American Dream
This is from a recent poem I wrote about the current situation we find ourselves in, as a nation and society. While I write much about the economy and what's going on with the way the big-wigs move the money around, there is a personal toll that all of this takes on all of us. This poem is intended to capture that. You can decide for yourself if I succeeded. The poem can be read in it's entirety at Uncle Sol Poetry - American Dream
by Carlton Smith...
they fought for the American Dream
that grand experiment that sprouted on a continent
so far removed from their ancestors
but gave an opportunity to every man
and ignored the privilege of birthevery man had a shot
every man had a chance to make it
today the magazines are out of shots
as your neighbor sits by the phone on thursday
waiting to punch in the right combination
to collect his check
...
Consequences – There are Always Consequences
Karl Denninger posted this item a week ago at his blog, Market Ticker. It's poignant enough that I thought I'd share it here as well, even a week after it was posted. Denninger has been a leading voice, predicting our current economic predicament well before it came to pass. It seems to me these words could use as wide an audience as possible. Here is an excerpt. Follow the link above for the entire article.
Yes, I know all about the stock market rally from last March. I know all about the claimed GDP "improvement." But I also know that we got both by adding more than $2 trillion in debt to the United States - or roughly 14% of GDP - over the space of the last 18 months. That's about 10% of GDP annualized, and incidentally, a 10% GDP contraction is the common economist's definition of an Economic Depression.
So let's cut the crap - we are in a Depression right now. We are pretending we are not, just like you can pretend you didn't really lose your job so long as your credit card does not reach its limit. We have been in that depression for about 18 months and there is no evidence that we will exit it, as we have yet to find a way to pull back the deficit spending without an instantaneous collapse in the economy.
Yet at some point we must and will stop. We will either do so of our own volition, or we will do so when the cost of borrowing skyrockets, as others get tired of funding our profligacy. If we attempt to "print" our way out of it the cost of petroleum products will shoot the moon and destroy our economy anyway.
Follow this link to read the whole article. It will be time well spent.
by Carlton SmithTroubled FDIC
My first article on Return of the Great Depression has gone live.
The FDIC announced last Tuesday that the number of troubled banks has risen from 552 in the third quarter of 2009 to 702 for the fourth quarter and that the fund may have to cover up to $20 billion in additional losses by 2013. If the economy worsens, this number could rise. The New York Times reports that Sheila Blair, FDIC chairwoman, said Tuesday that it was unlikely the FDIC would need to tap its emergency credit line with the Treasury Department, but she would not rule the possibility out.
The FDIC is losing money hand over fist. The only way they could possibly become solvent again is if the economy makes a remarkable recovery, soon. However, property prices are not rising and the only reason that foreclosures aren't still dumping on the market is that banks aren't kicking people out of their homes when they don't pay their mortgages. When you add the coming Commercial Real Estate mortgage crises to all this, it doesn't look good.
Banks are failing one after another and the FDIC covers the deposits. They have asked financial institutions for advance fees to stay afloat, but are running low again. And that well can only be dipped once. Once the fees are paid, they are paid. Now the only thing left for it to do is go to the Treasury, and the FDIC doesn't operate with a guarantee that the Treasury will back it. Personally, I don't see the Treasury turning them away, given the uproar that such an action would cause.
One has to wonder, in the end, how much this will cost. I'm curious to find out, if when all of this is over they figure out that Federally insuring the deposits of bank customers allows banks to take on more risky positions, resulting in a greater possibility of going bust. Or will they just keep scratching their heads.
by Carlton SmithThe Pretense of Knowledge
I confess that I prefer true but imperfect knowledge, even if it leaves much indetermined and unpredictable, to a pretence of exact knowledge that is likely to be false.
F.A. von Hayek, in his Nobel Prize lecture in 1974, shares some insights it would do well for all of us to take to heart. It doesn't seem like the numbers they are plugging into their equations in DC are causing the results they expected.
by Carlton SmithReturn of the Great Depression
Beginning today yours truly will be blogging along with Vox Day and Samuel J. Scott on all things economic at ReturnOfTheGreatDepression.com/blog. I will be focusing on the US Economy while Samuel focuses on Europe and Asia. Vox will write about whatever strikes his fancy.
You can look for 3 to 4 posts per week from me of some deeper substance along with daily posts to news items with a bit of detail. I will post excerpts of my longer pieces here, perhaps with a bit of commentary. Look for my first post to go live at 1:15 PM EST today.
by Carlton SmithPages
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