'Bailout psychology' destroying the economy

[FRED]

'Bailout psychology' destroying the economy
April 5, 2009 (San Francisco Chronicle)

President Obama must stop the bailouts and start the prosecutions. It's time to focus on anti-poverty programs to protect the growing unemployed from hunger and homelessness. Stealth payments to billionaire bondholders must cease immediately.

Since the mid-1970s, average Americans' wages have stayed flat when adjusted for inflation. Productivity rose, profits rose, but not wages. To compensate for stagnant wages and the desire to consume more each year, Americans worked more, retired later, spouses went to work, and many burned savings. Then they started borrowing. Debt became America's growth industry.

The scheme collapsed because Americans' wages weren't sufficient to pay the interest on existing debts. The only way out of this is to tighten our belts and pay down debt, the opposite of what our bank-owned government is advising.

The administration and the banks keep talking about a credit crisis, but there isn't one. Banks are lending. If you want a mortgage and can afford to pay it back, you can borrow at low rates today. You can finance a car at low rates for seven years. But most Americans don't want more debt because it is a debilitating path to poverty. The average American family already pays 14 percent of annual income in interest to banks.

To fix this fake crisis, there are fake discussions about what the government must do. The endlessly recycled plan to buy "troubled" assets isn't to get banks lending again, because they haven't stopped lending. The plan seeks for taxpayers to buy worthless assets at high prices to absorb rich investors' losses. That's it. It keeps coming back as a different plan, but with that same goal. There is no goal beyond that one goal: keep rich people from taking losses. more...

AntiSpin: Duh. Maybe if the San Francisco Chronicle's editors had allowed you to speak this obvious truth a few years ago the oligarchs might not have been able to put you out of business along with The Boston Globe, the LA Times, and others.

(Hat tip to Chomsky for the find.)

[Chomsky]

Re: 'Bailout psychology' destroying the economy

Thanks for the anti-spin. I posted this earlier today:

http://itulip.com/forums/showthread....ght=psychology

No hat tip?

[goadam1]

Re: 'Bailout psychology' destroying the economy

I love the new "oligarch" language around here. Remember that repetition is the propagandist friend.

[Jay]

Re: 'Bailout psychology' destroying the economy

I love the new "oligarch" language around here. Remember that repetition is the propagandist friend.

It ain't new round here. It just happened to win the popularity contest with kleptocracy.

[jacobdcoates]

Re: 'Bailout psychology' destroying the economy

I think we have both, a small group of financier stealing from the rest of us.

[FRED]

Re: 'Bailout psychology' destroying the economy

Thanks for the anti-spin. I posted this earlier today:

http://itulip.com/forums/showthread....ght=psychology

No hat tip?

You got it!

[FRED]

Re: 'Bailout psychology' destroying the economy

I love the new "oligarch" language around here. Remember that repetition is the propagandist friend.

Return on Leveraged Legal Looting (ROLLL) didn't stick.

[vanvaley1]

Re: 'Bailout psychology' destroying the economy

As regards to bank lending...somebody has made a decision to do something rather than just sit on the money. Two of the families we've been working with have received positive news this weekend in the mail. One has been approved for modification and the other has been put in the bin for modification approval review. Both these have been struggles for months.

Is the dam crumbling? Has it busted? From public pressure? From panic? From greed...as we've not seen the terms yet?

[BiscayneSunrise]

Re: 'Bailout psychology' destroying the economy

I've been having a long running dialogue with a friend of mine who is a full time trader. He's HEAVILY into technical analysis and in the past has done quite well.

Lately, though, he has been stymied. His TA tools don't work anymore, it's like being in a black hole where the normal rules of physics don't apply. So, not only is bailout psychology destroying the economy, the government has been actively working against people who are holding short positions.

In other words, not only is the government subsidizing bad behavior, it is working to destroy those prescient enough to see the ultimate outcome and who are ready to deploy money accordingly.

[cobben]

Re: 'Bailout psychology' destroying the economy

I like the concept "debt mine", as used in "Iceland is the canary in the debt mine."

Mining debt is what FIRE is all about, perhaps my little phrase could become useful I was just thinking.

Simple minds (like mine) and all that . . .

[flintlock]

Re: 'Bailout psychology' destroying the economy

I've been having a long running dialogue with a friend of mine who is a full time trader. He's HEAVILY into technical analysis and in the past has done quite well.

Lately, though, he has been stymied. His TA tools don't work anymore, it's like being in a black hole where the normal rules of physics don't apply. So, not only is bailout psychology destroying the economy, the government has been actively working against people who are holding short positions.

In other words, not only is the government subsidizing bad behavior, it is working to destroy those prescient enough to see the ultimate outcome and who are ready to deploy money accordingly.

I mentioned on another thread how I thought government intervention has changed the rules and a lot of former analysis methods won't work anymore. It really is becoming a casino.

[Sharky]

Re: 'Bailout psychology' destroying the economy

I mentioned on another thread how I thought government intervention has changed the rules and a lot of former analysis methods won't work anymore. It really is becoming a casino.

I very much agree with this. I think July 2008 was the breaking point.

Unfortunately, TA has many ardent believers; I think some people are hard-wired to see patterns, even when they don't exist. I've seen several people lose their shirts, including more than one close family member (repeated warnings just seem to get them energized to lose even more). I'm beginning to think America's stock market bubble was fueled more by gambling addicts than real investors. The whole scene feels more like Vegas every day.

[goadam1]

Re: 'Bailout psychology' destroying the economy

Return on Leveraged Legal Looting (ROLLL) didn't stick.

Rolll falls into a near pun category, it is funny once.

[goadam1]

Re: 'Bailout psychology' destroying the economy

Banks keep wanting to lend me money or open a line of credit or a credit card. I say, "no thanks." I think people will keep on borrowing if given the chance. Once inflation kicks in and assets are "rising" in value, the game will be on. Of course, we have a heck of a road ahead still.

[raja]

Re: 'Bailout psychology' destroying the economy

I like the last part of the article especially.
It provide suggestions for REVENGE

We can stop this by closing our accounts at any bank that took government money. A list is on the Treasury's Web site. Close your accounts and move them. If we do, those banks will suffer receivership or bankruptcy within a few months, and then there will be no need for bailouts. Our healthy community banks will thrive, while billionaire bondholders will have to downsize their G-5 fleets and take a haircut.
If you buy an American car, buy a Ford. Do not buy GM or Chrysler. GM and Chrysler took bailout money. If everyone who would buy a GM or Chrysler bought a Ford, GM and Chrysler would quickly go bankrupt, the government would be forced to stop giving them tycoon welfare, and Ford would probably have enough customers to get through this. If Ford takes bailout money, don't buy a Ford, either. You don't need to buy anything. Save your money until the government stops the bailouts. Your children will thank you for the peace and security.

I just tried to go to the Treasury.gov public website, and it asked for a password. I think it just got hacked :eek: