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Bernanke Is Getting Scared....
Market Ticker ^ | April 27, 2010 | Karl Denninger

Posted on 05/03/2010 10:15:52 PM PDT by Neil E. Wright

Bernanke Is Getting Scared....

You have to love this sort of utter claptrap...

“Achieving long-term fiscal sustainability will be difficult, but the costs of failing to do so could be very high,” Bernanke said in remarks prepared for a speech today to a White House commission on the budget deficit. “Increasing levels of government debt relative to the size of the economy can lead to higher interest rates, which inhibit capital formation and productivity growth -- and might even put the current economic recovery at risk.”

Really Ben?

We need to review a few graphs again.

Let's start with this one:

This is the true deficit, measured simply by the amount of Treasury debt (including intergovernmental games) outstanding.

Of note is that it has never decreased materially since 2001.

Why is this important?  Because every dollar that the government borrows and spends is one dollar that pulls forward demand from tomorrow and spends it today.

This game continues, as it did in the housing market, right up until you can't get any more credit to do it with. 

But more importantly as you put forward this sort of distortion in the market the economy becomes habituated to that deficit spending and incorporates it into GDP!

This then turns that deficit spending into a mandate on an ongoing basis lest you have a recession - or worse.

Now let's look at how big that distortion has become, as a percentage of GDP:

This is where your problem begins.  While government deficits have varied over time, during the 2000 decade they became both embedded in the economy and at a high and continuing level of about 4-5% of GDP.

That is, the so-called "recovery" in 2003-2007 was false; it did not consist of organic demand from the marketplace, but rather it consisted of government's fraudulently inflated demand.

Contrast this with the 1990s when private demand rose fast enough that the government was able to slowly withdraw stimulus via deficit spending, to the point that it actually approached zero!  That's REAL economic growth.

But now we've gone even further, and in the last two calendar years have put up nearly 10% and nearly 12% of GDP distortions, respectively.  Let me remind everyone that in the world of economics a 10% economic contraction is the formal definition of economic Depression; ergo, we have been in one for the last two years and are today!

The Obama administration estimates budget deficits will total $5.1 trillion over five years and hit a record $1.6 trillion in the year ending Sept. 30. The $1.4 trillion deficit in 2009 was equal to 9.9 percent of gross domestic product, the largest share since the end of the World War II.

Bernanke spoke to the National Commission on Fiscal Responsibility and Reform, established by President Barack Obama to identify policies to reduce the deficit to a sustainable level. The commission’s mandate is to propose a plan to balance the budget, except for interest payments on debt, by 2015.

That cannot happen without the economy undergoing the very adjustment in matching of output and final private demand that the government has spent ten years trying to avoid.

This is the ugly truth that Bernanke doesn't want to speak of, but he knows it to be true.  But neither he, nor the government budget folks, are willing to come out and tell the people the truth - since 2003 we have managed to compound a 58% distortion to our $14 trillion GDP!

To say that the adjustment occasioned by withdrawal of that support would be catastrophic would be the understatement of the year.  We never got anywhere near this level of distortion in the 1920s and 30s - the distortion reached about 25%, top to bottom.  The adjustment produced what we call The Great Depression.

Let me be clear: We have a $14 trillion economy that has accumulated a fifty eight percent net deficit, or more than double the distortions that had to be absorbed in the 1930s.

It is obvious that sudden withdrawal of that support would lead to an instantaneous and catastrophic economic collapse.

If you're wondering why I have spent three years arguing strenuously against the policies that our government adopted to try to "stem" the crisis, you now should understand - we are now absolutely dependent on the ability to maintain this level of distortion and will be able to withdraw it only slowly, if at all.

Any event that causes us to have to withdraw it suddenly WILL RESULT in the loss of our economy and republic.

This is not speculation - it is hard mathematical fact.

The risk taken on by those who promulgated and adopted these policies is criminally negligent.  Of course since the actors who did so work for the Federal Government criminal negligence isn't punishable as it's not a felony to do this as a government employee, even though such acts in the private sector certainly are punishable.

This is the precise set of actions that has led Greece to find itself in the box it is now in.  Portugal is headed down the same road, as is Spain, Ireland and Italy.  All five are at risk of economic collapse.

