Obamanomics vs. Reaganomics: Destroying the lies about trickle …

dancingczars.wordpress.com2/7/12

This entry was posted in Obamanomics vs. Reaganomics: Destroying the lies about trickle down economics and tagged conservative blog netowrk, Progressives are economic morons, Socialism doesn't, Trickle down works.

Another Record for Obamanomics | Wizbang

wizbangblog.com2/3/12

Another Record for Obamanomics. February 3, 2012 | Filed under Economics,Employment | Posted by Rodney Graves. And like all such records, it's not one that's doing the nation a damn bit of good.

President Obama has frequently justified his policies and judged their outcomes in terms of equity, justice and fairness.

All of which begs an obvious question,

How does our existing system and his own policy record stack up according to those criteria?

1) Is it fair that the richest 1% of Americans pay nearly 40% of all federal income taxes, and the richest 10% pay two-thirds of the tax?

2) Is it fair that the richest 10% of Americans shoulder a higher share of their country’s income tax burden than do the richest 10% in every other industrialized nation, including socialist Sweden?

3) Is it fair that American corporations pay the highest statutory corporate tax rate of all other industrialized nations but Japan, which cuts its rate on April 1?

4) Is it fair that President Obama sends his two daughters to elite private schools that are safer, better-run, and produce higher test scores than public schools in Washington, D.C. while millions of other families across America are denied that free choice and are forced to send their kids to second-rate schools?

5) Is it fair that Americans who build a family business, hire workers, reinvest and save their money—paying a lifetime of federal, state and local taxes often climbing into the millions of dollars must then pay an additional estate tax of 35% (and up to 55% when the law changes next year) when they die, rather than passing that money onto their loved ones?

6) Is it fair that Treasury Secretary Tim Geithner, former Democratic Senate Majority Leader Tom Daschle, former Ways and Means Chairman Charlie Rangel and other leading Democrats who preach tax fairness underpaid their own taxes?

7) Is it fair that after the first three years of Obamanomics that the poor are poorer, that the poverty rate is rising, that the middle class is losing income, and some 5.5 million fewer Americans have jobs today than in 2007?

8) Is it fair that roughly 88% of political contributions from supposedly impartial network television reporters, producers and other employees in 2008 went to Democrats?

9) Is it fair that the three counties with America’s highest median family income just happen to be located in the Washington, D.C., metro area?

10) Is it fair that wind, solar and ethanol producers get billions of dollars of subsidies each year and pay virtually no taxes, while the oil and gas industry which provides at least 10 times as much energy pays tens of billions of dollars of taxes while the president complains that it is "subsidized"?

11) Is it fair that those who work full-time jobs, and sometimes more than one in order to make ends meet have to pay taxes to support up to 99 weeks of unemployment benefits for those who don’t work?

12 Is it fair that those who took out responsible mortgages and pay them each month have to see their tax dollars used to subsidize those who acted recklessly, greedily and sometimes deceitfully in taking out mortgages they now can’t afford to repay?

13) Is it fair that thousands of workers won’t have jobs because the president sided with environmentalists and blocked the shovel-ready Keystone XL oil pipeline?

14) Is it fair that some of Mr. Obama’s largest campaign contributors received federal loan guarantees on their investments in renewable energy projects that went bust?

15) Is it fair that federal employees receive benefits that are nearly 50% higher than those of private-sector workers whose taxes pay their salaries, according to the Congressional Budget Office?

16) Is it fair that soon almost half the federal budget will take income from young working people and redistribute it to old non-working people, even though those over age 65 are already among the wealthiest Americans?

17) Is it fair that in 27 states workers can be compelled to join a union in order to keep their jobs?

18) Is it fair that nearly four out of 10 American households now pay no federal income tax at all, and is a number that has risen every year under Mr. Obama?

19) Is it fair that Boeing, which is a private company, was threatened by a federal agency when it sought to add jobs in a right-to-work state rather than in a forced-union state?

20) Is it fair that our kids and grandstands and great-grand-kids who never voted for Mr. Obama will have to pay off the $5 trillion of debt accumulated over the past four years, without any benefits to them?

What do you think? Was it fair?

