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Friday, August 31, 2012

1912-2012: Grading the Presidents pt 4: Clinton to Obama

We now come to the final installment of our 4 part series on grading the Presidents from 1912-2012, specifically on economic policies and their ramifications to the present.

Part 1:  http://ants-and-grasshoppers.blogspot.com/2012/08/1912-2012-grading-presidents-pt-1-taft.html

Part 2: http://ants-and-grasshoppers.blogspot.com/2012/08/1912-2012-grading-presidents-pt-2.html

Part 3 : http://ants-and-grasshoppers.blogspot.com/2012/08/1912-2012-grading-presidents-pt-3.html

And quite honestly, this is by far our most difficult task.  Not only because we're talking about a very recent period of time (1993 to the present) which means all readers have preconceived biases and 'favorties', thus will judge what we write based on that pre-determined prism, but because quite honestly, most economic policy in the modern era isn't determined by Presidents but, by the Federal Reserve.
Ever since Nixon took the US off the gold standard in 1971, it has given the Fed increasing power to determine interest rates, how much money is circulated into the economy, and the overall (artificial) growth of the stock market and by extension, the perception of the economy as strong or weak.

So a President may push forth a particular piece of economic legislation or seek taxes to be lessened or raised, but in the overall day to day economy which we all are dependent, a President's power is very, very minimal.

So when we judge the accomplishments (or lack there of) concerning Clinton, Bush 43 and Obama, not only must we be consistent in not letting non-economic issues sway, but being able to analyze the health/weakness of the economy and separate Presidential from Fed actions.

Lastly, don't let party affiliations distract you.. the three of them are all good buddies and pretty much have governed economically the same way

So we begin..
Bill Clinton (D)  1993-2001  Grade:  C+

Clinton finished his Presidency as the first Democrat since FDR to complete two terms of office, and in spite of certain scandals of sexual and/or constitutional ethics, left office quite popular.  But we are not interested in any of that.. only the economy.

Clinton can be called the first Wall St Democrat President.  He made no secret of his admiration and allegiance toward the financial sector, as well as doing everything humanly possible as President to help the banking sector's profits expand.

When Clinton took office the stock market's Dow was around 3,400 and would surpass 3,500 for the first time ever in May, 2003.  When Clinton's Presidency had completed, the Dow was around the 11,700 mark,  It disproportionately rose over 300% in a span of approximately 8 years.   Remember, it took approximately 210 years to get to that initial 3,400 mark.

A lot of this had to do with speculative bubbles created by the Federal Reserve to get people investing in stocks and politicians grabbed route as a means or growing the private sector.   The 'Dot-Com' bubble of the late 1990's is the best example.

But ultimately that wasn't based on Clinton policy as much as Fed Chair (at the time) Alan Greenspan's decision to take a laissez-faire attitude to the economy and let businesses essentially do as they want, trusting they were best to check n' balance themselves.
Greenspan was initially appointed by Reagan in 1987 (also re-approved by Bush 41, Clinton and Bush 43)  and coincidentally, the same year, the Glass-Steagall Act which was meant to control speculation in the banking industry was repealed.

So much of the faux illusion of a prosperous US and widening economic gap between 'have' and 'have not' originated from that decrepit cadaver Greenspan we'd need another 10-20 paragraphs to get into it all.

But let's get back to Clinton and look specifically at his policies.  As we mentioned in part 3, he forcefully pushed until successful to get Republican-negotiated NAFTA approved which has had terrible consequences for millions of workers, especially those who once held good paying jobs that have been relocated mostly to the south.

Another piece of Republican-led legislation that supposed 'liberal' Democrat President Clinton signed into law was welfare reform which was part of Newt Gingrich's "Contract with America"  and introduced by those who believed welfare was partly responsible for bringing immigrants to the United States.

Some positives of Clinton's economic record were pushing forth policy that created children's health insurance which provided coverage for up to 5million kids, and legislation which reduced taxes for 97% of working Americans while raising taxes on the wealthiest 1.2%  as well as mandating balanced budgets.
So far its difficult to determine what grade to give Clinton on economic matters.

There's two questions left that needs to be answered in assessing Clinton's Presidency: During the Clinton administration was the federal budget balanced? And was the federal deficit erased?

The answer is... Yes and No to both... Depends on whether Social Security is included.

Clinton was able to acquire additional revenue to pay on the deficit by taxing the rich (good) and making some cuts to the federal budget.  Then there's the Soc. Sec surplus based on the payroll tax.  Social Security taxes brought in more than the cost of current benefits,so the figures looked better than they would if Social Security wasn’t counted.

 So like Bush 41 and Reagan before him, Clinton took from the Soc. Sec. surplus which was meant to guarantee that there would always be a secure fund for the elderly.  He spent the surplus on paying down the US deficit.  That's where the extra revenue came from to pay it down and why Social Security is still set to run out of funds by 2035.
And remember as we wrote in the last posting, every President from Reagan to Obama has taken from that surplus and used it as a 'take a penny, leave a penny' jar to fund pet projects or other programs without having to raise revenue via other means.

So in summary, we find Clinton's economic track record to be a lot like Reagan and because we found Reagan's love affair with Wall St to be destructive for so many working people, we must apply the same feelings toward Clinton; a Democrat in name only.

The entire Clinton Presidency was a continuation of the sugar-high originated during Reagan. The deficit was paid using money meant to protect Social Security and the National Debt still rose under Clinton as we spent billions upon billions to involve ourselves in the Balkans, Somalia and other humanitarian 'hotspots'.

Clinton will always be a popular President, especially among Democrats.  He's charming, affable, and at the same time intelligent.  And while overall times were good economically under Clinton, he's as much responsible for the mess we're in today as Reagan and the Bush boys.
George W Bush (R)  2001-2009  Grade: F+

Once again, this is a very difficult analysis because even more so than previous Presidents, the Fed made most economic related decisions outside of tax reduction that its hard to directly credit or blame any recent or current sitting President.

When Bush took office, the budget had a surplus.  When he left office, it had a severe deficit.   That's what funding two on-going wars with no end in sight will do to the national treasury.

The biggest pre-9/11 decision he made economically were is now-famous tax cuts to the wealthy.  Originally they were supposed to extend through the entire 2000 decade but Pres. Obama has since extended it twice and it is feared, he probably will make them permanent (though we hope not) in December.

After 9/11, Bush told everyone grieving and full of anger not to take matters into their own hands or to seek revenge..   No the best way to show the terrorists they didn't win was to keep shopping.  Keep that 1st class flight reservation to Hawaii or Sydney; keep those 24k gold diamond earrings with matching tennis bracelet, etc..
After that lunacy, Bush gave a $10billion bailout to the airline industry who showed their appreciation by dramatically scaling back daily flights, cutting out food services and every other Scrooge-like trick to maximize profit off of its customers, such as charging for luggage and pillows.

After 9/11, the country was in a recession.  How to get out of it?  Bush and Greenspan had a 'brilliant' idea of stimulating and growing a housing bubble which would grow the economy out of recession, cause the stock market to artificially skyrocket even higher, and allow people (even though with bad credit or low paying jobs) to get homes they had no normal right to expect to be able to afford.