We are inexorably headed for the same result if we do not accept the economic adjustment that is necessary to bring both private demand and GDP into balance.

There are means available to massively stimulate private demand but none of them include federal deficit spending.  I have covered some of these in the past, including my particular favorite, adoption of The Fair Tax.  Sadly such real reform is radically and diametrically opposed by the interests in Washington DC as doing so removes the tax system as a means of social engineering, control, and corporate lobbying.

Ben Bernanke has reason to be "concerned", as he notes.

In truth, ladies and gentlemen, he is not "concerned" - he is terrified.  He, like I, is well-aware of the above graphs and facts, and since he knows how to use a calculator (or even a paper and pencil) he also knows the extent of the economic distortion that has been built up over nearly a decade of borrow and spend politics.

Our opportunity to solve this problem will expire, and as Greece has discovered that expiration is likely to come with little or no warning, and once it arrives there will be no real options available to us that avoid a disorderly economic collapse.


TOPICS: Business/Economy; Constitution/Conservatism; Culture/Society; Front Page News; Government
KEYWORDS: 111th; bernanke; bhoeconomy; bhosocialism; deficit; democratcorruption; democrats; denninger; economy; elections; fed; government; hopeychangey; meltdown; obama; pelosi; reid; socialism; spending; ticker
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Can some FReeper economist translate this to plain English for me??? I know the country is in deep doo-doo, but can someone tell me just how bad its becoming?

FREEDOM!

1 posted on 05/03/2010 10:15:52 PM PDT by Neil E. Wright
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To: Neil E. Wright

We’re in a heap of sh!t.


2 posted on 05/03/2010 10:19:44 PM PDT by Jim Robinson (JUST VOTE THEM OUT! teapartyexpress.org)
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To: Neil E. Wright

bookmark.....(in case you get an answer to your question!!)


3 posted on 05/03/2010 10:21:14 PM PDT by musicman (Until I see the REAL Long Form Vault BC, he's just "PRES__ENT" Obama = Without "ID")
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To: Jim Robinson
Gee, thanks Jim! I knew that!!! :) I just wanna know how deep the pile is.

FREEDOM!

4 posted on 05/03/2010 10:22:04 PM PDT by Neil E. Wright (An OATH is FOREVER (NRA member) Oathkeeper III We are EVERYWHERE)
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To: Jim Robinson
Well, your answer in #2 cleared up my question in #3 and probably Neil's question in #1 also.

Muttley Laugh

5 posted on 05/03/2010 10:25:34 PM PDT by musicman (Until I see the REAL Long Form Vault BC, he's just "PRES__ENT" Obama = Without "ID")
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To: Neil E. Wright

I’d say nine to ten times deeper than it’s ever been before.


6 posted on 05/03/2010 10:29:48 PM PDT by Jim Robinson (JUST VOTE THEM OUT! teapartyexpress.org)
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To: Jim Robinson

There you go again... Waxing elequent!!! (grin)


7 posted on 05/03/2010 10:33:32 PM PDT by SierraWasp ("Contempt of Congress" used to be a minor crime. Now it's a badge of honor!!!)
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To: Neil E. Wright

Which brings up the point - just what is Wall Street betting on these days? Mostly foreign investments? It surely can’t be on the US’s ability to overcome corruption by both the government and corporate entities. The problems of both would overwhelm even the most optimist of investors.

So... I would guess that those that have money are just trying to make more before the apocalypse... or at least our US version of the same... That would explain why only the markets are advancing while the rest of society is suffering.


8 posted on 05/03/2010 10:34:15 PM PDT by Deagle
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To: Neil E. Wright

“Increasing levels of government debt relative to the size of the economy can lead to higher interest rates, which inhibit capital formation and productivity growth — and might even put the current economic recovery at risk.”

No —— Sherlock! You mean the same debt you insisted we take on? You’re nothing but a thug and criminal.


9 posted on 05/03/2010 10:35:12 PM PDT by WKUHilltopper (Fix bayonets!)
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To: Jim Robinson
...Increasing levels of government debt relative to the size of the economy can lead to higher interest rates, which inhibit capital formation and productivity growth -- and might even put the current economic recovery at risk.”

My gosh!

If only someone had said this sooner.

.

(Besides, you know, WSJ, dozens of business pundits, and just about everyone except the Dems in Congress...)

