Archive for September 25th, 2010
“Although economists have much to learn from this crisis….I think that calls for a radical reworking of the field go too far,” Bernanke said in a speech at Princeton University, where he was a professor for two decades.
Standard economic models, such as the “workhorse” new Keynesian model, did not predict the crisis. Bernanke himself initially said the subprime crisis wouldn’t spread throughout the broader economy.
That’s because the New Keynesian model IS A FRAUD.
Got that? FRAUD.
Because Keynes’ theories required that the Treasury run a primary surplus and refill itself, paying off all its debt, during good times.
This has never, ever happened. Never.
Not once since The Fed was constituted in 1913.
Therefore, to base any economic “theorem” on this basis is a knowing, willful, intentional scam, a fraud upon the public, a pernicious scam that enables intentional acts of looting followed by “gun-up-nose” bailout demands.
It is a knowing scam because with foreknowledge over the space of nearly 100 years that government will not, now or ever, run that primary surplus, to provide “stimulus” as Keynes directs during downturns simply adds to structural imbalance that must come out of the people’s hide in the form of destruction of their purchasing power.
It cannot be otherwise.
Three areas of research he recommended were human behavior in times of panic, the role of liquidity in markets and how asset bubbles are created and pop.
Another damned lie.
C’mon Bernanke, you douche. Let’s play wayback.
Was that a bubble? Kinda obvious, right? POP!
Ok, how about this one?
Pretty simple, right?
Ok, how about these?
And that’s not the only thing Denninger feels strongly about….. the feisty Midwesterner has nothing but scorn for the industry overall.
“I refused to take any stake in the acquiring firm. The shell game being played by these corporations is astounding,” he said.
Denninger has also steadfastly avoided investing any of his personal fortune in the Internet: “I refuse to have anything to do with the Nasdaq 100. There will be a shake-out, and when it comes, it will be ugly and it will happen fast.”
He might as well have been speaking of Black Week, April 10 through April 14, when the Nasdaq crashed.
The volatility of Net stocks in the past few weeks makes Denninger seem prescient, but his dislike for the unseemly marriage of breathless hype and dubious business plans is visceral.
“Amazon.com has proven there is a race to zero in margins. It should be a US$2 stock,” he said.
It bottomed at $4.
Fuck you Bernanke.
Bernanke claims that “the models (and he) couldn’t see it.” Yet anyone who can read a chart saw it – the price is going from the bottom left to the upper right at dramatically greater acceleration rates than the broad economy. All of these instances sported P/Es ranging from the 20s to north of 60. AMZN had a P/E at the time north of 100.
Let me repeat the most-important line in that quote above for emphasis:
“I refused to take any stake in the acquiring firm. The shell game being played by these corporations is astounding,” he said.
The Tech Bubble and wreck an accident? My ass.
VIRTUALLY EVERY SINGLE IPO FROM 1997 ONWARD WAS MAKING KNOWINGLY FRAUDULENT CLAIMS ABOUT INTERNET GROWTH AND THE POTENTIAL TRAJECTORY FORWARD.
How do I know? Because I was able to see the core of the network, as were thousands of others. I wasn’t alone in knowing these were scams; everyone involved knew. They didn’t give a damn. They stole trillions of investor dollars. They made off with the loot and you, the common man, got assraped.
Worse, you can count the number of people who went to prison on the fingers of one hand, AND NOT ONE GOT NAILED FOR KNOWINGLY FALSE – MALICIOUSLY SO – SECURITIES SALES.
So they did it again.
This time in houses.
You know what happened. You could have a mortgage to buy a house as long as you were breathing. No income, no job, no assets. They even gave the loan a name – “NINJA.” Bernanke knew this. He was the supervisor of the banks. He didn’t give a shit. He knew damn well this crap was being securitized and sold off to people and that there was no way, on a long-term basis, these loans could be paid off. These loans were given ONLY on the back of rising prices – nothing more.
