Audit the Fed? Sure but is it enough?

Months ago Alan Grayson asked Bernanke which foreign banks got a $500 billion loan. Bernanke replied, "I don't know".
http://www.youtube.com/watch?v=n0NYBTkE1yQ
http://www.newsweek.com/id/161199

Did somebody really make an electronic run on the banks?

Of course audit the Fed.

But my problem is that auditing the Fed is not going to be enough. It takes too much pressure off of the President, Congress and the Senate for their own conflicts of interests, aka. special interests and lobbyists who work against American citizens. Auditing the Fed is not necessarily a red herring, it's only part of the problem.

Look, the American citizens gave Uncle Sam $1.34 trillion in income taxes in 2007. Corporate America gave Uncle Sam a lousy $300 billion plus BRIBES that year. They got preference because the bribes went straight to the legislators.

If Americans wanted to change things for the better, we have to address the context of bribery and a conflict of interest and limit that with our politicians. We are entitled to our representation, everyone on Capitol Hill should be sued for going against their contracts.

Why haven't Fuld and Mozillo been placed on trail YET? We need Congress to testify, we also need Dubya, Paulson and Bernanke to testify.

The employment/population growth dropped a staggering 60% in the last decade, which is why so many people foreclosed on their homes to begin with. (see table at the bottom of "Jobless Recovery" on Wikipedia) Guess what? A lack of jobs creates foreclosures. Gen Y is most adversely affected by these statistics and without jobs (less inflation) Gen Y doesn't have the capacity to lessen the fiscal burden to bail out criminals and foreign banks.

There are so many things that we need to nail our legislators for. Save America, Bomb K Street i say! (K Street in Washington D.C. is a major hub for lobbyists).

Obama myth. Job Depression Does not entail an "economic recovery" This is common sense.

The amount of baloney pushed by our politicians and the media is infinate material for comedy. It would be funny if none of it was true.

The left has been the worst perpetrators.

We've heard that Cows are to blame for Global Warming. Haven't cows been farting since cows have been in existance? What about the Bison and the Buffalo?

Then Obama convinces us that Cap and Trade or "energy reform" is the solution to our trade deficit with Saudi Arabia, since that's the cause of our bad economy. I'm not putting words into his mouth, there's no way I can make this stuff up.

At a time of such great challenge for America, no single issue is as fundamental to our future as energy. America's dependence on oil is one of the most serious threats that our nation has faced....It puts the American people at the mercy of shifting gas prices, stifles innovation and sets back our ability to compete.

So drilling in Alaska wouldn't help?

Okay Obama's wording is a tad melodramatic. The other trouble is that Obama doesn't tie his statements with a bridge of logic or facts. Cap and Trade is a tax that's going to hamper profit margins for businesses and reduce consumer confidence with it's customers, just so government can profit. Both of these solutions are exactly what you should not do to stimulate the economy. Taxing us heavily is going to hurt the country's economy for everyone. This is the truth, I'm actually sugarcoating it.

What is the next line of baloney? Oh! The job depression economic recovery, otherwise known as the "jobless economic recovery".

This isn't possible since the US is a consumer based economy.

Consumer spending used to make up about 67% of all the economic activity in the U.S., but over the past few years, it's ratcheted up to around 72%.

This is a significant number. Much of it has to do with real estate and derivative trading but here, it's just like calling the sky "blue".

How many jobs did we lose since the subprime collapse?

According to MSNBC,

About 6.7 million jobs were lost during this downturn.

Before I get into it, we have to note that the US job creation compared to the population growth dropped from 78.45% (dot com boom) in the 90's to 19.57% between 2000-March 2009.

Let's not forget that we offshored, outsourced and sent money to places that would not keep the economy strong without the derivative market to begin with.

According to the BLS website:

Employment in professional and business services continued to trend
down in July (-38,000); the industry has shed 1.5 million jobs since
the start of the recession. Within professional and business services,
employment in the temporary help industry edged down in July. While
temporary help has lost 844,000 jobs since the recession began, the
declines have lessened substantially over the past 3 months.

Transportation and warehousing lost 22,000 jobs in July. Since May,
the average monthly job loss was half the average monthly decline for
November through April (-17,000 versus -34,000).

Financial activities employment continued to trend down in July
(-13,000). The average monthly decline for this industry was 23,000
over the past 3 months compared with 46,000 per month from November
through April. Since the start of the recession, the financial acti-
vities industry has lost 501,000 jobs. Employment in information de-
clined by 16,000 in July, including losses in publishing and telecom-
munications.

