Summers Predicts there will be Three or Four Major Depressions in your Life Time, and many other crises in between

Looking back, one would be able to compare today how things to come were according to Larry Summers just six months ago:

April 24 (Bloomberg) — Lawrence Summers, director of the White House National Economic Council, spoke on April 24, 2009, at the Inter-American Development Bank in Washington, and gave his interpretation of the crisis, the policy response, and its results so far, and the opportunities he sees. (Bloomberg video: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a5RrzLNmM8jw).

Given that the political landscape of United States and most other countries is guided by the same principles and concepts of conventional economic wisdom, and there are no alternative economic theory afoot with any kind of political clout as to bring about any major changes to the conventional system (some drumming in the distance, but a long way off), it would be wise to use his “predictions” as personal and corporate guidelines in planning one’s business and life.

As one of the most important components of the economy, He sees what he calls a self-equilibrating system, regulated by supply and demand, as one of the major components of economics, which is right the vast majority of the time; but that it will fail three to four times in a century. He repeats the concept a couple of times, and gives it as the reason Keynes wrote his “General Theory” of economics.

Translated into personal terms, every citizen is at risk of getting caught two to three times in his life, as a victim to these depressions. Thus, it is appropriate and prudent, as a normal course of living and planning for one’s future that one should take them into consideration in personal and business plans; and include in these plans the preceding and succeeding years.

At a point in his speech, he states that these problems will not be solved overnight, as they were not created overnight. Let’s add a conservative two years in front of the Depression and another two years after. So, 15 years of anyone’s life is likely to be tied up in surviving depressions. But that’s not all.

Towards the end of the speech, about revisiting a regulatory system which at least in “certain respects has been a failure,” he mentioned the 1987 crisis-S&L debacle, the commercial real estate problems of the early 90’s, the Mexican crisis, Asian Crisis, LTCM crisis, the technology bubble, the event at Enron, and the current crisis, and states says these are too many for a 20 year period “for the lives of hundreds of thousand to have been wrenched and disrupted by the workings of a financial system in which they had no important role.”

What are the chances of getting caught in any one of these crises, which, whether major or minor crisis, translate for the average individual a loss of income, or equity? I’m talked to people who got caught and lost in one or more of these crises. One person lost $37,000 with the S&L debacle; $150,000 in commissions during the commercial real estate problems of the early 90’s; lost job and income during the technology bubble; and finally with some 60% periods of unemployment after the technology bubble burst. These losses do not include indirect fall-out, such as cost of retraining, or changing careers, and so on.

In the most stringent interpretation of American Values, my friend brought it all upon himself, because he should have seen it all coming, and would have been prepared for it. Most of us, however, would be more generous and focus on the notion that government exist to protect the individuals against internal or external assault and crimes that reduces and threatens his person, property, and other civil and social rights. Regardless of how it’s worded in the law, it is a crime to deprive or otherwise confiscate an individual’s property and wealth, property, and other freedoms or rights.

However, crime against the citizenry is now institutionalized and seen as a normal operating mode. Therefore, a prudent citizen today has to plan his own protection against these assaults, one of which are the fact that he will encounter at least 2 major depressions, and one or two “minor” ones in between them during his working adult life. That adds up to some 60% of the working adult’s life struggling from one crisis to the next.

You can’t blame people for not paying attention to those who end up suffering during these crises. After all, it’s a small percentage of the population, and the rest have more than enough to do trying to themselves stay afloat. Out of 300 millions American, one or two million people whose financial life has been destroyed, is not, statistically, such a bad thing, is it? Financial death can’t be compared to murder, can it? Not to mentions real loss of life due to the inability to finance ones life through healthcare and other life support resources. On top of all that: if they failed in their personal responsibility and planning, they paid the price for their failure.

Mr. Summers then sums up the problem with economics: “Periodically at the end of period of financial excess, the economies are pushed into a territory where its self sustaining properties cannot be relied upon. Therefore the policy has to counteract the vicious cycles, into a circle, and replace fear with confidence.”

He slides by some of the key sources of the problems, but details some of the fallout, such as credit crunch, housing, unemployment, production. In essence he wants to give us the impression that the on-going recession/depression is a natural economic phenomenon, and his solutions, the ONLY alternative he sees.