.

10 posted on 05/03/2010 10:38:07 PM PDT by Seaplaner (Never give in. Never give in. Never...except to convictions of honour and good sense. W. Churchill)
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To: Neil E. Wright

May I humbly suggest you read it a time or two more and try again to understand it? Yes, it means we are hosed.

Karl has a way of being fairly blunt about these things, but IMO, folks need to work a little at understanding the magnitude of what the US is looking at, financially and fiscally.

Just as a point of reference: We have this serious oil spill in the Gulf. And it’s inarguably a really crappy situation. Damage estimates are of course premature at this point, and oil hasn’t hit the shore at this exact minute, though it looks like it will, ultimately.

But the kinds of numbers being thrown around are $10 billion, $20 billion worth of damage that BP may ultimately have to pay out. Let’s double that, $40 billion.

We paid out $787 billion and another $832 billion (IIRC) in the two installments of TARP. 40 times what may happen, damage-wise, in the Gulf. Or if we forego the doubling I did in the calcs, just over 1% of what we paid the banksters. Where’s the screaming?


11 posted on 05/03/2010 10:39:35 PM PDT by Attention Surplus Disorder (Voters who thought their ship came in with 0bama are on their own Titanic.)
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To: Neil E. Wright

Our days are numbered.


12 posted on 05/03/2010 10:45:54 PM PDT by DB
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To: Attention Surplus Disorder

Yes, the cost to society and of cleanup by BP is a very small part of the problem when compared with the corruption involved within government and way too much of business.

If you think that this will have a large effect compared to what has happened, you are just wrong. This is a drop in the bucket compared to what has happened and what is continuing to happen with our government (and corporate) corruption. Yes, it may make an immediate effect, but it will be short lived and eventually overwhelmed by our ongoing corrupt government spending (in support of who?).

Hang on, the worst is coming... All of these piddly little diversions will not matter in the end.


13 posted on 05/03/2010 10:53:53 PM PDT by Deagle
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To: Attention Surplus Disorder; A Navy Vet
As I read this, it actually started taking off during the Bush administration with a REPUBLICAN Congress, correct? Hussein just pumped steroids into the system, in the final attempt to DESTROY the country.

Tell me again, WHY should we vote for republicans? Because they're better than the "alternative"??? What the hell's the difference these days????

★ FREEDOM! ★

14 posted on 05/03/2010 10:54:04 PM PDT by Neil E. Wright (An OATH is FOREVER (NRA member) Oathkeeper III We are EVERYWHERE)
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To: Jim Robinson
DEMOCRACY

Cloward-Piven writ large.

hit the fan

Cheers!

15 posted on 05/03/2010 11:04:28 PM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: Attention Surplus Disorder

What I’m surprised no one has taken up yet is tracking the roll of Treasury debt. If you look at the Treasury’s report on the term of the US debt, you can see they’re rolling it shorter and shorter... trying to keep the interest expense down.

Well, that’s what bankers did. And then you get to the left edge of the yield curve, and you hit a hard wall.

When short-term rates finally start going up, the interest cost of the debt will explode upwards. The long end of the curve will already probably be higher than we are now (well into the 4% and up range), so there’s no retreat into long-term rates.

The Fed has the same problem as the Treasury - they have over a trillion bucks of RMBS on their balance sheet, not to mention all the crap paper from various asset-backed lending facilities. When rates start going up, the Fed has a problem - they’re going to take losses on the RMBS portfolio. That’s on top of the losses they’re going to take from defaults.

We really do need to pass a Constitutional Amendment banning the “prodigies” from the Ivy League from ever serving in any branch of government ever again. When most people do something stupid, they fess up and say “Hmmm. Let’s not do *that* again.”

But the Ivy League crowd? No way. They double down, because they know in their heart that the world was wrong the first time and the world will realize the error of its ways the second time.


