes up, the market goes down. The Dollar goes down, the market goes up. Now today, literally minute-by-minute: Same correlation - near-perfect. Print this http://myprops.org/content/Perfect-Inverse-Correlation-Between-the-Dollar-and-the-Dow/ Wed, 11 Nov 2009 06:38:52 GMT A report by University of California, Berkeley economics professor Emmanuel Saez concludes that income inequality in the United States is at an all-time high, surpassing even levels seen during the Great Depression. The report shows that: Income inequality is worse than it has been since at least 1917 "The top 1 percent incomes captured half of the overall economic growth over the period 1993-2007" "In the economic expansion of 2002-2007, the top 1 percent captured two thirds ... http://myprops.org/content/Statistics-Wealth-in-America-and-in-Congress/ Wed, 11 Nov 2009 01:14:26 GMT I posted an 11-page summary of Senator Dodd's financial reform bill earlier today. After receiving input from one of the top experts on credit rating agencies and various other smart people, I have now formed an opinion about Dodd's bill. Specifically, Dodd's bill - while sounding good - is really an all-out attempt to save the current, broken system. Dodd's bill contains a number of concepts and catch-phrases that sound like reform. But the bill would actually: Keep the current ... http://myprops.org/content/Senator-Dodds-Bill-Trying-to-Prop-Up-a-Broken-System/ Tue, 10 Nov 2009 23:23:38 GMT A source on the Hill sent me the following summary of Senator Dodd's proposed financial reform bill. My source notes: The summary leaves out Sections 1201-1204, which contain serious changes to the Federal Reserve bank structures, transparency elements, and restrictions on 13(3). Comments and observations are always welcome. Dodd said at the press conference that this is a discussion draft, and that there will be room for comments and feedback in the next few weeks. The markup will ... http://myprops.org/content/Summary-of-Senator-Dodds-Proposed-Financial-Reform-Bill/ Tue, 10 Nov 2009 19:39:23 GMT I have previously written numerous articles documenting about sovereign credit ratings, asking whether the UK would lose its AAA rating, and pointing out that the credit rating agencies were playing games to avoid stripping the U.S., UK, Ireland and Spain of their AAA ratings. Reuters notes today that the UK is in danger of losing its AAA rating: Britain is most at risk among the big economies to lose its top-notch credit rating, while Japan faces a review of its rating if government debt ... http://myprops.org/content/Sovereign-Credit-Ratings-China-Up-...-UK-US-Japan-and-France-In-Question/ Tue, 10 Nov 2009 18:04:55 GMT Federal Reserve Governor Daniel Tarullo argues that we should not reimpose Glass-Steagall because: Financial institutions that experienced so many problems -- such as Bear Stearns and Lehman Brothers, which did not have commercial banking operations -- would still have posed a "too big to fail" threat had commercial banks been prohibited from owning investment banks prior to the crisis. He also said that commercial banks without investment-banking issues have, in the past, had ... http://myprops.org/content/Tarullo-Because-People-Die-of-Both-Poisoning-AND-Car-Crashes-We-Should-Not-Ban-Arsenic/ Tue, 10 Nov 2009 02:11:58 GMT As I have previously noted, the world's top energy economist - the International Energy Agency's Dr. Fatih Birol - has previously predicted that we will have peak oil by 2020. And I have previously disclosed that an insider told me we already have peak oil. Now, an article in the Guardian states that official oil estimates have been intentionally inflated to prevent panic: The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the ... http://myprops.org/content/Two-Senior-IEA-Officials-Oil-Reserves-Have-Intentionally-Been-Overstated-to-Prevent-Panic-Buying-.-.-.-Peak-Oil-is-Real/ Mon, 09 Nov 2009 23:44:10 GMT In July, I pointed out that high-frequency trading is distorting the market, and that - at least on some days - many more high-frequency trades occur than trades by human investors. Friday, I quoted Senator Ted Kaufman: The chief executive of one of the country's biggest block trading dark pools was quoted two weeks ago as saying that the amount of money devoted to high-frequency trading could "quintuple between this year and next." I know that technical market systems such as ... http://myprops.org/content/Can-Technical-Indicators-Still-Work-When-High-Frequency-Trading-Dominates-the-Market/ Mon, 09 Nov 2009 22:07:37 GMT When Mahatma Gandhi was asked what he thought about Western civilization, he answered: I think it would be a good idea.I feel the same way about free market capitalism. It would be a good idea, but it is not what we have now. Instead, we have either socialism, fascism or a type of looting. If people want to criticize capitalism and propose an alternative, that is fine . . . but only if they understand what free market capitalism is and acknowledge that America has not practiced free ... http://myprops.org/content/Dont-Blame-Capitalism-for-Wall-Streets-Corruption-and-Lawlessness/ Mon, 09 Nov 2009 18:57:30 GMT Preface: If you are a Christian, the importance of the Bible is probably obvious. If you are not, please consider passing this essay on to Christians you know. If you are an atheist and believe that religions is crazy, please remember that some that 85% of the American population identifies itself as Christian, and millions more identify themselves as Jewish, and that most people make decisions and process information based on beliefs and emotions. The head of Goldman Sachs literally said ... http://myprops.org/content/Big-Bankers-Say-Theyre-Doing-Gods-Work-...