Ya think? Even the flowery Bloomberg is having a hard time explaining away the Whitehouse's lies.
____

U.S. Economy Shrank in First Quarter by Most in Five Years



The U.S. economy contracted in the first quarter by the most since the depths of the last recession as consumer spending cooled.

Gross domestic product fell at a 2.9 percent annualized rate, more than forecast and the worst reading since the same three months in 2009, after a previously reported 1 percent drop, the Commerce Department said today in Washington. It marked the biggest downward revision from the agency�s second GDP estimate since records began in 1976. The revision reflected a slowdown in health care spending.

Consumers returned to stores and car dealerships, companies placed more orders for equipment and manufacturing picked up as temperatures warmed, indicating the early-year setback was temporary. Combined with more job gains, such data underscore the view of Federal Reserve policy makers that the economy is improving and in less need of monetary stimulus.

The first-quarter slump is �not really reflective of fundamentals,� said Sam Coffin, an economist at UBS Securities LLC in New York and the best forecaster of GDP in the last two years, according to data compiled by Bloomberg. �For the second quarter, we�ll see some weather rebound and a return to more normal activity after that long winter.�

Durable Goods

Another report showed orders for business equipment climbed in May, showing corporate investment is helping revive the economy after the slump at the start of the year. Bookings for non-military capital goods excluding aircraft rose 0.7 percent after a 1.1 percent drop in April, according to the Commerce Department.

Demand for all durable goods -- items meant to last at least three years -- decreased 1 percent, reflecting declines in the volatile transportation and defense categories.

Stock-index futures declined after the figures, with the contract on the Standard & Poor�s 500 Index dropping 0.2 percent to 1,939.1 at 8:55 a.m. in New York.

Economists surveyed by Bloomberg projected a 1.8 percent drop in first-quarter GDP, according to the median of 76 forecasts. Estimates ranged from declines of 0.5 percent to 2.4 percent. The economy expanded at a 2.6 percent pace in the final three months of 2013.

This marked the last of three readings for the quarter. The advance estimate of second-quarter GDP is scheduled for July 30.

GDP Forecasts

The economy will expand at a 3.5 percent rate in the second quarter and average 3.1 percent in last half of the year, according to the median projection economists surveyed by Bloomberg from June 6 to June 11. For all of 2013, the economy expanded 1.9 percent after a 2.8 percent gain in the prior year.

Consumer purchases, which account for about 70 percent of the economy, rose at a 1 percent annualized rate in the first quarter, the weakest pace in five years. The gain, which added 0.71 percentage point to GDP, compared with the previous estimate of 3.1 percent.

The revision reflected a drop in spending tied to health care services. The Bureau of Economic Analysis had estimated that major provisions of President Obama�s signature health care law would boost outlays. A quarterly services survey released this month showed the assumptions were too optimistic. Outlays for health spending actually slowed in the first quarter, subtracting 0.16 percentage point from GDP. The Commerce Department previously estimated those outlays added 1 percentage point to GDP.

Inventory Building

Companies boosted stockpiles by $45.9 billion in the first quarter, compared the $49 billion gain previously reported and less than the $111.7 billion buildup in the final three months of 2013. Inventories subtracted 1.7 percentage points from GDP from January to March, the most since the fourth quarter 2012.

Final sales, which exclude inventories, decreased 1.3 percent in the first quarter compared with a previously reported 0.6 percent increase.

Aside from services, consumer outlays on goods also slowed from the end of 2013, rising at a 0.2 percent rate. Demand faltered as the northern and eastern U.S. experienced above-average snowfall from December through February, keeping Americans closer to home.

Since then, households have boosted spending. Cars and light trucks sold in May at a 16.7 million annualized rate, the strongest since February 2007, according to data from Ward�s Automotive Group.

Business Investment

The weather earlier this year also hampered production at factories, which had trouble obtaining materials in time. Since then, assembly lines have become busier.

Business investment fell at a 1.2 percent annualized rate, today�s figures showed, compared with a previously reported 1.6 percent annualized drop. Companies reduced their spending on structures at a 7.7 percent pace, and spending for equipment fell 2.8 percent, today�s report showed.

Trade was also a bigger drag on GDP than last estimated. Net exports subtracted 1.53 percentage points from GDP, compared with a prior estimate of 0.95 percentage point.

