ECONOMIC HOUSE OF SAND

There has been a lot of misplaced euphoria around jumps in the stock market and big Black Friday sales. The EU is in deep economic trouble. People need to keep something in mind. Where does all of the bail out money come from? It comes from the 99%. In order for EU nations to reduce their debt, they will be forced to cut government spending-things like pensions, health care, education...Jobs will be lost. Then, The EU nations will have to raise money, taxes, to pay off debts. Will they tax the wealthy? Well, if the U.S. is any measure, the answer is no.  Millions will suffer so that 'investors' will get their money-YOUR MONEY. Do you really think this is sustainable?

Then, we have 'economists' touting the huge outlays for holiday spending. But, we also have reports that tell us, yes, some gizmos and gadgets were bought, but, most people bought necessities at bargain prices. This is not a sign of recovery. Further, more consumer debt is racked up to pay for these expenses. This is debt the 99% cannot afford.

The underpinnings of the global economic system are collapsing, being washed away like sand by an economic philosophy of greed. But, keep piling blocks high enough and eventually it gets top heavy and collapses. If you are looking for signs of trouble as we head into 2012, the economy is one sure sign that spells trouble-big time!

BIRTH PLACE OF DEMOCRACY TOLD DON'T INVOLVE CITIZENS

WHAT IRONY! The birth place of western democracy, Greece, is basically being told by the West not to be democratic by holding a public referendum on the Greek deficit crisis.

The Greek citizens did not create the crisis, but are being asked to pay the price for the sins of a few politicians and the banks.

Sound familiar? A similar situation occurred in Iceland and the people said no, twice, to paying off bad debts made by the banks. Did the world economy collapse? No. Why should it collapse if the Greeks get the right to say no to big money interests? What is really disturbing is the total lack of concern for people, and the total obsession with ensuring that bankers and investors make profits. This same scenario is happening around the world. Bailout/bonus mania is a disease that just does not respond to medication. The more they get, the more they want, regardless of the consequences to men, women and children. They don't care if you lose your home, can't feed your family, can't afford health care and can't find work.

How long must we sing this song?

THE ECONOMICS OF SCREW ME ONCE, SHAME ON YOU...

Screw me twice, shame on me. There can be little doubt those that control and dominate the American and world economy have had it pretty easy. Any time they get into trouble they simply cry 'too big to fail'and their puppet politicians simply take money from what was once a middle class and bail them out. The most recent being around $800 billion. And, while these 'too big to fail' companies make usurious profits and pay absurd bonuses for failure, they create no new jobs under the protection of the 'consumers aren't buying' mantra. Could it be because they have all of our money? But there has been so much said and written on this topic it is not worth repeating the list of corporate atrocities committed upon the consumers of the world. The bail out was the first, or rather the most recent and obvious, screwing. Shame on them.

These same corporate entities are now trying to screw us again, and if they are successful, shame on us. Hopefully, you all know that mid-term Congressional elections are coming up in November. The current mantra of these forces tends, on the surface, to sound appealing. Sound bites "cut the size of government, reduce government spending, keep tax cuts, fire the teachers, we can't afford to address climate change, reduce regulations, etc.," does have some appeal in a troubled economy. But what is really behind these corporate funded attacks? Of course they want the size of government reduced. If there a fewer food inspectors, environmental regulators, health and safety employees, they get more free rein to do as they please. Reducing government spending allows them to make more profit as they will be taxed less. Keep tax cuts helps the rich to stay rich. The poor don't pay many taxes anyway so it's not like tax breaks are very useful for the increasing numbers of people falling into poverty. They are not there because of taxes but because they have lost their jobs and banks are taking their homes.

Did you notice that just when people began to take climate change seriously that we had an economic crisis? How many times do we have to listen to the idea that increasing mpg will raise the price of cars and no one could afford them? Hell, we can't afford the cars they are making now. But we know that the technology exists for non-polluting/high mpg cars. But that means less money for the oil cartels. Spending money of safe and environmentally oil exploration would decrease the corporate bottom line. Corporations claim that such regulations cost jobs and raise the cost of energy so we can;t do that. How many people want to listen to 'save the environment' when they have a hard time putting food on the table?