And from this genius idea, came out the filth from the woodwork:  the predatory lenders who hoodwinked the poor into destroying their credit by attracting them to sign on the dotted line with 'teaser' APR rates.

The black and Hispanic communities in particular were very susceptible to these evil lending practices because for generations, they were so used to redlining (being purposely denied loans or offered at higher interest rates than Caucasians) that they jumped at the opportunity at home ownership.
In addition to the lender vultures were the vile Scum known as house flippers who basically bought and re-sold properties quickly, sometimes with minimal to no fixing up to make a quick profit while genuine homeowners were forced to pay 10-25% more for the home than they should have.  Some flippers would do 2..3..4 at a time and have no thought to the consequence of their actions other than making money.

And from this, came the housing collapse of 2007 which led to the beginning of the recession-depression we're all living through presently, and triggered the Wall Street crash of 2008.

And who can forget impotent Bush standing side by side which his arch nemesis, Nancy Pelosi as they both begged Congress to pass the $700 billion TARP program even though it had no oversight to check how the money was actually to be used...

Oh, and did we mention all those billions upon billions to fight and spread democracy throughout the Middle East.
During Bush's Presidency the stock market hit is historic high mark which was somewhere above 14,100 during the summer of 2007, then by the end of his second term in office eighteen months later,  dropped down to around 7,000.  

A lot of people who got wealthy under Reagan/Bush, then super-wealthy under Clinton, became Super-Duper wealthy under Bush Jr. while increasingly the bottom 99% saw their home values and 401k's begin to plummet.

Over time, we don't think historians will be too kind in evaluating Bush's economic policies, and neither will we..  The only thing that saves Bush from a complete F was that, as we've stated repeatedly, the Federal Reserve created the sugar high, the market bubbles, the asset over-valuations in the stock market and every other bad thing which causes the bottom 99% to have less upon less.

Bush in some respects, really was the naive, over-trusting dupe that he was famously portrayed as on SNL and because of that, and not having the guts or balls to Not bailout the finance industry, we give him F+
Barack Obama (D)  2009- present  Grade: F+

What can be said about Obama's economic policies?   Really little to nothing.  For that's what Obama has done for close to four years... little to nothing.

His political enemies labelled him a Socialist-- utterly wrong.  Had he been one (and one can be a socialist-capitalist), he would have pushed massive legislation in his first two years in office to copy FDR's job creation programs.   He would have pushed for a massive stimulus bill..  He would have privatized the banks and fixed the rot while maintaining governmental control.

Obama did little to nothing.

A stimulus bill was passed but very small in size, scope and cost.  He pushed a 'cash for clunkers' program to stimulate car buying in exchange for turning in your old car but that simply increased purchasing when program was in effect, then caused dramatic slow-downs in purchasing immediately after it was completed..

Obama talked a good game and did little to nothing..  He was too busy wasting away the fact he had a Democrat controlled Congress in the first half of his administration, to shove his Obamacare (a nationalized version of RomneyCare from Massachusettes); a program that most Republicans hate as being too intrusive and many Democrats hate as not being strong enough.
Unemployment kept going up and up, and when it decreased it wasn't due to massive hiring.  More like accounting tricks by the Department of Labor who scratched off millions of people out of work as not statistically counting as unemployed because they were out of work too long to matter.

Most if not all economic policies of Obama have meant to help Wall St and the financial class.  He briefly took over GM which in turn dramatically raised the prices of its vehicles then later in 2009 opened a new manufacturing plant in China

Obama has allowed Bernanke to push through QE1, QE2, two seperate "Operation Twists" and a possible QE3  without so much as a peep of dissent even though the Fed's actions have skyrocketed the National Debt from around $10 Trillion when Bush left to now close to $16 Trillion

And despite the desperation of biased sources like the National Association of Realtors, housing has not recovered.  Far from it, the industry is in the midst of a double-dip recession with no clear cut bottom point, especially when there is such a glut of new inventory; newly built homes just sitting vacant without owners.

In summation, Obama has been terrible.  In many ways he's conducted his economic policy (and foreign policy) exactly as we'd expect Bush to, had he had a 3rd term.  And in spite of all the rhetoric that Obama is a leftist, he shown himself to be equally pro-Wall St as Clinton.
No president since LBJ in the late 60s has had the guts and courage of conviction to tax the wealthy appropriately or take the needs of the every person into consideration when adopting domestic policy.

Obama came into office with an enormous amount of support and belief from others that he'd be different and set a different economic course from the Bush years.  Whether intentional or just way over his head, Obama has failed miserably and thus we give him the same grade as Bush Jr-- F+.
~ * ~   ~ * ~   ~ * ~
There's many reasons the US economy has steadily deteriorated over the last 41 years.  Weak and/or shortsighted leadership is a major reason.  No President who has taken office has any background in economics or finance. Perhaps some had business skills but you don't run government like the private sector; it is not designed nor set up to make cut-throat profit.

Because of this, no President especially from Nixon to Obama has known what to do to strengthen and protect the US economy from outside harm.  The goal is always very short-term quick fix policies that last through the mid-terms or next Presidential election.  They put too much faith and trust in despicable Fed Chairs whose interests is solely with the banks; never nations or citizenry.
And for the record, if there was a President Romney and his decisions matched his rhetoric, there is no doubt we'd be grading his "take the pain!" policies as an F as well.

Have good Labor Day weekend.. we'll be back Tuesday unless something worthy to write about before then...

Tuesday, August 28, 2012

1912-2012: Grading the Presidents pt 3: Carter to Bush 41

~ President Reagan had passed away a few years prior to this photograph...

Because Part 3 became such a long process to research and write, we realized that we were going to have to break this up into two smaller parts.   Today we will grade the Presidencies of Carter, Reagan and Bush 41 in terms of their economic records. This will span a total of 16 years (1977-1993)

The conclusion to this academic exercise will be on completed and presented on Friday when the Presidencies of Clinton, Bush 43 and Obama will be addressed and analyzed.

Part 1: http://ants-and-grasshoppers.blogspot.com/2012/08/1912-2012-grading-presidents-pt-1-taft.html

Part 2: http://ants-and-grasshoppers.blogspot.com/2012/08/1912-2012-grading-presidents-pt-2.html

Now during the period from 1977 to 2012, we've had 3 Democrat and 3 Republican presidents.  Different leaders-- different policies-- different ideologies and worldviews...

Ultimately there is one thing in commonality..  a continual drop in the quality of life for middle class to working poor commiserate with a dramatic rise in wealth and political power of the top 1%.

Some administrations were able to hide economic reality better that others. Eternal optimism and broad-smiling charm are always more appealing to voters than blunt honesty.

Think of it this way.. which parent is more popular to a child:  One who says 'It's time to go to bed' or the one who says.. 'Who wants more cake and ice cream??'

Now onto Part 3-- Carter, Reagan & Bush 41...
Jimmy Carter (D)  1977-1981  Grade:  D-

When Carter took office in 1977, the economy was in a major funk.  Four years later when he left office, the situation had not improved and he was voted out.

Now that's not to say Carter's presidency wasn't without successes such as creation of Departments of Energy and Education,  the Camp David Accords and the Panama Canal treaties.   The problem was that few to none of his achievements were economic.