-Are-They-Right/ Mon, 09 Nov 2009 05:34:10 GMT Daniel Gross points out that part of the reason that the American stock markets are going up even though unemployment is rising and the real economy suffering is because multinational corporations headquartered in the U.S. are experiencing strong sales abroad: Here's a puzzle: The stock markets are doing very well, yet the performance of the underlying economy doesn't seem to justify optimism. The buoyant S&P 500 has risen 53 percent since the March bottom. And while the economy expanded ... http://myprops.org/content/One-Reason-that-the-Stock-Market-is-Rising-While-Unemployment-is-Soaring/ Mon, 09 Nov 2009 04:40:56 GMT I'm reading Ron Paul's book "End the Fed", which is chock full of good quotes. This one caught my eye: I've always been convinced that the Exchange Stabilization Fund is involved in stock, commodity, and currency transactions by manipulating price. As part of the ignored President's Working Group on Financial Markets (Plunge Protection Team), the Treasury, along with the Fed, SEC, and CFTC, will continue to rescue the market any way possible. Unfortunately, it's more like that ... http://myprops.org/content/Ive-Always-Been-Convinced-that-the-Exchange-Stabilization-Fund-is-Involved-in-Stock-and-Commodity-Transactions-by-Manipulating-Price/ Sun, 08 Nov 2009 17:33:32 GMT I have repeatedly pointed out that the government's rescue of the too big to fails didn't just include $700 billion or so in Tarp, but also massive guarantees. Elizabeth Warren and the Tarp oversight panel now say taxpayer money guaranteed assets worth $4.3 trillion at the height of the financial crisis, in a bid to help banks ride out the panic. In addition, the Oversight panel's report notes that the guarantees are still providing invisible government subsidies even to healthy banks, ... http://myprops.org/content/Government-put-4.3-Trillion-of-Taxpayer-Money-Into-Bank-Guarantees/ Sun, 08 Nov 2009 06:01:05 GMT MarketWatch points out that Citigroup is already being broken up: Citigroup Inc.... is already being broken up under part-ownership by the government, [Richard] Bove and other analysts say... Citigroup, roughly a third owned by the government, is already being broken up, giving investors a preview of how other large financial institutions may be shrunk in future. "The break-up of some of the banks has already occurred," Bove said. "Citigroup doesn't really exist ... http://myprops.org/content/Citigroup-is-ALREADY-Being-Broken-Up-...-But-Its-Still-Way-Too-Big/ Sun, 08 Nov 2009 04:55:43 GMT In a must-read essay, Senator Ted Kaufman reveals that - despite all of the talk coming out of Washington - high-frequency trading is set to explode: We've gone from an era dominated by a duopoly of the New York Stock Exchange and Nasdaq to a highly fragmented market of more than 60 trading centers. Dark pools, which allow confidential trading away from the public eye, have flourished, growing from 1.5 percent to 12 percent of market trades in under five years. Competition for orders is ... http://myprops.org/content/The-Chief-Executive-of-Giant-Dark-Pool-Said-the-Amount-of-Money-Devoted-to-High-frequency-Trading-Could-QUINTUPLE-Between-this-Year-and-Next/ Sat, 07 Nov 2009 02:19:22 GMT As Reuters notes: An independent U.S. senator on Friday introduced a bill that would give the government the power to identify and break up financial firms that are "too big to fail," an idea that is catching on. "If an institution is too big to fail, it is too big to exist," said Senator Bernie Sanders in a statement. "We should break them up so they are no longer in a position to bring down the entire economy," he said. Sanders is an independent ... http://myprops.org/content/Senator-Sanders-Introduces-Bill-to-Break-Up-the-Too-Big-to-Fails/ Sat, 07 Nov 2009 01:11:16 GMT Investors are basically rational, right? In short, as many studies have demonstrated, no. But let's look at psychological research into people's basic thinking abilities. Since many Americans are investors, let's just look at the American people as a whole. Bear with me for a minute. A study in an area unrelated to investing sheds light on people's basic thinking processes. Sociologists from four major research institutions investigated why so many Americans believed that Saddam ... http://myprops.org/content/Investor-Psychology-Fear-Turns-People-Into-Sheep/ Fri, 06 Nov 2009 23:20:36 GMT If all of the horses are already out of the barn, fussing about how to patch the door to fill in cracks isn't very helpful. You have to go out and round up the escaped horses. Then - once