Related posts:

1. Obama Owns The Economy Now
2. What’s The Tax Debate All About?
3. Would Cain’s 999 Have Beeen A Good Thing?

Debt-Free United States Notes Were Once Issued Under JFK And …

theeconomiccollapseblog.com12/19/11

Our current debt-based monetary system was devised by greedy bankers that wanted to make huge profits by creating money out of thin air and lending it to the U.S. government at interest. Sadly, the vast majority of the …

The Corporate Cash Myth | Euro Pacific Capital

www.europac.net12/21/11

The death blow to US corporations could come when US interest rates rise to historically normal levels. A four-percentage-point rise in the interest rates paid on debt by US corporations would cost them nearly $300 billion per …

If you think that the US is in a terrible state financially, you’re right, because the US can’t pay the interest on its debts which is why those debts are getting bigger every second of every day.

But take a look at this slide-show and most likely be amazed.

Of the twenty countries listed, America is number twenty meaning that there are nineteen countries who owe much more of their GDP that it does.

And please note how the socialist countries are doing and perhaps cringe, knowing that this is the direction in which Obama would like to lead America.

Related posts:

1. The ‘Loan Modification Program’ Finally Gets Underway.
2. Ten US Banks Needs A Total Of $75 Billion
3. Obama’s Reelection Chances Don’t Look Good

Zakaria: The real burden on the U.S. economy – Global Public …

globalpublicsquare.blogs.cnn.com12/11/11

By Fareed Zakaria, CNN President Obama gave an important speech in Kansas last week. Whether you agree with all of it or not, he has begun a national conversation about the economy and the role of government.

Global Economic Crisis: The U.S. An Insolvent and Ungovernable …

www.marketoracle.co.uk12/18/11

Global Economic Crisis: The U.S. An Insolvent and Ungovernable Country :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website.

Do you now how bad the US economy really is?

If you answered, "Yes" then read on because it’s almost certainly far worse than you thought.

And if you answered, "No" or "Maybe" then sit down before you read on!

The following data along with links appeared on a blog entitled The Economic Collapse and for those unfamiliar with the site, TEC (The Economic Collapse) is a blog that regularly compiles a comprehensive list of the most startling and unsettling facts about the U.S. economy.

Why Does TEC Do It?

A blurb on the site says:

“If we do not educate the American people about how deathly ill the U.S. economy has become, then they will just keep falling for the same old lies that our politicians keep telling them. Just ‘tweaking’ things here and there is not going to fix this economy".

“America is consuming far more wealth than it is producing and our debt is absolutely exploding. If we stay on this current path, an economic collapse is inevitable. Hopefully the crazy economic numbers from 2011 that I have included in this article will be shocking enough to wake some people up"

“If we all work together, hopefully we can get millions of people to wake up and realize that ‘business as usual’ will result in a national economic apocalypse".

So Without More Ado – Here Are The Fifty Figures

1. A staggering 48% of all Americans are either considered to be “low income” or are living in poverty.

2. Approximately 57% of all children in the United States are living in homes that are either considered to be “low income” or impoverished.

3. If the number of Americans that “wanted jobs” was the same today as it was back in 2007, the “official” unemployment rate put out by the U.S. government would be up to 11%.

4. The average amount of time that a worker stays unemployed in the United States is now over 40 weeks.

5. One recent survey found that 77% of all U.S. small businesses do not plan to hire any more workers.

6. There are fewer payroll jobs in the United States today than there were back in 2000 even though we have added 30 million extra people to the population since then.

7. Since December 2007, median household income in the United States has declined by a total of 6.8% once you account for inflation.

8. According to the Bureau of Labor Statistics, 16.6 million Americans were self-employed back in December 2006. Today, that number has shrunk to 14.5 million.

9. A Gallup poll from earlier this year found that approximately one out of every five Americans that do have a job consider themselves to be underemployed.

10. According to author Paul Osterman, about 20% of all U.S. adults are currently working jobs that pay poverty-level wages.

11. Back in 1980, less than 30% of all jobs in the United States were low income jobs. Today, more than 40% of all jobs in the United States are low income jobs.

12. Back in 1969, 95% of all men between the ages of 25 and 54 had a job. In July, only 81.2% of men in that age group had a job.

13. One recent survey found that one out of every three Americans would not be able to make a mortgage or rent payment next month if they suddenly lost their current job.

14. The Federal Reserve recently announced that the total net worth of U.S. households declined by 4.1% in the 3rd quarter of 2011 alone.