He sees no viable alternative to a strategy of seeking to maintain demand, provide funding to market, strengthen financial intermediaries, contain vicious cycles in the housing market, and support the flow of credit. He asserts that there is the critical need to support the financial intermediary functions, assuring financial intermediaries are adequately capitalized with the views inherent in the current situation, which is an objective of the stress test.

In simple terms, what he told us in April are in full fruition in August and will continue as this Administration’s tack for the rest of the term: Give the lion’s share of government financing to the financial communities, and the wealth will trickle down to the economy. An interesting turn of words caught my attention in his remarks, when he used the term “intermediaries,” as if the economy could not function without intermediaries.

When he discussed “results” he used the word “mixed” and mentioned that production is running at a level significantly below shipment portending an upwards movement from the operation of the inventory cycle; hardly basis for optimism, but some bit of respite from pessimism. By August 4, 2009, in his “Memorandum” to Congress on the Status Report on Rescuing and Rebuilding the American Economy, several glaring holes become visible:

These points are:

  1. “Importantly, the Recovery Act will gain momentum over time, peaking during 2010 with about 70 percent of the total stimulus provided in the first 18 months. Five and a half months after the passage, we are on track to meet that timeline.”

To the casual observer, in reading news, and other media, the Affordable Home Financing program appears to be one of greatest activity. It is projected to satisfy all applicants by the end of five years. Other programs in the Recovery Act, much as the Housing one, are siphoned through “intermediaries” (read: financial community, banks). These legislations involve much regulation to be issued by the various secretaries to detail implementation and establishing tight qualification requirements. Take the Affordable House program: The legislation itself is a wonderful piece of PR, but the essence of its application is contained in the Secretary’s guidelines, which in 17 pages of details ensure that a servicer (read: financial institution, bank, et al.) will not only not lose anything from the existing contract, but will be further rewarded at the end, with packing into a balloon payment at the time of the sale of the home, practically every concession made. (The effect is pushing the same housing bubble into repeating again in five or so years.) Add to that a predominance at interpreting what is interpretable in the banks favor, for example, the guidelines require that the services escrows real estate taxes and insurance payments, they are adding this onto the monthly payments of the “modified loan” rendering the monthly payment higher than before in instances.

Under the $75 billion program, called Making Home Affordable, lenders are eligible for taxpayer subsidies to lower the mortgage payments of distressed borrowers. Of the top 25 participants in the program, at least 21 specialized in servicing or originating subprime loans, according to the center, a nonprofit investigative reporting group funded largely by charitable foundations. (There is more; you should read in detail).

In Summary, since the Administration’s whole policy view is toward the protection of the intermediaries, and since the intermediaries have shown a great deal of reticence in cooperating in making any concessions, or even comply with the law, and the administration is unable, unwilling or slow in enforcing or getting compliance, the various other programs in the Recovery Act, can be expected to parallel the Home Affordable program.

  1. “The positive stock market performance since earlier this year is helping to restore substantial losses in household wealth. For example, since the stock market bottomed out on March 9, 2009, the typical 401(k) account is up about 30%.”

This means if you had a 401(k) of 10,000, and as most people lost around 80% as a result of the collapse, you ended up with $2,000. Now with the 30% jump, you have achieved a modest recovery of $600. Now that’s progress!

Consider further, however, that what’s traded in the financial and stock markets represent real wealth in the real economy. Has there been a 30% rebound of real production, and new employment that produced the increase in the stock values? Hardly! It’s all the government guarantees and TARP (Troubled Assets Relief Program) money, and free money and concessions to the intermediaries with which the just re-inflated the stock markets. No real gain of wealth; just larger numbers for the same wealth.

  1. “• After GDP plummeted at a -6.4% rate in the first quarter, the economy’s pace of contraction slowed markedly in the second quarter. Private forecasters have estimated that the Recovery Act added more than 3 percentage points to second quarter GDP.”

The first quarter GDP for 2009 is barely finalized, and the second Quarter can only be estimated or extrapolated. But understanding the flow of cash, over the last six months, just paying attention to what happens around us, without looking at official statistics, we know a number of things: Big or bigger government expenditures. These enlarge the GDP; big money for the financial community. Some have already surprisingly reported profits. While the GDP doesn’t contain the value of the assets traded in the markets, they do contain the income inured therein. With all the TARP money and other guarantees given to the financial community by the Fed and the government, there has been plenty of money to re-start big trading in the financial markets. In fact, some of the big boys have reported to expect large profits for the recent quarters.

