Owner: The Politics of Debt URL:http://services.thebankruptcynews.com/blog/ Join Date: Mon, 19 Nov 2007 07:45:51 -0600 Rating:0 Site Description: In the Politics of Debt I try to explore how debt influences the American public and their political choices. From a broad perspective, you could say, for instance, that deeply indebted workers will see their chances for protest highly reduced (they will Site statistics:Click here
Transfer of Wealth from Individuals to Corporations 2007-11-21 11:35:40 If Money is Power, the
official data shows that the Bush administration has transferred power from the people to corporations at an alarming rate. thebankruptcynewsdotcom
The above chart shows the widening gap between corporate profits and salaries. If you want to see how dramatic this widening gap is, take a look at the following chart.
The curve represents the differential between Compensation of employees paid and Corporate Profits (before and after tax), which shows the transfer of wealth from employees to corporations. As you can see, the Bush administration shows a dramatic change in the transfer of wealth from workers to corporations.
Another notable trait of this chart is that after the tax cuts the gap between after taxes and pre-taxes transfer of wealth widens, which indicates that the tax cuts do not help corporations at all, actually it seems to hurt them. The reasons for this enormous transfer of wealth are increases in productivity (exploitation of labor, or in corpor Read more:Wealth
, Individuals
Stagflation: This Time It Is Different 2007-11-18 18:36:08 I just uttered two of the worst things any economist would ever want to see. And they are together, for good measure. “This time is different” is the first answer you hear when an economist with conservative economic views warns the public about something out of whack in the economy. It happened in 1929 and it happened again in 2000. When the voices of reason warned that the bubbles may burst, those who “got it”, who understood the new economy, answered like a Greek chorus: “This time it is different“. I still remember conversations with friends during the summer of 2005 when I started to get worried about the housing bubble in South Florida, all of them disregarded my worries with unruffled arguments that sustained the dreaded conclusion. So it is not lightly that I dare utter these words. thebankruptcynewsdotcom
For those who do not know what stagflation is or why you should care, there is only a simple explanation: imagine that you are out of wo
Dow Jones Finds A Convoluted Way to Do Nothing 2007-11-15 15:55:26 Last Friday I wrote that the
Dow Jones
at 13,099 should see a rest. I pointed out that some statistical barriers had been broken, and that the fall should stop around there. I was wrong by 0.6%, but not much more. And then, on Tuesday, we had this huge run rally of some 300 points. I did not expect it, I must confess. I announced and expected a flat week. And then, the Dow lost most of the rally gains between Wednesday and Thursday. What a weird way to go flat… thebankruptcynewsdotcom
As I write this on Thursday, the Dow is at 13,110. Barring a surprise government move (rate cut, or any other measure to inject liquidity into the markets) the next meaningful move should be down to re-test September lows. Next week is Thanksgiving Week in the US so I would expect more flat (”volatilely” flat perhaps?) markets until after Black Friday, which may bring or not bad news from retailers.
If the retailers’ news is good it will be due to the injection of liquidity into Read more:Nothing
Everything you wanted to know about ISVs 2007-11-12 09:04:57 But thought it would be too boring to listen to… thebankruptcynewsdotcom
I don’t know who these British guys are, if you know, please drop me a note. Enjoy!
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Banks Drive to Grab Land (2)
Subprime Mortgage Crisis Spreading to High-End Housing Market (0)
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At a financial crossroads (1)
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, wanted
Dow Jones at 13,099 should see a rest 2007-11-09 10:06:43 Yesterday’s fall broke statistical boundaries and the DJ rallied. Today’s fall created a new statistical boundary and broke it. Next week we should see a week of basically flat movement. The next down move should be to around 12.500. thebankruptcynewsdotcom
I still think this is a short term move, and that the Fed will inject more liquidity responding to a climate of fear and fear mongering. My guess is that the Fed will cut by .5 points, both rates.
There may be other measures by the government to inject liquidity into the economy. At this time the administration is a money junky and each fix will need a bigger fix the next time. At some time, not yet, the economy could suffer an overdose. Depending on the speed of the process that may be the task of the next administration, I am not sure yet about that.