you catch them - you can think about how to improve the barn. The same is true with the economy. The too big to fails are - by their very size and the moral hazard created by the government's actions - drawing the American economy down into a black hole. The TBTFs - by their very size - are so ... http://myprops.org/content/The-Government-is-Patching-the-Barn-Door-Instead-of-Catching-the-Escaped-Horses/ Fri, 06 Nov 2009 00:10:35 GMT Josh Lipton points out: The American Enterprise Institute for Public Policy Research (AEI) published a paper indicating that "by all relevant debt indicators, the US fiscal scenario will soon approximate the economic scenario for countries on the verge of a sovereign debt default." Well, the U.S. is acting like a banana republic. Lipton also quotes Einhorn and Rosenberg to argue that America's overheated printing presses and huge debts are helping to drive gold higher: David Einhorn ... http://myprops.org/content/By-All-Relevant-Debt-Indicators-the-US-Fiscal-Scenario-Will-Soon-Approximate-that-of-Countries-on-the-Verge-of-a-Sovereign-Debt-Default/ Thu, 05 Nov 2009 19:33:00 GMT Quick question: How do I make it so that when people click on my banner, they are directed to www.WashingtonsBlog.com, and not http://georgewashington2.blogspot.com ? I'd be grateful for any help! Print this post http://myprops.org/content/Shameless-Request-for-Web-Design-Help/ Thu, 05 Nov 2009 00:31:48 GMT The Wall Street Journal admits this week that economists blew it: The pain of the financial crisis has economists striving to understand precisely why it happened and how to prevent a repeat... The crisis exposed the inadequacy of economists' traditional tool kit, forcing them to revisit questions many had long thought answered, such as how to tame disruptive boom-and-bust cycles... "We could be looking at a paradigm shift," says Frederic Mishkin, a former Federal Reserve ... http://myprops.org/content/Wall-Street-Journal-Admits-Economists-Were-Wrong-But-Fails-to-Discuss-their-INCENTIVE-for-Being-Wrong/ Wed, 04 Nov 2009 21:14:38 GMT Yesterday, Elliot Spitzer said that the White House's defense of the financial status quo will give Republicans powerful ammunition in the 2010 elections. Today, Democratic cheerleader Markos Moulitsas (the "Kos" behind Daily Kos) wrote: Democratic turnout collapsed. This is a base problem, and this is what Democrats better take from tonight: ... If you water down reform in favor of Blue Dogs and their corporate benefactors, you will lose votes... If you forget why you were ... http://myprops.org/content/Voters-Repudiate-Democrats-Because-Dems-Sold-Out-on-Financial-Reform/ Wed, 04 Nov 2009 17:24:41 GMT Many people - including former analyst for the U.S. Treasury Richard Cook - argue that credit is too important a function to be left to the private banks. Indeed, even after taxpayers have given trillions in bailouts, backstops, guarantees, and other gifts, the giant banks are still not lending out much credit to individuals or small businesses. The talking heads say that real reform of this nature is not "politically feasible". But not politically feasible doesn't actually ... http://myprops.org/content/Take-the-Power-to-Create-Credit-Away-from-the-Giant-Banks-and-Give-It-Back-to-the-People/ Tue, 03 Nov 2009 21:37:13 GMT I think gold will do well long-term. And see this. But as I have previously argued, I think gold is surging right now largely due to weakness in the dollar. See this and this. Jon Nadler agrees, writing: Gold is not in a bull market. The dollar is in a bear market. Nouriel Roubini says that commodity prices have risen largely because of the huge carry trade in dollars, and that - when the carry trade unwinds - there will be a huge crash in virtually all asset crashes. And see Tyler ... http://myprops.org/content/Inverse-Relationship-Between-Dollar-and-Gold/ Tue, 03 Nov 2009 18:56:27 GMT India's central bank is buying 200 metric tons of gold from the IMF. China, Russia and some EU central banks have also expressed interest in buying gold from the IMF or elsewhere. Therefore, Bloomberg's article of today saying that "Central Banks Will Become Net Buyers of Gold, WGC CEO Says" is not controversial. Given that the IMF has only authorized the sale of 403.3 metric tons of gold at this time, the IMFs sales won't drive gold prices down. Indeed, the other 203.3 metric ... http://myprops.org/content/India-China-Russia-and-Some-EU-Central-Banks-Buying-Gold/ Tue, 03 Nov 2009 02:14:04 GMT Economist Blake LeBaron has discovered an important cause of stock market crashes: During the run-up to a crash, population diversity falls. Agents begin using very similar trading strategies as their common good performance is reinforced. This makes the population very brittle...In other words, when everyone is making the same trade, it will likely lead to a crash. Tyler Durden summarizes this idea even more succinctly: When everyone is on the same side of the boat, it always inevitably ... http://myprops.org/content/When-Everyone-is-On-the-Same-Side-of-a-Trade-the-Market-is-About-to-Crash/ Tue, 03 Nov 2009 00:42:37 GMT Nouriel Roubini writes: Ultimately, deleveraging