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?

Community Organizer Obama on Republican Economic Theory: “It …

www.thegatewaypundit.com12/7/11

President Obama, in one of his most expansive speeches to date, declared on Tuesday that supply-side economics is a failure and called “gaping inequality” across the country a moral shortcoming that is distorting American …

Obama says economic 'inequality' hurts everyone – CNN Political …

politicalticker.blogs.cnn.com12/6/11

(CNN) — President Barack Obama said Tuesday that economic inequality in America is at "a level we haven't seen since the Great Depression" and "hurts us all.

Here are four recent headlines.

“U.S. Manufacturing Growth Slows Substantially!”.

“Housing Imperils Recovery!”.

“Private Sector Added Few Jobs in May!”.

“Moody’s!”.

And they are all very bad news for Obama’s reelection chances in 2012 !

Obama Now Owns The Economy

Jimmy Carter owned the 1980 election-year economy and George H.W. Bush owned the 1992 election-year economy and both were one-term presidents.

Barack Obama however, has seemingly taken ownership of the 2011 economy, a full year and half before he has to face the voters which is great news for the GOP!

Obama’s self-confidence is famously limitless, but is almost certainly founded on vanity and not on facts.

During his hyper-partisan deficit speech at George Washington University in April, Obama raised major expectations of economic seriousness and then somewhat unexpectedly, dropped them over a cliff.

The day before that speech, most of Washington expected Obama to make a major policy statement about the big deficit-reduction debate that was then unfolding, but the president sadly contributed nothing.

Instead he ridiculed and derided the Republican leadership seated before him and with that speech, Mr. Obama effectively kicked off his 2012 presidential campaign, and in so doing politicized the economy.

Whether you agree or disagree with it, Paul Ryan’s budget which was released just one week earlier, was all about policy, and the Republicans were actually offering to take part-ownership of the economy by spending the year in dense discussions about the deficit and spending.

Bad Timing For Obama

Obama’s timing was not good to say the least because Americans are starting to panic about the economy, the persistently high unemployment and persistently weak growth.

Private forecasters have reduced their estimates for economic growth the rest of the year well below the 3%-plus the Federal Reserve predicted in April and the Fed’s 2012 growth forecast runs as high as 4.2% meaning that they must be using high-powered binoculars or telescopes.

The Failed Stimulus Package

The policy most explicitly intended to reboot the economy was 2009′s $814 billion stimulus, plus successive budgets that raised federal spending to 25% of a $14 trillion economy.

But in this year’s first quarter, the economy grew at only1.8% !

And What’s Worse

The housing sector, which is a monumental and intractable mess is choking the economy; and how did the White House respond?

The president allowed (or told) his “adviser” Elizabeth Warren of the new Consumer Financial Protection Bureau to involve banks and mortgage servicers in negotiations over a complex regulatory scheme whose goal is literally, “to fix their business model”.

And Worse

The White House now says the free trade agreements with Colombia, Panama and South Korea will be delayed absent payouts of more money for “trade adjustment assistance”, which means that unless the Republicans can force a change, that the last two years of uncertainty for trade commitments, will be extended

Is It Fair To Blame Obama?

Yes it is!

Because the US president made conscious policy choices during a deep recession to vastly reorder vast swaths of American industry and economic growth, like a long gray day, sits still below 3% !!!

Related posts:

1. Will Youths Blacks And Hispanics Desert Obama?
2. Would Cain’s 999 Have Beeen A Good Thing?
3. Twenty Questions Obama Needs To Answer

French Critical Of UK Economy, While IMF Warn Of “Gloomy” Global …

thewealthnews.com12/16/11

The French Finance Minister, Francois Baroin, has described the economic situation in the UK as being “very worrying”, while the IMF warn of a “gloomy” global outlook.

