Wednesday, July 08, 2009

Federal Reserve and Monetary Policy: GREEN SHOOTS, What a Bunch of Cow Patties

It’s the bottom of the ninth and Don Obama and his Mob are on their last out.

Let us recap:
  • The first was by Don Obama’s Treasury Secretary Geithner’s silence as Don Obama was sprouting his frustration at the financial institutions’ compensation.


  • The second is this so call “Healthcare Reform”. Its is obvious this Senate package will not see the “Light of Day”. First off, Senator Reid and Dodd ignored other Democrats that were working on their particular solutions in other Senate Committees. For a Democratic Party, that is not of “One Mind”, this is going to trigger “Turf Wars”. The final blow comes from the really smart Republicans who argue the “Healthcare Reform” package is a tax issue. The really dumb Republicans will continue to argue this is Don Obama and his Mob’s attempt to gain control of the lucrative Healthcare biz. The end result will be no Republicans’ vote. At least 11 Democrats will not go for this regardless of Don Obama‘s threat to eliminate gang members who refuse to vote yes.


  • The third out is shaping up to be the fault of Don Obama’s economic team’s insistence that “All is Well”. It is obvious the Federal Reserve has “Monetized” household debt (this is the reason the U$ Dollar is weak). Republicans’ who argue about the Federal deficit are wrong. I will be nice and give G.W. Bush’s record, about US Government’s debt; 2001 to 2008. From Flow of Funds: March 2002 $3.4 TRILLION: , from March 2009 $8.6 TRILLION. Increase in US Government Debt $5.2 TRILLION. It will be painfully obvious the US economic recovery has no “Green Shoots”. GDP will be about the same, -6% and the unemployment rate will reach double digits. This will negate the US Treasury’s worst case scenario. The result of which will require another $250 billion dollar bailout of the financial institutions due to the increase in late and the default of household debt. To counter the public outrage at another bailout for the “Rich“, a $1 TRILLION dollar stimulus package will have to be passed by the end of the third quarter of 2009. This is to counter the expected drop of GDP by at least -15%. If GDP drops to -10% then history, in the form of an Automorphism (see previous post) will indicate GDP can go to -25%. From the point of view of the Great Depression, Don Obama and his Mob will have to take command of the US economy and force the renegotiation of household debt (this will result in a known rate of return of invested capital) and force a recapitalization of output (it really was not World War Two that got the US out of the Great Depression. It was that the war allow President Roosevelt to take command of the US output in a “Free Market” economy).


Viva La Revolucion!!!!