Prices that had to rise 12% or more a year to cover a once-a-year flip costs – 6% for the buy, 6% for the sell, by the Realtards. Maybe you’re good and negotiate 1% off per side. Ok, the other 2% went to fees – fees that the banks got to keep, even if the paper was utter and complete CRAP.
Again, Bernanke didn’t give a shit.
Again, the bubble inflated. This time in houses. Bernanke claimed in sworn testimony as late as 2006 that there was no bubble and that housing prices reflected “strong fundamentals.”
Again the bubble popped. You know what happened. Millions of Americans lost their houses, millions lost jobs.
AGAIN, TRILLIONS IN WEALTH WERE VAPORIZED AND AGAIN THE BANKS KEPT ALL THE ILL-GOTTEN LOOT!
But this time, when the bubble popped, it popped a bit too early. The banks got stuck with some of their own crap. So Paulson and Bernanke went to Congress and threatened “Tanks in the streets” unless they got $700 billion. They rolled Congress to save their friends who not only should have gone bankrupt, many of them should have gone to prison!
But even that wasn’t enough. We still had a problem, and the market and economy was still falling apart. So Geithner and Bernanke, really the same guy with two faces, went to Congress again and got them to force FASB to make accounting fraud legal. That’s right – “make up a price for this asset and its ok on your balance sheet.” They did it, and heh, the banks were saved (well, not really, but it looks like it.)
So again nobody goes to prison, the same people steal all the money, and Bernanke claims – again – that he couldn’t see it coming – even though he was the guy supervising it all!
What’s worse is that all the crap that was shoved in the box – trillions of it – is still out there, much of it off balance sheet! Essentially every major bank has hundreds of billions of dollars of who-knows-what stashed where nobody can see or value it, exactly as ENRON did, and a couple of them have over one trillion in off-sheet exposure – more than enough to blow their capital to hell several times over if the valuations are not accurate. Yet we can’t see, we can’t examine, and we can’t know.
If I can see this without having a PhD from Princeton, either Bernanke is a fucking idiot who bought his degree and has an IQ smaller than my kid’s soccer shoe size or he’s a damned liar and has been intentionally misleading the American Public along with Congress for more than a decade.
Ok, so there’s history. None of which Bernanke claims he could “see” with his much-vaunted “models”, remember?
What do you think the banks are doing now, having gotten away with all-but-murder (and maybe some of that too) with not one but two full sets of scams in the last decade?
Why they’re doing it again.
Here’s some new charts – from today!
Bubble? P/E over 60 and a parabolic move? Gee, what do you think?
How about this one? Parabolic ramp extraordinare!
Heh, here we go again – with the same stock that did it before! Another parabolic ramp and this one is about 15% of the NDX, which means that when, not if, it breaks, it’s going to crash the entire Nasdaq. Again.
And it’s pal, another stock that did it once before, and was missed the last time too by the great Neo-Keynesians! Yet again we have another parabolic move, especially in the last few weeks – but then again, this stock is known for that crap. Go look back at 98/99 again. And again, it’s radically overrepresented in the NDX, so when, not if, it cracks it will start the snowball too.
And what does Bernanke say now? The same thing Greenspan said – they want higher stock prices and they don’t give a damn how they get them!
Well, there’s a problem – they already inflated the bubble. It’s in your face – again. It happened through yet more BS games with fraudulent claims of Keynesian economics which are nothing of the sort – absent the fiscal restraint and primary surplus that Keynes mandates during good times, these policies are nothing other than a raw SCAM and FRAUD upon the public.
Notice that the economy has not recovered. Consumers have not delevered. Of the ~$600 billion that has come out of consumer debt, nearly all of it – $588 billion – was defaults! Businesses not only haven’t delevered, they’re adding more debt to buy back stock!
Yet the common man has seen no wage growth and no net job additions at all. Not with 450,000+ claims a week coming into unemployment.