Mr. Summers alluded at the fact that our financial system has changed to where savings and deposits represent about 20% as a source of liquidity to the markets. A more significant element is the process of securitization which makes up the 80% or so. A quick and dirty way of understanding that is: a) Bank makes loans, gets a contract which expects certain income. b) Bank packages these loans, in a way that they can be sold to other financial institutions which will sell them in the financial markets, all over the world. C) Bank will receive new cash for that contract, and now has more to lend. This multiplies the liquidity almost ad infinitum.

There are other facilities given brokerage firms and other financial institutions where they can accept almost any type of asset, and give out cash in return. The Fed has also become a buyer of these assets as well. These processes give rise to huge sources of liquidity which has predominantly added liquidity to the financial markets, and considering the speed of liquidity increase, spurred the bubble. When there are no more real assets upon which to base new liquidity, then, they can take any financial assets, and create liquidity with that by securitizing that; selling new securitized assets, which can again be bundled and securitized into new assets, then sold, which can be again bundled and securitized into new assets, then sold, which can again be… you get the point; endlessly inflating the financial markets into bigger and bigger “wealth” which in the end won’t buy a slice of bread.

Another point Summers touched upon was “leveraging” followed by quick de-leveraging, as things that caused the present financial crisis. When we talk about leveraging, we are talking about increasing the control power of money, where a fraction of an asset value in cash will suffice to buy it, and control it.

One more element worth mentioning is High Frequency Trading (HFT), which is not new, the use of which has advanced more and more over the last ten years. Computer trading with various pre-set parameters, using various clever algorithms can buy in microseconds; be held for a few minutes, and resold at a profit. This process has the effect of increasing available liquidity for trading, which means more trading using the same money with resulting higher and higher income. It has been said that some 70% of trading in the financial markets is HFT.

All these practices represent multipliers to the money supply. Consequently they increase the income in the financial markets and financial communities, bringing the GDP higher. At the peak of the bubble the financial community represented about 40% of the GDP. Now, with the huge sums given to them, they have and can create enough liquidity to rev up trading to suggest an upswing in national production, and the illusion of new wealth.

Wealth is real products, and the ability to acquire them. 401 (k) will some day be converted back to cash, and the owners will use it to buy physical good, and pay for services in the real world, the real economy. Will they be able to buy a loaf of bread? Not if real products are not produced, no matter how large the figure they take out. So far, nothing, absolutely nothing has been done to open companies back up, and put people back to work.

On the other hand, in the super-casino of the nation, the game is for power over wealth and resources, not with the desire or need to acquire them for their own use, or for the common good, but for the right to control them. What will they control when there’s nothing being produced?

The undeniable flaw of a debt based, (except, technically, HFT’s) i.e.: loans which sooner or later must be retired, or rolled over, makes for unavoidable defaults, which will periodically have to collapse, and allow the cycle to start again, with one important effect: wealth has been again shifted from the lower 90% of the population to the top 1%, which are already holding or controlling 80% or more of the wealth.

So far, no problems have been solved. We’ve thrown billions to refill the casino, so they could keep on gambling. We can expect yet another bubble, and no doubt the next leg of the crash.

In the Baseline Scenario, a blog of professional economists, Simon Johnson presents some poignant comments, his evaluation of Summer’s, visible in the Administration’s actions: http://baselinescenario.com/2009/04/27/larry-summers-new-model/ and http://baselinescenario.com/2009/07/24/after-peak-finance-larry-summers-bubble/.

This quote from Howard Zinn, from ‘A People’s History of the United States,’ first published 1981, is very appropriate to allow one to predict how if unchanged, the social fabric will rend under the weight of so much moral decay:

“The American system is the most ingenious system of control in world history. With a country so rich in natural resources, talent, and labor power the system can afford to distribute just enough wealth to just enough people to limit discontent to a troublesome minority. It is a country so powerful, so big, so pleasing to so many of its’ citizens that it can afford to give freedom of dissent to the small number who are not pleased. There is no system of control with more openings, apertures, flexibilities, rewards for the chosen.

