Charlie Rose

Marena  10/03/2008 07:23 PM Report

Randy, I agree with you, and so does this Washington DC Journalist.

----------------------------------

Media haven't deigned to cover bailout dissent

By Daniel J. Parks

October 3, 2008

Chicago Tribune

In my 18 years as a journalist—nine of them in Washington—I've rarely seen my profession behaving as badly on a hard news story as it has during coverage of the financial bailout bill.

The level of condescension has been breathtaking.

Particularly on network and cable television, journalists and supposed financial experts have been wagging their fingers at the voting public for pressuring Congress to vote against the bill. To hear them tell it, you would think there was universal agreement—at least among smart people—that something needs to be done now.

But this isn't a divide between smart and dumb people; it's a divide between Wall Street and its allies in Washington, and the rest of the country.

And no, it's not the same thing.

If you've spent much time listening to cable news lately, you would think there is universal agreement among economists that an immediate, enormous government intervention in the markets is the only way to stave off a recession, and perhaps even a depression. This is simply false. Many economists reject the notion that something must be done immediately and have called for more careful consideration of a wider range of options. Some even reject the premise that any bailout action will make much of a difference.

While it is true that most Wall Street economists predict doom and gloom for America without immediate government action, many of these economists are connected in some way to the institutions that would benefit from a bailout. There are scores of respected economists who hold different opinions, but nobody is running to the University of Chicago, for example, to put its economists on national television.

I don't know which side is right, but I do know that only one side of the argument is getting much attention.

Sen. Richard Shelby of Alabama has been among the leading critics of the bailout plan. He has gotten little media coverage, except to be dismissed as something of an amusing sideshow. But Shelby is the top Republican on the Senate Banking Committee, and as Monday's vote in the House demonstrated, his skepticism of the bailout plan is much more widespread than the relatively scant media coverage of such a key figure would suggest.

It's been almost humorous to watch the reaction to the stock market. As the vote on the bailout bill tanked Monday, the stock market plunged—an obvious reaction to the vote. Talking heads on TV solemnly cited this as evidence that a grave mistake had been made, and here was the evidence. But then a funny thing happened. The next day, the stock market bounced back, regaining most of what had been lost the previous day. The reaction was comical: Don't pay too much attention to single-day fluctuations in the market, we were told.

Ali Velshi on CNN is among the worst. The bald, bespectacled financial analyst practically wags his finger at America as he exhorts over and over again that everyone is at risk, and that the good people of America just need to listen to the experts.

Newspapers have been better than television in their coverage. The Washington Post ran a story Sept. 26 noting that there are many economists who disagree with the conventional wisdom of Wall Street

on the bailout issue.

But this theme generally gets lost in the day-to-day coverage and the underlying, unyielding message is that something big must be done quickly.

For example, The Washington Post's Steven Pearlstein, whose expertise and analysis I respect on most issues, joined the "They just don't get it" bandwagon with a column in Wednesday's edition titled, "They just don't get it." Pearlstein showed remarkable arrogance in declaring "too many people don't understand the seriousness of the situation."

The fact is, most people do understand. They just aren't convinced that this particular approach—or any government approach—is the best answer. And there are plenty of smart, highly educated people on their side. Just because you won't find many of them on Wall Street, or in Washington, doesn't mean they don't exist or their analysis is any less sound.

Even among the voters who believe a bailout would help, many remain opposed regardless. They want to see Wall Street suffer for its excesses, even if they must suffer, too. Normally the media would seek out and admire stands on principle such as this, but not on this story.

The disconnect appears to stem from the fact that in many cases, financial journalists have simply gotten too cozy with the Wall Street crowd. These journalists have failed to cast a critical eye on what their small circle of East Coast experts in the financial world tell them, and they have ignored other sources in most cases.

One would think that after being taken to the woodshed for failing to challenge the underlying assumptions on the need to go to war in Iraq, journalists would be more cautious about accepting the establishment explanation of any undertaking of this magnitude. But the journalists who covered the war for the most part are not the same journalists who are now covering the economy.

Perhaps the two groups should have a chat.

