It would seem that the so called stress tests have been loosing
more that a little of their credibility and on more that one front.
Now Time magazine has an expose about them. Even referring
to the esteemed Mr. Geithner as a con artist of the first caliber. 

 Not that three months of supervisory scrutiny of the
country's top 19 banks hasn't produced some grim news. If
the economy dropped to Depression-era levels of
unemployment and credit shrinkage, according to the
Treasury and the Federal Reserve, those firms could lose
nearly $600 billion by the end of 2010, on top of the $350
billion they've already lost since mid-2007. Bank of
America needs nearly $33.9 billion in new capital, Wells
Fargo needs $13.7 billion and Citigroup needs $5.5 billion.
Altogether, 10 of the top 19 need $74.6 billion in
additional capital. (See who's who in Obama's office.)

But in a remarkable bit of salesmanship, Geithner has
managed to package those findings as positive. Most of the
banks can meet or beat the newly imposed government capital
requirements on their own, either by selling off parts of
their business, converting loans into stock or
participating in the fledgling government-led effort to get
toxic assets off their balance sheets. And those that are
short on cash won't need more in total than the $110
billion to $135 billion the Treasury still has from the
original $700 billion in TARP funds that Congress gave the
Bush Administration for bank rescues last fall. "There is a
reassurance in clarity," Geithner said at a briefing on
Thursday.

Eat your heart out, Prof. Harold Hill.

Those revelations were greeted on Capitol Hill with stunned
silence by Republicans and barely suppressed joy by
Democrats. "I believe that many of [the banks] will be able
to meet their capital needs, without further government
capital," Federal Reserve Chairman Ben Bernanke told the
Joint Economic Committee on Wednesday. Further, he said,
Administration officials "don't think there's a near-term
need" for more money from Congress. "That would be
terrific!" chirped the committee's Democratic chair,
Carolyn Maloney, of New York.

Ah...but if it were only true...and that simple. But as with most things
of this nature, the reality is quite different. But trying to bring back
the good old days with credit and the printing press does not always
work out. As Germany found out in the 1920s.

 But it's not all of it. Facts are important too, and some
think Geithner and the government are fudging them. Nouriel
Roubini, the hard-headed pessimist who foresaw the
financial crisis, wrote Tuesday in the Wall Street Journal
that the overall positive message of the stress tests
"would be good news if it were credible," but it's not. He
points to the recent IMF report that estimated $2.7
trillion in U.S. loan and security losses, and his own
estimate of $3.6 trillion for the same potential losses.
"The financial system is currently near insolvency," he
concluded. Bernanke disputes the numbers, saying banks have
"taken significant write-downs, they have reserves and
there are substantial earning capacities." But Roubini is
not alone in questioning whether the government used
appropriately pessimistic assumptions in conducting the
stress tests, especially as the financial sector faces a
potential flood of commercial real estate losses that could
mirror the residential market's recent woes.

Still, even if the numbers are based more on positive
thinking than cold hard facts, it's tough not to be
impressed by what Geithner and company have accomplished.
In addition to the boost in public confidence, they've
apparently figured out how to get the banks to support
Geithner's other iffy program, the one designed to rid
banks of toxic assets. Until now, banks have resisted
selling the highly securitized, largely illiquid toxic
assets, arguing they're worth more than the current
fire-sale prices being offered on the open market. But
taking them off the banks' books is key to restarting
lending, and the stress tests' mandate to boost capital may
be enough to get the process started.

The Treasury has given the troubled banks until June 8 to
decide how to raise that capital, and until November to do
so. Just by chance, early June is right around the time the
Treasury expects big-time fund managers to have come up
with the $500 million they need to leverage government
subsidies to purchase the toxic assets on the cheap.

All of which goes to show that whatever his faults, Tim
Geithner knows how to game America's confidence in the
banking system. But does that mean the stress tests
themselves are one big confidence game? Perhaps. The
playwright David Mamet said such scams get their name not
from the confidence the victim places in the con man, but
the trust the con man pretends to place in the victim to
elicit trust in return. By that standard, Geithner may be
the most effective con man around, for better and for
worse.

Ah yes...the old shell game and he learned it from the the masters.
The self same people who brought us this disaster. Any one for a
slightly used B flat flugelhorn ?


C

Apparently is not working out  as expected.

Consumer borrowing plunged in March at the
fastest pace in 18 years as Americans put away
their credit cards and hoarded cash amid the
worst recession in decades.

The Federal Reserve said Thursday that consumer
borrowing dropped 5.2 percent in March, the
biggest decline since an 8.1 percent fall in
December 1990.