Improving job opportunities are boosting prospects for the economy. Employers added 217,000 workers in May following a 282,000 gain in April, according to the Labor Department.

FedEx Outlook

Officials at FedEx Corp. (FDX), the Memphis, Tennessee-based operator of the world�s largest cargo airline, are looking for continued economic pickup this year and into next. The company forecast 2.2 percent U.S. growth for 2014 and 3.1 percent for 2015, T. Michael Glenn, executive vice president for marketing development, said on a June 18 earnings call.

�Our expectations for economic growth for the remainder of the year have actually improved somewhat,� Glenn said. �The global economy is recovering from the Q1 setback in the U.S. and slowdown in China and should steadily improve.�

Price pressures remained muted in the first quarter. A measure of inflation, which is tied to consumer spending and excludes food and energy, climbed at a 1.2 percent rate.

Subdued inflation is giving the Fed�s policy making committee room to keep the main interest rate near zero to encourage lending and spur growth. Even so, the Fed announced June 18 that it is paring asset purchases by $10 billion to $35 billion per month, showing that it remains confident that the U.S. economy can make do with lessened stimulus.

The Fed said economic activity �has rebounded in recent months� as the labor market showed improvement and household spending showed signs of �rising moderately.�

I'm at a loss on the economy.

Right now, we are supporting the design and construction of well over a thousand units in multifamily construction.

Somebody has got to have money to live in them - and some of them are upscale townhomes, so its not like it's all section 8.

We're building like a mf'er - but the economy continues to tank.

Bubble, bubble, toil and trouble.

It would improve rather quickly if the AIC and his peeps in DC would be tossed out on their sorry-azzed butts..

Yeah! Rebound!

We can hope for change.






(sarcasm smiley needed)

Just now - from FOX:

" The U.S. economy contracted at an annual rate of 2.9 percent in the first quarter, the biggest drop since the first quarter of 2009, from a previous estimate of a contraction of 1 percent. Wall Street expected the world�s biggest economy to shrink by an annual rate of 1.7 percent."

All due to the a-holes in DC.. All of 'em..

It's not just the guys in there at this time if you ask me. There has been a concerted effort to switch the economy from produce/consume to financialized for 2, maybe 3 decades.

It worked. We converted. Financialized economies are inherently unstable and prone to excess and crashes. Ours was and it did. Afterward we refused to take steps to reign in financial excesses or even to pin the losses on bad debt to those who profited from its production.

THAT, and nothing else, is why our economy is still in the tank. Rising energy costs have helped to keep it from recovering but the run up in debt and the ensuing crash was decades in the making.

The current crop of clueless politicians is a symptom not the disease.

IMvHO of course.

Will

2.9 % drop? What? That has to be a glitch.

2015 will see a big boost in the economy when ZeroCare fully kicks in.




We got that going for us.

local rag was waxing poetic about the "Post Recession Boom" here in Florida.
These people are not delusional at all, but instead, are pushing the dhimmicrat/liberal/progressive/socialist lie, that hussein has turned the economy around.

What gets me is the hypocrisy by the left.

One minute they're crying about income inequality, low wages, more part time jobs, shrinking middle class spending power, twenty percent are in poverty and not able to meet basic nutritional needs.

The next minute they're talking about the great Zero recovery, lower unemployment #s, flexibility in work hours, and backing Moochelle's agenda to prevent obesity.

The sad truth is that the economy is teetering on the abyss of a massive depression that will make the one in the 1930's look like a summer vacation and all its going to take is a slight bump to send it over the edge.

All the political smoke and mirrors in the world is not going to change things.

We are busy again after 5 years of drastic reduction in construction. There are some new builds... but over half our work is the huge market of renovations of existing properties for section 8. Investor groups have sat on their money but are now taking advantage of .gov programs for rehabitation and guaranteed renters.

Kent

it's not about what gets built. It is all about what get sold and actually paid for.

That's just the profit margin, stuff has to be paid for as it's built and it's investor money doing it. Big investor groups, as in billions, don't risk their money without some security. Wannabe investors jump on the band wagon and get caught not realizing when the bigs have taken their profit and vacated the market...

bubble...

Kent

It will crash and burn before we get this piece of sh*t out of the WH

It is designed to crash immediately AFTER he is gone...just like they always do.

I am pretty sure that this has already been explained, we had a really cold winter so people stayed home and didn't shop.