There is none that disperses its’ control more complexly through the voting system, the work situation, the church, the family, the school, the mass media & none more successful in mollifying opposition with reforms, isolating people from one another, creating patriotic loyalty.”

The causes and flaws in the system that caused the collapse are many and interwoven, to where problems exacerbated the others mutually. As it has been often said, we can’t run the same experiment over and over and expect different results.

October 3rd, 2009 by NickP | No Comments »

Tell President Obama to be proactive on the Public Option

Thanks for taking action.

Here are some ways you can spread the word to make sure President Obama gets the message loud and clear.

If you are on Facebook, click here to post the petition to your Wall.

If you have a Twitter account, click here to automatically tweet:
Tell @BarackObama: We need you to lead the fight for the #publicoption. http://bit.ly/1JXL1r Pls sign & RT (from @openleft & @credomobile)

You can also send the follow e-mail to your friends and family. Spreading the word is critical, but please only pass this message along to those who know you — spam hurts our campaign.

Thanks for all you do.

–The CREDO Action Team

Here’s a sample message to send to your friends:

Subject: President Obama, it’s time to speak out.

Dear Friend,

Right now, there are two health care reform bills in the U.S. Senate: one from the Senate HELP committee with a public health insurance option, and from the Senate Finance committee without a public option. Before any health care bill is sent to the floor of the Senate for debate and voting, the Senate Democratic leadership and the White House must merge the two bills into a single bill.

If a merged bill that includes a public health insurance option is sent to the floor, it will be a huge boost in our campaign to win a public option. If no public option is included in the bill sent before the full Senate, it will be tougher to add it later in the process.

We need the most influential person in these negotiations, President Obama, to tell the Senate Democratic leadership to include a public option in the bill that is sent before the full Senate.

As the President of the United States, elected by voters who want big change to the health care status quo, President Obama has tremendous political power to influence Democrats Senators. Call on him to use that influence, and keep a public option in the bill sent to the full Senate.

I just signed a petition urging President Obama to tell the Democratic Senate leadership to include a public option in the health care bill brought to the floor of the Senate.

I hope you’ll sign it too. Take a look:

http://act.credoaction.com/campaign/obama_up_or_down_vote/?r_by=-1054111-.LJslTx&rc=confemail1


Have a comment for CREDO about this action? Want to keep up with our advocacy campaigns? Find us on Facebook and Twitter.



October 3rd, 2009 by NickP | No Comments »

Economic Recovery Not in Sight

We must focus on the real statistics of an economic system: Production, and this is tied to employment. The statement that unemployment has slowed up, or hasn’t increased any further is publicly known to be an outrageous lie. Any drop in the unemployment count is the people who ran out of benefits and are dropped off the count. Why does the Administration keep sounding off on this note? The traditional media continues with its traditional blather of meaningless chatter, and not an ounce of outrage, and no sounds of alarm.

The productive capacity of the population is further being eroded by the failure of the Home Affordable Financing Program. Large numbers of people are being disqualified for bogus reasons which don’t even appear on the guidelines that could disqualify them. It has become clear that the financial community, banks, et al., gain from driving people into bankruptcy and foreclosure. They make a better fee on foreclosures than on loan modifications, and other home saving programs.

People’s survival are thus threatened, and their ability to work dragged on by the despondency that a weak President as much as he talks he cares, can’t or wont do anything but whine at the bankers he put in place to run the programs that aren’t   running.

Without real increase in production of physical in the real economy, the gains seen in the stock markets are no more than more paper, inflated by lavish TARP bailouts, accounting shenanigans, and Fed throwing more and more money into the system. It should be clear that no matter how high stocks rise, if the companies they represent continue to fire people, and rely on making “accounting” or paper profits, when it comes to cash in the high priced stocks and bonds, the bread isn’t there for the purchasing; we can be certain that there’s no recovery in sight.

