Almost TWENTY yrs ago (in 2006), I predicted we were about to go into another Depression. I now call this DEPRESSION 2.0 The proposals I've developed are the ONLY way to solve problems that now face the USA.
CLICK on "START YOUR JOURNEY HERE" TO your top right!
Just like the "Great War" EVENTUALLY became known as "World War I", ONLY during the Second World War, I have now started to call this the SECOND Great Depression for this reason. I call this "DEPRESSION 2.0"
I am so upset with Brian Lehrer in his broadcast today (look at the segment HERE). Forget about the fact that I waited patiently on hold for over 38 minutes before he chose to not go to any listeners.
His question? How will we know when we are on the road to recovery.
Let's just say I was underwhelmed. At one point Dean Baker told Brian that the recession would stop this year(unemployment would take to the end of the year to level off...).
Of course, in his scenario, he presumes that everything on wall street will be 100% rosy.
This kills me.
3 years ago I started this blog because I predicted this economic crisis. 2 years ago I started coming up with ideas to prevent and minimize the problems with this 'depression 2.0'. Since last year, I have been looking for an audience (I have a life, I can't post this everywhere...)
And among others, I forward posts from this blog to people at my home NPR station, WNYC in NY.
Where the response to my posts have been less then stellar. Either I am 'automagically' moved to their spam box, or the fact that I have no professional background in economics disqualify me from having valid opinions on this subject.
But the fact remains.
My predictions have been validated (even by real economists, and even Presidents.) My predictions for saving the nation (based on the original 'new-deal') will change and improve our entire country. My (personal) batting average for 'long term prognosticating' (or being a 'visionary').. is pretty good (see here on the blog).
So why am I still upset?
Even today, these so called experts keep feeding us lies. Everything will be OK. The economy will recover immediately.
I wish I could say I was just paranoid. It's more than that. You'll see in 6 months, that the consumer debt made into CDO's (see here: ) are going to cause VERY very bad pain.
I've said this before (here), and will continue to keep discussing this. (because it's my blog!)
We need an ABSOLUTE ban on all financial objects that are bundled (like CDO's) to OTHER objects.
Example:
We need to ban CDO's that are/were based on sub-prime mortgages.
We need to ban CDO's that are/were based on consumer based products like:
Credit Card debt.
Consumer loans (car and other loans)
Education (college/student) loans.
Review of the 6 top reasons we need to outlaw Collateralized debt obligations are as follows:
In the old days, when the Bailey Building & Loan Association made a loan, they DIDN'T try and sell it. They KEPT the loan ON their books, and the neighbor who had the loan or mortgage payed them DIRECTLY. They didn't have to have ANOTHER company SERVICE the loan.
SELLING the mortgage (debt) does NOT make more money available for the bank. This is not real life. In real life, (today) NO Loans are being made, because banks are now what I call "chicken-S*it
CDO's are toxic. Attempting to take the risk from a loan, and apportion it to 100 different investors is nice. However, too little too late. I repeat, CDO's are toxic, and will NEVER be a worthwhile asset to ANY financial institution EVER again. I will also predict that ANY bank that ever purchases CDOs from ANY institution will need to have the brains of its board of directors scanned for metal from bullet fragments.
The days of "Greed Season" are over for Wall Street. Wall Street Bonuses got inflated because some 'genius' figured out how to "SCAM" the market, creating (for his company, and himself {his bonus}) a WIN-WIN scenario, where the ONLY loser (today) is US, the taxpayer.
The most important reason to ban CDO's? We now OWN the banks. We now need to EXERT FINANCIAL CONTROLS that will bring the market place BACK to a safer time, like when the Bailey Building & Loan Association made loans to their community.
We must ensure that the BANKS are RE-REGULATED. the Glass-Stengal repeal of 1999 and other similar "SLIME" last minute financial regulations MUST be undone.
We must also ensure the dirty "STINKY" political fireball launched by (now former) Senator Phil Gramm, in the last minutes of his 'duty' in the senate is FINALLY undone.
Again to review: *No new CDO's. *Existing CDO's must be settled NOW, not in 25 years. *We must ensure that these large companies (like American Express, Citicorp, JPMorgan/Chase are ALL broken up into smaller divisions, that (heaven forbid!! might even COMPETE against each other. *We need to re-teach banks that they will loan people money, and get property in return, that they can hold (or resell to another bank). They cannot make illogical and illliquid theoretical property from something that doesnt exist.
put $0.07 down, and the government will put 7 cents in and LOAN you 85 cents to buy ONE dollar of toxic assets.
You share the profits/losses (up to 15%) with the government.
so you put 7 cents in, you COULD lose another 15 cents =22.5cents lost.
How is this anything but PAYING the banks for poor work??
This year's Nobel Laureate (Paul Krugman of the NY Times) agrees that this is NOT a Good idea.
Also:
I do NOT think that we (as a nation) are getting better.
The recent stock drop (DOW)from 7500 to 6500 came 15 months before I predict the bottom of the market will come.