Reducing the size of government, firing teachers to save money and massive public employee layoffs will not help the economy. If no jobs are being created, where will these people work? If we go on a benefit cutting spree, then how would all of these people live? Is there room for reform and efficiency improvement? Of course, but a wanton and reckless loss of government jobs will do nothing to help the economy. Although, it will allow the banks to take more homes away. Clearly, right-winged financed political campaigns against everything means that they are for themselves, not for us. Look at the resistance to the extension of unemployment benefits; efforts to take away Social Security benefits; the lack of interest in feeding hungry people; the unwillingness to help us get affordable health care and the basic disdain to human suffering and ask how these actions could benefit you.

There is no question that we need improved efficiencies and abuse of programs needs to end. But the demonetization of government workers, the poor, the middle class and efforts to create a sustainable and peaceful world serves only the interests of those that have a lot and not the interests of the majority of people. If you buy into the corporate financed propaganda, shame on you!

FINANCIAL CRISIS: THE CASE FOR ECO (NOMIC) - DIVERSITY

Nature provides us with many lessons that we all too often overlook or ignore. Take a newly created pond. While initially almost lifeless, it soon becomes the home for millions of bacteria and one celled organism. Water loving plant seeds arrive on the winds of a spring breeze. Frogs find it a haven for their eggs. Bird droppings add more life. Almost miraculously small fish appear. Insects begin to thrive and their eggs add to the pond’s foods supply. Mammals come to quench their thirst and take up nearby residence. Soon predators arrive and a system of checks and balances develops that keep populations under control. All becomes interdependent and the eco-system thrives through diversity.

This stable and thriving eco-system is then visited by a new predator-one with no natural enemy. It soon begins to devour the larger of the pond’s inhabitants. Smaller populations then begin to grow and overcrowd the system. Competition for food leads to a system in distress and the extinction of smaller organisms. The food chain is disrupted and other organisms begin to die out. Scavengers disappear and carcasses once consumed become the home of disease. The system collapses and the once bountiful pond becomes stagnant and putrid. The new predator moves on to its next pond.

Biological diversity keeps the natural environment healthy and thriving and this is a major lesson that should be embraced and studied by economic and political leaders. While anti-trust laws fought some of the early abuses of the Industrial Revolution, later generations found the need to add occupational safety, child labor, consumer protection, and regulatory legislation to combat the growing power of the business elite. In other words, efforts were made to abate the abuses of the economic pond’s major predator. The problem is that those who were being regulated found the way to become the regulator. The growing complexity of the financial systems meant that those being regulated had to advise those who sought to reign in the power of the few. It is clear, that the small fish in the economic pond where losing their battle to maintain a healthy and balanced eco (nomic)-diversity.

Once thriving small town banks were devoured larger financial institutions and small town stores were gobbled up by the ‘mall’. The economic predator grew in size feeding off of the small fry’s and smaller economic species began to die off. The new predator got so large that not a single aspect of society was beyond its grasp. It consumed politicians, the media, social reformists, medicine, literature and foreign policies. It even managed to take over the production of currency and secreted a deadly virus called credit. But like all predators that consume its eco-system, they were destined to collapse the system. This is what we now call the ‘financial crisis.’

The eco (nomic)-system in which this predator lives now borders on extinction. The odd thing is, the prey on which it feeds has grown so accustomed to its presence that it is now offering up sacrifices in the hope of staving off the inevitable. It is feeding it more food, money, and helping it consolidate its power. It is devouring its own offspring, growing even larger, and spelling certain destruction of the system in which it flourished. It has nearly totally eliminated any competitor and yet it still desires to consume even more. In order to survive, the world needs to restore eco (nomic)-diversity. The world, to restore balance, needs more than one bank; more than one oil company; more than one store to shop in; more than one form of energy; and, more than one producer of food. The monopolies are back and they are using our money to grow even bigger.