16 posted on 05/03/2010 11:06:02 PM PDT by NVDave
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To: Neil E. Wright

You ask a good question even as you hint at the answer. Objectively, both parties bear considerable blame. Yes, the Dems were instrumental in passing the CRA and pressuring Fannie and Freddie to underwrite the goofy loans that were being forced on local banks. But the GOP was roughly equally at fault for their acquiescence to the repeal of Glass-Steagal. Glass-Steagall was a 17 page bill that kept banks who had access to the Fed lending facilities from gambling with taxpayer money. It did a damn good job from 1932 to 1987. If you’ve been watching the hearings on finan reform lately, you’ve heard mutterings along the lines of “we need to bring back Glass Steagall”, and I think Sen Levin said that, quote unquote. Both of these sagas are longish stories that I can’t precisely chronicle...(but the info is out there if you wish to delve. I believe it is helpful to understanding “how we got here”)

But I’d also suggest that the “solution” (if any actually exist) lies not in the assignment of blame to this or that party. Where it *does* lie, IMO, is along the lines of what occurred after the S&L crisis in the early nineties. After that crisis was resolved, over 1,000 successful prosecutions were carried out by the Feds and great numbers of bank executives did hard time behind bars. Now? You can count the number of bank execs who have been prosecuted on one hand with fingers to spare.

You may wish to look for a few videos by William (Bill) Black on YouTube. He has a smallish number of lectures and interviews posted there. He was the primary Fed prosecutor during the S&L fiasco, and makes it pretty clear what was going on.

Now I will say, that what you might learn from Bill Black is forensic. It’s historical. It may be that you’re more interested in what we will be facing as time goes by. It’s not pretty, but it is a serious purge and reality-confront that we almost certainly cannot avoid.


17 posted on 05/03/2010 11:14:29 PM PDT by Attention Surplus Disorder (Voters who thought their ship came in with 0bama are on their own Titanic.)
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To: Neil E. Wright

Thanks for the article.

” and as Greece has discovered that expiration is likely to come with little or no warning “

So this can happen over night, like the September 2008 event?


18 posted on 05/03/2010 11:14:52 PM PDT by Visceral (The more I learn, the less I know)
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To: NVDave

As usual, you’re quite right!

No, there is no mathematical solution for what we’re looking at, in all its convoluted and frankly horrific implications. It’s really hard to believe that we will be able to hang out for a decade or more all the time 1/4” from a worldwide detonation and just cruise onwards in uninterrupted bliss and prosperity. Especially with the proven incompetents we have in charge of the financial system. “No banker left behind.”


19 posted on 05/03/2010 11:20:46 PM PDT by Attention Surplus Disorder (Voters who thought their ship came in with 0bama are on their own Titanic.)
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To: Neil E. Wright

As Treasury bonds become riskier investments, yields (interest rates) will soon skyrocket. No one knows exactly when the run on bonds will occur. Those drastic interest rate hikes will spread to local governments and private business. ...more waves of foreclosures. As business slows further, sooner or later, stocks will fall hard, causing more businesses to fail. The number of unemployed will go enormously higher.

Raising property taxes and taking a national sales tax won’t work any more than such actions did in other countries. ...business killers. Revenues will shrink to a small portion of what they are now. When the federal, state, county and city governments finally discharge large percentages of employees, it will be too late. Default will no longer be de facto default. It will be undeniable.

The government can’t simply inflate its way out of this one. There’s virtually no heavy manufacturing to raise taxes on for that. Worthless dollars are every bit as worthless to government employees as to anyone else.

So you see that neither piggish political party, full of rhetoric and money, will save the day. Both are far too piggish and more interested in pandering to government employees and foreign partners than hard working men.

Enjoy the ride.


20 posted on 05/03/2010 11:21:23 PM PDT by familyop (cbt. engr. (cbt), NG, '89-' 96, Duncan Hunter or no-vote.)
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To: Neil E. Wright

Think of it this way. You had a lot of bills to pay and you were juggling them every month, alternating those that got paid while incurring heavy late charges and higher interest rates.

So you borrowed enough from the local loan shark to pay off all your bills and now you only have to pay the loan shark - but his interest rate is even higher and penalties are much harsher. But what the heck, the improved cash flow now lets you take out new loans and buy a new car and house, which you do.

Now, your boss has just fired you, and the loan shark won’t settle for just kneecapping you.

Does that clear things up for you?


21 posted on 05/03/2010 11:29:16 PM PDT by RebelTex (FREEDOM IS EVERYONE'S RIGHT! AND EVERYONE'S RESPONSIBILITY!)
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To: RebelTex

I hope you don’t mind, but I posted this article along with your easy-to-understand explanation on my Facebook page.


