Ben’s not the problem, but is he the “Man to Solve It”?

Now wait one second, Mr. Ron Paul. I don’t think it’s fair to suggest that Ben Bernanke caused the recession. That would be like saying that he personally engineered the subprime mortgage security, these… as Greenspan called them, creative Financial Products. As well it would be like suggesting that he, and not Greenspan, first became aware of these derivatives and how if left unchecked, like most objects the bubbles surround, could have a greater fallout on the bigger economy. Unfair if you ask me, but a saint in this affair he is neither.

Ben, Your crime is negligence my friend. You had a chance to study the possible effect of the subprime fallout in its making. You knew by the figures that it had reached the title of bubble based on the intel you collect on the economy daily. Crunching the numbers would have told you that the value of these products were highly inflated. He also knew that the subprime lendees were starting to default at a rate exceeding what the current (at that time) secondary housing market could absorb (2 million that year alone). And you ignored the fallout.

The housing industry supports so many other industries and about 30% of the blue collar work force, how could you be so naive that you would forget about small appliances and turf farms, or the trillions of dollars worth of collapsible wealth there was hidden in two highly regulated markets; the banks and real estate.

The one thing no one wants to admit is the part that 140 a barrel oil played into that scenario. How it was the real pull that was slowing the economy. It was just bad timing that the subprime fallout occurred simultaneously. Timing was the real culprit of this decades recession, if you ask me.

But… Ben, you could have made a real difference when it started in Dec. 2006. This would have been a great time to look at the senarios the fallout could have, mixed with the fuel pressure. Greenspan warned us that natural gas would peak in the US and that without building new infrastructure to trasfer the reigns to importers, that the preasure it would put on the economy could be catastrophic beyond repair, which coupled with the war in Iraq and the inflation which follows war, it would have taken a real genius to worm us out of that without a flu shot!

Act 2, Scene 2011 – INFLATION

So, here’s the dealio folks. We know that although Greenspan was a economic muse it didn’t save him from ignoring the truth sometimes. Struggle as we do, it’s life! Ben on the other hand has not been at all the successor we were expecting. I think we were into the whole moderating side of Keyenian economics. Sure it won’t last forever, but it does tend to keep inflation and unemployment in check, for the most part. And, here’s where it gets a little tricky, and I see Ben looking ahead a little bit, but… how do you tame a super-hyper inflation.

We just poured approximatly 4 Trillion dollars into the US economy, Europe is already beginning to see an uptick in there inflation from the money they poured into there central banks. The problem is that when these banks start loaning out this money it is going to multiply, as they loan it. This mixed with inflation in every other country that followed this lead will have a global effect of manic deflation.

Seriously we should have let the fallout happen and build a health economic plan that was based on total value, including energy and global costs of repair. It’s not really a choice if we understand what we are facing.

Last Night on TV

So, last night I’m watching the La Lakers take the first game of the Western Conference Finals (online of course) and I get to watch all the commercials on ESPN. Some of you might think that’s a bit odd, but I don’t have access to commercial television; no cable or satellite dish, just my internet connection.

All through the game I saw a lot of different advertising and this one I couldn’t believe. First of all Toyota is advertising their prius and it’s Green Appeal, and then I see this Cadillac Escalade commercial and it hits me that this whole GM bailout is going to fail, sure as shit. How is this any different?

Toyota and Honda are both selling cars that people need in order to meet with the changes coming, frankly gasoline cannot last for ever and these things can get 50 mpg. What does an Escalade get for mileage. I don’t even care. Like I said I don’t even own cable..

It amazes me we even bothered bailing anything out at all, the banks the insurers and the automakers can fold and I don’t think I would miss them at all. It seems to me that they got themselves into this mess, right!?

But, promising the American Government that it would change directions and then going on like “business as usual”, minus the layoffs, factory closures, and dealer closings. Don’t worry we’ll help you stretch out that failure, while we let our factory workers and and sales people find something else to do.