UK Economic Data Weakens, GBP to Follow « FXTimes – Forex …

www.fxtimes.com12/15/11

The economic data from the UK this week was a disappointment and may point to further GBP weakness in the coming months as the market fully prices in further quantitative easing from the Bank of England. We review the …

The Good News

The stock market has started the year strongly, and Sterling is up against the dollar and was even rising against against the Euro, until the Chinese bought huge quantities of euro debt
this week.

The Bad News

The threat of inflation is now blindingly apparent and the Bank of England would surely have liked to raise interest rates this week, but what that would that have done to a housing market that’s already heading south; or to those people with other, shorter-term debts, whose price would have become even more suffocating?

For many of them, the day of reckoning has been long postponed, but now it may be just weeks away

The French And Support For The Euro

François Fillon, the very polite, courteous and rather successful French prime minister, went to London this week and seemed to take for granted Great Britain’s continued support of the euro, arguing that its economic future depended upon it, too. He exaggerated of course, but he did so because of the great and in my opinion unjustified fear in France that the game is up for their currency.

"Unjustified"?

Yes, because it’ hard to see why there is this fear since if the euro went under, then the French could simply return to the franc and find themselves able to widen their export markets, because everything would be cheaper.

France’s financial sector, along with Britain’s, would come under heavy pressure because of their exposure to euro debt, but these were risks taken by banks, and they would just have to bear them.

The Banks

In the same way that a Government has no business telling banks what they can pay their staff, it has no business continually bailing them out either.

The UK Government

UK politicians have encouraged the thought over the past couple of months that while things are still very difficult, and hardships inevitable, that the worst is already over, but it’s likely that what they’re really saying is that no more pain will be inflicted in the near future.

Outside Factors

What’s not being mentioned however is that factors beyond their control will soon start to kick in such as;

An external blow to the economy, whether in the shape of the euro ceasing to defy gravity, or simply more bad news from America,

Taxes

UK taxes remain far too high, and are as serious obstacle to recovery and if a recovery has to start from an even lower base, then the obsession with not cutting taxes in case some "rich" person, possibly even an evil banker becomes richer will have to be jettisoned once and for all.

Bankruptcies, Business Failures And Unemployment

Even without external shocks, interest rates must rise, and they’ll cause personal bankruptcies and business failures to rise with them and unemployment will rise too.

House prices will fall, and most likely the stock market too, but the UK cannot postpone indefinitely the final acceptance that it must live within its means.

Growth

Growth is the only way out and it will require the Government stimulating demand and although it won’t be easy, some kind of action is necessary because paralysis is nearly always fatal.

Related posts:

1. Watchdog- “Causes Of Financial Crisis Have Not Been Addressed”.
2. Will China Cause America’s Next Financial Crisis?
3. The ‘Loan Modification Program’ Finally Gets Underway.

Right Wing Fringe: How Can Obama Win ?

rightwingfringe.blogspot.com12/17/11

A new AP-GfK Poll says that 52 % of American believe that Obama does not deserve to be re elected. With support for Obama waning in all quarters, its difficult to see how he can win. He has lost independents, rumor has it he …

Can Obama win? – Cannonfire

cannonfire.blogspot.com12/16/11

For the first time, the poll found that a majority of adults, 52 percent, said Obama should be voted out of office while 43 percent said he deserves another term. The numbers mark a reversal since last May, …

The Revisionist Hype

Firat of all, let’s ignore the revisionist hype in so many sections of the liberal media about President Obama staging some kind of mythical political comeback!

This is a presidency with an approval rating of around 50% (according to the RealClear Politics poll of polls), that presides over a nation where just 27% of voters think the country is moving in the right direction, and just 29% of Americans think he will be returned to power in 2012.

The White House may be claiming a couple of political wins in the dying embers of the lame duck Congress after expending a great deal of political capital in the Senate over the reckless ratification of the Moscow-friendly START Treaty and the repeal of Don’t Ask Don’t Tell, but these are issues barely on the radar screens of most American voters in the lead-up to 2012, an election which will be dominated by the economy and health care reform, and the political landscape still looks strikingly bleak for the “transformational president” as he goes into 2011 and 2010 was an incredibly bad year for Barack Obama, no matter how much, The New York Times or The Washington Post might try to sugar coat it.

