---The original bailout; past all of the nasties of financial institutions and associated, being their practices and morals, was likely needed to prevent full blown financial chaos, meaning and including, limited access to your electronic investment dollars, which are a series of 1's and 0's residing within a server.
Central bankers, governments all around the globe and companies.....growth, growth, growth.
Is economic growth a substitute for having a happy family and a quality life; full of gotta have it things? Some amount of wealth surely can contribute to an individuals/family opportunities to advance their position in society. The marketing folks, which include more than those at QVC, HSN, Walmart and related, are found happily at their work in many U.S. federal positions, too. The congressional folks are always marketing this or that; and this would include the current actions of the Federal Reserve; and the chairman, more so. And a U.S. president thinks they have power, eh?
So, is the pure mandate of an economy and those involved; to shape policy for, growth at any cost? Has such a model provided much benefit in reducing poverty or adding equality among population groups? While this may seem an "off-the-wall" note related to investing; many of these actions on a large enough scale or as a cumulative cluster of monies always affects people and for we here, the investing cycles. One must consider whether this grand experiment in current monetary policy may indeed,
"Burn down the house" in the name of growth and a lower unemployment rate that may have entered a phase of economic cycle that is "now normal". Japan is still working on this model; although most of their debt is internally owned, unlike the U.S. The Federal Reserve and Treasury are working on this, too; and may indeed own most of whatever resembles the U.S. government credit markets, going forward.
The dog, spinning in a never-ending circle, we know; never really may catch it's tail, regardless of the size or speed of the dog. A continued "bark, bark" does not help.
Perhaps the ultimate goal of a central bank, in the developed countries; should be to determine (if this is possible) how much monetary stimulus could help a given economy during times of stress, and merely issue monies, tax free to each and every citizen who is of legal status to that country. Based upon data believed to be correct; during the past 4 years about $3.2 trillion of Fed. Reserve actions have been put in place, against a U.S. population of about 316 million. The math indicates about $10,127 per capita or a family of 4 receiving a little over $40,000 during the last 4 years. Yes, some of this money would be wasted from poor decisions; but much of it would have been spent properly and likely generating income for businesses, who in turn may have hired more folks; and all involved would have paid more in taxes at a federal, state and local level.
Alas and meanwhile; the dog chases it's tail.
Final notes, and not all inclusive; by any means, in no particular order.
--- 1995 brought NAFTA, GATT and the World Trade Organization via a lame duck congressional session.
--- Mr. Clinton.
Mr. Clinton publically declares that Glass-Steagall is no longer relevant. --- Grant money. Check around your community/state for projects pending or in place; and review how much of the funding monies are in the form of a federal grant. Yes, work is created; and numerous projects are valid, but too many are not. When a community (a true event from about 3 years ago in MI) could not support 10 local and private art "centers", then the local economy has spoken. However, the U.S. district congress person was able to "enable" grants monies to help extend the dying entities. A news story on the same day noted that the local food bank was "empty". Money, not well spent; for the sake of the arts, in my opinion.
--- Silly spenders. Ah, congress and the government. One may not deny that there are those with the truest of hearts and intentions roaming around the streets of D.C. But, they do seem to become derailed in clear thinking, sometimes. I will only note two items. Fuel from corn and/or bio-products is one such area. The cost and benefit, from my knowledge is to the downside. Okay, a new market for corn is in place and some jobs have been created. The downside of the E85 blend is problems with use in older engines of all types (sludge formation, causing numerous problems) and take a look at a new vehicle sticker to find the mileage notation when using an E85 fuel, versus traditional unleaded fuel. Say what, it is lower MPG; can't be. Lastly, and an example that crosses many people and places over very many years and not solely directed at this person; is the "bridge to nowhere in Alaska". Come on D.C. people, why don't you all just act properly? Oh, wait there is more.............I almost forgot about the lobby folks in D.C. Talk about stimulating the economy. Well, at least in D.C., for the restaurants and hotels.
--- FASB.
Hey, let us change the rules for bad assets....cool, let's do it --- Derivatives.
A few trillion among friends, all is well; don't worry, be happyBut, wait; there's more, the infommercial stated--- Bernanke, May, 2007.
Mr. Bernanke, FRB speech, May, 2007Mr. Bernanke statements, May, 2007....."But I believe that, in the long run, markets are better than regulators at allocating credit."
"All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system. The vast majority of mortgages, including even subprime mortgages, continue to perform well. Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable."
--- Fight fire, with fire ? Los Alamos, NM got lucky with a best guess method. Hoping QE's to the Nth power may be as fortunate.
May, 2000May, 2011 --- Free market capitalism. Ah, words that are uttered by some on the great television tube and in print. There are some folks who do reside in free market capitalism. Those being the reported 30 million nomadic peoples of the planet and those who are in, or moving to the underground/barter economic systems in developed countries. The reminder of peoples are moved and stroked by sometimes perverted and corrupt monetary and political methods.
--- Low interest rate environment. We know the low interest rate environment is face slapping the many who previously relied upon the world of CD's and related money markets to generate some extra income. The side effects, not unlike the medication commercials on tv are too numerous to mention. A few areas of the negative side are: The aforementioned CD/money market downside. Pension funds and insurance companies that have to alter their plans going forward; and moving to the "riskier side" with investments (hedge funds, private equity, etc.) One side effect is that many long standing policies/insurance companies that provided long term health care plans are no longer offering such policies, either to companies for employees or to private citizens, as investment returns can no longer match the growth rate of health care. Hot money moving into whatever, many times being commodities and resulting price increases; whether the price increase should really be driven with pure and natural demand. Two side effects of this are higher prices for the consumer and perhaps lower earnings for companies who at least trail with price increases; and if they do not, their profit margins suffer.
The end results of low interest rates, may be the opposite of any implied benefit.
No, part of this is not a Mr. Bernanke bash. In theory, he fully expects this grand money experiment to have a happy ending; in order, that history may judge him in a favorable position.
And you are correct, you did not volunteer for this experiment either.
Our house wishes all well going forward with the investment pursuit.
I am finished.
Regards,
Catch
