photo credit: TheeErin

Some A$2 trillion has been pumped into banks globally. Last night saw a record amount of commercial paper sold in the US, with the Fed buying some US$60 billion in debt. A record day in the US sharemarket followed. How many more days like that will last until the Fed’s kitty needs to be replenished?

The Republican administration has ensured that banks worldwide are cashed up. But what do small businessmen think? Will they borrow all this cash to keep investing? Or are their expectations different to the short term political aspirations of politicians?

Business will be hesitant to invest when property prices are expected to drop, but yet policymakers do all they can to avoid this occurring. The resultant hesitation will delay the true market corrections needed.

David Hirst comments on how women are doing the straight talking needed, with the Federal Deposit Insurance Corporation’s Sheila Bair saying:

“We’re attacking it (the crisis) at the institution level as opposed to the borrower level, and it’s the borrowers that are defaulting. That is what’s causing the distress at the institution level … So why not tackle the borrower problem?”

Whilst banks are propped up, copying Enron style accounting by keeping assets marked up beyond their market value, the latest commentary on retail sales figures vindicates our probing. The people’s sentiment is reflected in sales. No matter how well cashed up banks are, they won’t be able to help retail sales.

FURNITURE and electrical retailer Harvey Norman says trading conditions were still tight three weeks after the Reserve bank delivered a surprise 1 per cent cut to official interest rates.

The company said yesterday that written sales at its Australian franchise stores fell 3.6 per cent over the four weeks ended October 26 compared to the same period a year earlier.

Retail sales will only improve when we are spending less on rent. Land and property prices must fall. It will be ugly. The easy profits land speculation delivers led to over-investment.

The government’s of the world are engaged in a blame game, diverting attention away form the prime issue.  Bankers know the real cause. Perhaps deregulation is partly to blame. However, the much bigger issue at stake is the Government’s failure to capture the economic rent delivered to prime locations. This led to the frothing-at-the mouth over investment in land.

We challenge the first banker to stand up and call it as it is!

photo credit: azrainman

Will it ever be learnt? The Greenspan playbook of cutting interest rates pushed the asset bubble ever higher and higher in the early to mid 90′s. Now Australia’s Reserve Bank governor Glenn Stephens is endeavouring to do the same. And gee whizz the markets rally. Surely this is an act of panic. Yet again a central bank backflips for the financial sector. But to whose advantage?

Once again, the real estate interests and their financial symbiants will get rescued from the folly of ignoring the inevitable real estate cycle. The real estate cycle is caused by government and gets rescued by government. This indicates the real purpose of government: to protect and subsidize the landed interests, including lenders who use land as collateral. Since land values periodically crash, the real interests need to be bailed out if they are to keep being protected. Meanwhile, worker-tenants pay not only taxes but higher rents to the landed royalty.

taken from If you’re going to bailout anybody

Read more on a grounded solution

photo credit: thelastminute

Summary

The Earth Belongs to Everyone – that’s the title of the new book by last week’s guest, UN rep Alanna Hartzok. She discusses why wage/ rent slavery is no different, if not worse than outright slavery. US dramas and a touch of Garnaut fill the show. Below are the notes host Karl Fitzgerald scurries through as he/I traverse through the gammut of issues that economics effects.

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“When the people find they can vote themselves money, that will herald the end of the republic”. — Benjamin Franklin

The Earth Belongs to Everyone – Book details

Order Alanna Hartzok’s excellent new book to get to the bottom of the drive to war and insights to the subliminal chains we wear each and every day with every tax dollar we pay.

A Collection of Articles and Essays by Alanna Hartzok. Themes include: Democracy, Earth Rights and the Next Economy; Sharing Our Common Heritage; Land for People, Not for Profit; Financing Local to Global Public Goods; Women, Earth and Economic Power; From Warfare to Earthshare.

Alanna Hartzok – Earth Rights International website
Alanna 2006 tour details, multimedia

Other articles covered:
If you’re going to bailout anybody Money to the People!

