Skip to comments.There Must Be Some Way Out Of Here
Posted on 07/18/2002 11:01:35 PM PDT by Uncle Bill
There Must Be Some Way Out Of Here
July 18th 2002 | WASHINGTON, DC From The Economist print edition
Americans are losing confidence in the economy. Can George Bush stem the slide?
THESE are not happy times for the White House. Share prices are tumbling, consumer confidence has fallen sharply and George Bush's own approval ratings seem to be heading down. For an administration haunted by the ghost of George Bush senior, whose defeat in 1992 was blamed on a sluggish economy, the parallels are becoming painful, not least because the current president's efforts to reassure Americans are also falling flat.
Mr Bush's trip to Wall Street to preach about corporate ethics was widely derided as too little, too late. This week's follow-up, a hastily-arranged pep talk on the economy in Alabama, proved another embarrassment. This economy is coming back, boomed Mr Bush. That's the fact. Meanwhile, in one of Wall Street's more dramatic days, stockmarkets slumped (though they recovered somewhat after he finished). It was all too close to Herbert Hoover, who famously proclaimed America's economy to be on a sound and prosperous basis in October 1929.
Judging Mr Bush's words by short-term movements in share prices is, of course, neither fair nor useful. The real questions are whether the White House has correctly diagnosed what ails the American economy, and whether its policies are right.
Mr Bush's basic contention is that the fundamentals of the American economy are in good shape. This was also the message of Alan Greenspan, chairman of the Federal Reserve, in congressional testimony the following day. At first blush, they have a point. Inflation is low and productivity growth remains surprisingly robust. Much of the excess investment that firms had built up during the boom has been worked off. Consumer spending remains surprisingly solid. Retail sales, for instance, rose 1.1% in June, far faster than analysts were expecting. The Fed has raised its forecast for economic growth in 2002 to 3.5-3.75%.
Yet despite these apparently good fundamentals, consumers are worried. The University of Michigan's consumer-confidence index fell sharply in July, to levels last seen in November. The main reason, of course, is the stockmarket slide (see article). Over the past two weeks alone the Dow Jones Industrial Average has fallen by 6%. The S&P 500 has dropped to levels not seen since October 1997. The technology-laden Nasdaq index is 72% below its peak in March 2000.
In large measure, this slide is the deflation of the 1990s bubble, a point Mr Bush himself hinted at: America must get rid of the hangover that we now have as a result of the binge...we just went through, he said in Alabama. But it has clearly been aggravated by the slew of corporate scandals and the loss of investor confidence.
Sliding equity prices could begin to hurt those fundamentals, promoted so assiduously by Messrs Bush and Greenspan. Household saving, in particular, may be found wanting as Americans re-evaluate what they can expect from their retirement portfolios. That suggests a protracted spell of sluggish, rather than buoyant, consumer spending. Capital investment could also suffer, if firms become more cautious about borrowing.
Unfortunately, there are scant signs that the administration will help counter this. In his Alabama speech, Mr Bush promised an agenda for long-term growth. This encompassed: fiscal policy (he wants to make his tax cut permanent, whilst forcing Congress to hold the line on spending); trade policy (he urged Congress to grant him fast-track authority to negotiate trade agreements); corporate reform (he touted his new Corporate Fraud Task Force, promised more money for the Securities and Exchange Commission, and urged Congress to send him an accounting-reform bill before August); boosting accountability in schools; and terrorism-risk insurance.
This grab-bag of assorted policies hardly constitutes a post-bubble economic agenda. Even if you thought it did, once you start going through the individual bits, the progress is patchy. For instance, the Senate certainly passed a tough corporate-reform bill on July 15th, and Mr Bush welcomed it. The next day Republicans in the House of Representatives promised to dilute many of the measures in the Senate bill (though they did agree to stiffer sentences for corporate criminals).
Nor do the prospects for trade policy look good. The Bush team has been pushing Congress for fast-track authority for 18 months. Legislation squeaked past the House of Representatives last December and the Senate in May. But reconciling the two bills has been difficult. If Congress does not get round to voting on fast-track by the August recess, the proximity of the mid-term elections in November suggests that the politically sensitive trade bill has little hope.
The biggest and most intractable problems, however, concern fiscal policy. Nobody seems to have absorbed how a post-bubble environment might influence the budget. On July 12th, the Bush administration announced that the federal government would run a deficit of $165 billion this year, compared with an earlier forecast of $106 billion made in February 2002. Although the economy has grown faster than expected since February, tax revenues have plummeted. Much of this revenue drop is due to the stockmarket, as individuals' capital gains have turned into losses. If the bear market lasts, so too will those revenue shortfalls.
In these conditions, Mr Bush's main fiscal policythat his 2001 tax cuts, ostensibly to be reversed in 2010, should be made permanentis hard to justify. If demand weakens substantially, there may be a case for more tax cuts (or spending) today. But it is hard to see the fiscal wisdom in making future tax cuts permanent at a time when revenues are so uncertain.
On spending, blame needs to be divided between the White House and Congress. Mr Bush talks tough on spending. He has threatened to veto a $27 billion supplemental budget bill that Congress has larded up to $31 billion. However, by agreeing to far larger, and permanent, expenditures (such as the massive farm bill) Mr Bush has lost the moral high ground. Congress, in turn, is closely divided, and short on any procedural systems for fiscal discipline. Finger-pointing and partisan bickering are far more likely in Washington than the confidence-inspiring policies that America's economy needs.
Copyright © The Economist Newspaper Limited 2002. All rights reserved.
