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Get Ready For ANOTHER Depression

August 24, 2009

Obama’s bail-out of trillions to bankers kept deflation away, and for the moment kept the economy from tanking into oblivion. I’ll give him that. I can understand why he did it.  If he wouldn’t have taken any action, things would have been bad.  To them, it seemed the lesser of two evils to bail out the bankers.  Ok.  I knew it was evil.  Didn’t like it.  Didn’t agree with it.  But, I sat back and said, “I can see the reasons, as long as he regulates the markets after he bails these guys out.”  If the administration wouldn’t have taken any action, our debt based economy would’ve went through a really nasty correction.  In my opinion, that correction was very much needed.  This bubble needs to be further DEFLATED and rebuilt on a sound foundation, not REINFLATED, but whatever.

Instead of letting the people who were financially ignorant reap the fruit of their own stupidity (the bankers, and those who buried themselves too deep in debt), the burden was instead heaped mostly onto the responsible middle-class.  Their savings and retirements are being inflated away with printed money to save the economy and we’re all going to be suffering from rising costs for everything.  Taxes are being raised on those who make more than $250k.  So basically the bail-out amounted to handing sane people’s hard work and money to bankers.   The corrupt bankers ran off with their spoils, and laughed all the way to their Swiss banks.   And the ignorant have mostly been able to stay in homes they can’t afford, and their big screen TVs and furniture have not been repossessed, yet.

And now the government is trying to get people to buy a new car they don’t need, with cash for clunkers, to “stimulate” the economy.  More debt.  Debt financed prosperity.  Printed money funding the “stimulus”.  Print money, hand it in huge wads to bankers, and then have them rehand it to us again in more credit card loans.  They want us to go out and hit the malls, and get back out there, shopping.

That’s the worst possible advice to give Americans.    That’s not what we need.  Not one bit.  We need to CUT BACK on spending.  We need pay off our debts, and save some money.

This will inevitably lead to some businesses losing some money.  So be it.  Retail sales will continue to decline, as they have been recently.  They have to.  Retails stores were given an artificial boom when we all gorged in our debt financed mania.  Now we no longer have the money.  If that leads to some short-term unemployment, so be it.  In the long term, we can’t live like this.

These policies benefit the government, and big business.  They don’t benefit us.  Businesses want to sustain their prior profits, even if they’re unsustainable and completely debt driven.  They can’t bear the idea of having to take a profit cut, but they sell these policies to us with the threat that, “If we don’t make our huge profits, we’ll have to cut some workers, leading to unemployment.  You wouldn’t want that, would you?”

But what do they expect the government to do?  Deny that business cycles exist?  Deny that debt financed booms can only last for a season?  My God, how much greed is there?  Isn’t making huge profits during the boom enough?

I think a lot of people in the government actually believe these policies are helping avert unemployment, but I’m sure a lot of them know a certain unspoken truth:  the government plays along with this ploy because they want to print up more and more money to alleviate their massive debts, which they’ve run up with their war machine in the middle east, and other programs.

They ran up a huge bill with these wars, and they find it quite convenient to print up huge wads of money, which erodes away the debts they’ve ran up.  It’s a win win for them and their buddies.  Big business profits, banking, and big government military spending.  The inseparable trio.

As for the middle class, all of this will only bury us further and further in debt, costs will rise, taxes will increase with no real benefit, savings and retirements will erode away, and the purchasing power of our wages will continue to decline year after year.

None of these policies are real stimulus.  They’re just an erosion of one person’s wealth so it can be squandered by others and further bury them in debt.  It’s selling the American consumer a heroine syringe and a set of shackles.  Dope them up one last time (new car loan, credit card extension), then lock them to the wall.   Sane and responsible Americans are forced to purchase the syringes and watch their neighbors shoot up.  The bankers (drug dealers) run off with their huge lending-scheme profits.  Then they’ll fasten their debt-laden customers (addicts) in financial shackles (addiction) and continue to earn themselves a nice steady income stream from interest payments.

Instead of everyone learning from their mistakes, cutting back on spending, and learning to save and be responsible, people are continuing their over-consumptive lifestyle.  They’re going right back to what they were doing, and continuing to do all the things that drove us to this mess to begin with.

If we try to bail this system out we’re only diving headfirst into a black hole.

The first bail-out didn’t have to be passed so quickly.  There was no reason whatsoever for that money to be handed to them with no strings attached.  That’s just stupidity, and evil.

Giving a chance for someone to change is what we should offer, but with bankers I wouldn’t hold my breath.  Bankers have never been honest.  History tells us that.  Making the public finance credit extensions…  That’s like giving their neighbors drug money so they can shoot up one last time.   If these banks, and the public won’t change, then they should have never received any assistance to begin with.  I’m not sure how you’d change the American public, but we could have at least regulated the financial industry.

The main problem is the Federal Reserve’s loose credit policies, and Congress’ removal of regulation over the past years.  That’s the REAL  problem.  Congress gutted the Glass-Steagall Act which was the big financial regulatory package passed after the Great Depression.  Then much worse legislation was pushed through – the Commodity Futures Modernization Act.  This basically gives financial institutions the ability to self-regulate themselves, with little to no oversight at all.   And the Fed has pumped up this huge bubble far beyond what would’ve ever taken course naturally.  And we all know the result of this wonderful combination.

But here’s the big news.  Everyone, get ready for round 2! I told you months ago this would happen, but now it’s finally being reported… It’s confirmed… The banks are back to the same practices they were before. They’re packing up their bad debt into complicated investment packages, and selling them off with high ratings.

Wall Street may have discovered a way out from under the bad debt and risky mortgages that have clogged the financial markets. The would-be solution probably sounds familiar: It’s a lot like what got banks in trouble in the first place.

In recent months investment banks have been repackaging old mortgage securities and offering to sell them as new products, a plan that’s nearly identical to the complicated investment packages at the heart of the market’s collapse.

“There is a little bit of deja vu in this,” said Arizona State University economics professor Herbert Kaufman.

Read the rest for yourself:
http://www.huffingtonpost.com/2009/08/24/up-to-old-tricks-wall-str_n_267066.html

And after this, the article lets a bunch of worthless economists give their view on the matter.  These complicated financial packages are nothing but bad news.  Risk and financial speculation will save us?  We as Americans have really sunk to a new low.

This reminds me of a drunkard who has wasted his son’s college funds on wild living, drugs, and alcohol.  He has a small wad of money left, so he goes on the river boat, and tells his son, “Don’t worry!  I’m going to make it right.  I’m going to win big.  I’ll get your college money back.”  But we all know what will soon happen.  In a few hours he’ll lose it all, and come back with nothing.

I’m going to tell the world something no one wants to hear.  You all ready?  Every successful economy in world history, and every superpower the world has ever known are all PRODUCERS.  They produce things.  They keep some money saved away for rough times, and operate in surpluses.  Excessive consumption, and not enough production is always the downfall of every nation.  ALWAYS.  Without exception.

There’s no magic wand for the Fed to wave.  There’s no fancy  government policy for Obama to act which can save stupidity.  Deficits, debts, higher and higher taxation, printing up money, rising inflation, rising unemployment…   These are all signs that the economic policies being executed are no good.  Every red flag is firing off saying, “Stop!  Stop!  Stop!”

Go on.  Keep preaching printed money.  Keep preaching government spending cures all.  Keep preaching deficits don’t matter.  Keep on doing your thing.   But don’t come begging to me for money when none of it works.  And it won’t.  I’ll be in my study working on my Physics studies.

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