how does one fix this sick economy?

[lamboguy]

i don't have the answer. but one must ask the problem instead of skirting thru the deal. the problem is simple. back when reagan was the president the longshoreman used to load lots of goods going overseas. 85% of their work was outgoing. today it is exactly the opposite. basically the only things going overseas is paper and rags.

the genious leaders we have do anything but address this. they come up with stimulous, bank bailouts, automobile bailouts, handouts and government jobs.
the government jobs are just to insure that they get re-elected down the road.

its interesting how the latest deal is to raise taxes on those that make $250,000 a year in 2011. not that tax hikes are the greatest thing for any economy, but for arguement sake lets believe in this great theory that the redistribution of wealth will be great for our world. i wonder how many people will be making the $250,000 in this country in 2011 to get the tax out of. my honest guess is that if we keep going down this collision course by the time 2011 rolls around you might have about 15% of the people making the $250,000 today around then. this in economics principles is called the law of diminishing returns.

[HUSKER55]

The problem is that I don't thiink either candidate had an idea of what to do.

While any idea I have would solve the problems, (ahem), it requires more guts and starch in the collars to have a long term impact. That is what happens when you have a president with no military service where action was required. Clintons idea of action was Monica and Hillary agreed. she never spoke out against it as I recall.

Obviously the dems don't get this. They still think there is a free lunch. They still think you can spend yourself rich. They believe in pyramid schemes. I would not be surprised to find out they play the lottery for their retirement account.

What is needed is for men to take control of their houses. Until that happens, nothing else will. In most states it is against the law to discipline your own child. That will not work and has never worked and will never work.

We spend more time effort and money worrying about criminals well being instead of on something more productive such as helping the victim by eliminating the source of their pain. Then there are the terrorists attacks. Has anyone been executed yet? No, but 3000 of our working citizens were. The dems see nothing wrong with that.

The dems want to release some of these bastards already.

You watch, they will defend their pussy attitudes and then you wonder why we have a problem.

JMHO

[LottaKash]

They believe in pyramid schemes. I would not be surprised to find out they play the lottery for their retirement account.. JMHO

No longer true, they have found the "Bailout" & "Stimulus" way......

best,

[dutchboy]

It seems like every decade there is always a crisis.

1970's it was Vietnam, gas shortages, high inflation

1980's it was the Savings and Loan crisis, farmland prices dropped and the government foreclosed on the farms due to the fact the farmers were not allowed to have a negative net worth with government issued loans, housing prices crashed, Iran/Contra scandal

1990's it was the first Iraq war, Dot Com crash, President Clinton and his numerous scandals

2000's is what is going on now

The late 1400's it was the Dutch Black Tulips crash.

[ArlJim78]

yes and this crisis is being used in order to advance the far lefts socialist makeover of America.

[HUSKER55]

I stand corrected

[prospector]

fix it?
doesn't sound like they want to fix it..

i'd let companies going bankrupt go bankrupt..
do away with retirement and health benefits for all members of congress..present and definately past..
cut congress staffs by 75%
have congress open for 3 months a year only...subject to recall..
limit terms to 2 terms..

but then, i have only the power of the ballot...and that's not worth much when you can have 25 polling places in wisc. with more votes than voters..talk about stealing an election..:bang:

[RichieP]

I'd let companies going bankrupt go bankrupt..
do away with retirement and health benefits for all members of congress..present and definitely past..
cut congress staffs by 75%
have congress open for 3 months a year only...subject to recall..
limit terms to 2 terms..


:ThmbUp::ThmbUp::ThmbUp::ThmbUp:

[ddog]

guess what, THEY don't fix it.

IT , will eventually FIX itself, where/what that will look like is the only question.

I don't think it will be a nice "where/what" for the vast majority.

[ddog]

another little something on the plate...

you will recall scoffing at the boilerplate goon posting a long while back about 1997 levels for the majors, well..............seems there must be a little fire in that boiler notwithstanding.

hope you were along for the ride.


Wheeeeeeeeeeeeeee!


