Futures are down on the possibility of a rate hike once we see “sufficient” improvement oh really?
By Daniel at 9 October, 2009, 9:54 am
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
What you mean to tell me the futures are not fired up? Ready to go? We can expect to see even more macroeconomic volatility, excessive government spending, excessive subsidies paid out to unemployed, declining/volatile dollar, unselective enforcement of current laws, more hardship for long-term investors, widespread corruption going unabated, and a high degree of economic “instability” throughout the end of 2009. For the past 3 decades debt-financed consumption has been the United States’ primary economic engine. The United States’ top manufactured products were debt, paper assets, and greenbacks. So it is no wonder when the bubble collapsed it wiped out all the “phony wealth” and the past decades “boom.” Many are just now coming to terms with just how silly and foolish it is to live off credit. Consumer “savings” currently is little more than debt service. (not all but most) Americans cannot actually rebuild the savings that the banking system needs to escape from the current mess. The government does few things better than create piles and piles of debt. With the Federal Reserve keeping interest rates low there is no place for all the cheap “easy money” to go except into the next asset bubble.
As the working public dies under the pressure of an ailing economy, the government sits around hiring more workers and has their “hands tied” refusing to go after corruption. As U.S. citizens loose trillions, the Federal Reserve is happy to gain power to not just sell Treasuries but buy them as well. As the the public outrage builds about overall economic conditions, President Obama has “captured the world’s attention and given its people “hope” for a better future. Winning a Nobel peace prize due to his “extraordinary efforts” to strengthen global diplomacy. It is good to be “hopeful” but I would like to see less rambling rhetoric and more action. Government has been steadily grabbing more political power and more control over our individual lives, and restricting the ability of the middle class to become “independent” of government meddling. The juggernaut campaign of “all is well on the home front” is in full swing now and nothing will stop it. Finding ways for the banks not having to clear out their toxic assets is a recipe for economic pain and eventual failure!
The current system is based on a corrupt, rotten system with its initial roots emanating with Washington and Wall Street elitists. Worst, those in charge of prosecuting wrongdoings are part of the problem making a mockery of the justice system as the “overseers.” Those in charge with oversight of markets are at least complicit and worst likely accelerating disintegration in the financial system. With a growing lack of leadership “talent” in business, government and educational institutions, there is a toleration of incompetence and a failure. Many firms heavily rely on coercion and deception to get what they want. (many are perfectly positioned and doing just fine – ask GS) The willingness of citizens and taxpayers to tolerate coercion and deception and permit Wall Street banks to get what they want is unacceptable. Because of the America’s questionable leadership and inability to change anything one year post Lehman it will take a “grass roots” effort to bring about reform.
Will we see a highly robust, sharp rebound in economic activity? Not likely as much uncertainty is still present in many different sectors of the economy. Consumer are still trapped by debt and it will take years of deleveraging to overcome the binges of the past 3 decades. Commercial real estate is in major trouble. Banks have put 38 cents in “reserves” for every one-dollar of “bad loans” down from $1.68 for every $1! (WSJ) They have absolutely no way of covering these future losses. And as consumers continue to beef up their own balance sheets, cut up their credit cards the downward pressure on “quick” recovery will continue. Consumer spending may prove to have increased slightly via government subsidies; holiday sales will be a telling sign on how economic “recovery” is progressing. Granted, we have indeed seen many positive indicators; it is far too soon to proclaim recession over! Let the games begin. Happy FDIC Friday!
ImpendingDoom
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
No comments yet.