Personally I believe that all that bailout money would have been far more wisely spent on education, because the people running these companies obviously missed out on economics 101…

My Name is America, and I’m a Power-aholic…

Since the dawn of Power, Nations have sought to control the world through political and military strength. It is quite rare that countries and there power are ever totally honest about their own repercussions unless they are defeated by the next leader of the “Known World”.

For the last two years (one of the longest campaigns in history) we have heard about the “Change” embraced by the Obama Administration, but what does that mean. Well, according to Alex, change means to fix the pipes that are broken. Bronco says that it is an inherent trait of every administration to build new things in order to leave a mark in history, but the problems are underground, in those pipes.

What really needs to change in America lately seems to be the need to change. We live in a two party political system that swings like a rusty pendulum, where nothing ever really seems to change at all. It’s renamed or ignored and the thing that does seems to change is usually the etiquette defining the behavior surrounding it, rather than the thing itself. If you don’t believe me try ending some pork barrel project in the democratic whip’s state.

Seriously, we all just need to get used to it. Franky nothing short of a total overhaul of Washington will accomplish a thing, because no matter what it’s just going to keep pretending to represent the people and will continue to support the special interests of politicians that benefit from their constituents political payoffs, in the form of campaign funding. It’s all about getting and keeping you position, rather than sacrificing any political future to do what is right for the individuals whom you represent.

America needs to go to Rehab, and get off the politico-Crack it’s high on. And the media, which is supposed to be the public watch dog, has way fallen short of it’s duties, suffering the same addictive behaviors that Washington is suffering from, which is the threat of being cut off by the dealers that are swinging the Blonde, Gold the political system is all cracked out on!

“Half measures availed us nothing.. We stood at a turning point” and guess what happens if nothing changes… you got it, “Nothing Changes”!

The Dollars Fading Glory – Changing of the Guard

In the last year, running parallel with the Subprime Mortgage Problems and the sharp price increases of Oil, we have heard a lot of news about the declining value of the Dollar against the World’s other currencies. What does that mean for the Dollar and The US in political and economic terms.

For the last 50 years the US has lead the way in the Geo-political arena due to its military strength, but mostly due to its financial position in the Global Economy. The strong steady value of the Dollar made it a safe investment for most countries as well as a secure currency to pay for and accept payment on goods and services, not only from the US, but other countries like China who trade globally with foreign currencies. Most oil producing countries have traditionally accepted Dollars.

These factors, in the past, have kept demand for the Dollar high and have allowed the US to charge huge deficits by borrowing in the form of Treasuries to foreign countries to pay their bills in Dollars. That may soon be coming to an end according to George Soros, Hedge Fund Billionaire. He has refferred to it as an “end of an era”.

The US wealth, through institutions like the World Bank and the IMF, has allowed the US to dictate many of the terms and conditions of the World’s economic climate via loan conditions and policy favoritisms, which often favor US Corporations and US trade policies, but these factors are beginning to shift.

There is a trend leaning toward commodities, as a safe haven as the Dollar continues to fall against the World’s currencies. International Business Vendors are beginning to require payment in Euro’s to prevent losses from long term conditions of contracts due to the Dollar’s possible decline over the duration of the agreements. Confidence in the Dollar, which once stood as an icon of strength, is waning.

The Change.

This week Korea announced the Asian Monetary Fund (AMF), an agreement between South Korea, China, Japan and the Association of Southeast Asian Nations (ASEAN). This fund, some $80 billion,will help member states cope with any liquidity crisis, a South Korean official said Sunday*. The fund will also allow member states to borrow without the terms and conditions often part of IMF loans. This will present a dramatic shift in the World’s economic political climate as other currencies vie for global influence.

Other changes that will effect the US more directly will be the waning of US Dollar demand forcing the government to run a balanced budget effecting its ability to finance its leviathan military force.

