High Finance

I don’t know what to say, but this is not the way to do it! The Fed and Treasury keep effectively printing Money, and We are reaching the Point where We will have both Recession and high Inflation. Nothing will cancel the Recession; it being basically an incapacity of Consumers to Spend, because it was fundamental over-consumption in relation to their Incomes. Most Consumers had increased their Consumption by about 45%, when their Incomes increased by only 25%. We cannot base a Recovery upon the principle of maintaining this over-consumption. The underlying factor is to employ more People, not to keep Bankers at work, when that labor simply continues bad practice or underwrites Production which has no Market.

Felix Salmon does not think much of the Citigroup bailout. The killing element stands as the $3.4 billion which has to be paid back each year, before Stockholders can even begin to draw a Dividend. Citigroup Stock will not appreciate in Price where the Government takes a probable 30% of the Profits off the Top, and the bad Securities are still within the Citigroup portfolio to the tune of in excess of $670 billion based upon mortgages which will be beat up. The guarantee of $250 billion seems hardly enough in consideration that $1.3 trillion of their assets must be judged Sour; where there will be delays in Payment, if payment comes at all. I begin to wonder who is going to bail out the Treasury, as Paulson chameleons it into a Goldman Sachs Look-Alike.

Greg Mankiw presents Us with an interesting Post with an analysis of the proposed Obama package to promote Employment. It is obvious that Obama plans to save the Jobs of Bankers and Businesspeople as well; it being the only possibility for the shortfall in Job numbers under the Obama plan. I wish Greg had analyzed the Cost per Job Saved for each Banker, and the potential Cost for each Business Job saved. The discrepancy clearly portrayed that saving Jobs is more expensive than creating Jobs, especially when it comes to Bankers and Business. One-Percenters, it seems, are always the most expensive Welfare recipients! lgl