The economic deterioration process seems to have entered its exponential phase. Things that were expected in the near future, are already happening. $100 oil, reduction o Read more:Dow Jones
CNN.com agrees with TheBankruptcyNews 2007-11-08 06:52:40 In clear evidence that there is a liberal media conspiracy against President Bush, CNN
moved in to confirm with a poll that the American people are starting to feel
the pain of the failed economic policies. The following article would prove that thebankruptcynewsdotcom
My blog is part of the liberal media (swear I did not know)
CNN is spying on me
My tinfoil hat is not working anymore
Or
You can’t hide reality for too long.
“According to a CNN/Opinion Research Corporation’s poll conducted November 2-4, the economy now tops the list of the issues voters now rate as most important in their vote for president, with 82 percent of those surveyed saying it was extremely or very important. That’s just ahead of the war in Iraq, which 80 percent said was an extremely or very important factor in how they will decide to vote.”
Analysis: Could it be ‘the economy, stupid’ again? - CNN.com
Do you want to help with this blog? I need help editing, researchi
The Real Economy II 2007-11-07 16:56:58 In the previous article (
The Real Economy) I showed that the purchasing power of the Dow Jones, when it is compared against commodities instead of against "imaginary" dollars, has decreased by about 50% since they year 2000. In this article, I will play with the assumption that the US dollar is still backed up by gold. I am using data from 1901 to the present, because the US adopted the
gold standard in 1900. A clarification is needed here, I do not think that gold is particularly useful in any way as money, but since the US used it as money from 1900 to 1971, I think it is appropriate to use it as a constant value. thebankruptcynewsdotcom
I created this constant value using the following formula:
1 Dollar / Average Yearly Gold Price = Price of 1 Dollar in Gold
Other studies compare the depreciation of the Dollar to other currencies, or to a basket of commodities. This constant allows us to compare US Dollars to US Dollars and to figure out the real depreciation of the Do
Dow Jones at 13,300.02 2007-11-07 15:37:54 In October 22nd we said that the DJ was in for
400 to 600 more points of pain. Since then the Dow Jones
went up a little and down a little, a lot of nothing happened until today. thebankruptcynewsdotcom
I still expect the Dow to go down to around 12,600 with a lot of noise and fear mongering.
I am publishing soon the second part of the article the Real Economy. Things are much worst than seem by reading the Wall Street media, but for different reasons. I still think that our problems are not a short time recession or the current high price of oil. Our problems are the future runaway inflation and the future high price of oil: it may double or more from here within a couple of years.
^DJI: Basic Chart for DOW JONES INDUSTRIAL AVERAGE IN - Yahoo! Finance
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Tags: bank, dow jones, dow jones industrial average, Economy, fear, fear mongering, inflation, oil, price of oil, recession, runaway inflation, wall street
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From the American Dream to the American Nightmare 2007-11-01 16:38:31 From the AmericanDream
to the American Nightmare
How Government policy and public complacency are transforming America from an Owners society into a Renters society
I should write a book about the subject, but I am lazy and busy. So I am going to write a review about the non-existing book “From
the American Dream
to the American Nightmare (How Government policy and public complacency are transforming America from an Owners society into a Renters society) instead.The book starts with an analysis of the number of home owners compared with the number of renters in the American society, from the end of the Civil War onwards. It compares voting rights at different historical moments and shows how land ownership or, in a more general sense, any ownership, is intrinsically connected with the right to vote and make political decisions in public life. After reviewing the data, it makes a convincing argument that the advancement of public liberties is in direct correlation with the numbe
Sinclair Lewis’ Quotations 2007-10-28 12:44:40 You can, and should, read
SinclairLewis
‘ seminal book It Can t Happen Here. His biography is available (of course!) at Wikipedia. thebankruptcynewsdotcom
I want to share here a few great quotations:
“When fascism comes to America it will be wrapped in the flag and carrying a cross.”
