Category: Economy

In the big U.S. newspapers this afternoon are reports of former Federal Reserve Chairman Alan Greenspan’s appearance before the U.S. House Oversight and Government Reform Committee today.

The Washington Post reports Greenspan described the financial crisis a “once-in-a-century credit tsunami” and the Los Angeles Times adds Greenspan warns unemployment will rise.

“This crisis … has turned out to be much broader than anything I could have imagined … Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment.”

According to The New York Times, Greenspan said he “made a mistake” in believing free markets could regulate themselves without government oversight.

On a similar note, the LA Times adds Greenspan “admitted that the crisis showed flaws in his strong free-market ideology”, but I don’t interpret him saying that at all.  

A Stars Hollow Gazette

Wheeeeeeeeeeee!

When we left our story Her Bartiromoness was proclaiming the best week ever.

Oh fickle finger of fate.

What do I expect?  Another dead cat bounce followed by a sell off into the weekend because who wants to be long?

Peter Goodman of The New York Times examined the role of Alan Greenspan in the financial collapse in The Reckoning: Taking Hard New Look at a Greenspan Legacy.

The article has been sitting open in my web browser now for almost two weeks wondering when I was going to write about it. Since I’ve not see this article covered, I want to make sure it doesn’t go unnoticed. Unfortunately, I do not find Greenspan very inspiring, so the best I can do at this time is a Lazy Quote Diary™. It begins with a quote from Greenspan.

“Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient.” – Alan Greenspan in 2004

Last Friday, I wrote about how 10% of $700 billion bailout is to cover Wall Street banker pay and bonuses.

At least one member of Congress is awake. None other than Rep. Dennis Kucinich has called for an investigation. According to The Guardian —

Kucinich, an outspoken Democratic opponent of the US taxpayer’s $700bn bank bail-out, said his staff would immediately begin asking Wall Street firms set to benefit what plans they had to distribute bonuses.

“When Congress placed restrictions on excessive executive pay, it had no intention of permitting business as usual with respect to bonus structures,” he said. “It would add insult to injury to ask taxpayers not only to bail out a firm, but to pay for bonuses as well. The Guardian’s report necessitates an immediate inquiry.”

Why in a time when banks are being bailed out by the American taxpayers, do they still believe they should award bonuses to their executives and other employees?  

Happy Monday, folks, I do hope you all had a good weekend!  Welcome to another installment of Manufacturing Monday!  Now things are looking bad out there, as many of you probably already know.  We start out with more dire jobs news at GM. Turning to some good news, it seems economic forces that made us “costly” has now turned the tables of sorts, with ironically the biggest pusher of China, Wal-mart (or is it Walmart?  I’ve seen this store both ways.) forcing suppliers to look domestically.  Lastly, we got Honda moving more work to North America. But first, as is par for the course, we get to the latest economic info related to manufacturing.  So without further adieu…

Cross-posted from Progressive-Independence.org.

According to Reuters, the wealthy are starting to feel the sting of what they’ve done to the American and global economies.

http://www.reuters.com/article…

Wealthy Americans like Morrison and Goldberg were relatively insulated from the global financial crisis until just a few months ago. Now, falling stock markets are slashing their investments, and some are even starting to panic.

“I’m a little angry that I didn’t trust my own gut, my own instinct to stay on the sidelines and wait,” said Goldberg, 57, an executive coach who lives in Washington. “I’m angry at myself.”

Of course, reaction to the financial crisis differs from person to person and even from husband to wife.

“My husband’s approach has been ‘Oh my God, I’ve got to sell, we’re mature people and there goes our retirement’,” said Morrison, 59. Morrison, who lives in Alexandria, Virginia, and runs a PR firm, has about $2 million in investable assets.

Why, they’re even having second thoughts about buying those extra yachts and private jets!

http://www.reuters.com/article…

GENEVA (Reuters) – The financial crisis is forcing the wealthy to rethink splurges like fancy cars and yachts, private bankers say, threatening to crimp the free-wheeling luxury goods spending bonanza of previous years.

Luxury brands had signaled they were weathering the global financial crisis better than others, with many saying they expected emerging markets in Asia and China to offset flat or declining sales elsewhere.

But investors have been looking for signs the credit crunch and dismal economic outlook are biting into purchases of luxury goods, and bankers to the wealthy say even the super-rich have begun to rein in spending as they fret over their shrinking portfolios.

It’s even gotten so commodities are going out of fashion!  See?

http://www.reuters.com/article…

GENEVA (Reuters) – Dabbling in commodities markets has fallen out of favor with the wealthy who are abandoning the sector in droves as energy and metal prices slide, private bankers say.