Health care employment increased by 20,000 in July, about in line
with the average monthly gain for the first half of this year but
down from an average monthly increase of 30,000 during 2008. Employ-
ment in lei-sure and hospitality has been little changed over the
past 3 months.

In July, the average workweek of production and nonsupervisory work-
ers on private nonfarm payrolls edged up by 0.1 hour to 33.1 hours.
The manufacturing workweek increased by 0.3 hour to 39.8 hours. Fac-
tory overtime was unchanged at 2.9 hours. (See table B-2.)...

The change in total nonfarm payroll employment for May was revised
from -322,000 to -303,000, and the change for June was revised from -
467,000 to -443,000.

THIS IS A SEVERE JOB DEPRESSION!!! We haven't lost this many jobs since the Great Depression.

Now, since people lose spending power when they lose their jobs; wouldn't it be safe to assume that they're not going to be very big consumers? Let's discuss this for a minute. If the economy is 72% consumer based, the job losses here will infact drop this consumer sentiment quite a bit? Sure people are going to take up sales, but it's likely to be the "already haves" vs. the "have nots".

Along with that missing consumer sentiment, didn't a record number of job losses stir a record number of foreclosures? The sudden drop in real estate prices caused many legitimate (non-ARM) borrowers to fall into foreclosure when their debt was greater than the value of their properties. When the demand for real estate drops due to affordability (people can't afford ARM loans without a job, sorry Obama); then real estate prices are going to keep dropping without the use of synthetic demand (credit default applied inventory for ARM loans used by speculators in the real estate market).

Wealth creation is never a guarentee. So apparently this "recovery" is the rebirth of the credit market which will probably hurt us as much as it helps. It should be the result of a solid trade relationship between our debtor country China, Japan and Saudi Arabia.

It's been almost a year since TARP was given to the corrupt CEO's to save their institutions with. They're not lending.

I'll bet anyone that next year, we're going to hear, "We didn't think it was this bad." Just like Bernanke unconciously dropped interest rates in 2005 to low levels to sell ARM loans to increase the returns for unsecured credit default investors.

It's just baloney. The media or our government is not telling us the truth.

Why does the Commodities Futures Trading Commision(CFTC) Exist?

Here's an excerpt from Bloomberg:

Aug. 12 (Bloomberg) -- President Barack Obama sent Congress his plan to rein in the $592 trillion over-the-counter derivatives industry...

Go on. Go on.

...The proposal issued yesterday would pressure derivatives users such as banks and hedge funds to move away from opaque customized contracts by imposing higher capital and margin requirements on the instruments. Standardized derivatives would be moved to regulated exchanges or trading platforms and sent through official clearinghouses, according to the draft measure. ....

Check. Sounds nice. Keep going...

Custom derivatives are more profitable than contracts traded over an exchange, so the dealers will work to get the legislation “watered down,” Miller said. The derivatives proposal is part of a broader overhaul of financial industry rules meant to prevent a repeat of last year, when the collapse of Lehman Brothers Holdings Inc. and American International Group Inc. froze credit markets.

You don't say! And why did we, the wronged taxpayers bail them out again?

“These markets have largely gone unregulated since their inception,” the U.S. Treasury said in a statement yesterday.

Hmmmm....very fascinating. Fascinating indeed. This is an astonishing discovery.

“Enormous risks built up in these markets -- substantially out of the view or control of regulators -- and these risks contributed to the collapse of major financial firms in the past year and severe stress throughout the financial system.” ...

So the $592 Trillion dollars was just substantially "out of view" or "out of control" of the regulators? I see. That $592 trillion dollars could easily get lost in a haystack. Any Auditor from a Big 4 would be the first to tell you that trillions of dollars could be anywhere on the equity section... could those unsecured values be hiding under the mattress? In the closet? It's so easy to lose track of trillions. I do that every week at my ATM. My banker loves me for it. i should lose another trillion so I qualify for a government approved bailout!

The CFTC was extraordinarily cautious, ethical and effective in the last 10 years in preventing the greatest financial scandal of the history of the world!!! They must be very good.Pickel and Gensler deserve a promotion. Oh wait!!! Obama just gave them one. Obama is expedient.

...The draft legislation would require the Securities and Exchange Commission and the Commodity Futures Trading Commission to set capital and margin requirements for non-bank swap dealers and “major swap participants” that are “as strict or stricter” than those set for U.S. depository institutions by federal bank examiners, according to the proposal. ...