;)

[riskman]

INTERESTING ARICLE FROM:RGE MONITOR

http://www.rgemonitor.com/us-monitor/255804/there_wont_be_an_economy_to_stimulate_without_solv ent_banks

There Won’t Be An Economy To Stimulate Without Solvent Banks
Charles Davi | Mar 2, 2009
Uncertainty, Volatility, And Inaction Since this crisis began, we’ve seen uncertainty, volatility, and inaction play out not only in the financial markets, but also in the halls and minds of our elected officials. Each is a bane to the economy, and stifles the ability of market participants and consumers to plan and carry out the business activities that keep people employed and spending money. A new chapter in our venture into the unknown began when Timothy Geithner announced his six and a half page plan to save the Universe. Although the DJIA is often and unjustifiably described as the “market” and any movements therein deemed the “market’s response,” it was clear by the end of that Tuesday that at a minimum, the equity markets did not like Geithner’s plan. But more importantly, in my opinion, is the reemergence of a disturbing upward trend in certain indicators, such as the Swap Spread. This suggests that banks are, once again, becoming more reluctant to lend to each other. To put things in less technical terms, the inter-bank lending markets are providing the steady drum beat of our death march, while the equity markets contribute unwieldy gesticulations of terror. The result is hardly efficient, and something drastic must be done if the banking system and the broader financial markets are to recover.
Defibrillator For A Corpse Regardless of your position on government spending and its effects on the economy, without solvent and functioning banks, there will be no economy to stimulate. If we continue to ignore the fundamental role that banks play in our economy, debates on government spending versus lower taxes will be had over burning garbage bins and cans of beans.

Our economy requires functioning credit markets in order to operate. Credit markets have grown to become dependent on the broader financial system because of the way in which credit risk is traded and distributed. Therefore, without functioning, solvent banks to create and manage these markets, and without investors confident in the stability of the broader financial system, our economy cannot function, no matter how much money we throw at it.

Despite this, the current administration has thrown all of its weight behind a gargantuan spending bill without first solving the core issue that precipitated and underlies the crisis: bank insolvency and illiquidity. This influx of cash may stem the tide by keeping certain businesses and consumers afloat with government cash, but it does little to nothing in the way of restoring stability and confidence in the financial system. In short, no matter what your economic philosophy is, pragmatism dictates taking action to restore the viability of the banks.

[boxcar]

We should all withdraw our money from the banks to facilitate the crash. We must bring down the banks and Big Gov all at once and simultaneously. We need to starve both of our money. Seems like a drastic and very painful solution, but it surely beats any fascist-oriented alternative that would only prolong the agony.

Boxcar

[lamboguy]

We should all withdraw our money from the banks to facilitate the crash. We must bring down the banks and Big Gov all at once and simultaneously. We need to starve both of our money. Seems like a drastic and very painful solution, but it surely beats any fascist-oriented alternative that would only prolong the agony.

Boxcar

hey, now i didn't think of that one, its a great idea.

however as bad as these financial institutions are, they are only the secondary problem. this country has turned from a manufactued based economy to a service based one. pretty soon there will either be nothing to service or no one able to pay for the service in united states currency.

not that this matters, but i think stock market starts to rally bigtime this week like maybe thursday for a few months, even if it looks like the world is going to end.

[Valuist]

The dot.com bubble burst didn't start until 2000. Earlier it was said it was in the 90s. The rise was in the 90s, not the bursting of the bubble.

We as a country need to take our medicine....NOT in the form of bailouts and out of control government spending. Recessions are a way to wash out the excesses. Why does the economy need to be running full throttle every day of every year? Obviously, it can't handle it. Some businesses NEED to fail, and with less government intervention, we'll get over things sooner. All this stimulus crap is going to do is prolong any possible recovery.

