Wednesday, August 26, 2009

Chess vs 52 Pickup

A Federal Judge has ruled against the Federal Reserve in a Freedom of Information Act suit over the Fed’s secret bank bailouts totaling at least two trillion in cash and another 22 trillion in other loan guarantees and god knows what else (it’s secret). The Fed’s excuse is that to reveal just how insolvent this handful of large banks really are would cause a panic.

Don’t hold your breath to ever get this information since the ruling can be appealed up to a Bush appointed appeals court and ultimately to the Supreme Court of Corporate America. To show his solidarity with the Fed’s policies, President Obama did immediately on the announcement of this ruling interrupt his vacation and re-appoint Fed Chairman Bernanke to a four year term several months before this would normally be expected.

The spin in the media was that Obama made this announcement to distract from the new larger projected ten year deficit but trillion dollar a year deficits were of never of any concern for the financial services industry in the past. Revealing how bad things really are is a concern however since rich people that have all their money invested in these institutions might start to suspect that their money is long gone. They would be right, it has been a multi-trillion dollar Ponzi scheme, Bernie Madoff was an amateur.

The idle rich have always lived on the blood of the American middle class but Reaganomics has killed the host and the parasites are increasingly just sucking air. The Federal Reserve has created bubble after bubble to reanimate the corpse but each time it falls down faster and harder. The unemployment rate continues to climb not because consumers are buying less and saving more but because jobs continue to be out sourced just as fast it can be arranged.

These lost jobs do eliminate supporting service jobs but increased Government spending and higher and higher trade deficits have been offsetting this for years. This of course could not be sustained and last year it began to collapse in earnest. The only thing that broke the fall was the worldwide panic made the dollar suddenly more valuable and imports became more affordable. This will not last, even at the USD’s peak the trade deficit was still a billion dollars a day. The next bubble’s bursting will be far more severe.

This mess can still be undone and it’s possible Obama is positioning himself to do something (you know, playing chess), but the Republicans are still playing 52 pickup.

Handicapping the Four Horses of the Apocalypse at