cavelamb wrote:
John R. Carroll wrote:

No George, but we will likely have what is the "reasonable"
alternative. Thinking that what's gone on to date has "saved" the US
economy in any serious manner is an illusion. Dillusional, in fact.
The only thing the world was saved from was immediate and
catastrophic collapse.

Our political leaders threw away a perfectly good crisis/opportunity
to act forcefully without the voting public caring much about the
carnage.
That time has passed for the moment but such a time will come again
early in 2011.
Employment has never been as low as it is right now and it's going to
continue to shrink.
Capacity utilization is also continuing to decline if you add back
what's being removed permanemtly or temporarily from the pool.
The US is six percent of the labor pool away from havimg the rate
hity 50. It will. That's sort of a tipping point, in my opinion, in
a consumer driven economy.

Regional banking institutions that haven't failed are extremely weak
by any reasonably prudent standard and they will continue to weaken.
Those that are failing now aren't in trouble because they weren't
prudent. They are failing because their customers increasingly don't
have the income required to repay their debts. This is one of the
direct consequences of two income families and the encouragement
they got to take on debt at the two income level. Another is that
with two incomes, there is less pressure to keep wages in line.
Rather than increase the earnings of, for instance, a Mold Maker or
Tool and Die Maker, spouses went to work. That second income has
proven as problematic in the long run as it was beneficial in the
short.

America, as an economy and a country, has fewer and fewer consumers,
even as families, able to earn enough to satisfy the obligations
they have, let alone go out and consume more.

Everything you wrote beyond this point is as completely obvious as
it is impossible to get done in our system.
Reinstating G-S alone would be catastrophic in it's consequences
because it would be so complicated a migration from where we are
now. That's what Congress has to deal with and they have decided
that it's to complicated a maneuver for them to enact as law.
I agree with them.

What I think is that we'll just fall completely on our collective
asses. Rebuilding from scratch was a real advantage for FDR and it
will be for Obama and his team.




The Soviet Union fell - into chaos.
Is that what we too face?

Not really.
The Soviet Union, as a nation, failed because they were bankrupt - as in not
solvent.
No thinking analyst or economist anywhere in the world would tell you that
America, the Nation, is financially bankrupt.

Our financial services sector, on the other hand, is, or is becoming,
exactly that.
America, as a Nation, has tremendous reserves of real wealth and capital. A
significant fraction af what is in existence in the world.
America, as a Nation, is solvent as well as liquid. Our liquidity is the
result of the Dollar being the worlds reserve currency.

There are NO circumstances under which any thinking analyst or economist
anywhere in the world would tell you that America's financial services and
Banking industry is solvent when fairly valued. What they will say in
response to the "fairly valued" bromide is

"Well sure - if you want to use fair valuations. Of Course!".

LOL

There is only one reason not to use fair valuation. I think you can figure
out what that reason is and who, or whom, is interested in ignoring it.



--
John R. Carroll