Quote of the day--on our current American socio-economic system

From a commencement speeck by Ben S. Bernanke, Economist and Fed Chairman at Princeton University this Spring:

“A meritocracy is a system in which the people who are the luckiest in their health and genetic endowment; luckiest in terms of family support, encouragement and, probably, income; luckiest in their educational and career opportunities; and luckiest in so many other ways difficult to enumerate — these are the folks who reap the largest rewards.

 

The only way for even a putative meritocracy to hope to pass ethical muster, to be considered fair, is if those who are the luckiest in all of those respects also have the greatest responsibility to work hard, to contribute to the betterment of the world and to share their luck with others.”       

The one article on our economy virtually all adult Americans should read

Matt Taibbi, writing in Rolling Stone magazine in his article The Mad Science of the National Debt

"What a crazy time we live in. 

Domestic politics have devolved into an ongoing hostage crisis in which the opposition party threatens to blow up the financial universe every six months or so, and the leading political minds in the country can't figure out how to keep this from being a permanent feature of our budgetary process. Meanwhile, global monetary policy is drifting in the direction of semipermanent stimulus, and no one has any idea how it all ends. It's two different runaway-freight-train action movies going on at the same time. God help us."

While Rome burns, Congress fiddles

Americans, nationwide, being busy with trying to keep our jobs and homes and families and lives intact are, mostly, going on with our lives, of course but in the meantime, our own US Congress declared an 8 week vacation for itself and vacated Washington.

Wonderful.

Forget that the nation is facing a "fiscal cliff" that will hit us January 1--of their making--if they don't come up with a budget. Forget that.

They're going to come back right after the November election and have precious little time to do the rather huge job of working together and compromising to make that budget agreement so huge cuts aren't imposed.

In the meantime, there's little media coverage, really.

This, thankfully, broke today:


If Congress Goes Over The Fiscal Cliff, Here's How You'll Get Hurt At Tax Time (Link at bottom).

From the article:

If Congressional gridlock sends the U.S. government tumbling over the fiscal cliff later this year, Americans could face an average tax hike of almost $3,500 in 2013. Nearly 9 of every 10 households would pay higher taxes. Every income group would see their taxes rise by at least 3.5 percent, but high-income households would suffer the biggest hit by far, according to a new Tax Policy Center analysis.

And that's just a small part of what will happen if Congress doesn't get back to work.

From Federal Reserve Chairman Ben Bernanke, as reported from MISH'S Global Economic
Trend Analysis Blog:

"...the Congress and the Administration will soon have to address the so-called fiscal cliff, a combination of sharply higher taxes and reduced spending that is set to happen at the beginning of the year. According to the Congressional Budget Office and virtually all other experts, if that were allowed to occur, it would likely throw the economy back into recession. The Congress and the Administration will also have to raise the debt ceiling to prevent the Treasury from defaulting on its obligations, an outcome that would have extremely negative consequences for the country for years to come. Achieving these fiscal goals would be even more difficult if monetary policy were not helping support the economic recovery."

So, Congress, get busy.

Please get back to work, get busy and start compromising.

Links: http://www.forbes.com/sites/beltway/2012/10/01/if-congress-goes-over-the-fiscal-cliff-heres-how-youll-get-hurt-at-tax-time/

http://globaleconomicanalysis.blogspot.com/2012/10/bernanke-begs-congress-to-address.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29


http://www.npr.org/blogs/thetwo-way/2012/10/01/162088383/report-if-congress-ignores-fiscal-cliff-most-americans-will-pay-more-taxes

Ladies and gentlemen, your United States government

500 billion dollars and they don't know what central banks it went to. One half trillion dollars.

And you're angry at THIS president and his administration?

I don't care who you are, whether you're a Conservative, a Republican, an independent, Tea Party member, Libertarian, whomever, if you're in any way angry at this president and his administration for what you see as going into "Socialism" and "big government" and a social-welfare state, honey, you have another think coming.

Yes, come with me now as we once again look back on that last administration and what they and the Fed did for big business, specifically the big banks in this country and around the world.  Let's put this current administration into perspective.

That last administration, via Mr. Bernanke and now former Treasury Secretary Hank Paulson did with our government--and our money.

They gave the following low-interest loans to the following companies, and in these amounts:

Goldman Sachs received nearly $600 billion; 

Morgan Stanley received nearly $2 trillion; 

Citigroup received $1.8 trillion; 

Bear Stearns, received nearly $1 trillion, 

Merrill Lynch, received some $1.5 trillion in short term loans from the Fed.