requires the writing down of debt as reflationary policies are not a free lunch and won't solve the debt overhang problem (Dr. Roubini). Important case study: Japan back into deflationary territory despite huge public debt and QE (Chinn). Rather than a sign of inflation, higher long-term yields may be pointing to higher real interest rates which are compatible with a deflationary environment (BofA). The equilibrium coexistence of zero interest ... http://myprops.org/content/Roubini-Deleveraging-Requires-The-Writing-Down-Of-Debt-As-Reflationary-Policies-Are-Not-A-Free-Lunch-And-Wont-Solve-The-Debt-Overhang-Problem/ Mon, 02 Nov 2009 23:32:08 GMT As I have repeatedly noted, China has been blowing a bubble with easy credit. MarketWatch's Craig Stephen warns investors to be wary of a potential correction, at least in some sectors: Policy tightening could soon become the dominant market theme, meaning it's time for a rethink. After recent rate hikes in Australia and Norway, tightening is back on the agenda in many countries, including China. And with the U.S. just clocking up 3.5% annualized GDP growth for the third quarter, dollar bears ... http://myprops.org/content/Update-on-China-and-Japan/ Mon, 02 Nov 2009 20:13:55 GMT Keynesians argue that we must increase fiscal stimulus to prevent a full-scale depression. They argue that "deficit hawks" are wrong when they say that we can't afford any more stimulus, and that worrying about debt in a crisis of this size is penny wise and pound foolish, given the bleak unemployment figures and other fundamentals. They also point out that America's debt as a percentage of GDP is far less than Japan's. On the other hand, those worried about the giant debt ... http://myprops.org/content/Aggressive-Fiscal-Stimulus-Spending-Only-Shortens-Recessions-by-Two-Quarters/ Mon, 02 Nov 2009 17:44:02 GMT Kevin de Bruxelles succinctly summarizes the fact that the government has broken the social contract with the American people, and the ultimate meaning of that breach of contract: One only needs to consult Hobbes to see where the answer lies. In Leviathan, Hobbes contrasts two states for human society. The first being a state of nature which is described as perpetual war between individuals. The moral logic of the state of nature is that there is no right or wrong: "To this war of every ... http://myprops.org/content/The-Government-Has-Broken-the-Social-Contract-with-the-American-People/ Mon, 02 Nov 2009 01:33:30 GMT As I have repeatedly written, the largest U.S. banks have repeatedly gone bankrupt due to wild speculation which was blessed by the Fed, and then the government covered up their bankruptcy. As the New York Times writes today about one of the too big to fails: Over the past 80 years, the United States government has engineered not one, not two, not three, but at least four rescues of the institution now known as Citigroup.Indeed, as prominent economist James Galbraith told Bill ... http://myprops.org/content/Galbraith-Administrations-Sole-Goal-is-to-Restore-System-of-5-or-10-Years-Ago-But-Confidence-Wont-be-Restored-Unless-Fraud-Which-Led-to-Crash-is/ Sun, 01 Nov 2009 19:47:57 GMT Many people have called politicians prostitutes. True, Obama has received more donations from Goldman Sachs and the rest of the financial industry than almost anyone else. And Summers, Geithner and the rest of Obama's economic team have made many millions - even recently - from the financial industry. And Congress has largely been bought and paid for, and two powerful congressmen have said that banks run Congress. So yes, they have certainly sold their goods to the highest ... http://myprops.org/content/Politicans-Are-NOT-Prostitutes-...-They-Are-Pimps/ Sat, 31 Oct 2009 19:57:16 GMT Ron Paul tells Bloomberg that Congressman Watt has just more or less killed the bill to audit the fed: Representative Ron Paul, the Texas Republican who has called for an end to the Federal Reserve, said legislation he introduced to audit monetary policy has been "gutted" while moving toward a possible vote in the Democratic-controlled House. The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central ... http://myprops.org/content/Congressman-Watt-Guts-Bill-to-Audit-the-Fed/ Sat, 31 Oct 2009 16:49:16 GMT In September 2008, I wrote: In the 1974 comedy Blazing Saddles, Cleavon Little plays the new sheriff in an old Western town. The sheriff is African-American, and when he rides into town for the first time, the [racist] townspeople pull out their guns and are about to shoot him. But he quickly puts a gun to his own head, pretends he's scared of his own gun, and says "BACK OFF OR THE AFRICAN-AMERICAN GUY GETS IT!!!" The townspeople are dumb and fall for it, suddenly terrified that ... http://myprops.org/content/Too-Big-to-Fail-and-the-1000-Pound-Man/ Fri, 30 Oct 2009 20:09:44 GMT William R. Hawkins (formerly an economics professor at Appalachian State University, the University of North Carolina-Asheville, and Radford University, with graduate degrees in both Economics and History, and then later an aide to Republican congressmen) argues that America is repeating the mistakes which led to the fall of