Carter took office during a period of international stagflation, which persisted throughout his term.

In economics, stagflation is a situation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high.  It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.

As a result of this, interest rates were extremely high during the Carter years which was great for savers but an absolute killer for those seeking to buy homes or automobiles, etc... anything that required repayment.

Stagflation in the US actually originated with Nixon who pushed forth a policy of price controls in 1971, which in direct conjunction with taking the nation off the gold standard, precipitated a decade long decline in the US economy which by the late 1970s, laid on Carter's lap to fix.

Unfortunately, he was not up to the task.

By 1980, Carter was so unpopular that Ted Kennedy was running against him in the primaries, making a strong showing and by the time Carter survived to face Reagan, he simply was no match with someone giving upbeat, optimistic visions of "Morning in America".  
Carter would lose 49 of 50 states in the electoral college to Reagan in 1980, one of the biggest landslide losses in US political history.

The best way to understand that period if not lived through it, would be to rent the film "Miracle" with Kurt Russell about the 1980 Olympic champion hockey team.  You will get a good feel and understanding of the overall malaise that many felt back then, which was among the reasons that special team became so beloved and inspirational to the nation.

It was difficult to find any piece of legislation or policy of action Carter took to try to combat the stagflation.  He came across by many including long-standing Democrats to be a weak and ineffectual leader who lacked the ability to present an economic vision for the nation outside of common-sacrifice.

As a result, we gave Carter a very poor grade.

Carter could be called the last "True" Democrat President; one who did not compete with the Republicans as to how dramatically he could bend over backwards to court or alter public policy to appease the immoral Wall St for donations.

In other words, the Democratic Party of today is not your Daddy's party.

When Carter left office in early 1981, the Dow was around 1,024.  By the year 2000 which was the last of Clinton's second term in office, the Dow reached upwards of 11,500.  In other words, it had taken over 200 years for the stock market to reach 1,100 for the first time ever (Feb 24, 1983) and would increase 10x in size within a span of only 17 years.
Ronald Reagan (R)  1981-1989  Grade: B-

Its very difficult to be brief and concise when it comes to the Reagan Presidency but we will make every attempt possible...

Reagan was/is to the political right what FDR was to the left.. much beloved and he left an indelible imprint upon the political fabric which for better or worse, will be felt for generations.

To fiscal conservatives, Reagan was a genuine breath of fresh air.  He conveyed confidence, strength and an abundance of optimism an hope for a better tomorrow.  And though it took a couple years for his economic programs to lift the nation out of recession, for many the 1980's was a period of great economic prosperity.

Reagan believed in laissez-faire economics,  once famously stating essentially that government does not fix problems; it IS the problem.  So his remedy to get the economy in gear was intense tax cutting for wealthy (from 70% to 50% rates) and corporations, a simplified tax policy and coordinated with the Fed a dramatic slashing of interest rates to record lows to stimulate additional consumption.

His supply-side economic policies, were dubbed "Reaganomics", He also push forth deregulation of the economy, which allowed business on Wall St to dramatically expand their profits without the checks and balances which were in place before.
Reagan reduced government spending--buy mostly on the poor.  He certainly did not curtail spending on national defense, getting into an economic pissing contest with the Soviets as to see who could build up their weaponry as quickly and expensively as possible.

As a result. Reagan pushed the national debt up to over $1 Trillion for the first time in US history.  It seems like a paltry number when you think the national debt currently stands close to $16 Trillion.  But understand that at no time since Reagan has anyone made the attempt to pay back the debt to pre-Reagan figures.

For better or worse, Reagan showed while in office, all the benefits and none of the drawbacks of an economic policy of perpetually kicking the financial 'can' for future generations to deal with.

And really that's the problem with Reagan from an economic standpoint-- He was a great success as President because it is easy to spend and spend, when there's no sincere thought or consideration to paying back what is borrowed.

We love those who do the 'buying' and tend to dislike those who do the taking-away, which is why no Presidential candidate in his/her right mind ever runs on the "Time to pay the piper" platform.

And brings us to credit cards which was such an important part of the overall economic growth of the Reagan years:  this heavy influx of personal credit cards pushed into the hands of everyday Americans which allowed the Reagan economy to grow and flourish.  There was a time credit cards were specialized; meant only for the very affluent.

But by the early 80s as wages were continually worsening in comparison to cost of living, a financial buffer was needed to give everyday people the means to stay afloat and compete with the well-to-do.


Legislation was passed which took power away from individual states to decide what APR a credit card could charge, instead stating the rate approved by the home state of a card issuer as a  nationalized rate with nationalized means of debt collection. And from this policy, once credit card issuers were fully protected, credit card use boomed.

So how to grade Reagan's economic policies fairly and free as possible from bias? That's the big question and task at hand...
 The economy Was better when Reagan left office than when he was inaugurated.  Unemployment was down, 16 million new jobs were created, and inflation significantly decreased.

But Reagan is a good example of the "Two Americas" problem which has steadily gotten worse into the present.  Reagan cut the budgets of non-military programs including Medicaid, food stamps, federal education programs and the EPA.

And while he protected entitlement programs, such as Social Security and Medicare, his administration attempted to purge many people with disabilities from the Social Security disability rolls.  Reagan also used the additional revenues collected by the increased Social Security taxes to pay for other programs and replacing the funds with IOU's (a practice All Presidents have done since, which is why there's talk of Social Security becoming one day insolvent even with the supposed increased revenue)

So once again... how to grade Reagan?  If you're a fiscal conservative, he gets A+++ and if you are a traditional Democrat, you give Reagan a D-.   We are neither.  We see Reagan's good but we've also seen over time the negative repercussions of such short-sighted economic policies.  So Reagan's economic policies get him a grade of B-.
George H. W. Bush (R)  1989-1993  Grade:  D+

Bush 41 had many successes as President, mostly stemming from 'Operation Desert Storm' which at the time was criticized by many because he refused to invade Iraq.  History has shown that to have been a wise decision based on Bush 43's demonstration of what happened when invasion took place.

Economically though, Bush 41's Presidency was not a glowing success and his post-Desert Storm approval rating of 85% dropped dramatically as the nation was in a recession by late 1991, and ironically it was 6 blustery words uttered during a speech during  the 1988 Republican Convention which caused him to lose his base support and ultimately lose re-election:

'Read my lips... No New Taxes!'

Because of a deficit that had grown three times in size in just a 10yr period thanks to President Reagan's over-spending on defense and nuclear arms,  Bush was forced to go back on his campaign pledge and this alienated a large percentage of his fiscal conservative base who didn't seem to believe that higher taxes should ever apply to them.

As stated before, the US was in a mild recession in 1991-92 but by the time of election, unemployment had risen to 7.8% and 14.9% of Americans were now officially at poverty levels or below.

The true black mark on Bush's Presidency (one that eventually Bill Clinton would share when passed) was NAFTA-- the North American Free Trade Agreement.
The treaty was supposed to eliminate the majority of tariffs on products traded among the United States, Canada, and Mexico, to encourage trade amongst the countries and remove investment restrictions among the three countries. The promise (or lie) was that NAFTA was going to create millions of new jobs for Americans.

