Nouriel Roubini the Macroeconomist Extraordinaire

(Time)

The opportunities for global growth on a sustained basis are quite positive. Right now the basic building block of global demand , the US consumer, is faltering; therefore there is a lack of aggregate demand relative to supply. The supply has been rising because China and emerging markets have been investing so much in new factories and new productive capacity. A lack of demand relative to excess supply--that’s what the global recession is.

You have to have a complete rebalancing of the global economy. The global imbalances are not sustainable anymore.

(From Dec. 2009 issue of GQ)

I have spoken before of how I believed there existed a very real danger of slipping into a depression economy or have the “double-dip” recession model enacted upon us. I believe the danger still exists but there are many signs pointed in the other direction as well.

Roubini speaks of an “L-shaped” model in terms of his predictions for American economic recovery, and I think he holds the most accurate take on economics available. The “double-dip” is the “W-shaped” model that I spoke of before and it looks like the “L” or perhaps the optimistic “elongated U” are the far more likely graph of US economic growth.

The media calls him “Dr Doom,” and I guess that makes me “Dr Doom Jr” because I am less optimistic that we will balance the global economy. But if there was ever any question as where I get my economics, I would have to cite Roubini.

Let us not forget that he predicted the housing market burst and the coming of the global economic recession. It is important to hear what he has to say at this stage and I find it strange how often his assessment mirrors my own:

Roubini’s Three Major Concerns about current US Economy

1. The banks that “still have bad assets weighing on them, remain unable and unwilling to lend.”

2. The “US households that are increasingly indebted and decreasingly employed.”

3. The corporations that are “improving balance sheets by cutting jobs and cutting costs other than increasing revenue.”

--

The big question here:

Why in the years and months before the economic crisis was it only “bubble bloggers,” Roubini and a handful of Democrats who warned of the coming housing market bubble bursting and the resulting recession from the burst?

There is no question that Federal Reserve Chairman Ben Bernanke responded aptly to the situation and that the Congressional bailout measures were indeed necessary. What remains to be seen is if the same people who would so readily jump to rescue a sinking economy would have the foresight to see the coming of a “double-dip” recession or if they would warn of it if indeed they did. I believe many financial “experts” are people who only understand talking-up the market and have long since given up on objective assessments on economics.

All Hail the Corporate Empire

All hail the Corporate Empire.

Poison-pushers and war-mongers rejoice; your neckties have absolved your sins.

The rusted wheelchair left to rust by the riverside finds a new owner.

A lonely overpass serves its intended purpose: a home for American families.

A toxic watershed refreshes a dry throat. Blessed are the war-makers; gifted are the clever thieves.

Someone, somewhere, made note of the misery and went wholly unnoticed.

Crying for the dream we all lost, she spoke of her true feelings.

Striving for the world we envision, he came to know his heart.

An exchange of blood for money; the transaction making us all a little bit evil.

A maniac takes his pound of flesh; just another day living under the Corporate Empire.

==============================================

Inspired by “Praise to the Highways” by Roberto Bolaño appearing in the December 2009 issue of Harper’s Magazine.

The Last Honest Salesman in America

What happened just now in America?

Was anyone else paying attention, or was it just me?

The last thing we need these days are people running a fast game and rolling out the carpet of corporate lies for anyone put in front of them.

What we need is an army of intelligent and savvy business people who can stand behind what they do and not become fast talking cheats.

I stand here in a world of sales and marketing to tell you that certain people push you toward something you don't really want and all they really see when they look at you is a big dollar sign with feet.

We are not all this way. And I would like to say I'm proud to tear myself from the mold and stand on my own two feet of integrity.

There is still many things that I don't do, that I could to help others out in their sales endeavors, that might be an ultimate factor in proving just how I am playing the sales game over here. But holding onto trade secrets and keeping things from rebounding back to the office is hardly the same thing and trying to get you to buy something you don't really want or need.

I stand here the Last Honest Salesman in America. And when you deal with me you deal with the truth.

Reality Check: Economics in America

Let it be said that I am not bought off and not invested in how much money you make one way or the other.

I am one of last people on the web that is willing to tell the truth and attempt to remove all the shadowing and spin that resides over all that is the media.