the Hapsburg empire: Spain was the first global Superpower...With Spain as its political base, and gold and silver flowing in from its American colonies, the Hapsburg ... http://myprops.org/content/America-Is-Repeating-the-Mistakes-Which-Led-to-the-Fall-of-the-Hapsburg-Empire/ Fri, 30 Oct 2009 19:27:05 GMT I have previously debunked numerous false arguments used to defend the too big to fails. See this and this. But the apologists for the TBTFs are now arguing that breaking up the beached whales ... er, giant banks ... will harm America's ability to compete with foreign banks. Joshua Rosner (managing director of an independent financial services research firm), has written an important essay debunking this argument: Those who argue against a more proactive reduction in risk and size of ... http://myprops.org/content/Breaking-Up-The-Too-Big-to-Fails-Will-NOT-Harm-Americas-Ability-to-Compete-with-Foreign-Banks/ Fri, 30 Oct 2009 17:42:42 GMT Elizabeth Warren sums things up pretty succinctly: The banking lobby is as powerful and deeply entrenched as ever, but it was powerful in the 1930s, too. Nonetheless, the New Dealers learned the Great Lesson: Powerful insiders cannot be permitted to write the rules, and prosperity and security depend on a playing field that supports a vibrant middle class. Today, we face a similar set of questions as we faced then. Will the institutions that created the crisis continue calling the shots and ... http://myprops.org/content/Congress-We-Cant-Help-the-American-Public-Because-The-Dog-Ate-Our-Homework/ Fri, 30 Oct 2009 04:30:56 GMT Former officials are often more honest than current ones, since they aren't under pressure to spread happy talk. Former European Central Bank chief economist Otmar Issing recently said what current officials aren't addressing: Nobody can be sure that we have a self-sustaining recovery. The challenges facing the ECB are tremendous. "Money multipliers have collapsed everywhere. What M3 is telling us is that confidence is missing. I don't see any way to stabilise M3 in such ... http://myprops.org/content/Money-Multipliers-Have-Collapsed-Everywhere...Confidence-Is-Missing.-I-Dont-See-Any-Way-To-Stabilise-M3-In-Such-Circumstances/ Thu, 29 Oct 2009 18:08:35 GMT Whatever you think of the AFL-CIO, its president - Richard Trumka - is dismantling the Fed and the proposed "Tarp on steroids" legislation in his testimony to Congress today. Here are the must-read parts of his prepared remarks to the House Financial Services Committee: We are deeply concerned that the Committee's work thus far on the fundamental issues of regulating shadow financial markets and institutions will allow the very practices that led to the financial crisis to ... http://myprops.org/content/Trumka-Dismantles-Tarp-on-Steroids-Bill-and-the-Federal-Reserve/ Thu, 29 Oct 2009 16:49:49 GMT The American government is doing everything it can to avoid breaking up the too big to fails, even though there is absolutely no reason not to (see this and this). As Reuters columnist Rolfe Winkler writes today: The new legislation unveiled by Representative Barney Frank doesn't end "too big to fail" - it codifies it. It also puts taxpayers on the hook for a large portion of future bailouts. But Europe is in the process of breaking up: LloydsRoyal Bank of Scotland Northern ... http://myprops.org/content/Europe-is-Breaking-Up-Its-Too-Big-to-Fails/ Thu, 29 Oct 2009 00:43:54 GMT On September 25th, I wrote: Paul Volcker and senior Harvard economist Jeffrey Miron both testified to Congress this week that the government is trying to make bailouts for the giant banks permanent. Writing Wednesday in The Hill, Congressman Brad Sherman pointed out that : In my opinion, Geithner's proposal is "TARP on steroids." Section 1204 of the proposal [the proposal being the "Resolution Authority for Large, Interconnected Financial Companies Act of 2009"] allows the ... http://myprops.org/content/Government-Trying-to-Create-PERMANENT-Bailouts-for-Big-Banks/ Wed, 28 Oct 2009 21:22:56 GMT Forget the permabears, even Pimco's Bill Gross is now saying a V-shaped recovery is unlikely: The total bond market yields only 3.5%. To get more than that, high yield, distressed mortgages, and stocks beckon the investor increasingly beguiled by hopes of a V-shaped recovery and "old normal" market standards. Not likely, and the risks outweigh the rewards at this point. Investors must recognize that if assets appreciate with nominal GDP, a 4-5% return is about all they can expect even with ... http://myprops.org/content/Bill-Gross-V-Shape-Recovery-is-Unlikely/ Wed, 28 Oct 2009 19:57:11 GMT Stephen Roach (former chief economist for Morgan Stanley, and now director of Morgan Stanley Asia) is one of the most influential and respected American economists. Roach told Charlie Rose this week that we have had terrible Federal Reserve policy for the past 12 years under Greenspan and Bernanke, that they concocted hair-brained theories (for example, that we should let the boom and bust cycle occur, but then "clean up the mess" once things fall apart), and that we really need to ... http://myprops.org/content/Should-We-Give-the-Fed-More-Power-...