President Clinton would go on to make the passage of NAFTA a priority for his administration, despite its conservative and Republican roots – with the addition of two side agreements – to achieve its passage in 1993

Proponents of NAFTA have always maintained it was a success but tend to ignore the dramatic decrease of good-paying jobs as a result.

According to the Economic Policy Institute, rise in the trade deficit with Mexico alone since NAFTA was enacted in 1994 led to the net displacement of 682,900 U.S. jobs by 2010 with 61% being high-paying manufacturing jobs.  In addition, since NAFTA was enacted, U.S. manufacturing employment has fallen by 5 million jobs.

Clinton gets blame for signing it but Bush 41 gets equal blame for negotiating it.

It is mainly for the NAFTA and lack of any clear economic policy to grow the economy while being so singularly focused on foreign policy issues, that it is impossible to give Bush 41 an economic grade higher than D+
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We conclude on Friday with part 4: Clinton, Bush 43 & Obama

Monday, August 27, 2012

1912-2012: Grading the Presidents pt 2: Truman to Ford

~ White House lawn - VJ day: Aug 15, 1945

In part 1, we analyzed 6 Presidents encompassing the years 1912-1945, a 37 year span.  And in that period, with the exception of Warren G Harding who was arguably the Worst US President we've ever had, each individual who held high office then earned good to excellent grades.

http://ants-and-grasshoppers.blogspot.com/2012/08/1912-2012-grading-presidents-pt-1-taft.html

And now we move on to Part 2- Truman to Ford (1945-1977), a span lasting 32 years.  As stated in Part 1, we do not grade based on wars won or lost, constitutional scandals or anything else not tied in some direct way to the national economy.  And where there is a connection, we make mention of it.

Now we continue:
Harry S. Truman (D) -- 1945 - 1953   Grade: C+

Truman was the first US President to enter that position in the middle of an ongoing war, having done so because of the passing of FDR.  Truman is obviously famous for his decision to use nuclear weapons on Japan to quicken the end of the war and as Commander in Chief during the Korean Conflict.

But we're here to focus on finance and economics, not military success or intentional stalemate out of concern (some might argue cowardice) toward the Chinese..

Economically, post WWII was anything but a smooth and orderly transition to peacetime.  It was quite disorderly and Truman faced many challenges in domestic affairs.  The years of 1945-48 were marked by severe shortages, numerous strikes, and the passage of the Taft–Hartley Act (allowing for the monitoring of activities and power of labor union) over Truman's veto.

Due to Truman's unpopularity on the domestic front including a post-war recession which took hold, the Democrats lost both houses of Congress in 1946 midterm elections to the Republicans, though they would reclaim majorities in 1948 along  to correspond with Truman's amazing election victory which confounded all predictions at the time.

Most of Truman's focus during his Presidency, especially his elected term was on foreign issues..
As it stands based on the information presented thus far, Truman would get a 'D' for his economic handling.  But then one must consider a very important economic decision under his Presidency-- The Marshall Plan, which was a four year American program where the US gave monetary support to help rebuild the devastated European economies after the end of World War II.

Besides being important on a humanitarian level, the Marshall Plan basically lifted from impoverished rubble, millions upon millions of Europeans and allowed them the means to purchase and consume US products and services.  US Corporations benefited greatly and profits were so strong, that many built or expanded their business interests worldwide during this period.

In in the immediate post WWII world, the US was basically the only game in town, as the saying goes.  Wanted a quality TV or automobile?  You bought US made.   You wanted a piece of undependable, unreliable crap?  You would at that time, buy from China or Japan.  Funny how things change within a couple generations...

So when everything is taken into consideration, Truman's economic grade is a solid C+ because as stated before, it was quite a turbulent economic adjustment after WWII and indirectly, Truman benefited greatly by the US being the only non-Communist superpower, and by extension, leader of the world.

As in his assent to the Presidency, Truman's economic record could be summed up with the phrase 'Right place, Right time'
Dwight D Eisenhower (R)  1953-61  Grade:  C+

Eisenhower's greatest achievement prior to becoming President as most know was as Supreme Commander of Allied Forces during Europe theater of WWII and was quite successful in that role.

As President, 'Ike's' focus was mostly on foreign issues such as the continuing Cold War tensions with the Soviets and the situation in the Suez Canal in 1956.  Domestically, the economy was rapidly improving thanks to being the only capitalist superpower and other nations still trying to recover and rebuild itself.

And domestically, the big events were the Communist hysteria drummed up by witch-hunt specialist Joe McCarthy, and the Surpreme Court reversed segregation in the classroom during Eisenhower's time in office.

Probably Ike's biggest domestic economic achievement was authorizing the Interstate Highway system which was not only important from a symbolic and practical standpoint, but it gave a lot good paying jobs to many hard working laborers.

His biggest setback which history has forgotten was that he was President during a severe recession which hit the US in 1958-59 but didn't leave any lasting damage once sustainable recovery was quickly established.

For Eisenhower, like Truman we give a grade of C+ because legislatively neither did much on their own to boost the economy.  It was doing quite well as-is which allowed 'Ike', like Truman before him to put more focus and attention on foreign policy matters during the late 1940s through to the end of the 1950's.
John F. Kennedy (D) -- 1961-63  Grade:  A-

Most of the attention of Kennedy's Presidency goes to the Cuban Missile Crisis, the failed Bay of Pigs preceding it, and socially the Civil Rights fight (which was really led more by Martin Luther King. Jr; Kennedy took a less active role than history gives him credit for)

Kennedy was actually a successful economically as President but it gets overshadowed because the economy is a very unglamourous subject to focus on among the multitude of movies, TV mini-series and other biopics made on Kennedy's life and time in public office.

Despite low inflation and interest rates, GDP had grown by an average of only 2.2% during the Eisenhower presidency (scarcely more than population growth at the time), and had declined by 1% during Eisenhower's last twelve months in office.

The economy turned around and prospered during the Kennedy administration. GDP expanded by an average of 5.5% from early 1961 to late 1963, while inflation remained steady at around 1% and unemployment eased.  In addition, industrial production rose by 15% and motor vehicle sales rose by 40%.
This rate of growth in GDP and industry continued until around 1966, and has yet to be repeated for such a sustained period of time.

It is easy to understand why so many look glowingly upon Kennedy's Presidency as an age of 'Camelot'.  Even if you get beyond the Hollywood imagery emptiness of a good looking young couple (Kennedy & Jackie) and all the personal visions of simple, happy life that period conjures, there is actual statistical truth to back up the premise that the early 1960s were a very good time for Americas economically.

This period is the true zenith of an upward steady progression for the US economy in terms of real benefit not only to the top 1% but the nation as a whole which began in earnest right after the Civil War as US industries started to drastically pick up.

On economic terms, Kennedy's Presidency is the last 'A' grade we'll be giving.
Lyndon B. Johnson (D)  1963-1969  Grade: B+

If you were to compare LBJ economically to a type of baseball player, it would be the guy who hits both massive Home-Run bombs and also would strike out in big situations.  In baseball, that is called the ultimate 'hit or miss' player.