Daniel J. Parks is the managing editor of Congressional Quarterly

Miguel  10/01/2008 11:21 PM Report

The first part of evolution in the market and economic practices up to this point is now over. A new part two phase must begin where investors who tend to live life on the edge...don't!. Hedging, leveraging, and short selling is what got us here, and this bailout needs to be revised to federally reevaluate these current practices and show publicly how dangerous they can be. A more specific approach could be a revision of the Sabarnes-Oxley Act. Now, we need to strongly emphasize the importance of restoring confidence in the people of Main st, the true backbone of the American Economy. Henry Paulson knows how to make money, but does he know how to restore confidence?

Chris  10/01/2008 01:52 AM Report

Okay... Let's say all these folks are right and we need to pass the bailout. My concern is where is the accountability? Just recently, when the media started to warn us about adjustable rate mortgage failures and the potential disaster it would create many in government including John McCain said we shouldn't reward poor judgement. Now these same folks are saying let's save wall street from their poor judgement? I think we probably need to step in, but there needs to be some true consequence and NO reward to these CEOs. There also needs to be some guarantee that we are going to invest in all americans not just the wealthy in the financial sector. Frankly, tougher credit and less lending might not be such a bad thing. One of the biggest problems in america right now is the fact many of us live much larger than our means should allow. Perhaps going back to a more cash based economy would encourage people to buy what they could actually afford. We ALSO must rethink how our economy works. A country that consumes more than it produces is going to have problems. We constantly bolster the financial sector while we have let manufacturing go out the window. We've let medical costs and fuel prices tick ever skyward. AND because in a country where an undergraduate degree has become as important as a high school diploma our colleges are getting too expensive to attend. Why are these things relevant to a discussion on the economy? Well these things all contribute to the citizens ability to produce and consume.

Randy  10/01/2008 01:13 AM Report

The government/corporate/media blitzkrieg on the american people has begun. It is practically impossible to get an opposing viewpoint on the bailout from the voice media. Even local conservative talk show hosts who originally opposed the bailout have been persuaded by unknown means to covert to a pro-bailout stance and shift public opinion. It reminded me of 2003 when it was impossible to find a media voice that opposed the Iraq invasion. This is very scary stuff. What have we, as a country, turned into?

loislin  10/01/2008 12:44 AM Report

i am listening to the guests on tonights show say that "everybody" knows that something has to be done.

that is incorrect..

i had dinner with some die-hard republicans last Saturday night, they both thought nothing should be done and everything will be fine.. really just fine ... they think that only wall street company's will loose money.

these were 2 men who are very internet savvy .. but they are just repeating the neoconservative party lines..

i asked them what planet they are living on, and they told me that this "whole issue" is just made up by the liberals who want to socialize America..

i asked them what they thought was going on with the banks failing..

they just started telling me how this all started when the democrats did such and such..

which i told them i didn't care at all about.. they kept saying everything comes down to "liberals are trying to cause a problem with ___" fill in the blank with health care.. crime.. housing.. what ever the topic is..

i am really worried that these people have lost the ability to think for themselves..

i hear this is what the Chinese like about their government, they don't have to think for themselves because the government knows what is best and will take care of them..

i have no idea why my friends would not recognise their republican president's urgent message on the state of the financial world..

and just to even things out..

my democratic friends think that the republicans are trying to steal the nation, trying to create an upper class that can not be "deposed", who will use ill-gotten gains of a massive nature to keep the middle class "under their control" ... they are all about the republicans want to "Control" us.. and they think that if the government doesn't do something to help the middle class then .. well, the world will come to an end in some form or other..

what i want to know is, what are these political party's doing to people to make them so blindly loyal to what ever the party line of the moment is.. ??

can't we get a political party called "the normal people" ..

i think we might need to import a few with a time machine to get it started, but something has to snap people out of this fog..

Caroloyn  10/01/2008 12:36 AM Report

I think the bailout package would be a "better pill to swallow" if it also includes that CEO's and the top tier of their respective Company be forced to pay back the stocks they dumped on the market at the very end when they knew their company was in its death spiral. No one can tell me that these fat cats don't dump their stock and then get a severence package to boot. They all should leave with nothing, just like the average working "Joe" who gets fired, or let go in so-called "down sizing" and then can't find another job. Don't tell me the economy and all the jobs being outsourced to other countries hasn't helped the defaulting on the home mortgages. And it won't stop until the workers here have "real" income to pay for these homes that have spiraled out of their reach and the banks cut way back on their closing costs. Young people today can afford a down payment or closing costs; but, not both...not if they want a mortgage that they can afford along with the household bills and home improvements that also is part of home ownership.