“The trouble with this country is that there are too many people going about saying, ”The trouble with this country is…”
“Intellectually I know that America is no better than any other country; emotionally I know she is better than every country.“
“Advertising (propaganda, Not. Ed.) is a valuable economic factor because it is the cheapest way of selling goods, particularly if the goods are worthless.“
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Tags: Democracy, economic factor, fascism, propaganda, sinclair lewis
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When being a Christian meant being compassionate (0)
A primer for living in a totalitarian state (13)
No nation could pre Read more:Quotations
Dow Jones Ready for Next Leg Down 2007-11-23 11:19:59 Two weeks ago, when the Dow had fallen about 1000 points, I said that the
Dow Jones
at 13,099 should see a rest. I expected at least two flat weeks and we had them within less than 1%. As I write this the Dow is at 12,930.24 (0.98% lower than the 13,099 I detected as a possible stop for the fall). thebankruptcynewsdotcom
Baring a surprise move from the Federal Reserve next week, the next meaningful movement for the Dow should be below 12,5000 (about 4% down from here). The Federal Reserve will intervene to protect America’s economy in times of war.
As I mentioned in
October 1st, I am expecting the Dow to double its price in dollars in the next 2 years. I also expect that to be an inflationary move, not sustainable and based on the feedback mechanism that feeds all inflationary human activities. Basically, a bubble. After that bubble, we should see real economic trouble.
Theoretically, as the value of the dollar tends to 0, the amount of dollars needed to sustain economic activ
US Businesses in Recession-Like Mode 2007-11-23 09:26:12
thebankruptcynewsdotcom
This chart shows
Undistributed Corporate Profits (corporate profits that are neither paid as corporate profits taxes nor paid to shareholders as dividends) as percentage of GDP based on
official data. Official recessions are marked in red as per
NBER data. The chart shows that, as business cycles contract, corporations are able to retain less of their profits (the curve goes down). During expansions, the corporations retain more of their profits (the curve goes up).
As you can see, corporations have not been able to retain profits at the level of the peak since the first quarter of 2006. The fourth quarter of 2006 looks like the normal bottom of a recession (as compared to 2001, 1990, 1980, etc.).
The following chart is a detailed view of the 2000-2007 period.
As you can see, regardless of any official announcement of recessions, US businesses have been behaving as they normally do during recessions. It is beyond of the scope of this analysis to account
First Thanksgiving Grace in History 2007-11-23 08:05:36 "…and we thank ye Lord that the natives have no concept of the private property of the land." thebankruptcynewsdotcom
Happy Thanksgiving
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, Grace
, History
Dow Jones, 2 to 5 day pull-back and long term buy signals 2007-12-02 19:51:05 Two days ago, I wrote
Dow Jones
13,252. Not All Clear Yet. I said “the surprise move is non-existent, so this 300 points rally may reverse by Friday. Second, if this move does not continue tomorrow with a close above 13,260, it will reverse by Friday or Monday, and the next move will continue to be down to below 12,500.” Bernanke read the article and yesterday he reinforced the idea that the Fed will cut interest rates (the surprise move). Besides, the Dow never closed below 13,260, which erased the bad vibes for a violent pull back. thebankruptcynewsdotcom
Today the Dow is pulling back a little, and this pull back may last between 2 and 8 days, but the window of opportunity for the bears is closing fast. I do not see the Dow going now to 12,500 in a violent fashion. The Short Term Bear Feast I announced in October is coming to an end, and the Christmas rally is approaching. The Fed meeting in December 18 should consolidate the rally.
The Dow gave a technical long-term bu
The Myth Of Gold as Inflation Hedge 2007-12-02 17:41:25 Gold sellers like to write long articles and develop interesting theories to provide rational justification for their business. If you have read my previous articles on gold, you already know my opinion (it is just another commodity with an interesting history). The myth of gold as an inflation hedge comes from a rather primitive observation, when the value of money decreases, the value of gold rises. The myth goes like this: if you bought 100 ounces of gold at the yearly average for 1969, you spent $4109, if you sold it today, you would have $79,400. That’s a gain of 1832%, or 48%, a year. thebankruptcynewsdotcom
On the other hand, if you spent the same amount on the Dow Jones you had bought 4.7 shares of the Dow at the yearly average for 1969. Those 4.7 share would now be worth $73.825 (reinvesting dividends). A gain of just 1700%, or 45% , a year.
Gold sounds like a an excellent investment, right?
Wrong. And here is why.