In order to restore eco-diversity, the notion that ‘big is better’ must be replaced by the old mantra, ‘small is beautiful.’ Smaller, diverse systems create a healthy economic environment. Does this create economies of scale? No. However, it does preserve ‘economies.’ Economic mutualism and the consolidation of perceived economic power has infected the economic organism. If one part of this organism is diseased, it infects the entire economic body and spreads like an unstoppable cancer. Anti-biotic bailouts will not work- the disease has developed immunity. The recent economic stimulus packages are like penicillin, but the diseased organism will not respond and the cure may actually increase the spread of the infection.

A plant that depletes the soil of nutrition will soon die. No amount of added water or sunlight will save its life. Farmer’s in the dust bowl learned this lesson the hard way. Our economy is a plant that has depleted its source of nourishment - the consumer. Add all of the bailouts you want to the plant, but it will still die. The soil, the consumer, needs the nourishment. Want to end the current financial crisis? Then we must fertilize the soil and diversify the plants.

GIVE THE MONEY TO THE PEOPLE!

The trickle down theory does not and has not worked. It is time to give the money to the people and not big corporations and the “used to be” giants of Wall Street. We have seen all kinds of moves on the part of Wall Street backed government officials to bailout toxic debt and the flailing stock market. If you do not have a degree in advanced economics, most of what these officials are doing and saying sound like gibberish. In fact, it is gibberish!

World-wide bailouts are not working. They were destined to failure from their inception. The Bush refrain that we must “give it time to work” is a ploy to keep the public from discovering the real truth. The economy is broke, something is very wrong. Laissez-faire economic theory from the 18th Century is not going to work. The early assumption of capitalism was that if left unfettered and not regulated, business could grow and prosper and all would benefit. To an extent, that was correct. There is no doubt that the early greatness of early Western capitalism made many millionaires and it did help create a middle class. Of course, this was done on the shoulders of third world nations as their resources were plundered and the working class that suffered innumerable abuses. Fortunately, these abuses and monopolies were exposed and the plethora of worker protection, child labor, occupational safety and ant-trust laws presumably corrected such abuses.

Then came the emergence of Reagan economics and the move to de-regulation let loose the ugly Wall Street beast. Under the guise of free trade, globalization became the mantra of corporate giants and conservative economic gurus. Business boomed, jobs moved overseas, third world workers worked for pennies a day and all was well in the profit column. The issue is basic, capitalism is based upon the notion that consumers will endlessly consume and keep the wheels of business rolling. If they do not consume, ad campaigns are created to “convince” consumers that they “need” the new gadgets, gizmos and widgets if they are to keep their jobs and to claim the right to be called American. And, if all else fails, which it did, you entice, induce, cajole and scam the consumer to go deeper into debt to keep companies in the black.

All of this implies a contract between business and consumer. The contract says that business will produce quality goods at a fair price and allow credit at reasonable rates. The consumer agrees to be paid a fair wage for its work, borrow to keep the money flowing, pay its bills and consume happily ever after. This “contract has now been broken” by the huge corporations and the finance industry. The products are inferior. Workers are not paid a fair wage. Loans are made at ridiculous rates. Consumers have been hoodwinked by massive and aggressive “buy this product’ campaigns that leaves one’s head spinning. Business has lost the trust and faith of the consumer.

Government has also broken its contract with its people. It has allowed industry to prey upon unsuspecting, naïve and gullible consumers. It has allowed industry to steal from the poor and middle class in order to increase its wealth beyond all imagination. It has left business unchecked and unregulated and given it free reign to do as it wills to accumulate riches that have only benefited the few at the expense of all. This system has now collapsed and all but the business and government understand this. Government has ‘given’ billions to the tycoons of industry because they are not making enough money. And, they cannot understand why the system is still failing. Our good money is being thrown into a corporate black hole from whence it will never emerge.