[onefast99]

The failure in the economy began with the downfall of the housing market and AIG bought billions of these loans and never once hedged aginst them going bad(in the form of a housing value decrease) . If that is a way to run your business you better hope it works, because if it doesnt you are going to go bankrupt, unless you are AIG and you have endless amounts of money the government will give you! To anwer your original question lambo, there is no fast way to get back to the days when we were prospering as a nation. Our natural resources are not used by much of the world let alone us. The previous president was blind when it came to the economy. He thought with one side of the brain and acted with the other. Obama inherits Captain Smiths wheelhouse on the doomed Titanic, there is not enough life rafts for the entire economy, its time to let some of the dead weight go before they drag us down deeper into a depression.

[Golf and Horses]

Monetary Reform Act - A Summary (in four paragraphs)

This proposed law would require banks to increase their reserves on deposits from the current 10%, to 100%, over a one-year period. This would abolish fractional reserve banking (i.e., money creation by private banks) which depends upon fractional (i.e., partial) reserve lending. To provide the funds for this reserve increase, the US Treasury Department would be authorized to issue new United States Notes (and/or US Note accounts) sufficient in quantity to pay off the entire national debt (and replace all Federal Reserve Notes).

The funds required to pay off the national debt are always closely equivalent to the amount of money the banks have created by engaging in fractional lending because the Fed creates 10% of the money the government needs to finance deficit spending (and uses that newly created money to buy US bonds on the open market), then the banks create the other 90% as loans (as is explained on our FAQ page). Thus the national debt closely tracks the combined total of US Treasury debt held by the Fed (10%) and the amount of money created by private banks (90%).

Because this two-part action (increasing bank reserves to 100% and paying off the entire national debt) adds no net increase to the money supply (the two actions cancel each other in net effect on the money supply), it would cause neither inflation nor deflation, but would result in monetary stability and the end of the boom-bust pattern of US economic activity caused by our current, inherently unstable system.

Thus our entire national debt would be extinguished – thereby dramatically reducing or entirely eliminating the US budget deficit and the need for taxes to pay the $400+ billion interest per year on the national debt - and our economic system would be stabilized, while ending the terrible injustice of private banks being allowed to create over 90% of our money as loans on which they charge us interest. Wealth would cease to be concentrated in fewer and fewer hands as a result of private bank money creation. Thereafter, apart from a regular 3% annual increase (roughly matching population growth), only Congress would have the power to authorize changes in the US money supply - for public use -not private banks increasing only private bankers' wealth.

H.R. 833

[onefast99]

Many banks will fail and the banking system will be nationalized to stem continued economic failure. The Chinese will lose the most as investors. Hedge funds will continue to wreak havoc with unleaded gas futures and oil.

[NJ Stinks]

I saw this at the Finacial Times UK website. I'm no economist but what I can digest makes sense. Until U.S banks are stabilized, we'll never get anywhere.

__________________________________________________ ______

Clear up the mess

Published: February 24 2009 20:48

With no end in sight for the US banking crisis, uncertainty is corroding worldwide markets. That has changed the political debate: what was once unmentionable – even government ownership of banks – is now loudly discussed. This is a good sign: leaders must show they are prepared even for worst-case scenarios. The US bank rescue plan contains the tools to do this – but the government uses them too timidly.

The plan, fleshed out by Treasury secretary Tim Geithner this week, gives banks a “stress test” to see if they have enough capital. This can bring much-needed light to banks’ murky balance sheets and return some predictability to markets. Currently, however, that is where markets’ horizon ends. Mr Geithner has not said what he will do to banks deemed under water. This makes an enormous difference to investors: until they know what to expect, private finance will not thaw.

More at the link below:

http://www.ft.com/cms/s/0/970c3324-02aa-11de-b58b-000077b07658.html?nclick_check=1

[DJofSD]

You want to fix the economy? Put something like the RTC in charge. It will eliminate the bad actors, allow the solvent institutions to prosper and at the same time clear out the toxic assets -- and we'll get clarity as to what exactly the failed institutions have on their books which is in large part what is causing the stock market so many anxious moments.

[ddog]

just with AIG , they basically ran a scam with the aid of the EU based banks for the most part.
the EU banks wanted to be able to get around their capital reg limits so AIG sold them "protection" against default that those banks could then use as "fake" capital to allow those banks to play in the financial ponzi scheme.