First, the $79,400 you have now, are enough to buy&hel Read more:Inflation
, Hedge
The Myth of Republican Fiscal Conservatism 2007-11-30 11:58:41 Seeing Rudy Giuliani and Mitt Romney fight over who is more of a fiscal conservative made me think that they are actually barking up the wrong tree. You see, although the Republican
Party claims to be the party of "small government", and many fiscal conservatives vote Republican for that reason, the record shows that the last Republican fiscal conservative president was Richard Nixon. What? Not even Reagan? No. Reagan was no more fiscally conservative than the so much maligned Jimmy Carter. thebankruptcynewsdotcom
The following set of charts shows Government expenditures as a percentage of GDP, quarter by quarter since 1947. This method allows us to really know how much money our government is spending, not in dollar terms, which are meaningless, but in relationship to the wealth of the nation.
There are three presidencies during which government expenditures declined significantly: Dwight D. Eisenhower’s, Richard Nixon’s and Bill Clinton’s. Maybe it is jus Read more:Conservatism
Dow Jones 13,252. Not All Clear Yet 2007-11-28 13:03:16 Last Friday I wrote that the
Dow Jones
was Ready for Next Leg Down. I said that “baring a surprise move from the Federal Reserve next week, the next meaningful movement for the Dow should be below 12,5000“. Today we had
the surprise move and the Dow rallied almost 300 points. thebankruptcynewsdotcom
I will add here two notes of warning. First, the surprise move is non-existent, so this 300 points rally may reverse by Friday. Second, if this move does not continue tomorrow with a close above 13,260 it will reverse by Friday or Monday and the next move will continue to be down to below 12,500. Hopefully, the
Short Term Bear Fest that I announced in October 12th was starting, is coming to an end. Unfortunately, if it is already coming to an end, it is because of speculative hopes and increased liquidity, which will bring us tons of problems two years from now.
Tags: debt, dow, dow jones, dow jones industrial average, fed, Federal Reserve, liqu Read more:Clear
An Exercise In Market Timing 2007-12-09 15:43:20 Over the past two months (actually beginning October 1st) I conducted a documented experiment on this site. Although Reuters and other media republished some of the articles, my impression is that this exercise in market timing went completely unnoticed. Since I do not, neither do I want to, provide financial advice, I will not publish any more articles related to market timing. What I will do here is dispel the myth that the markets are unpredictable. thebankruptcynewsdotcom
First a clarification. I do not think that randomness has a place in the universe. I firmly believe that randomness is just a general name for the limit of our computational power. Whatever lies beyond our ability to compute complex results arising from simple rules we call random. In the quest for knowledge, whenever I read a reference to randomness, I read it as as confession of the limits of the knowledge of the writer.
This subject is not an easy one to tackle. We spent our Thanksgiving dinner with family and Read more:Exercise
, Market
, Timing
The Rags To Riches Trap 2007-12-07 14:58:58 We are impressionable animals. Our biology evolved to help us pay attention to the unusual in the pattern. thebankruptcynewsdotcom
In the natural world, this is indeed helpful, because the opportunities and dangers usually show as a rupture of the background pattern. However important for us, those out-of-the-ordinary occurrences are just that, things that may not repeat themselves for a long time. We give them an overwhelming weight, but we shouldn’t let them be the center of attention for longer than their existence.
The American society is still great on its mobility. But it is important to understand that the rags to riches stories are statistically few enough to create the illusion of possibility without helping to create the conditions for a real change that affects the majority of the population. If it happens to you, great for you, but do not assume that is going to happen to everybody else. If it did not happen to you, do not worry, there is nothing wrong with you. Stat
How Your 401k And IRA Rob You 2007-12-08 15:06:00 “Don’t worry about a thing;” said my doctor, “I have an excellent risk management program for your health.” thebankruptcynewsdotcom
“Great, that sounds great,” I said, “I like avoiding risk. What are the risks you see in the management of my health?”
“Well, you know, the functioning of the human body is a mystery, it is random. So the most important thing is to medicate you for different possible diseases and go around changing the medication as I see you evolve.”
I tried to argue that I was healthy, and I was there for a checkup, but to no avail. He was convinced that, although I was healthy that day, there was no way of knowing whether I would be healthy 10 minutes after I left the doctor’s office. Of course, I left the office to never come back. I would expect a doctor to know the workings of the human body, unless he is a mediaeval doctor, that is.
