Busted: Bankers and The Global Economy

January 27, 2009

U.S. Unemployment Reality

John Williams, founder of Shadow Government Statistics, calculates that the jobless rate is a full 10 percent higher than the government is reporting.

Unemployment: Jiggering with Accounting

Unemployment: The Skinny about Obama’s Stimulus


Obama: When is a Stimulus not a Stimulus?

barack-and-energyWhen is a U.S. government stimulus not a stimulus? The latest rendition of the $825 billion economic stimulus plan won’t be spent very quickly for what President Obama has specified to the American public. What do I mean? The Congressional Business Office released data that suggests that it will take longer than expected to boost the economy. Why? The government wouldn’t be able to spend at least one-fourth of a proposed $825 billion economic stimulus plan until after 2010. Even then, only about 12% of the stimulus is actually being used for stimulus.

According to the preliminary report, the government would spend about $26 billion of the money this year and $110 billion in 2010. $103 billion would be spent in 2011, $53 billion would be spent in 2012 and $63 billion between 2013 and 2019. That is stretching the total stimulus plan for a decade.

Wouldn’t you like to see the report for yourself? Now that the details have seen the light of scrutiny, those wonderful PDF files that American taxpayers have paid for have been rendered unavailable in a similar fashion to the EESA budget details in 2008.

The Obama administration said $3 of every $4 in the package should be spent within 18 months to have maximum impact on jobs and taxpayers.

• Less than $5 billion of the $30 billion set aside for highway spending would be spent within the next two years, the CBO said.

• Only $26 billion out of $274 billion in infrastructure spending would be delivered into the economy by the Sept. 30 end of the budget year, just 7 percent.

• Just one in seven dollars of a huge $18.5 billion investment in energy efficiency and renewable energy programs would be spent within a year and a half.

• About $907 million of a $6 billion plan to expand broadband access in rural and other under-served areas would be spent by 2011.

• Just one-fourth of clean drinking water projects can be completed by October of next year.

• $275 billion worth of tax cuts to 95 percent of filers and a huge infusion of help for state governments is to be distributed into the economy on an uncertain time line.

What is the stimulus really for?

• The House stimulus bill includes an extra $87 billion in federal aid to state Medicaid programs.

• It allots some $120 billion to boost state and city education programs.

• There’s $4 billion for state and local anti-crime initiatives in the legislation, not to mention $30-plus billion for highways and other infrastructure projects.

• $6.9 billion to help state and local governments make investments that make them more energy efficient and reduce carbon emissions.

• $87 billion to states, increasing through the end of FY 2010 the share of Medicaid costs the Federal government reimburses all states by 4.8 percent, with extra relief tied to rates of unemployment.

• $120 billion to states and school districts to stabilize budgets and prevent tax increases and deep cuts to critical education programs.

Overall, about one-quarter of the entire $825 billion recovery package would be devoted to activities crucial to governors, mayors, and local school boards. Out of 157 items, 117 have nothing to do with job production or employment/economic stimulus per Representative Mark Kirk.

The bottom line is that the latest stimulus plan is not an economic stimulus plan at all, but rather a bailout for government entities and federal programs. Most of the stimulus money that has been planned to be spent this year is not for economic stimulus at all. The nation needs more economic “energy” put in the right places if we are going to spend the money at all. ~ E. Manning

January 8, 2009

How Will Obama Create a Wall Street Miracle?

obama-discusses-stimulus-2009Throughout America’s history, there have been some years that simply rolled into the next without much notice or fanfare. Then there are the years that come along once in a generation – the kind that mark a clean break from a troubled past, and set a new course for our nation. So started Barack Obama’s “stimulus speech” today. Perhaps Obama’s opening statement is somewhat understated, but certainly well placed in the realm of psychology.

The emphasis of his speech was largely inspirational in nature, but held a few small pearls where ideas are concerned. One area is of special concern:

“…it means reforming a weak and outdated regulatory system so that we can better withstand financial shocks and better protect consumers, investors, and businesses from the reckless greed and risk-taking that must never endanger our prosperity again. No longer can we allow Wall Street wrongdoers to slip through regulatory cracks. No longer can we allow special interests to put their thumbs on the economic scales. No longer can we allow the unscrupulous lending and borrowing that leads only to destructive cycles of bubble and bust.”

obama-big-brotherSafety in America is rarely a hard sell for a people obsessed with their own security. How is President Obama going to accomplish this miracle of financial national health that not a single man in existence has dared to attempt to act on? How will America create the miracle of coveted and elusive financial transparency without creating a “big brother” situation in the realm of business, privacy and the American Dream? How can a system be created that doesn’t limit freedom while making runaway theft and abuse a topic of the past on Wall Street and in financial circles. Much like Bush’s “war on terror” seemed like a good idea when the twin towers fell, a dramatic change in course including an invasion of privacy where Corporate America and Wall Street are concerned could be a slippery slope.

Unfortunately, the U.S. Federal Government is not a bastion of transparency in any regard, which leaves many Americans pausing to consider: “What will I have to give up to keep America safe from reckless greed and risk-taking that must never endanger prosperity again.” Is America preparing itself for another “war on terror” in the name of financial literacy? What new technology and control system will we use to create this mandated financial transparency or is this a resolution that will fall neatly into the hands of global finance ministers?

Nancy Pelosi and the elected lawmakers are about to make more bailout history in the hope of abating the tide of recession with the intention of avoiding economic depression. There will be no Congressional vacation without a legislative solution for bettering the economy. So far, throwing money and liquidity a la Milton Friedman has done little to help the situation. In desperation, the Feds are looking to avoid the specter of an 25% American unemployment rate and the resulting unpopularity, misery and perhaps rebellion against established authority as millions bite the economic dust in a nation ill equipped to deal with any blight. What America has now is nothing less than political panic.

