The domino effect

I should have titled this “How our economists and federal reserve and politicians and corporate executives are blinded by greed” because they still don’t understand what has happened here in America and in the rest of the World.

Fact: I do not have the resources available to me to do a detailed analysis of this, but if you will analyze the GDP of the top 20 countries you will find that their economy depends on Americans buying their products which allows them to buy what they need.

Lets now review the domino effect:

1. American companies put Americans out of work or substantially cut their wages when they are unable to find similar or better paying work after their jobs have been offshored.
2. These same Americans that were struggling but making their mortgages default on their sub prime mortgages (this SYMPTOM is what the experts say is the real problem.)
3. Our manufacturers and retailers began to go bankrupt because their primary customers can no longer buy their products (Americans out of work)
4. Our government rather then halting the export of jobs and the import of H1-B’s actually increases the loss of jobs and hides the data behind unverifiable unemployment reports that are meaningless.

Bottom line, if you want a strong World economy, you will reverse step 1 and everything else will fall into place.

Now there are some that will accuse companies like AIG of contributing to this problem, but I do not believe they contributed at all to the World GDP’s problems, but they did pursue a massively fraudulent scam on investors world wide and every one of them that developed or sold derivatives that are worthless should be in jail forever.

The reason I feel this way is this, with an option on a stock or commodity, somebody that originally held that stock or commodity has agreed to sell you their stock or commodity so you are protected whether the stock or commodity rises or falls.

However, with a derivative, as long as it goes up you will make trading income, but if the bottom fell out of all of the World’s markets tomorrow, do you really think that the market maker would have the resources available to purchase this derivative that he or she knows has absolutely zero tangible value?

Don’t know if you read my analysis a few months ago to see where the strength of the market is, but if you haven’t, you should take a look at it because the bulk of all trading is based on derivative products which in my opinion are worthless.

You can read that report by clicking here

How the Fed Blew It

Federal Reserve Chairman Ben Bernanke is on track to be appointed to a second term by the U.S. Senate, but does he deserve it? The Washington Post takes a damning look at how the Fed’s approach to regulation under Bernanke left banks exposed to the financial crisis. “[R]ather than looking for warning signs, the Fed had joined—and at times defined—the mainstream consensus among policymakers that financial innovations had made banking safer,” The Post writes. In May 2007, Bernanke said “Importantly, we see no serious broad spillover to banks or thrift institutions from the problems in the subprime market. The troubled lenders, for the most part, have not been institutions with federally insured deposits.” His statement was flat-out wrong: Five of the 10 largest subprime lenders during the previous year were banks regulated by the Federal Reserve.

Read it at The Washington Post

Click here to read the article