22 posted on 05/04/2010 12:42:52 AM PDT by abigailsmybaby ( I'm not going to buy my kids an encyclopedia. Let them walk to school like I did. Yogi Berra)
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To: Neil E. Wright

Those are almost hockey stick graphs.


23 posted on 05/04/2010 12:45:29 AM PDT by abigailsmybaby ( I'm not going to buy my kids an encyclopedia. Let them walk to school like I did. Yogi Berra)
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To: RebelTex
Now, your boss has just fired you, and the loan shark won’t settle for just kneecapping you.

Simple, kill the loan shark.

24 posted on 05/04/2010 1:25:30 AM PDT by glorgau
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To: Neil E. Wright

Vote Conservative. Stay Independant. This is the only choice (except for gunpowder of course) to clean out all the Rats! This is the Tea Party philosophy. In other words, fire the Rinos and throw out the Liberals. There is still a chance to reform the Repubs. The Dems may be a hopeless case by now.


25 posted on 05/04/2010 2:40:11 AM PDT by rwoodward (Lucas)
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To: Neil E. Wright
you do remember that the rats controlled the House TWO years before bama didn't you?...and that the messiah was sitting his skinny little arse in the Senate TWO years before the presidential election......you do remember the constant hinderance the rats put up to ANY reform or changes to Fannie and Freddie don't you ?.......

.if you don't realize the sh^t that this country is in, that if we only had won a few more Senate seats intead of having close calls in several states, we wouldn't be in this mess....

if people can't figure out the good guys vs the bad guys, then either they're not really reading and listening or they just aren't really conservatives to begin with...

I see it coming already.....the "conservatives" and the pubs are going to eat each other alive INSTEAD of focusing on a complete shift in the house and senate that would STOP the insanity going on immediately...

we'll dink around and divide the patriots and then some idiots will run third party and some idiots will vote third party and SHAZAAM....the rat gets elected again and again and again..

I absolutely believe that there are many plants on blogs and forums that are paid to disrupt and agitate.....

26 posted on 05/04/2010 3:23:07 AM PDT by cherry
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To: RebelTex
Wait, can't we delay this by just raiding all the private retirement funds?!

Sarcasm/off.

27 posted on 05/04/2010 3:52:58 AM PDT by elk
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To: cherry
I am well aware of when the dims took over the congress. However, if you look at the charts, and READ the article, the debt started up in 2001 and has gone up EVERY year thereafter. It took a big jump in 2008, and has more than doubled under the current regime. That idiot bush, with his "compassionate" conservatism was a statist, every bit as much as was clintoon and is the current _resident in the once White House.

I will give bush his due on the war and on quite a bit of his foreign policy, but that rooster-sucking socialist-lite laid the groundwork for the current _resident.

★ FREEDOM! ★

28 posted on 05/04/2010 4:22:42 AM PDT by Neil E. Wright (An OATH is FOREVER (NRA member) Oathkeeper III We are EVERYWHERE)
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To: Neil E. Wright

29 posted on 05/04/2010 6:53:28 AM PDT by Liz (If teens can procreate in a Volkswagen, why does a spotted owl need 2000 acres? JD Hayworth)
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To: Neil E. Wright; Bokababe; ding_dong_daddy_from_dumas; stephenjohnbanker; DoughtyOne; ...
RE :” This is where your problem begins. While government deficits have varied over time, during the 2000 decade they became both embedded in the economy and at a high and continuing level of about 4-5% of GDP. That is, the so-called “recovery” in 2003-2007 was false; it did not consist of organic demand from the marketplace, but rather it consisted of government's fraudulently inflated demand. Contrast this with the 1990s when private demand rose fast enough that the government was able to slowly withdraw stimulus via deficit spending, to the point that it actually approached zero! That's REAL economic growth......The Obama administration estimates budget deficits will total $5.1 trillion over five years and hit a record $1.6 trillion in the year ending Sept. 30. The $1.4 trillion deficit in 2009 was equal to 9.9 percent of gross domestic product, the largest share since the end of the World War II. ...That cannot happen without the economy undergoing the very adjustment in matching of output and final private demand that the government has spent ten years trying to avoid.

