Sunday, October 18, 2009

The imbalance has not been corrected: Strategic issue #1 remains


Petrodollar Recycling explained

"Starting around 1996, a large current account deficit in the United States has been matched by surpluses primarily in other advanced economies and in emerging Asia, and has been accompanied by corresponding shifts in net foreign asset positions".

We all know now that 'fiscal imbalance' is a major issue affecting the economy. Recently President Obama announced with the G20 a mission to adjust this fiscal imbalance primarily by encouraging the Chinese to spend more, and by adjusting incentives to encourage Americans to save more. One issue that the G20 failed to address on this issue is resource dependence and the global cost (affecting China/Asia as well). With strong allies in Saudi Arabia and Canada, the U.S. has no incentive to transfer from it's carbon-based energy system. Although Obama has been the most progressive president on this issue, it is not fast enough or powerful enough to create dynamic change in the economy (there needs to be a stronger 'nudge'). The Chinese are moving more quickly because, like much of Asia, oil supply cannot keep up with the pace of growth in their economies - How come we haven't done a cost-benefit analysis?

Copenhagen 2009

Americans have trouble contemplating 'climate change' science. 49% don't believe it is real, let alone a problem. This is why the debate about oil production needs to be transitioned from an environmental issue to a financial issue. It's a $300 billion/yr. issue since 1996. There needs to be a shift in policy to get people behind the move from carbon-based power to renewable that is based on this imbalance. Obama talking points on this should say: "Don't like the $700 billion stimulus package because it's wasteful? Well we stimulate Saudi Arabia's economy that much every 2 years - that's wasteful."

The Western world can easily bankrupt ourselves. As the richest countries we are now the most indebted. This is how empires collapse and new world orders are created. It is issue #1 to eliminate dependence on foreign oil.

Saturday, October 17, 2009

Aristocrats tax peasants: Top 1% at it again

Goldman Sachs: Your tax dollars, their big profits

The structure of our modern democracy is currently at risk and this economic panic has succeeded in assisting the largest transfer of wealth from the middle class to the ruling elite in the history of human civilization. The $70 trillion dollars the U.S. Federal Reserve/Treasury (debt machine) have produced to bailout the financial services industry has been used by the elites to buy up all the depreciated assets that the middle class can no longer afford.

History could read that banks (aided by consumers and the federal government) made billions of dollars worth of loans to over-inflate the housing market. They made billions off of the interest and transaction fees and then sold the mortgages at a profit. The banks traded these on a "secret market" of OTC transactions in a game of musical chairs - betting on who'd get caught using derivatives. When they all got caught (Mar.-Sept. 2008), the American taxpayer was left with the gambling debts.

Now that we have bailed them out, they are using the liquidity and investment, that the taxpayers provided them, to make money by taking advantage of the distressed finances of the middle income households that makeup the primary spending power of the U.S. consumer economy. The U.S. taxpayer may end up making back $0.60-.80 on the dollar for our investment, while Goldman Sachs pulled in $3 billion in profit in 3 mos. and saw its stock value increase 150% since March 2009. Secondly, the inflationary pressure that will have to be worked through the system to absorb the trillions of dollars of liquidity poured in through new U.S. debt will be a drain on purchasing power for decades.

Goldman Sachs

The current and previous U.S. treasury secretaries are Goldman Sachs alumni, and Goldman Sachs is one of the largest political contributors to both parties ($994,795 to Obama, his #2 contributor). The lines between the government and the banks have blurred, and this poses and issue for the U.S. taxpayer because the government needs the banks to be profitable to earn the billions invested back over the coming decades, however the banks become profitable through interest and fees that are essentially a tax on citizens. Also, the most profitable parts of banks are the ones that citizens want to regulate most. Right now it seems that the Goldman Sachs lobby is winning over the finances and futures of the American taxpayers. Our democracy is in jeopardy if the interest of business takes precedence over the interests of constituents. ~GK


First post

This is going to be the first of a daily (hopefully) posting about changes that are happening in the global economic and political spheres.

My mission statement is to provide a macro view of current events to tie them into broader themes affecting our societies.