It's better then the article.



http://abcnews.go.com/blogs/politics/2011/... /

Thursday, November 3, 2011

by Robert Reich

The biggest question in America these days is how to revive the economy.

The biggest question among activists now occupying Wall Street and dozens of other cities is how to strike back against the nation’s almost unprecedented concentration of income, wealth, and political power in the top 1 percent.

The two questions are related. With so much income and wealth concentrated at the top, the vast middle class no longer has the purchasing power to buy what the economy is capable of producing. (People could pretend otherwise as long as they could treat their homes as ATMs, but those days are now gone.) The result is prolonged stagnation and high unemployment as far as the eye can see.

Until we reverse the trend toward inequality, the economy can’t be revived.






http://robertreich.org/post/12303771388

August 22, 2011

"Open Your Eyes: the Euro and Europe are on the Edge of the Precipice"

Eurozone Crackup

By MIKE WHITNEY

"We believe that the market has now entered a major downtrend. It is a mistake to dismiss the slide we’ve seen to date as mindless and devoid of fundamentals as many strategists maintain. These are not just scary headlines—-they are scary fundamentals.... There will undoubtedly be some more sharp rallies that will be interpreted as new bull markets. In our view, however, the bear market has only begun, and has a long way to go."

-- Comstock Partners, "Bear Market Rally Far From Over", Pragmatic Capitalism


A toxic combo of poor economic data in the US and a widening credit crunch in the eurozone has sent stocks plunging for a 4th consecutive week. On Friday, the Dow Jones Industrials fell 172 points as jittery investors exited equities for the safe haven of cash and government debt. Global equities have lost more than $6 trillion in the last month alone while the yield on the benchmark 10-year Treasury dropped to a record 1.99 per cent on Thursday. The low yields on Treasuries indicate the growing fear that troubles in the EU are reaching a crisis-phase. Political gridlock has increased volatility and triggered a slow-motion run on the EU banking system. The same process unfolded in the US for a full year before Lehman Brothers collapsed (from July 2007 to Sept 2008) putting the financial system into a death-spiral. Now it's Europe's turn. This is from the Wall Street Journal:

"A dramatic sell-off in European financial markets on Thursday renewed fears that Europe's banks are too weak to withstand the Continent's debt crisis, increasing the chances that the region's leaders will be forced to pursue radical steps toward fiscal union in order to preserve their single currency....

“That realization has in recent days prompted Germany, the region's economic powerhouse and an opponent of fiscal union, to reconsider proposals that would force it to accept responsibility for the debts of its neighbors. Thursday's markets rout, the worst in Europe in more than two years, suggests Berlin and Paris may have to act quickly. If investors lose confidence in the region's banks, Europe's financial system could seize up, tipping the euro zone into another recession." (" Renewed Fears Europe's Banks Too Weak To Withstand Debt Crisis", Wall Street Journal)

The situation is progressively getting worse. Money markets, commercial paper and the repo markets--where banks get their funding--are all under pressure. The time to act is now, but EU leaders remain frozen in the headlights.

http://www.counterpunch.org/whitney0822201...

The worst housing crash since the Great Depression just got worse. What happens when home values pop in other bubble metro areas?
New home sales fall 82 percent from peak versus 80 percent during the Great Depression

This is likely to be the first ever global economic disaster caused by real estate sponsored by big banks. During the Great Depression real estate values collapsed as the economy contracted and millions lost their jobs. That is the typical pattern of real estate bubbles bursting. Something in the economy creates a vision of a new paradigm and money starts flowing into real estate as a consequence of this euphoria. This happened in Japan as their economy and stock market frothed over with mania. There is no time in history that the entire world from the U.S. to Canada to Australia to Spain to China suddenly went into a massive trance and believed that real estate suddenly would carry the weight of every single economy forward. Of course what we are seeing is the unraveling of this system. The bubble has burst. Yet the banking system that relied on real estate as their game of choice in the casino cannot come to terms with reality because it would render them insolvent (which they are by the way). So instead, the charade continues yet the public is catching on to this mass deception. What happens when the worst housing crash since the Great Depression gets worse?

http://www.doctorhousingbubble.com/worst-h...

August 4, 2011

An Open Letter to President Obama

Casting Aside Elizabeth Warren

By RALPH NADER

Dear President Obama,

Today is Elizabeth Warren's last day at the Treasury Department where she performed, in your opinion, very commendably in laying the groundwork and recruiting the excellent staff for the new Consumer Financial Protection Bureau inside the Federal Reserve.