Although that is a fictional patient-doctor conversation, it
Retailers post disappointing November sales - MarketWatch 2007-12-06 08:18:40 On
November
15 I wrote regarding the November retail numbers: thebankruptcynewsdotcom
If the news is bad, the Fed will feel justified in declaring that the risk of a recession is higher than the risk of inflation, and lower the rates a
little bit more. Either way, at this , the end will be the same. There is only one way to solve this situation, and it is the immediate withdrawal from Iraq, which is eating our economy away much in the same manner as the Vietnam War did, and the Afghanistan invasion did with
the Soviet economy.
Now we know the answer. The news are bad. We are marching towards a 50 point cut in December, and more and more policies to inject liquidity into the markets. If you are long term reader of my blog you know that this is the scenario I’ve been using as most probable since
August.
Don’t get swayed by the news, keep you eye on the ball and prepare for the most probable outcome, that’s my philosophy. Right now we are moving into a period of hig
Is Gold a Hedge Against Excess Liquidity? 2007-12-04 22:27:58 No. thebankruptcynewsdotcom
Short article today.
In the above chart, an ascending line shows gold acting as a hedge against the mad emission of currency by the fed. A descending line show gold losing value against the “currency inflation.” As you can see, gold is not a particularly apt instrument to hedge against liquidity injections by the Federal Reserve (which eventually produce inflation).
The flat line at the left of the chart is the period during which the US used the gold standard (the fed could not print more money than the gold it had in its reserves and the price of gold was regulated).
The periods of accelerated injection of currency are marked by steep down lines. If the current conditions persist, and history can provide any lessons, we shall be in a period of high inflation in the next 2 to 5 years.
The following chart shows the same data (adjusted for scale), where you can see how the price of gold does not correlate to the injection of money by the Fed
Read more:Hedge
, Excess
, Liquidity
An Interesting Source of Information 2007-12-20 09:54:23 Today I want to share a very interesting website:
Wikileaks. Their goal is to develop thebankruptcynewsdotcom
… an uncensorable Wikipedia for untraceable mass document leaking and analysis. Our primary interest is in exposing oppressive regimes in Asia, the former Soviet bloc, Sub-Saharan Africa and the Middle East, but we also expect to be of assistance to people of all regions who wish to reveal unethical behavior in their governments and corporations. We aim for maximum political impact. Our interface is identical to Wikipedia and usable by all types of people. We have received over 1.2 million documents so far from dissident communities and anonymous sources.
Time magazine covered the issue in the article
A Wiki for Whistle-Blowers. Since our own secret services are known to have done similar things in the past (disseminating information about other regimes) I would recommend visiting the site using some form of anonymous surfing (I personally use
PCMesh which Read more:Source
Black Swans, Bell Curves and Stagflation 2007-12-19 00:37:11 This is not the promised article about the stupidity of black swans. This is an article about how we tend to focus our attention on the odd, rather than the mundane. I guess some talking head mentioned stagflation, because the
previous article on the subject received unusual attention. People are hitting the site searching for a “stagflation hedge”. In my cozy ivory tower (I am done trading for the year, and there is no point in ruining a nice winter vacation with long- term worries), I can imagine that there’s quite a bit of fear and looting going on in Wall Street. thebankruptcynewsdotcom
Let me remind my readers of what I said October 3: “News will fly, both bad and great,
talking heads will talk about recession and inflation, and some times, they will talk about them on the same line to mention stagflation (stagflation will be mentioned only by those at the forefront of the
financial analysis).” I think we are finally there. Wall Street operators wi Read more:Black
, Curves
Mystery of Atlantis Solved 2007-12-17 10:14:07 Plato tells us in
Timaeus about Atlantis
: thebankruptcynewsdotcom
Now in this island of Atlantis there was a great and wonderful empire which had rule over the whole island and several others, and over parts of the continent (…) and then, Solon, your country shone forth, in the excellence of her virtue and strength, among all mankind. She was pre-eminent in courage and military skill, and was the leader of the Hellenes. And when the rest fell off from her, being compelled to stand alone, after having undergone the very extremity of danger, she defeated and triumphed over the invaders, and preserved from slavery those who were not yet subjugated, and generously liberated all the rest of us who dwell within the pillars.
