Where does the time go? (And the tax money?)
According to Stockman the bubble ends today.
What is explained here by a former vice president of the Federal Reserve Bank of Dallas is what we have said now for years. The Fed’s actions post-Crash have exacerbated wealth inequality and generally skewed the financial system even more toward the already wealthy. If one had assets pre-2008 chances are one has done reasonably well over the last 6 years or so. For those without assets pre-2008 it’s been a whole different game.
Yeah, I mean even a stopped clock is right 2 times a day, but the Fed doesn’t seem to be right – ever.
As we’ve said before, we live in fascinating economic times. (Not always the most fun though.)
This should be interesting. It is widely thought that the Federal Reserve will move to raise rates a bit this month. Meanwhile Canada, our largest trading partner appears to be moving in the opposite direction. (Along with Europe.)
But before you hop the next tramp steamer to Copenhagen consider whether interest rates at -.75% and 60% increases (over 3 years) in housing prices are indicative of a healthy economy. But hey maybe you want to kaste terningerne. There are worse places to be stuck in a housing bubble collapse.
As we’ve said China is driving things economically right now. The Federal Reserve doesn’t want to say it. It wants everyone to think that though our boat is leaking it is unlikely to leak as much as the rest of the the world’s economic “boats.” And right now that may be true. But we are still taking on water. The Great Economic Experiment post 2008 is failing, as many of the more market oriented have long predicted, and now the American central bank has very few options.
Thanks for the tax dollars suckers!
GE is one of the great American crony companies. Jeff Immelt, once head of Obama’s “jobs council” and current CEO of General Electric, has played the crony game extremely well. First in securing emergency financing courtesy of the American taxpayers because it screwed up royally. And then he was able to exploit various Obama era boondoggles which funneled money GE’s way on an ongoing basis. (Think wind turbines etc.)
Now Mr. Immelt is stamping his feet because it looks like GE may permanently lose the the sweetheart deals it has at the taxpayer underwritten Export Bank.
Things are getting wacky in The Ultimate Crony Capitalist State.
We are pretty much obliged to run this one. Of course it has popped. It’s been deflating for months. Really longer than that though the Shanghai Stock Exchange didn’t reflect it for a while. And it’s not like the Chinese pop is over, it’s got plenty more to go. Lots of “fun” is still ahead of us.
People who care about the world economy and world politics should look closely at China. It is a classic case of “
Actually not totally true.
China is, as we say, The Ultimate Crony Capitalist State. Business and government are an amalgam. Long a crony paradise where a premium was placed on compliance and government favor and not on real pricing.
It looks like reality is finally starting to hit however.
About 6 months ago I was talking to a China energy markets analyst and he explained the complexities of implementing a carbon tax regime in the country to me.
There was a time when good “liberals” in the United States railed against military spending. Granted it wasn’t because they wanted to reduce the size of government or to cut taxes, but because they wanted more money for social programs.
But that general disposition seems to have disappeared. Now, many big welfare state people are also big warfare state people. Military spending you see is a form of “stimulus.” Bombs, guns,whatever. Just get that money into the system.
Cheap money feels good initially. Nearly everyone is happy when central banks open the floodgates (or helicopter doors) and cash spills into the economy. Hooray! Money! Why is it here now instead of yesterday? Who knows? Get while the getting’s good. Look, the stock market’s rising – whoopee! Monetary tequila. Bottoms up!
But the morning, the aching, head thumping morning always comes after such a binge.
“All I know is Ben Bernanke was tending bar. Goldman Sachs was buying me drinks.
There is some debate around here as to the world’s most crony company. There are many candidates but consistently in the top 5 or so is Goldman Sachs, Government Sachs.
Few companies have exploited the taxpayer and political connections to the extent Goldman has. Truly it is a company built fundamentally on cronyism.
In 2008 Goldman Sachs was leveraged more than 100 to 1 on its assets. (That is probably a conservative estimate.) When the economic tide turned it was fully exposed.