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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: grusum who wrote (233785)12/21/2009 12:40:30 PM
From: Skeeter BugRead Replies (1) of 306849
 
denninger nails it... the government wants more and more debt... everything else be d*mned. they can lie all they want, but they can't hide their *actions*.

as a prime example. as the dollar sunk from 150 to 72, the fed and treasury line was "we support a strong dollar policy."

they were *lying*. their actions proved it.

-------------------------------------

Reality is that none of the so-called "regulators" - worldwide - have any interest at all in prudent lending. Why not? Because prudence in lending, leverage ratios that are actually enforced and mark-to-market restrict bank profits - that is, the amount of GDP that banking institutions of all sorts can extract from the economy and transfer out to the "privileged class" via so-called "proprietary trading" and bonuses.

Indeed, this is where government and regulatory interests align to the detriment of economy stability: Governments want to see big GDP increases, and increasing leverage (amount of borrowing outstanding in the economy for a given GDP level) is one way to do this.

The best way to control this trend would be to mandate (by law) that GDP be adjusted to reflect leverage changes in the economy - that is, if debt goes up by 4% of GDP then the 4% has to come off the reported GDP numbers.

That would stop the BS immediately - which, of course, is why it won't happen.

Don't believe the hype - it is increased leverage over the last 30 years, as I have identified in The Ticker since 2007, that has driven our so-called "strong economic growth."

Now the check for our profligacy is on the table and the waiter is tapping his foot.

market-ticker.denninger.net
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