Repeal the 16th amendment and abolish the income tax. Abolish the IRS and take away the citizenship of senior IRS officials and send them to Russia where they'll feel at home. Obliterate federal spending, and start to pay off the national debt in large chunks. Abolish "static scoring" with regards to taxation of any kind. Reinstate and restore the Constitution and Bill of Rights and abolish all laws, treaties, emergency orders and executive orders that have rendered it useless and return to the Constitutional boundaries of our constitutional Republic our founding fathers gave us. Importantly, repeal the Emergency and War Powers Acts. Repeal all laws created by unconstitutional and extraconstitutional devices, such as Executive Order or Presidential Directive. Repeal and abolish all unconstitutional federal involvement in states issues such as: crime, health, education, welfare and the environment, and only God knows how many other intrusions. Social programs such as Social Security, welfare and Medicare must be repealed. So too, do most federal subsidies. Rescind all treaties and International Agreements which are not in perfect agreement with the Constitution. Tell the United Nations to stuff it! The U.S. should disassociate itself from the U.N. and the U.N. should be forced to leave the United States. Destroy all documentation that links the U.S. with the U.N. See Arthur Andersen for details. Alger Hiss, screw you. Furthermore, demand that the federal government refrain from meddling in the business and squabbles of foreign nations, unless there is an imminent threat to the people of the United States. PROTECT OUR BORDERS!! Elect a real small government candidate for President, and the same for Congress. Take memory loss drug to try to forget that most Americans love socialism in about every way and that politicans are simply a reflection of themselves, and, none of the above is going to happen. Now, returning back to reality. Terrorism, shadow government, Stock market crash, federal government crash, Police State, Martial Law, gun-confiscation, FEMA, FBI, CIA, Dictatorship, T.I.P.S., Carnivore, Operation Magic Lantern, Echelon, The Patriot Act, Executive orders too numerous to count, slavery, death, One World Government. It could never happen here. For those of you not just interested in Medicare Part B.
HOW BIG IS THE GOVERNMENT'S DEBT? - $33.1 TRILLION!
"We have no government armed with power capable of contending with human passions unbridled by morality and religion. Avarice, ambition, revenge, or gallantry, would break the strongest cords of our Constitution as a whale goes through a net. Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other." President John Adams, second President of the United States addressing the U.S. military, October 11, 1798
You've obviously compiled, as have I, evidence demonstrating the malthusian driven megalomaniacal intentions of the world elite.
What surer way to kill off large chunks of population than to let it enslave itself with its own unbridled passions? A corralled herd is more easily culled than free men who can still fight back.
Is your screenname somehow connected with attempts to awaken what manhood remains in men who've permitted themselves to be morphed into sheeple?
Instead of being Tax Free which they are because they are Churches , they have accepted the "tax exempt" status from the government. They can lose their tax exemption status if they go against government/pagan policies.
Hitler said "Tell a lie long enough and people will believe it."
Chruches believing that "tax exemption" granted by government is innocent is one of those lies.
"The UN's doctrine of tolerence and diversity."
Stalin said America would be taken down by a "War of Concessions" different words same end.
Inncidently (as I'm sure you know) the UN is another of those lies that Hitler talked about.
As far as these churches corrupting our Churches , I think You have to go back to Constintine as the beginning of the corruption. With the introduction of pagan idols and pagan celebration days to increase the churches members.
I describe how I came to Christ , by saying I came through the "back door". I didn't discover Him in Gods' Word , I discovered Him after I discovered the "evil" He faced for us. When I found the "evil" He defeated for us , I knew He was real.
That's when I understood His Love for us.
I'm not trying to preach to the choir , I can't. I don't read the Bible.
I'm relying on my Faith in Christ to guide me.
I don't believe for a second that God put us here to suffer at the hands of His enemies. Even though that is a role Christians have accepted for thousands of years. Even today being slaughtered in Africa.
There was one time I heard where Christ hid from His enemies , and that was so Scripture could be fullfilled.
I believe like Christ , we need to come together as ONE CHURCH IN GODS' NAME AND FOR GODS' HONOR and drag His enemies into His Light where they will crumble. And there is no doubt in my mind that they will crumble in His Light.
These barbarians need to accomplish what they do , in secret. If people knew half of what they have done , they would drag them into the streets and make examples out of them.
That's what they fear , TRUTH. And the TRUTH leads to God. That is why they must separate us from our God with such things as diversity and incorporation as Ceasar did.
There's no doubt in my mind that we can stop them and change the ending of the Bible. But "We" have to stand together in His name as one Church and for His honor , placing Him back above man.
Only then will we be able to defeat man's corrupt laws that will enslave and eventually destroy us.
Basically , "we" have to STAND UP WITH CHRIST and do what must be done , instead of sitting on our hands and waiting for Him to do it for us. I believe in my heart He will walk with us and we will win.
The folks on Wall Street say this time will be different. That this rally will last. If history doesn't provide the proper context for that pipedream, maybe valuations will.
America's 500 biggest stocks are selling for anywhere between 25 and 40 times one year's earnings, depending on how one accounts for nonrecurring charges. Even at the cheap end of that range, the S&P 500 ($SPX: news, chart, profile) is still selling for more than twice the historical average for a bear-market low.
The highest price-earnings ratio seen at a major market bottom during the past 60 years is approximately 12.5, technician Paul F. Desmond at Lowry's Reports tells me. That was in June 1962. (Read more about tops and bottoms.)
Next time a guy tells you this time will be different, ask if he or she works for a brokerage, investment bank, pension fund or mutual fund manager. If the answer is no, ask when was the last time they made money in this market of sick stocks.
Has scandal taught big business a lesson?
a. Yes, they've learned the hard way--------(25%)
b. No, they'll get off easy and do it again-------------------------(60%)
c. I'm not sure------(15%)
We are "2" because we are two and "sheep" because we follow the L-rd and not the god of this World nor false shepherds/wolves sent to deceive the sheep. Herd mentality is a dangerous thing.
There have been many signs of a coming crash and I have posted those often, i.e., trains de-railing and going over cliffs, buses crashing, decks falling into the ocean, fires at Cache Mt. and so on. Here's just one: 89. It is harvest time in the land. The Hayman fire and a big Rodeo (corral) fire and these speak of far worse to come...the fire of persecution by the one worlders taking over.
Uncle Bill has been writing about this economic crash for several years and unforunately, his threads often have little traffic. Others threads go to the 100's or 1000's which are examples of the Delphi Technique and Hegelian Dialectic in practice to deceive Freepers every day -- threads which excite the emotions such as the child murder threads or those which bait Rep/Dem (as if they represented Good/Evil, when they do not). A friend just sent this link: So, Have You Been Delphi'd? -- There is more here: LEARN. People should not only think outside the box, but get outside the box. Sodom is on fire.
