|06-30-2011, 11:10 PM||#1 (permalink)|
Join Date: Aug 2008
Evolution of US crisis
First you had a housing bubble with bad debt, bonds backed by that debt, and derivatives backed by such bonds. As the housing bubble popped, derivatives passed losses across the entire financial system, causing a global crisis. Not only bankers passed their losses to someone else, but also US exported its crisis to other nations.
But still there were toxic assets, money created by banks in accounting books, fake money. To cover such assets, TARP came, a very cheap loan that paid an annualized rate of nearly 2%, just about the interest of US treasuries, so it was a matter of using TARP money to use that money to buy bonds to cover TARP interests.
On top of that the FED lend money to banks at nearly 0% and they could buy US bonds that paid nearly 2%, and then came QE1 and QE2 to buy those bonds and bad loans and bring liquidity back to banks. What happened with that money?
US lacks demand, customers for companies because unemployment and reduced income and paying loans and healthcare has suckd Americans dry. Instead of using QE to give money to people as the "helicopter Ben" idea proposed, it was given to the banks.
Banks bought commodities (Coca-Cola acusa a Goldman Sachs de manipular el precio de los metales | Economía | elmundo.es) and conducted speculative attacks on foreign bonds (La inteligencia griega identifica a los autores del ataque a su deuda · ELPAÍS.com) so inflation felt by Americans comes from financial speculation, not from increase of demand.
How is US recovering while Americans are not? Blame dyseconomics (Dyseconomics: The New Macro Econ and the Greatest Economic Boom Ever - stock_creeper - Seeking Alpha).
Credit card holders were punished by banks, and FED was on their side (Fed rejects request to help credit card holders | Reuters).
There are many myths that still make people to be trapped in a limited set of ideas or solutions, trapped inside the box. Communism or capitalism? Both are inside the box. Why not becoming Amish?
Americans need to understand macroeconomics and go against everything they believed before ever attempting to get out of the hole. But since no solution was implemented, just one bubble after another that they called recovery, the economic correction awaits at the end of the road, but it has been procrastinated for a long time.
In the meantime the American dream has become a nightmare, where trickle up is the norm. During the 1950s, rich paid almost 90% as taxes and this is how US could afford to be developed. During Reagan administration it was brought down to 28% and Bush lowered it a bit more. No wonder why US has such a huge debt. American taxpayers in main street can't pay as much as the rich did.
In Spain a movement called 15M (los indignados, the outraged) and DRY (Democracia Real Ya, real democracy now in spanish) has spread across Europe. 15M has been making peaceful but powerful demonstrations in Madrid and Barcelona. These are some of the ideas they propose to restore democracy:
21 ideas inspiradas en el 15-M - PÃºblico.es
Use Google translator.
A solution for US must come from Americans. Nobody else can do anything. Look in foreign media about 15M and Democracia Real Ya. US must restore its democracy.
Last edited by ar81; 06-30-2011 at 11:17 PM.
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