-Or-Less/ Wed, 28 Oct 2009 16:26:56 GMT The former chairman of Citigroup, John S. Reed, wrote a letter to the editor of the New York Times calling for a reinstatement of Glass-Steagall: As another older banker and one who has experienced both the pre- and post-Glass-Steagall world, I would agree with Paul A. Volcker (and also Mervyn King, governor of the Bank of England) that some kind of separation between institutions that deal primarily in the capital markets and those involved in more traditional deposit-taking and ... http://myprops.org/content/Former-Chairman-of-Citigroup-Restore-Glass-Steagall/ Tue, 27 Oct 2009 23:07:35 GMT I have repeatedly pointed out that big banks are not more efficient than smaller banks. For example, I previously noted that an article in Fortune concluded: The largest banks often don't show the greatest efficiency. This now seems unsurprising given the deep problems that the biggest institutions have faced over the past year. "They actually experience diseconomies of scale," [Celent analyst Bart] Narter wrote of the biggest banks. "There are so many large autonomous ... http://myprops.org/content/Big-Banks-Are-NOT-More-Efficient/ Tue, 27 Oct 2009 18:52:54 GMT Nouriel Roubini - who called last years crash - said last week that "a big crash is coming": There's a huge bubble, because we have zero rates in the U.S., zero rates around the world and a huge carry trade. Everyone is borrowing at zero interest rates in dollars and getting a capital gain because the dollar is weakening, so they are borrowing at negative rates. And then they invest in risky assets:commodities, equities, credit. We're creating a bigger bubble than before. It's ... http://myprops.org/content/Roubini-Ritholtz-Smithers-Forecast-a-Correction/ Tue, 27 Oct 2009 18:25:31 GMT Derivatives expert Janet Tavakoli made the following comments by email about the Bloomberg article "New York Fed's Secret Choice to Pay for Swaps Hits Taxpayers": "There's no way they should have paid at par," she says. "AIG was basically bankrupt." I agree. By way of contrast, Tavakoli points out that: Citigroup Inc. agreed last year to accept about 60 cents on the dollar from New York-based bond insurer Ambac Financial Group Inc. to retire protection on a $1.4 billion ... http://myprops.org/content/Tavakoli-on-AIG-Swaps-Theres-No-Way-They-Should-Have-Paid-at-Par.-AIG-Was-Basically-Bankrupt-and-Goldman-Sachs-CFO-Lied-About-AIG/ Tue, 27 Oct 2009 18:11:41 GMT On her way inside the Banking Convention, where she was about to deliver a speech, FDIC Chair Sheila Bair told protesters: It's time to put an end to the 'Too Big to Fail' doctrine... No more bailouts, no more bailouts! This is without doubt the most important populist moment so far this year. Print this post http://myprops.org/content/FDIC-Head-Sheila-Bair-Tells-Protesters-Its-Time-to-Put-an-End-to-the-Too-Big-to-Fail-Doctrine...-No-More-Bailouts/ Tue, 27 Oct 2009 00:41:40 GMT The Federal Reserve is unlawfully withholding information from Congress. Says who? Says noted economist James Galbraith: To this day, Chairman Ben Bernanke has refused to disclose to Congress exactly who has received help under the many crisis measures and under what terms. The legal and constitutional situation is clear: Congress has a right to this information. There are no plausible national security concerns. Galbraith also slams the idea that the Fed should be the main ... http://myprops.org/content/Galbraith-Fed-is-Unlawfully-Withholding-Information-from-Congress/ Mon, 26 Oct 2009 19:14:26 GMT In May, analyst Mike Mayo predicted that the bank loan loss rate would be higher than during the Great Depression. Moody's has just confirmed May's prediction. Specifically, in a new report, Moody's concludes that (as summarized by Zero Hedge): The most recent rate of bank charge offs, which hit $45 billion in the past quarter, and have now reached a total of $116 billion, is at 3.4%, which is substantially higher than the 2.25% hit in 1932, before peaking at at 3.4% rate by ... http://myprops.org/content/Moodys-Bank-Loan-Loss-Rate-Worse-Than-During-the-Great-Depression/ Mon, 26 Oct 2009 16:48:27 GMT Yves Smith argues that socialism, fascism and an economy which describes itself as capitalism but allows "looting" are really pretty much all the same. That's a dramatic statement. Is Smith right? Socialism Initially, it is important to note that it is not just people on the streets who are calling the Bush and Obama administration's approach to the economic crisis "socialism". Economists and financial experts say the same thing. For example, Nouriel Roubini ... http://myprops.org/content/Capitalism-Socialism-or-Fascism/ Sun, 25 Oct 2009 19:49:09 GMT For the first time ever, at least half of all American workers are women. In addition, mothers are the primary breadwinners or co-breadwinners in nearly two-thirds of families. These are the findings from a new report called The Shriver Report: A Woman's Nation Changes Everything, put out by Maria Shriver, wife of Arnold Schwarzenegger. The Shriver Report will receive widespread media coverage this upcoming week. While the mainstream media is heralding these