"This expansion will run forever,"
Rudi Dornbusch - MIT economics professor - July 30, 1998, Wall Street Journal.
"We don't want one, we don't need one, and, as we have the tools to keep the current expansion going, we won't have one."
Rudi Dornbusch - MIT economics professor - July 30, 1998, Wall Street Journal. Regarding The U.S. having a recession.
"Thus, only natural causes, and not the Fed, can bring the economy to a standstill. Fortunately, we have the monetary and fiscal resources to keep that from happening, as well as a policy team that won't hesitate to use them for continued expansion."
Rudi Dornbusch - MIT economics professor - July 30, 1998, Wall Street Journal.
Where's The Risk?
"And there are dangers that institutions take bets on particular risk models that turn out to be wrong. Long-Term Capital Management nearly collapsed in 1998 after the Russian default undermined its investment assumptions. Similar mistakes could emerge if others have taken on too much bank credit, assuming the extraordinary bubble of the 1990s would continue for longer."
Andy Fastow - Enron's off-balance-sheet partnerships known as LJM2 - "Do I know everything that's going on? Do I have to sign off on every deal that goes in there? Yes," he says. "I'm in the unique position of not having the ownership or the responsibility or obligation to sell the assets, but I know everything about them, and I've been involved in their approval and maybe in their structuring."
Mr. Speaker, America's trade deficit for September hit $35 billion for one month, $35 billion. America is heading for a $420 billion, 1-year trade deficit. Unbelievable. If this continues, America will have a crash that will make 1929 look like a fender-bender. What is even worse, China is now taking $100 billion of cash out of our economy, buying missiles, and pointing them at us.
Beam us up, all of us. We must be stupid. Ronald Reagan almost destroyed Communism, and the Clinton administration has reinvented it, is now subsidizing it, and is now stabilizing it. I yield back any common sense left and any patriotism left in this Congress. ... James Traficant
Ah...Hegelian-speak! The Towers of Babel/Babylon have fallen and crashed in the marketplace. They cannot be rebuilt by consensus.
LEARN - Homepage
About Consensus and Facilitation
The Delphi Technique. What Is It?
The Delphi Technique: How to Disrupt It
What's Wrong With Consensus
What American Citizens Need to Know About Consensus and Facilitation
The Community of Sixty
Dean Gotcher on Consensus Building
Ah...Hegelian-speak! ...They cannot be rebuilt by consensus.
You of course realize that the word synthesis is older than Hegel?
Do you shun plants because they engage in photosynthesis?
Even useful hardware comes from synthesis -- e.g., photo+copier.
Whole ideas spring from the synthesis of theory with experimentation. Enormous progress springs from joining academic inquiry with empirical experience. It's not all the result of thesis and antithesis you know. Better yet, check your dictionary. Your definition is a late addition and hasn't rendered the original meaning obsolete. (Just as my life has not lost all gaity because I'm not homosexual<G>)
I pray you get my, er, drift. See, even analogies and metaphors (like "beat a dead horse" comes to mind for some reason) rely on synthesis of a current situation with a vivid image. My life and writing would sure be dull without them.
And come to think of it. Just which one of us responding like the Hegelian student here? <G> Perhaps you've become the anti-Hegelian? You've been studying it so long you've adopted a Hegelian view-point of all processes? Better be careful there -- your ideas may be coalesced and absorbed into the basis of the next thesis. <G>
Look, without a predetermined outcome, the synthesis of which I wrote had to with sparking new inspiration, not excision and elimination so as not to interfere with a predetermined goal.
Now, after all that, instead of a negative response, perhaps following my suggestion to compare and contrast those two links for common and uncommon ideas just could be safe? <G>
"I place economy among the first and most important of republic virtues, and public debt as the greatest of the dangers to be feared."
Thomas Jefferson to William Plumer, 1816.
"The burden of debt is as destructive to freedom as subjugation by conquest."
I was joking. Some might think that is a rare event. Not joking, however about the following:
Rom 6:16 Know ye not, that to whom ye yield yourselves servants to obey, his servants ye are to whom ye obey; whether of sin unto death, or of obedience unto righteousness?
Remember the old time cartoon of an angel on one shoulder and a devil on the other? America has yielded itself continually for a long time to various forms of idolatry in its worship of Mammon -- hedonism, materialism, pride, selfishness, and every evil and sexual perversity under the sun. The few who remain who want good are appalled to see the country given over to socialist monsters who are not interested in the public good but in totalitarianism and slavery. Those one worlders will embrace their false prophet, Islam, and require that the whole world worship their beast system and will put a boot to the head of all resistors. As long as the Power Elite silence or eliminate the ones who expose their lies, writing to one's Congressmen is a waste of time. Congressmen should be renamed Transgressors...they have kicked out good and love their Barabbas to whom they bow.
The rich men of the earth who hide out in the Caymans enjoying their ill-gotten gains should party hard and enjoy every fresh breeze they can. Where they are ultimately going is going to be Hot and forever. One of the founders said of the republic..."if you can keep it" or something like that. America didn't keep it. There are serious consequences. Consensus may be comforting, but it is probably too late. Even Lot had to leave town.
"Scenes are now to take place as will open the eyes of credulity and of insanity itself, to the dangers of a paper medium abandoned to the discretion of avarice and of swindlers."
Thomas Jefferson to Thomas Cooper, 1814. ME 14:189.
"A spirit... of gambling in our public paper has seized on too many of our citizens, and we fear it will check our commerce, arts, manufactures, and agriculture, unless stopped."
Thomas Jefferson to William Carmichael, 1791. ME 8:230.
"We are now taught to believe that legerdemain tricks upon paper can produce as solid wealth as hard labor in the earth. It is vain for common sense to urge that nothing can produce but nothing; that it is an idle dream to believe in a philosopher's stone which is to turn everything into gold, and to redeem man from the original sentence of his Maker, 'in the sweat of his brow shall he eat his bread.'"
Thomas Jefferson to Charles Yancey, 1816. ME 14:381.