15. According to a recent study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154%.

16. As the economy has slowed down, so has the number of marriages. According to a Pew Research Center analysis, only 51% of all Americans that are at least 18 years old are currently married. Back in 1960, 72% of all U.S. adults were married.

17. The U.S. Postal Service has lost more than 5 billion dollars over the past year.

18. In Stockton, California home prices have declined 64% from where they were at when the housing market peaked.

19. Nevada has had the highest foreclosure rate in the nation for 59 months in a row.

20. If you can believe it, the median price of a home in Detroit is now just $6000.

21. According to the U.S. Census Bureau, 18% of all homes in the state of Florida are sitting vacant. That figure is 63% larger than it was just ten years ago.

22. New home construction in the United States is on pace to set a brand new all-time record low in 2011.

23. 19% of all American men between the ages of 25 and 34 are now living with their parents.

24. Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row.

25. According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980. Today they account for approximately 16.3%.

26. One study found that approximately 41% of all working age Americans either have medical bill problems or are currently paying off medical debt.

27. If you can believe it, one out of every seven Americans has at least 10 credit cards.

28. The United States spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

29. It is being projected that the U.S. trade deficit for 2011 will be 558.2 billion dollars.

30. The retirement crisis in the United States just continues to get worse. According to the Employee Benefit Research Institute, 46% of all American workers have less than $10,000 saved for retirement, and 29% of all American workers have less than $1,000 saved for retirement.

31. Today, one out of every six elderly Americans lives below the federal poverty line.

32. According to a study that was just released, CEO pay at America’s biggest companies rose by 36.5% in just one recent 12 month period.

33. Today, the “too big to fail” banks are larger than ever.  The total assets of the six largest U.S. banks increased by 39% between September 30, 2006 and September 30, 2011.

34. The six heirs of Wal-Mart founder Sam Walton have a net worth that is roughly equal to the bottom 30% of all Americans combined.

35. According to an analysis of Census Bureau data done by the Pew Research Center, the median net worth for households led by someone 65 years of age or older is 47 times greater than the median net worth for households led by someone under the age of 35.

36. If you can believe it, 37% of all U.S. households that are led by someone under the age of 35 have a net worth of zero or less than zero.

37. A higher%age of Americans is living in extreme poverty (6.7%) than has ever been measured before.

38. Child homelessness in the United States is now 33% higher than it was back in 2007.

39. Since 2007, the number of children living in poverty in the state of California has increased by 30%.

40. Sadly, child poverty is absolutely exploding all over America.  According to the National Center for Children in Poverty, 36.4% of all children that live in Philadelphia are living in poverty, 40.1% of all children that live in Atlanta are living in poverty, 52.6% of all children that live in Cleveland are living in poverty and 53.6% of all children that live in Detroit are living in poverty.

41. Today, one out of every seven Americans is on food stamps and one out of every four American children is on food stamps.

42. In 1980, government transfer payments accounted for just 11.7% of all income. Today, government transfer payments account for more than 18% of all income.

43. A staggering 48.5% of all Americans live in a household that receives some form of government benefits. Back in 1983, that number was below 30%.

44. Right now, spending by the federal government accounts for about 24% of GDP. Back in 2001, it accounted for just 18%.

45. For fiscal year 2011, the U.S. federal government had a budget deficit of nearly 1.3 trillion dollars. That was the third year in a row that our budget deficit has topped one trillion dollars.

46. If Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for about 15 days.

47. Amazingly, the U.S. government has now accumulated a total debt of 15 trillion dollars. When Barack Obama first took office the national debt was just 10.6 trillion dollars.

48. If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.

49. The U.S. national debt has been increasing by an average of more than 4 billion dollars per day since the beginning of the Obama administration.

50. During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.

So Who’s To Blame?

Take A Look At The Federal Reserve

Since its inception, the Federal Reserve has been a perpetual debt machine that has almost single-handedly destroyed the value of the U.S. dollar!

The Solution

From The TEC website:

"One of the most important steps that we could take to bring prosperity back to America would be to nationalize the Federal Reserve.  Doing so would allow the federal government to quit borrowing money, dramatically reduce taxes and eventually pay off the entire U.S. national debt. 

Instead of inheriting the largest debt in the history of the world, future generations would actually have a chance at economic prosperity because they would not be forced to pay off the horrific debt of previous generations. 

There are no good reasons to keep the status quo.  Our current debt-based monetary system will inevitably lead to a complete and total economic collapse.  We desperately need to make a change while we still can.  As you will see below, there are a ton of good reasons why we should nationalize the Federal Reserve.