Money isn’t production. Products, real products, food, buildings, desks, knives, butter are production. The rising stocks will add to the GDP’s increase (or halted decline); but rest sure that they will only be numbers which will not represent real wealth, but just inflation in the financial markets. Wealth is NOT being created. It’s being destroyed: foreclosures end up with abandoned and vandalized homes the value of which keeps dropping, until the they have to be bulldozed as the final wealth destruction. People need homes, but they can’t have the homes that are built and left abandoned. What is this? Is it the result of the application of good sense on the part of the financial community, and the Administration? The Stimulus legislation has been structured so almost the entirety of it is managed and channeled through the financial community, banks, et al. The level of cooperation has been such that a few more millions homes will be foreclosed upon, because they didn’t want to modify loans and dragged their feet to make sure those in dire situation can’t be saved in time, further driving them into desperation and reduced ability to produce.

For now the solution lies in the public understanding these things, and refused to be fooled by empty words from legislators which have been bought, and paid for by the financial community. Stay angry (if even quietly so) and keep writing to the President, and anyone you can think of. Talk about this with your friends. Tell them what you understand, and stimulate debate.

We shall not see a shred of recovery unless, and until we focus on our people’s well-being, their productive capability, and putting them back to work, and not in do-little or nothing public works, but in real industry where we are building things once more. People need things; they need things, and often can’t get it because it’s no longer produced… such as good health, good medical service, as an example to be real and hit home with most readers… but also industrial and commercial products; there are many products that are no longer available. There are engineering skills, and technical products and shops that have disappeared over the last 20 years.

Talk won’t do… even our own in telling what’s going on. That’s just to prepare the minds of people to deal with truth and reality. Immediate action in the form of direct funding of production is far better than what’s being done now.We got to open the purses that are now being drained in a sterile group of financial market, and offer it to people to rebuild the companies they have had to close down, and hire the people that have been fired, and get people back to work. Put out an announcement that any company that presents a half decent business plan for products that our society really needs, will be financed, and employee salaries guaranteed (or better yet paid directly by government agency), and get the production going again…

August 9th, 2009 by NickP | No Comments »

The Slow Pace of Change

I decided to make this brief post so some of the folks that are following me don’t think I’ve died, or given up the ghost or the fight. I’m a voice amongst many, crying in the desert, and least likely to be heard than most, even if what I said was truth above others.  I’m currently working on a comprehensive article on economics basics, which is intended to provide self evident truths as criteria for examining the truths and evaluating our personal future, as well as the nation and the worlds.

The world situation isn’t improving, and no political action is making any changes toward achieving popular goals. You need to judge this not by what your read in the mainstream media, as they are the spokes-folks of the status quo, but examine your own personal prospects for the future, and by what’s going on around you in your daily world.

The world is owned and controlled by the financial community, and the governments are their servants, and they will do whatever it takes to keep their power. And they depend on keeping the public in the dark, and fomenting further ignorance, and mystery. Nothing will change for the public for a long time. They think they are at a point of no return, and they’ve won. But will as each starts taking specific action the pendulum will start swinging the other way. My upcoming article talks to that point. I’ve recently launched a call to withdraw from the larger banking institutions, and while I got words of support, I’ve received little actual feedback on results. But action needs to be expanded on that project, and you’ll hear more in the future.

Meanwhile, don’t let the powers get complacent by postponing your self education. Learn what you can, but don’t take people’s word for it; examine with your intelligence. If it doesn’t make sense, it probably hasn’t any; your lack of background training isn’t necessarily at fault.

We, the people, actually have the power to make the change in many very direct ways.

June 28th, 2009 by NickP | No Comments »

Five Economic Storms Raging Now

It is my pleasure to present an article that explains in common terms what’s really going on, and what can be expected:

Five Economic Storms Raging Now, by Martin D. Weiss, Ph.D.

What makes such type of report important is the clarity and self evidence of what is being stated. Only based on real fact, can citizen’s action be effective.

You can expect that IPPA  (we) will initiate some critical action no later than the end of June.

May 12th, 2009 by NickP | No Comments »

Populism is not a style, it’s a people’s rebellion against corporate power

An important and witty disertation on populism by Jim Hightower,  to which my own article here, “An analysis of progressive politics, past, present, future” share related observations:

Read it at the Hightower Lowdown

May 10th, 2009 by NickP | No Comments »

The public talks with its money-Bust the Banking Monopoly

Call to Action: Bust the Super-bank Monopolies

If your life is going well, and nothing is really wrong around you, then, you needn’t read any further. But if you are like me who see at times gradual, at times steep social and political decline which lessen people’s ability to live, then, join me in taking action; read on; take action and pass it on.