Since the Dow has already dipped to 6500, I think the new bottom will be perhaps 4750. Still around june 30th of 2010.
I STILL say that we are in for another major financial crisis, that of the OTHER collateralized debt obligations (financial obligations based on aggregated assets) when THEY collapse. Credit card, car loan, college loans and ALL consumer loans that were made into CDO's will collapse, and cause major havoc in our government (again!).
I still say we need an OUTRIGHT ban on all CDO creation again
BANKING Crisis: Alternate views: Brian Lerhrer show 2-18-09 Here:
AUTO-BAILOUT (Brian Lerhrer-Andrea Bernstein: 2-18-09 :Here (and listen to my voice as first caller too!)
BANKING CRISIS: Frank Rich (op-ed) says on Brian Lerhrer, "there's plenty of blame to go around, especially since many consumers partook of the good times, specifically with the large amount of derivatives associated with the consumer credit card market (6 mins,30 seconds to 7:00 in link above on 2-23-09).
Republican Intransigence : Frank Rich Interview on Brian Lerher 2-23 (see link above) 16mins 15 seconds into segment they discuss how,"
various republican governors are 'living in the past, and are seeming to bet for the country to fail (betting against the stimulus working) and almost ROOTING for more economic disarray and disaster, and,
at the same time, they are standing up for an ideology of being "deficit hawks" that they completely disregarded for the entire eight years of the Bush administration. Not just the trillion or so dollars spent on Iraq, but also on the Bush tax cuts.
And so now they're standing up for a principle that they didn't stand up for before, at a time when it's particularly questionable, and they look like complete hypocrites.
I think what we've got here is a southern, regional largely white male, aging party which is consigning itself to the margins of American politics...
And I don't think thats a good thing for the country, I think we need a serious opposition (party) to any government that we have.
And he concludes... These people are drinking their own kool-aid. Newt Gingrich was crying in the back of the plane during the Clinton years, I think it's just going to blow up in their faces, it already is.
Well (mark breathes...) Frank Rich said it for me today.
These people are drinking their own kool-aid.... I think it's just going to blow up in their faces...Republican governors are 'living in the past, and are seeming to bet for the country to fail...
Thanks again Mr Rich, for your words (again!) backing up my predictions.
If Oliver Stone did a sequel to "Wall Street," his classic 1987 film, Michael Douglas' Gordon Gekko character would be out of prison and heading a covert "psych-ops" team masterminding Wall Street's secret war against America's 95 million investors.
CDO's and WHY they must be OUTLAWED and abandoned IMMEDIATELY.
For those new to this blog, I believe that we have ONLY seen 25% of the financial crisis in the United States. I feel quite strongly that the other 75% will drop on the economy as the CDO's that were made from CONSUMER DEBT (car loans, credit cards, Student Loans, etc) bomb as more and more people start to default and/or file for bankruptcy.
sub-note: I think that the ill-conceived revision of the bankruptcy laws, (advocated for decades by the FINANCIAL institutions) will be UN-DONE within five years, after the government sees how much DAMAGE it will have done to consumers in this country...AND that as a result, bankruptcy judges WILL be able to rewrite ALL debt (or remove it ALL!) (but it serves the financial industry RIGHT!)
Reasons we need to outlaw Collateralized debt obligations are as follows:
In the old days, when the Bailey Building & Loan Association made a loan, they DIDN'T try and sell it. They KEPT the loan ON their books, and the neighbor who had the loan or mortgage payed them DIRECTLY. They didn't have to have ANOTHER company SERVICE the loan.
SELLING the mortgage (debt) does NOT make more money available for the bank. This is not real life. In real life, (today) NO Loans are being made, because banks are now what I call "chicken-S*it
CDO's are toxic. Attempting to take the risk from a loan, and apportion it to 100 different investors is nice. However, too little too late. I repeat, CDO's are toxic, and will NEVER be a worthwhile asset to ANY financial institution EVER again. I will also predict that ANY bank that ever purchases CDOs from ANY institution will need to have the brains of its board of directors scanned for metal from bullet fragments.
The days of "Greed Season" are over for Wall Street. Wall Street Bonuses got inflated because some 'genius' figured out how to "SCAM" the market, creating (for his company, and himself {his bonus}) a WIN-WIN scenario, where the ONLY loser (today) is US, the taxpayer.
The most important reason to ban CDO's? We now OWN the banks. We now need to EXERT FINANCIAL CONTROLS that will bring the market place BACK to a safer time, like when the Bailey Building & Loan Association made loans to their community.
We must ensure that the BANKS are RE-REGULATED. the Glass-Stengal repeal of 1999 and other similar "SLIME" last minute financial regulations MUST be undone.
We MUST FORCE these "mega"banks to DIVEST. CITI-bank can NO LONGER be the behemoth that it is. Much of these mega-banks WERE created right after the Glass-Stengal repeal, and must be UNDONE.
It' the only way to make the second depression we're in last for LESS time, and recover the economy...