This time, unlike in 1995, unlike in 2004, the ramp in stocks happened without any meaningful recovery in real final demand nor in the earnings capacity of Americans.
Anyone care to guess how this bubble will end, and whether it can really drive a “real recovery”?
Bernanke ought to be at minimum impeached for willful and intentional dereliction of office – not once, not twice, but now three times over, in sequence.
And we, the people, have sat back and allowed it.
The United States is rapidly becoming the very first “post-industrial” nation on the globe. All great economic empires eventually become fat and lazy and squander the great wealth that their forefathers have left them, but the pace at which America is accomplishing this is absolutely amazing. It was America that was at the forefront of the industrial revolution. It was America that showed the world how to mass produce everything from automobiles to televisions to airplanes. It was the great American manufacturing base that crushed Germany and Japan in World War II. But now we are witnessing the deindustrialization of America. Tens of thousands of factories have left the United States in the past decade alone. Millions upon millions of manufacturing jobs have been lost in the same time period. The United States has become a nation that consumes everything in sight and yet produces increasingly little. Do you know what our biggest export is today? Waste paper. Yes, trash is the number one thing that we ship out to the rest of the world as we voraciously blow our money on whatever the rest of the world wants to sell to us. The United States has become bloated and spoiled and our economy is now just a shadow of what it once was. Once upon a time America could literally outproduce the rest of the world combined. Today that is no longer true, but Americans sure do consume more than anyone else in the world. If the deindustrialization of America continues at this current pace, what possible kind of a future are we going to be leaving to our children?
Any great nation throughout history has been great at making things. So if the United States continues to allow its manufacturing base to erode at a staggering pace how in the world can the U.S. continue to consider itself to be a great nation? We have created the biggest debt bubble in the history of the world in an effort to maintain a very high standard of living, but the current state of affairs is not anywhere close to sustainable. Every single month America does into more debt and every single month America gets poorer.
So what happens when the debt bubble pops?
The deindustrialization of the United States should be a top concern for every man, woman and child in the country. But sadly, most Americans do not have any idea what is going on around them.
For people like that, take this article and print it out and hand it to them. Perhaps what they will read below will shock them badly enough to awaken them from their slumber.
The following are 19 facts about the deindustrialization of America that will blow your mind….
#1 The United States has lost approximately 42,400 factories since 2001. About 75 percent of those factories employed over 500 people when they were still in operation.
#2 Dell Inc., one of America’s largest manufacturers of computers, has announced plans to dramatically expand its operations in China with an investment of over $100 billion over the next decade.
#3 Dell has announced that it will be closing its last large U.S. manufacturing facility in Winston-Salem, North Carolina in November. Approximately 900 jobs will be lost.
#4 In 2008, 1.2 billion cellphones were sold worldwide. So how many of them were manufactured inside the United States? Zero.
#5 According to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.
#6 As of the end of July, the U.S. trade deficit with China had risen 18 percent compared to the same time period a year ago.
#7 The United States has lost a total of about 5.5 million manufacturing jobs since October 2000.
#8 According to Tax Notes, between 1999 and 2008 employment at the foreign affiliates of U.S. parent companies increased an astounding 30 percent to 10.1 million. During that exact same time period, U.S. employment at American multinational corporations declined 8 percent to 21.1 million.
#9 In 1959, manufacturing represented 28 percent of U.S. economic output. In 2008, it represented 11.5 percent.
#10 Ford Motor Company recently announced the closure of a factory that produces the Ford Ranger in St. Paul, Minnesota. Approximately 750 good paying middle class jobs are going to be lost because making Ford Rangers in Minnesota does not fit in with Ford’s new “global” manufacturing strategy.
#11 As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time less than 12 million Americans were employed in manufacturing was in 1941.
#12 In the United States today, consumption accounts for 70 percent of GDP. Of this 70 percent, over half is spent on services.
