Peter Blane


Today, the first week of 2010

Posted in 1 by wusspett on January 5, 2010

As 2009 is finally beginning to become a memory, and we all exhale a sigh of relief that we can keep our passion and anger for the past 12 months wrapped up in a year called 2009.

2009 was quite an experience for the markets and per capita.  We had the DOW as low as 6547 and as high as 10,500.  We have had the highest unemployment rate in decades – 10.2%.  A mortgage deliquency rate of about 33% and increasing.  CPI over the last 12 months increased 1.8 percent before seasonal adjustment, the first positive 12-month change since February 2009.  A year most politicians and I wish had gone better.

Now, it seems, we are taking note on what lessons we should be learning.  Ben Bernanke has a few things to say about how none of the financial collapse or the meltdown of the mortgage market has anything to do with loose monetary policy.  Unfortunately, most of his speech revealed a college student could calculate, forecast, and implement the tightness/looseness of monetary policy (check out The Taylor Rule). 

The new debt ceiling has been signed into law at 12.4 trillion – the largest amount of debt our country has tried taking on.  Although, a new ceiling is likely since this ceiling should only last through February.  So, while other governments are slowly buying our country, we will be drowning in new bond issues and inflation.  This new debt issuance is going to be interesting for our governments credit rating because it “may ‘test the Aaa boundaries’ because public finances are worsening in the wake of the global financial crisis.”  In other words: the U.S.’s ability to claim a guaranteed rate of return on it’s bonds has deminished.

For those of you out there with a level of cynicism, let’s see what lessons we have really learned from last year 🙂

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The Thanksgiving Haymaker

Posted in 1 by wusspett on November 24, 2009

As you are probably aware, there has been quite a stir over the financial landscape this year.  This is year is a time of self discovery where we – as a country – ask what we’re made of.  I think everyone realizes it, and everyone is taking advantage to push their agendas.  I challenge you, therefore, to consider what you believe about the science of economics (as a relatively young science), who you are voting for, and why you believe the things you do at this point.

There is a lot going on in the background of what the media is pushing into headlines and through your tv screen.  For instance, Timothy Geithner got grilled on his performance thus far for his role as treasury secretary – finally.  As you can tell, i’m not the biggest fan of timothy geithner.  The reasons include: 1) His encouragement of an economic “stimulus“, 2) the article he and larry summers wrote, and 3) his inability to accept responsibility (site any Congressional Oversight Panel video with him).

Speaking of stimulus, I have been against the ideas of Paul Krugman for a while.  There is, of course, a group of economists that agree with him.  The latest news is that we in need of a second stimulus.  The reason we need a second stimulus is because:

“skyrocketing debt is far less of a concern than letting the country’s people and productive capacity lie fallow for the decade or more that it will take back to get to full employment.”

By the way, if reading this article was the first time you heard of the Congressional Oversight Panel, it was formed last year.  It was formed in lieu of the TARP program to keep track of developments and to ensure the program’s succeess.  So, everytime there is a new program, remember: as programs increase, the government grows, and that requires more tax revenue.  You know how many people pay income tax?  130 million people – less than half the population.  If you pay income tax, I would encourage you to think about what programs the government should have – since you’re footing the bill.

What has also been funny to watch is the developing investigation of ACORN.  Apparently, all that we needed to do was look under a few rocks, and the corruption just spills out everywhere.  I wonder what an unbiased investigation of the government and the federal reserve would reveal?  I’ve said it before, but, currently, the Fed CANNOT be audited for the following:

  1. transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization;
  2. deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations
  3. transactions made under the direction of the Federal Open Market Committee; or
  4. a part of a discussion or communication among or between members of the Board of Governors and officers and employees of the Federal Reserve System related to clauses (1)-(3) of this subsection of US Code.

So, why hasn’t Paul Volckner been in the news?  He’s the Obama Administration’s economic czar, but, given the “economic crisis”, I haven’t seen this guy in the news once!  I was happy about Obama’s choice to nominate Volker because Volcker helped us through the recession in the early ’80s.  This guy is saying some pretty intense stuff too.  Like “I don’t remember any time, maybe even the Great Depression, when things went down quite so fast.”  Dude is 82 years old, so he was about 8 years old in 1930.  I would listen to this guy; he REMEMBERS the Great Depression!  Why is he not being heard?  There’s a list of articles that, as Obama’s head of  the Economic Recovery Advisory Board, should be paid some attention.

Go be angry.