Right now, most Americans believe that the Federal Reserve is actually an agency of the federal government.  But that is simply not the case. 

The truth is that the Federal Reserve is about as "federal" as Federal Express is, and the Federal Reserve openly admits as much. 

For example, in defending itself against a Bloomberg request for information under the Freedom of Information Act, the Federal Reserve stated in court that it was "not an agency" of the U.S. government and therefore not subject to the Freedom of Information Act".

So Who Owns The Federal Reserve?

According to the Federal Reserve’s own website, it is the member banks that own it.

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation’s central banking system, are organized much like private corporations–possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

Will Obama Nationalize The Federal Reserve?

No chance!

So Who Might Do It?

Well Obama’s replacement might, but even that’s not for sure because we don’t know who it will be; or if it will be.

But we do know however that the 2012 election will be one of the most important in US history.

So if you care about the US then make sure you vote, and be sure to vote Republican because with a Republican in the White House there’s a chance of positive change, but with Obama there’s none!

And if you want to know what the interest on Amreica’s debt is doing to our economy then checkout:

Forget The Deficit! How Big Is The Interest On Our Debt?

Related posts:

1. Obama – “A Lurch From Shock To Trance”.
2. Obama Owns The Economy Now
3. Tarp And Its Tentacles Could End Up Costing $23.7 Trillion

Moody's Review China's Credit Rating, Overseas Investment …

www.proactiveinvestors.co.uk11/8/11

HIGHLIGHTS FROM CHINA About ARC China ARC China is a Shanghai-based investment manager focused on investments in consumption-driven, entrepreneur-owned small and medium sized enterprises in China's Tier II and Tier III …

China cuts bank reserve ratio by 50 bps | Bramesh's Technical …

www.brameshtechanalysis.com11/30/11

In a major rating action review of as many as 37 banks globally, S&P has incidentally upgraded two Chinese banks – Bank of China and China Construction Bank. A credit rating is generally considered as a tool to measure an …

A PDF of The Ratings Of Various Countries By The Credit Agencies Is Available For Download

Government officials in China are berating the U.S. because of the Standard & Poor’s downgrade to AA+ and Guan Jianzhong, chairman of Dagong Global Credit Rating, says the U.S. dollar is,

"Gradually being discarded by the world", adding that the “process will be irreversible".

China’s Credit Rating

Fitch gives China an A+ which is their fourth highest rating.

Moody’s gives China an Aa3 which is there third highest ranking.

S&P lists China’s debt rating as AA-, which is the fourth highest level, due to its “sizable” contingent liabilities in its banking system.

Debt to GDP

China’s debt-to-GDP ratio is not only worse than the United State’s ratio, it’s probably worse than Portugal’s, and Portugal is close to bankruptcy.

Despite Moody’s Investors Service saying last month that China’s local debt was understated by hundreds of billions of dollars, the People’s Daily said S&P’s downgrade of the U.S.’s credit rating,

"Sounded the alarm bell for the dollar-denominated global monetary system".

Some Points To Ponder

China has come to own an estimated $1.16 trillion in U.S. debt, by printing excessive Yuans which holds down the currency’s value, making its exports dirt cheap, and it then it uses that extra printed currency to buy U.S. debt.

China likes to say its debt-to-GDP ratio is 17% but the respected Beijing-based research firm Dragonomics says it’s in fact 89% of GDP, which if true would make it worse than Portugal’s which is 83% of GDP.

Stephen Green, who is China economist at Standard Chartered Bank, reckons China’s total debt, including contingent liabilities, is 77% of GDP.

Moody’s said last month that China’s local government debt is understated and might be 3.5 trillion yuan ($540 billion), bigger than its state auditor has estimated,

China’s central bank alone holds an estimated $1.16 trillion in debt, and the government has already increased credit in the system to a reported 200% of GDP.

The eurozone’s problems have kept the euro on a very questionable footing, with the European Central Bank keeping it strong by raising interest rates.

Japan’s massive debts, which are the largest in the world, have kept the yen on an unsound footing.

Strong U.S. defense of Japan, South Korea, Saudi Arabia, Kuwait, Qatar and the United Arab Emirates make it in their interests to protect the dollar.