Commodity prices, which have surged for most of the past six years, have imploded over the last three months. Estimates by Citigroup and Barclays Capital put third-quarter losses in the asset class at between $50 billion and $60 billion.

“Commodities were in fashion at the beginning of the year and clients reduced their exposure mid-year,” said Bruno Lebre, head of investment at SG Private Banking, adding he had been advising clients to limit energy and metals exposure in their portfolios.

Rich people everywhere are starting to get skittish, and are now starting to heed the old adage, “don’t put all your eggs in one basket.”

http://www.reuters.com/article…

GENEVA (Reuters) – The world’s wealthiest are opening multiple accounts to help spread risk through the global financial crisis, their bankers say.

“Clients who had accounts with three institutions now have six accounts. Clients who had six accounts now have 12 accounts,” Gerard Aquilina, vice chairman of Barclays Wealth (BARC.L: Quote, Profile, Research, Stock Buzz), told the Reuters Wealth Management Summit in Geneva.

Aquilina said he even had one client with 21 accounts with 50 million British pounds ($88 million) in each of them.

You know the Second Great Depression is having a huge impact when even the ridiculously wealthy get nervous.  We’re supposed to take notice of this, because it’s not as though anyone else has been adversely affected by the financial meltdown, right?

Now she has the time to Grieve for her Son, Killed in Iraq only a short time ago, Her Reality!!

I was just sent the following:

One tenth of the $700 billion bailout to be footed by U.S. taxpayers is projected to go to the pay and bonuses of Wall Street bankers. The same captains of finance who sent the world into a financial meltdown are now going to be rewarded handsomely.

The Guardian has found that the Top Wall Street bankers are to receive $70 billion in pay deals.

Financial workers at Wall Street’s top banks are to receive pay deals worth more than $70bn (£40.4bn), a substantial proportion of which is expected to be paid in bonuses, for their work so far this year – despite plunging the global financial system into its worst crisis since the 1929 stock market crash…

Staff at six banks including Goldman Sachs and Citigroup will pick up the payouts despite being the beneficiaries of a $700bn bail-out from the US government that has already prompted widespread criticism. The government cash has been poured in on the condition that excessive executive pay will be curbed.

While we drown in debate I’d like to remind you of the implosion of the Republican Party.

Trading opens today at 9:30 am (et) (Ding, Ding, Ding, Ding, Ding, Ding, Ding) after a loss of 733.08 points, the second-worst single-day point loss by the Dow in history.

So to remind us how we’ve gotten where we’re at…

Happy Anniversary–

But remember, the market drop is because the Democrats forced stupid loans to brown people and I’m afraid the most (shudder) “LIBERAL” one will be President and Filibuster Proof Democratic Socialism reign so it’s all good for McDone.

We’re DOOOOOOOOOOOOOOOMED!

WHEEEEEEEEE!

A long time ago, in an economic universe far, far away, people cared about the trade balance. When the U.S. trade deficit passed $100 billion for the first time, there was much wailing and gnashing of teeth. Doomsayers warned of an imminent ”hard landing” in which a crashing dollar would precipitate economic crisis. Even calmer types regarded the unprecedented red ink as a warning sign.

But a funny thing happened on the way to the 21st century: people lost interest in the trade balance. In January, the Commerce Department announced last week, the United States set a new world record: the biggest monthly trade deficit ever. (Is this a great country, or what?) Measured as a share of G.D.P., last year’s current account deficit (the broadest measure of the trade gap) was wider than ever before. But the markets couldn’t have cared less. They were more interested in the accounts of MicroStrategy (a high-flying tech stock that lost two-thirds of its value in one day when it adopted a new accounting standard) than in those of the United States.

http://query.nytimes.com/gst/f…

The Pony Party is an Open Thread.  Please do not REC the party!

The economic crisis can be summed up in three words TRUST, CREDIT and TERRORISM.  

Banks do not Trust each other so they are not willing to provide Credit to each other. During this economic panic, Paulson used terrorist tactics of threats and fear of economic collapse to coerce Congress to give him Czar like powers over our tax dollars.

Why don’t financial institutions trust each other?  Because for years they have been cooking the books, claiming they have more value than they really do.  So now that things have gotten tight no one is willing to issue Credit to anyone else because no believes what anyone claims they are worth (and rightly so).

I’m not an economist and the only real numbers I crunch are my personal expenses and when bidding construction jobs putting together those costs and percentages which in these latter years of my life, preferring more to do the work, I have done very little of, except while doing the work to bring a better quality for hopefully a bit cheaper cost in material and professional skill.

Watching what is now taking place in banking and the dream new capitalist economy that’s been sold for a number of years isn’t really a big surprise to this common man, many were forecasting exactly what would happen if we followed the sales pitch.