Posts Tagged ‘Dean Baker’

The Road to World War III – The Global Banking Cartel Has One Card Left to Play

The Road to World War III – The Global Banking Cartel Has One Card Left to Play

By David DeGraw (h/t ZH)

The following is Part I to David DeGraw’s new book, “The Road Through 2012: Revolution or World War III.” This is the second installment to a new seven-part series that we will be posting throughout the next few weeks. You can read the introduction to the book here. To be notified via email of new postings from this series, subscribe here.

******

Editor’s Note: The following is Part I to David DeGraw’s new book, “The Road Through 2012: Revolution or World War III.” This is the second installment to a new seven-part series that we will be posting throughout the next few weeks. You can read the introduction to the book here. To be notified via email of new postings from this series, subscribe here.

I: Economic Imperial Operations

The Road to World War III - The Global Banking Cartel Has One Card Left to PlayWhen we analyze our current crisis, focusing on the past few years of economic activity blinds us to the history and context that are vital to understanding the root cause. What we have been experiencing is not the result of an unforeseen economic crash that appeared out of the blue with the collapse of the housing market. It was certainly not brought on by people who bought homes they couldn’t afford. To frame this crisis around a debate on economic theory misses the point entirely. To even blame it on greedy bankers,…
continue reading


Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,




Burning Down the House

Burning Down the House

Courtesy of DEAN BAKER at CEPR 

This column was originally published by The Guardian. 

Las Vegas, US housing market, foreclosures, mortgages

Trash is piled up outside houses at the abandoned Desert Mesa subdivision in Nevada. The north Las Vegas housing authority started the project in 2004, but the entire subdivision has since fallen into foreclosure. Nevada continues to lead the nation in foreclosures, unemployment and bankruptcies. Photograph: Ethan Miller/Getty Images

The howls of surprised economists were everywhere last week as the government reported on Tuesday that July had the sharpest single-month plunge in existing home sales on record. The next day the Commerce Department reported that new home sales hit a post-war low in July.

All the economists who had told us that the housing market had stabilized and that prices would soon rebound looked really foolish yet again. To understand how lost these professional error-makers really are it is only necessary to know that the Mortgage Bankers Association (MBA) puts out data on mortgage applications every week. The MBA index plummeted beginning in May, immediately after the last day (April 30) for signing a house sale contract that qualified for the homebuyers tax credit.

It typically takes 6-8 weeks between when a contract is signed and a house sale closes. The plunge in applications in May meant that homebuyers were not signing contracts to buy homes. This meant that sales would plummet in July. Economists with a clue were not surprised by the July plunge in home sales.

What should be clear is that the tax credits helped to pull housing demand forward. People who might have bought in the second half of 2010 or even 2011 instead bought their home before the tax credit expired. Now that the credit has expired, there is less demand than ever, leaving the market open for another plunge in prices. The support the tax credit gave to the housing market was only temporary.

It is worth asking what was accomplished by spending tens of billions of dollars to prop up the market for a bit over a year with these tax credits. First, this allowed millions of people to sell their home over this period at a higher price than would…
continue reading


Tags: , , , , , , , , , , , , ,




The Attack of the Real Black Helicopter Gang: The IMF Is Coming for Your Social Security

The Attack of the Real Black Helicopter Gang: The IMF Is Coming for Your Social Security

Courtesy of Dean Baker at CEPR, writing at Truthout

See article on original website

A few years back there was a fear in some parts about black UN helicopters that were supposedly taking part in the planning of an invasion of the United States. While there was no foundation for this fear, there is basis for concern about the attack of another international organization, the International Monetary Fund (IMF). 

Last week the IMF told the United States that it needs to start getting its budget deficit down. It put cutting Social Security at the top of the steps that the country should take to achieve deficit reduction. This one is more than a bit outrageous for two reasons.