"Congress passed the Federal Reserve Act on the 22nd of December 1913, and from that day forward the United States of America ceased to be a republic."
Anne Williamson - The FED - March 2001 - WorldNet - Vol.10, No. 3.
In 1913 a man gathers up his family and moves from Kentucky to another state far away. He has his lovely wife, and six children to take care of. This is a great challenge, as he has virtually no money, and worse, only an 8th grade education.
Upon arrival, he begins the hunt for a variety of jobs. Within a short time he lands two labor jobs. He works both jobs for some time. He then finds a solid position for a logging company, where he performs a variety of tasks including falling, rigging, operating heavy equipment, etc.
By now, a few years later, he has added two more children to his quiver, for a grand total of eight children. He has bounced from apartment, to rentals, to a rental farm where he is finally happy and content.
He refuses to let his wife work. He and she are content and happy with her taking care of the home and the children, while he provides for the family.
One day he is approached by the landlord, who he has known for some time, to buy the small 25 acre farm. His first instinct is no. He refuses to go into debt. Debt to him was an enemy, a heavy load, slavery in motion. The landlord will sell the acreage for $35 an acre, the home for $650. That's $875 for the land and $650 for the home with everything included. Grand total: $1525. The man had half of that amount. He agreed with the landlord that he would give him the $1525 within a two year time period. No loans, no papers, just a handshake.
He sold a few things, saved his money, plus the money he had already saved, and through hard work gave the landlord the full price, even beating the deadline.
Years thereafter, he purchased 20-30 acre tracts adjoining his property one at a time, until he had 380+ acres, he built a new smaller home, added a huge barn, purchased a tractor, accumulated large heads of cattle, horses, and put in the best fencing available throughout the entire farm. The river and large creek that run through the property provided excellent irrigation for the crops in the fields. The dirt is so rich and dark, you would do a double-take when you saw it. TV? What was that.
For the most part, the farm was self-sufficient. Deer and even elk could easily be killed on the farm, or surrounding timber areas. Timber? That's old growth timber, that you could walk barefoot through, and see the awesome handiwork of God Almighty.
They worked this farm through the Great Depression, world war and troubles of all kinds. One child died. But seven lived to a ripe old age. This man, even when old, often stated, he could breathe out here.
So, his wife never held a job. She never finished high school. She married him at 15 years of age. She worked terribly hard on the farm, and, well, raising eight kids, speaks for itself. If cooking is an IQ, she was a genius. She never missed a day of church. She read books and studied all of her life, and wisdom flowed from her soul. Neighbors from miles around would ask her of many things knowing they would receive an answer. He had an 8th grade education. His work ethic was legend. He bought a small farm and gradually turned it into a 380 acre spread, with tractors and attachments, farm machinery, a new home, cattle, horses, well, fencing, etc. He didn't borrow a dime in his whole life. No loans, no banks, no credit, zip. He did this within an approximate 30 year timeframe.
Now, I challenge a young blue collar worker with an 8th grade education, no money, a young wife with little education, and 8 kids, to move to another state, with no job prospects, to find a job(s), purchase a small farm, turn that farm into a 300-400 acre spread, with tractors, machinery, a new home, cattle, horses, fencing, etc., without ever borrowing money from anybody, and do it within approximately 30 years. Good luck.
For those who think it can't happen here, Ninevah and Babylon were once great centers of civilization.
There are thousands of unexcavated "tells" in the Middle East which were once thriving cities.
The moving hand writes, and then moves on.
Tene, tene, tekel uupharsin...
I'll bet someone back home is going, "Now why don't he vote?"
"Investors are extremely nervous - almost paranoid," said Ned Riley, chief investment strategist at State Street Global Advisors. "The paranoia comes from making a decision and having it turn about to be devastatingly incorrect."
. The IMF's push for global currency;
. How the enormous cost of international bankers' ill-advised loans to irresponsible debtor nations has been transformed on the backs of American taxpayers;
. How all this has affected the U.S. stock market.
Give me my IMF loan,
the stupid rich Americans
can pay for it.
"Compounding the gloom are the revisions made by government statisticians to earlier figures. It now turns out that last years recession was significantly worse than previously estimated, and growth in the first three months of 2002 a bit less impressive than earlier statistics had indicated. The backward changes will mean a downward revision to America's spectacular productivity figures and cast further doubt on the miracle of the new economy.
The new figures are a blow to hopes that Americas economic recovery is well established. Suddenly, the recovery looks weak and the economy looks vulnerable to further shocks."
"Another way to make sure that we foster growth and restore confidence is to hold people accountable for misdeeds in the public sector."
George W. Bush - University of Alabama at Birmingham Alys Stephens Center - July 15, 2002.
NOTE: Do as I say, not as I do
Blast from the past:
Stock Market Suffers Largest Loss in History as Dow Industrial Average Drops 508 Points
The Washington Post
By Peter Behr and David A. Vise
Washington Post Staff Writers
Tuesday, October 20, 1987; Page A01
The stock market was devastated by the worst one-day collapse in history yesterday in a pandemonium of panic selling that shattered all records and swamped stock exchanges around the country and overseas.
The best-known market barometer -- the Dow Jones average of 30 industrial stocks -- plummeted 508 points, five times the previous record set last Friday. The Dow closed at 1738, dropping 22.6 percent, or nearly double the 12.8 percent plunge of Oct. 29, 1929, the crash that began the Great Depression.
More than 604 million shares were traded on the New York Stock Exchange and 239 million on the American and over-the-counter markets, shattering previous records.
Investors lost more than $500 billion in stock market value, according to Wilshire Associates of Los Angeles, which publishes an index of some 6,000 publicly traded stocks.
And the losses were mirrored on markets around the world in a sobering demonstration of the electronic and psychological links that now tie the world's investors together.
John Phelan, chairman of the New York Stock Exchange, called the collapse a near "meltdown" caused by a "confluence" of factors: the market's inevitable turnaround after its long climb, heightened anxieties over rising interest rates and future inflation, and the impact of computerized trading maneuvers.