#13 The United States has lost a whopping 32 percent of its manufacturing jobs since the year 2000.
#14 In 2001, the United States ranked fourth in the world in per capita broadband Internet use. Today it ranks 15th.
#15 Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.
#16 Printed circuit boards are used in tens of thousands of different products. Asia now produces 84 percent of them worldwide.
#17 The United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States.
#18 One prominent economist is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040.
#19 The U.S. Census Bureau says that 43.6 million Americans are now living in poverty and according to them that is the highest number of poor Americans in the 51 years that records have been kept.
So how many tens of thousands more factories do we need to lose before we do something about it?
How many millions more Americans are going to become unemployed before we all admit that we have a very, very serious problem on our hands?
How many more trillions of dollars are going to leave the country before we realize that we are losing wealth at a pace that is killing our economy?
How many once great manufacturing cities are going to become rotting war zones like Detroit before we understand that we are committing national economic suicide?
The deindustrialization of America is a national crisis. It needs to be treated like one.
If you disagree with this article, I have a direct challenge for you. If anyone can explain how a deindustrialized America has any kind of viable economic future, please do so below in the comments section.
America is in deep, deep trouble folks. It is time to wake up.
Wealth inequality rivals the months prior to the Great Depression – Americans would prefer a more evenly distributed wealth system. Over 80 percent of Americans still feel we are in a recession.
The official announcement that the recession is over underscores the massive disconnect between Wall Street and the rest of America. Wealth inequality in America is at levels last seen right before the Great Depression ravaged our economy. Yet the inequality has grown even more intense as this crisis has gone forward. 43 million Americans are now classified as being in poverty. This trend hasn’t shifted in the last decade, recession or no recession. The system is absolutely flawed and that is why we have over 16 percent underemployment, 41 million Americans on food stamps, 4 out of 10 workers in low paying service sector jobs, the median household income falling under $50,000, record monthly foreclosure filings, and yet the recession is over according to a small group of economists. The recession may be over for Wall Street but the rest of America is still struggling.
Wealth inequality has been exacerbated by the casino like behavior of investment banks on Wall Street. A recent study shows how out of touch with the facts most Americans are when it comes to wealth inequality in their own country. One fascinating finding is that most Americans, even between those that make $50,000 and $100,000 actually envision optimal wealth distributions that are very similar:
Source: Norton, Ariely
Let us explain the study. For this part, the researchers asked over 5,000 Americans their ideal wealth distribution in the U.S. The participants were also asked what they estimated the wealth distribution of the U.S. looked like. For the most part, their estimates were significantly off. Most estimated that the top 20 percent controlled roughly 60 percent of all wealth. In reality, the top 20 percent control over 83 percent of the pie. We’ve talked about this when the top 1 percent actually controls over 40 percent of all U.S. wealth. However, when asked for their ideal distribution regardless of income or political affiliation most Americans thought the ideal wealth for the top 20 percent would be 20 to 30 percent. Ironically the ideal that most Americans have looks more like Sweden than our current system:
The respondents were also given these items below and most preferred the Swedish model. The equal distribution lost out by a small margin showing that Americans realize that there will be an inequality in the system but nothing like we currently have. The middle class is being squeezed out of the pie. The propaganda from Wall Street is that everyone can be rich but the reality shows otherwise. In fact, Wall Street tries to sell the sizzle of the steak to Americans by conjuring up political fears and other distracters to detract from the fact that Wall Street is robbing Americans blind. When the politics are put aside, most Americans want a radically different system when it comes to wealth distribution. Our economy is broken on so many levels and banks are to blame. Many Americans feel this way:
It is interesting that only 18 percent of Americans have confidence in U.S. banks. A larger majority have very little confidence in the banking system as they should when you have the broke FDIC backing $13 trillion in banking assets. With no actual reform in the banking system we can expect another crisis to come up shortly. Why? The real economy isn’t responding because what is happening is you have actual real wealth being drained out of the economy through bailouts for the rich. It doesn’t happen directly but through a connected system. The absolute richest Americans own the bulk of stocks so the fact that the bailouts have boosted stock values has helped this tiny group of Americans bounce back. That is why only a few months after the stock market crashed in early 2009 the first folks to start posting billion dollar profits were the banks. Of course this happened because of the taxpayer funded bailouts. Shift money from taxpayers, to Wall Street, to the wallets of the elite.