So, there you have it guys, nothing to worry about.

Real economy is the production of goods for profit/wealth within the community. Taking raw materials and producing a different product that is more valuable than the sum of production.

Construction does this in spades but there still has to be industrial/agricultural/mineral/energy product production to support.

You can see it in ND oil or NV gold mines or...

If Intel builds a big semiconductor plant out from town. Soon there will be new roads and stores and schools and business to service and trucking and restaurants and homes and infrastructure/police/fire and strip bars...

strippers gotta eat...

All from profits made and wages paid by Intel.

Kent

Right, and with inflation "only" at 1.2% (excluding energy and food ) for the quarter, things are fabulous. This should easily be covered bt the increased profits and raises that everybody gets.

Not surprised in the least. The info pumped out of the FED, GAO, EIA, etc is bogus, and at best "cloudy". You can't/shouldn't believe one thing being publicized.

There's been an all out war on our nation's economic health going on for a while now by the central government and by their allies in the banking establishment. Should we be surprised by the result?

This.

Economic booms are almost always perpetuated by cheap credit. Macro-economies are all credit based in one way or another, but then there�s GDP that underpins the credit. The economic boom of the �90�s was because business figured out how to make money on the internet, and we saw the largest expansion of our economy ever. But understand much of that economic expansion was by the credit given to those who were invested in the .com�s, which fueled consumer spending. Then the next excuse for cheap credit was home based loans such as home equity loans. Lots of credit was given out cheaply for anyone who owned real estate, and again that fueled consumer spending.

I think the economy since the bust of 2008 is due to the fact that this is the first time in a few decades that we�ve had an economy that�s based purely on GDP and non-credit related consumer spending. What�s more, the consumers that fuel our economy are disappearing. Middle class are the big consumer spenders and the middle class has been shrinking for at least 15 years. So when the government infusion of the economy is finally over, we don�t really have anything but just plain GDP production that�s fueling our economy, so we shouldn�t be surprised that it�s moving at a snail�s pace. If the middle class continues to disappear, then we�ll hit a point of no-return and our economy will begin a very long phase of contraction as it tries to balance itself.

Barak Hoover Obama has a nice ring. The [bleep] POS couldn't make a lemonade stand profitable.

Well Said

You want them to include the cost of what people spend a majority of the money on in the inflation calculation? That is crazy, it would look bad if they did that.

Nicely written GunGeek. I appreciate the sentiment.

But I disagree with the last sentence. We began that long decline phase back in the 70s. We put it on steroids in the 80s. And we made it unanimous in the 90s.

You cannot build a healthy and sustainable economy on financial fever dreams and social media bullshit. When this nation turned its back on manufacturing and laid its gaze on things like finance and real estate the die was cast. Now our biggest export is entertainment.

When your economy depends more on the likes of Lady Gaga and Lindsey Lohan than the next door neighbor who works at (or rather "worked" at until we shipped his job overseas) the local saw mill, steel plant, and auto plant you are in a world of trouble.

At least IMvHO.

Will

vel, on the face of it, helicopter Ben (Bernanke) has failed to enlist enough helicopters to use in the shoveling of funds out to the poor and disaffected. if only he had tried harder.

point is, we no longer have an effective economic theory to guide us.

but we can sell crude oil to other nations. that should help. Russia is doing well selling natural gas to Europe and annexing countryside.

I hope we don't get caught up in a bidding war over Alaska.

Regurgitated ponzi schemes are not an economy, product manufacturing is.

Kent

And being the middleman for the world's product manufacturing to the US consumer base is a weak substitute.

Kent

My statement is only partially true. The decline will not be something you can put your finger on because politicians will refuse to acknowledge an America in decline, so they'll always look for some way to inject the economy with fake money to show some economic expansion. True, "real" wages have been flat since the '70's and are now actually beginning a decline.

Your assertion is that our economy be production driven by adding more manufacturing, but I say our economy is now, and always has been consumer driven. One can make a case for supply side or demand side (consumer) economics since either can drive an economy at any given time. But I personally think the more healthy economies are driven by demand rather than supply.

Despite the fact that manufacturing in the US has fallen, we're still the 2nd largest manufacturer in the world. China has surpassed us mostly because they make the cheap low quality crap that would never be profitable to make in the US.

