If credit peaksdoes employment, globalization and peace?

 We have lent a huge amount of money to the US

so of course we are concerned about the safety of our assets

 

Frankly speaking, I do have some worries

 

Chinese Premier Wen Jiabao

 

US Insists China Fears Over Debt Unfounded

The Wall Street Journal

 

If Executive Order 6102, signed on April 5, 1933

let the Federal Reserve confiscate gold for $20.67 per troy ounce

and the government raised the price to $35 not long after

 

did the US government devalue the dollar by 41%?

 

The Gold Reserve Act of 1934…

changed the value of the dollar in gold

from $20.67 to $35 per ounce

 

This price remained until August 15, 1971

when President Richard Nixon

announced that the United States

 would no longer convert dollars to gold at a fixed value

thus abandoning the gold standard for foreign exchange

 

Wikipedia

Have the leaders of most emerging economies

essentially been stealing their citizens’ savings

by lending money to developed economies

to keep currency exchange rates relatively low

to encourage more sales of manufactured goods?

 

If global central bank foreign exchange reserves more than tripled

as the US dollar fell by ~50% since 2000

did Americans buy manufactured goods from foreign nations

with IOUs that are now worth about half as much?

 

Who is the largest holder of US Treasury debt?

 

What could happen

if a generation of underemployed, underpaid

educated and indebted young adults

become disillusioned by their elders’ financial mismanagement

and seek to identify and punish those responsible?

Can some come to irrational conclusions to justify erroneous assumptions?

The economics profession appears to have been unaware of the long build-up to the current worldwide financial crisis and to have significantly underestimated its dimensions once it started to unfold.

…We trace the deeper roots of this failure to the profession’s insistence on constructing models, that…disregard the key elements driving outcomes in real-world markets.

The economics profession has failed in communicating the limitations, weaknesses and even dangers of its preferred models to the public.

This state of affairs makes clear the need for a major reorientation of focus in the research economists undertake as well as for the establishment of an ethical code that would ask economists to understand and communicate the limitations and potential misuses of their models.

The Financial Crisis and the Systemic Failure of Academic Economics

How could fiscal 2009’s reported Federal Deficit be only $1.42 trillion if Total Debt increased by more than $1.88 trillion?

Date                    9/30/2008                         9/30/2009

 

Value                    $10,024,725,000,000            $11,909,828,000,000

 

 

 

 

How could the national debt have increased

 by considerably more than...the "deficit"?

  

Simple.

  

Just call the money borrowed from the Social Security trust fund

an "intragovernmental transfer,"

and exclude it from the calculation of the deficit.

 

 Corporate managers have gone to jail for less book cooking than that.

  

John Steele Gordon

A Short History of the National Debt

Wall Street Journal

Do most not win first place?

The first rule is not to lose

 

The second rule is not to forget the first rule

 

Warren Buffett

 

If it doesn’t matter whether you win or lose as long as you have fun

and the chances of losing slowly are high

could it be more fun to lose quickly

to win sooner?

Could some of the few who don’t lose muchduring widespread financial turmoilbe relatively less risk averse than many who lost a lotas potentially profitable opportunities arise?

A closed mouth doesn’t get fed

 

Brandi Justice

If you have to lose

should the most valuable pieces be protected

by sacrificing the less valuable first

 

like a pawn before a rook

 

or a stranger before family?

Did the world’s wealthiest generationforfeit their children’s financial futurefor present prosperity?

The median household

with a person between the ages of 55 and 64

 saw its wealth fall by almost 50 percent

from $315,400 in 2004 to $159,800 in 2009

 

Center for Economic and Policy Research

 

Did the largest generation of parents in American history

promise themselves social benefits

their children won’t be able to pay for?

 

If we don’t change directions

we’ll end up where we’re going

 

Bumper Sticker on My Car

Could more than a few Baby Boomers

end up competing with their children and grandchildren

for low wage jobs?

Has Globalization Peaked?