The annoying part about economics is that it's such a subjective science. Imagine if your doctor diagnosed you for a brain tumor using subjective scientific method to make his conclusion. Would denial of a brain tumor cease the patient from dying? Because this is exactly how the scientific method being applied to revive the American economy. I get warm fuzzies just thinking that our livelihood is being taken seriously by such caring, ethical and capable experts!

Derivatives are contracts used to hedge against changes in stocks, bonds, currencies, commodities, interest rates and weather. Credit-default swaps are derivatives created primarily to protect lenders and bondholders from company defaults.

THANK YOU BLOOMBERG!!! THANK YOU!
Please call them subprime instruments, credit defaults, CMO's or CLO's from now on. Any financial instrument secured by another financial instrument with the capacity to hedge is a derivative. They're not all subprime trash.


BTW, Hedge Funds are not the only investors of Subprime garbage and the Subprime junk isn't the only thing invested by Hedge Funds.

Lawmakers still need to decide how to split oversight and enforcement between the SEC and CFTC.

Opaque financial products, including some derivatives, contributed to almost $1.6 trillion in writedowns and losses at the world’s biggest banks, brokers and insurers since the start of 2007, according to data compiled by Bloomberg.

Dawn Kopecki called them "derivatives" again. Arrrrgh!!! BTW, this is the same CFTC that "overlooked" a $592 trillion derivative market that accumulated $4 quadrillion in trades since it's inception.


Hey Obama, nice jobless "economic recovery". Boomers, please do everything to vote the following criminals out of office; Obama, Boxer, Frank, Gramm, Leach and Bliley. And why aren't any of the CEOs of the failed banks (like AIG) tried for fraud and imprisoned yet? When is Paulson, Bush and the others going on trial for the greatest financial scandal in the history of the world?

Boomers, since you have the largest number of voters, you're the ones with enough numbers to have this problem fixed. Neglect it, you're guilty of the crime as well and your children might as well wait in anticipatino for your passing in order to afford a home to raise our families in. Thank you for understanding!!

And don't demand another bailout when this "recovery" falls through the floor. The "mob" at the healthcare scene is just a hidden glimpse of the anger at the bailouts we've seen last fall.

Again, my peeve is with our "elected officials", not necessarily with Dawn Kopecki of Bloomberg News. We don't kill the messenger here.

BABY BOOMER SPECIAL---GENERATIONAL THEFT= EPIC DISASTER

The generational groups have been labeled for marketing purposes, yet they're also most valuable for political purposes.

I wanted to dedicate an entire blog just for the Baby Boomers in light of America's disaster economy as of late. The group hated wars and loved collectivist solutions to our country's problems. We don't have a battle between political parties. The collectivist Boomers voted in collective anarchists under the guise of the Republican Party, so there is no republican party. We have an overwhelming democratic majority in Congress and an administration which has a very low approval rating.

The Boomers have an overwhelming voter base in this country. This is notable because they as a group have the ultimate say in what gets voted into office and who gets voted out. This can either work in our favor or work against us. Unfortnately in the last decade this trend has worked against the younger generations. I'll elaborate.

For the years 1940-1994, inclusive, 202 million Americans were born; about 77% of all Americans now living were born after 1939. During the baby boomer years, 1946-1964 (inclusive), 75.8 million Americans were born. The ratio of males to females has stayed relatively constant. There were approximately 1.05 male births for every one female birth.

"Every 7 Seconds"

I believe it was Bill Geist who noted first (in 1997) in his book "The Big 5-Oh" that another boomer turns 50 every 7 seconds. Whew! Is that possible? Well, you don't have to be a math major to check it out. Let's look at 50 years ago - 1959 - when 4,245,000 boomers were born. Now, I suppose that some of them have not made it this far, so let's round it down to 4,000,000. (That's just my estimate, but it is close enough for my purposes here.) So, a bit more than 4,000,000 will turn 50 in 2009. Let's see how that breaks down:

per year: 4,000,000
per day (4.0 mil / 365): 10,958
per hour (10.6 k / 24): 456
per minute (456 / 60): 7.1


And 7.1 per minute amounts to one every 8.5 seconds.

http://www.bbhq.com/bomrstat.htm


Now let's evalueate this situation.

Back in the days when Boomers became young adults;
-A single earner household could afford a mortgage, a car and to raise a family and save money without a college degree.
-Young adults refused to live with the "squares" and moved out, choosing to live in cheap apartments with their own cars they could afford on the REAL WAGES then.