Based upon the TED spread, look it up on Google, this index that should be around 0.5 is now approaching 5.0. The TED Spread is the difference between what banks pay to borrow from each other for 3 months and what the Treasury pays. This is where credit is locked into a virtual traffic jam. What is the solution? Stop wasting our money bailing out banks and business and put the money in the hands of the consumer. With that money we will pay our bills, pay our mortgages, save, invest and consume. That is how you get the money going again and build confidence. In the meantime, regulate those that broke their trust, reduce mortgage and credit card interest rates and produce 21st Century products that will save and not enslave our planet, us and our children!

ECONOMISTS SAY BAIL OUT WASTE OF $$$

PLEASE READ THE FOLLOWING-THE LIST OF WHO SIGNED CAN BE FOUND AT THE URL END OF THE MESSAGE. ALSO, LOOK AT THE ASSETS OF THE TOP 50 BANKS AND TELL ME THE BANKING INDUSTRY NEEDS MORE $$$$.

(This letter was sent to Congress on Wed Sept 24 2008 regarding the Treasury plan as outlined on that date. It does not reflect all signatories views on subesquent plans or modifications of the bill)

To the Speaker of the House of Representatives and the President pro tempore of the Senate:

As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:

1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.

2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.

3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.

For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.


Signed (updated at 9/27/2008 6:00PM CT)

http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm

Here is a list of the 50 largest banks and savings institutions in the United States ranked by total deposits in thousands of dollars.

Institution Name
State
Headquartered No.
of
Offices Total
Deposits
June 30, 2007
Bank of America North Carolina 5,728 596,584,899
JPMorgan Chase Bank Ohio 3,108 439,996,000
Wachovia Bank North Carolina 3,103 314,850,000
Wells Fargo Bank South Dakota 3,255 263,664,999
Citibank Nevada 1,036 210,289,000
Washington Mutual Bank Washington 2,180 202,706,306
SunTrust Bank Georgia 1,747 114,579,848
U.S. Bank Ohio 2,590 113,097,080
Regions Bank Alabama 2,087 88,388,815
Branch Banking and Trust Company North Carolina 1,484 83,720,251
National City Bank Ohio 1,451 82,374,824
HSBC Bank USA Delaware 455 75,342,071
World Savings Bank, FSB California 287 73,247,967
Countrywide Bank Virginia 2 60,616,621
PNC Bank Pennsylvania 836 59,188,198
Keybank Ohio 965 57,286,597
ING Bank, fsb Delaware 1 54,161,553
Merrill Lynch Bank USA Utah 3 51,601,084
Sovereign Bank Pennsylvania 745 49,134,698
Comerica Bank Michigan 395 41,797,801
Union Bank of California California 331 40,650,535
Commerce Bank Pennsylvania 398 40,126,588
North Fork Bank New York 356 38,059,484
Fifth Third Bank Michigan 775 37,990,237
LaSalle Bank National Association Illinois 138 34,653,022
E*TRADE Bank Virginia 2 33,197,825
Bank of the West California

671


33,151,413
Citibank (South Dakota) N.A. South Dakota 4 32,892,908
Manufacturers and Traders Trust Company New York 673 32,811,138
Harris National Association Illinois 226 30,725,670
The Bank of New York New York 9 29,601,000
Chase Bank USA, Delaware 3 29,565,966
Marshall and Ilsley Bank Wisconsin 321 28,899,307
TD BankNorth Maine 626 28,092,910
Fifth Third Bank Ohio 415 27,054,097
USAA Federal Savings Bank Texas 1 25,267,329
Citizens Bank of Pennsylvania Pennsylvania 415 24,485,743
The Huntington National Bank Ohio 424 24,121,042
Citizens Bank of Massachusetts Massachusetts 262 23,713,359
LaSalle Bank Midwest Michigan 268 23,435,977
Compass Bank Alabama 420 23,405,240
First Tennessee Bank Tennessee 259 21,763,800
Charter One Bank Ohio 490 21,270,835
Capital One Louisiana 354 20,567,194
Discover Bank Delaware 2 20,343,620
UBSBank Utah 1 20,222,245
Morgan Stanley Bank Utah 1 19,535,000
Colonial Bank, National Association Alabama 321 16,663,063
Banco Popular de Puerto Rico Puerto Rico 202 15,269,000
TD Bank USA, National Association New York 1 15,246,862