This is the ugly truth that Bernanke doesn't want to speak of, but he knows it to be true. But neither he, nor the government budget folks, are willing to come out and tell the people the truth - since 2003 we have managed to compound a 58% distortion to our $14 trillion GDP!

To say that the adjustment occasioned by withdrawal of that support would be catastrophic would be the understatement of the year. We never got anywhere near this level of distortion in the 1920s and 30s - the distortion reached about 25%, top to bottom. The adjustment produced what we call The Great Depression.”

Look like we are following the Greece model of bankrupting the country. Go back to 2008 when the two parties picked two liars to tell us how more candy(debt) would fix our spending and debt problems magically, and the bigger spender and liar (Obama) won. Now he has hired a national debt commission to tell us the bad news, we really will have to pay for his (as well as Bush's) gross and wasteful spending, something he repeatedly told us wouldnt happen. They promised us it was free (to us.)

30 posted on 05/04/2010 6:56:25 AM PDT by sickoflibs ( "It's not the taxes, the redistribution is the federal spending=tax delayed")
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To: abigailsmybaby

I don’t mind at all. I’m honored.


31 posted on 05/04/2010 7:01:38 AM PDT by RebelTex (FREEDOM IS EVERYONE'S RIGHT! AND EVERYONE'S RESPONSIBILITY!)
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To: glorgau

LOL

That’s racist.

;>D


32 posted on 05/04/2010 7:05:13 AM PDT by RebelTex (FREEDOM IS EVERYONE'S RIGHT! AND EVERYONE'S RESPONSIBILITY!)
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To: All
....the true deficit is measured simply by the amount of outstanding Treasury debt (including intergovernmental games); has never decreased materially since 2001. Important b/c every dollar the government borrows and spends is one dollar that pulls forward demand from tomorrow and spends it today. This game continues, as it did in the housing market, right up until you can't get any more credit to do it with. But more importantly as you put forward this sort of distortion in the market the economy becomes habituated to that deficit spending and incorporates it into GDP!.......

GOOD FOR GOLDMAN, BAD FOR AMERICA (G/S the major toll collector on govt's red-ink railroad)
BY TERRY KEENAN, anchor of Cashin' In, Fox News Sat 11:30 AM.

EXCERPT G/S morphed into a commercial bank to take advantage of gov't handouts, yet Goldman is really a hedge fund on steroids, with trading accounting for 69% of gross revenue in the first quarter........ a big chunk of its trading involves US govt debt -- federal, state and local...... G/S has a huge vested interest in the US digging a deeper and deeper hole.........trading govt IOUs is big business.....one of the few growth markets on Wall Street. IPO's, M&A's, etc, have yet to recover but the US will borrow a record $3.25 trillion in the current fiscal year -- four times as much as in 2008.

With its biggest competitors out of business, G/S is a major toll collector on Washington's red-ink railroad.......a "debt tsunami" that will lift Goldman's fortunes. G/S plays on the bankrupting of America -- the more we borrow, the more they make........ ........but the American public should know this side of the G/S profit miracle. .......Through savvy trading and management, G/S set aside $11.4B this year to compensate its employees on a playing field cleared of its top competitors and soon after Uncle Sam bailedout G/S with $10B TARP -- and millions more through AIG, all paid for by taxpayers. G/S benefits nicely from the govt borrowing binge that was triggered in part by the banking crisis that started in Wall Street's own backyard.

SOURCE http://www.nypost.com/seven/07192009/business/good_for_goldman__bad_for_america_180130.htm

==============================================

REFERENCE Goldman Sachs Will Be Sitting Pretty With Emanuel in the Obama White House
By: Timothy P. Carney, Examiner Columnist, Nov 21, 2008

Goldman Sachs always has clout in Washington, as evidenced by the firm’s alumni serving as Treasury secretaries under both Presidents Bush and Clinton. Today, in these tumultuous times of bailouts and meltdowns when the investment banking leviathan needs Washington more than ever before, Goldman can leverage its most valuable asset yet—incoming White House chief of staff Rahm Emanuel. Goldman Sachs is the giant of Wall Street, and more than any other investment bank, Goldman is surviving the current financial storm.

