St. Louis Fed President James Bullard says ‘Fed will act if economy weakens further’

September 30, 2011 by · Leave a Comment
Filed under: Economic News 

We are totally screwed.  I am sorry to have to use such crude vernacular but it is true.

It comes down to this, we have a debt-based monetary system in the United States and it have been replicated across the globe.    The problem we face that NONE of our officials / representatives seems to be able to own up too is that we have too much debt in our system.   When addressing debt, you have two options, pay it off or default (restructuring debt is a default).

When you are dealing with this type of monetary problem, you response can not be, “create more debt”.    That is like drinking your way out of being drunk, it is a total oxymoron.  Why does no one out there in our journalistic world have the gull to just straight up call them out on this subject.   All the options the Fed and Treasury have come up with keeps coming back to creating debt.

We need to do the following to fix the economy and yes, its painful but not as painful as it will be if we let the hole get bigger:   Raise Taxes (across the board but make it the least onerous on our poor), Reform entitlements (period, we can’t afford the current level of service) and reduce the annual budget deficit (means we spend what we tax, you want large government, then we pay for it).

I know if you don’t agree you are shaking your head and thinking, oh that is easy to write down.   Your right, it is easy.   But, we need to do it and to this point no plan I have seen seems to address these in any meaningful way.   If I was President Obama, I would do it under executive order if I had too and take the consequences in court and defend yourself there.  I believe he could make the argument that he is doing it for the welfare of the country as his duty.  It would be unpopular at first but if he could hold out and let these changes take affect, we would see major changes in how the world treats U.S. debt and equities and we would start to see a real recovery.

The last issue we need to address which is the major reason unemployment has maintained itself over 9% is because of the false promise of “free-trade”.  That term is a oxymoron in itself, if you know about exchange and barter (trade), there is always a winner and loser for an exchange in raw value.   In this era of “free-trade”, the United States is the loser and any country that can sell their manufactured goods in our domestic market is the winner.   It is basic math, if I can pay someone $400 a year compared to $44,000, which is more profitable?  With that answer, you find that is where the jobs are going and in my opinion, the housing bubble only masked the problem by creating many jobs that are not permanent and if that did not happen, we would have even worst unemployment numbers.

Now if we accept that at the expense of our national job economy we feel that we need to “share the wealth” that is one thing, but then we should state it as a national policy, not dress it up as something else and try and sell it to us by “experts”.   Middle-class income jobs are disappears and the cold hard facts are they are not coming back and even if we re-train our workforce for the “job of tomorrow”, as soon as a company figures out they can do it somewhere else for 1/10th of the pay, I’ll let you guess what happens next.

We use protectionism as such a dirty word.   It is funny we will all stand up and salute for national military defense but cower away for any mention of national economic defense.   As far as I see, it is a privilege to be able to sell in the world’s richest country, NOT A RIGHT.

Yahoo! Finance (Kristina Cooke in New York)  The Federal Reserve will act if the economy weakens further and has the tools to do so, a top Fed official said on Friday.  St. Louis Fed President James Bullard said he expects the economy to grow modestly over the next year — though the sluggish pace leaves it vulnerable to shocks.

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Federal Reserve provided $16 trillion in secret bailout loans during credit crisis

July 22, 2011 by · Leave a Comment
Filed under: Global News 

First off I’ll apologize for the less frequency in news pieces.  I have been in the process of moving and it has not gone as smooth as you’d wish.  Regardless, how could I ever pass on a juicy nugget like this one from the outspoken gentlemen from Vermont, Senator Bernie Sanders.

$16 trillion dollars is actually quite a bit of money.  That is more than the total Gross Domestic Product (GDP) of the united states for an entire year.  365 days of any productive commerce in America.  A GAO report has been published that investigates the accounting of the U.S. central banking institution. It is a 236 page report and I don’t have any opinion until I sit down and read it, which I intend to very shortly, like now.  I found a chart in the appendix that showed a $8 trillion dollar loan / exchange / swap to the European Central Bank.  Bank of England and the Swiss National Bank also were also heavy recipients of assistance from the Fed.  Hopefully more insightful data points are waiting to be uncovered.

What we are in a sense saying is that the banking system in its present state is “so” important that it or parts will not be allowed to fail from market forces.  This problem is their is no limit to the amount of credit or assistance that can be given.  These dollars are not totally sterile, these banks us them as reserves that loans can be made against.  This question should be the prerogative of the people and we should be made aware when such use of our credit facilities are made. This is the great moral hazard, now they know they in fact are “too big to fail”.

Sen. Sanders Website:

The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. “As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” said Sanders. “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”

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Big News: Supreme Court tells Fed to release secret bailout loan details

March 21, 2011 by · Leave a Comment
Filed under: Legal News 

Over two years and finally some good news and in my opinion the right choice on this case.  If you have read any of my previous postings about the secret Federal Reserve (NY Fed) loans to banks (domestic & foreign).   The Federal Reserve tried to maintain that is was better to keep these secret to basically prop up the banking sector than to tell the truth and let us decide (with our deposits), which banks should succeed and who should fail.  THAT IS HOW A MARKET SYSTEM WORKS and that is suppose to be a cornerstone in America (at least I was taught that in public schools).

I will continue to reiterate the point that if we do not punish the reckless banks and prosecute any criminal activity, we will have another financial crisis sooner than later and it will be much worst because they know as long as its bug enough, the taxpayer will be here to bail them out.   Not in my country is what I say.

The Supreme Court not only denied the banks appeal but they did not even have comment, just do it.   On the other side, this could have serious consequences for the short term but it will be good for the long term.   I believe this release of information could be the needle that breaks the recoveries back.   Heed those words, you have been warned.

NY Times: The high court, without comment, refused to hear an appeal from an association of bankers trying to keep the information from becoming public.

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Quatitative Easing 3 (QE3) “May Get Discussed,” Says Fed’s Hoenig

February 10, 2011 by · Leave a Comment
Filed under: Policy News 

Here we go again.  How many of these failed programs will our dollar have to take until we realize that printing money does not produce real growth.  We should see purchases even farther out on the yield curve (10 & 30 year).  Commodity prices will begin to raise even more if this happens.  We see a constant downplay of the threat of inflation, if we keep this strategy then it will happen.  One thing people forget is that bad inflation usually happens very quickly, think of a snowball rolling down a hill.

QE3 may be coming to a central bank near you later this year, according to according to Kansas City Fed President Thomas Hoenig, who said that the Federal Reserve may consider extending its quantitative easing program beyond June 30, 2010 – the current completion date scheduled for QE2 – if U.S. economic data does not meet policymakers expectations in the coming months.

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Federal Reserve may be `Central Bank of the World’ after UBS & Barclays aid

December 3, 2010 by · Leave a Comment
Filed under: Economic News 

Bloomberg – Federal Reserve data showing UBS AG and Barclays Plc ranked among the top users of $3.3 trillion from emergency programs is stoking debate on whether U.S. regulators bear responsibility for aiding other nations’ banks.

UBS was the biggest borrower under the Commercial Paper Funding Facility, with $74.5 billion overall, more than twice as much as Citigroup Inc., the top U.S. bank recipient, according to the data released yesterday. London-based Barclays Plc took the biggest single amount under another program that made overnight loans, when it got $47.9 billion on Sept. 18, 2008.

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