Nikki (In Las Vegas)  10/01/2008 12:06 AM Report

What everyone needs to understand is that whether the American tax payer agrees with the bail out situation or not, it has to be passed. Business, large and small, financial institutions and inviduals all rely on credit to expand, make investments, buy a home, buy a car, pay for college, obtain a credit card, etc.; not to mention all the jobs in those sectors that will potentially be lost if these firms fail. Unfortunately, we're also financing a war, have a mortgage mess and a current account deficit that doesn't allow us to ignore this problem. Add to the fact that these finanical institutions are so interconnected not only with investments but with loans and insurance that when one goes down, the domino effect begins. So, when you go to open up a home equity line of credit, get a home loan, an auto loan, a student loan or refinance your home, or get some type of insurance you won't be able to, because if the banks won't lend to each other, they won't lend to individuals or businesses or take any kind of risk, no matter how perfect their credit. The other reaction to this mess as well is that what happens here also affects other markets world wide, not mention that most of our debt is held by foreign countries. This is why you can't have a "free market system," and that regualtion on what banks and investment institutions can do needs to be clamped down on or altered; the ability to do credit default swaps, derivatives, tax shelters and mortgage securitizations all need to be reassessed. Banks bundling and selling loans for a profit to another company is nothing new, but when you sell them to Wall Street, you invite a terrible moral hazard situation. Again, to do nothing and let the markets correct this, isn't a viable option. What happened with these financial institutions was morally unconscionable, no the CEO's shouldn't receive their pay packages and yes severe punishments should be handed out, but time isn't a luxury in this situation. However it is these instutions that we rely on for loans, in whatever capacity and in the long run letting them fail will only the hurt the American Tax payer.

Stephen B. Wise  09/30/2008 11:03 PM Report

It looks like you deleted my comment of this morning, regarding Al Hunt's view that the "people are irrational".

Steve Brown  09/30/2008 10:53 PM Report

Al Hunt's theory of the public being irrational is an empty statement. (Charlie should have let Floyd Norris answer more since he has the mastery of the subject matter.) I do not know of anyone who feels the federal government and the Wall Street crowd has been honest on this disaster. Secretary Paulson, turn a blind-eye Goldman Sachs Paulson, wanted $700 billion to spend at his discretion with total immunity and the general public is supposed to feel good about this? They were practicing reckless financial sex without a condom and now we are pregnant. This is the first time in my lifetime that I can remember a portion of the public saying they are willing to take a financial hit to finally correct the greed of Wall Street. We are not talking about an ignorant public thinking the bailout is a ruse. Members of Congress need to pay attention to their failure. Pelosi will be to Congressional leadership what Bush has been to the Whitehouse. I agree with other posters on the notion Charlie should have included some of the renown economist (and they are out there)who disagree with the current bailout plan.

Amy  09/30/2008 10:39 PM Report

After reading citizen comments on message boards ranging from Charlie, to Kos, to the NY Times to WaPo, it looks like the solution that most people would be happy with, would be for the government to put up a guillotine right in front of the NYSE. It might even make the bail-out go down easier. Just a thought.

Marena  09/30/2008 10:31 PM Report

"Not so much bail-out as rip-off"

-Nouriel Roubini

Someone on the show mentioned Roubini thought the Paulson bailout was good...he did no such thing. Here is his article from yesterday. He says the plan is a "disgrace" & "does not even achieve its basic objective". He also mentions the plan will make the recession worse, and does not resolve the stress in the financial system. It's worth a read.

http://www.guardian.co.uk/commentisfree/2008/sep/29/wallstreet.useconomy

John Furber  09/30/2008 08:25 PM Report

I, too, am against taking taxpayer money to bail out Wall Street. And I, too, have been a fan of the Charlie Rose show for years. I was astonished to see such one-sided boosterism for this proposed drain on the U.S. Treasury. By analogy, should the citizens of Nevada be taxed to reimburse every player who loses money at the casino tables? It would seem to be more fair to confiscate the personal assets of the CEOs and directors whose decisions contributed to the poor performance of their companies.