Our economy has always been driven by consumer spending, that hasn't changed and it's not likely to change. The only way we're going to increase manufacturing in the US is to make it profitable to manufacture things in the US. But they need to be quality goods that are competitive on the world market. Such goods will provide quality jobs, which provide the working class with enough money that they can spend on consumer goods.

That's what people don't get about the income inequality thing. The left uses it as their call to arms to promote socialism. The right completely blows it off because it doesn't fit their world view.

But the income inequality (which is a symptom, not the disease) is pulling money away from consumer spending, which is taking away DEMAND for consumer goods. If demand falls, then production will have to fall until the supply/demand line balances. The disease of income inequality is the pooling of the power to set wages away from the worker and more toward the corporation. Wages needs to have a good balance between worker/corporation, just like the supply & demand line. But it's all on the side of the corporation these days, and wages are now in decline. The problem is, while that may be good for the corporation, it's bad for the overall macro economy...and eventually it will come back to hurt the corporation...it's a "circle of life" sort of thing.

If you try to shore up the economy on the supply side, you end up with companies that lose money because there's more supply then there is demand, so it's not sustainable. That's why I'm not a fan of supply side economics in general. (although there are times where it's advantageous).

These bubbles of cheap credit that fueled the economic growth of the 90's and early to mid 2000's fueled demand. Demand increased, but wages stagnated or went down. So when it was all done, the system is left unbalanced.

the mega-seaports either in operation or under construction tells me that the flow of goods & services are not going to slow anytime soon.

with 7 billion people, all hungry, more or less, somebody is going to attempt to feed them rather than risk getting gutted.

If it were only that simple...but I agree with your sentiment.

NAFTA and basically unregulated cheap imports have done away with the working class. Add to that our immigration and open borders (and of course the rampant greed today) there's not enough jobs to go around even to supply those aging into the work force!

Were headed for an era, when the baby boomer's can no longer work and of having nothing but an abundant supply of un-educated cheap labor with no real skills, and a country that will completely rely on imports.

Theres' no going back, theres' no solving the problem, at best theres' just slowing down the process!


Phil

This.

Kevin Phillips points out in his book �Bad Money, � for the last 30 years, financial services expanded from 11% to 21% of America's GDP while manufacturing fell from 25% to 13%. Wall Street big wigs rake in trillions trading inflated or nearly worthless securities that artificially increase in value at each stage. Lawmakers on the right are unwilling to fix it. Lawmakers on the left are unable. On the right, faith in the free market is absolute. On the left, integrity has been thoroughly compromised by political contributions.

and I would suggest it's all because of the lack of a viable economic policy (theory) that the mainstream can rally around. the middle class came from so many divergent directions, that they can't come together into a coherent whole.

NAFTA whether blamed on the demo's or republicans was a feeble attempt to keep foreigners on their own soil. we all know how well that worked.

but, what to do next, pray tell?

$4 a gallon gas for the last five years hasn't helped the economy either.

And that's what it all really boils down to. Both parties serve corporations, not Americans. And I'm not asking them to abandon corporations, just to represent both.

Thats' a global commodity; we have very little say in that price. Unless we were able to greatly decrease our demand...that would drive prices down.

The problem is an easy one. We have an economy based on consumer spending, and consumers aren't spending. That's easy.

Why are they not spending, that's easy also; they don't have extra disposable income.

What to do about it; that's the hard one. Because the solutions require both the left and the right to abandon their pre-conceived notions and political rhetoric in order to work toward a solution. THAT just ain't gonna happen!

Of course it's that simple, reality always is. Cheap credit wasn't an issue, unsubstantiated credit forced by the .gov into the housing market caused a bubble or ponzi, which when burst dramatically effected the supply economics nationally, joblessness and consumer spendable money.

The oil industry in ND and Texas have started to pull in national resources for manufactured product. Housing products are rising, starting to filter into the economy and jobs. If there is money to be made by investors they will spend, none of this gets done without huge private investment.

Sometimes the economy can carry on despite .gov or wallstreet... but it's very difficult when the economy is sabotaged by .gov agencies and regulations.

Kent

Somehow, somewhere, someone will have to walk out the door into the fields or jobsite, or plant, or energy field, or mines, or engineer and invest... a product for profit... times by a million...

To produce an economy.

Kent

The government didn't force them...it was a ponzi scheme but it was their own doing. The .gov forcing them into it was the spin that Limbaugh picked up on, but as it turned out, less than 20% of the bad loans were the government backed/mandated loans.