A remark by Securities and Exchange Commission Chairman David S. Ruder, discussing the possibility of a government-imposed halt in trading, added to the binge.
Other observers said fear was the overriding factor yesterday. "This is a financial panic," said Allen Sinai, chief economist with Shearson Lehman Brothers Inc.
"It is the classical mob psychology that takes over," said Burton Siegel, chief investment officer of Drexel Burnham Lambert Inc. "It feeds on itself. What you are dealing with here is a complete change in perception and psychology."
"This is chaos," said Neil Call, executive vice president of D.F. King, an investment services firm in New York. "Every market in the world is in panic or close to it."
[End of Partial Transcript]
Wall Street Traders' Ghastly Day - "The government has to intervene,"
"I guess I should learn to imagine anything."
Plunge Stuns Local Investors - "I watched Dad struggle through the Depression and the thing I learned was that you keep liquid, and you don't owe money,"
A broker at another firm spent the day keeping clients from taking rash actions.
"No," she told one worried caller. "Don't sell. Don't do anything." She listened a bit, and said: "Um, hum. Yeah. I know ... But it's not a crash."
After the Fall, a Nation Befuddled - "The difference between a pigeon and an investment banker was that the pigeon could still make a deposit on a Mercedes."
"Since a lot of people thought that fear brought on by the crash could cause a recession, psychologists were asked about fear.
"The main issue around panic is the theme of losing control, of being trapped," said Reid Wilson, a clinical psychologist who has written a book called "Don't Panic: Taking Control of Anxiety Attacks." "We try to cover for the worst possible scenarios, like a fireman facing a burning building. Will these stairs cave in? How stable is the ceiling? We go back in our minds to the past to find something similar. Here we go back to 1929. That in itself brings out fearful thoughts."
Thanks especially for the IMF links.
This global redistribution of income isn't so much fun anymore but it's probably the least of our worries coming down the pike.
But wait, er, uh, he said this.
America Teeters Toward Fiscal Disaster
Slumping Economy May Prompt Investor Exit
"Investors already inclined to sell may opt to do so now, rather than risk bigger losses waiting to break even, after a range of government and industry reports this week pointed to a slowing economy."
Ailing markets reflect investors' fear of diving in
"Combine all the bad news about crooked accountants, duplicitous CEOs, terrorist threats, paltry profits, shattered confidence, lost fortunes and shrinking 401(k) balances, and it boils down to one basic quandary now facing investors: Either stick with stocks or give up on them once and for all."
Friday, 8/2 Market Wrapup
Still Watching The Banks
With Brazil now on the ropes, the IMF is considering giving the country more time to repay its $11 billion in loan payments due next year. We now see bankruptcies rising, companies as well as countries defaulting on their debt, credit spreads widening, and one has to wonder, Who is next? There is too much debt and the growth in derivatives has only compounded this situation. Over the last few weeks, worries and concern has started to spread over the nations top three banks and their exposure to derivatives. The current exposure exceeds J.P. Morgan Chases net equity. Even as large as Citigroup is, their current exposure could cause severe problems for the banks, especially if systemic risks throughout the worlds monetary system start to multiply as we are now starting to see unfold. In fact, given the extent of their derivative book and considering that they are in all of the wrong places, it is hard not to imagine that one of these three banks are headed for trouble, if not all three. The banks are supposed to have risk control measures in place. Yet with derivative books this large, it doesnt seem possible they can avoid the occurrence of future problems. In the case of JPM, their derivative book of $23.4 trillion and equity base of $40 billion is all that covers $51 billion in potential credit risk, not mentioning the $68.8 billion in derivative risk exposure. These three banks are in all of the wrong places -- corporate loans, loans to emerging markets, and counterparties to a Titanic-size derivative book. Add to this the fact that most of the derivative books of these major banks are of the OTC variety -- which means they are far riskier and less liquid -- it isnt too imaginative to envision more problems occurring. A lot of the derivative business is based on blind faith and assumptions. These are the assumptions that are built into the derivative risk models that provide the theoretical pricing for much of these complex instruments.
"It's So Derivative"
|J. P. MorganChase||$23.4 Trillion||$68.8 Billion|
|Bank of America||$9.8 Trillion||$6.9 Billion|
|Citigroup||$6.6 Trillion||$22.4 Billion|
Source: Office of the Comptroller of the Currency as of March 31, 2002
It is the complexity of these instruments and the prevalence of problems in the international system that is now causing central bankers and investors to worry. As I said above, someone somewhere is going to come up on the wrong side of these trades. At this time we dont know who. We just have clues.
Looking Like A Double-Dip Recession
The economic numbers this week are showing the economy is starting to slow down again and that the recession was much deeper than originally thought. On Friday the government reported the economy created fewer jobs than expected and that the unemployment rate remains stubbornly high. Factory orders fell 2.4% in June and many more companies are reporting a slowdown in sales and profits. The economic numbers this week have already caused one major Wall Street firm to predict the threat of recession will cause the Fed to lower interest rates again. Goldman Sachs, which predicted a rate hike because of a strong economy only five weeks ago, is now calling for the Fed to lower interest rates again in order to thwart another recession. Some question this move given the large contingent of foreign ownership in our financial markets. Lower interest rates would now be considered an act of desperation that could cause foreign investors to panic and exit our markets. Currently, interest rates are more attractive overseas, especially in Europe.
This week Trim Tabs reported that money flowed into equity funds in a delayed reaction to a jump in stock prices. Last week $20.5 billion flew out of stock funds. For the month of July nearly $48 billion flowed out of stock equity funds. This follows outflows last month that were close to a record $48 billion.
What we have seen this week and this quarter is a number of clues on the economy and on earnings that call into question a second half recovery. The economy was much weaker than originally thought and shows signs of new weakness. Corporations continue to report weak sales and profits and there are new signs of retrenchment in spending on the consumer front. It is hard to make a case at this point for a second half recovery. In fact, it is much easier to predict the economy will lapse back into a recession instead of a strong recovery. In summary, the primary trend is for the bear market to continue and for the economy to head back into recession. In addition, there is even a greater risk that the Perfect Financial Storm is coming closer to fruition as barometric gauges in the financial system have taken a sudden drop.