Since then;
-the cost of living skyrocketed.
-families are no longer cohesive.
-the majority of this country's poor consist of single mother households. (libertarians aka. Mises are misogynists, and this is the reason why I'm not a libertarian. Women should be encouraged to enter the workforce with competative skills, not receiving welfare)
-living standards went down because the muscle determining our economic policies don't come from scholastic economists who work for our country; they come from politicians who take bribes from bureaucrats who are only interested in short term gains and monopolizations for themselves via. cheating at the expense of the taxpayer.
-real wages went down due to Outsourcing and Offshoring.
-The Boomers were really the last group of middle class earners that could save and afford a legitimate mortgage. Therefore most of the Primary owners of Real Estate are Boomers. Many made up the speculative, flippers who took out ARM loans to purposely inflate the price of real estate. Therefore, the price of real estate was unaffordable to the masses with w legitimate mortgage on our REAL WAGES.
-nobody in the Boomer group has shown any disapproval with the bailouts, the fraud in the subprime crisis, generational theft, outsourcing, offshoring, the federal deficit, the Halliburton scandal, etc. Although they want to preach government control over everything. They have the voting power to make it possible.
-illegal immigration increased more than tenfold. Our fiscal budgets can't handle this, over 80 hospitals closed in California alone due to the high cost of illegal immigration.
-the bailouts/collapse of the subprime market demonstrates that the Boomer generation as a whole learned nothing from the S&L Crisis. The greatest financial scandal in the history of the world happened under the Boomer watch.
-Instead of using their political/voting/investing powers to work, the Boomers instead chose to allow their elected politicians to take taxpayer dollars to bailout the bad CEO's. The anger is nothing more than theatrics. They vote with their wallets. Many people in general are nieve on how financial engineering works. Without a job market, there's nobody to pay off a krappy ARM Mortgage to inflate demand and prices on a house.
REGRESSIVE TAXATION:
-During a bad economy when the banks are still refusing to lend money, during a nasty economic contraction the boomer elected politicians want to hinder personal finances, consumer spending power, savings (for investments) and business expenses by imposing a hefty tax called a Cap and Trade policy.
-How in the world do pot/hash/crack/opium smoking, coke/meth sniffing Boomers get the audacity to increase the drinking age and impose regressive taxation on smokers? Again, these policies are imposed by Boomer elected politicians!! They're not taxing the rich, they're punishing people for being born without a silver spoon.
GOVERNMENT FISCAL INCOMPETANCE
The government lost social security. We have to feel for the Boomers on this one. HOWEVER-this is exactly what the Boomers decided to do about it.
1. 401K's, IRA's and other various retirement accounts. That's what I specialize in. The Dot com was a hit but after vesters were bled dry, they decided to speculate in derivatives/real estate.
2. Instead of calling out the government for mismanaging THEIR money (like the Boomers have the power to do); they instead choose to bailout the bad banks and criminals; impose a stimulus and put our fiscal situation at the mercy of foreign entities (ie. CHINA).
3. Now the Boomers want people like Pelosi (who can't even count) to regulate their healthcare and their retirement pension accounts.

Here's a quote from WikiInvest about Generational theft,

Impact on Medicare and Social Security
Most immediately, the Boomers will begin to draw government benefits such as Social Security and Medicare. Both entitlement programs will be exceedingly costly. In 2006, Social Security cost U.S. taxpayers about 4.2% of GDP, or approximately $554 billion. This figure is expected to increase to 6.2% of GDP by 2030, and to continue rising.

Meanwhile, the potential long-term costs of Medicare are even more severe. Currently, Medicare costs U.S. taxpayers about $230 billion per year, or 3.1% of GDP. However, these figures are expected to rise dramatically over the next 20 years as more Boomers pass age 75. In fact, government analysts estimate that by 2018, Medicare will have surpassed Social Security in terms of its annual cost.

Given these figures, the Social Security and Medicare Boards of Trustees stated in their 2007 Annual Report that, “…currently projected long-run growth rates [for the programs] are not sustainable under current financing arrangements.” Translation: Either long-term-benefits must decrease, or taxes must increase if benefits are to continue at their current levels.

Dependence on Foreign Countries
This quandary poses several difficulties for the U.S. government and for taxpayers. If current budget deficit levels persist, the federal government will be forced to pay for Social Security and Medicare by issuing new debt in the form of U.S. Treasury bonds. While this may lend long-term support to the price of the U.S. dollar, it will also allow foreign buyers—mostly Chinese and Japanese—to exert greater control over long-term U.S. interest rates.

