Tuesday, February 10, 2009

The Long and Slow Slide Into Depression

Between the Senate vote to approve their version so-called stimulus package and Treasury Secretary Timothy Geithner's strangely panicked yet vague bank Rescue Plan pronouncements, the stock market is crashing, now down over 400 points.

Watching President Obama and Secretary Geithner and Senate and Representative Leaders mapping out a multi-pronged governmental approach virtually identical to the actions that led to the 1930's Great Depression is genuinely a terrifying experience. I picked a really poor day to stay at home.

The news reports are restrained (read
Five Reasons the Markets Don't Like the Bank Bailout)when compared to the discussions I've had with financial experts behind the scenes. The panic is real. And the markets show it.

The government cannot spend their way out of this crisis. In fact, the more the government spends, the deeper and longer the crisis will last. Geithner's signals of future bailouts really terrifies virtually every economist not on the administration's payroll.

Famed investor and global economic analyst Jim Rogers predicts
Government Bonds May Be Last Bubble. If he is even partially right, it would mean the collapse of the United States.

Investors will have to short government bonds at some point despite their current attraction, as the amount of debt issued is "staggering" and inflation risks are down the road, Jim Rogers, CEO of Jim Rogers Holdings, told CNBC Tuesday.

"I'm buying gold just because I'm periodically buying gold, because I do expect it to be much higher over the next decade," Rogers said, adding that history has never seen all major central banks printing money "as fast as they can" at the same time.

"I know we're going to have serious inflation down the road," Rogers said.

Rogers is right. We are not going to be able to finance this level of national dept. In effect, the government is merely printing money and massive inflation is absolutely guaranteed. Rogers is wise to signal a move to buy more gold.

I believe we really must defeat the massive inflation package masquerading as a stimulus plan. Once again I suggest you call your Representative and Senator. Tell them to delay or vote against the Stimulus Package. We need Democrats to break with the President and vote with the Republicans. That is damned tough for them to do, but our very future depends on it.

Then we must demand a whole lot more from President Obama and Treasury Secretary Geithner.


Chris said...

Forget it. This Trojan horse is too important to Democratic support groups. We're going to bankrupt this nation in order to entrench quasi-socialist levels of government spending. Now that the baselines have been put on steroids, we probably won't ever be able to roll back any of this. Any attempt to cut increases will be portrayed as a cut in the service itself, as usual.

We're screwed. I wish my bell bottoms still fit, 'cause we're going back to the 70s.

Stella by Starlight said...

Our nation was bankrupted by the previous administration. Why didn't anyone do anything then? Explain to me why Halliburton lost $2 billion during the Iraq war? Who was doing oversight?

Bob Keller said...

Stella, wrote: "Our nation was bankrupted by the previous administration. Why didn't anyone do anything then? Explain to me why Halliburton lost $2 billion during the Iraq war? Who was doing oversight?"

I hate to be rude yo one of my very favorite fellow bloggers but "so fuckng what?" This is esactly like saying "The last guy who lived in this house killed his wife, so it's really OK for me to kill my entire family." Or an arsonist to say, "Another guy burned down this warehouse, so it's OK for me to burn down the entire city of Los Angeles."

The very curious Democrat response of pointing to the often unrelated misdeeds of the Bush administration is so very bizarre as to be ridiculous.

This is exactly why I hate labels and I hate partisanship. If it was wrong for Bush to build huge deficits, then it certainly wrong for Obama to double down on a strategy that clearly didn't work over the last eight years.

Only this is so very much worse, because this package will lead to rampant inflation that will rob Americans of what little savings they have left.

And, at some time very, very soon, America will no longer be able to even service the debt.

So. I'm sorry Stella, but either defend the Stimulus Bill on its own merits or don't, but an argument about Halliburton is not even remotely relevant.

Bob Keller said...

Please also see my companion blog entry It Will Take great Courage..... for an additional view of the name calling that passes for discussion in today's blogosphere.

Unknown said...

Financial times of London.

Why Obama’s new Tarp will fail to rescue the banks.

Has Barack Obama’s presidency already failed? In normal times, this would be a ludicrous question. But these are not normal times. They are times of great danger. Today, the new US administration can disown responsibility for its inheritance; tomorrow, it will own it. Today, it can offer solutions; tomorrow it will have become the problem. Today, it is in control of events; tomorrow, events will take control of it. Doing too little is now far riskier than doing too much. If he fails to act decisively, the president risks being overwhelmed, like his predecessor. The costs to the US and the world of another failed presidency do not bear contemplating.

What is needed? The answer is: focus and ferocity. If Mr Obama does not fix this crisis, all he hopes from his presidency will be lost. If he does, he can reshape the agenda. Hoping for the best is foolish. He should expect the worst and act accordingly.

Yet hoping for the best is what one sees in the stimulus programme and – so far as I can judge from Tuesday’s sketchy announcement by Tim Geithner, Treasury secretary – also in the new plans for fixing the banking system. I commented on the former last week. I would merely add that it is extraordinary that a popular new president, confronting a once-in-80-years’ economic crisis, has let Congress shape the outcome.

The banking programme seems to be yet another child of the failed interventions of the past one and a half years: optimistic and indecisive. If this “progeny of the troubled asset relief programme” fails, Mr Obama’s credibility will be ruined. Now is the time for action that seems close to certain to resolve the problem; this, however, does not seem to be it."


Stella by Starlight said...

So fucking what? LOL. Wizard, you are truly terrific, and your logic is dead on. No offense taken from one of my very favorite bloggers. I wish I had better facts about the economic situation, but from what I know, Lee makes a good point.

Damn, I was so hopeful...