See Top 50 Bank Holding Companies -- Source: FDIC

IF THE TABLE DOES NOT COME OUT RIGHT GO TO: http://nyjobsource.com/banks.html

THE WALL STREET THAT STOLE CHRISTMAS

History has proven that “power corrupts and absolute power corrupts absolutely.” While many understand this concept with respect to political systems, it is also true in other areas of human activity. Absolute power over anything is a corrupting influence that casts its pall over religion, economics, news, education, economics and most other aspects of society.

While all desire a totally free society, we have found that human frailty and perceived imperfection has not permitted such a system. Even in the early dawn of civilization, it was evident that those with the biggest clubs and the strong would prey upon the weak. Big men stole from the small, big nations raped and pillaged the meek, and a concentration of power and wealth with accompanying abuse is the subject of World History I. From the Mongols and the Romans, the absolute monarchies of the 17th/18th centuries to Hitler and Stalin and Burma, it has been clear that absolute political power leads to abuse and atrocities.

The same soon appeared with regard to religious power. Those who did not follow the dogma and dictates of state religions were burned, fed to the lions and cast out. Even the modern religious institutions are rife with historical terrorism. Under the banner of “onward Christian soldiers” religions of cultures like the American Indians and those of Africa were systematically destroyed. The term Inquisition is well documented in the annals of theological abuses.

During the era of the great monarchies, economic systems were also subject to abuse and corruption. The supply of goods and services served one purpose; to increase the wealth of the king or queen. Under the system of mercantilism, lands were conquered for colonies, resources were stolen for the mother country and gold and silver were stashed in the king’s vaults. However, the growth of a middle class and increased agricultural technology gave rise to a new line of economic thought; CAPITALISM.

Out of the ashes of the absolute power of kings grew an economic system that called for no government interference in the affairs of business. Thinkers like Malthus and Smith said that an economy free of government intervention would grow and prosper. The Industrial Revolution had begun! With the movement of population to the city factories blossomed and society and business planted the seeds that have ripened in the 21st century. With absolute control over money, goods and services, industry created the highest standard of living in the world. But in keeping with the problem of absolute power, the system became corrupt as sweat shops, poverty wages, unsafe conditions, company stores, child labor, monopolies and other abuses demanded government intervention. Anti-trust legislation, safety regulations, child labor laws and other government regulations were enacted to save the public from the devouring mouth of unfettered capitalism.

Bring the history to modern times and we have Reaganomics once again de-regulating industry in order to free them to pursue globalization. Up until now, all appeared well,
but the ugly head of absolute power reared its head. It has been all about making more money regardless of how it was made. Profit became the new monarch and abuse has now brought the American and maybe even the world economy to its knees. If you have watched the news you must know that our financial institutions are collapsing. Congress and the White House have been trying to undo in one week what has taken years to create. Sides have been taken and the “free marketers” have lined up against the “regulators.” While it is clear that lack of oversight and regulation created an economic monster gone amok, there are those who still think that less regulation, tax breaks and guarantees. This is money for the rich and the few at the expense of the many. After all, it is the lack of regulation that has created the current crisis. The questions are: how much regulation is needed; how much will it cost to fix the problem and, who will pay the ferryman?