Related posts:

1. S&P Downgraded US Credit Rating Because Of Huge Deficits
2. Will Moody’s & Fitch Downgrade America’s Credit Rating?
3. Paying Off Debts Will Improve Your Credit Rating

Did S&P Downgrade Your Bank? | The Daily Capitalist

dailycapitalist.com11/30/11

Did S&P Downgrade Your Bank? By Jeff Harding, on November 29th, 2011. S&P issued new ratings for the world's 37 largest banks. Was your bank upgraded or downgraded? As a public service, I have included the entire list. Standard …

S&P: No U.S. Credit Rating Downgrade Despite Supercommittee Fail

www.huffingtonpost.com11/22/11

WASHINGTON — Credit rating agency Standard & Poor's says it will not downgrade the U.S. government's credit rating because a Congressional committee failed to come up with a plan to trim deficits by at least $1.2 trillion …

As you most likely already know, the U.S. had its AAA credit rating downgraded for the first time by S&P, which slammed the nation’s political process and said lawmakers failed to cut spending enough to reduce record deficits.

If you already know the bad news, but don’t know exactly the reasons for the downgrading then maybe watch the vid!

Aug 5, 2011 David Beers, the London-based managing director of sovereign credit ratings at Standard & Poor’s, talks with Bloomberg’s Tom Keene about S&P’s downgrade of the U.S. credit rating.

It’s a pity that David Beers stammers and says so many “ahs”, but it’s perhaps understandable because he’d never been in such a hot-seat before.

Just imagine the heat that he’s getting!

Related posts:

1. Will Moody’s & Fitch Downgrade America’s Credit Rating?
2. China Has A Much Lower Credit Rating Than The US
3. Paying Off Debts Will Improve Your Credit Rating

If you’re considered middle-class,

then it’s almost certain that Obama will soon break the promise that he made you,

when he wanted to get elected.

Taxes, The Stimulus Package And Unemployment

Higher Taxes

The projected deficit for 2010 is already $1.8 trillion, and a further $1+ trillion will be added to that, if the 10-year health care reform program gets added.

And even if it doesn’t get approved, then higher taxes still look inevitable.

Former Federal Reserve Chairman Alan Greenspan recently warned that even if the deficit-neutral plan that is presently being peddled by Democrats to fund government-run health insurance program were somehow passed, that it wouldn’t be enough to prevent higher taxes.

Speaking of the baby boomers that are currently signing up for Medicare he said, “We have to attack both the original shortfall and make sure we fund whatever new initiatives that occur in the health care area. It’s not adequate to be strictly revenue-neutral, because there’s a lot more to be done”.

And Treasury Secretary Tim Geithner agrees, “We will not get this economy back on track and the recovery will be not be strong and sustained, unless we can convince the American people that we’re going to have the will to bring these deficits down once recovery is firmly established”.

When asked if it was, “a matter of when, and not if, taxes would be raised, Geithner responded, “That is absolutely right”.

The Stimulus Package

Administration officials say they hope to see positive economic growth before the end of the year, and they credit the $787 billion Recovery and Reinvestment Act that was passed in February with preventing recession from going into a deeper depression.

Mike Pence, who is the No. 3 Republican in the House, insists however that the economy is recovering in spite of the stimulus plan, and not because of it, and he is adamant that to get out of the recession, that it is the American people that need to be spending money and not the Government.

“Borrowing a trillion dollars from future generations of Americans and spreading it around the economy is going to have some catalytic effect in the economy in the short term, but again, it’s no substitute for fiscal discipline in Washington, D.C. This piecemeal approach of government handouts through a government bureaucracy, is no substitute for broad-based tax relief and fiscal discipline in Washington, D.C.”.

Unemployment

The Recovery and Reinvestment Act (the stimulus package) which was opposed by all but three Republicans in the House and Senate, was intended to help save, and/or even create between 3-4 million jobs, but unemployment which is now averaging 9.5% and is between 10-14% in some states, is now expected to keep rising for at least another six months.

Expressing the administration’s hopes, National Economic Council President Larry Summers said, “Jobs are a lagging indicator, and once output increases, jobs will start to pick up. I think we have a ways to go. I want to emphasize the basic realities. Unemployment is still very high in this country”, and he went on to add that it wouldn’t be a good idea to rule out future taxes.

"There is a lot that can happen over time, but what the president has been completely clear on is that he is not going to pursue any of his priorities, not health care, not energy, nothing . In ways that are primarily burdening middle-class families.

