Your wrong. If you go read the congress finanicial committee charter it is to appoint the FED chairman and oversee the economy with respect to the Treasury, but then you probably weren't paying attention in civics class? Besides, not expecting them to pump money into the system, but rather to start recognising that we have run all the way through the recession points and are now going out the bottom to worse.
What I want is for the FED and the rest of these old world economists to stop looking for the old world Keysian signs that teh economy is going down the tubes and focus on what is going on now and make the right moves to mange things. Alan Greenspan took it upon himself to claim that the wealth effect was enough reason to pump interest rates up to stop this economy, but he overcooked it and blew it back down so hard it now has a life of it's own. Yea, interst rates alone will not cut it now. AG went too far. If he was interested in saving alot of small businesses, he would have pumped a half point rate cut in the two weeks before Christmas selling season and not 2 weeks after it. He knew the numbers then, just he did not act, but rather waited until all the small businesses which make 40% of their yearly revenue that time of year bombed out and went belly up.
We have 401k where people are losing money by being locked into the plans which only allow for mutual fund investing and no provision for converting to cash, so they all lost 60% last year. what is the second order effect of that on the social security system? How about the welfare system? How about old jobs versus new jobs? What will our young people face if older people hold jobs longer into their 70's while they earn enough to retire again? Or will our young be burdened with caring and supporting their parents? How about the fact that real wages have not increased since 1955, even with now that two people from the household are working, rahter than one?
How about if everyone claims a loss this year on their taxes and net effect is that we loose 60% in tax revenue? How great does this republican tax cut look now? Possible? No way. the only reason that we had this extra tax money is because we had an expanding economy and we had a condition which meant that everyone was paying taxes. So where do these clowns think they are going to get the money for this? And if they said right now "we lied, we are not going to give you any tax relief", how many people will stop buying even mroe consumer goods?
Or how about the invested captial for companies, not just the dot coms, but real companies. We have dried that one up too. which means loss of jobs, which means less invested captial, which means loss of jobs, which means less invested captial.....
Or the credit crunch in which we have less invested captial to loan out and people have tigther credit?
No, there are many many second order effects that we have going on VERY fast because now we are an electronic society and we can move money, investments, and cash very fast. Faster than the old world Keysians can track them with old parameters. did you think that all these CEOs are incapable of estimating their businesses? No, they are blindsided by the speed at which the economy is deteriorating. If they can't see it with much simpler models and much better tools than the FED, then how in the heck can we expect teh FEd to estimate it?
One more thing.....this capitulation item. Not going to happen. Everyone has been selling all along the way and MANY people are now sold out at 40% or less of net equity. the day of 3B shares trading just isn;t EVER going to come, so the old world Keysians and technial analysis is not going to hold and if we wait for this technical market turn to happen, then we all ride this nice wave down to the bottom. At about another 20%, we start to hit real safeguards that are in place and once we hit that, we bottom hard. Last time that happened, it took world war 2 to get us out of it. Look out for the WPA...
And at what point do people start a run on the banks? the FDIC guarnatees it? Right. Wiht what money? If alot of the banks start failing, they do not have enough money to bail them all out. Remember teh LTCM problem that Greenspan so nicely went in and fixed? taht was his claim then. But then after he and his wall street buddies made a few Billion off of it, they quietly went out of business anyway. boy, I missed the event of all the banks going out of busines that AG promsied due to it. Seems some sweet deal was cut and then after they all fed at teh trough, they all retired on goverment(read OUR) money. How come the damm congress hasn;t investigated that one?
bannana republic? Yea, Greenspan has sure made a banana president out of Bush, hasn't he? Bush will turn out to a one term president just like his father. His only hope to stay in office is to start some world war, which he is working real hard at doing. Let's just hope at some point the congress wakes up and figures out that we are getting pretty screwed up right now, figures out that both FED policy and fiscal policy as well as some economy moves are needed to get this thing going back the other way, not the 40% gain per year, but more like 4 to 6% gain so that everyone can at least put money somewhere and trust it to be there next year.
BTW - I am not in any of the classes above, but feel that we are dumping alot of troubles on my kids and your kids to clean up for the next 10-15 years. My rant was more pointed towards the fact that every single day CNBC takes on this "OH NO, another company reported a loss", rahter than focus on something postive once in awhile. We are all pretty damm aware that they are all going to report bad numbers, so now who is reporting good ones?
Later. |