First, the IMF deserves a substantial share of the blame for the economic crisis that gave us big deficits in the first place. The IMF is supposed to oversee the operations of the international financial system. According to standard economic theory, capital is supposed to flow from rich countries like the United States to poor countries to finance their development. In other words, the United States should be having a trade surplus, which would correspond to the money that we are investing in poor countries to finance their development.

However, the IMF messed up its management of financial crises so badly in the last 15 years that poor countries decided that they had to accumulate huge amounts of currency reserves in order to avoid ever being forced to deal with the IMF. This meant that capital was flowing in huge amounts in the wrong direction. One result of this reverse flow was that the United States ran a huge trade deficit instead of a trade surplus. 

The trade deficit in the United States was a big part of the story of the housing bubble. The trade deficit cost millions of workers their jobs. This was one of the main reasons that economy was so weak coming out of the 2001 recession. This weakness led the Fed to keep interest rates at 50-year lows, until the growth of the housing bubble eventually began to generate jobs in the fall of 2003.

The IMF both bears much of the blame for the imbalances in the world economy and then for failing to clearly sound the…
continue reading


Tags: , , , , , , , , , , ,




Drunk Driving at BP

Drunk Driving at BP

Dangers of Driving When Drunk

Courtesy of DEAN BAKER, at CEPR

While BP has taken some heat over its spill in the Gulf, it is remarkable how limited the anger actually is. Many defenders of the company have made the obvious point: It was an accident. BP did not intend to have a massive spill that killed 11 people, devastated the Gulf ecosystem and threatens the livelihoods of hundreds of thousands of workers.

Of course this is true, but it is also true that a drunk driver who runs into a school bus did not intend to be involved in a fatal collision. As a society, we have no problem holding the drunk driver responsible for a predictable outcome of their recklessness. Driving while drunk dramatically increases the risk of an accident. This is why it is punished severely. A person who is responsible for a fatal accident while driving drunk can expect to face many years in jail. Even someone who drives drunk without being in an accident often faces jail time because of the risk they imposed on others.

This raises the question as to why the public seems to accept that the top officials at BP, who cut corners and made risky gambles in their drilling plans, should be able to “get my life back,” as BP CEO Tony Hayward put it. The people who lost their livelihood as a result of BP’s spill will not get their lives back, even if BP does pay compensation. Certainly the 11 workers killed in the original explosion will not get their lives back. Why should the people responsible for this carnage be able to resume their lives of luxury?

There are two separate questions. The first is a narrow legal issue concerning the extent to which Hayward and other high-level executives can be held criminally liable for the accident. It may be the case that the laws are written so that even if companies commit gross negligence that results in enormous harm, including multiple deaths, top officials are not criminally liable. This is a question about the status of current law.

The second question is a moral and economic one about what the laws should look like. From either standpoint, it is very difficult to see why we would want to say that reckless behavior that would be punished with long prison sentences if done by…
continue reading


Tags: , , , , , , , , ,




Are the Losses of Fannie and Freddie Now “National Policy”?

Are the Losses of Fannie and Freddie Now "National Policy"?

Courtesy of Trader Mark, Fund My Mutual Fund 

fannie and freddieBarry Ritholtz and Dean Baker discuss a concept I’ve advanced – effectively Fannie and Freddie (or as we call them around here, FanFredron) are being run for loss to create a false housing economy via subsidization. They do put forth an additional point that I have not harped on as much: one added benefit of this ‘policy’ is our financial oligarchs win…. again.

If we ever do get back to a world where the private sector is truly a part of financing the housing market it is going to be mighty interesting to see what true mortgage rates will settle at, now that ‘strategic default’ is part of the American lexicon. The higher risks involved will create an increase in costs to every future mortgage due to this exciting new fad. But with government now supporting some 95%+ of all financing this is an issue that won’t face us for many years. Thankfully the government does not price in any risk and gleefully backs mortgages of almost any kind (still). Until some far in the future reform date, more below market rates offered by the 2 institutions that can gladly lose money forever – ponzi style.