At the same time that you cast her aside from the position to head the Bureau--clearly the most impressive candidate for that responsibility on many criteria--your emissaries were busy at posh Manhattan restaurants raising money from the Wall Streeters. Very successfully so. Reports are that of the first $100 million of your $1 billion campaign warchest, over one-third has come from the financial industry.

Wall Street bankers and brokers were opposed to the nomination of Elizabeth Warren. Everyone knows why. She has their number and she would have been a knowledgeable tough federal cop on the financial corporate crime, fraud and deception beat. Millions of fleeced Americans, many of whom lost their pensions, their savings, their investments, needed and wanted her to be at the helm.

Does it bother you at all to know that as you were doing what Wall Street wanted you to do vis-à-vis Elizabeth Warren, your people were begging Wall Street for money and implying that you've earned their support because you just turned your back on your liberal/progressive base that sent you to the White House and did Wall Street's bidding?

http://www.counterpunch.org/nader08042011....

August 1, 2011

Obama's Big Payback to Wall Street

The Worst Deal in American History?

By MIKE WHITNEY

Is Obama's debt ceiling agreement the worst deal in US history?

Probably. But not for the reasons that are presently being discussed in the media. What makes the deal such an unmitigated disaster is that it strips congress of its Constitutional authority to control the nation's purse-strings. That authority will be handed over to a bipartisan committee that will decide how to slash $1.5 trillion from the budget in order to reduce the deficits. But, since the committee will be evenly comprised of Republicans and Democrats, there's bound to be disagreement about what programs should be cut. This is all by design, because if the committee is unable to decide where the cutbacks should be, then the decision will be made for them via an "enforcement mechanism" that will require across-the-board spending cuts.

Pretty sinister, eh? It's is a backdoor way of repealing Congress's primary authority while making austerity the default position of the US Government. Whenever in doubt, "Cut spending". Naturally, the GOP refused any agreement that would involve new taxes.


http://www.counterpunch.org/whitney0801201...

Weekend Edition
July 29 - 31, 2011

Debt Ceiling Doomsday

Shadow Banking and the Repo Market

By MIKE WHITNEY

]i\ "International markets are absolutely on tenterhooks, because up until now there really has been a pretty blithe assumption that sooner or later politicians would strike a deal, and it would probably be last-minute, but a deal would be done before Aug. 2.

What is really starting to think in right now is that not only is there a growing risk the rating agencies could downgrade U.S. debt, even if there is some kind of short-term Band-Aid solution, but secondly there may not even be a deal by August the 2nd. And so a lot of people in the financial markets right now are starting to look at what-if scenarios and creating plans for what they half-jokingly call doom day, potential -- or D-day, potential default day."

-- Gillian Tett, editor Financial Times, PBS Newshour

Okay, so we all knew that the cultists and screwballs who run the GOP were going to take this to the 11th hour, right? But who knew that once they got us out on the ledge, they wouldn't know how to cut a deal? Instead, Tea Party confederates seem determined to make sure the US plunges into the abyss. They want to add a balanced budget amendment to the current legislation which has no chance of getting it passed. President Barack Obama has already promised to veto the bill.

So, here we are, just 4 days away from the August 2 deadline, and no closer to a budget agreement than we were two months ago when this whole fiasco started. Only now, Wall Street is worried, the public is pissed off, and anyone holding US Treasuries around the world is starting to rethink their portfolio. On top of that, the markets have been pounded for 4 days straight, futures are falling like a stone, and the economic data is getting weaker and weaker all the time. (BEA reports that 2nd Quarter GDP came in at an anemic 1.3%) The last thing the country needs is another crisis to send the economy sprawling back into recession. Here's a clip from an article in the Financial Times:

http://www.counterpunch.org/whitney0729201...

July 26, 2011

Under Cover of "Crisis"
Obama's Ambush on Entitlements

By MICHAEL HUDSON

You know that the debt face-off is as staged as melodramatically as a World Wrestling Federation exhibition when Obama makes the blatantly empty threat that if Congress does not “tackle the tough challenges of entitlement and tax reform,” there won’t be money to pay Social Security checks next month. In his debt speech last night (July 25), he threatened that if “we default, we would not have enough money to pay all of our bills – bills that include monthly Social Security checks, veterans’ benefits, and the government contracts we’ve signed with thousands of businesses.”