Marena  09/30/2008 07:13 PM Report

Here are some more educated & respected opponents that you could have on your show...like the former FDIC Chairman. Here's an excerpt from a CBS article to give you some perspective on why the bailout stalled.

"Issa said that the credit is actually due to former FDIC Chairman William Isaac, who has been on Capitol Hill briefing lawmakers as to what other options and financial tools are available to the treasury. Isaac spoke to a group of skeptical Democrats yesterday and set up camp outside the Democratic Caucus meeting Sunday. Along with liberal economist Dean Baker and another economist, James K. Galbraith, the trio would engage Democrats coming in and out of the meeting.

Isaac has also spoken to dozens of Republicans. Issa said he was in the Capitol until past midnight Sunday night and returned again Monday morning before the vote.

“As more and more people got educated as to tools and how they could be used and why they’d be better, I think it surprised Republican leaders, because they had members that had the ammunition to say why they couldn’t support this one at taxpayers’ expense,” said Issa."

Spencer  09/30/2008 06:57 PM Report

There are lot's of ways to look at this proposal. Wall Street and the administration are calling it a rescue plan. That sounds good, but some other ways to view it are: (a) how would Wall Street react if the government went to them and asked for $700 billion for a project that may or may not have a return?; or (b) why should every man, woman and child in this country pony up about $2300, but the people that made the bad decisions get to keep their jobs and walk away with more money than the average American will ever make in a lifetime of work?; or (c) if the collapse of the American banking system is a world wide problem and finance ministers around the world want us to support the plan, then where are their checkbooks? The Republicans have been advocating tax cuts, deregulation and free market enterprise for years. They have controlled the White House and Congress for seven of the last eight years when it was obvious to many people that giving low wage earners adjustable mortgages that they could barely afford was reckless at best and criminal at worst. With Phil Grahm in the lead the Republicans banned the regulation of mortgage backed securities. When they stand up and take responsibility for the mess, I’d be willing to support a rescue plan that has controls to avoid a repeat occurrence and some penalties for those that were responsible. Until that time I’m willing to let Wall Street enjoy the fruits of their lobbying efforts for deregulation and no oversight.

Marena  09/30/2008 06:52 PM Report

Charlie, I was slack-jawed after watching your show on the bailout. Your show has been one place where some objectivity still reigns in this era of talking head nonsense, sensationalism, and disinformation. But last night, you were no different.

Where was the other side to this story? Where were the 3 Nobel Prize winners and over 200 Distinguished Economists who said this plan was no good? Or how about Roubini who said it was trash? Or the others that are saying it is bad, e.g., the former head of the FDIC and 22nd US Labor Secretary Robert Reich? And that's not even close to the end of the list.

Where was the part of your show where you looked at other plans that Economists have crafted that have a much better chance of succeeding than Paulson's, but didn't leave the taxpayer on the hook? Plans that take into account history of other countries that have struggled through this and what does & doesn't work. Btw, Paulson type of plans have never worked. See the IMF (International Money Fund) study on this. Plans that get to the actual root causes, not just continue to artificially inflate things. Where are the Game Theory experts in Markets who would tell you not to take the gyrations at face value. Where are the experts that will tell you to look at the 700 point type drops in context...as a percentage, taking into account where they dropped from - 12,000!!

I could write pages more, but I thought you had a staff to provide you this type of information, not some viewer.

Plus, I was disappointed to hear you parroting what Bush does - the black/white solution. It's this bailout plan or we crash. The people who don't want the bailout aren't saying they don't want market intervention. Since when did those 2 things become synonymous? Most of them are saying they recognize something needs to be done but want a plan done by experts and with a good chance of succeeding, that doesn't dump it all on the taxpayers. Instead of the Shock Doctrine, "we don't know if this will work" plan Paulson threw at us. Paulson is also the fox guarding the henhouse, and there are major constitutional issues with this plan.

Where were those parts of the story Charlie? And the others, of which there are many more, such as Moral Hazard and Govt. bankruptcy. All I could think was that you've obviously money and friends in this deal to be so blatantly for it.