Once again, the real estate interests and their financial symbiants will get rescued from the folly of ignoring the inevitable real estate cycle. The real estate cycle is caused by government and gets rescued by government. This indicates the real purpose of government: to protect and subsidize the landed interests, including lenders who use land as collateral. Since land values periodically crash, the real interests need to be bailed out if they are to keep being protected. Meanwhile, worker-tenants pay not only taxes but higher rents to the landed royalty.

A government of the people rather than of the landed royalty would require either anarchism, so that all state subsidies to landed interests cease, or else the public collection of all the economic rent, and its equal distribution to the people as cash or as civic services. That rent would replace all punitive taxation, would eliminate recessions and depressions and poverty, and would remove the suffocation of enterprise now taking place. But the very system of land royalty also controls education, so few will learn the right lesson from the great real estate crash of 2008.

Public dollars are already lining speculator pockets on Wall Street

Bailing out big banks means more of the same. Look where the AIG money went. Where billions of Fed dollars are going. And the underlying land — called housing” — market still has not hit bottom. We trim, blend, and append five 2008 articles: Bloomberg of Sept. 29 by Mark Pittman, the Associated Press of Sept. 29 by Min Lee, Reuters of Sep 24, and CBS MarketWatch of Sept 24 and 17.

Steve Keen: Hank Paulson the evil scientist, not the hero

Paulson, like his many buddies in Wall Street who also paid themselves enormous “wages” (Paulson paid himself US$37 million in 2005 as CEO of Goldman Sachs), deluded himself into believing that subprime lending made economic sense.

Even in the weekend that it was worked out, five major financiers failed — Wachovia in the USA, Bradford and Bingley in the UK, Fortis NV in Belgium, Hypo Real Estate in Germany, and even Iceland’s major bank Glitnir — leading to state takeovers costing well over US$50 billion. How long would a US$700 billion Antidote last in today’s climate?

Music

Thanks to the following artists for their beautiful work:
Your Body Could Start A War (Feat. Leah) by LAL
Samba MachineKassin+2 (from the album “Futurismo” on Luaka Bop)

thxs also to Dublab for providing much of the music we play via their free mp3 blog

http://www.flickr.com/photos/pingnews/

With oil surging $15 overnight to record levels for a single day’s trading, one wonders if economic theory is understood by Paulson’s panickers. With US$247 billion pumped into the global banking system over the last week by the world’s central banks to assist liquidity in the short term money market, one wonders why the US Fed now jumps to the beat of Wall St rather than considering the wider ramifications for the rest of the economy?

All this new money has to find somewhere to live. Speculators see such pumping within the economic framework as inflationary. Commodities are typically a safe haven when inflationary expectations rise as consumers will always need that certain commodity – be it oil, barley or wheat. Listen to Phil Anderson on the Renegade Economists to hear this explained.

Thus commodity investors were very excited by Paulson’s panick. But what will happen in the long run?

The high money supply will push interest rates down, reducing stresses on new borrowings and perhaps encouraging new business investment. But there is a proviso.

That proviso is that investment will only occur if stability is maintained. However, with nearly 1 million US sub-prime borrowers about to switch over to higher rates under their Adjustable Rate Mortgages, we’ve only just entered the sub-prime meltdown.

But the lower interest rates will also hinder the necessary correction in the land market. This will drag the US economy through a long recession rather than a shorter sharper one if market forces were left to correct behaviour. Did Ben Bernanke learn anything from his time in Japan? (*Please note, land prices are not measured as part of inflation’s ‘basket of goods’ in either Australia or the US.)

Instead Paulson has bailed out his banking mates and the devil is in the detail:

“The proposal would prevent courts from reviewing the Treasury’s actions while raising the nation’s debt ceiling.”

And surprise surprise the US sharemarket tanked over night. All it will take is a Chinese whisper on bonds and we will back to square one – the market trying to correct itself because too much money is being spent on land/ rent/ mortgage repayments, leaving too little for investment or consumption.

Just one more paragraph as this bailout is simply white collar crime! What else can this US regime do for it’s mates? Why on earth do the people who created this bubble get bailed out? Why aren’t the people who came up with CDO’s and ARM’s being hauled through the ringer? A hint can be seen by the fact that Paulson worked at Goldman Sachs until 2006.