Allow me to plain:

We are headed for a depression.

I repeat this as a man with three businesses and a successful career in marketing said this statement to me.

A math teacher of high credentials has said to same to me in the past year.

You won’t hear this from the bought and paid for economists who sat on their hands and let our economy crumble beneath us as they remained mute.

While the word ‘depression’ in regards to economics is about to appear on the FFC Banned Words List there is much to be understood about what awaits us.

I’ll remove as much jargon as I can.

The economy will go up. But then it will come back down again.

They call me a “W” in terms of my economic perspective in that I believe we will regain strength in the market in coming quarters. But I think these will be temporary gains and ultimately we will fall back into a recession cycle that will lead to a depression.

Most media economists tell you that they are a “V” which to me just denotes that they are blindly optimistic or much more likely bought and paid for.

Some maintain that there will be no improvement and they are labeled the “L‘s”.

And some still think we will have gradual and slow recovery that is unhampered and they are labeled as “U‘s”.

Anyone like myself who speaks of a forthcoming American Depression would squarely fit into the “W” or the “L” camps.

However, the notion that all hope is lost is a false one.

Most of us ‘money-savvy’ people already know that fortunes can be made in depressions and that the wealth of the nation will not dissolve into thin air but rather will be distributed down to the people who have the intelligence and the foresight to take advantage of the downturn.

This is just a sliver-lining though. Each family should take real steps right away to build up the value of your home, maximize your portfolio and be prudent about major expenses.

But it’s important to realize that if we are going to prove me, a math teacher and a successful business man wrong that this nation will have to refocus itself on consumer spending.
If all of America continues to tighten it’s belt in this endless fashion then you begin to see why some predict this outcome at a latter date. Most say about three years and I would estimate a little longer span of time but the same end result.

eTrade and the Recession

I have been intentionally over-paying those little everyday expenses like tipping and things like not using the local ‘insider’ coupon clip.

It’s been awhile for me personally since I bought a product online, but supporting eTrade is another way is try to do your little part to shoot some life into the economy while your online.

I plan to buy the next gift for someone special via online.

Net-Trade is complex for the ordinary consumer to understand but there are multiple ways to support domain hosts, web loggers, local businesses and local markets.

Change starts at home.

Making your home more energy efficient in every way possible is a sound investment. Energy costs are not likely to drop in any foreseeable future.

This is just one of many steps I suggest you take to affect real change in your local environment and community.

The federal government can only do so much. Each bailout and stimulus they devise will ultimately fail if the Consumer Markets do not participate.

We need to take the time to educate ourselves enough as citizens to better understand our role at this stage in our national economy.

We all can make some difference.

We all can effect some amount change within our respective spheres.

Bank Stress Tests

The Obama administration is considering making public some results of the stress tests being conducted on the country's 19 largest banks, said people familiar with the matter, a move that could help more clearly separate healthy banks from the weaklings.

Until now, the government has tried to treat all banks equally, pouring cash into both strong and struggling institutions to prop up the financial sector. The strategy has provided cover for beleaguered banks, which received funds along with their stronger brethren.

This possible move, combined with first-quarter bank earnings and the push by some financial institutions to raise new capital and repay their bailout funds, could lay the groundwork for a new phase in the financial crisis. Within weeks, the stronger banks could emerge free of government shackles and flush with new funds, with weaker ones still reliant on federal largesse. That would transform how investors and the government view the financial sector.

STRESS, RELIEF: Shown last month, Wells Fargo's John Stumpf, BofA's Kenneth Lewis, US Bancorp's Richard Davis, Morgan Stanley's John Mack, PNC's James Rohr, State Street's Ronald Logue and Citi's Vikram Pandit. Since announcing the stress tests earlier this year, the government hasn't made clear what, if anything, would be disclosed about the assessments. The Treasury originally suggested it would defer to individual banks to disclose results. But some regulators worried about banks selectively leaking information, causing a possible bias against rivals.

The stress tests were designed to build confidence that the nation's largest banks could weather a severe and prolonged economic downturn. Regulators are trying to determine how much assistance banks might need to continue lending in such circumstances. Banks that need more capital will get six months to raise it from private investors or take cash infusions from the government.