Traditionally a Democratic booster, and one of Barack Obama’s top sources of funds in this past election, Goldman has always had some particularly strong allies within government. Emanuel is one such ally. An interesting early chapter in the Goldman-Emanuel relationship took place in the setting of Bill Clinton’s campaign for the White House in 1992. Clinton hired Emanuel as his chief fundraiser.

At the same time, however, Emanuel was on the payroll of Goldman Sachs, receiving $3,000 per month from the firm to “introduce us to people,” in the words of one Goldman partner at the time. This is certainly a noteworthy relationship, but it’s one that has almost entirely escaped scrutiny. (snip)

In his four terms in Congress, Emanuel has raised $74,750 from Goldman, making the firm his number four source of funds. Goldman has helped Emanuel. How has Emanuel helped Goldman? The most obvious answer, as mentioned in this column two weeks ago, is in Emanuel’s lead role in shepherding the “$700 billion” bailout—first proposed by former a Goldman CEO, Bush Treasury Secretary Henry Paulson—through the skeptical House.

Of course, back in the Clinton days, Goldman benefited from NAFTA and the bailout of the Mexican currency, with Emanuel pushing NAFTA through Congress, and Rubin hammering out the peso bailout. Did Goldman improperly funnel money to the Clinton campaign by subsidizing Emanuel’s salary in 1992? Did Goldman’s help to Clinton spur the Democratic president to push NAFTA and the Mexican bailout?

The answers to these questions are opaque, and with Emanuel burrowed deep within the Obama White House, the continued relationship between Goldman Sachs and Obama’s right hand man won’t be easy to follow.

Watch which regulations of Wall Street Obama fights for. Watch where the bailout money goes. And don’t be surprised Goldman soon sitting pretty once again.

http://www.washingtonexaminer.com/opinion/columns/TimothyCarney/ Goldman_Sach_Will_Be_Sitting_Pretty_With_Emanuel_in_the_Obama_White_House_112108.html

33 posted on 05/04/2010 7:06:40 AM PDT by Liz (If teens can procreate in a Volkswagen, why does a spotted owl need 2000 acres? JD Hayworth)
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To: Neil E. Wright
well neil, im no economist...but its apparant that fedgov has created an uncontrollable monster, and it now roams the countrside...

at some point it will return and feed...

34 posted on 05/04/2010 7:12:35 AM PDT by Gilbo_3 (Gov is not reason; not eloquent; its force.Like fire,a dangerous servant & master. George Washington)
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To: elk
Wait, can't we delay this by just raiding all the private retirement funds?!

Piker.

There's a lot of unseized wage money out there. THINK BIG!

35 posted on 05/04/2010 7:13:00 AM PDT by Lazamataz ("We beat the Soviet Union. Then we became them." -- Lazamataz, 2005)
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To: sickoflibs

” Look like we are following the Greece model of bankrupting the country. Go back to 2008 when the two parties picked two liars to tell us how more candy(debt) would fix our spending and debt problems magically, and the bigger spender and liar (Obama) won. Now he has hired a national debt commission to tell us the bad news, we really will have to pay for his (as well as Bush’s) gross and wasteful spending, something he repeatedly told us wouldnt happen. They promised us it was free (to us.) “

Bailing out Greece won’t help them. Their insane retirement pay will wipe them out again.


36 posted on 05/04/2010 7:17:37 AM PDT by stephenjohnbanker (Support our troops....and vote out the RINOS!)
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To: RebelTex; sickoflibs; NFHale

perfect analogy...


37 posted on 05/04/2010 7:22:30 AM PDT by Gilbo_3 (Gov is not reason; not eloquent; its force.Like fire,a dangerous servant & master. George Washington)
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To: stephenjohnbanker

RE :”Bailing out Greece won’t help them. Their insane retirement pay will wipe them out again.”

The EU has no money anyway, they have to borrow it. Glenn Beck did a great show yesterday on unions protesting violently for theit govrernment handouts in Greece and the USA


38 posted on 05/04/2010 7:24:16 AM PDT by sickoflibs ( "It's not the taxes, the redistribution is the federal spending=tax delayed")
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To: elk

LOL

The Loan Shark already controls all the private retirement funds.