According to the NBER the recession is over but try telling that to Americans:
Over 80 percent of Americans still think we are in a recession. Why? Because we are if you define it as a poor economy for the bulk of inhabitants! Foreclosures remain near peak levels, 1 out of 7 are now in poverty, and good luck finding good work in this economy. The other 20 percent think things are getting better because the modern day casino known as Wall Street is up by 70 percent from the low in 2009. Yet what use is that if it doesn’t translate into jobs? GDP grows because productivity is squeezed out of each worker and CEOs can use the recession as an excuse to cut workers while boosting their own paychecks. Also, you have banks that are now making the bulk of their profits through speculating on Wall Street without even producing actual value in the real economy. How is that even good for the economy? Isn’t speculation the reason we are in this mess in the first place?
Why don’t we hear about the giant inequality gap in America? Because the mainstream media doesn’t actually report what matters to most Americans. Just look at the divergence again:
When we set aside politics, most Americans want an economy that allows for a robust middle class. We expect that people will have differing views in our country but right now much of the political noise is being stoked by Wall Street to keep you from focusing on the above chart. Which candidate is even bringing up the above as a key issue to their campaign? The small elite in our country realize they have a sweet thing going and the fact is, most Americans want to make wealth equality a priority when it comes to wealth. At the very least, banks and Wall Street don’t want Americans wising up to the fact that 83 percent of the nation’s wealth is in the hands of the top 20 percent.
When labels are removed Americans prefer a wealth distribution that looks like Sweden. If we look carefully at the charts above, you can see how the middle class is being slowly erased.
THR: Are you concerned that American Netflix subscribers will look north and ask for the same discount Canadians get at $7.99?
Hastings: How much has it been your experience that Americans follow what happens in the world? It’s something we’ll monitor, but Americans are somewhat self-absorbed.
Oh we are eh?
Incidentally, he allegedly “apologized.”
Well let me make a recommendation to all those self-absorbed Americans: Go visit a Redbox and drop your Netfucks subscription.
Let’s just do the math.
Let’s say you have their $9/month subscription. You can rent 9 movies a month for that from Redbox for one night. How many movies can you realistically watch with the one-DVD-at-a-time deal from Netflix on that plan? Four, right? One per weekend, since it takes two days (at least) to turn it around – assuming you need to go to work.
So let’s say you have the 2-DVDs out at a time – that’s $14/month. Will you watch 14 movies in a month? There are eight weekend days – if you want one movie per weekend day, you’re still spending about half as much.
Want the 4-DVD plan so you can have two for Friday and two for Saturday night? Ok, cool – that’s $24/month. But there are, again, 8 weekend days, and two movies each would be $16 at Redbox.
Oh, and you get it now – not in a couple of days, and not “on queue.” Pick a movie right now, watch it five minutes later. Unlike Netflix.
Are you a TV show hound? Ok, ok, I get it. Got cable or DISH, right? Got a DVR? Use it. No? Consider getting one.
I know, people will put up with this crap in America, instead of doing what they should do – leave. This is twice in two days these guys got caught with their feet in their mouth – first by getting caught hiring shills to pretend to be excited Canadian “customers”, and now with this.
So here’s the question Americans: ARE YOU REALLY SELF-ABSORBED, AS YOU HAVE BEEN ACCUSED OF, OR WILL YOU TELL NETFLIX AND THEIR CEO TO STICK IT WHERE THE SUN DOESN’T SHINE?
I guess we’ll find out.