That is something that is not going to happen".

P.S.

A few hours after writing the above, the following was published;

Just 16% of U.S. voters believe that tax increases help the economy.

A new Rasmussen Reports national telephone survey finds most voters (54%) say tax increases hurt the economy, a number that has been fairly consistent for more than a decade.

Fourteen percent (14%) say tax increases have no impact, and 16% are not sure.

Related posts:

1. Will Youths Blacks And Hispanics Desert Obama?
2. New Poll Says Obama’s Base Is Crumbling
3. More Than Eighty Reasons Why Obama Shouldn’t Be Reelected!

Barofsky, who is the government’s top bailout watchdog says that the total price tag for federal support stemming from the financial crisis could reach as much as $23.7 trillion in the after factoring in commitments from dozens of programs that were implemented throughout the federal government since 2007, and added that just the financial exposure of TARP and its related programs could reach $3 trillion.

He says that TARP, which started as a $700 billion bailout has expanded way beyond that;

“TARP has evolved into a program of unprecedented scope, scale and complexity. Moreover, TARP does not function in a vacuum but is rather part of the broader government efforts to stabilize the financial system”.

In his report, Barofsky also says that the Treasury Department has repeatedly failed to adopt recommendations that his office believes would bring more transparency and accountability to the execution of the bailout.

In a written response, the Treasury again rejected that call saying, “Although it might be tempting to do so, it is not possible to say that investment of TARP dollars resulted in particular loans, investments or other activities by the recipient”.

The report found that fifteen banks had used funds that were acquired from the FDIC to buy weaker rivals, with the banks saying that “the acquisitions helped preserve banking services to customers”.

Related posts:

1. Ten Banks Win Approval To Buy Back Their Shares From TARP
2. The ‘Loan Modification Program’ Finally Gets Underway.
3. Does Obama’s $8.6 Trillion Deficit Worry You?

China and US Try to Make Trade Progress to Save Global Economy …

dgriffith401.wordpress.com12/16/11

“The one thing that we can be certain of, among all the uncertainties, is that the global economic recession caused by the international financial crisis will be chronic,” he was quoted as saying by the official Xinhua news …

How The U.S. Is Quickly Becoming A Third World Country (Part 1 …

seekingalpha.com11/22/11

… 3rd world status. Economic data indicate a harsh reality that obviates mainstream political debate. The evidence suggests that, without fundamental reforms, the U.S. will become a post industrial neo-3rd-world country by 2032. … According to the Economic Policy Institute, the U.S. trade deficit with China alone caused a loss of 2.8 million U.S. jobs since 2001. Falling Real Wages and Household Incomes. Workers earning more dollars are actually poorer in terms of …

Major financial crises have occurred many times in the United States, and the one in 1929 wasn’t the first, and the present one won’t be the last.

The earliest one on record was in 1792, and there were several crises in the 19th century and also in the 1980′s

In short, recession cycles should be understood to be a normal part of living in a world of inexact balances, one in which there is an attempt to balance supply and demand.

The present world-wide economic crisis, which was caused by the United States wasn’t simply a result of unexpectedly large losses in subprime mortgages or because many of those loans were securitized in complex bonds.

In retrospect, it would seem that the major contributor to the collapse, was what are known as repurchase agreements, which are commonly known as repos.

A repo is a form of short-term borrowing for dealers in government securities. The dealer sells government securities to investors, usually on an overnight basis, and buys them back the following day.

For the party selling the security, and agreeing to repurchase it in the future it is a repo, and for the party on the other end of the transaction, the one who is buying the security and agreeing to sell in the future, it is a reverse repurchase agreement.

Repos are classified as a money-market instrument and they are usually used to raise short-term capital and the Fed uses repos to manage the aggregate reserves of the banking system.

The size of the repo market continually varies so it’s impossible to state its actual size, but it’s generally thought to hover around the $10 trillion mark at any given time.

Banks rely heavily on repro loans, and what caused the collapse of Bear Stearns and Lehman Brothers, was that the repo market panicked because of rising doubts about subprime securities, and loans suddenly became more expensive, or totally unavailable.

So What Can Be Done?

The Obama administration has a plan to protect the country and the world from the next financial crisis, and it can basically be divided into three parts.

1) Stiffer Capital Requirements

Some banks and other financial institutions would be considered too important to fail, because their collapse would pose a threat to the country’s financial stability.