(Amazing fact I heard the other day, Fannie Mae has lost more money the past 2 years than it made the previous 30 years. Chew on that for a moment before you move onto the next paragraph. Thankfully there is no such thing as a clawback in corporate America.)

6 minute video

 

The Senate on Tuesday rejected a Republican sponsored measure that would effectively cut off support to Fannie Mae and Freddie Mac in two years. The government-sponsored enterprises, now in conservatorship, have already cost the government about $145 billion.

And there’s no limit to how much more they can ask for for the next two years!

Fannie Mae lost $11.5 billion in the first quarter while Freddie Mac lost more…
continue reading


Tags: , , , , , , , , ,




Wall Street Deficit Hawks Have No Shame

Wall Street Deficit Hawks Have No Shame

alan greenspanCourtesy of Dean Baker of Center for Economic and Policy Research

Almost 25 million people are unemployed or underemployed right now. This was a completely preventable disaster. This is worth repeating a few hundred billion times so that even the geniuses in Washington can understand it.

The disaster was completely preventable. The reason we had the disaster was that the people controlling economic policy, that would be people like Alan Greenspan and Robert Rubin, either had no clue about the housing bubble or deliberately decided to ignore it.

Nothing about this story is complicated – let’s write this so that even a Wall Street billionaire can understand it. We had an $8 trillion housing bubble. It was inevitable that it would collapse. Bubbles do that. When we get an over-priced housing market then builders build more homes. That’s because it becomes very profitable to build homes when prices are high. If builders keep building lots of homes, then eventually there will not be enough people to buy them at bubble–inflated prices, even with the loony mortgages being pushed at the time by the Wall Street banks.

When people can no longer buy homes, their prices drop. When their prices drop people will default on their mortgages and banks lose lots of money.

man read a newspaper in bath

More importantly, when prices drop, builders stop building homes. People also stop spending money based on their housing bubble wealth. The falloff in construction and consumption implies more than $1 trillion in lost demand in the economy. This lost demand throws the economy into a serious recession, with tens of millions of people losing their jobs. It’s all very very simple. You probably don’t even need an intro economics course to understand it.

But, the deficit hawks, led by Wall Street investment banker Peter Peterson either did not see the bubble or chose to ignore it. They ran around the country in the peak years of the housing bubble yelling about “fiscal irresponsibility” even as the housing bubble was growing to ever more dangerous levels. They used their money and their political standing to dominate public debate and crowd out those of us who were trying to warn about the bubble. There were numerous television shows, radio shows and news stories devoted to their dire warnings about the deficit. They even persuaded a major documentary maker to put out…
continue reading


Tags: , , , , , , , ,




Taylor, NY Times, Dean Baker Call Out Bernanke

Taylor, NY Times, Dean Baker Call Out Bernanke

Courtesy of Mish

Oil being poured into water, studio shot

Bernanke’s hubris, inability to admit mistakes, and his blaming everyone but himself for his mistakes is increasingly starting to touch on nerves.

On Tuesday, the New York Times asked the right question: If Fed Missed This Bubble, Will It See a New One?

In 2005, Mr. Bernanke — then a Bush administration official — said a housing bubble was “a pretty unlikely possibility.” As late as May 2007, he said that Fed officials “do not expect significant spillovers from the subprime market to the rest of the economy.”

The fact that Mr. Bernanke and other regulators still have not explained why they failed to recognize the last bubble is the weakest link in the Fed’s push for more power. It raises the question: Why should Congress, or anyone else, have faith that future Fed officials will recognize the next bubble?

Just this week, Mr. Bernanke went to the annual meeting of academic economists in Atlanta to offer his own history of Fed policy during the bubble. Most of his speech, though, was a spirited defense of the Fed’s interest rate policy, complete with slides and formulas, like (pt – pt*) > 0. Only in the last few minutes did he discuss lax regulation. The solution, he said, was “better and smarter” regulation. He never acknowledged that the Fed simply missed the bubble.

“We’ve never had a decline in house prices on a nationwide basis,” Mr. Bernanke said on CNBC in 2005.