Here are four reasons why it was a year Obama will want to forget:

1. The midterm elections were a defeat of epic proportions for the Obama Presidency, and were the worst since 1948!

When Barack Obama spoke of a “shellacking” at the midterms, it was a huge understatement.

The Republicans scored a significantly bigger win than they did in 1994, with their biggest gain in the House of Representatives in sixty two years.

And fortunately for the Democrats only thirty seven Senate seats were up for election, which most likely prevented what would have been an almost certain handover of power in the upper house too.

Republicans also made huge gains at the gubernatorial level, with the GOP now holding twenty nine governorships to the Democrats’ twenty. Republicans also picked up 680 seats in state legislatures, which is the highest figure in the modern era.

2. Conservatism grew increasingly dominant in America!

The midterms were certainly no flash in the pan, but were definitely part of the much broader conservative revolution which swept America in 2010.

As a recent Gallup survey showed, 48% of Americans now describe themselves as “conservative”, compared to 32% who call themselves “moderate”, and just 20% who call themselves “liberal”.

Conservatives now outnumber liberals by nearly 2.5 to 1, a ratio that is likely to increase in 2011.

The percentage of Americans who now call themselves conservative has risen six points since 2006 and eight points since 1994.

Barack Obama, who is the most liberal US president of the modern era, only has a natural liberal constituency comprised of just one in five Americans, which certainly does not bode well for 2012.

3. The Left lost a huge amount of ground and also engaged in a brutal civil war

2010 was a monumentally bad year for the liberal establishment in the United States, not only in electoral terms but also in terms of increasing divisions within its ranks, as well as the continuing decline of the “mainstream” liberal media.

The conservative media, from Fox News to The Wall Street Journal, had a tremendous year with increasing market share, while establishment giants from CNN to network news outlets continued to decline.

The White House very unwisely (and werhaps stupidly) took on Fox in a major offensive, and spectacularly lost.

And Glenn Beck, Sean Hannity, Rush Limbaugh, and a constellation of conservative talk show hosts had a bumper 2010 too.

In the meantime, America’s disillusioned liberal elites are increasingly aiming their fire at each other, in scenes that are reminiscent of the bloodthirsty finale of Reservoir Dogs.

The New York Times columnist Paul Krugman perfectly captured the brutal post-midterm atmosphere on the Left in a fiery broadside against the president: “Whatever is going on inside the White House, from the outside it looks like moral collapse and a complete failure of purpose and loss of direction".

4. The Tea Party became more powerful than the president at the ballot box

The Tea Party was the big victor of 2010 because it spectacularly humiliated the White House by running rings around it.

A small grassroots movement with barely any resources evolved into the most successful US political movement of this generation, sparking a national protest against the big government policies of the Obama administration, and a powerful call for a return to America’s founding principles.

The Tea Party, which was initially mocked and jeered by its political opponents, including the president, later came to be feared by the Left as it flexed tremendous political muscle.

A September, a CNN poll showed that “while just 37% of Americans are more likely to vote for a candidate if backed by Barack Obama, a far larger 50% will vote for a Tea-Party endorsed candidate".

The Tea Party continues to gain momentum following the midterms, where it scored significant successes, and a late November USA Today/Gallup poll showed the Tea Party virtually neck and neck with President Obama in terms of voter opinion on who should influence government policy.

Related posts:

1. Will Youths Blacks And Hispanics Desert Obama?
2. New Poll Says Obama’s Base Is Crumbling
3. Do Liberals Finally Understand Obama Was A Huge Mistake?

World banks brace for euro collapse | GoldSilver.com

goldsilver.com12/26/11

Banks around the world are preparing for the possible collapse of the euro as fears of the European debt crisis increase.