The banks had a very elaborate scheme going on in the derivatives market, and they were convinced the housing market would never go down. Most don't realize it, but if it was just the housing market and bad housing loans, we wouldn't have really had the big economic meltdown that we had.

No the real meltdown was the derivatives market, and .gov had NOTHING to do with that.

Since you've seemed to just swallow the spin on what happened, I doubt you'll take the time to read what REALLY happened, but on the off chance you're interested, here's the official report: http://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf

The economy is what it is. You can wring hands and hate it, or you can make a bunch of money and position yourself for what comes next.

Yep, you have to make something to create wealth. The promotion of an economy based on taking in each other's laundry is akin, economically speaking, to a scientific proposal for a perpetual motion machine. But the folks who drove our industry out knew perfectly well what they were doing.

You sound like a pitch-forker. Pat Buchanan has been saying exactly that for decades. He was right.

Yep.

Now that's funny... you spin that 20% of failed loans that were 'mandated' as if 1/5th statistically is inconsequential.

And if I'd just understand that derivatives were a legal ponzi scheme...

Or the construction industry that historically shouldered 4.5 millions jobs annually for 25 years, not including the 6+ million during the boom years, would fall to 2.2 million jobs for the last 6 years... that in itself isn't an economic national disaster...

Or the .gov had nothing to do with deregulating the derivatives market in what? 2000 or so.

Kent

Senator Ted Cruz ✔ @SenTedCruz
Follow
Q1 GDP fell 2.9%, Obama Admin blames winter. But �85 winter was also historically cold & Q1 GDP grew 4%

(Tweet)

Things are bad and may get worse...

Obwan will see to that


He has an agenda...

or

I s very stupid

Snake

Look at the bright side. He's stupid.

Good post, Will.

I'd like to add that the overwhelming burden of a bloated .gov will continue to crush the life from our economy, no matter what it does.

Yet...dumbass Americans still fight the export of natural resources.

Yet dumb ass voters still re-elect dumbass people to be president.

it's pretty clear that no one and I mean no one has a clue as to how the new capitalism and the new socialism are going to fit together. the Obamacare debacle involves 12 or so percent of the economy, maybemore.

our natural resources, at the core, is what we have, plus our human capital and technology.

somebody point to a well accepted monetary theory, and we'll get the horse up on all fours walking again. until then, she's lying on her side.

We know exactly how it works. When you keep the government out of capitalism,it works very well.

As for Monetary theory:

Manufacturing won't save a damn thing, as most factory jobs pay little more than burger flippin' {and far less than waiting tables] now that most are non union. Around here, most factory work pays 9.00 - 11.00 per hour to start and it takes years to work up to a liveable wage. Folks making that kind of money aren't buying anything beyond the bare nessesities and ain't gonna stimulate schit.

And that's why it's better for us to let the Asians make the paper umbrella's that we throw away when we are done with our beach drinks.

Manufacturing with high human capital requirements are a horse of a different color, and that's where we need to be working to throw off the shackles of high corporate taxes and regulation and turn loose the beast that is the American Worker.

We ain't got any paper umbrella factories hereabouts. Not a one. We do have ones that make yogurt, plywood, wood pellets, fork lifts, calendars, date/address books and guns and what I said applies.

Manufacturing is a noble pursuit, but we need to manufacture quality goods that are in demand on a world wide scale. Added to that, we need to find a way to raise pay for the average worker. Worker wages have been stagnant for nearly 30 years and are now headed downward; that's really bad news for our economy over the long term.

Everyone seems to be pissed that the US is heavy in the service industry. But that's a very viable industry because our know how is something we can trade well on the world market, is in high demand, and those who work in professional services industries tend to make good wages.

The US financial industry is the one business sector we need to be worried about, because they took down our entire economy just a few years ago. We need financial service, no doubt about that. But we need to know the system is stable, so it's the one industry we need to monitor and regulate. Don't interfere, just keep an eye on them and don't trust them.

It's not about stimulus. It's about wealth creation. There are only three ways to acquire wealth, 1) make it, 2) steal it, and 3) receive it as a gift. But someone has to be making it first. If not, residual wealth from earlier creation gradually dissipates. Stimulus doesn't create wealth. It just shuffles around the residual wealth.

The only people factory work will create wealth for is the few at the top and those folks are already wealthy.