This is not remotely true. But it has become the scare theme for over a week now, ever since the President used almost the same words in his interview with CBS Evening News anchor Scott Pelley.

Of course the government will have enough money to pay the monthly Social Security checks. The Social Security administration has its own savings – in Treasury bills. I realize that lawyers (such as . Obama and indeed most American presidents) rarely understand economics. But this is a legal issue. Obama certainly must know that Social Security is solvent, with liquid securities to pay for many decades to come. Yet . Obama has put Social Security at the very top of his hit list.

http://www.counterpunch.org/hudson07262011...

By: Mike_Whitney

"We have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand." John Maynard Keynes

Black Tuesday. On October 29, 1929, the stock market crashed triggering the worst economic collapse in history, the Great Depression. Thousands of banks and businesses failed, shanty towns sprung up across the country, and 15 million Americans (25% of the workforce) lost their jobs. President Herbert Hoover, who believed the turmoil would be over in a matter of weeks, opposed providing aid to the needy and unemployed. He supported the same policies as his GOP heirs in Congress today who seek to deepen the present crisis by cutting unemployment benefits, slashing fiscal stimulus and balancing the budget on the backs of workers.

The Hoover Doctrine was summed up by Treasury Secretary Andrew Mellon who famously said, "Liquidate labor, liquidate stocks, liquidate real estate...purge the rottenness out of the system." Mellon's views prevailed and by July 8, 1932, the Dow Jones Industrial Average had fallen to 41 points (an 89 percent drop from its peak in 1929) while the economy sunk into a decade-long slump.

Before the crash, stock prices had been propped up by massive amounts of margin debt that melted away in a deflationary inferno when the panic selloff began in late October. The calamity took down 4,000 banks and left the broader economy in ruins. John Kenneth Galbraith summed it up like this in his masterpiece "The Great Crash: 1929":

http://www.marketoracle.co.uk/Article29021...

By Mike Whitney

Equities markets have been battered all week by bad economic data sending investors piling into "risk free" Treasuries. The Dow Jones slipped 276 points on Wednesday followed by a 41 point loss on Thursday. The benchmark 10-year Treasury has ducked below 3 percent repeatedly signally a slowdown that could lead to another recession.

On Wednesday, the S&P/CaseShiller home price index confirmed that 5-year long housing crash was still gaining pace. Home prices have fallen to their lowest level in 8 years with no end in sight. Meanwhile the Chicago Manufacturing Gauge recorded its biggest decline in 2.5 years while factory orders dropped in April by the most since May, 2010. There was also bad news on the unemployment front where privately-owned businesses hired only 38,000 workers from April to May, nearly 100,000 less jobs than analysts had predicted. Also, consumer confidence fell to its lowest reading in six months.

So, housing, manufacturing, unemployment and consumer confidence are all down, down, down and down.

Friday's unemployment report was also worse than expected. The Bureau of Labor Statistics (BLS) reported that unemployment rose to 9.1 percent while the Labor Force Participation Rate remained stuck at 64.2%, well below the normal rate of 67%. According to Calculated Risk, "The current employment recession is by far the worst recession since WWII in percentage terms...(The BLS report) was well below expectations for payroll jobs, and the unemployment rate was higher than expected."

So, no new jobs are being created and the economy is quickly decelerating. It's all bad.



http://www.marketoracle.co.uk/Article28499...

May 10, 2011

Is This the End of the Road?

Countdown to Default

By MIKE WHITNEY

Sometime in mid-May, the United States will hit the debt ceiling ($14.3 trillion) which is the legal limit that the country can borrow without congressional approval. If the ceiling isn't raised, the US will default on its debt and the government will begin to shut down. But that appears to be less likely now than it was a week ago because Treasury Secretary Timothy Geithner has implemented a plan that will pay off bondholders and keep the government operating until early August. Geithner's accounting maneuvers are designed to give the Obama administration and congress a little more time to hammer out the details on a final budget deal. But that's not going to be easy, because Democrats and Republicans are still far apart on the issue of spending cuts, and neither party is willing to give ground. And that's why Wall Street is so worried, because if a settlement isn't reached soon, the uncertainty is liable to roil markets and send stocks plunging.