“The Federal Reserve has unparalleled expertise,” Mr. Bernanke told Congress last month. “We have a great group of economists, financial market experts and others who are unique in Washington in their ability to address these issues.”

Fair enough. At some point, though, it sure would be nice to hear those experts explain how they missed the biggest bubble of our time.

Useless Expertise

All that "expertise" was less than useless. It is amazing how hopeless Bernanke was about housing, about jobs, about the recession, about everything.

Bernanke did not get a single thing right.

Taylor Disputes Bernanke

Please consider Taylor Disputes Bernanke on Bubble, Says Low Rates Played Role.

John Taylor, creator of the so-called Taylor rule for guiding monetary policy, disputed Federal Reserve Chairman Ben S. Bernanke’s argument that low interest rates didn’t


continue reading


Tags: , , , , , , , , , , ,




The Ongoing Cover Up of the Truth Behind the Financial Crisis May Lead to Another Crash

Perhaps the best introduction to this terrific article by (the other) George Washington is in the comment section. So why should we care about the crimes and the cover ups?  Our freedom depends on our government enforcing and abiding by the law. It’s apparent that we are headed down the slippery slope Justice Louis Brandeis describes in Olmstead v. United States (1928):Justice Louis Brandeis

"In a government of laws, the existence of the government will be imperiled if it fails to observe the law scrupulously. Our government is the potent, the omnipotent teacher. For good or ill, it teaches the whole people by its example. Crime is contagious. If government becomes a lawbreaker it breeds contempt for law: it invites every man to become a law unto himself. It invites anarchy."

We have the Federal government’s massive and flagrant display of lawlessness, and population somewhere on the way from apathy to dependency in the Fatal Sequence cycle of civilization.  Not winning a combination if you ask me. – Ilene

The Ongoing Cover Up of the Truth Behind the Financial Crisis May Lead to Another Crash

Courtesy of George Washington’s Blog

William K. Black – professor of economics and the senior regulator during the S & L crisis – says that that the government’s entire strategy now – as during the S&L crisis – is to cover up how bad things are ("the entire strategy is to keep people from getting the facts").

Indeed, as I have previously documented, 7 out of the 8 giant, money center banks went bankrupt in the 1980′s during the "Latin American Crisis", and the government’s response was to cover up their insolvency.

Black also says:

There has been no honest examination of the crisis because it would embarrass C.E.O.s and politicians . . .

Instead, the Treasury and the Fed are urging us not to examine the crisis and to believe that all will soon be well.

PhD economist Dean Baker made a similar point, lambasting the Federal Reserve for blowing the bubble, and pointing out that those who caused the disaster are trying to shift the focus as fast as they can:

The current craze in DC policy circles is to create a "systematic risk regulator" to make sure that the country never


continue reading


Tags: , , , , , , , , , , , , , , ,




 
 
 

Phil's Favorites

Stupidity Well Anchored: Absurdity of Inflation Expectations in Graphic Form

Courtesy of Mish.

The amount of sheer nonsense written about inflation expectations is staggering.

Let’s take a look at some recent articles before making a mockery of them with a single picture.

Expectations Problem

On July 17, 2017, Rich Miller writing for Bloomberg proclaimed The Fed Has an Inflation Expectations Problem.

Expectations matter because they shape how households and companies act and thus can go a long way in determining where inflation actually ends up. Consumers accustomed to meager inflation will resist paying up for goods and services.

“Lower inflation expectations make it all the more diff...



more from Ilene

Chart School

Tech Trades Squeeze Stops; Russell 2000 Approaches Resistance

Courtesy of Declan.

There is a bit of an overreach on today's action as the level of loss was light. However, the much-anticipated breakouts in the Nasdaq and Nasdaq 100 look like they will have to wait a little longer. Both Tech indices saw the squeeze put on tight long stops, but not enough to suggest a panic sell-off is imminent. However, any sell-off has to be watched; losses below the 50-day MA would be concerning.