 

 …If historians look back on today's severe downturn

with its crumbling markets, rising unemployment

 and massive government interventions

 they could well be busy analyzing how globalization

 the spread of trade, finance, technology

and the movement of people around the world

 went into reverse…

 

…For generations, the deficits that we have run this past decade

and the trillions of dollars we are spending

now mean we will be highly dependent on foreign loans

 from China, Japan and other parts of the world…

 

 

…In the last quarter of 2008, U.S. GDP dropped by 6.2%...

 the U.K. by 5.9%, Germany by 8.2%, Japan by 12.7%

 and South Korea by 20.8%. Mexico

 

 Thailand and Singapore and most of Eastern Europe

are also in deep trouble

 

In every case, employment has been plummeting

 

 

…So far popular demonstrations

against government policies have taken place

 in the UK, France, Greece, Russia

and throughout Eastern Europe

and the governments of Iceland and Latvia

have fallen over the crisis

 

The Japanese government is offering to help

a broad array of its corporations

but certainly not subsidiaries of foreign companies in Japan…

 

…Western European banks that were heavily invested

in countries such as Hungary, the Czech Republic and the Baltics

have pulled back their credits

causing a devastating deflation throughout Eastern Europe

 

…In the 1930s

when capital flows and trade among countries collapsed

 and every country went its own way

world growth went into a ditch

 political ties among nations deteriorated

nationalism and populism

 combined to create fascist governments in Europe and Asia

 and a world war took place

 

 

 It took at least a generation

 for globalization to get back on track

 

Jeffrey E Garten

Yale School of Management

Held economic and foreign-policy posts

 in the Nixon, Ford, Carter and Clinton administrations

 

If financial markets are mirrors of mass psychology

and many simultaneously experience anxiety, depression, stress

emotional instability, unresolved grief, unemployment, homelessness academic problems, career burnout, sleep disorders

loss of confidence and self-esteem along with feeling deceived

what does the recovery process of a nervous breakdown involve?

Have the powerless created symbolsfor the powerful to destroyto create dissentby turning apathy into perceived oppression?

The enjoyment of power is fatal to the subtleties of life

 

Ruling classes degenerate by reason

 of their lazy indulgence in obvious gratifications

 

Alfred North Whitehead

Pakistan Blocks Anti-Government Marchers

By VOA News

13 March 2009

Can a nonviolent movement

survive against an information censoring violent opponent?

 

Nonviolence is fine as long as it works

 

Malcolm X

Is stability a legitimate reason to stifle justified dissent?

Have the powerless created symbolsfor the powerful to destroyto create dissentby turning apathy into perceived oppression?

The enjoyment of power is fatal to the subtleties of life

 

Ruling classes degenerate by reason

 of their lazy indulgence in obvious gratifications

 

Alfred North Whitehead

Pakistan Blocks Anti-Government Marchers

By VOA News

13 March 2009

Can a nonviolent movement

survive against an information censoring violent opponent?

 

Nonviolence is fine as long as it works

 

Malcolm X

Is stability a legitimate reason to stifle justified dissent?

Emergency Banking Act

…passed on March 9, 1933…the Emergency Banking Act

…allowed a plan that would close down insolvent banks

and reorganize and reopen those banks strong enough to survive

 

On March 5, 1933, the day after Roosevelt's inauguration

he called a special session of Congress

which instituted a mandatory four-day bank holiday

 

This act provided for the reopening of banks

after federal inspectors had declared them to be financially secure

 

Within 3 days of the act's passage

5,000 banks had passed inspection and were reopened

 

Roughly two-thirds of US banks quickly reopened

…and faith in banking institutions was somewhat restored

 

Wikipedia

If subsidization can perpetuate instead of solve problems

at what point do bailouts do more harm than good?

Emergency Banking Act

…passed on March 9, 1933…the Emergency Banking Act

…allowed a plan that would close down insolvent banks

and reorganize and reopen those banks strong enough to survive

 

On March 5, 1933, the day after Roosevelt's inauguration

he called a special session of Congress

which instituted a mandatory four-day bank holiday

 

This act provided for the reopening of banks

after federal inspectors had declared them to be financially secure

 

Within 3 days of the act's passage

5,000 banks had passed inspection and were reopened

 

Roughly two-thirds of US banks quickly reopened

…and faith in banking institutions was somewhat restored

 

Wikipedia

If subsidization can perpetuate instead of solve problems

at what point do bailouts do more harm than good?

If polluters should payfor the cost of cleaning up their pollutionand some polluted the global economywho should pay for fixing it?

If the government habitually bails out overextended businesses

is it good business to overextend?

 

Joseph E. Stiglitz, Economic Nobel Laureate

 

 

 

Capitalism without financial failure is not capitalism at all

but a kind of socialism for the rich

 

James Grant

If polluters should payfor the cost of cleaning up their pollutionand some polluted the global economywho should pay for fixing it?

If the government habitually bails out overextended businesses

is it good business to overextend?

 

Joseph E. Stiglitz, Economic Nobel Laureate

 

 

 

Capitalism without financial failure is not capitalism at all

but a kind of socialism for the rich

 

James Grant

Can non-random events cause random effects?