This was not just in home based stuff it was/is widespread across all types of industries.

That's why to a great extent the fed/gvt here were/are scared to death at the thought of all this stuff having to be unwound or even exposed.

The losses (paper) but still backing stuff out in the real econ are unknown i think even now.


It's a terrible situation.

Think of it like you selling a policy to someone that you have to payoff on if some strangers home burns down.
Now do that a hundred times over and over and over and trade bits and chunks of that to others in little POS and you have a clusterF**k that is spread everywhere.


it's just a bitch.


HAd a bit of experience with some fairly large S&L in the RTC days.

It was nothing like this complicated and wide spread.

I could support something along the lines of that if we would first reign in the banking rules , roll them back to the Glass/Steagall days first.

other wise you will just end up giving big prizes to people who will try to spin it all up again.

big mistake to think the system was viable from the last 15 years or so and try to reinflate under that same set of rules.

that should not be the goal imo.

[Marshall Bennett]

big mistake to think the system was viable from the last 15 years or so and try to reinflate under that same set of rules.

that should not be the goal imo.
The current situation is proof enough that the system wasn't viable . The current plan is to compound it by a unknown variable , but with even more bailouts on the horizon , adding interest , the factor could be multiplied a million times over . Needless to say , " Obamanomics " isn't off to good start , given the history of the system you refer to .

[Greyfox]

I'm not an economist and I'm not going to pretend that I know anything about fixing this currently broken system.

But this morning I read 5 pages of a "blogger" who seems to know what he's talking about. His name is Dave Nalle.
The article is Economic Stimulus: Real Solutions.

The article in it's entirety can be read at:

http://blogcritics.org/archives/2009/03/01/173721.php

Part of what he said was:

Page 1
"But to find real solutions you have to approach the situation rationally, and not in a desperate panic. Thus far the reaction of Congress as well as both the Bush administration in passing the TARP bill, and the Obama administration in passing the stimulus package, has been one of irrational panic; throwing money at the problem without thinking about the consequences of their deficit spending or more effective and more responsible alternatives."



Page 5 "First off, a great deal of what is in the "stimulus" package isn't stimulating. It doesn't create jobs or help people directly. It's a bunch of pet projects and spending on programs with very little stimulative value. That's just a waste of money and time. As for what real aid there is, it's used inefficiently. Putting the money through the hands of state governments and bureaucrats and hirelings and contractors before it gets to people in the form of welfare and jobs is grossly inefficient. It reduces the amount of aid that gets to actual people and it delays the rate at which that aid gets distributed.
If you accept the dubious idea that spending taxpayer money can create real stimulus in the economy, then the more money you spend and the more directly you get it into the economy the better. If that's the case then we would be better off taking the $800 billion and just mailing a check for $5000 to every person who filed a tax return last year. The cost would be lower overall, and the money would go directly into the economy — at a level where much of it will actually be spent. It would have a much more substantial and much more immediate stimulating effect. We'd still pay a big price in inflation down the road, but a large direct stimulus would work in ways which the planned slow and diluted one will not.

To actually get out of recession you need to cause the GDP to grow. That requires the creation of new wealth, not just redistributing taxpayer money. Creating new wealth is very difficult, especially when you try to do it in an already weak economy. The alternative is to make what we have more valuable, rather than less. This means doing the opposite of deficit spending. A combination of the two would be ideal.

Bankrupt and restructure failing businesses. Abandon the idea of cheap home ownership and accept renting as a lifestyle. Get government out of the economy and back to neutral regulation. Eliminate all corporate taxes. Artificially reduce wages while assisting workers to relocate and retrain. Cut back on the money supply. Intentionally cause deflation. Accept the idea of increased unemployment and decreased wages, at least in the short term. We'd be going back to 1990 and starting over again and trying to get it right this time. There would have to be some spending, but we'd likely pay a lot of the price in short-term hardship. This is where we have put ourselves, and real solutions like the ones I suggest here will do more good than all the pie-in-the-sky socialism and deficit spending which are going to drive us deeper into debt and just prolong the recession."