I held this letter back for several weeks to watch for further signs; I probably shouldn’t have. While Wall Street wallows in TARP (Troubled Assets Relief Program) money, Main Street continues to struggle, lose jobs, and companies that haven’t closed down are operating on survival mode.

Despite the eloquence and the humanitarian and progressive speeches from the President, and all the support and positive press, the administration can’t seem to control the financial community (or doesn’t want to). TARP has been completely spent, and huge sums of it can’t be accounted for. (But they’re sure showing up as profits in their publicly released projections!) The Fed and banks have refused to detail amounts and how it was used; despite the presidential outrage at the bonuses, he still allowed a $500,000 cap. The excuse: reward productivity. They changed the meaning: Productivity should translate into benefit on behalf of the people served, not themselves and their corporations at the expense of the public. When they lost millions for the entire population how dare they call it productivity?

It is theft. The public stands firm: No bonuses. The financial community is an integral part of the disbursement of ARRA (American Recovery and Reinvestment Act). They will earn billions in contract fee for “managing and distributing the money” in compliance with ARRA. But we expect they will make it difficult, if not impossible, and they’ve already got included the necessary loopholes into the ARRA law, to reap the maximum advantage possible, plus any additional perks that can be slushed through their obscure accounting systems.

Take the “affordable housing” feature, where anyone stressed out to keep up with their mortgages, should be able to refinance down to around 4%, no fees. It’s one of the greatest things for the economy. Go to your local HUD office, and find out how in effect, most people do not qualify. More than 50% of home owners are already disqualified regardless of personal situation, if their mortgages aren’t owned by Freddie Mac or Fannie Mae. Next, you need to be one month behind in payments to qualify. If you go past one month behind, you can’t qualify. Since I wrote this draft, they put up an expansion to the program to extend to people whose mortgages aren’t owned by Freddie and Fannie; I haven’t followed up to see whether it really works at this time; but history tends to repeat itself, particularly if it is the same people who did it before.

Where is the money to put people back to work in companies that have had to close because banks refused to make loans or renew their revolving credit? Business owners I’ve talked to have scaled their operations way back, and fear their inability to last another year and a half.

A recent law was passed to prevent abuses against credit card holders, where extra fees, and larger monthly minimum, and interest increases were put on people without notice, and without recourse. The law doesn’t become effective for another year… so the credit card companies can continue to fleece the public for yet another year.

And it goes on and on. All you need to do is test any of the projects and try to see if you can benefit from any of the wonderful programs. The financial community will benefit.

Whether the Administration can’t or doesn’t want to; therefore, they need public encouragement as expressed by the action through their money.

Action objective: To force the 4 Major Banks, Bank of America, Citibank, Wells Fargo, and Chase, to break up into independent community banks.

1.    1. Forward this letter only to known friends to avoid getting this letter going into spam boxes. Also, send it out within two days. If it goes down to 9 layers at 5 letters each person, and no breaks in the network, the network will build up to about 2 million at the 9th level. Assume breaks of 50%, so it should take some 100 people at the top level to eventually reach about 50% of the population, and if only half actually do the next steps, it maybe large enough numbers to force the break up.

2.          There are many people who don’t yet have email accounts. These should be notified verbally. Tell your friends.

3.     2.  Take all financial assets, checking and savings accounts you have in any of the above banks. Don’t close the accounts, keep enough to last a month or two in services charges, and ask for paper statements. (There maybe a cost in withdrawing certain types of accounts. We don’t want people to lose money in the process, so decide what you can endure losing.)

4.     3.  Move it to local-community banks. Do check the community bank to ensure it is not owned by a huge Super-bank.

Talk about doing this has been circulating on line, for about a month. I think this is a way to help implement. If every one that participates sends his within two days, and take action by late, we should see enough numbers to see some reaction. What can happen? If tens of millions move their funds the super-banks will feel it, and the results are likely to make the mainstream media. If nothing is heard, the action was inadequate or the network didn’t reach its goals due to breakdown. In either case, future action can be better planned.