Living near Miami, it was bound to happen that one of my end-of-year parties implied the presence of a large number of Cuban-Americans. I shall not mention the exquisite food, the incessant laughter and the suggestive dancing, but only the clues that took me to s Read more:Mystery
Welcome LORENA 2007-12-17 06:50:15 My dear friend Lorena joined me in this adventure. She is a professional writer who writes
her own blog and she most gracefully decided to help me with this blog. She will be editing (and writing when her “muse kicks her in the head”). I hope she stops the worst of my mistakes and the eventual lapses in logic before I click the Publish button. thebankruptcynewsdotcom
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Greenspan: Give Homeowners Financial Aid: Financial News - Yahoo! Finance 2007-12-16 21:59:14 Keynes to the rescue! thebankruptcynewsdotcom
Greenspan
did not specifically call for a tax cut. Instead, he called for the government to apply money to the severe housing market slump. Such a cash infusion would typically come through a tax break or a new government spending program.
From Keynes to Monetarism and back to Keynesian economics. Oh, the American economy has gone a long way since The end of laissez-faire.
If you don’t know what I am talking about, you may want to read
this article. Don’t get scared, but it is the economic philosophy used to get us out of the great depression.
Greenspan: Give HomeownersFinancial
Aid: Financial News - Yahoo
! Finance
This article is part of the series "Documenting The Hyperinflationary Genesis"Bernanke’s creative solution: Let’s do it againAt a financial crossroadsHow to survive hyperinflationLet the party begin. We will be dead tomorrowI have $ 100,000,000,000 and yet I can’t retireIs the Dow Jones at a new
Things That Go Bump in the Night 2007-12-15 13:12:03 Today I am republishing the latest John Mauldin’s Weekly E-Letter. Although I prefer to write my own material, I thought it would be interesting to publish somebody else’s for a change. Although I not always agree with Mr. Mauldin’s opinions, I respect his thinking. In this article he provides an opposite view to the one I expressed in the article
Stagflation: This Time It Is Different. Since one of the goals of my blog is to provide alternative views that hopefully may help you to go and do your own research and find alternatives to the tried and tired approaches to investment of the Wall Street press, I thought it was just fair to share with you this counterpoint view regarding stagflation. Besides, he’s always a great read. I’ve thoroughly enjoyed
Bull’s Eye Investing: Targeting Real Returns in a Smoke and Mirrors Market and
Just One Thing: Twelve of the World’s Best Investors Reveal the One Strategy You Can’t Overlook and if you ar Read more:Night
Disposable Personal Income Shows Disturbing Historical Trend 2007-12-13 11:30:08 How do you measure personal wealth? As a standardized way to measure the wealth of individuals as part of a nation, it is the average disposable personal income.
Disposable
personal income, is the total after-tax income received by persons, or the income available to persons for spending or saving. By using this, it is easy to say if the population of a country is richer or poorer overall. Disposable personal income, however, does not measure how that wealth is distributed (if I ate two loaves of bread and you ate none, it will still show that we each ate one loaf), but that is not the subject of this post. thebankruptcynewsdotcom
The US has been in a worrisome trend for the past 30 years. Although disposable personal income has been growing (we are “richer” than our parents), the percentage at which disposable personal income grows year by year is smaller and smaller. To provide an example, it is like driving a bicycle uphill. You will still go higher, but the amount of Read more:Personal
, Historical
, Income
Universal Health Care: How Stupid Have They Figured Out We Are? 2007-12-11 21:29:47 Of course, the correct rhetorical question should be “How stupid do they think we are?” but, after checking the data, we need to face the music, people. We must be, as a nation, one of the most stupid groups of people on earth. thebankruptcynewsdotcom
In other articles I discuss how we must take action to protect our inalienable right to liberty and the pursuit of happiness. Here I take into our right to life; a healthy one for that matter.
So where are we in the map of nations without UniversalHealth
Care? We share a prominent place with most of the 3rd world. I say, this is real solidarity with those who have less, those countries can feel that a big and powerful brother is right by them.
So, of course, that says nothing. There is no correlation between Universal Health Care
and Economy. What’s more, countries with Universal Health Care are so burdened by taxation that they cannot grow the way we do.
For instance, we all know that “Free” health care Read more:Stupid
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