findings as showing that women ... http://myprops.org/content/The-Real-Reason-that-for-the-First-Time-Ever-More-Women-are-Working-then-Men/ Sat, 24 Oct 2009 22:02:45 GMT Elizabeth Warren - like many other financial experts - thinks that fraud played a role in causing the financial crisis. As she told Michael Moore: I want to know who did what. Responsibility is about making sure we fix this, and that it will not happen again. Warren is calling for an investigation, and suspects that an investigation would have serious legal ramifications: I was talking to someone who spent many years as a prosecutor, and he said when that much money disappears it's ... http://myprops.org/content/Elizabeth-Warren-Suspects-Fraud-As-Cause-of-Financial-Crisis/ Fri, 23 Oct 2009 22:55:12 GMT AFP reports: The Federal Reserve will expand its so-called stress tests of the banking system to ensure they have enough capital during difficult periods, Fed chairman Ben Bernanke said Friday. Bernanke highlighted the positive impact of stress tests conducted earlier this year on major banks, a move aimed at ensuring their financial health and building confidence. "Building on the success of this initiative, we will conduct more frequent, broader, and more comprehensive horizontal ... http://myprops.org/content/Stress-Test-Shenanigans-Round-2/ Fri, 23 Oct 2009 18:41:26 GMT Guess who said the following: Far from turning around the [George] Bush legacy of deficits and debt, [US president Barack] Obama has made it worse. It has got all the hallmarks of a financial collapse about to happen in America... The US dollar is almost becoming like junk bonds. A senior Senator from Australia. Leading Australian paper The Age adds: The Nationals Senate leader Barnaby Joyce is openly canvassing an economic upheaval that would dwarf the current global financial ... http://myprops.org/content/It-Has-Got-All-the-Hallmarks-of-a-Financial-Collapse-about-to-Happen-in-America-...The-US-Dollar-Is-Almost-Becoming-like-Junk-Bonds/ Fri, 23 Oct 2009 18:27:46 GMT I don't know how many rank and file members of the giant labor unions will show up, but the President of the AFL-CIO and the Secretary-Treasurer of the SEIU have both called for people to attend the bank protests in Chicago on October 25-27. Everyone from PhD economists to professors of economics have also supported the protests. Print this post http://myprops.org/content/Labor-Unions-to-Participate-in-Bank-Protests/ Fri, 23 Oct 2009 05:33:54 GMT In an article which is quickly going viral, Michael Moore says the American people should demand public banking: Each of the 50 states must create a state-owned public bank like they have in North Dakota. Then congress MUST reinstate all the strict pre-Reagan regulations on all commercial banks, investment firms, insurance companies -- and all the other industries that have been savaged by deregulation: Airlines, the food industry, pharmaceutical companies -- you name it. If a company's ... http://myprops.org/content/Michael-Moore-Promotes-Public-Banking/ Fri, 23 Oct 2009 04:57:18 GMT TARP Inspector General Neil Barofsky says in a new report that TARP has allowed the too big to fails to get even bigger, and that: Absent meaningful regulatory reform, TARP runs the risk of merely reanimating markets that had collapsed under the weight of reckless behavior. TARP . . . reanimating not only zombie banks, but also zombie markets. Print this post http://myprops.org/content/Barofsky-Absent-Meaningful-Regulatory-Reform-Tarp-Runs-the-Risk-of-Merely-Reanimating-Markets-That-Had-Collapsed-Due-To-Reckless-Behavior/ Thu, 22 Oct 2009 19:41:46 GMT Financial insider and commentator Yves Smith wrote an essay last week entitled "MSM Reporting as Propaganda" arguing that the government has been using propaganda to make people think that things are getting better, no one is angry, and - therefore - no one should get upset: The message, quite overly, is: if you are pissed, you are in a minority. The country has moved on. Things are getting better, get with the program... Per the social psychology research, this "you are in a ... http://myprops.org/content/Herding-the-Sheep/ Thu, 22 Oct 2009 19:28:15 GMT I was asked to post this and - because I've got kids myself - will do so as a public service announcement. For more information, click here. Print this post http://myprops.org/content/Million-Baby-Crawl/ Thu, 22 Oct 2009 00:34:53 GMT A top advisor to French President Nicolas Sarkozy - Henri Guaino - said on Tuesday that hat the United States was "flooding the world with liquidity" to try to inflate away its debt. But as UBS economist Paul Donovan, prominent economist Michael Hudson and others have shown, it is a myth that governments can inflate their way out of debt traps. As I have previously noted, trying to inflate our way out of debt is like a monkey trying to outrun a lion. Print this post http://myprops.org/content/Top-French-Official-U.S.