midtowng's blog

"We are all leaders"

By any standard measure the suicide of Wesley Everest should be considered unusual.
Everest had only recently returned from the front lines of WWI France, so a suicide isn't all that shocking. However, the circumstances of his death on Veterans Day 1919, should have raised questions with the coroner. That is, if the coroner had bothered to examine the body before declaring it a suicide.

Everest's teeth had been knocked out with a rifle butt. He was then tossed over the side of a bridge several times until his neck was broken from the noose tied around it. Afterward his lifeless body had been shot full of bullets, which is very difficult for a dead man to inflict upon himself.

Perhaps the coroner was just stating that Everest's suicidal action happened long before his death. It happened when he decided to become a member of the Industrial Workers of the World.

Rolling risk in America's debtoconomy

Moody's released a report that would be headlines in the financial news media of any country that wasn't in bed with Wall Street.

The average maturities of new debt issuance by Moody’s-rated banks around the world fell from 7.2 years to 4.7 years over the last five years — the shortest average maturity on record.

So how much is that in raw numbers? Banks will face $7 Trillion in maturing debt before the end of 2012, and $10 Trillion by the end of 2015.
Those are staggering numbers, but it doesn't end there.

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The Approaching Muni Bond Implosion

New York Lieutenant Governor Richard Ravitch made a statement last week that should have gotten headlines, but didn't.

“I believe that the states across the United States will face deficits a year after stimulus ends of $300 billion to $500 billion a year,” Ravitch told about 200 people gathered at New York University’s Robert F. Wagner Graduate School of Public Service. “You’re going to begin to see cracks in the municipal bond market well before then, because that’s an inexorable casualty of unfundable state deficits.”

To put this into perspective, the total state budgets for 2010 was about $1.4 Trillion. If his predictions are anywhere close to being true then the budget problems of the states are essentially unfixable.

The GDP of Stimulus

Now that the Great Recession has been declared dead and gone by everyone who failed to see the possibility of it happening in the first place, it is important to examine the reasons for its demise.

The White House has been busy declaring that its Stimulus policies have created or saved 640,000 jobs. We should note that the White House originally claimed credit for 1 million jobs, and only revised them down after realizing that they are spending $234,000 for each job saved. More revisions are sure to come.
It's also important to note that the job number is based on mathematical calculations and is impossible to prove.

One thing that can't be denied is that the stimulus did have an effect on the economy. It's this impact that needs to be examined further.

The real reason for the economic crisis

The economic crisis has the country flailing.
That's not a controversial statement. Since early 2008 the federal government has been trying various, and expensive methods, of jump-starting the economy and propping up the housing market. Since December 2007 the Federal Reserve has created an alphabet soup of programs to stabilize the credit markets.

So far all of these attempts to stabilize the economy have had mixed results at best. Trillions of dollars have been spent and yet the economy is still crippled. Why?

The problem is that the people in charge are asking the wrong question. They are asking, "How do we get back to where we were before this crisis?" The question they should be asking is, "How did this happen?"
Unless we understand what happened and why, we will never be able to fix the economy.

The Spartacus of Baseball

John Montgomery Ward was inducted into the Major League Baseball Hall of Fame in 1964. He debuted with the Providence Grays on July 15, 1878, as a pitcher. He won 164 career games with a 2.15 ERA. He threw the second perfect game in baseball history.
When an injury ended his pitching career in 1884, he learned to throw with his other arm and became a shortstop and second baseman. He went on to collect over 2,100 hits and steal 540 bases, including 111 in just one season.
He played on two pennant winning New York Giants teams, and managed the team for two other seasons. No other player in the history of baseball has won over 100 games as a pitcher and also collected over 2,000 hits.
For all these reasons he deserves to be remembered.

However, these accomplishments were nothing in comparison to the real legacy that defined him as a person and left its mark on baseball.

Higher gas prices: What we pay for bailing out Wall Street

The financial media has almost completely ignored the massive rebound in oil prices this year.

(CNNMoney.com) -- Oil prices have vaulted above $78 a barrel this week as investors continue to fret about a weak dollar and the pace of the economic recovery.

When the news media has mentioned oil they've tried to paint it as a good thing - expected demand from a booming economy. Of course the general economy is not booming, or doing much of anything for that matter.

No love for the dollar

A lot can happen in two weeks. Normally the foreign exchange market for developed nations move like glaciers. But in these days of global warming even glaciers are breaking speed limits.
Less than two weeks ago the World Bank President had some interesting things to say regarding the dollar.

"The United States would be mistaken to take for granted the dollar's place as the world's predominant reserve currency," Mr. Zoellick told the School of Advanced International Studies of Johns Hopkins University.
In his strongest comments yet in the debate over the dollar's reserve-currency status, Mr. Zoellick said that, "looking forward, there will increasingly be other options to the dollar."

For 65 years the American dollar has been the world's reserve currency. Practically as good as gold. So Mr. Zoellick's words might be considered controversial.

Sacrificing the Economy to the Volcano God

Hundreds of years ago the Incas would sacrifice virgins to appease their Volcano God.
The Gods and methods of sacrifice may have changed, but the tradition remains.

Like the Incas of old, we find ourselves helpless against forces we do not understand. The foundations of our economy shake and falter in terrifying ways.
In our desperation for answers we turn to High Priests of Economics who tell us these evils have befallen us because of our sins. We must sacrifice the innocent to the Volcano God or it will destroy us all.

The High Priests of Economics never explain exactly how these sacrifices will fix the economy, nor do they mention that the sins in question might be their own. Yet we still rush to offer up our children's futures through unpayable debts while never considering that there might be better alternatives.