Archive for July, 2011

A bi-partison DISCUSSION. (Not a food fight.)

Friday, July 29th, 2011

This is long (by modern ADD twitterfied standards) but it’s a complex issue, and these two guys, a liberal and a conservative, do a good job of discussing the debt ceiling, the debt, and the economy.テつテつ It’s an outtake from the Charlie Rose show.

テつ“This is how people on the different sides of the political fence agree and disagree.テつ They disagree on the how and when but not on the reality of the numbers and the fact that it needs to be fixed. “

(It’s my first time trying to post an embedded video, so if it doesn’t work, please be kind.)

July 2011 Capital Drain newsletter is ready

Wednesday, July 27th, 2011


I’ve just sent out the July 2011 Capital Drain newsletter.テつ If you’re on the direct mailing list for that, you should be receiving it now.

If you’re not yet on the list, but would like to be, send me an email.

If you’re just not ready to commit, but want to sample the experience, 沽 you can follow this link:テつ July 2011 CapDrain.

I hope you’ll enjoy it.


Unfinished Business, or Prologue to Another Crash

Tuesday, July 19th, 2011

Barry Ritholtz has put together a masterpiece annotated summary of what we’ve learned about the Too Big To Fail giant banks, and what we have not done with that knowledge, and how it’s going to haunt us.

Without further introduction,
Break Up the Giant Banks NOW (Before They Drag the World Economy Down)

Economic Recovery through mid-2011

Thursday, July 14th, 2011

Where are we in our recovery?テつ There’s good news, and bad news.テつ The good news is that the proximate cause of the recession has been stabilized pretty well.テつ The bad news is that the main driver of a recovery is still too stable, not rising fast at all.

The banking crisis has calmed down.テつ The big money-center banks are loving their new Too Big To Fail status, rolling in record profits and still whining about any new restrictions on their investing style.テつ The smaller banks that do business with consumers are no longer in free-fall, but a few are failing every week.

FDIC Bank Closures through July 8, 2011
The FDIC has been doing its job well.テつ When a FDIC-insured bank fails, the FDIC protects the small depositors, wiping out the investors and almost always replacing the incumbent (failed) management.テつ Even so, the total cost since the crisis began is over $80Billion now, to clean up nearly 400 banks.テつ The pace of new failures is relatively low and steady, and the average cost per failure is far below the peak level.

The cost to the taxpayer, BTW, is $zero– it’s all funded by insured banks’ payments into the FDIC insurance system.テつ Why do the big banks not have a similar industry-funded backstop?テつ Ask your Senators and Representative.テつ Don’t let them change the subject.

The part of the recovery that’s most disappointing is the lack of new jobs.テつ To be precise, it’s a problem of the new private-sector jobs being not much more than the public-sector (state and local) government budget-induced layoffs.テつ Net, the recovery in jobs is anemic.テつ The fraction of jobs lost in this recession was far higher than in any other since the Great Depression, and the pace of new job creation is even slower than the “jobless” recovery of the mid-2000s.

Compare employment in 5 recessions

Unemployment Claims in 5 recessions 2011-07-14

We have come a long way from the economic meltdown of 2008, but we won’t really recover until we get a lot more people in this country working.テつ The stimulus packages of 2008 and 2009 were political compromises, but they were better than nothing.テつ The cash grants to local governments to prevent (delay) layoffs were particularly effective, but politically repugnant to doctrinaire Conservatives. Right now we have no political compromises, no stimulus, massive mis-emphasis on the deficit (tomorrow’s battle, not today’s), and basically no more progress on the jobs part of the recovery.

Why?テつ Ask your Senators and Representative.テつ Don’t let them change the subject.