The first installment of this blog came out in May of 2006. There were no real perceived problems, just suspicions. Now we have progressed three years into this morass. Each step forward seems a little more encumbered.
With the bank failures, our government claims many banks are too big to fail (a bank with an office in every state seems to fit this profile). FDIC insurance has covered all bank losses so far. For some odd reason the FDIC now wants to collect 3 years of premiums from the banks in advance. The bookkeeping instructions for carrying this on the bank books, is what could be politely labeled “creative financing.”
With unemployment, those no longer looking for work or those working part time are not counted. And unemployment insurance has just been extended to 92 weeks. If you are lucky/ unlucky enough to have joined the unemployed, you have just won a two year vacation from Uncle Sam. Ski the winter in Colorado giving ski lessons and relax in the summer in Malibu busing tables at night (On the unemployment forms never check working out of state or mail the form back with an out of state postmark). I do recommend the season pass at Vail--great skiing, and the ski bunnies are cute.
The Federal Reserve is keeping home loan rates low by buying all T-bills presented for redemption by the market. Congress is curious how much money the Federal Reserve has on the books dealing with securities it is holding as collateral. Freddie and Fannie figure into this mess. Just how is the paper carried and on whose books? At what point does a home foreclosure become bank owned real estate? And at that point who’s books carry the asset? Hint, it’s probably not the bank.
None of these actions appear to be any sort of real solution, but rather a method to keep the game going. Each in their own way is becoming a larger problem. And then someone chimes in “Bernanke was slow to act, but his actions saved us from having a Great Depression.” That is a professional car salesman close if I ever heard one.
What we need to realize, we still haven’t arrived to our unplanned and unscheduled destination, “The Great Depression.” Government intervention has slowed down the process. It could take four years to get there not three as I had anticipated. Nobody is throwing in the towel yet, and we need millions of people doing so, not just one or two of me.
It is very easy to point to state budgets and look how much they are short this year alone. They can’t run on deficits like the Federal Government. How can state tax collections for next year exceed this year’s? When you think about it, common sense doesn’t cost anything, how come Congress can’t see the light of day?
Just ask yourself one question. If the government's crystal ball didn't see this coming, how come it has all of the answers now? I'm pretty well fed up with this government snow job.
On another note, Google has cut me off from posting pictures unless I agree to terms written back in 12/13/06. I haven't clicked to agree on it, only because it is back dated 3 years. I did have three visuals for this article, but I modified it to leave them out. I think that Google is becoming a hard ass, there is no option to deny, only the yes button if you want to upload pictures. Not sure what this means. Bear with me for now.