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Is the Fed setting America up for another economic crisis?



Incest between Wall Street and the Fed

Do you remember the “too big to fail” crisis? Remember the talking heads on cable news debating whether or not the banking system in America should be bailed out or allowed to fail and rebuild? Well guess what? Here comes round two, according to economists Gretchen Morgensen and Josh Rosner on the Daily Ticker as featured in the video above.

It seems that since the banks have been bailed out, everything is on the right track, but Morgensen and Rosner look back in time and see parallels to today, pointing to the continued “incestuous relationship” between the Fed and Wall Street which enabled the first crisis which resulted in a bailout.

The Fed “failed to oversee” the banks and we’re just now learning about a secret $80 billion fund for banks back in the spring of 2008 with some suspecting that more details will leak this year about the bailout.

Former Federal Reserve Chairman Alan Greenspan has already publicly admitted that the “fatal flaw” that required bank bailouts was self regulation and Morgenson and Rosner say nothing has changed.

They note that originally, we grew “too big to fail,” so the government consolidated the banks and the belief was that they shouldn’t be too closely regulated not only because profitability was being misinterpreted as the banks being sound and that if they were punished for misdeeds, they would fall and the entire economy would be destabilized.

The authors say the psychology is now that the Fed is pretending there isn’t a problem in the name of economic stability. Because of this, they predict the banks will go back to taking more risks because of a lack of oversight and the cycle starts all over again.

What’s next?

So they say we’re back in the exact same situation, so what’s next? Will the Fed go back to Congress asking for another bailout in the name of economic stability or will the President keep his promise that no more bank bailouts will happen and let them fail on their own merit and rebuild?

Tell us in comments what you think the best course of action is- let the incestuous relationship continue in the name of economic stability or take on the challenge of letting the fail-worthy banks fail and building a new foundation from there?

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  1. Joe Loomer

    June 2, 2011 at 5:04 am

    The more things change, the more they stay the same…. Glenn Beck also does a great job of pulling the pieces together and showing whom is related to whom and what incestuous relationships exist not only in the finance sector, but other areas of private business and the government. I don't always agree with GB, but can't argue with the "six degrees of separation" approach.

    Navy Chief, Navy Pride

  2. Missy Caulk

    June 2, 2011 at 7:42 am

    The question I have is what happened that day in 2008, when Paulson went to Bush and said the economy is going to crash?

    Article 1, Section 8 of the Constitution states that Congress shall have the power to create money and regulate the value thereof, not a bunch of international bankers.  

    A group of bankers funded and staffed Woodrow Wilson's campaign for President. He had committed to sign the Federal Reserve Act of 1913.

    In 1913, a Senator, Nelson Aldrich,(maternal grandfather to the Rockefellers)pushed the Federal Reserve Act through Congress just before Christmas when much of Congress was on vacation.(sound familiar?)

    When elected, Wilson passed the Federal Reserve Act.Later,Wilson remorsefully replied, referring to the FED,"I have unwittingly ruined my country". Now the banks financially back sympathetic candidates. Not surprisingly, most of these candidates are elected. 

    Congressman Charles A Lindbergh said after the passage of the Federal Reserve Act in 1913, "The new law will create inflation whenever the trusts want inflation. From now on depressions will be be scientifically created."

    "I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs."  Thomas Jefferson, U.S. President.

    "It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow  morning." — Henry Ford   

    In answer to your question, yes they can.

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?



NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<


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Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.



young executives

job openings

Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.


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Economic News

Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.



gas tax


Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.


Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.

Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.

“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”

Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.

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