The conservative Republican Study Committee is calling for "immediate spending cuts, spending caps at about 18 percent of GDP and a balanced-budget amendment similar to the plan unveiled by Senate Republicans in March." (Washington Post) That's not the kind of "compromise" that the Obama team is looking for, nor will the Dems agree to slash spending and risk a double dip recession just to placate GOP deficit hawks. That's a non-starter. So, the standoff will probably drag for a while longer while the looming August 2 deadline gets closer and closer. If negotiations break-down and policymakers aren't able to reconcile their differences by early August, then the big steel door on the Treasury vault will slam shut, government payments will stop, and the United States of America will default.

No one expects that to happen. The US has never defaulted on its debt and it's not going to now. But, guess what, it really doesn't matter, because by the time congress agrees to a deal, the damage will have already been done. You see, foreign banks and financial institutions don't base their investment decisions on what actually happens, but what they "think" will happen. So, if the political stalemate continues, investors will get increasingly nervous and move their money out of US Treasuries and into something else. And, that WILL happen because, every day that goes by, the uncertainty builds and investors grow more apprehensive.


http://www.counterpunch.org/whitney0510201...

Weekend Edition
April 29 - May 1, 2011

Hanky-Panky at the Fed

Grand Theft Benny

By MIKE WHITNEY

It's the biggest flim-flam in the nation's history. But, thanks to the Congressional Research Service, the scam has been exposed and the public can now get a good look at the type of swindle that passes as monetary policy.

Here's the scoop: When Fed chairman Ben Bernanke initiated the first round of Quantitative Easing (QE), the stated goal was to revive the flagging housing market by purchasing $1.25 trillion in mortgage-backed securities (MBS) from the country's biggest banks. The policy was a ripoff from the get-go. No one wanted these mortgage stinkbombs that were stitched together from subprime loans to unqualified applicants. But because the banks were already busted--and because the $700 billion TARP was barely enough to keep the ventilator running until the next bailout came through-- the Fed helped to conceal its real objectives behind an elaborate PR smokescreen. In truth, the Fed must have colluded with the banks to move the toxic assets off their books (and onto the Fed's balance sheet) with the proviso that the banks withhold foreclosed homes from the market.

By keeping the extra homes off-market, supply went down, demand went up (slightly), and housing showed signs of a rebound. The withholding of supply was synchronized with the Firsttime Homebuyers credit, which provided an $8,000 subsidy to new home buyers. This pumped up housing sales and further concealed what was really taking place, which was a gigantic transfer of public wealth to the banks in exchange for putrid assets that no one wanted. Naturally, the process kept the market from correcting and added vast numbers of foreclosed homes to the shadow inventory.

http://www.counterpunch.org/whitney0429201...

March 28, 2011 9:25 AM


Taking in Charles Ferguson's excellent documentary, Inside Job, about the dark doings of Wall Street in our time, I confess I was awestruck all over again at the complete surrender of Obama to the very characters who embodied the corruption that rotted our system from the heart outward. Summers, Rubin, Geithner, and a host of other revolving door grifters who did everything possible to set up the implosion of banking, defeat the rule of law in money matters, and ruin millions who wanted nothing more than something useful to do in this society for a living wage.

Most impressive of all in this brave film were the shameless academic mandarins caught on camera trying to weasel out of their greed-driven misdeeds - Glenn Hubbard, chair of the Columbia University Econ department, a perfectly programmed polished WASP (like out of a "Ken" doll box) on the outside, slithering corruption inside, who played a major role in removing all restraints on Wall Street, then served as a director on the boards of several predatory financial giants, including the biggest, Black Rock, and pretended not to remember if he got paid for it;
Martin Feldstein of the Harvard Econ department, in-and-out of government like a rat in a cheese-box, who sat on the board of AIG in the months before it blew itself up on credit default swaps, and who saw nothing about the company's operations that gave off a bad odor after it entered the most massive government receivership the world has ever seen; and most memorably Fred Mishkin, former Federal Reserve governor, now an academic rover, who wrote a cheerleading report for the Icelandic banking system about five minutes before it collapsed, then changed the report's title from Financial Stability in Iceland to Financial Instability in Iceland, then denied it on camera in the face of obvious evidence, then forgot whether he got paid six-figures to write the glowing report, then dissolved on camera into a maundering puddle of indignity and humiliation.