It can be argued, very convincingly I might add, that most "stimulus" actually DESTROYS wealth. Since stimulus, in and of it's self, does not create new wealth, what it really does is create a new allocation of existing wealth with a bias toward consumption (wealth destruction) instead of savings, investment future creation. Since this consumption comes out of the savings that would other wise fund our new factory's etc that would create new, real employment, the "stimulus" slows down long term growth.

But the wealth has to exist to start with before a society can become wealthy. We're becoming a poorer society because we're not creating real wealth (we've shipped wealth creation to other countries so corporations can make higher short term profits). Wall Street doesn't create wealth. It just shuffles a shrinking pie around.

In the mushy middle you described above, you are correct. It needs to be high tech /high skills, leading edge areas to create a growth in wealth for the individual contributors.

Yep.

That's just not true. Complex capital markets are an essential element of the wealth creation process. Without Wall Street, how would the money from all those savers every be packaged to finance new factories, plants and equipment? When you walk into a store, most of the inventory you see was purchased on credit. How does that happen without Wall Street, letters of credit, and short term commercial paper? Imports, most are financed via Bankers Acceptance, another wall street product??

And it's exactly that attribute of Wall Street that's the most reviled, the goal to make a profit, the seeking of maximizing returns while minimizing risks (while taking their cut), their cold dedication to the numbers that make them such and important partner in the wealth creation process.

The fly in your ointment is that we don't have millions of "high tech/high skills" people to fill those kinds of jobs and we never will. As an aside, I currently work for a gun company and we have some of the most talented gunsmiths you'd ever want to meet building guns here. It takes years to learn and develop the skillsets to build fine quality firearms yet it doesn't pay for schit. I remain unconvinced that manufacturing will ever do much to boost the financial status of "the individual contributors" ..

WOW, that's absolute BS. I'll bet you still believe in the Laffer Curve too.

"Stimulus" in and of itself is neither good nor bad; the good or bad is dependent upon when and how "stimulus" is done.

So people will still produce at a 100% tax rate?

Really?

I didn't say Wall Street doesn't serve any function in wealth creation. I should have said that Wall Street speculation doesn't create wealth, but rather just shuffles around pieces of a shrinking pie.

Hey you got something right. Wealth is created mostly on credit. Access to credit is absolutely essential for businesses and markets to grow.

The economies of the '90's and 2000's was based on the fact that credit was cheap and available. Now we don't have credit that's cheap and available, so the economy is crawling. Now our economy is actually based on production. And until someone can find a way to make credit cheap and available again, our economy will continue to crawl at a snail's pace.

But understand, we live in an era where we've become addicted to all the benefits of cheap credit. Credit is a wonderful thing for businesses, but we've WAY over done it over the past 20 years. Now we think a US economy that grows by 3-6% every year is "normal".

The good news of our economy right now is...it's mostly real. Yeah there still is some stimulus, but it's been going down every year since 2009, and when we're weaned off; we'll have a real economy for the first time since the 1960's.

And there you go, once you move to extremes and absolutes; any rational discussion is over.

Not at all. But your response just served to prove one point on the curve.

Monetary Policy is only one piece of the puzzle.
Right now, credit is cheap:
[img]http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=CIp[/img]

But as you mentioned the problem lies in the availability. Increased regulations serves as a disincentive to both lend, and borrow. Consequently, despite low rates and an ample money supply, the increased regulatory environment is stifling growth. Perhaps the easiest demonstration of this is the velocity of money:

[img]http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=Cek[/img]

It doesn't matter how cheap the money is when the regulations make it impossible to loan money, or borrow to invest and make a profit.

Again we're in agreement. I'm very pro-Wall Street regulation, but specifically the type of regulation that keeps them honest...not the kind that creates BS busy work, and complicates things for not discernible benefit.

Wall Street has to be regulated because the incentives for dishonesty are just too great for them not to go down roads they shouldn't be going down...so from that standpoint they need to be regulated.

The lending of credit to corporations has never been the problem with Wall Street, so where that is concerned the Government's ONLY role should be to ensure they're not leveraging too far. If anything, they should grease the wheels.

Oh come on!

It was shored up from .gov "shovel ready jobs" which mostly benefited politicians and government workers.

I pretty much said that further along; but I guess you never read the rest. Once we're off the stimulus tit, then it's all real. Right now it's just mostly real with some stimulus.