[Marshall Bennett]

Many economist have echoed the same . One wonders why it has so seemingly fallen on deaf ears of late . One could possibly conclude that we're in uncharted territory but the longer the crisis plays out , the particulars become more and more familiar . Does it take a genious to apply basic economics to a fallen system and adjust ? I don't beleive we've found ourselves in uncharted territory , I beleive its being created . I'm afraid after trillions have been spent and its still broke , a genious may then be in order .

[Track Collector]

Deaf ears?

Remember that today's government only cares about self-preservation, and any concern for the people is mostly for show. What else can explain all their foolish actions? Throughout time, people just can't help themselves when they come in to power and significant material wealth.

I do believe that there are a few in government who sincerely want to serve the people, but they are greatly out-numbered by the political elite in Washington, DC who believe in "business as usual". Their position only gets stronger when actions are taken to take away the benefits (wealth) of those who work hard and have made this country great.

Our only power as average citizens is to vote in NEW leadership on both sides of the isle over the next few years who are not already heavily invested in the current regimes.

[ddog]

check this out, even if it turns out to be a little too dark , it's still bad enough.

We are not in this thing alone, we have others we must depend on, too much for my taste , but that was all baked in the cake a decade or so ago so one must eat what's on the plate now......



Let’s begin our journey by pointing out a regulatory ‘anomaly’ which
has allowed European banks to take on much more leverage than their
American colleagues and which now makes them far more vulnerable.
In Europe, unlike in the US, it is only risk-weighted assets which
matter to the regulators, not the total leverage ratio. European banks
can therefore apply a lot more leverage than their US counterparties,
provided they load their balance sheets with higher rated assets, and
that is precisely what they have been doing.
That is fine as long as you buy what it says on the tin. But AAA is not
always AAA as we have learned over the past 18 months. Asset
securitisations such as CLOs proved very popular amongst European
banks, partly because they offered very attractive returns and partly
because Standard & Poors and Moodys were kind enough to rate many
of them AAA despite the questionable quality of the underlying assets.
Now, as long as the economy chugs along, everything is dandy and the
AAA-rated assets turn out to be precisely that. But we are not in dandy
territory. Many asset securitisation programmes are in horse manure
to their necks, so don’t be at all surprised if European banks have to
swallow further losses once the full effect of the recession is felt across
Europe. The two largest sources of asset securitisation programmes are
corporate loans and credit cards. Senior secured loans are still marked
at or close to par on many balance sheets despite the fact they trade
around 70 in the markets. The credit card cycle is only beginning to
turn now with significant losses expected later this year and in 2010-11.
Not much of a cushion left Citibank has calculated that it would only take a cumulative increase in
bad debts of 3.8% in 2009-10 to take the core equity tier 1 ratio of the
European banking industry down to the bare minimum of 4.5%1. By
comparison, bad debts rose by a cumulative 7% in Japan in 1997-98.
One can only conclude that European banks are very poorly equipped
to withstand a severe recession. Seeing the writing on the wall, they are
left with no option but to shrink their balance sheets. Despite talking
the talk, banks will use every trick at their disposal to reduce the loan
book. No prize for guessing what that will do to economic activity.
The wheels are coming off But that is not the whole story. It is not even the most worrying part of
the story. For the true horror to emerge, we need to turn to Eastern
Europe for a minute or two. Nowhere has the credit boom been more
pronounced than in Eastern Europe. And nowhere is the pain felt more
now that credit has all but dried up.


the w(hole) thing here, buckle in scotty you ain't in KS anymore!

http://www.arpllp.com/core_files/The%20Absolute%20Return%20Letter%200309.pdf


:kiss:

[Tom]

Obama has some respect for White House traditions....he signed the stimulus package on the very same desk where President Clinton got his package stimulated.

[Greyfox]

Obama has some respect for White House traditions....he signed the stimulus package on the very same desk where President Clinton got his package stimulated.

:lol: :lol: :lol: You deserve a cigar for that one.

[Marshall Bennett]

Clinton got more bang for his buck with his package .