The Nasdaq 100 is looking a little more vulnerable with the MACD trigger 'sell' and +DI/-DI sell' trigger. Look to this index for leads.
...

more from Chart School

Zero Hedge

A Look At How Nestle Makes Billions Selling You Groundwater In A Bottle

Courtesy of Zero Hedge

A few weeks ago we shared with readers a lawsuit filed in Connecticut against Nestle Waters North America, Inc. alleging that the water they marketed as Poland 'Natural Spring Water' was actually just bottled groundwater...the same water that runs through the taps of many American households. 

Now a new investigation from Bloomberg Businessweek reveals how large water bottling companies choose their plant locations based not on the steady supply of pristine, natural drinking water, as their labels and other marketing campaigns would lead you to believe, but based on which economically depressed municipalities...



more from Tyler

ValueWalk

UAW's Loss At Nissan Auto Plant Masks Genuine Progress For Organized Labor

By The Conversation. Originally published at ValueWalk.

Harley Shaiken, University of California, Berkeley

]]> Get Our Icahn eBook!

Get our entire 10-part series on Carl Icahn and other famous investors in PDF for free! Save it to your desktop, read it on your tablet or print it! Sign up below.

A spirited, decade-long effort by workers to organize a union at the sprawling Nissan assembly plant in Canton, Mississippi, seemed to drive into a ditch on August 5, when officials finally tallied the elec...



more from ValueWalk

Digital Currencies

Jamie Dimon Faces Market Abuse Claim Over "False, Misleading" Bitcoin Comments

Courtesy of ZeroHedge. View original post here.

A week after Jamie Dimon made headlines by proclaiming Bitcoin a "fraud" and anyone who owns it as "stupid," the JPMorgan CEO faces a market abuse claim for "spreading false and misleading information" about bitcoin.

Unless you have been living under a rock for the past week, you will be well aware of JPMorgan CEO Jamie Dimon's panicked outburst wi...



more from Bitcoin

Insider Scoop

3 Reasons Intuit Will Continue To Dominate The Tax Business

Courtesy of Benzinga.

Related INTU Intuit's Stock Is Still Enticing, Even After A Big 2-Year Run Benzinga's Top Upgrades, Downgrades F...

http://www.insidercow.com/ more from Insider

Members' Corner

"Citron Exposes Ubiquiti Networks" But TNN Says "Not So Fast"

What do you think? (There's a comment section below )

"CITRON EXPOSES UBIQUITI NETWORKS" 

Does Ubiquiti Networks (NASDAQ:UBNT) actually have real products that sell to consumers? Of course! So did Valeant and WorldCom, but that does not stop its financials from having every indication of being completely fraudulent.

Citron will detail a series of alarming red flags and detail how Ubiquiti Networks is deceiving the investing public.

Read the full report here.

******

Rebutal by The Nattering Naybob, ...



more from Our Members

OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Biotech

Can low doses of chemicals affect your health? A new report weighs the evidence

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

 

Can low doses of chemicals affect your health? A new report weighs the evidence

Courtesy of Rachel ShafferUniversity of Washington

Assessing the data. LightField Studios/shutterstock.com

Toxicology’s founding father, Paracelsus, is famous for proclaiming that “...



more from Biotech

Mapping The Market

The App Economy Will Be Worth $6 Trillion in Five Years

Courtesy of Jean-Luc

This would be excellent news for AAPL and GOOG to a lesser extent although not inconsequential:

The App Economy Will Be Worth $6 Trillion in Five Years 

In five years, the app economy will be worth $6.3 trillion, up from $1.3 trillion last year, according to a report released today by app measurement company App Annie. What explains the growth? More people are spending more time and -- crucially -- more money in apps. While on average people aren't downloading many more apps, App Annie expects global app usership to nearly double to 6.3 billion people in the next five years while the time spent in apps will more than double. And, it expects the...



more from M.T.M.

Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



more from Promotions

Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



more from Kimble C.S.

All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

more from David



FeedTheBull - Top Stock market and Finance Sites



About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>