There is one thing that is certain, our economy is in very deep trouble and the blame has washed up on the shores of Wall Street. New house construction is at a recent history low, unemployment is up, job creation down, credit is tight, retail is down, durable goods are way off and the near future has the lights on dim. There is another certainty; the age-old top down fix will not work. Actually, it has never worked. While greed, corruption and misuse of economic power may be causal in the current crisis, the solution is at the bottom of this power pyramid in the hands of the people. I, for one, favor putting the “bail out” money in the hands of the consumer so they can pay their mortgages, pay down credit cards, buy alternative energy products and stimulate jobs. I also favor reducing absurd interest rates on credit purchases, putting a mandatory low interest on mortgages, banning flexible rates and closely regulating financial institutions. Democracy and a controlled economy are not antithetical.

Like the Grinch, Wall Street is in the process of stealing this Christmas and perhaps others. We can also take another Grinch lesson, the true meaning of most holidays’ lies not in things, but in the spirit of why the holiday even exists. The real way to reduce the power of the wealthy and Wall Street is not to want what they have, but rather to redefine the very concept of wealth. If money is the most important thing, then it, and those who control it, have power over your life. But if what they have is not valued, then they have no power to control your life. Be of good cheer, be informed, let your feelings be known and vote your conscious in the upcoming election and let the Wall Street Grinch get what it deserves.

MONEY, MONEY EVERYWHERE BUT NONE FOR YOU AND ME!

Forget all those campaign promises of tax breaks. With the Feds giving trillions of dollars to bail out banks and corporations using your tax dollars any promise to reduce middle class taxes is impossible. Amidst the news that the nation’s “best economic minds” are going to solve the current financial crisis, the clear observation is that it is these very minds that permitted the crisis to occur. I am not in the least bit reassured that our financial future is in good hands. Furthermore, it is greatly dis-heartening that neither Obama, nor McCain can offer any better alternatives.

The American public is now in the middle of the same old refrain, more money for huge corporations at our expense so that they can continue to make more money. Between the funds for Fannie Mae, Freddie Mac, Bear Stearns, AIG and who knows who else, the Feds are committing at least $4.1 TRILLION to salvage these institutions. This is being done, we are told, to salvage the free market system: a system which, since massive deregulation, has run rampart in its effort to consolidate control over the world economy. Under the guise of globalization and free trade, these companies have grown to a proportion that would make even the economist of the early twentieth century shudder.

All that these great minds have managed to do is to give more money to those who created the problem. It is like giving more bullets to Russia because they used them up in Georgia and want to use more somewhere else. The claim is that there is little alternative. This makes no sense. If this same amount of money was given to every American household, they would get close to $15,000 per household. If just given to family households, the amount would be about $57, 000. With this money in the hands o9f the consumers, mortgages could be caught up and other debts paid down. Good for banks and good for the consumer. The government could even have deducted out mortgage payments and then distributed the balance. What would happen if the Feds mandated that all mortgage interest rates be dropped to the prime lending rate? Banks would still make some money and people could afford to make payments rather than suffer foreclosure. How about mandating that credit card interest rates be kept to 8% rather than 15-24%? Consumers could pay the bills and the banks make money. How about, like we have done for poor countries, forgive the mortgages of those under a certain income level? Keep people in the homes and refinance at a real low rate? The point is that there are alternatives worth exploring other than having our money chase bad money. Keep in mind that this $4 Trillion will not spur new economic growth nor create jobs. All it is doing is making sure that big corporations survive. What is even worse is that in this process, companies like Bank of America has gotten even bigger and now controls a greater amount of money. What does that do to help the taxpayers? What happens if they get into trouble?

As taxpayers, we are being hit from all sides. The cost of the war in Iraq and Afghanistan, billions needed for storm damage recovery and now our very bank accounts are put in jeopardy. How can we ever expect to improve education and health care when hundreds of thousands are losing their jobs, food and fuel prices are soaring and many have been relegated to a day-to-day existence? Our economic system is broke and the “laws of economics” need to be re-written. We need a consumer based system that puts customer and taxpayer first, not the mega-rich. There is plenty of money but there seems to be none for us.