 

Why did US financial markets not recover from the highs of 1906 until 1915

from the highs of 1929 until 1954

or the highs of 1973 until 1982?

 

Does observation alter the observed?

 I must not fear

 

 Fear is the mind-killer

 

 I will face my fear, I will permit it to pass over me and through me

 and when it has gone past I will turn the inner eye to see its path

 

Where the fear has gone there will be nothing

 

Only I will remain

 

Bene Gesserit Litany Against Fear

Dune

 

Can non-random events cause random effects?

 

Why did US financial markets not recover from the highs of 1906 until 1915

from the highs of 1929 until 1954

or the highs of 1973 until 1982?

 

Does observation alter the observed?

 I must not fear

 

 Fear is the mind-killer

 

 I will face my fear, I will permit it to pass over me and through me

 and when it has gone past I will turn the inner eye to see its path

 

Where the fear has gone there will be nothing

 

Only I will remain

 

Bene Gesserit Litany Against Fear

Dune

 

What could be the initial reaction if Volcker replaces Geithner?

 

 

A government which robs Peter to pay Paul

 can always depend on the support of Paul

 

George Bernard Shaw

What could be the initial reaction if Volcker replaces Geithner?

 

 

A government which robs Peter to pay Paul

 can always depend on the support of Paul

 

George Bernard Shaw

Is the government penalizing well run businessesby rewarding poorly managed firmswith taxpayer money?

The ultimate result of shielding men from the effects of folly

 is to fill the world with fools

 

Herbert Spencer

Coined the phrase “Survival of the fittest”

 

If the government selectively subsidizes some business

are those looking to purchase homes, cars and energy

obliged to pay higher prices and taxes to fund the subsidies?

 

Did some economic and political leaders

bail themselves out of mistakes

with trillions of debt and newly created money

handed down to the unaware of following generations?

 

We have in many ways humiliated ourselves as a nation

with some of the problems that have taken place here

 

Henry Paulson

 

Naked Capitalism, Willem Buiter

The Wall Street Journal, Calculated Risk, Bloomberg, Bloomberg, Big Picture , Felix Salmon, 

Is the government penalizing well run businessesby rewarding poorly managed firmswith taxpayer money?

The ultimate result of shielding men from the effects of folly

 is to fill the world with fools

 

Herbert Spencer

Coined the phrase “Survival of the fittest”

 

If the government selectively subsidizes some business

are those looking to purchase homes, cars and energy

obliged to pay higher prices and taxes to fund the subsidies?

 

Did some economic and political leaders

bail themselves out of mistakes

with trillions of debt and newly created money

handed down to the unaware of following generations?

 

We have in many ways humiliated ourselves as a nation

with some of the problems that have taken place here

 

Henry Paulson

 

Naked Capitalism, Willem Buiter

The Wall Street Journal, Calculated Risk, Bloomberg, Bloomberg, Big Picture , Felix Salmon, 

How many foreign investors want to purchaseAmerican residential or commercial mortgage debt?

 

 

Russia on Thursday banned investment

of its $220 billion sovereign wealth funds

in bonds of agencies such as Fannie Mae and Freddie Mac

saying it needed more liquid assets to meet the needs of its own budget

 

Russia had about $100 billion of its foreign currency reserves

 invested in U.S. government agencies at the start of 2008

as it sought to broaden its portfolio and chased higher yields

 

It has now cut its holdings to zero while the foreign currency reserves

the world's third largest, fell by a third to $384 billion

 as a result of heavy forex interventions

to support the rouble in the recent months

 

MOSCOW, March 5 (Reuters)

 

If investment returns are dependent on rising financial markets

and liquidity supplied by new and existing investors

 

what should happen if incoming investment slows

and lack of liquidity creates a confidence crisis?

 

Foreigners' net ownership of our national wealth...

will leave us paying ever-increasing dividends and interest to the world

 rather than being a net receiver of them as in the past

 

We have entered the world of negative compounding

 

 goodbye pleasure, hello pain

 

Warren Buffett

If the US Constitution says

 

All bills for raising Revenue shall originate in the House of Representatives

 

and the Federal Reserve announces

 

Purchases will be financed through the creation of additional bank reserves

 

to buy Mortgages from Government Sponsored Agencies

 

is creating bank reserves out of nothingness raising revenue

and are some foreign investors more reluctant to purchase Agency securities

because the Federal Reserve is

by fiat?