What Will Happen if the Euro Collapses? A Few Scenarios | Global …

globalspin.blogs.time.com12/13/11

Despite the distracting political drama over the UK's outlier rejection at last week's European Union agreement on fiscal and budgetary coordination, it's now become clear that main objective of the collective effort–to ensure …

If you think that the European financial crisis resembles the American banking crisis of a couple of years ago then you’re underestimating the gravity of Europe’s problem.

The European sub-prime crisis of 2007 and 2008 was ‘solved’, although most likely only temporarily, by nationalizing bank debt, and whilst that calmed the markets, the bottom line is that bank debt was merely being transferred onto the public-sector balance sheets.

The governor of the Bank of England, Mervyn King perhaps summed it up best when he said:

“Dealing with a banking crisis was difficult enough, but at least there were public-sector balance sheets onto which the problems could be moved. Once you move into sovereign debt, there is no answer; there’s no backstop”.

The investors who leapt back into the US markets in 2009 and fueled the biggest stock-market leap since the recovery from the Wall Street Crash in the early 1930s, are now quickly disappearing and the confusion on European bourses is even worse, and we are now in a similar position to that of 2008.

The crunch that is now happening in Europe was foreseen by a great many economists for many years however, because of the difference in approach by Germany and Holland who practice high saving and low spending, and the Mediterranean countries and southern Ireland who have exactly the opposite approach.

The Mediterranean countries and the U.K. too, borrowed cheap in order to raise their standards of living, ignoring the question of whether they could afford to take on so much debt, and that was one of the main causes of the sub-prime disaster.

The Big Danger

Whereas it was possible to bail out sub-prime households, and the banks that lent to them, the International Monetary Fund doesn’t have enough cash to bail out major economies like Spain, Italy or Britain.

The sub-prime property market in the US, together with its slightly less toxic relatives represented a $2 trillion mound of debt, but the combined public and private debt of the most troubled European countries which include Greece, Portugal and Spain is closer to $9 trillion.

If Greek and other government bonds collapse, then that country’s banking system would de facto become insolvent overnight and banks throughout the euro area would be at risk because they hold so much of their neighbors’ government debt.

The Prognosis

It took Britain just a few days in September 2008 for the Government to push through the semi-nationalization of Royal Bank of Scotland and HBOS, but as politicians are now discovering, organizing a European sovereign bail-out is far, far more difficult than rescuing a bank, or banks.

The euro continues to fall and European politicians who are torn between Brussels and their electorates are emitting confusing signals which only tend to destabilize the markets even further.

The single currency might possibly survive, but only if its members were to agree to an even closer political union, and the likelihood of that happening seems as likely as the survival of the Euro.

Related posts:

1. Will China Cause America’s Next Financial Crisis?
2. Watchdog- “Causes Of Financial Crisis Have Not Been Addressed”.
3. Ten US Banks Needs A Total Of $75 Billion

China has been moving in the direction of free-market capitalism for many years, and the benefits of the move have been spectacular.

China now has a two trillion dollar trade surplus, and it’s now America’s principal banker.

With every day that passes. the U.S. is more fiscally reliant on China, and it continually begs the Chinese to go on supporting it.

In the short run, the Chinese will, but the interest rate will have to be much higher and in the long run, they probably won’t.

According to Fortune magazine’s latest list;

a) The number of U.S. companies in the world’s top 500 fell to the lowest level ever.

b) More Chinese firms than ever made the list.

c) Thirty-seven Chinese companies now rank in the top 500, including nine new entries.

d) The number of U.S. firms fell to 140, which is the lowest total since Fortune began the list in 1995.

e) China surpassed the United States as the world’s biggest automaker in the first half of 2009. American sales were 4.8million vs. China’s 6.1 million which is a huge difference.

How Did China Do It?

a) China has no capital-gains tax and only a 15 to 20% corporate tax.

b) The United State intends to raise its cap-gains tax rate to 20% percent, and also increase its top personal tax rates.

Investment flows to its most profitable destination, provided it has a stable currency, but it can be moved with a couple of mouse clicks and Bush’s last year and Obama’s first several months have made the U.S. a turnoff when it comes to investment.

