Myth 1: Unemployment is below 10%
What nonsense that is. The official jobless rate, at 9.7%, is a fiction and should be treated as such. It doesn’t even count lots of unemployed people. The so-called “underemployment” or U-6 rate is an improvement: For example it counts discouraged job seekers, and those forced to work part-time because they can’t get a full-time job.
That rate right now is 16.6%, just below its recent high and twice the level it was a few years ago…
Myth 2: The markets are panicking about the deficit
To hear the G-20 tell it, the U.S. and other top countries had better slash those budget deficits before the world comes to an end. And maybe the markets should be panicking about the deficits. But they’re not. It’s that simple.
If they were, the interest rate on government bonds would be skyrocketing. That’s what happens with risky debt: Lenders demand higher and higher interest payments to compensate them for the dangers…
Myth 3: The U.S. is sliding into “socialism”
For a system allegedly being strangled in its bed, U.S. capitalism seems to be in astonishingly robust shape.
Numbers published by the Federal Reserve a few weeks ago show that corporate profit margins have just hit record levels. Indeed. Andrew Smithers, the well-regarded financial consultant and author of “Wall Street Revalued,” calculates from the Fed’s latest Flow of Funds report that corporate profit margins rocketed to 36% in the first quarter. Since records began in 1947 they have never been this high. The highest they got under Ronald Reagan was 30%…
More on all 3 myths at the link.
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Governments Move to Cut Spending, in 1930s Echo
The world’s rich countries are now conducting a dangerous experiment. They are repeating an economic policy out of the 1930s — starting to cut spending and raise taxes before a recovery is assured — and hoping today’s situation is different enough to assure a different outcome.
In effect, policy makers are betting that the private sector can make up for the withdrawal of stimulus over the next couple of years. If they’re right, they will have made a head start on closing their enormous budget deficits. If they’re wrong, they may set off a vicious new cycle, in which public spending cuts weaken the world economy and beget new private spending cuts.
On Tuesday, pessimism seemed the better bet. Stocks fell around the world, over worries about economic growth.
More at the link.
Shorter version: If you have less than $2 million in assets, you’re fucked. If you have debt, you’re fucked. If you have a job, your employer will be even more of an asshole than last year. If you don’t have a job you’re on your own in 6 months. If you own a small business, sell it now while you still can.
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IMO, the biggest myth is the “free market”.
Everyone in America has to travel to a centralized government approved “store” to buy anything, and no one can freely set up a shop in their own home.
The last few years I lived in the US, I had to travel 2 miles to buy beer or snacks, six miles to buy groceries, and 12 miles to buy general merchandise.-
IMO, the biggest myth is the “free market”.
Now that you mention it, the list I posted is “the biggest CURRENT myths”. That there’s a “free market” at all is more like “the central, ongoing myth”.
I watched “Food, Inc” the other day. It wasn’t what I expected. I was expecting to be grossed out by the way animals are treated. Not much of that, at all.
The way the meat and chicken processors have taken over the market is amazing. As is the way Monsanto has seized control of seeds. I couldn’t believe that people would borrow up to 1/2 a million bucks to build a chicken house in return for an $18,000/year contract that can be voided by the processor if you don’t make EVERY “improvement” they demand.
Farmers in America have become serfs, which brings up an analogy.
In medieval England “Lords” and “Princes” owned all the land. People were allowed to live on and farm that land, but had to pay a “tax” to do so. When said “Lord” or “Prince” died, the land went to his heirs.
This year we had our first-ever case of a billionaire dying and passing on his ENTIRE estate, tax free.
Now, as much as I wish I owned more land, I understand what “fungible” means. Passing on money to your heirs in a capitalist society is passing on MORE power than passing on land, not less.
So, we have reached the point where we have a “money monarchy”. You have to do nothing more than be born into wealth to make the rules. (And given the corrupt way we elect congress-critters, I’m not really open to arguments that money isn’t power in America.)
“Redistribution of wealth” is necessary for democracy to survive.
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This is where I get the economic news:
http://www.cepr.net/
http://www.epi.org/Any economic news from the government is skewed, in my humble opinion. I do not trust what any government worker has to say. They all lie.
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I really don’t believe that all government workers lie, but I do believe that a lot of the statistics we get are skewed. GDP, unemployment, M3 and M6 data, for example. Those numbers are manipulated, I believe, on a regular basis to “set the mood of the country”.
It’s hard to ferret out what’s really happening, but with Europe joining the call for “austerity”, which simply means “fuck the poor”, it’s looking more and more like we’re moving toward a more barbaric “social and economic darwinism” society, every day.
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If the poor are going to be poor, the best thing to do is chuck working for corporations, stop making them rich, and go into small businesses that can utilize bartering among other means of exchange.
If you are sitting ok, now is really the time to do it. Because you are not desperate yet.
Downsize and cater to the community.
