There is no chance whatsoever that we will sidestep on a global basis the sins of our financial fathers. No administration will make it correct or even better. The best case scenario is a double dip depression, but a depression is in gear and there is no clutch action to shift those gears.
Obama’s fiscal stimulation program is becoming modestly readable. He is hoping to put off major funding inflows into cement and rebar as long as possible in the hope that the monetary stimulation will have an effect, but as below you can see that monetary policy has not and will not do anything positive for the economy. The Fat Cats have all that in their pocketbooks, be it corporate or individual. It has paid off legal claims, attorney’s fees and multiple types of funds due to others.
As soon as they go easy but PR hard the fiscal stimulation fails. The knee jerk reaction will open the flood gates. Banks and financial institutions are still on the begging bowl loan and donation line. Business is just awful and unemployment is in depression territory certainly if viewed through the truth window of Shadow Statistics (www.ShadowStats.com).
The cut in the dividend of GE is simply a harbinger of more problems there. Confidence of builders is in the tank. Consumers are spent out and taken out on a stretcher. There is only one way to go when the problem at the basis of all this remains hidden and unattended to.
When Lehman was thrown under the bus, the $60 trillion plus pile of credit default derivatives imploded. That pile can NEVER have a clearinghouse and it is that pile now sitting on any business recovery of merit. Geitner, our possible new Secretary of the Treasury, fluffed off questions about regulating the OTC derivative market.
You can anticipate piles of BS daily with the media continuing to educate you with disinformation. All of this is like intoxicating the terminally ill patient in order to convince that patient that he can anticipate a long and healthy life. It may be kind but will not make the patient live one more day.
Commercial Bank Asset Growth Rates
There is an old saying that you can lead a horse to water, but you cannot make him drink.
This saying certainly applies to the quantitative easing strategy currently being employed by the Fed. Once the derivatives began to collapse in the Fall of 2008, the Fed began to liquefy the banking as the buyer of last resort of bad assets. Over a period of three months, the net free reserve position of the Federal Reserve Bank have been "repaired."
The "repair", however, has had little effect on lending. In fact, since the end of Summer 2009 the growth rate of total loans which includes business, real estate and consumer loans continues to deteriorate. Even more shocking is that the cash assets growth rate has gone parabolic since the Fall of 2008. In other words, banks are hoarding cash and curtailing loans. The return of the real estate and consumer spending (bubbles) cannot happen without access to easy credit.
Times have changed. I will post more about this on my website. If I ever get the time…
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