Be careful how far you push this, you may end up making Obama look good; and I know that's not your intent.

Stimulus is a very small % of our GDP. If you're saying our economy is all stimulus, then you're saying Obama is putting 5% in and getting a 95% return...that would make him a genius.

You. me, and Adam Smith. Even he agreed banks warranted sufficient regulation to insure the public trust in our financial and monetary systems. You mentioned the over leverarge, which was a very real problem, that was the result of a deeper problem from a perverse incentive structure that rewarded "swinging for the fences" and insufficient penalties for "striking out". So part of the solution is insuring those who can benefit from high risk idea's sufficiently share in the risk to properly temper their decision making.

As for the current regulations in this country, as you suggest many of them are "BS". It's not just the financial regulations, just add your list of alphabet soup agencies here, and begin totaling up the incremental costs each add to a selected product, and before long the regulatory costs become a significant portion of your per unit product costs. If you are GE, hey, what's one more lawyer, but, if you are Mom and Pop, or Mr. Enterprise, there are the kind of issues that change the calculus to prevent you from going into business, or expanding your current operations. It's in this way the complex regulatory structure hurts the small to medium business and favors the Mega Box stores etc that everyone likes to vilify.

Re: Bold - AMEN to that!!!

But we found out that for many, even that didn't sufficiently ensure stability. The big investment bank CEO's all lost massive sums of money. Dick Fuld, former CEO of Lehman Bro's lost over 95 million dollars of his own money in a single day. He, like the other CEO's were very invested in their companies.

And that CEO vestment in the companies is why Alan Greenspan thought that the investment banks would always protect themselves. The problem is, they all now make SO much money, that even if they bankrupt a company (like Fuld did to Lehman); they're still VERY rich...it doesn't ruin them.

So to your point...even though they have skin in the game...and even though often it's a LOT of skin; generally it's not ENOUGH skin to make them get nervous.

So that's where the regulation needs to happen; just making sure they're not doing stupid stuff.

But in 2008 the regulators were part of the problem. Government regulators (as we know) have a REALLY bad habit of being way too cozy with the companies they regulate. Just like the Minerals Management rubber stamping of deep water wells in the Gulf, the FDIC allowed companies to leverage to a rate of OVER 30:1. That SOB should have gone to jail for gross negligence.

And that brings me to the subject of jail. No one has gone to jail for 2008 even though there were clear cut cases of fraud. Instead the "justice" department (another "regulator" way in bed with Wall Street) only sought out fines.

If these SOB's knew they'd go to jail for their shenanigans; they may think twice next time.

Retail banking should be recognized and treated as a utility. Highly regulated and not very profitable. Boring even.

AND it should be strictly separated from investment banking. Period. End of story. As long as banks have the ability to take deposits and turn them into casino investments nothing else will ever insulate the government from having to bail them out if they get in trouble. Nothing. The political costs of allowing banks to go under and take people's savings accounts will never allow it.



No it's not.

The reason Wall Street is reviled is because these parasites and their economist lap dogs have created a system that insulates their private fortunes from any risk at all! While creating a dysfunctional casino capitalism that benefits only those who come to the game with fortunes at the start.

Almost EVERYTHING associated with trickle down economics, deregulation, and globalism has turned out to be a disaster. According to this insane theory we should be awash in real wealth and brimming with new entrepreneurs. We've had 30 straight years of Neo-liberalist administrations and congresses with alternating bouts of social conservatism or liberalism.

We tried it. It failed.

Balance. That is the key. Balanced budgets. Balanced regulatory regimes. And balanced trade. All in the context of a mostly self sufficient nation. It takes all 3 to get this shebang to sit upright. And yes, in case you are getting ready to ask, that does mean the end of the dollar as reserve currency. No nation on earth can be trusted with such temptations. And certainly not our coin operated government.

But don't you worry. None of this will happen. Voluntarily turning our backs on this idiocy is the last thing we will do. We're going to ride this horse all the way down. We'll be throwing the spurs to her and slapping her flanks with the reins long after the poor creature has passed on.

The dream dies hard and that's just the way ideologies go under. When you tie your entire economy to a fantasy you take your chances.

Will

Will,

That was one of your best posts ever.

Thanks Kevin, I am feeling feisty this morning. One too many cups of high test at breakfast.

Will