Such a situation could become precarious if foreign buyers perceive that Treasuries no longer represent the best investment for their export-driven foreign currency reserves. For example, if euro-denominated government bonds become more attractive on a long-term basis, foreign buyers may liquidate Treasuries in large numbers, in which case long-term U.S. interest rates would soar. The resulting impact on U.S. credit and real estate markets could be severe.

Labor Burden on Younger Workers
For taxpayers, the Boomers’ retirement means that younger workers will have to bear a much larger burden in order to support the burgeoning ranks of retirees. Currently, there are 3.3 U.S. workers to support each retiree, but by 2030, this number will fall to only two. Given the political clout that seniors have and are likely to retain in the future, an increase in payroll taxes to support the Boomers’ needs seems entirely plausible. Extrapolated over a 10 to 20-year period, such an increase could represent a significant drag on U.S. economic growth. While increases in per-worker productivity may offset some of this burden, it remains to be seen how the U.S. will deal with what is arguably one of the most difficult financial burdens it has ever faced.

The investment advice given regarding the Boomer population are as follows:

Carnival Cruise Lines (CCL) and Royal Caribbean Cruises (RCL) stand to benefit from an increase in senior traffic, as both derive a large percentage of their income from passengers over 55. Royal Caribbean in particular has more than doubled its market capitalization in the last five years, and may continue to benefit as more seniors gravitate toward warmer-weather vacations. Retirement means more time to one’s self, and for many Boomers, that means time to travel. This is the generation of Woodstock and Timothy Leary; they have an expansive worldview and enjoy extending their horizons.
Merck (MRK) and Pfizer (PFE) are pharmaceutical giants that will almost certainly benefit as seniors require more prescriptions and Medicare coverage is expanded. Advanced Medical Optics (EYE), which manufactures products for cataract surgery, laser vision correction, and contact lens care, stands to benefit as well.
Walgreen Company (WAG), Rite Aid (RAD), CVS (CVS) are retail drugstores where senior citizens purchase their drugs.
NBTY (NTY), Leiner Health Products, and Nature's Sunshine Products (NATR) are nutritional supplements manufacturers. As an increasing number of senior citizens consume more healthcare dollars, many of these elderly consumers will also consume more preventive medicines, including the dietary supplements.
AmerisourceBergen Corporation (Holding Co) (ABC), Cardinal Health (CAH), and McKesson (MCK) are wholesalers who distribute branded and generic drugs to pharmacies, where senior citizens purchase their drugs.
Affordable Residential Communities (ARC), which manages more than 350 senior living communities nationwide, has seen solid appreciation over the last five years as analysts anticipate strong growth in demand for senior housing.
Brookdale Senior Living (BKD) offers senior living facilities which cater to independent and assisted living seniors. They also have been selected to assist in many elderly housing expansion projects.
Merrill Lynch (MER), Charles Schwab (SCHW), Principal Financial Group (PFG), and MetLife (MET), all of which have invested substantial resources in developing their retirement services, will likely reap large rewards as retirement assets under management grow over the next decade. For many Boomers, retirement will require specialized financial planning as life expectancies expand and estate planning becomes more complex.
BlackRock (BLK), Goldman Sachs Group (GS), and Lehman Brothers Fin SA (LEH) all manage pension funds for large institutional investors and will likely benefit as companies are forced to commit more capital toward funding their pension obligations.
Stryker (SYK) offers surgical drills, saws, rasps and even cement mixers. Orthopaedic Implants segment manufactures replacement joints, spinal rods, screws, as well as many other implants. Stryker also offers rehabilitation services in over 31 states. Zimmer Holdings (ZMH) offers similar services.
Stericycle collects and disposes of medical waste. An aging population uses more medical services than a younger population and consequently produces more medical waste for companies like Stericycle.

And to end this blog, it seems like the market anymore is the thieving of not just money, but debt and interest. The World Factbook noted that the net worth of America is around $50 trillion dollars, take or give $20 trillion for market/dollar value fluctuations. The projected burden on our country for Boomer Social Security, Medicare and Medicaid is $50 trillion. That's before the stimulus, the omnibus, the current federal deficit, the probably need for military defense, welfare, interest payables on our treasuries and many other administrative expenses.

Just food for thought. We need to get our Boomers aware of their power in our country at this time. I pray that they are on our side in fixing our country's problems instead of robbing future generations of opportunities and a quality of life they might deserve.