TRAFICANT knows why the ECONOMY is TANKING -PRINCIPLE OF FAILURE TO YIELD to the globalist for transffring US job overseas.
I yield back to all the Clinton/BushBots the remaing time the US has to servive.
With the Dow Jones industrial average and other major market indexes once again falling sharply, it seems worth asking whether drops in stock prices can topple the economy. Did Oct. 28 and 29, 1929, plunge the economy into depression, and could this era's swooning Dow do the same?
British Literally Bet On Markets With A Gambling Scheme
Pull up a chair, place your bets, and stay awhile
President Bush Fudges America's Books
"Bush did not come clean in explaining the whole picture when he said "For the first time the accounting profession will be regulated by an independent board that will set clear standards to uphold the integrity of public audits and have the power to investigate abuses and discipline offenders." Does this mean when a CEO does not want to bow to the wishes of the international banking cartel that "charges" will be brought against him for his non-compliance?
Or does it mean what Treasury Secretary Paul O'Neil said in the July 25 Washington Post, when he warned several weeks ago that what was being set up would "let corporate crooks slide through enforcement cracks by giving 'the power to enforce securities law to an unaccountable private body'"? Lawrence Lindsey understands full well what is taking place when he explained on July 28 this humongous transfer of power: "the SEC has been elevated to the Federal Reserve."
In Capital, Business And Politics Firmly Entwined
By Judy Keen
July 31, 2002
Hanging in the bar of The Caucus Room, an expense-account restaurant halfway between the White House and the Capitol, is a painting of an elephant, a donkey, a bull and a bear sitting amiably around a table.
The depiction of the symbols of the Republican Party, the Democratic Party and Wall Street in chummy repose is a metaphor for life in official Washington. Politicians of all persuasions, corporate executives and their lobbyists coexist in an insular universe, bound by money, social connections and self-preservation. It's a facet of Washington life that lawmakers don't usually brag about when they're back home.
Now, corporate accounting scandals and their political fallout have unnerved this cozy community. Cracking down on business abuses doesn't come easily to presidents and lawmakers who depend on corporate cash to underwrite their campaigns and to provide jobs for their family members and often for themselves after they leave office. A new law against corporate corruption won't change any of that.
The scene Tuesday in the White House East Room was a singular event. Bush, a former oil company CEO, signed the law tightening business accounting practices and setting tough penalties for CEOs who violate it.
Congress passed the law in a hurry because lawmakers feared voters' wrath, says Charles Lewis of the Center for Public Integrity, a non-profit group that tracks the influence of money in politics. But "both parties are in up to their necks with these folks," he says.
Until the Enron and WorldCom scandals hit the headlines, the bond between government and business thwarted efforts to tighten controls. Two years ago, the accounting industry successfully headed off a Securities and Exchange Commission effort to bar accounting firms from doing consulting work for the companies they audit. Fifty-two members of Congress backed the industry in letters to the SEC.
Enron lobbied the White House to install its favored picks in key regulatory positions. Enron CEO Kenneth Lay contacted Bush adviser Karl Rove and White House personnel chief Clay Johnson about appointments to the Federal Energy Regulatory Commission. Two of Lay's choices, Pat Wood and Nora Brownell, were appointed.
Some of the ties are obvious. Bush's Cabinet is stocked with former business bosses. Vice President Cheney was CEO of Halliburton, an oil-services company being investigated by the SEC for its accounting practices during his tenure. Both major political parties depend on business sources for about 70% of their income. Members of Congress rely on corporations and their lobbyists to underwrite their campaigns. More and more, companies are putting their headquarters in the Washington area. The region is the nation's third largest high-tech hub.
Big business also is entwined with big government in the social fabric of Washington. Lawmakers, federal officials, business executives and lobbyists serve on the same boards for museums and private schools. They spend weekends together on the sidelines of their children's soccer games.
"What you see in Washington today is a totally incestuous relationship," says Scott Harshbarger, president of Common Cause, a public-interest group. "The culture of influence and arrogance between business and politics" makes it hard for politicians to go after their corporate benefactors with gusto, he says.
Others see nothing inherently wrong. They argue that managers who have experience running companies are vital to government because they know how to meet budgets and goals. Business leaders say their relationships with lawmakers are beneficial because they help shape economic policy that creates jobs. "If we were not here to tell the business side, it would have a detrimental effect on public policy because business creates the wealth that this country depends on," says Hank Cox of the National Association of Manufacturers, the nation's largest industrial trade group.
Republicans have long been labeled the party of business. But the current business scandals are also awkward for Democrats.
For years, center-leaning Democrats have been working to emphasize their pro-growth policies. The strategy has worked, if corporate donations are any guide. Over the past decade, for example, WorldCom, the telecommunications company that filed for bankruptcy protection this month, spread its political contributions evenly between Republicans and Democrats. Over the past five years, the accounting industry gave more money to Democrats on the Senate Banking Committee than to the panel's Republicans.
Even in the current climate, lawmakers find it hard to wean themselves from corporate largesse.
A day after voting this month to limit debate on legislation tightening rules on corporations, 16 Democratic senators flew on corporate jets to Nantucket for a retreat with 250 campaign donors. Jets were supplied by BellSouth, Eli Lilly and FedEx. Among those at the island getaway were Senate Majority Leader Tom Daschle of South Dakota and Sen. Hillary Rodham Clinton of New York.
In 1995, 20 Democrats helped pass the Private Securities Litigation Reform Act, which shielded CEOs from shareholder lawsuits. When President Clinton vetoed it, the Democrats joined Republicans to override his veto. Among Democrats who voted to override the veto were two potential 2004 presidential candidates: Joe Lieberman of Connecticut and John Kerry of Massachusetts.
"Big business doesn't have a party," says lobbyist Haley Barbour. Barbour, a former chairman of the Republican National Committee, is an owner of The Caucus Room, where a porterhouse goes for $36.
Washington's elite social network knows no party affiliations. Boundaries between politics and business blur around dinner tables in Georgetown mansions and at horse shows in Middleburg, Va.