I've been disgusted with the media for a long time, and their constant hysterics and fear mongering. Today did nothing to redeem that. I was particularly interested in how they used the word "blame" instead of "credit" for the bailout not going through. Oh yea, there's no bias there. They've gone just about as far as they can from any objectivity in reporting. Their views on the Iraq War & Patriot Act have also turned out to be wrong.

Charlie, I watched your show saddened that you seem to be drifting away from providing a civilized forum for intelligent discussion during such an epic time in America...a time when we need reasoned, calm voices the most. I could say more, but instead I will close with a quote that seems especially prescient this week. The Iraq war, the Patriot Act, the Shock Doctrine, the Financial Boondoggle, Attack Politics, and the poor VP running mate choice, all add up to the beginning of the end. Any bailout that still has its' basis in Paulson's plan, is the nail in the coffin.

"America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves."

Abraham Lincoln (1809-1865)

Vlong  09/30/2008 05:28 PM Report

Al Hunt wonders who there could besides Bernanke, Paulson, Buffett and Welch? How about some successful investors who actually laid money on the line and bet successfully against subprime? These include John Paulson (no relation to his feckless namesake); Jim Rogers and Wilbur Ross. I know that Rogers and Ross are against the bailout. How about having them on the show?

Maria R  09/30/2008 05:24 PM Report

Dear Mr. Rose:

It seems that your distinguished guess last night believe we are ignorant or irrational because a lot of us do not agree with the term of the bail-out. Do you mean 450 millions for the CEO of Lehman and the bad debts for yours truly is a PR problem! The Reps that did not vote for this heist are doing exactly what their constituents wanted them too. Why are they getting accused of playing politics?In any case, they are politicians. Since Americans who are againts the bail-out are somehow suffering from "irrational exuberance" what will we do next? Maybe cancel our subscription to the NYT. In any case, we have already bailed out Fannie Mae, Freddie Mac, part of Wachovia's bad debt, and WaMu.

What will Mr. Goldman Sachs tell us next-that are dogs will be poisoned if we don't get this bail-out. Well, in fact, my dog was poisoned by substandard Chinese products last year, and most of the MBS that are owned by the Chinese, were bailed out too. Does he want us to invest in the Chinese milk dairy industry too?

Thnaks, Maria R.

Kate  09/30/2008 04:07 PM Report

The Charlie Rose Show has been very biased in favor of the 700 billion dollar bail-out. Opposition is not based on emotion, but on common sense. The show should seek and present a wider range of views, such as those expressed by Marcy Kaptur, 13-term Ohio Congresswoman, and William Isaac, former FDIC chairman, both of whom have strongly recommended alternatives to the 700-billion boondoggle.

Marilyn  09/30/2008 04:04 PM Report

Can't support the bail-out. I'm waking up to the fact we are nothing more than steerage on the Titanic. Ricardo C. Amaril spells it out frighteningly well, and beyond my comprehension....$62 trillion in dirivitives market?!

Clint  09/30/2008 03:19 PM Report

Are they really surprised at the taxpayers’ reaction? Did they really think that the general public would be OK with this… you can call it a “bail-out” or a “rescue plan”, they can get their PR & Marketing team together and call it another stimulus package but the American people are going to see through it.

I don’t think they realize just how much the average American has been hurting and for some time now. We all know when people have even less to lose, the fear card or threats of tighter credit don’t mean as much.

I think that Wall Street and government officials may be underestimating just how much the average person is willing to endure before they get “played” by people who seemingly only care about “the Markets” and their own huge investment accounts.

Especially because they knew!!! They knew, they were trading higher-risk paper and using bogus mathematical formulas and models to disguise the higher-level risk.

Wall Street said they wanted “Free-Market” regulation over government regulation and now that the “Free-Market” is speaking they don’t like the sound of it. And that George Bush, Wall Street, government officials and even some media outlets begging we need to do something NOW, NOW, NOW sounds like more self-serving than public-serving.

Edwina Hughes  09/30/2008 03:06 PM Report

Charlie,

You have saved my sanity (or at least the future of my TV set) many times in the last 8 years. Sadly, tonight was not that helpful (although I still didn't throw my TV out the window.

Several concerns:

1)Where are the women (spelled WOMEN) who could comment on the economy (Palin & Pelosi excepted) with more honesty,clarity, and insight than Al Hunt?