Well honed in this method of action should get more immediate action from any administration or Congress. The result of this initial action will help better organized future “vote with your money” protests which WILL produce real change. The people must be heard.

May 10th, 2009 by NickP | No Comments »

Name Change: National Progressive Party becomes International Progressive Alliance

In consonance with the philosophy expressed in today policy and strategy statement:

An analysis of progressive politics, past, present, future what was until recently “The National Progressive Party” is now the “International Progressive Alliance.”

However, the change only expands its purpose and activities, and does not change any of that which is contained in the “Current & up-to Date Party Status and Policy” section.”

Read the contents in that section, and write us about possible ways you might want to be part of this project.

May 9th, 2009 by NickP | No Comments »

Banking Stress Test: Figures that lie, and Liars that figure

(Posted as a comments to Open Left, article by Chris Bowers) All the facts are inconclusive, and probably intended to entertain, and distract.

1.    The link provided for Geithner’s statement links to a Wall Street Journal article by “staff,” entitled, “Geithner’s Statement on Stress Test Results.” There isn’t a single piece of text in quotes which would indicate Geithner’s actual words; so when Chris provided that link he must have done it as a tongue in cheek sarcasm.

2.     A couple of hours’ search I found the deepest level of detail in this statement found in Market Watch:

According to the methodology, the 19 banks were asked to project estimated losses on loans, mortgage securities and other packaged products, including off-balance sheet positions estimated for 2009 and 2010 based on the adverse forecast in a “stressed economic environment.” They were instructed to project losses for 12 different categories of loans and securitized loans. (Market Watch)

3.    Given that accounting methods are questionable, and significantly based on “professional” interpretation, the stress test results are inconclusive, and appear to be no more than a PR campaign to shape perception on the right and center, and inject doubt amongst dissenters. (The hidden variables in accounting methodology are still in place: Mark-to-Market, Off balance sheet items. There are other lesser known book cooking techniques, which deal with spurious interpretations by “professionals.” In other words, “professional opinion.” Can we really go on that?)

4.     GDP calculation contains financial market trading, as well as all other real economy trading (buying/selling); in other words, purchases/sales in the financial market add to the GDP. So the GDP can be manipulated through lots of transactions between traders, and still means no bread on the table. This is like playing the monopoly table game, and everybody is broke, so the winner adds money to everyone’s account so trading can continue, but not enough money to give up its controlling lead, so without any real new production, the “economic activity” was expanded, but the real economy has continue to decrease. No new real products, more people unemployed, and so forth. At the peak of the bubble, the financial community contribution to the GDP was somewhere around 35-40%… Nothing is  produced; just lots of trading and gambling; makes activity look good in the numbers, but see where we ended up?

5.     One can’t help but conclude that this stress test and the entire process is Geithner’s prestidigitation to hypnotize the public, create the illusion of a recovery, and perpetuate the commonly believed fallacy that “we need to fix the financial markets so the economy recovers.” All the TARP (Troubled Assets Recovery Program) in the world isn’t going to effectively increase the real Gross Domestic Product by a single percentage; and by real I mean, physical goods, manufactured goods, tangible stuff. Until we see people going back to work, the rest is poppycock. It’s not a matter of pretending to understand the “stress Test” and whether it’s bullwhip. The simple economics 101 of the situation is that it does not take into account real information that would affect the economy as a whole.

6.    Approval figures have no economic or social value considering the reasons they were created in the first place, and the sampling groups. They are used to a) Suggest to people that they are on the wrong side of an issue; b) Inject doubt in the opposition; c) continue to blind the believers; and d) measure the effect of the media on the minds of people.

What would happen if the Open Left issued its own approval ratings for the administration officials, based on a methodology that calculated actual benefit and or damage to the nation and the people as a whole? What would happen if the sample groups were given the truth about what’s going on?

May 8th, 2009 by NickP | No Comments »

New Organizational Activities Page

When new policy is adopted it will be written in a post which will be permanently listed under the heading of

Current & up-to Date Party Status and Policy.

(right hand column)

When it is first published it will also be announced as a blog post, such as this one, and a link provided to the new page.

The new organizational outline for action can be read in its entirety here:

Action Agenda for the Establishment of the National Progressive Party

May 7th, 2009 by NickP | No Comments »