Financial Crisis Called Off

Peacenik was a peripheral guest at an extravagant wedding on Sunday. It gave Peacenik a chance to see how the barons of Wall St. and Bay St. actually spend their money. Peacenik thinks they waste it, but I guess stimulating the flower shops in the Bay of Quinte helps some folks out. Just like buying a beer at the pub, but on a slightly different scale. Maybe the recession is over. Hell Peacenik had lobster and salmon for dinner and the steaks were 3 inches think. Is the recession over? Kunstler in this piece below doesn't think so. And neither does Peacenik. Walking to the wedding alter on a rose petal path may feel good, but you can't eat rose petals.



by Jim Kunstler

Whew, what a relief! Everybody from Ben Bernanke and a Who's Who of banking poobahs schmoozing it up in the heady vapors of Jackson Hole, Wyoming, to the dull scribes at The New York Times, toiling in their MC Escher hall of mirrors, to poor dim James Surowiecki over at The New Yorker, to - wonder of wonders! - the Green Shoots claque at the cable networks, to the assorted quants, grinds, nerds, pimps, factotums, catamites, and cretins in every office from the Bureau of Labor Statistics to the International Monetary Fund - every man-Jack and woman-Jill around the levers of power and opinion weighed in last week with glad tidings that the world's capital finance system survived what turned out to be a mere protracted bout of heartburn and has been reborn as the Miracle Bull economy. Our worries over. If you believe their bullshit. Which I don't.

All this goes to show is how completely the people in charge of things in the USA have lost their minds. They seem to think this mass exercise in pretend will resurrect the great march to the WalMarts, to the new car showrooms, and the cul-de-sac model houses, reignite another round of furious sprawl-building, salad-shooter importing, and no-doc liar-lending, not to mention the pawning off of innovative, securitized stinking-carp debt paper onto credulous pension funds in foreign lands where due diligence has never been heard of, renew the leveraged buying-out of zippy-looking businesses by smoothies who have no idea how to run them (and no real intention of doing it, anyway), resuscitate the construction of additional strip malls, new office park "capacity" and Big Box "power centers," restart the trade in granite countertops and home theaters, and pack the turnstiles of Walt Disney world - all this while turning Afghanistan into a neighborhood that Beaver Cleaver would be proud to call home.

By the way - and please pardon the rather sharp digression - but does anybody know if they buried Michael Jackson yet? It's only been a couple of months. And, if not, is that the stench now wafting across the purple mountains' majesty from sea-to-shining sea? Isn't it a little indecent to keep the poor fellow waiting? Or is a really surprising comeback secretly planned, with product tie-ins and all?

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It's a Beer Market!

The days of wine and Rose's may be over, but the hoisting, historically, continues apace, good times or bad

by Tom Acitelli

What drink best complements a recession?

"The prevailing view is that beer isn't affected that much by economic ups and downs," said Paul Gatza, director of the Brewers Association, in a Friday email.

The trade group measured taxable beer barrels produced by domestic brewers from 1985 through 2005. In 2001, during the tail end of the last national recession, breweries produced more beer barrels than they had annually in any of the seven years before--over 180 million or a watering 5.58 billion gallons. To find a year when breweries last cleared that mark, you'd have to go to the early 1990s, in and around another recession.
In a time of timorous spending habits and inflated costs amid shrinking job security, beer remains virtually recession-proof.

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Peacenik found some good news! Peacenik found some good news!

A Futile Bailout as Darkness Falls on America

by Paul Craig Roberts
www.counterpunch.org

America has become a pretty discouraging place. Americans, for the most part, will never know what happened to them, because they no longer have a free and responsible press. They have Big Brother’s press. For example, on September 28, 2008, a New York Times editorial blamed the current financial crisis on “antiregulation disciples of the Reagan Revolution.”

What utter nonsense. Every example of deregulation that the New York Times editorial provides is located in the Clinton Administration and the George W. Bush administration. I was a member of the Reagan administration. We most certainly did not deregulate the financial system.

The repeal of the Glass-Steagall Act, which separated commercial from investment banking, was the achievement of the Democratic Clinton Administration. It happened in 1999, over a decade after Reagan left office.

It was in 2000 that derivatives and credit default swaps were excluded from regulation.

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punditman says...
I was no fan of Reagan -- that's for sure. But I am also no fan of historical inaccuracy. Paul Craig Roberts sets the record straight on how the US got into this mess, how the bailout is a sham and he poses this question:

"At what point do America’s foreign bankers decide that the additions to US debt exceed what can be repaid? Does the world have a blank check for America’s mistakes? This is the same world that is faced with American demands that countries support with money and lives America’s quest for world hegemony. Europeans are dying in Afghanistan for American hegemony. Do Europeans want their banks, which hold US dollars as their reserves, to fail so that Paulson can bail out his company and his friends?

Finally, from further on in the above article: "The current crisis required more than bad loans. It required securitization and its leverage. It required Fed chairman Alan Greenspan’s inappropriate low interest rates, which created a real estate boom. Rapidly rising real estate prices quickly created home equity to justify 100 percent mortgages. Wall Street analysts pushed financial companies to improve their bottom lines, which they did by extreme leveraging."