LBJ's biggest success by far was the Civil Rights Act of 1964.  People usually focus on the social/racial aspects but economically it was far broader in scope and power; it was meant as part of a larger fight; a modern war on poverty.

He was responsible for designing the "Great Society" legislation that included laws that upheld civil rights, public broadcasting, Medicare, Medicaid, environmental protection, aid to education, and his "War on Poverty".

In 1964, the national poverty rate was 19% (about 1 in 5 Americans).  Johnson believed in expanding the government's role in education and health care as poverty reduction strategies, which can also be seen as a continuation of Franklin D. Roosevelt's New Deal, which ran from 1933 to 1935.

Because of LBJ's legislative actions, the poverty rate dropped to 11% by 1973 and until 2009, did not see rates anywhere close to where it was when Johnson was President for another 36 years.

After Johnson, future Presidents and politicians with different economic agendas made continual efforts to frame the debate in negative terms.  They weren't social safety nets any longer-- they used biased, misleading words like 'entitlements'  Thanks to the switch in policy and national attitude toward the poor, National Poverty was at 20% as of 2009.
~ Photo taken during VP years

LBJ would get an A++ if there was no Vietnam war.  But there was so it has to be included.  Its no so much of concern for this exercise that US forces were prevented from achieving a tactical military victory by Johnson and thus thousands upon thousands of US soldiers died for nothing.

The reality is the dramatic cost escalations for fighting the war ultimately curtailed the finances needed to successfully push forth the Great Society and Johnson.  The annual budgets skyrocketed into the tens of billions, unheard of then..  Congress was no longer going to write LBJ blank checks to pursue all his policy aims and now Johnson was forced to pick and choose.

And he chose continual war over his domestic dreams.

No President since LBJ has come even remotely close to dedicating themselves to making life genuinely better for everyday people, particularly the lower/poorer classes.  Not Nixon, Ford or Carter in the stagnant 1970s.. certainly not Reagan..  nope, not Clinton.. obviously not the two Bushes... and absolutely not Obama.

So Johnson gets an economic grade of B+ but it could have been more...

It should have been more...
Richard M. Nixon (R) -- 1969-74  Grade: F

It can be tough to fairly assess Nixon as President because Watergate will always be the #1 focus of his Presidency and for many, a window into his (lack of) character and soul.

We're not interested in Watergate here-- it was a criminal and constitutional issue but not one of economics.  We also don't focus on his personality which, to be frank, was most unlikable.  So instead, we look at what policies if any did Nixon draft to make the nation better...

Domestically, Nixon's administration generally embraced policies that transferred power from Washington to the states.  Among other things, he initiated wars on cancer and drugs, imposed wage and price controls, enforced desegregation of Southern schools and established the Environmental Protection Agency.

But the one economic policy which we care about far above all others was Nixon's decision to pull the US currency off the gold standard in 1971, a decision which has overall had disastrous consequences for  this nation into the present and for future generations to come.

The gold standard is a monetary system in which the standard economic unit of account is a fixed weight of gold. No country currently uses the gold standard as the basis of its monetary system, although several hold substantial gold reserves.  Prior to 1971, many nations including the US did peg their currency to gold.
So what did/does that mean? Let's say money is still pegged to gold, and the US holds a supply worth $3 trillion dollars.  That means that all the currency printed by the Fed-- dollars and coinage which is circulated in the US economy can not go over that $3 Trillion figure.

It serves as a fiscal checks/balances so governments can not overspend and over-circulate its currency which leads ultimately to devaluement of money and all prices for products/services rising.

The reason Nixon did this?  Just like the destruction of the 'War on Poverty' with LBJ, blame the continual Vietnam War.   All those untold billions upon billions given to the military industrial complex so we would fight endlessly to obtain an 'honorable peace'..  Well, eventually by 1971 the US simply did not possess enough gold to pay for war and sufficiently run a nation.

So Nixon devalued the currency, the Fed could print as much as it wanted with no tangible backstop or limit, the war could continue for two additional years and for millions upon millions of people, their wages in terms of purchasing power, would never be that good again.

We've seen a 40yr slow, incremental decline in worker wages compared to purchasing homes, automobiles, etc.  And to fill that eventual dramatic void, credit cards were made available to the masses starting in the early 80s so people could focus on the 'later' vs the 'now'

The 1970s was a rough decade economically in many respects.. In 1971, the Dow reached a high around 850 (the Dow did not reach 1,100 for the first time until the early 1980s)  By the end of 1980, 10 years later, the Dow was hovering at the exact same number)

The financial drain of the Vietnam War played a big role, but nothing bigger ultimately than leaving the gold standard and because of this, Nixon gets a failing grade economically.
Gerald R. Ford  (R)  1974-77  Grade: D

Now we reach the last President of 'Part 2'.  Ford became President when Nixon resigned rather than suffer the disgrace of impeachment.

Ford presided over arguably the weakest economy since the Great Depression, (the current recession-depression is far worse) with growing inflation and a recession during his tenure.  As a result, very little to any of the economic problems of Ford's administration were of his doing or his fault.   But electorates demand results not excuses and in 1976, Jimmy Carter defeated him.

Its difficult to judge Ford, having only served 895 days, the shortest period of any President who did not pass away while in office, but we will try...

The focus of the Ford administration became fixing the increase in unemployment, which hit 7.2 percent in December 1974.

In January 1975, Ford proposed a 1 year tax reduction of $16 billion to stimulate economic growth, along with spending cuts to avoid inflation. Ford was criticized greatly for quickly switching from advocating a tax increase to a tax reduction. The Tax Reduction Act of 1975 which resulted in a federal deficit of around $53 billion for the 1975 fiscal year and $73.7 billion for 1976.

Ford, like many Presidents afterward (it was solely a Republican issue until 1992 when Wall St Democrats were elected and push this distorted mindset with equal furvor to Reps.) wrongly felt that by lowering taxes on corporations and the very wealthy, that would stimulate jobs and grow the economy.

Time and time again as we will show in Part 3, it does not work and any successful connection between the two is coincidental at best.

When New York City faced bankruptcy in 1975, the mayor was unsuccessful in obtaining Ford's support for a federal bailout. The incident prompted the New York Daily News' famous headline "Ford to City: Drop Dead", referring to a speech in which "Ford declared flatly ... that he would veto any bill calling for 'a federal bail-out of New York City'".

The following month, November 1975, Ford changed his stance and asked Congress to approve federal loans to New York City.
Both then as currently, A&G HATES Bailouts... Bailouts for Corporations, Industries, Cities, States and/or other Nations..  The collective 'We' always are forced to pay for the Fuck-Ups of a few.

So as a sidebar find it interesting that ultimately every President from Teddy Roosevelt bowing to JP Morgan after the Panic of 1907, to Ford to George W. Bush & Obama bending over and spreading cheek literally to help the corrupt financial system...  They All ultimately cower from their beliefs and agree to massive bailouts. We guess its a prerequisite that to serve the nation's highest office you are not to possess any conviction or backbone.

Also kind of funny that a city that touts itself arrogantly as 'the Greatest City in the World' desperately needed government handouts.  If its an individual, that person is looked upon as a bum or loser or other derogatory term..