Ben, Shut Up

Posted in 1 by wusspett on October 23, 2009

Ben Bernanke is in front of congress opening his mouth again.  His perogative is still to have “regulation reform” for the “financial system”.  Let’s go with the main points:

  • Congress to have a way to “wind down” to-big-to-fail companies paid through an assessment on the financial industry, not by taxpayers
  • The Obama Administration proposed expanding the power of the Fed.
  • Bernanke wants more protection for consumers to help nurture this “budding recovery”.

First of all, since when is GDP a flower?

Anyway, I think there is merit to what Ben is saying.  We need to not be idiots and follow the rules that are already in place.  Where I disagree is the amount of new rules he and the government are proposing.  Would we be in this severe situation if AIG hadn’t insured highly risky derivatives?  Probably not would be my guess.  Just don’t put all your eggs in one basket!  Done. You don’t need more rules.  If the SEC is doing their job – which they don’t do a lot (Madoff) – and the Fed is doing their job – enacting monetary policy (not proposing new legislation) – and the government is doing its job (do you really need an example?) then the rest will fall into place.

But, since no one wants to do their job and no one wants to own up to anything or pay for the consequences, we (the U.S. Citizens) are stuck hearing reports about new policies that will “protect” us from making bad decisions.  Yes, they want to make sure we don’t make bad decisions.  I mean, who else would these rules apply to?  The banks have OUR money.  The banks are run by US.  These proposed laws will effect YOU and ME.  What should be happening is the SEC and Fed and the Government get new rules imposed by US to regulate THEM.  I think that would nurture this budding recovery.

Matt Costa

Posted in 1 by wusspett on October 21, 2009

That title is funny to me because Matt Costa wrote a song called “Sunshine“.  The reason that I think it’s funny is because Senate bill 604 is referred to as the Sunshine Act (or the Transparency Act in the House of Reps – 1207).

If you’re not familiar with Ron Paul, you may not be aware there is actually a representative in Washington D.C. not acting like a child with our money.  Ron Paul presented H.R. 1207 to Congress proposing to audit the Federal Reserve:

The crucial issue of Federal Reserve transparency requires an analysis of 31 USC 714, the section of US Code which establishes that the Federal Reserve may be audited by the Government Accountability Office (GAO), but which simultaneously severely restricts what the GAO may in fact audit.

Currently the Government Accountability Office (GAO) is supposed to do the auditing of the Federal Reserve.  The GAO has some limitations, and, thus, cannot report or keep track of any of the following:

  1. transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization;
  2. deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations
  3. transactions made under the direction of the Federal Open Market Committee; or
  4. a part of a discussion or communication among or between members of the Board of Governors and officers and employees of the Federal Reserve System related to clauses (1)-(3) of this subsection of US Code.

So, if this Sunshine Act were to be passed, the Federal Reserve would be audited on the above 4 points for THE FIRST TIME EVER.  Check out the below video.  The Federal Reserve can’t seem to keep track of any of our money.  If you listen, Elizabeth Coleman essentially denies her job description.  Try and make it through this 5 minute clip without getting mad.

Alan Grayson (D-FA) questions Federal Reserve Inspector General

IMF

Posted in 1 by wusspett on October 5, 2009

This article is all I’m concerned with today as it covers a number of issues.

The main interviewee in this article by Gordon Isfeld is IMF Finance Minister Jim Flaherty.  I would like to at least give Jim credit for his tone.   In my opinion, he sounds like he’s trying to communicate what he does to a classroom of children on career day.  The reason I’m giving him credit is because this is largely the case.  A lot of people have no idea what all he does or why it’s important – it just sounds important – and that’s how people with no skills and a great resume get into the work force (different article required; for now let’s stay with Jim).

Jim mentions, at 2 different points, 2 things I find interesting.  Firstly

“Confronted with the biggest threat to the global economy in 70 years, many countries took extraordinary measures to protect both their economies and citizens from economic collapse.”

Secondly

“But we’re going to see a lag. We’re going to see joblessness lag the recovery of the economy.  That’s always happened during a recession in modern times, so we have to expect that, and that’s why we have to continue stimulating the economy.”

Now, right away, why do we need the IMF at all then?  He didn’t say how the IMF helped other countries, he said what they did.  He also is saying what the IMF will do – future tense.  So, what’s the selling point here?

Then Jimbo says this:

“The IMF is a member-based institution, and if members do not take their responsibilities seriously, it does not matter if the IMF is legitimate or credible. It still will not be effective. The fund membership needs to improve its record of responding to and implementing IMF policy advice.”

Hahahaha, man what I would give to have that job!  So far, it sounds like the IMF’s members were lazy, good-for-nothin’s that gave bad advice.  I could be both serious and advise effectively.