It isn't clear precisely what information the government might disclose. It remains possible the data won't be specific to individual banks. But some within the administration believe a certain amount of information needs to be released in order to provide assurance about the validity and rigor of the assessments. In addition, these people also are concerned that the tests won't be able to fulfill their basic function of shoring up confidence unless investors are able to see data for themselves.

Staff at the various regulatory agencies have been discussing the matter for several weeks and are expected to brief top regulators as soon as this week. One possible solution: Aggregating the data provided by the banks so the government could provide a broad snapshot of the banking industry's health without disclosing firm-specific data.

Last month, Comptroller of the Currency John Dugan said "there will be definitely some information that will be provided" once regulators make their decisions. "Exactly what that will be and when it will be provided will come forth later," he said at the time.

Several small banks have already repaid their bailout funds. On Tuesday, Goldman Sachs Group Inc. successfully raised $5 billion in equity aimed at helping it repay $10 billion in Troubled Asset Relief Program, or TARP, capital it received in October. Other large financial institutions don't appear to be keen to tap the equity markets any time soon, but the recent revival in their stock prices has made the concept more appealing.

A senior U.S. Treasury official said the government will accept repayment of rescue funds from any institution whose regulator dubs it healthy enough to operate without federal capital.

The move to stop treating banks equally is sparking concern about the effect on specific institutions seen as weaker than peers. "You can create a run on a bank pretty quickly," said Eugene Ludwig, chief executive of consulting firm Promontory Financial Group and a former Comptroller of the Currency.

Wayne Abernathy, executive vice president of financial institutions policy and regulator affairs at the American Bankers Association, said the government needs to provide information about the results but also protect examination data.

"I don't think they can ignore the appetite they have created for this information," Mr. Abernathy said. Having the government publicize some information would allow policy makers to control the message. "It's what can we say that is meaningful while still protecting the quality of that exam data," he said.

Mr. Ludwig cautioned that any information could give rise to mischief. "Bank exams are confidential for good reason," he said. "Given the kind of confidential information they contain, there is always the possibility of misuse or misinterpretation."

By DEBORAH SOLOMON and MICHAEL R. CRITTENDEN

Anarchy vs. Populism

Ever reviled, accursed, ne’er understood,
Thou art the grisly terror of our age.
“Wreck of all order,” cry the multitude,
“Art thou, and war and murder’s endless rage.”
O, let them cry. To them that ne’er have striven.
The truth that lies behind a word to find,
To them the word’s right meaning was not given.
They shall continue blind among the blind.
But thou, O word, so clear, so strong, so pure.
Thou sayest all which I for goal have taken.
I give thee to the future! Thine secure.
When each at least unto himself shall waken.
Comes it in sunshine? In the tempest’s thrill?
I cannot tell -- but it the earth shall see!
I am an Anarchist! Wherefore I will.
Not rule, and also ruled I will not be!
- John Henry Mackay

I draw your attention simply to the first nine lines of this quote, and have included it in it’s entirety for a full perspective.

I believe we have suffered this current Global / American Recession in a large part to the economic strategy of ‘greed is good’ and more specifically the enactment of Anarcho-Capitalism in our banking, mortgage and credits markets the United States of America.

A lack of sound order and a lack of logical policies will only ultimately lead to a lack of accountability from authority.

A populist does not reject authority, or rule, outright. Rather a populist is prone to ask:

“By right to do govern? Whom do you serve?”

While I will express a degree of fondness for Pure Anarchism in which all property is outright theft; I find the whole ideology unworkable and only expressly attainable in small, sustainable and highly isolated communities. Much like Marxism is all looks good for an intellectual discussion and quid-pro-quo debating but in a real world setting the whole underlying concepts quickly become revealed as nothing but an ideologist’s dream work.

America of 2009 needs real solutions and not simply an outpouring of sentiment to ’make AIG pay-you-back,’ but rather a hopeful outpouring of people willing to listen.
People willing to engage.

The Presidency of Barack Obama is but a stepping stone in a much larger and much longer road. We must begin to demand the highest standards of our leaders. On both Wall Street and Capitol Hill.

It is not wrong to want justice. It is not wrong to want fairness. It is not wrong to question authority.

I am a Populist-Liberal! Wherefore I will.