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I am going to post the entire article here, because once I found it, I also found that later it had been completely and totally changed. This is the first article I viewed.
IMHO, the DIms need to get their poop together and really DO SOMETHING that benefits the entire country, not just corporate America. The way I see it, they are just not doing it just now.
“A Gigantic Ponzi Scheme, Lies and Fraud”: Howard Davidowitz on Wall Street
http://finance.yahoo.com/tech-ticker/%22a-gigantic-ponzi-scheme-lies-and-fraud%22-howard-davidowitz-on-wall-street-514236.htmlPosted Jul 01, 2010 08:00am EDT by Aaron Task in Newsmakers, Banking
Related: XLF, AIG, GS, JPM, BAC, C, FNMDay one of the Financial Crisis Inquiry Commission’s two-day hearing on AIG derivatives contracts featured testimony from Joseph Cassano, the former head of AIG’s financial products unit. Goldman Sachs president Gary Cohn was also on the Hill.
Meanwhile, the Democrats are still trying to salvage the regulatory reform bill, with critical support from Senator Scott Brown (R-Mass.) reportedly still uncertain.According to Howard Davidowitz of Davidowitz & Associates, what connects the hearings and the Reg reform debate is the lack of focus on the real underlying cause of the financial crisis: Fraud.
“It was a massive fraud… a gigantic Ponzi Scheme, a lie and a fraud,” Davidowitz says of Wall Street circa 2007. “The whole thing was a fraud and it gets back to the accountants valuing the assets incorrectly.”
Because accountants and auditors allowed Wall Street firms to carry assets at “completely fraudulent” valuations, he says the industry looked hugely profitable and was able to use borrowed funds to make leveraged bets on all sorts of esoteric instruments. “Their bonuses were based on profits they never made and the leverage they never could have gotten if the numbers were right – no one would’ve given them the money in their right mind,” Davidowitz says.
To date, the accounting and audit firms have escaped any serious repercussions from the credit crisis, a stark difference to the corporate “death sentence” that befell Arthur Anderson for its alleged role in the Enron scandal.
To Davidowitz, that’s perhaps the greatest outrage of all: “Where were the accountants?,” he asks. “They did nothing, checked nothing, agreed to everything” and collected millions in fees while “shaking hands with the CEO.”
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I got a response to this from a retired CEO of a national bank. He knows what he talks about most of the time, tho he is still human in so many ways.
This is what he said when he replied to me,
http://www.investorvillage.com/smbd.asp?mb=971&mn=359420&pt=msg&mid=9217980:“Re: “A Gigantic Ponzi Scheme, Lies and Fraud”: Howard Davidowitz on Wall Street
Let me toss in my 2 cents. Davidowitz yelling fraud is disingenerous. He’s trying to make hay from the fall out. The same system that he is complaining about was in place for generations making huge profits for most real estate investors.Here’s the real problem, friends. Historically, there are booms and busts in real estate. Almost a generational thing. Say one boom and one bust a generation. All related to who is valuing what real estate.
This latest one became a massive financial bubble when all the smart guys from business schools forgot their history lessons and decided to enable real estate to become the basis of retail banking. The accountants would record the transactions at historical cost of the property after a decent independent appraisal. Fine and good.
But, the returns we not good enough. Even tho most residential real estate loans don’t last longer than 7 years, banks got greedy and wanted to get the assets to return more income and fees. So, they started getting the Universities involved in order to develop financial products. Banks could turn a mortgage into a security and turn their fees into finders fees and brokerage fees, and get the loan off the books. And the investment banks decided that they could carve out 2 securities out of the basic mortgage loan… the interest payment from the home owner and the principle of the mortgage. And thus, they created 2 derivatives from one asset… all in the name of higher profit.
The game lasted almost 15 years from 1992 to 2007 while Alan Greenspan keep the economy chugging along and eliminated the economic cycle. No boom or busts. Just boom.
Thus the market for real estate became the market for real estate/financial centered banks/stock brokerages all mixed into one.
But, the concentration of risks was considered unnecessary. The market was going up, right?
I’m afraid that blaming the rules and calling them fraudulent is like criticising the Black Plague of Europe by saying they needed to get rid of all the bodies more quickly.
No. We all needed wiser men that were not so intent upon creating something new that would blur all the formal lines of understanding risk. We needed someone to say, “Gee whiz guys, you can’t legislate away economic cycles. What’s going to happen when real estate valuations plummet?”
That’s what was really missing. Good old fashion horse sense. As in, don’t turn your local bank into a casino by buying up all their assets and eliminating their motivation to make only quality loans. Force them to live with what they’ve lent… even if they are complaining about a lack of return on assets. And suddenly, all those Fannie Mae and Freddie Mac problems go away…don’t they?
Yes, we’d have one heck of a credit crunch. But, such discipline is what you do when you take away a teenage girls credit card paid by daddy, isn’t? “
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