1)Al Hunt's absurd, out-of-touch and outrageous statement (and reiteration of it later in the program) that the public's disapproval of the bailout is 'an irrational response to the bailout ...connecting their lack of health care and inability to work and save their homes' with the plan to protect the wealth and assets of those who have caused their pain' shows his knee-jerk analysis of the public's overwhelming negative response. The clearly forseeable collapse of the economy due to the corporate greed that has become the wealthy person's operational value system(with very few notable exceptions)has been talked about "on the street" for severy years. In what building was All hiding?

3) I have never seen Al Hunt look or sound so out of touch. Are there no "powerful" Americans with substantial savings and assets who understand that the rest of us have reached our bottom line? We no longer wish to tolerate the unabated victories and increasing wealth of the powerful....in business, in government, in media!

4) I am 65, daughter (take note: a woman!) of a factory worker and hospital worker,have worked since I was 13, have a Master's degree and am an ordained American Baptist Minister, now retired, working part-time as a classical music dj. I don't know how many zeros there are in a billion or trllion dollars. I don't pretend to understand the innards of the chocholate covered financial ants we are being asked to swallow.

But hear this! I would rather live through a depression, lose my small townhome, see my pension deteriorate (as it aready is!) go on "indigent" health care (which I have already had to do) and stand in a bread line (I was Executive Director of a poverety agency for 6 years, and helped people with "bread" for their table)than to see this plan go through.

5) When will congress and the media finally hear that the People are truly, completely, and without reservation, fed up! (Apparently they haven't read agreat deal about the roots of humna revolutions.)

6) Congress: Develop a plan that begins with those who have been the victims of this unbridled greed and power.

For the first time the wealthy and powerful may actually share the fears the rest of us have lived with for several years. If they begin by helping those people on whose backs they have made their money and gained their power perhaps we will hear the other ('ugly but necessary'??) parts of their plan. But not until our conditions have been met.

7) This is the first comment I have ever written, and it is signed and sealed with all the rational and irrational, passionate and dispassionate commitment of my being.

Sincerely,

The Rev. Carolyn E. Hughes

Dawn Burnham  09/30/2008 03:01 PM Report

I enjoyed the program immensely, via computer. Strong agreement with the previous poster. Last night on CBC "As it Happens"(radio) Peter de Fazio from Oregon was interviewed re the day's events. This was the first time I fully understood the complexities/innuendos of the current problem. de Fazio's comment that the problem was always more elegant than the solution.

Mr. Norris has defined the solution with great care. Thank you.

Chris Roberts  09/30/2008 02:43 PM Report

Neo-cons don't expect to "create" crises. The Chicago School theory (initiated largely by Milton Friedman) has it that crises are opportunities and the trick is to have your response ready to apply very quickly while the population is still in shock. Katrina was a "God given" opportunity. This one is an economic opportunity. Here's a recent interview with Naomi Klein - http://www.democracynow.org/2008/9/24/naomi_klein_now_is_the_time concerning the application of the "shock doctrine" to the current crisis. Also BTW: here's a link to last Sunday's Philadelphia Inquirer concerning how some Republicans frame issues - http://www.philly.com/philly/news/nation_world/29852724.html

Chris Roberts  09/30/2008 02:41 PM Report

Neo-cons don't expect to "create" crises. The Chicago School theory (initiated largely by Milton Friedman) has it that crises are opportunities and the trick is to have your response ready to apply very quickly while the population is still in shock. Katrina was a "God given" opportunity. This one is an economic opportunity. Here's a recent interview with Naomi Klein - http://www.democracynow.org/2008/9/24/naomi_klein_now_is_the_time concerning the application of the "shock doctrine" to the current crisis. Also BTW: here's a link to last Sunday's Philadelphia Inquirer concerning how some Republicans frame issues - http://www.philly.com/philly/news/nation_world/29852724.html

Chris Roberts  09/30/2008 02:40 PM Report

Neo-cons don't expect to "create" crises. The Chicago School theory (initiated largely by Milton Friedman) has it that crises are opportunities and the trick is to have your response ready to apply very quickly while the population is still in shock. Katrina was a "God given" opportunity. This one is an economic opportunity. Here's a recent interview with Naomi Klein - http://www.democracynow.org/2008/9/24/naomi_klein_now_is_the_time concerning the application of the "shock doctrine" to the current crisis. Also BTW: here's a link to last Sunday's Philadelphia Inquirer concerning how some Republicans frame issues - http://www.philly.com/philly/news/nation_world/29852724.html

Ricardo C. Amaral  09/30/2008 02:09 PM Report

On April 11, 2008 I posted the following on the Elite Trader Forum. My screen name on that forum is SouthAmerica.

