Couple of bad news stories, unfortunately:
Social Security is running out of cash:
http://finance.yahoo.com/focus-retir...-readytoretire
Unemployment insurance is skyrocketing and businesses are getting hard:
http://money.cnn.com/2010/02/09/news...ntent=My+Yahoo
"Speak English! said the Eaglet. "I don't know the meaning of half those long words, and what's more, I don't believe you do either!"
The Eaglet from Lewis Carroll's Alice in Wonderland
That's news??Originally Posted by Ski
Latest and one of the most important articles by James K. Galbraith on why Public Debt is good and how it is impossible for a Government to run out of moneyExposes a lot of myths about money and how it drives economic benefit.
http://www.thenation.com/doc/20100322/galbraith
The rate of depletion is far faster than expected.
There have been a number of very interesting stories in the economic world over the last few months...I've been ass deep in schoolwork at SAMS and have only been able to screw around on the Net late in the evening for brief periods.
The EU is having major problems - specifically with the PIGS - that's Portugal, Ireland, Greece and Spain..which will ripple effects across the world.
The unemployment numbers are still going up in the US, the rate is slowing down.
The DJIA is way higher than it should be...where is the money coming from?
That's news??
"Speak English! said the Eaglet. "I don't know the meaning of half those long words, and what's more, I don't believe you do either!"
The Eaglet from Lewis Carroll's Alice in Wonderland
The Bailout money. Lending is down to it's lowest level since the Depression because Big Banks (Brokerage Houses) can make more money swapping stocks than investing in the Real Economy, part of the original reason the Glass-Stegall act was created during the Depression.
If that is what you think, then you should be shorting the market (I wrote a bunch of covered calls yesterday). But, as for where the money is coming from - it's coming from those areas of the economy that are perceived to be greater risks than the stock market. People fear inflation and interest-rate risk, so they're running to equities.
Schemd, it is to soon for inflation, the immediate threat is still deflation, after that will come the inflation and I agree with you it will come. The immediate goal of the Kleptocracy is to consolidate Banking power. The latest FDIC report shows more banks are in the red zone than ever before and since they cant face the public rage of another bailout......Big Banks will buy small and medium banks again concentrating power more than ever. It is already starting to happen. Pay attention to SunTrust......I grew up with and went to school with alot of those folks. What you are seeing happen was being talked about all the way back in the Reagan years. Just took them a little longer than planned.
http://www.marketwatch.com/story/ban...ion-2010-03-10
I think that's a poor explanation.
Who regulates derivatives? Who regulates futures? Okay, now who regulates securities that are derivatives and futures (futures options, for example)? There's a turf war there. Why? One Congressional committee oversees the CFTC. Another committee oversees the SEC. The former committee gets campaign contributions from agricultural firms and other commodities traders. The latter committee gets campaign contributions from bankers. Arguably, the CFTC and SEC two could perform better oversight if they merged or broke off portions of their bodies and formed a separate commission that focused on hybrid securities. But if the first course is pursued then then one committee loses some large donors. If the other course is pursued the both committees will fight for oversight of the new commission. As Barney Frank put it, in a surprisingly candid moment, "it is not politically feasible." And there it is.
Then there are insurance companies that are regulated at the state level. They like being regulated at the state level because they have developed patronage networks and relationships with state legislators. They don't want those long-cultivated relationships severed to be regulated at the federal level (there are also legitimate reasons to oppose it, but those are secondary).
Never attribute to a grand conspiracy what can be explained by politicians commandeering the legislative process to entrench themselves in power.
I agree that the banking "industry" strongly desires fewer rules and less responsibility so that it can continue to receive what is, in effect, a free government insurance policy for the downsides to its trading. But, again, this is a relatively simple fix on paper that will not be fixed because the legislators can't get past their own self-interests.
Last edited by Schmedlap; 03-11-2010 at 06:37 PM.
Slap:
Why public debt is good?
Last night, I was at a Board of Education meeting, and the subject was public debt.
Montgomery County Maryland figured out that they could make big strides on their school construction backlog by borrowing more money to get cheap contracts now (30% below three years ago, with all energy factors included).
Assuming the project basket was wisely selected (not too much of the required pork), the taxpayers, and jobs should do well.
Who but government could do this?
Steve
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