But if its a city on their 'knees'?  Well... really no difference is there... Same 'Loser' tagline applies

So to wrap up with Ford, ultimately he was a bad President like his predecessor Nixon but since Ford didn't cause the problems, we can not fairly give Ford an 'F'..  Instead, he gets a 'D' for every idea and strategy implemented to deal with his recession being a failure.
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In a few days, we will wrap up '1912-2012: Grading the Presidents' with the administrations of Carter through Obama...  That should make for some lively debates we are sure...

Friday, August 24, 2012

1912-2012: Grading the Presidents pt 1: Taft to FDR

~ Theodore 'Teddy' Roosevelt

To wind up another utterly unmemorable week in markets and the like, we thought we'd give Wall St the respect it deserves by completely ignoring it, and writing on something more interesting for the weekend edition.

The Presidential version of 'American Idol' is happily nearing an end.  And like it or not, one of the two remaining candidates will win in November.  And whoever that person is, he will bring with him a Grade-A goofball as the Vice President.

But rather than focus on the depressing present, we're going to wax nostalgic and take a trip into our nation's past.    In the last 100 years (1912-2012), the nation has seen 18 men take office and swear allegiance to the Constitution.  And some even meant it.

We've had everything from capital-G 'Great' Presidents to garbage with many in between.  Both political parties represented with aplomb and with shame.
~ White House lawn- 1912

So we at 'A&G' have decided to grade each President specific to economic and fiscal policy decisions as well has how each has handled financial crises which appeared sudden under their watch.

We don't focus on sex scandals, handling of war(s), or Constitutional crises.  Being a good communicator, likability or how often if any that person was re-elected, will play no bearing in how we grade each President.

Because this is a lengthy exercise and not just simply a Grade with a couple words tossed around, we decided the best way to present the information to you was in three parts...  Part I will be 'Taft to FDR';  Part II will be 'Truman to Ford';  Part III will be 'Carter to Obama'

You may agree or disagree-- that is quite OK.   It means you care.

One last thing- Because Teddy Roosevelt served as President prior to 1912, we did not include him in the grading 'officially' but if we had, 'A&G' would have given his Presidency a grade of A- on economic/financial matters.  We just wanted to give the 'Trust Buster' his proper respect..

And now we begin:
William Howard Taft (R) -- 1909-13    Grade: B+

Some background first:  Taft was Teddy Roosevelt's VP and when Teddy boxed himself into a corner by promising in 1905 he wouldn't run for re-election, it opened the door for Taft to win.   Roosevelt tried to run again in 1912 under a 3rd party ticket  (Bull Moose Party) but it split the Republicans in two and allowed Woodrow Wilson to win the election.

On the positive, Taft's domestic agenda emphasized trust-busting, civil service reform, strengthening the Interstate Commerce Commission and improving the performance of the postal service.   On the negative, he signed into law the 16th Amendment which was introduction of Income Tax.

Because he was an academic more than politician, Taft was not very popular by many and alienated many in his own party.  He's widely forgotten today outside of the fact he weighed over 300lbs.  Later, he was nominated to and served on the US Supreme Court, even becoming its Chief Justice-- a position he was much more comfortable with.

Overall, economic times were very good under Taft.
Woodrow Wilson (D)  -- 1913-21    Grade:  B-

Some background first: Wilson is famous for being President during WWI; a war he promised he'd keep the US out of until the bankers let him know in uncertain terms that their billions upon billions in loans to Britain, France, etc.. would never be re-payed (defaulted upon) unless US entered the war and turned the tide vs the Germans.

Wilson also tried to push forth his 'Fourteen Points' plan at the post WWI conference at Versailles; it was mostly ignored.  For time constraints, we won't get into it here.

Economically, Wilson did many good things such as: Federal Trade Commission Act (authorized to issue “cease and desist” orders to large corporations to curb unfair trade practices), the Clayton Antitrust Act (sought to prevent anti-competitive practices), the Federal Farm Loan Act (aimed at increasing credit to rural, family farmers) and child labor was curtailed by the Keating–Owen Act of 1916

But the black mark for Wilson economically was passing the Federal Reserve Act which gave birth to that Creature that sucks the lifeblood of the US economy; a private bank called the Fed.  It took those bloodsuckers 5 years to pass legislation to create the Fed-- Roosevelt and Taft fought it; Wilson approved.

In addition, the US suffered a post-war recession in 1919 as the nation tried to shift from a war economy to peacetime..  it was a severe recession but also extremely quick, and by 1920 the nation was prospering again..

If not for the Federal Reserve Act, we'd give Wilson an A-, but we can not ignore how horrible that parasite, the Fed has been for this nation as it continues its sole function of putting banks before anything/anyone else.   So we gave Wilson a B-
Warren G Harding (R)  1921-23    Grade: F

Harding died midway through his one term in office.   Its hard to say much positive about the man-- a total immoral (politically and sexually) scumbag who rewarded friends and political contributors, referred to as the Ohio Gang, with financially powerful positions.

The highlight (or lowlight) of Harding's Presidency was the notorious Teapot Dome scandal (a bribery incident where the Secretary of the Interior Albert B. Fall leased Navy petroleum reserves at Teapot Dome and two other locations to private oil companies at low rates without competitive bidding)  Fall and several of Harding's appointees were eventually tried, convicted, and sent to prison for bribery or defrauding the federal government.

Really nothing positive to say about him economically or otherwise.
Calvin Coolidge (R)  1923-1929    Grade:  C-

The 1920s under Coolidge was a prosperous time for most people.  It certainly was for Wall St.  Markets kept rising.. So did the profits..  A belief took hold that nothing could ever alter the economic direction in the nation from going Up, Up, Up.

Coolidge was the father of laissez-faire capitalism which refers to the belief in a truly free market where with very few exceptions, government gets out of the way of the private sector.  The market will regulate itself, weed out the baddies and conduct itself appropriately without need of legislation, regulation or tariff.  The private sector establishes wages, work conditions, etc and if the employee doesn't like it, he/she is free to leave...

Coolidge was fiercely anti-organized labor, taking an active role in crushing Boston police officers who tried to form a union then later went on strike.  Coolidge directed all the officers to be fired and a new police force to be hired.  Later in 1981, Ronald Reagan would use this as his inspiration for dealing with the Air Traffic Controllers' strike.

If 'A&G' was a fiscal conservative blog, we'd grade Coolidge with A+.  If we were an extreme-leftist blog, we'd grade Coolidge with F-.  Because we are neither, we decided to give 'Silent Cal' a grade of C- because economically times were bustling for many people during the later part of the 1920s and when you compare it to what life was like in 1930, he deserves some credit.

Overall however, we will say that laissez-faire does not work...never has.. never will.  It is much like steroids-- both will give quick, dramatic results with many immediate benefits, but the downside comes just as quickly with major negative side-effects that last far longer than the initial plusses achieved from it.
Herbert Hoover (R)  1929-33   Grade: B-

People like to blame Hoover for the Great Depression.  It occurred in late 1929 and Hoover was in office, thus it had to be his fault...    No.   Hoover can be criticized for policies after the stock market crashed but not for the act in itself.  It was a culmination of 9-10 years of continual prosperity which transferred itself into continual greed and excess.

