I continue to be truly amazed at the stupidity displayed by our government - both state and federal. First, on the Federal level:
At the center of the plan, which administration officials are referring to as a "white paper," is a move to remake powers of the Federal Reserve to oversee the biggest financial players, give the government the power to unwind and break up systemically important companies -- much like the Federal Deposit Insurance Corp. does with failed banks -- and create a new regulator for consumer-oriented financial products, according to people involved in the process.
Right. And The Fed's record? Right here, as I have repeated several times:
Chairman Bernanke before the Congressional Joint Economic Committee on March 28th 2007, just a few days later: "Although the turmoil in the subprime mortgage market has created severe financial problems for many individuals and families, the implications of these developments for the housing market as a whole are less clear. The ongoing tightening of lending standards, although an appropriate market response, will reduce somewhat the effective demand for housing, and foreclosed properties will add to the inventories of unsold homes. At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency."
Chairman Bernanke at the Federal Reserve Bank of Chicagos 43rd Annual Conference on Bank Structure and Competition, May 17th, 2007: "We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system."
Chairman Ben S. Bernanke speech to the 2007 International Monetary Conference, Cape Town, South Africa, June 5th: "The troubles in the subprime sector seem unlikely to seriously spill over to the broader economy or the financial system."
Chairman Bernanke to Committee on Banking, Housing, and Urban Affairs, U.S. Senate, April 3rd, 2008: "Clearly, the U.S. economy is going through a very difficult period. But among the great strengths of our economy is its ability to adapt and to respond to diverse challenges. Much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year."
Less than six months after that last pronouncement, the stock and credit markets imploded.
Never mind the intentional manipulations of our markets that have made things much worse, not better, all undertaken in whole or part by The Fed, and all of which were claimed to be solutions to our problems:
This is an organization that should obtain more authority?
Absolutely none of the so-called "prescriptions" to moderate or fix the mess we are in have worked nor can they, as none of them address the root cause of the problem.
In the "real world" I would be at least fired and probably under criminal investigation to determine if I had intentionally harmed the organization that I worked for.
Next up we have Joe "I've got an IQ smaller than my shoe size" Biden who said:
WASHINGTON (AP) Vice President Joe Biden said Sunday that "everyone guessed wrong" on the impact of the economic stimulus, but he defended the administration's spending designed to combat rising joblessness.
Everybody eh? Hmmm.... Gee, you folks in the mainstream press don't read many Tickers, do you? Or, for that matter, Mish Shedlock, who has pretty-well nailed this as well. Both of us, along with a few others, have consistently been right since this entire load of garbage began. You can look at the Tickers from January and February of this year, you can look at them from 2007, or from 2008.
A few examples? Shall we set the wayback machine to February 10th?
You stood in front of the American Public and lied through your damn teeth. You claim that America faces a "catastrophe" if we don't pass your bill - but its not YOUR BILL, its Pelosi's and Reid's bill - a bill full of PORK and BS.
Perhaps January 24th tickles your fancy:
You can't use credit to pay bills in a sustainable fashion. That is, pulling forward demand is destructive to the economy and paying principal and interest ("Bills") with the issuance of yet more credit is suicidal.
Or perhaps you prefer January 5th:
There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved. Ludwig von Mises
This is mathematics folks, not politics. The mathematical facts do not care if you're Republican, Democrat or Martian. Anywhere and everywhere there is a capitalist economic system where people have recognized the right to own, control and direct the use of private property with the intention of making a profit such a cycle is inevitable and interference with liquidation of "bad bets" always results in more severe economic damage to the system as a whole.
Maybe you'd prefer September 23rd, 2008?
Of course Bernanke said that if the bailout isn't passed the economy will contract. What he didn't say, but should have, is that it is going to contract anyway (bailout or not), and in fact already is. We are in a recession now and this is in fact unavoidable as the bad debt must be defaulted.
I could keep going, but you get the point I'm sure. The entire record - all of it, every single post - is here for you to peruse. Have at it, and judge me on my record, then compare against Bernanke, Obama, Pelosi, Reid, Paulson, Geithner, Bush, McCain or all of your "vaunted" economists who have led you down the primrose path.
I'll put my record up against any of them.
Nor is the Federal Government alone. California is being stupid again as well:
California is imposing a 90-day moratorium on housing foreclosures under a new law that takes effect Monday.
Yet another attempt to "kick the can" while explicitly ignoring the cause of the problem - excessive debt and unsupportable valuations caused by fraud.
The media doesn't help. The WSJ has been reporting an entirely-fictional "P/E" ratio on the major indices for months, ignoring investment and credit losses (using what is called "operating earnings"), which is fundamentally dishonest. What - a loss that is caused by writing crap loans didn't really happen? Since when?
This has been somewhat corrected - I say "somewhat", because the numbers are still wrong. The last check I made of the S&P 500 on "as reported" earnings (a month or so ago) pegged the P/E over 100. But now the WSJ's "data page" is showing the Nasdaq at 34.7, the S&P at 36.4, and the Russell 2000 as "nil".
Two questions: What possible benefit to the readers of the paper does the WSJ bring by distorting market P/E ratios, and why the sudden change back to including credit losses? None of this was announced anywhere; unless you watched the footnotes, you'd have never caught it. And exactly who is Birinyi Associates (their "data provider" for this), and where is the disclosure of their methodology and math? Since the WSJ is the nation's "business paper of record" would really be that hard for their business desk to do this work themselves? Well, no, but then they'd be responsible for it. "See duck duck!" A most-honest report from S&P itself is found at this link; why doesn't the WSJ simply use the folks who publish the index?
Finally, how do you like owning stocks with a P/E of 36.
Look folks I realize nobody likes hearing this, but I'm not going to quit saying it: asset prices that are pumped due to financial fraud, which then entice people to take on unsupportable and insoluble debt using them as collateral always leads to a huge economic bust.
In fact, every single economic depression since the founding of our republic and before, back to Tulip Mania, in fact was caused by this very same thing.
There is no means to "stop" the corrective process, one can only make it worse. The best, proper, and indeed only choice is to force all the bad debt into the open, force those who both lent and borrowed imprudently to go bankrupt, and allow asset prices to collapse back to sustainable levels.
Whether you want a different solution does not matter.
The math does not permit any other outcome.
When, my friends, will Americans demand that the children who have been playing with firearms and have now (economically) shot anywhere from 9% to 18% of the economy's jobs (depending on whether you prefer U-3 or U-6) be disarmed and ejected from the public sphere, allowing adults into the room and for the inevitable unwinding of this speculative debt bubble to occur - an unwind that must be completed before we can return to a sound economy?
Americans refused to demand it in the summer of 2007.
They refused in the spring of 2008.
They decided to acquiesce when TARP was passed in the fall of 2008.
They believed in "hope and change" in the first months of 2009, and the "benefits" of the stimulus bill.
And now you're being sold down the river once again.
America has two choices: continue to suffer as a direct consequence of the charted course of this ship of fools and its infantile crew, or demand that they all be thrown into the brig and that the adults be allowed to read the charts, view the depthfinder, radar and compass, and chart a course that, while not easy and not without pain, will lead to success - and an economic recovery.
The choice is yours America.
How much more of this will you accept?
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