Not to rule, but to question the value of our rulers to us.

The R-Word

Recession; In the span of no more a few months the word is now ‘fair game’ in America.

An American Recession, no less. After only a handful months these two words can be freely connected in advertisements and in public media formats.

This after a time in which any Democrat or liberal spoke of a coming recession they were dismissed as ‘kooks’ and ‘doomsayers.’

I was one of those ’doomsayers.’ And I was right. 

While the prevailing wisdom is to downplay a sick economy and a weak dollar I do not believe this to be the correct course of action.

If the economy is sick, we should know about it.

If the dollar is about to drop, we should know about it.

If a stock is about to devalue, we should know about it.

And on, and on.

I believe that one of the reasons we have suffered this recession is due to this very mentality combining with the ‘greed is good’ mentality.

A broadcaster, a stock quote broker, a banker or an economic journalist has no benefit to being truthful to their audience and every benefit to simply remaining mute. Or worse yet, talking up a business, stock or concept that they know to be unsound.

The idea that saying into a camera or many media outlet the raw truth of the economy as being a detriment to that economy is false.

The investors and consumers need to be able to make informed decisions. If those trusted to give honest and credible advise are proven to simply communicate in a ’one answer only’ situation then the reality of market hazards remain the sole property of those already succeeding in market endeavors.

Leaving us, the common people, out in the rain.

Caps-Lock Engaged America

“populist outcry”

“socialist agenda”

“economic outrage”

We are hear these words connected in the Big Buzz of the Media, lately.

We live in a state of economic chaos. Right now, today.

As an internet-blogger I call this state we exist in “Caps-Lock Engaged America.”

My need to translate everything into internet terminology is no doubt why I prefer this way of describing the current state of affairs in America.

These pundits and talk show hosts of the right wing seek to drum up fear in the public, nothing more.

In the absence of logical arguments they simply wish their audiences to suspend all logic and proceed to believe in conspiracies.

The left wing is busying itself with AIG-Hate while shunning these new Populists as madmen and radicals. We are neither.

These are the very same kind of ‘madmen’ and ‘radicals’ who helped to form the Democratic Party of our day, but I digress.

There is no shame in being upset. But direct your anger.

President George W. Bush spent this country broke as if it was his personal play-thing to abuse and mistreat as he would.

One of the primary functions of a President of the United States of America is to be a Steward of the American Economy.

The previous President not only failed in this, he failed so miserably that his actions in this area specifically are in fact criminal.

President Bush had an obligation to use his position to inform America of the coming recession. Yet he joined in the chorus of conservatives who claimed all was well in the economic seas.

The ’proper’ blame doesn’t stop there.

The major leaders of financial institutions, those chairing relevant boards and countless figures in the media all failed in this exact same respect.

These individuals had a duty to the American public to inform them of an impending crisis that would directly effect their home life and personal budget.

These individuals knowingly withheld information from investors and consumers in a clear effort to destroy any chances we had at mitigating the coming storm.

Some moved funds into bonds instead of stocks. Some transferred funds into foreign currencies. Some bought precious metal portfolios.

But many more simply did not know or would not listen to those like myself who warned of this coming American Recession.

Blah, Blah, AIG, Blah, AIG, Blah

Can you say: media scapegoat? Can you say: easy target?

No fan of AIG or anything. Bunch of suits passing around paper that doesn't move one piece of anything that helps even one worker. Let them all pick crops, I say.

But I am a media-watchdog and have had my eye on the government like a hawk. Bonuses for these jokers is not the right 'aim' of this new American-frustration we are all experiencing.

Bemoaning the continuation of old and backwards thinking will not move us on. We must come to readily expect ourselves for many things and remain unphased. America must quite literally reach a No Bull State of Operation extremely quickly if we are regain any of what has been lost.

We can expect the economic guru's to come out of the wood-works. We can expect our former leaders in business and government to try to interject themselves and contort the matter at hand.

Just as every peoples before us we may use this moment to strive or use this moment to relent.
A demand for accountability is but a beginning. The true goal must always be to bring forth the individuals who will operate as honest brokers and stewards of the economy while tossing aside corporatist and those who played us all for fools.

They are the true enemy of the common person.

Not any specific group but the whole entity of continued corruption.