How do these rogues survive the disclosure of their turpitudes? Is there no one at places like Harvard and Columbia who has any sense of shame or even an inkling of disappointment that they employ such odious hustlers? Apparently not. This is a system with no mechanism of self-regulation left. And there's Obama at the tippy-top of it serving like a department store mannequin with a Department of Justice that someone has hung a "gone fishin'" sign on. I voted for him in 2008, and I want to start a movement in whatever's left of the Progressive core to get rid of him. Being a decent, presentable fellow with a nice family is just not enough. Even his vaunted speech-making abilities have gotten on my nerves. If I hear him say "make no mistake" one more time, someone will have to restrain me from kicking in the flat screen TV. Obama, it turns out, is the mistake.

http://kunstler.com/blog/2011/03/make-no-m...

(March 11, 2011)

by charles hugh smith

Financialization and centrally planned speculative credit bubbles have undermined the real economy: that's why things are falling apart.

There is no pleasure in "I told you so" when things fall apart. Many of us recognized the artifice and folly of the credit-housing bubble "Bull market" as early as 2004, but few cared to listen because they were deeply complicit in the Status Quo's legerdemaine: their home was rising in value, their pension fund was being fattened, their sales were rising on the onrushing tide of abundant, cheap credit, their tax revenues were soaring, and their benefits/perquisites were notching higher with every tick up of the stock and housing markets.

Faith in a centrally planned economy operating under the flimsy guise of cartel-State "capitalism" was supreme, as were greed, self-absorption and an overweening sense of entitlement to consumerist "prosperity."

Both corrupt political parties enthusiastically embraced the bubble-culture of fraud and speculative excess, for they too benefited from the illusory glow of "permanent economic growth" and the ever-richer contributions from the fiefdoms, cartels and Financial Elites who gained the most from the credit-based frenzy.

The "prosperity," "growth" and "wealth" were all illusory, but the pain is real. Hardworking, dedicated, smart, experienced people are being laid off into an economy with few prospects. Young people are graduating from university into the same bleak atmosphere of a paper-thin facade of magical thinking and propaganda finally crumbling.

Things are falling apart because the economy has been undermined by financialization and the extreme concentrations of capital and State power. I think these charts tell the story rather well:

Here we see the Federal Reserve-engineered credit-based speculative financialization bubbles and busts reflected in the stock market. All that cheap credit sloshing around created asset bubbles which sucked in capital and borrowed funds seeking extraordinary returns. Then when the bubble inevitably popped, the players were left with the debt, which remained real, while their illusory wealth vanished.

http://www.oftwominds.com/blogmar11/things...

Weekend Edition March 4 - 6, 2011

The Return of Subprime

What's Driving the Surge in Auto Sales?

By MIKE WHITNEY

Subprime is back!

Only this time it's popped up in the auto market where it's triggered an impressive surge in sales. According to Marketwatch, General Motors February sales topped 45% to a robust 207,028 vehicles, way above analysts expectations. But soaring car sales have less to do with the allure of those gussied-up Silvarados than they do with "easy financing" for people with less-than-stellar credit. Here's a clip from an interview on Wednesday's Nightly Business Report with Autonation's President Michael Maroone that helps to explain what's going on.

NBR's Susie Gharib: Another dose of good news today from the auto world, a day after Detroit`s big three reported strong February sales. Autonation, the country`s largest seller of new and used cars, reported a big jump in its numbers. New vehicle sales rose 29 percent compared to a year ago. And U.S. brands made up 40 percent of sales. GM models were especially popular..... Mike, what about any kind of special deals or incentives to entice consumers to buy?

Maroone: Well, almost every day there`s a new incentive. They`re used in a very tactical manner. The incentives are relatively flat with prior periods. But today we saw GM announce zero percent financing, up to 72 months on specific models. We`re seeing Honda increase their incentives. Nissan`s got a very aggressive program. Toyota has been aggressive. So almost every manufacturer has something and it varies tremendously. It`s certainly tactically driven and it is stimulating business.

Gharib: What about on the credit side, for someone that does need financing, is it getting easier to get a loan or is it still pretty tough?

Maroone: Susie, it`s gotten much easier. The big driver of the recovery in 2010 was the restoration of credit. The change in 2011 is we`re now seeing an improving environment for sub-prime. So last year prime and near prime were more normal and this year we`re starting to see the sub- prime segment come along and that`s very important for our industry. (The Nightly Business Report)

Repeat: "72 months zero percent financing" to people with dodgy credit. Sound familiar?


http://www.counterpunch.org/whitney0304201...