The highest taxes in the U.S. look likely to be around 50%, but in the OECD (Organization for Economic Cooperation and Development) they’re 42%!

If health care is nationalized which seem more and more unlikely at the time of writing it will consume around 15% of the U.S.’s economy and the energy proposals, another 15%.

As I write this;

a) Dow Jones stocks are down 8%

b) China’s stocks are up 71%

c) The world index is up 4%

d) Emerging markets are up 25%

Investment risk and work effort, are sadly no longer seen as rewarding, or as things worthy of pursuing in the U.S. and the increasing bureaucratic red tape and the current government’s policies on taxes, spending and regulation are causing the United States to lose more and more of its competitiveness in the global race for capital, prosperity and growth.

Related posts:

1. Will China Cause America’s Next Financial Crisis?
2. China Has A Much Lower Credit Rating Than The US
3. Ties Between China And Israel Get Even Stronger

Those looking at a V shape believe that if the recession nosedived, which is one side of the V, then it should bottom out and quickly recover to its former glory, the other side of the V.

The U shapers believe that if a recession begins quickly, but then slows down, remains at the bottom for a while and then skyrockets back to its previous glory, that it is U shaped.

Which Are Right?

If you look at any of the previous recessions that were caused by the bursting of a huge speculative bubble, you will find that the recoveries took a long long time to come about, which suggests that the V shape believers are wrong in expecting a quick recovery from the present recession, because the economy cratered very quickly indeed.

Those that believe that we’re in a U shape right now are perhaps closer to the truth, because they believe that exiting from the present crisis will take a great deal of time.

U-shapers believe however, that what will drive the recovery is investors that slowly come back into the market to take advantage of the low prices.

This recession is so deep however, that it’s not investors that will have to bring about some kind of recovery, but consumers, and right now they’re not playing ball.

Consumers account for around 70% of the U.S. economy and they’re the ones that took a real beating this time, and until they start spending you can forget about any serious kind of recovery.

What, No V Or U Shaped Return To Former Glory?

The two chances of regaining what once was, are probably slim and nothing.

The question might be better phrased, “how will consumers start fueling the economy?”.

The growing line of unemployed won’t fuel it, and householders will have a major problem getting home equity loans and perhaps worst of all, those that do have a little cash are intent on keeping it, and we just saw consumer confidence take another dive.

The probable truth is that America has seen the end of its economic, and perhaps its military hegemony, and Obama for right or wrong, certainly doesn’t want a return to either them.

America is surviving on loans right now, and will be for the foreseeable future.

The Chinese have a two billion dollar surplus, and will soon demand higher returns on their investment in the U.S. because they see it as overburdened with debt and that will only increase the U.S.’s debt mountain.

Americans will replace worn out cars and appliances of course, but who will invest in factories and businesses that build those things?

The original question was;

Will the U.S. Return To Its Former Glory?

The answer is almost certainly ‘no’, and a Scottish historian by the name of Professor Alexander Fraser Tyler, who wrote in 1787 about the decline and fall of the Athenian Republic over two thousand years before, perhaps explains it best.

“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.”

“The average age of the world’s greatest civilizations has been 200 years. These nations have progressed through this sequence:

From bondage to spiritual faith
From spiritual faith to great courage
From courage to liberty
From liberty to abundance
From abundance to complacency
From complacency to apathy
From apathy to dependence
From dependence back again into bondage”.

Related posts:

1. The Economic News Is Both Good And Bad
2. A Meltdown Of The Euro Will Be Far Far Worse Than The Banking Crisis
3. Our Economy – When Even The Ugly Looks Pretty.

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.

Related posts:

1. Watchdog- “Causes Of Financial Crisis Have Not Been Addressed”.
2. A Meltdown Of The Euro Will Be Far Far Worse Than The Banking Crisis
3. Ten US Banks Needs A Total Of $75 Billion

Hertz Chief Executive Officer Mark Frissora said, “It’s a cool technology. My two sons use Zipcar and they said, ‘Dad, you have to get into this’” and Hertz is set to announce its own sharing service, starting with 1,000 vehicles in New York City, by the end of the year.