It is 2008. The U.S. Has Dragged the World into a Depression

http://www.elitetrader.com/vb/showthread.php?s=&threadid=124509

SouthAmerica: Just a Reminder: It is worth reading the enclosed article that I wrote in November/December 2004 making an economic forecast through the end of 2008.

I wrote the enclosed article right after the November 2004 presidential election and the article was finally published in February 2005. My mindset has not changed since that time. Maybe you will find interesting that particular article, since I wrote the article from the point of view of November 2008 forecasting the coming worldwide economic depression.

Published on February 13, 2005 on Brazzil magazine.

Original title: “The First Great Depression of the New Millennium”

Brazzil's magazine editor changed the title to:

It’s 2008. The U.S. Has Dragged the World into a Depression.

By Ricardo C. Amaral

http://www.brazzilmag.com/content/view/1424/49/

_________________________________________________________________________

Keep in mind I wrote that article 4 years ago and not last week. Quoting from that article:

…The First Great Depression of the New Millennium

During the second term of George W. Bush’s presidency, finally all the American mismanagement and mistakes did catch up with the American economy, and a number of trends merged into a perfect storm causing the final meltdown of the US economy.

The American economy went through a downward spiraling out of control implosion. Massive US government budget and trade deficits forced the Federal Reserve Bank to raise interest rates to try to stop the steep decline of the US dollar in world markets against other currencies.

Soon after September 11, 2001 the US dollar started sinking in world markets like the Titanic. The Economist had a Special Report regarding the US dollar on its December 2004 issue - “The disappearing dollar.”

The article said: the decline of the US dollar in the last 3 years makes the United States responsible for the biggest international monetary default in the history of the world. The US dollar had declined by 67 percent versus the euro from US$ 0.82 in November 2001 to US$ 1.37 in December 2004.

________________________________________________________________________

The world lost its confidence in the US economy because they realized that the US economy was over leveraged, and would not have the necessary cash flow to pay its bills in the future. The US economy was outsourcing its good paying jobs by the millions to other countries - in the last four years the US economy had exported over 10 million jobs. A flood of US corporations started reincorporating in tax havens to avoid paying US corporate taxes.

To compound the US economic problems, US corporations started repudiating the benefit payments of their pension and health plans. Everybody wanted to pass their pension responsibility to the US government - the trend started with the steel industry, then the airline industry, the major auto manufacturers, and after that, every company with a substantial pension plan. The US government had no choice other than to swallow approximately US$ 600 billion in new pension liabilities.

…the market dynamic of all these events combined to cause a major institutional collapse in the derivatives market, and that started a domino effect in the entire financial system causing a massive meltdown.

Panic among the major holders of US dollar also contributed to the stampede like we had never seen before - and at the end, Chernobyl looked like nothing when compared with the final meltdown of the US dollar, and US economy during the summer of 2008.

________________________________________________________________________

jeffrey dosik  09/30/2008 02:09 PM Report

They want us to bail out the same people who said that free trade and outsourcing is good for us! They want to put the social security surplus in the stock market! If they can't deceive us they use extortion!

Ricardo C. Amaral  09/30/2008 02:07 PM Report

I posted the following on the Elite Trader Economics forum regarding this bailout:

September 29, 2008 SouthAmerica: I got my education from the years that I worked for John M. Templeton and from the people who had been around John M. Templeton for many decades.

John M. Templeton believed in the capitalist system and on free market solutions.

US government intervention is going to distort the market even further – the financial institutions don’t trust each other because they know that the entire financial system is full of toxic waste not only from the sub-prime mess but also from the derivatives market that is spinning completely out of control to the tune of trillions of US dollars in losses.

The financial gods of Wall Street want to dump these trillions of losses in the derivatives market into the taxpayer lap.