The United States spends 3.7% of its GDP on its military. This is historically low for the United States since it peaked in 1944 at 37.8% of GDP (it reached the lowest point of 3.0% in 1999-2001). Even during the peak of the Vietnam War the percentage reached a high of 9.4% in 1968.** In Dollars and Cents that equals $711 bil, or 48% of the entire World’s military budget. Total expenditures for 2008, for defense purposes, will exceed $1 Trillion.

This could have several different possible effects that may take some time to yield, but what is immediate will be the need for the US to rely more on cooperative efforts of other countries and their militaries if they wish to continue the war on terrorism. Currently other countries are far less adamant as the US when it comes to the military as a primary means to global security.

The Problems

The current global economic conditions are being stressed by many factors. Record oil prices are pushing up inflation around the World. Food shortages that may be the result of a combination of increased demand from countries like China and India with runaway growth, fuel stocks for ethanol from the US and Europe, that are shaping the worlds farming, shortages of fertilizers and the Global Climate changes we’ve seen in Australia, now suffering a 6 year drought, and UG99 Wheat Rust that has broken out in Africa and the Middle East.

The World’s banking and lending agencies are writing off billion of Dollars as the fallout of the Subprime Mortgage mess floods the globe. The banks are responding with tighter lending standards putting more pressure on businesses, and consumers. Bankruptcies that were once exploding mostly in the US are beginning to occur in Europe from similar loose lending practices, and the governments involved, mainly the US, are simply unwilling to do what it will take to put a dead stop to the foreclosures that are bring down the value of properties and collapsing home owners equity. Many home owners now owe more than the value of their own homes.

If these weren’t enough, the war on Iraq and the possible threat of attack over what the West considers to be nuclear violations on the part of Iran, are pushing up the speculation on oil which if taken too high could essentially put the breaks on the World’s Economic Growth and grind down global trade to a halt, but these aren’t the real issue that needs to be resolved.

The big issue is what will take the place of the Dollar? China is unwilling to use its currency in open trade, allowing it to keep control over its currencies value. The obvious choice would seem to be the Euro, but here’s why that won’t be the solution. Europe is currently headed into a similar cycle of foreclosures and the lending problems the US is currently in. Their inflated currency will have strong effects on exports that will eventually begin to effect their growth and inflation due to high oil prices may limit the European Central Bank from being able to respond, similarly to the US Fed ’s difficulties.

The Solution

The solutions are very simple for someone like me, who has little to loose when it comes to Global Economics. Either way I can still grow food and spear fish in an abundant ocean, while living in a bamboo hut.

The first thing to do is to pull the US Military out of foreign territories and restore control of the middle east to its sovereign. Cut military spending and divert those funds into alternative energy sources that won’t put a strain on the World’s food supplies, end US Farm subsidies, and stop promoting growth and capitalism as a right.

Promote conservation and energy self sufficiency through tax incentives and laws forcing major changes in technology. Stop the collapse of real estate values and bailout the home owners instead of the banks and the construction firms that lead to the bubble in the first place.

Learn to cooperate with the World’s Societies to build a harmonious relationship with the Earth, allowing indigenous life styles to share in the cultural cornucopia instead of forcing hunter gatherers to civilize into good consumers, which merely adds to the demand on the World’s already strained natural resources.

And lastly, let the rule of law no longer be a shroud of protection for the true criminals of the world. Let the courts hear the cases of crimes against humanity when the Union Carbide’s of the World fill communities with deadly gas, or the Bear Stearns’ create an economic mess that displaces families into bankruptcy and humiliation by the millions, instead of rewarding them for their failures.

The fact is that Consumer based Capitalism has put greed at the helm of our Global Ship and Supply and Demand, no matter how you dress it up, will always mean those who have and those who do not. The uncertainty of the Global Economy will not be solved by a shift of leadership if that leadership is based on similar principles, but will only compound it and historically these ideas have lead us into World Wars and Cold Wars to decide the fate and direction of our Global Paradigms.

*According to www.tradingmarkets.com
**According to www.Wikipedia.com
.