August 29, 2008

GDP Up: Why the Panic?

Bernanke and a much needed visit.

Bernanke and a much needed visit...

The economy performed far better than expected in the Spring (second quarter), reportedly led by exports and increased government spending, notably the stimulus program. Still, many economists like Wachovia’s Mark Vitner are talking up recession. Figures are continually revised up and down as more information comes in. “To many, it still feels like a recession.” Indeed it does!

Because of the weak dollar, nations have been buying more U.S. goods resulting in a foreign trade bonanza for the U.S. despite economic weakness on the home front. Consumer spending was up as well, reportedly sponsored by the $91 billion federal government fiscal stimulus program. Uncle Sam is still sitting on the remaining third of money allocated for the stimulus. What Congress will do with the surplus is anyone’s guess. That stimulus is now part of the burgeoning national debt that is approaching $10 trillion. The presidential candidates report that they are unconcerned with national debt as they propose new fiscal budget-busters.



The reality is still pessimistic as everyone realizes that all isn’t well. In fact, if you read enough news, you might get confused over the sundry viewpoints expressed. Still, nothing has changed except that when quarterly figures are updated, sometimes the nation comes out ahead in the statistics department. In the meantime, a weak dollar will help multinationals to consume more U.S. products or purchase from more U.S. suppliers. The world of business simply isn’t sharing that monetary goodness with their employees as they prepare for the reportedly bleak future ahead, continuing to fulfill the prophecy of recession. The labor market is still in decline, perpetuated in part by the continued offshoring of U.S. jobs to foreign markets. ~ E. Manning

July 17, 2008

U.S. Fed Discusses the Real Economy

Recently, the Fed discussed the housing market and economic slump in its’ latest open meeting. Currently, the housing market is one of the single largest factors in the U.S. economic decline. According to the Fed, the outlook for the housing market remained bleak, with falling prices, slow sales, high inventories of unsold homes, and further declines in construction activity over coming months.

Despite level borrowing from the Fed, mortgage rates have been increased and foreclosures continue to rise in the United States. Falling wealth and real income, tightening credit conditions, rising energy prices, and sharply declining consumer sentiment were seen as likely to restrain consumer spending later this year, particularly after the effects of the fiscal stimulus trail off.

The economic stimulus as dispensed (more…)

June 10, 2008

What are the Feds Doing with Stimulus Money?

President Bush signed the Economic Stimulus Act of 2008 back on February 13, calling his stimulus idea a “booster shot” for the American economy. At the signing ceremony, Bush stated, “The bill I’m signing today is large enough to have an impact, amounting to more than $152 billion this year, or about 1 percent of the GDP (gross domestic product).”

At that time, the government mandated that checks be issued to qualified citizens through May. The process has dragged on through June. Some Americans have not received their promised stimulus payments through the Internal Revenue Service.

Barack Obama is circling the country in a two-week campaign. He is proposing that lawmakers should inject another $50 billion immediately into the sluggish U.S. economy. Mr. Obama noted the largest monthly increase in the unemployment rate in over 20 years. He intends to use his position in the Senate to generate a movement for “another round of fiscal stimulus, an immediate $50 billion to help those who’ve been hit hardest by this economic downturn.”

Mr. Obama supports the expansion and extension of unemployment benefits, as well as a second round of tax rebate checks. “Relief can’t wait until the next president takes office.”

Federal unemployment benefits for people out of work are usually limited to 26 weeks. A movement of Democrats wants to add another 13 weeks plus an additional 13 weeks in states with unemployment of 6% or more. President Bush has previously been against extending unemployment benefits, preferring to bail out imprudent banks and mortgagers.

On June 6, the Treasury Department reported that it has sent out nearly 67 million in stimulus payments worth approximately $57 billion. Now the important question comes to mind. The stimulus package was advertised as a $152 billion stimulus. Where is the remaining $95 billion stipulated by the first stimulus plan?

Now, we are talking about a new stimulus plan as if the first stimulus plan is complete. Where did the money go? What is Washington up to? Is the stimulus a straw dog of sorts? Has economic stimulus become mere hype?

Comments? Make your comments here!

March 16, 2008

Bush Says Economy in Rough Patch

Filed under: federal reserve, money — Tags: , , , , , , — digitaleconomy @ 12:00 am

It is a “no-brainer”, but sooner or later, our venerable President Bush had to hint at what he is really facing in the economy. He spoke his mind on March 14 as Bear Stearns was dealing with overcoming the terror of eminent failure. President Bush acknowledged that the economy was in “a rough patch” but that acting too aggressively could have “far-reaching and unintended consequences.” The “acting too aggressively” pearl-of-wisdom originates from the Federal Reserve. The “acting too aggressively” quote has been taken out of context so much, it has become the watch word of the season. President Bush has basically designed a double excuse. Too little action and the U.S. is in trouble. Too much action and the U.S. has far-reaching and unintended consequences which is also trouble. Could Mr. Bush’s $170 billion economic stimulus plan using all the available funding credit available when the stimulus plan was designed actually work? “I believe we are a resilient economy,” he said.

unclesam.jpgBased on recent Federal Reserve action and upcoming expected failures, Uncle Sam is automatically becoming his own banker as monetary failure in banking and mortgage finance is covered by the Fed and the U.S. taxpayer, creating an ever-increasing national debt. The situation is so tumultuous that the national debt seems to be the last thing anyone would think of.

Bush finished his remarks by stressing the importance of leaving U.S. markets open to overseas trade and capital, saying that not doing so would harm the economic future of the country. “It is dangerous for a country to be isolationist and protectionist,” Bush said.

It would seem that as long as trade deficits don’t continue to cost U.S. taxpayers money, leaving trade open would be the thing to do.

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