Zipcar Inc. was not taken seriously when it first started out and was considered by most to be simply a joke.

It only had one car, and that was a lime-green VW Bug.

Now it boasts over 6,500 cars, will show its first profit in the third quarter, and that during a major recession!

What Is Car Sharing?

Users of the service swipe an access card over a reader in the windshield to unlock a Zipcar through a wireless data link, and the keys are waiting inside, attached by a cord to the dashboard.

The cars can be rented by the hour or day, and the annual fee includes, gasoline and insurance.

The service is presently available in 28 U.S. states; several Canadian provinces, as well as in London, England.

Reservations, pickups and returns can be handled self-serve through the Internet, or by telephone.

How Much Does It Cost?

Zipcar customers currently pay an annual membership fee of just $50. 00 plus $8.50/hr. which includes 125 miles/day and gasoline.

The number of venture-backed IPOs this year is down around 90% percent from the same period in 2007, but Scott Griffith who is CEO of Zipcar says, “We’re succeeding and we’re growing in a year where flat is the new up. Sales will reach $120 million this year and grow to $1 billion within a decade”.

When Griffith became CEO in 2003 the company had 5,000 members.

It now has over 3000 members and the company licenses its proprietary software to city governments in order to reduce costs.

How Big Is The Potential Market?

According to a report that was commissioned from the Economist Intelligence Unit – 37 million customers and yield $10 billion a year in revenue – and that’s big business!

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The “Jack Welch” Portfolio Algorithm « CSS Analytics

cssanalytics.wordpress.com10/14/11

Jack Welch is one of the most recognizable names in business as the former CEO of General Electric. His skills and leadership in running one of the largest companies in the world have been the source of numerous books …

Jack Welch Led Gossip Sessions « Leadership Freak

leadershipfreak.wordpress.com11/18/11

Jack Welch Led Gossip Sessions. With typical candor and color, Jack Welch said, “We always had one hell-of-ah gossip session after every meeting.” (ELP, 2011, NYC). At least two things happened at meetings Jack Welch …

Jack Welch, the former chief executive officer of General Electric Co., and author of “Straight from the Gut”, has been very busy on the talk shows and speaking circuit lately, and here’s what he’s been saying.

“The government has taken advantage of the economic crisis to get a tighter grip on the US economy, and this does not bode well for business”.

“There are so many things that bother me right now. Over the last couple of weeks, things have really gone south in the government relationships”.

“These guys, when they came in, said a crisis like this is impossible to waste. The government seems to think there’s a crisis and now we can get in here and do all the things that we dreamed about when we were at Harvard, when we were somewhere else”.

“The government now controls about 37% of the US economy, including health care, and this makes businesses uneasy, despite promises that the state’s role will shrink when the economy gets better. Now, these guys say they want to get out. Do you believe that? Do they want to get out?”.

“The Troubled Assets Relief Program (TARP) funds, with the conditions attached to them, are also something to be avoided by businesses. And the news that six insurers secured a green light from the Treasury Department to receive funds under the TARP is not good news”. Referring to Obama, Welch said, “I don’t particularly like where he’s taking us. To get the money he needs, he has to have a fake budget. He’s fooling people about how we’re going to have the top line support the programs in the middle without enormous taxes”. Asked about the restructuring of Chrysler, he replied, “I didn’t like the terms. The creditors’ rights were trashed and the unions got 55% of the company”. He did have a couple of good things to say though, “The president’s plan to implement the nation’s first national standard for greenhouse-gas emissions was sound. This emissions plan is not one that gives me great trouble’. And on the direction of the economy, “I want new housing starts to go down, down, down. It’s the only way to get housing prices stabilized, and we need to stabilize housing prices. While the market didn’t like it, housing starts going down again I like it”.

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