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On nearly all counts and certainly in total, it worsens and lengthens the problem. The basic problem is a shrinking money supply. The demise of the dollar which is only becoming more valuable at this point, is a rather silly notion until the now rather powerful deflationary feedback loop is stopped. Obama has magnified the problem.
The Federal Reserve stimulus is just a lot of cage rattling of no meaning. Its pushing with a string. It does not matter with deflating asset prices which is the real basis for bank credit. Once effective interest rates reach zero their is no money creation potential.
Bailouts for Insolvency is post inflationary. Rebuilding bank assets is simply cleaning up balance sheets subject to bank accounting rules. That is why a zombie bank still exists. Its an accounting rule they are violating because banks are not normally allowed to create money without being responsible for the principle outlay. Creating money for a bailout is simply a book keeping method to bypass the rule. Its post inflationary. No new money is actually being created. No new money is ending up in the hands of the goods and services economy. It was already spewed out.
The Fed has now made loans to banks who have in turn put them on deposit with the Fed who pay interest on deposits equal to the price of the loan. Its circular book money. Until market based forces create demand for assets, banks will only see their collateral vaporize. They will not loan.
The Obama plan by "assisting" home owners keeps people in houses that are worth less than the liability is stifling . I don't want anyone to help me keep something that is worth less than I am paying. Help yourself and walk away. What this will do is instead of default and have the asset written off, this will keep money flowing to banks which retire the money. To pay a mortgage people must take money flowing in the economy and remove it to a bank. If everyone defaulted the money would be "free" to the seller and circulate in the economy. The Obama assistance shrinks the money supply. It will also artificially support housing prices which will NOT draw out bank credit.
The jobs plan is also rather weak.It will not represent long term or real demand. This will have a temp worker effect and contract hire. Most people who have been out of work need to rebuild their savings and will not see long term employment which will also cause them to hesitate to spend. Lowering taxes or tax credits would be much more effective.
So in total the Obama plan is counter stimulative. Allowing defaults would cause the banks to be insolvent and they would need to start from scratch and it would clean the books instead of seek to draw money out of the system. It would eventually cause the collapse again but at least this one would be over. Our banking system will always collapse this way.
So this brings us to who are they really helping?
It started with Bush & Paulson. Who did they help? His frat buddies, his business relations, his politico's.
Who is Obamanation helping? His frat buddies, his business relations, his politico's.
The powers at be, do not want to solve anything, they want to shift everything in a panic generated scenario to the hands of their friends and power brokers.
Where they are blinded is in the fact that the middle class will not stand for it and do everything they can to counter act their destruction of the American way of life. You will see blood in the streets this summer, and its not going to be pretty in the large cities.
Bernanke said he thought a recovery may start in late 2009, but full recovery would be 2-3 years or more.
Yeah I saw that. As usual the government is there with late news, but at least it confirms it.
Most of the big businesses have office loads of analysts and bean counters crunching numbers that already know when the recovery will start. My company does and already forecasted what quarter a recovery will be. Of course with Obama's anti-stimulus bill they probably have to reforecast and delay it a few quarters. But it was indeed in the 1st qtr 2010. Most companies forecasted likewise. The private sector always has smarter financial people than the government, not to say we still have the idiot CEO's and CFO's that mess things up.
Now, the reason the dow is plumeting is because business and investors are getting a picture that
1.) Obama and his economic team don't know what they are doing (Giethner coming on TV and saying no details about he will distribute the TARP funds/Obama on TV saying he is going to reduce the deficit in half, one week after he signed a bill that doubled it),
and
2.) Obama's policies are turning out to be un-friendly to business (nationalized banks, increased business tax).
Yeah I saw that. As usual the government is there with late news, but at least it confirms it.
Most of the big businesses have office loads of analysts and bean counters crunching numbers that already know when the recovery will start. My company does and already forecasted what quarter a recovery will be. Of course with Obama's anti-stimulus bill they probably have to reforecast and delay it a few quarters. But it was indeed in the 1st qtr 2010. Most companies forecasted likewise. The private sector always has smarter financial people than the government, not to say we still have the idiot CEO's and CFO's that mess things up.
Now, the reason the dow is plumeting is because business and investors are getting a picture that
1.) Obama and his economic team don't know what they are doing (Giethner coming on TV and saying no details about he will distribute the TARP funds/Obama on TV saying he is going to reduce the deficit in half, one week after he signed a bill that doubled it),
and
2.) Obama's policies are turning out to be un-friendly to business (nationalized banks, increased business tax).
So this is a formula for recovery in 2010?
It's sounds more like the Fox guarding the hen house, while the roosters get slaughtered by the farmer.
Obama's policies are not unfriendly to honest businessmen but are creating difficulties for the speculators and thieves. I think he has not increased the top bracket income tax rates to a level that discourages gambling with other people's money. INHO the upper 5% should be paying between 85% to 98% of their total income after deducting the 85th percentile amount.
Obama's policies are not unfriendly to honest businessmen but are creating difficulties for the speculators and thieves. I think he has not increased the top bracket income tax rates to a level that discourages gambling with other people's money. INHO the upper 5% should be paying between 85% to 98% of their total income after deducting the 85th percentile amount.
Why should the government get all their money? Raising taxes will discourage investment. That is the last thing we need.
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