Citigroup, Bank of America, Goldman Sachs and similar institutions would I imagine, be on the government’s most protected species list.

The companies on the list would face stiffer capital requirements in the form of shareholders’ investment, with the idea being that greater capital would provide a larger buffer against losses and a crises.

It might be of interest to note however, that at the time of writing that none of America’s biggest banks are any longer in the top three world-wide.

The top three banks in the world by market capitalization are;

1) Industrial and Commercial Bank of China
2) China Construction Bank
3) Bank of China

Citibank and Bank of America are not even on the list of the top twenty.

Two Canadian banks, Royal Bank of Canada (RY) and Toronto-Dominion Bank (TD) have recently made it to the list.

Australia also has two banks listed, and in addition to the Chinese banks, the importance of emerging markets is confirmed by the presence of Itau Unibanco Banco Multiplo (ITU) and Banco Bradesco (BBD).

The problem with the administration’s protected species plan, is that the very largest financial institutions in America, would effectively become protected and pampered wards of the state and they would most likely squeeze out the smallest ones and lenders would compensate by raising their interest rates or by only lending to the safest borrowers.

2) The Policing Of Unethical Lending Practices

The administration foresees the creation of a Consumer Financial Protection Agency that would police what appear to be unethical lending practices, and ensure that loan documents for mortgages, auto loans and other types of consumer credit are comprehensible.

* The Securities and Exchange Commission would still retain power over the stock markets.

3) Changing The Rules

Financial firms that issue securitized bonds such as bundles of mortgages, auto loans and other credits, would be required to hold 5% of the bonds themselves, the thinking being that this would cause sellers to examine loans more carefully.

In early 2007, when the problems of subprime mortgages and repos first emerged, few if any regulators foresaw the coming meltdown, so the question needs to be asked, “should we trust government regulators instead of bankers, traders and money managers?”.

Due to their past failings, it would seem that we shouldn’t.

The dangers of overregulation should generally not be ignored or minimalized, but especially so in the U.S. whose economy is anchored on risk-taking and expansion.

We don’t yet know exactly what will cause the next financial crisis in the U.S. but its roots are already clearly foreseeable.

By 2019, the U.S. federal debt is expected to be $11 trillion and right now, the Chinese, who are presently supporting the U.S. economy are already preparing a retreat from the dollar.

China has now called for the creation of a new currency to eventually replace the dollar as the world’s standard, and is proposing, if not demanding, a sweeping overhaul of global finance that truly reflects the developing nations’ growing unhappiness with America’s role in the world economy.

If China decides to pull the plug, which is increasingly likely, we will soon understand what caused America’s upcoming financial collapse, but many will say that they didn’t see it coming.

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U.S. household wealth fell in the first quarter by $1.3 trillion, extending the biggest slump on record, as home and stock prices dropped.

Real-estate-related household assets decreased by $551.1 billion, which follows a $974.5 billion decrease in the fourth quarter, and mortgage borrowing was unchanged from January through March.

Retail sales did rise in May for the first time in three months, but the increase was solely due to people returning to automobile showrooms looking for bargains.

The economy contracted at a 5.7% annual rate in the first quarter, and consumer spending rose by 1.5%.

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Other banks which are said to have met government approval are
JPMorgan, American Express Co., Bank of New York Mellon Corp., BB&T Corp., Capital One Financial Corp., Northern Trust Corp., State Street Corp. and U.S. Bancorp.

The repayments come almost eight months after the Treasury provided nine banks with the first $125 billion from the $700 billion TARP fund.

Amongst banks which didn’t win approval are Bank of America Corp., Citigroup Inc. and Wells Fargo & Co.

The Treasury announced today, June 9th, that combined with repayments that have already been received from twenty other firms, the government will have gotten back about $70 billion so far, and added that dividend payments on the shares issued to the government under the Capital Purchase Program total about $4.5 billion to date, including $1.8 billion from the ten banks that have now been released.

The treasury statement also noted that, “Proceeds from the TARP repayments will help reduce the federal government’s borrowing and the national debt”. “The repayments also boost the cushion to respond to any future financial instability that might otherwise jeopardize economic recovery”. “Firms buying back the government’s preferred shares also have the right to repurchase warrants the Treasury holds at fair market value”.

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1. Ten US Banks Needs A Total Of $75 Billion
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