According to an article published on the front page of The New York Times today “Treasury Would Emerge with Vast New Power” – the article said: “The draft legislation, which will be put to a House vote on Monday, gives Treasury Secretary Paulson and successor extraordinary power to decide how the $ 700 billion bailout fund is spent. For example, if he thinks it wise, he may buy not only mortgages, and mortgage-backed securities, but any other financial instruments.”

_________________________________________________________________________

****

I knew all along that this $ 700 billion dollar Wall Street bailout was a massive fraud inflicted on the American taxpayer and nothing else.

These scam artists are selling this bailout to rescue the real estate market when in fact it is a case of bait and switch these scoundrels are going to use the bailout money in an effort to stop the derivatives market from a nuclear explosion – now that this financial weapon of financial destruction has blown into pieces people want to clean up the mushroom financial cloud with a $ 700 billion dollar bailout.

The only problem is that just God knows how many trillions of US dollars are going to be necessary to clean up the mess from this derivatives nuclear explosion.

The $ 3 trillion dollars Hedge Funds market is in the middle of this derivatives nuclear explosion.

The right question that people should be asking right now is the following:

The explosion on the derivatives market is going to be contained as the explosions in Hiroshima and Nagasaki or this derivatives nuclear explosion was the new version of the nuclear bomb that is 1,000 times more powerful.

I believe that they are going to find out that the explosion of the derivatives market is the latest version of the nuclear device.

Source: 1930's FDR "New Deal" - 2008 Democrats approve the "Death Deal"

http://www.elitetrader.com/vb/showthread.php?s=&threadid=138650&perpage=6&pagenumber=2

______

Ricardo C. Amaral  09/30/2008 02:05 PM Report

When I watching The Charlie Rose Show today I was not surprised by the opinions of Al Hunt. He had no choice other than be in favor of the Wall Street bailout since he works for Bloomberg television, and radio two mainstream media sources of Wall Street information. He would be crazy to express an opinion against this massive Wall Street bailout. He was just a mouth-piece to lobby in favor of the bailout.

Charlie cut Floyd Norris more than once when he was giving his opinion about the Wall Street bailout. Wall Street is trying to intimidate the politicians by giving the impression that the sky is falling on Wall Street.

If they finally twist some arms and manage to pass the Wall Street bailout then if the politicians want to see Wall Street throwing another temper tantrum all they have to do is don’t allow the bailout money to be invested on any type of derivatives instruments.

That would drive the scoundrels in Wall Street crazy.

________________________________________________________________________

I posted the following today on the Elite Trader Forum and also on the PBS Washington Week Forum.

September 29, 2008 SouthAmerica: Right now the House is voting on legislation that it will be considered the largest swindle in financial history.

These Congressmen must be “Brain Dead” to vote in favor of the passage of such bailout for Wall Street that it does not mean a thing to main-street.

I never imagined that Americans were so stupid – only “brain Dead” people would approve such a bailout.

We have a $ 62 trillion dollar derivatives market that is spinning completely out of control in world markets – the derivatives market is unregulated, and have been operating in automatic-pilot during all these years of explosive growth on that market – a market that grew from less than $ 1 trillion dollars in January 2001 to the current size of $ 62 trillion dollars.

________________________________________________________________________

Basically, the bill that they are voting today on the House will give the authority to the Treasury Secretary to buy $ 700 billion dollars of these toxic financial weapons of mass destruction.

The Hedge Fund industry in the United States that is ripe and ready to implode into the black-hole is the next major financial crisis that is ready to explode and these guys have a ton of derivatives toxic financial weapons of mass destruction.

The $ 700 billion dollars should be considered only the down payment to the US government intervention in an effort to stop the complete meltdown of the derivatives market.

Americans are silly to think that a dime of these $ 700 billion dollars is supposed to help with the problem of melting real estate market in the US.

These $ 700 billion dollars are going to disappear into a black-hole of derivatives toxic financial weapons of mass destruction.

After people start understanding what is going on and after a few more bailouts the world is going to realize that the US dollar has been tuned into Confetti and finally we should have the meltdown of the US dollar in world markets.

http://discussions.pbs.org/viewtopic.pbs?t=105115

____________

Michael  09/30/2008 01:11 PM Report

I watched this epsiode today and was very impressed with Floyd Norris. The first calm head I've seen on this issue who seems to understand all the different sides. Thank you for this insightful program.