;>D


39 posted on 05/04/2010 7:28:37 AM PDT by RebelTex (FREEDOM IS EVERYONE'S RIGHT! AND EVERYONE'S RESPONSIBILITY!)
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To: Gilbo_3; RebelTex; NFHale; stephenjohnbanker; ding_dong_daddy_from_dumas
RE :”Think of it this way. You had a lot of bills to pay and you were juggling them every month, alternating those that got paid while incurring heavy late charges and higher interest rates. So you borrowed enough from the local loan shark to pay off all your bills and now you only have to pay the loan shark - but his interest rate is even higher and penalties are much harsher.

This is not exactly what happened late 2008-2009. Interest rates were low with controlled inflation because the world economy went sour and there was a flee to the dollar. And we (federal government) borrowed as much as we could similar to that temporary teaser 0% APR (that congress tried to ban for credit cards) that was guaranteed to skyrocket given any increase in demand and economy improvement. So Obama borrowed (given Bush's lead) more than the country could ever paid back, and promised us it was free.

China can never force us to pay them back, but they can cut back out credit line which is all we have left to keep us a float.

40 posted on 05/04/2010 7:36:53 AM PDT by sickoflibs ( "It's not the taxes, the redistribution is the federal spending=tax delayed")
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To: Gilbo_3

Thank you.


41 posted on 05/04/2010 7:47:50 AM PDT by RebelTex (FREEDOM IS EVERYONE'S RIGHT! AND EVERYONE'S RESPONSIBILITY!)
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To: sickoflibs

It’s an analogy, not a detailed explanation.

None of the explanations, so far, contain all the facts, not even yours. An accurate analysis would have to cover many years and entities, government and private.

It would make a long, (and probably boring for most), doctorial thesis for some economist. Unfortunately, Milton Friedman is no longer around to grade it, but perhaps Walter E. Williams could give it a shot.


42 posted on 05/04/2010 8:05:20 AM PDT by RebelTex (FREEDOM IS EVERYONE'S RIGHT! AND EVERYONE'S RESPONSIBILITY!)
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To: Liz

bump


43 posted on 05/04/2010 8:11:18 AM PDT by Freedom_Is_Not_Free (Bye bye Miss American Freedom. When did we vote for Communism?)
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To: RebelTex

Yep, I didnt want to get into housing bubble and credit expansion here.

But everytime there is a economic contraction, we do a debt/monetary stimulation for political reasons and pull out some ‘experts’ who claim it is necessary never telling us the future consequences, look at Paul Krugman who is still taken seriously by MSM.


44 posted on 05/04/2010 8:18:26 AM PDT by sickoflibs ( "It's not the taxes, the redistribution is the federal spending=tax delayed")
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To: RebelTex; sickoflibs
the simplicity of the analogy 'dumbs it down' for guys like me who would be fast asleep with the detailed thesis...

as another posted, the only option is to 'light a match' to let the insurance pay the shark [an option i guess we currently are doing] or go after the shark directly and eliminate the source of power...

We The People better realize that we are the shark, and plan accordingly for the collapse of the insurance companies...

45 posted on 05/04/2010 8:28:27 AM PDT by Gilbo_3 (Gov is not reason; not eloquent; its force.Like fire,a dangerous servant & master. George Washington)
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To: Gilbo_3
Try: #44
46 posted on 05/04/2010 8:30:19 AM PDT by sickoflibs ( "It's not the taxes, the redistribution is the federal spending=tax delayed")
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To: Neil E. Wright

Wait a minute! Those graphs look loke hockey sticks!


47 posted on 05/04/2010 8:37:22 AM PDT by 724th (If the enemy is in range, so are you.)
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To: abigailsmybaby

They are, at that.

The difference is, the data is not made up or manipulated to arrive at a foregone conclusion.

It is real, and as Jim said, we are in deep sh!t!


48 posted on 05/04/2010 8:44:03 AM PDT by Taxman (So that the beautiful pressure does not diminish!)
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To: Attention Surplus Disorder

49 posted on 05/04/2010 9:22:30 AM PDT by ding_dong_daddy_from_dumas (Pat Caddell: Democrats are drinking kool-aid in a political Jonestown)
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To: Liz; Neil E. Wright; Attention Surplus Disorder; sickoflibs; stephenjohnbanker

50 posted on 05/04/2010 9:26:20 AM PDT by ding_dong_daddy_from_dumas (Pat Caddell: Democrats are drinking kool-aid in a political Jonestown)
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