-Trying-to-Inflate-Its-Way-Out-of-Debt/ Wed, 21 Oct 2009 18:39:23 GMT I've always wondered how America fell so fast. In 2000, we were described as the sole remaining superpower - or even the world's "hyperpower". Now we're in real trouble. How did it happen so fast? As everyone knows, the war in Iraq - which will end up costing $3-5 trillion dollars - was launched based upon false justifications. Indeed, the government apparently planned both the Afghanistan war (see this and this) and the Iraq war before 9/11. And the financial system ... http://myprops.org/content/How-Did-America-Fall-So-Fast/ Wed, 21 Oct 2009 16:24:09 GMT Congressmen Grayson, Clay and Miller are introducing an amendment to the Consumer Financial Protection Agency bill: Today we will offer the "Financial Autopsy" amendment. The Grayson/Clay/Miller amendment is essential to attacking the root problem of consumer bankruptcy and foreclosure because it requires the CFPA to do a financial audit of products that have caused the highest rates of bankruptcy and foreclosure annually. Not later than March 31st of each calendar year, the CFPA will list ... http://myprops.org/content/Congressmen-Grayson-Clay-and-Miller-Introduce-CFPA-Amendment-Which-Would-Fix-One-Size-Fits-All-Problem/ Wed, 21 Oct 2009 04:24:07 GMT Joe Biden apparently said yesterday that we are in a depression, not a recession: I am currently at a computer without a sound card, so please let me know if Biden did not in fact say that. Print this post http://myprops.org/content/Biden-This-is-a-Depression-Not-a-Recession/ Tue, 20 Oct 2009 23:10:01 GMT PhD economist John Hussman has some great quotes in his current market comment: It appears to be wishful thinking to believe that the credit crisis is over. Most likely, what we've witnessed in recent months is little more than the combination of a lull in the [mortgage] reset schedule coupled with a wholly unsustainable burst of deficit spending amounting to over 7% of GDP. My impression of the U.S. banking system is that it is quietly going insolvent, in a manner that will become evident ... http://myprops.org/content/Hussman-Our-Policy-Makers-Bailed-Out-Bank-Bondholders-Instead-of-Focusing-on-Debt-Restructuring/ Tue, 20 Oct 2009 18:55:50 GMT David Einhorn - President of Greenlight Capital, which manages around $5 billion dollars - says that people claiming that the lesson of 1937-8 is not to withdraw stimulus too soon are wrong: An alternative lesson from the double dip the economy took in 1938 is that the GDP created by massive fiscal stimulus is artificial. So whenever it is eventually removed, there will be significant economic fall out. Our choice may be either to maintain large annual deficits until our creditors refuse to ... http://myprops.org/content/Einhorn-The-Real-Lesson-of-1937-8/ Tue, 20 Oct 2009 14:20:16 GMT The following is an advanced copy of an essay by Janet Tavakoli to be released tomorrow. Reprinted with permission of Tavakoli Structured Finance. Warren Buffett's Wall Street War By Janet Tavakoli October 20, 2009 In a January 2009 interview with NBC's Tom Brokaw, Warren Buffett criticized leveraging "to the sky," and creating "phony instruments [RMBSs, CDOs, et al.] that fool other people so you stick money in your pocket." In 2002, he claimed over-the-counter derivatives are ... http://myprops.org/content/Tavakoli-We-Should-Impose-a-95-percent-Excess-Profits-TaxOr-Windfall-Profits-TaxOn-Certain-Financial-Institutions...-Enriching-Themselves-at-Our-Expense/ Tue, 20 Oct 2009 01:00:34 GMT As I have previously noted, HSBC currency chief David Bloom doesn't think that the dollar will rally when the stock market next tanks: The dollar rallied last year because we had a global liquidity crisis, but we think the rules have changed and that it will be very different this time [if there is another market sell-off]. Is he right? I have argued that the new dollar carry trade could very well unwind during the next crash, which could create an enormous need for dollars. I've ... http://myprops.org/content/Is-David-Bloom-Wrong-About-the-Dollar/ Tue, 20 Oct 2009 00:49:48 GMT My friend on the Hill has confirmed the Washington Post's claim that the big banks have lost their bid for exemption from state regulations. But only in the House. My friend says that the too big to fails are going to try to kill the bill in the Senate. As the Post summarizes the battle in the House: The House Financial Services Committee is expected to vote Tuesday to let state governments protect bank customers by imposing restrictions that go beyond existing federal laws, according ... http://myprops.org/content/Congress-Actually-Stands-Up-to-Banks-.-.-.-But-What-About-the-Senate/ Mon, 19 Oct 2009 19:40:25 GMT Robert J. Shiller is one of the most prominent American economists and is one of the 100 most prominent economists in the world. Shiller recently confirmed two points that alternative financial writers have been making for years: (1) Mainstream economists don't pay any attention to bubbles - even though bubbles always burst, causing recessions or depressions and ( 2) People are in an extend-and-pretend environment, trying to paper over the severity of economic problems and kick the ... http://myprops.org/content/Shiller-Look-up-Bubble-in-an-Economic-Textbook-and-Its-Not-There.-People-are-Living-in-a-Pretend-and-Extend-Environment/ Mon, 19 Oct 2009 16:32:32 GMT