And actually, we are not critical with his post-market crash policies because they were the correct decisions.. its just the economic collapse was simply too severe to be fixed in one 4 year term of office.

Hoover is fascinating in that he tried to combat the ensuing Great Depression with approaches not expected stereotypically by a Republican: volunteer efforts, public works projects such as the Hoover Dam, tariffs such as the Smoot-Hawley Tariff, (it raised U.S. tariffs on over 20,000 imported goods to record levels), an increase in the top tax bracket from 25% to 63%, and increases in corporate taxes.

These initiatives did not produce economic recovery during his term, but served as the groundwork for various policies laid out in Franklin D. Roosevelt's New Deal.

We believe the reason the Great Depression lasted as long as it did, wasn't because of any failings necessarily on Hoover's part but that it was the first true global economic collapse.

Germany was supposed to pay war reparations to France and England which they would take and repay the US for loans our bankers and government gave out.  But demanding money from a dead horse like Germany back then is like trying to extract it from Greece today.  So Germany's economy melted, the rest of Europe could not repay the US and melted too, and then the US got pulled up under the tide.

Only one nation ever fully repaid its WWI debts to the US:  Finland.

So when all things are considered, we graded Hoover a B-.  His policies were the right ones (especially taxing the wealthy and the corporations). But he simply did not have the time to see his policies implemented while his laissez-faire Republican party fought him tooth and nail on every public and social policy, then besmirched Hoover's name for many years after as 'the cause' of the mess.
Franklin Delano Roosevelt (D)  1933-1945    Grade: A++ 

We write the most minimal on the President who is the most well known of the list thus far..

In his first hundred days in office, Roosevelt spearheaded major legislation and issued a profusion of executive orders that instituted the New Deal—a variety of programs designed to produce relief (government jobs for the unemployed), recovery (economic growth), and reform (through regulation of Wall Street, banks and transportation such as the SEC {Securities Exchange Commission}).

Roosevelt also introduced unemployment compensation, Social Security for the elderly and disabled and Medicare to America (Germany was the first nation to implement such programs for its people).

The economy improved rapidly from 1933 to 1937, but then relapsed into a deep recession which took America's entrance into WWII to officially get out of.

On pretty much every historian's Top 5 greatest US Presidents' list, FDR is listed somewhere upon it..  A&G is no different..  so easily he gets an A++  and if we were to rank all 18 Presidents from 1912 to the present, we would put FDR at #1.
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On Monday, barring any major economic development worth writing about, we will continue with Part II 'Truman to Ford' and then at some point next week close with Part III 'Carter to Obama'

Until then, have a good weekend...

Thursday, August 23, 2012

Can't have 'Confidence' without the 'Con'

Bernanke:  "Ever notice how food tastes so much better when knowing fewer have access to it?"
Geithner:  "Nom Nom Nom" (continually nodding)

Today's the first day in quite a few weeks that the insidious stock market has dropped triple digits a trading day..  As of 3p, its -105pts down to 13,067..

Guess those Wall St bloodsuckers haven't given up on trying to get that mid-September approval of QE3..  we wonder if this is a one-day "profit taking" adjustment (as CNBC loves to say) or the beginning of the 'dogs' intentionally starving themselves of profit for a couple weeks before the big hand-out?

Time will tell...

In a perfect world, we would take an eraser in one hand, piece of chalk in the other, and properly adjust that over-inflated Dow number to something accurately reflecting the True state of the US economy as it exists this moment..

So we'd erase the '13' part and replace with '8' and maybe change the '0' to a '4' and... Ta-Daa!  You get '8,452' --  That is what the Dow should be without the Fed's meddling.
But as with everything in life, every designed action has a specific set of purposes behind it.  The Fed's goals were as follows:

1)  Provide a means of continual back-door bailouts to zombie banks and financials by purchasing their toxic debt at over-valued prices to guarantee the banks would make sizable profits while preventing 'mark to market' which would show the enormity of the debts which banks hold on their balance sheets; the Fed would take intentional losses  --  Check (success)

Example:  You are desperate for $$.  We can't simply just give you what you need.  But, we observe you recently had a bad flu and have quite a lot of really nasty tissues collected in your waste basket.  So we will "cleverly" offer you $50 per yukky tissue which we will immediately discard, you have your $$ and no one can legally say we simply 'Gave' you free money.

2)  Allow those greedy banks to make profit both by selling the toxic crap way beyond its value, but pay the banks to hold that money in deposit for them.

Yes- that is correct.  After the Fed gives $$ to the banks, it pays them at a rate of 0.75% to Not lend that money out to the public i.e. home loans, car loans, etc.    It thinks it can cleverly control the rate of dollar devaluation this way.

Its one thing to physically print trillions in money- that devalues what's currently being used in everyday transactions gradually i.e. 'lobster in a pot'.    But if the lent $$ got out to the public, then people notice everything go up in price 100-200% within weeks and the US becomes Egypt.

So banks and financials get rewarded twice for being 'too big to fail', the populace does not benefit in any way, and the greater society is kept manageable --  Check
~ Yaayy.. Everything's Baaaa-ck to normal..  Baaaa!"

3)  Give the impression to millions of Americans who do not pay any attention to financial or economic news outside of what the Dow is today, that the nation is on a path toward continual, sustainable recovery.

The everyday 'Joes' and 'Jolenes' end up being happy and docile even though their lives haven't improved an iota, and politicians love it because they're not forced to pass watered-down legislation that may anger their biggest campaign contributors. -- Check

Example:  You're waiting a very long time in line at the bank to make a deposit.  Ten people are in front of you and you're losing your patience... But you finally see some positive movement: the one teller available to serve the public now takes the next customer in line.

You're still ninth in line and going to be there an eternity but that one action of minimal line movement convinces you to remain patient, calm and... here's that magic word.. its coming... wait for it...  ''Hopeful"

Everyone is blissfully ignorant that nothing was done to fix what caused the recession to occur in the first place.   And as long as soothing words tell us 'Help' is on the way, and we still have a few nickles left in the savings jar to ride it out, we will.
The Fed along with the US Government (remember the Fed is a private bank; as 'Federal' as FedEx) have treated all post-WWII recessions the same..  Do the absolute minimal to convey that there is recovery, get the masses to believe it, then when they open their wallets and purses, it becomes via confidence something self-sustaining.

Confidence..  CON-Fidence... Con-Man...  Con

Its no different than that first time someone taught you to ride a bicycle.  You're nervous and fearful you will fall..  The other soothes you with (lies) words to the effect that they won't let go...  that nothing will happen...

So you start to ride with the other person holding the back of the bicycle to give it support, and once you start pedaling, he/she lets go... And you're riding your bike joyfully, never looking back; head in the clouds on the assumption that the other's hand is still steadying the bike.

Yours truly had a different experience.

A trusted person was holding the back of the bicycle and promised not to let go..  the ride begins and I instinctively glance back to discover no hand steadying the bike.  In anger, I allowed the bike and myself included, to fall off onto the grass, yelled at the person who deceived me and Never Ever trusted that person again... Ever!

