So now stocks are bullish?
By Daniel at 2 February, 2010, 8:51 am
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Who would of guessed? Must be the new $3.8 trillion budget or the “growth” of 5.7% in GDP in the 4th quarter of 2009. Really, the GDP figure is akin to a car sitting in a traffic jam, burning gasoline while going nowhere. With the car sitting in gridlock traffic burning gas it actually INCREASES the GDP figure because it means the driver will have to buy more gas, which will increase sales for both the gas station and the global mega-corporation (parent company) that has absolutely no loyalty to America. Then we can turn around and cheer Corporate America beating criminally rigged expectations on Wall Street and string the “recovery” carrot along as planned.
And from the point of view of society as a whole, what does it mean that we worship so ardently an abstract statistic such as GDP, that is composed almost completely of bizarre and clearly non-productive activities like the car sitting in gridlock traffic? (Inventory adjustments and government subsidies) The initial GDP figures that beat expectations always get the headlines, it’s the revised-down figures that are much more accurate indicators of “real“ economic activity, conditions that rarely get media attention or much reaction from Wall Street. Clearly, this is just how the puppet masters on Wall Street want it.
The ruling elites on Wall Street have spent boatloads of money trying to create legislation that allows it to engage in reckless, criminal activities. The financial sector worked night and day to stop predatory lending laws, to gut consumer protection laws, and to ensure that the federal government’s “regulators” didn’t have a clue about anything. Their ideal scenario was to have the kind of regulation that doesn’t prevent them from doing anything, but allows them to say, in case of any problems, that they assumed everything was all right because such criminal business practices were done “within the law.”
The Wall Street mentality of “heads, I win; tails, the Government will bail me out” can no longer fly. While TARP 1&2 may have “saved” the financial system from collapse, absent meaningful reform, we are still on the same destructive path to financial Armageddon. Regardless of the idiotic mistakes made, no one is on the financial hook, other than the taxpayer and future generations. It is no surprise banks are reluctant to lend to consumers. As reductions in the value of their underlying “toxic” assets are applied across the board, the equity base of financial institutions vanishes along with trust in their solvency – especially Citigroup. Hence, banks are now doing EXACTLY what John Maynard Keynes said they would in such circumstances: hoarding all the cash.
The American taxpayer has continued to shoulder the risk that had once been borne by the private investors. We took all the risk in bailouts and got very little upside, if any. We eagerly, stand and cheer our most iconic corporations wondering when the job market will finally turn. Repeatedly, we are called upon to “tighten our belts” to “foot the bill” for the entire financial system. In this economic environment no sooner is one hole patched than a number of others appear. We now have a once-in-a-generation chance to fundamentally redesign an economy that is both more efficient and more stable. The question remains weather the Obama Administration is up to the challenge of breaking these banks. Institutions must be downsized to a level where no institution is too big to fail; failure to act will result in another painful economic downturn. Passing such astronomical debt burdens onto future generations is criminal and immoral.
- ImpendingDoom
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