From Senator Bernie Sanders (Independent, VT) today at The Huffington Post:

We also learned that the Fed's multi-trillion bailout was not limited to Wall Street and big banks, but that some of the largest corporations in this country also received a very substantial bailout. Among those are General Electric, McDonald's, Caterpillar, Harley Davidson, Toyota and Verizon.

Perhaps most surprising is the huge sum that went to bail out foreign private banks and corporations including two European megabanks -- Deutsche Bank and Credit Suisse -- which were the largest beneficiaries of the Fed's purchase of mortgage-backed securities.

Deutsche Bank, a German lender, sold the Fed more than $290 billion worth of mortgage securities. Credit Suisse, a Swiss bank, sold the Fed more than $287 billion in mortgage bonds.

Senator Sanders asks a very pertinent question:  Has the Federal Reserve of the United States become the central bank of the world?

Mind you, that last administration kept all this quiet and totally out of the public's knowledge until only recently because Sen. Sanders had to put into law a provision, asking for a breakdown of just what exactly was given to whom but for all the complainers and haters out there, of this administration, I ask you--where was your outrage back when the ultra-white and very-privileged George W. Bush and Co. were spending like drunken sailors and starting pre-emptive and illegal wars, all in our name?

If you're going to be raising hell about something, you ought to be raising it about the guy who gave over the candy store to the rich fatcats, not the guy who is, now, trying to stand up for the everybody else in the country and not the wealthiest top tier.

You knuckleheads.

Link to original post:  http://www.huffingtonpost.com/rep-bernie-sanders/a-real-jaw-dropper-at-the_b_791091.html

Are we, as a country, never going to allow a downturn in our economy again?

That's the question.

Are we never going to allow a downturn in our American economy again, no matter the cost?

There is word out right now, on the wires, that both President Bush and Federal Reserve Chairman Ben Bernanke are both quoted, saying they'd be for another "stimulus package" for the American people, to push forward the economy.
(Link to story here:
http://news.yahoo.com/s/ap/20081020/ap_on_bi_ge/financial_meltdown)

Holy cow.

You gotta be kidding me.

Let's get this straight.

We already had the largest debt, ever, in the history of the country, going into this year, thanks to this President and his direction (I can't call it leadership).

Then the nation's banks start tanking and we come up with, oh, what was it? 700 billion dollars to bail out the banks (that actually may end up already being a trillion dollars or thereabouts).

That boosted our debt even larger and deeper by a fewfold.

And now, like they're running for office themselves, George and Ben want to spit out more money to us so we can go spending.

They want to make it at least as large as the last boost we gave ourselves so it would be in the range of 168 million dollars.

But wait. There's more.

Some economists are saying it should be twice that size.

Talk about short-term, shortsighted vision.

The one who started this talk was Barack Obama and he's running for office.

Now, I'm an Obama supporter but this part of his platform never got my support. I thought it was just panerding to win votes. It is short-sighted and would only have a very brief benefit to the economy and country.

Then House Speaker Nancy Pelosi chimed in, saying she'd support it. I thought that was purely to help her friend and fellow Democrat Obama. I thought it would go away.

Now this.

So it gets me back to my original question.

Do we not have any patience or allowance any more for a downturn in the economy?

Do we not realize that there are business cycles that have to be gone through?

You know, the old "Chauncey Gardner" statements from the movie "Being There" about there needing to be a dying season, in order to create the space for new growth.

I don't think we get it.

We all know we'll have to borrow--yes, borrow--this money, only to loan it back to ourselves.

And we'll probably have to borrow it from the Chinese, of whom we have no fondness, other than their propping up our economy.


Am I the only one who thinks this is blatantly stupid?

Good question

From Interest Rate Roundup Blog by Mike Larson, yesterday, as Fed Chairman Bernanke spoke:

"If loaning Treasuries and cash against hundreds of billions of dollars in lousy commercial and residential mortgage securities and other paper hasn't worked ... if agreeing to buy an unlimited amount of commercial paper hasn't done much ... if lending tens of billion of dollars to AIG hasn't stopped the market from worrying about the health of other insurers ... and if cutting the funds rate ALREADY -- from 5.25% to 2% -- hasn't worked, you have to wonder what cutting the funds rate even further toward zero would accomplish."

Read the full entry here:

http://interestrateroundup.blogspot.com/2008/10/bernanke-speech-focuses-on-economic.html

What, exactly, is going to turn things around, if anything? What will calm the world's markets?

Who knows? All we can do is stay tuned--and hope.
___________________________________________________
To end today, a riddle:

What do the international economies and Senator John McCain have in common?

Answer:

They're both tanking. (One's bad.)