Earlier this month, Republican Fred Malek, chairman of a private venture capital company, hosted a dinner celebrating White House chief of staff Andy Card's designation as the Boy Scouts of America citizen of the year. At the head table with Card were Mac McLarty, a chief of staff in Bill Clinton's White House, former Clinton Transportation secretary Rodney Slater and Sen. Olympia Snowe, R-Maine.
No one in the eclectic group talked shop, says Malek, who ran the senior George Bush's 1992 campaign and headed the Office of Management and Budget in Richard Nixon's White House. "There's politics and then there's the other elements of life."
But Donna Shor, a society columnist for Washington Life magazine, says business conducted in social settings is just done more subtly. A casual chat over dinner negates the need for a workday phone call to discuss a troubling aspect of a pending bill, she says.
"Washington is a very small community, and we all swim in a small pool," Shor says. "Our kids go to school together, wives serve on the same charities and boards and our executives give to the same charities. When you spend that much time together, business and personal tend to blend together."
Overt examples of the merger of government and business in Washington are plentiful:
Colin Powell has never worked in business but is the first secretary of State with an MBA. Card is a former GM executive who also was the auto industry's chief lobbyist. National security adviser Condoleezza Rice was on boards at Chevron and Charles Schwab. Labor Secretary Elaine Chao was on the boards of Northwest Airlines and Columbia/HCA Healthcare. Army Secretary Thomas White spent 11 years at Enron.
Susan Bayh is on the boards of E Trade Bank, pharmaceutical company Corvas International and health care and insurance company Anthem. Ruth Harkin is on the board of oil company Conoco. Richard Blum, Feinstein's husband, is on the boards of six companies. Wendy Gramm was on Enron's board until June 6. She also gets director's fees from State Farm.
Sen. Harry Reid, D-Nev., has two relatives on Washington lobbying firms' payrolls: his son, Key, and son-in-law Steven Barringer. Doris Matsui, wife of Rep. Robert Matsui, D-Calif., lobbies Congress on trade and tax issues. Her husband is on the Ways and Means Committee, which writes tax legislation.
At least one administration official has a lobbyist spouse. Diane Allbaugh, wife of Joe Allbaugh, head of the Federal Emergency Management Agency, lobbies for electrical companies. She was a utilities lobbyist in Texas.
The Democratic and Republican presidential nominating conventions are unabashed festivals of corporate cash. Seven companies, including GM, Microsoft and AT&T, coughed up $1 million each for the Democrats' 2000 gathering in Los Angeles. One, insurer American International Group, gave $2 million. Global Crossing, a telecommunications company that filed for bankruptcy protection in January amid probes of its accounting practices, anted up $250,000. Adelphia Communications, which later disclosed that it guaranteed billions of dollars in loans to the company's founders and filed for bankruptcy protection, gave $100,000.
Eight companies, including GM, AT&T and Microsoft, gave $1 million each to the GOP convention in Philadelphia. Global Crossing and Enron each gave $250,000. Tyco, whose CEO resigned June 3 after being indicted for personal tax evasion, gave $100,000 to the Philadelphia host committee.
The influence of business on government is not new. Woodrow Wilson complained that "the government, which was designed for the people, has got into the hands of the bosses and their employers, the special interests. An invisible empire has been set up above the forms of democracy."
Lewis sees this era's business scandals as a chance for reforms that could crack the empire's foundations by limiting business donations to campaigns, for example.
"Is this a summer moment that will pass? Or is this a serious moment that could lead to a re-examination of how we view government accountability?" he asks.
"What's happening here is public blowback that's terrifying everyone in Washington. Maybe the sleeping beast known as public opinion is starting to awaken."
By Eric Burroughs
August 4, 2002
NEW YORK (Reuters) - Severe stress in global markets has nerve-wracked investors fearful that one big shock could jam the gears of the financial system -- much like the crisis days of 1998.
"People feel like gasoline has been dumped on the floor and it wouldn't take much to ignite it," said James Glassman, senior U.S. economist at J.P. Morgan Chase.
Plunging stocks and multibillion dollar bankruptcies the past month have investors assessing the widespread damage to banks and insurers. If more scandals or failures come to light further straining capital markets, it could force central banks to jump to the rescue, pumping money into the system through lower interest rates.
Fear is starting to hurt economies as well. The financial market squeeze in both the United States and Europe is depriving businesses of crucial capital and sharply increasing their cost of borrowing at a time when global growth, led by the $10 trillion U.S. economy, appears to be losing steam.
"The Fed has to get concerned about the capital markets effectively tightening for the Fed at a time when it wants policy to remain accommodative," said Brad Stone, chief U.S. market strategist at Barclays Capital.
"The Fed may need to lean against that. Some weeks ago that looked like a very low risk. Now it's definitely a real risk," he added.
MONEY HARD TO GET
Interest rates charged on high-quality corporate debt right now stand at near-record levels -- 2.2 percentage points above risk-free Treasuries, up more than half a percentage point since early June.
Investors, scared they cannot trust corporate balance sheets, have proven reluctant to lend money. Corporate bond issuance by investment grade companies sank in July to $22 billion, down 63 percent from its January to June average. Last week investment grade debt suffered its worst week since at least 1997, and junk bonds are set for their worst year ever.
Funding through the short-term commercial paper market also has become very difficult, with total outstanding issuance for nonfinancial and financial firms falling a hefty $93 billion this year. Banks have turned skittish about lending. Initial public offerings have dried up.
"The way the events are unfolding right now for the near term, dealing with these many financial constraints is going to impinge and impinge and impinge on economic activity," said prominent Wall Street economist Henry Kauffman, who has argued the Fed should cut interest rates.
Swap spreads -- a measure of banking sector risk that signaled the systemic distress in 1998 -- popped out last week on the credit anxiety about J.P. Morgan before stabilizing. Investors are even raising risk premiums on assets usually considered very safe like mortgage-backed securities.
With markets so stretched, harried traders are looking anxiously for the one trigger that could set off an explosion.
"The markets continue to scan for a 'smoking gun' to justify some emergency policy response," said Michael Wallace, an economist at Standard & Poor's MMS.