Most people want to be lied to... Want to be told everything is OK and things will all work out so don't worry... go back to normalcy or to paraphrase President Bush to a scared nation after 9/11, 'Keep Shopping'
And then there's some.. statistically not many, but some who won't simply tolerate that.   They want to actually see some plan in motion to get the economy moving.

They want to see genuine legislation passed, not simply talk of it... They want to see CEOs arrested and forced to do perp walks, not simply some lower-level middlings like Madoff who's actions had no great effect on the 2008 collapse occurring.

People-- you know, we're pretty amazing when you think about it.  Amazing how much we put up with; how much we take.  Our 'breaking point' never seems to have any Snap! to it... just a lot of bend.

Look at Greece-- their people have nothing.  If there was such a category as '4th world nation' that would be Greece -- financially gutted, privatized, severe unemployment only worsening with more austerity on the way... the financial equivalent of being raped and tossed into a ditch...

The Grecian people -- such dead dogs -- couldn't even muster the spirit and pride to vote for a political party who was going to tell the ECB, IMF, et al to go to Hell... no spirit to rise in unison against their oppressors.
America is in far better shape economically than Greece but that's really like saying 'Celebrity Apprentice' is a far superior quality TV show than 'So You Can Dance!'

Imagine how many more years of middle and working-class destruction we all will be passively accepting before we eventually get to the Grecian levels of today?

They seem to take it well... We're sure we'll do the same...

Wednesday, August 22, 2012

Those in the Know, Do Truly Know

In yesterday's posting, we referred to professional Investors and market traders as dogs...  Dirty, mongrel mutt dogs..

We've also called them rats, roaches, vultures...

Maggots, parasites, bottom feeders..

Every word a fully accurate description.

But as vile as some of the terms that A&G uses to succinctly depict them, it is even more so how governments around the world, non-stop cater to them and conduct public policy for their benefit.

This is all old news to those who loyally have stayed with us for just upon two full years this coming Labor Day..  You all know the deal.

This Yahoo! Finance headline kinda says it all & makes us disgusted..

'With QE3 Hopes Delayed, The Next Treasury Rally Begins'

Stocks are at a five-year high as of yesterday...  The greed of investors basically killed off their September QE3.  But they still made ample profit while the bottom 99% trudged along with no lifeboat in sight..
And the dogs know that at any time the market drops a little bit too much for the Fed's taste, that free QE money will be poured in... taxpayer money..  money added to the US debt..

But loyal readers, you knew that too, didn't you?

Apologies.. hard sometimes not to be a little repetitive when dealing with such economic stagnation--  will the stock market Ever drop and Investors get the Punishment they Richly Deserve?   Will Greece ever admit they are dead?   Will the Euro as a currency admit it is finished?

These same stories.. over and over.. months upon months.. in some cases, years... and we are forced to continually cover the repetition in the off-chance that there is resolution one way or another..

We at A&G believe strongly that there will be dramatic movement in the US and global economic situations this autumn and that the stock market will finally have a serious drop akin to 2008.

Now most will snicker.. 'Who are we?  Hmmfff.. just some blog...'

We understand..

We did find three individuals who agreed with us and are betting heavy on the outcome we're predicting... They're not just any ol' simple Joe off the street..  They just happen to be three of the wealthiest people in the entire world:
1)  Lord Jacob Rothschild

He believes that the euro is headed for quite a tumble.  From a recent CNBC article:  "You know the euro is in deep water when a doyen of the banking industry, Lord Jacob Rothschild takes a £130 million ($200 million) bet against it."

Seems like someone stands to make a pretty penny from the collapse.  And if/when there is a Greek default, or if Germany leaves the euro, or if a new currency comes along to replace the euro those currently betting against it will end up looking like geniuses...

Like us at 'Ants & Grasshoppers'
2)  John Paulson

Paulson is a billionaire Hedge Fund Manager.  He made somewhere around 20 billion dollars betting against the U.S. housing market during the last financial crisis (the one we're still dealing with), and now he has made huge bets that the euro will go down and that the price of gold will go up.

From Der Speigel:  "The hedge fund manager once made billions by betting on a collapse of the American real estate market. Not surprisingly, the financial world sat up and took notice when Paulson, who is now widely despised in America as a crisis profiteer, announced in the spring that he would bet on a collapse of the euro.

3)  George Soros

The Billionaire Investor has been putting massive amounts of money into gold in anticipation of the Euro currency collapsing.  In the last quarter alone, Soros has purchased $130 million in the commodity.

From a recent article in the UK Telegraph:

"There was also news last week in an SEC filing that both George Soros and John Paulson had increased their investment in SPDR Gold Trust, the world’s largest publicly traded physical gold exchange traded fund (ETF).  Mr Soros upped his stake in the ETF to 884,400 shares from 319,550 and Mr Paulson bought 4.53m shares... These are significant positions."

To those in America, who may only know Soros as the thorn in Conservatives' sides who started 'MoveOn.org' and tries to sway US elections,  in Britain, he was primarily responsible a few years back for dramatically weakening the UK currency and made a fortune from it.

Then there's this from MarketWatch about possibly another major player in the purchasing of gold.. Not a person but a nation:

"Within the gold market, there is unconfirmed speculation that China plans to buy up to at least 5,000 to 6,000 metric tons of gold and that it will start to buy during this year, according to Kevin Kerr, president of Kerr Trading International.

If China buys this much gold, that would exceed annual, global production of gold, he said. “We do not have enough gold for China to buy that much, and it will take China time to purchase this amount of gold.”"
We do not advise people to buy or not buy gold.  That's not the purpose of this posting.. We have nothing to sell you and never will.  All investments that you make are your own and are ultimately 'caveat emptor' or 'Buyer Beware'

But to be honest, we're getting sick and tired of people--both the friendly, good intentioned sort and the arrogant smart-alecky type, not giving proper respect to what we do and the information we provide.  

Yes, what we've been writing about has not come to pass yet..  Yes, it is certainly irritating when the financial elites come up with endless tricks and schemes to make those like us look like the tale of "Peter and the Wolf"

But here's the un-manipulated, non-propagandized truth:

Since '08, nothing has gotten fixed-- nothing was even attempted..    

Everything was glossed over globally with trillions upon trillions of various currencies to keep zombie banks looking solvent and creating fresh new asset bubbles for the bottom feeders to profit from under the guise that their prosperity 'trickles down' to the common know-nothing on the street.

That as been the past four years in a nutshell.   The banks and other financial institutions simply could not fail!  You certainly could..  They couldn't..  Never.
Four years ago, statistically speaking, 20% suffered dramatically in some way from the ongoing recession with probably half that number being people who would have suffered financially even if the economy was strong.   Then you have the 1-2% at the top who supremely prospered...

So what's left is approximately 79% somewhere in the middle who've either felt untouched or lives impacted minimally, not realizing over time the principle of 'lobster in a pot' is being applied to them; the slow eating away of their savings, their home values; the expiration of their welfare checks...

And because 79% do not believe themselves affected, believe their leaders will fix everything by themselves in due course, etc, there has been little to no vocal expression for change. The Occupy movement tried-- they were quickly caricatured and lampooned by the 79% to their demise.

We expect by some point this autumn, there's going to be economic turbulence.. and if you are a loyal follower of A&G, you never will say to yourself  'I didn't know'