Rattled markets showed their heightened state of anxiety on Friday when rumors of an emergency central bank meeting in Europe to help a failing bank or insurance company swept through trading desks, sparking selling of stocks and powering gains in safe-haven short-term Treasuries.
Banking trouble fears hit a fever pitch on July 24 when rumors spread of liquidity problems at J.P. Morgan Chase -- the largest U.S. bank-- and Citigroup after congressional revelations of their dealings with failed energy trader Enron Corp. The impact across credit markets was harsh and swift.
Later that day ratings agency Standard & Poor's said such talk was unfounded and reaffirmed the ratings of both banks, but investors remain shaken and the damage to market conditions has not improved much.
Europe has also seen its fair share of worries about the quality of its banks and insurance companies on the asset losses, providing fodder for the rumor mill.
On July 25 Germany's second largest bank, HVB Group , posted a second-quarter loss and described business conditions as among the worst since World War II.
Economists are quick to point to the differences between this episode and the late summer of 1998, when Russia's debt default sent investors rushing out of risky assets globally and nearly brought the financial system to its knees when the hedge fund Long-Term Capital Management almost collapsed.
Conditions were so bad then that even the massive U.S. government bond market -- considered the most liquid in the world and a refuge from turmoil -- nearly froze as dealers demanded higher and higher premiums to execute trades.
Eventually the Fed cut rates to restore investor confidence, even though the economy was in good shape.
The current pain in capital markets has yet to reach those extreme levels of distress, said J.P. Morgan's Glassman. But he said the market sees conditions as deteriorating to the point where a crisis could happen "at any moment."
Wall Street Takes Another Dive
"On the Dow, financial services giants J.P. Morgan Chase and Citigroup led the decline, falling 6.3 percent to $22.34 and 7.2 percent to $28.65, respectively."
A briefing given last month to a top Pentagon advisory board described Saudi Arabia as an enemy of the United States, and recommended that U.S. officials give it an ultimatum to stop backing terrorism or face seizure of its oil fields and its financial assets invested in the United States
You're working on it (affectionately, It is almost too late).
Corporate debt saps nation - Credit stress hits Depression level
"Moody's Investor Research now says the nation is in the worst credit stress since the Great Depression of the 1930s."
Bailouts for everybody. Uh, well, except you. Sorry. Somebody has to pay.
In an effort to boost the economy, socialist George W. thinks the "Government ought to have a policy that helps people with a downpayment." This is not a joke, he really stated it.
Please, make this all go away
"Congress passed the Federal Reserve Act on the 22nd of December 1913, and from that day forward the United States of America ceased to be a republic."
Anne Williamson - THE FED, March 2001, WorldNet, a monthly publication of WorldnetDaily.com.
Central Bankers Meet to Assess Anti-Recession Efforts
The Associated Press
By Joseph Rebello August 29, 2002
JACKSON HOLE, Wyo. (Dow Jones/AP) - The world's best-known economists and central bankers are meeting here this weekend to try to decide a question Wall Street resolved long ago: Who is best equipped to fight recessions - elected government officials or central bankers?
Investors are paying attention anyway, hoping that the predictably academic tone of the annual economic conference of the Federal Reserve Bank of Kansas City will not keep Alan Greenspan from shedding light on a more urgent question: Does the Fed need to do more to fight the current U.S. economic downturn?
The U.S. economy, after all, remains sickly despite the unprecedented dose of stimulus it got last year in the form of tax cuts enacted by Congress and interest-rate cuts executed by the Fed. Consumer confidence is wobbly and business investment is tepid. The Fed hinted two weeks ago that it might cut interest rates again, but more recent comments by some Fed policy makers have puzzled investors.
"Alan Greenspan knows what people are interested in," said James Glassman, an economist with J.P. Morgan in New York. "If he chooses to signal anything, he can do so in a few words at this conference. The markets just want to know what the Fed's frame of mind is - what would it take for the Fed to act again" to boost the economy.
Greenspan, who enjoys superstar status among the central bankers gathering in Jackson Hole, is scheduled to deliver a speech at 10 a.m. EDT Friday that kicks off the two-day meeting. He traditionally confines his remarks to the main topic of the conference. But analysts say the topic this time - "Rethinking Stabilization Policy" - is broad enough to give him an opportunity to clarify Wall Street's doubts about the Fed's intentions.
Those doubts grew last week after three Federal Reserve regional bank presidents suggested the Fed should not cut interest rates again despite the central bank's view that the chief risk facing the economy is of a renewed slowdown. Chicago Fed president Michael Moskow said the Fed "cannot - and should not - try to smooth out every bump" in the economy. Investors' expectations of another rate cut this year receded as a result.
The conference also will provide a platform to central bankers from other leading industrial economies to shed light on the outlook for those economies. The deputy governor of Japan's central bank, Yutaka Yamaguchi, is scheduled to make a presentation on monetary policy and economic conditions in his country. He also is likely to hear from other economists on what the Japanese must do to end the country's decade-long recession.
Ottmar Issing, a member of the European Central Bank's executive board, is set to discuss the ECB's efforts. And Guillermo Ortiz Martinez, governor of Mexico's central bank, is scheduled to describe the Mexican experience.
The central bankers, however, typically spend most of their time listening to presentations by top academic economists. Those economists, according to participants in the meeting, are expected to argue that governments are generally ineffective when they try to fend off recessions by cutting taxes or increasing spending. The job of fighting recessions should be left instead to central banks.
That isn't a novel idea. Many Wall Street economists agree that legislatures typically take too long to organize a fiscal stimulus, which means the economy gets that stimulus when it is no longer needed. Still, those economists also say, the U.S. tax cuts last year show that governments can be effective if they manage to act quickly.
"We ended up with a milder recession than we would have had" if tax cuts had not been enacted, said David Jones, an expert on the Fed. "At least this time the timing was much better."
HOW BIG IS THE GOVERNMENT'S DEBT? - 33.1 Trillion - By Andrew J. Rettenmaier, a NCPA senior fellow and the executive associate director of the Private Enterprise Research Center at Texas A&M University.
The Fall of the Republic