In dollar terms, consumer borrowing plunged by
$11.1 billion. That's the largest dollar amount
on records dating to 1943, and more than three
times the $3.5 billion drop that economists
expected.

The borrowing category that includes credit cards
dropped 6.8 percent in March after a 12.1 percent
plunge in February. The category that includes
auto loans fell 4.2 percent after rising by 1.2
percent in February.

The Commerce Department last week said that the
personal savings rate edged up to 4.2 percent in
March, marking the first time in a decade that
the savings rate has been above 4 percent for
three straight months.

Imagine that. People saving instead of borrowing. What a concept.
I can't imagine why. Maybe....Fool me once, shame on you. Fool
me twice, shame on me.

I know this may seem a little far fetched but could it be that the
general public has finally woken up to the fact that the party is
over. That the government is much more interested in the welfare
of the denizens of Wall Street than them. Or maybe the sh*t has not
quite hit the fan yet and they better be ready for when it does.


C

And here they are. 





C

Here is an interesting article on how our educational systems is
at least partially responsible for our current state of affares.

Perhaps you were like me as a child. You loved learning. You'd
spend hours and hours studying something of interest. Yet, you
hated school. It was unutterably boring. It was rigid. It
stifled original thought, even punished for it. Give any
answer other than the prescribed one, even if you had clearly
demonstrated a full understanding of the subject, and you were
given a bad grade.

Disrupt the class - meaning that you questioned the
teacher - and you could expect time in detention, even
more grinding boredom. Standing out from your classmates made
you "different". You'd be ostracized by the other kids. The
school itself supported such behavior. It sponsored things
like cheerleading, another term for a popularity contest,
where the kids from the right families were nearly always
elected.

To survive through it all, you either had to get out - a
daunting prospect for a child - or stuff your creativity,
your spark. You probably thought of yourself as an oddball.
After all, it was you who were different from all the others.
It probably never dawned on you that most of the other kids
were just as miserable - and just as fearful of speaking
out. It probably never dawned on you that many of your
teachers felt much the same way. That is, they did if they
really wanted to teach.

I know of this myself. I was a C & D student all through school but
learned more about radio and electronics that nearly anyone my age
and some older.

What are Americans good at? Buying, of course. Having the
latest and greatest of. . .well, of anything and everything,
as long as the media tell them they should have it. It's how
Americans measure themselves, how they determine their
success. Who cares if someone can carry on a good conversation
about the state of the world? Who even wants to listen? It's
so depressing. Let's talk about the cool super-fast car that
Joe just bought or the fancy house Jim and Mary are getting
for no money down!

Go into any supermarket and look at what's surrounding the
checkout aisles. Publications-if you can call them
that-elling about the clothing of some super model or
the antics of an actor or actress, anything but factors that
will affect them, like how the planet is heating up because of
overuse of natural resources, overpopulation, overconsumption,
burning fossil fuels, and all the myriad of other things that
really matter. Pseudo-food, filled with petroleum products,
sugar, sweeteners as bad as or worse than sugar, colorings to
make them appealing, hydrolyzed this and phosphylated
that-virtually nothing that nourishes. And the junk
sells!

The only beneficiaries of this purchasing rampage are those
who own and run corporations. The masses of people work in
them at soul-numbing, mind and health destroying jobs. Running
on treadmills at just the proper, accepted speed. Wearing just
the right fashion and makeup. Commuting in latest style
vehicles, purchased for that reason. Returning to the
overpriced homes that they'll never have the time to enjoy
just so they can say they live in them, since they'll almost
never actually own them. Doing jobs that promote the
destruction of their environment and their health for these
dubious benefits. Unable to think that there might be another
way.

As John Gatto wrote in Harper's, "There were vast fortunes to
be made, after all, in an economy based on mass production and
organized to favor the large corporation rather than the small
business or the family farm. But mass production required mass
consumption, and at the turn of the twentieth century most
Americans considered it both unnatural and unwise to buy
things they didn't actually need."

And we wonder how the banksters could get away with all their sleazy
shenanigans. Not only did we let them do it, our educational system -
with the encouragement of their parents - taught them how and applauded
their success.  We have met the enemy and he is US, with a phony Ivy
League degree.

C

Senator Bernie Sanders web site has quite a few.


C

And Sibel Edmonds  explains in this editorial.  Is it any wonder
congress currently rates only just above a used Yugo salesman ?

C

I just got through reading this piece on the decline and fall of the middle class
in this country and the writer makes some very good points.

     What is ending is not only a time when the
American auto industry was a colossus in the
domestic and world economies. What is ending is
any genuine chance that the majority of American
workers-most of whom do not acquire the pedigrees
we've come to consider as the gate passes to
personal prosperity-can attain anything resembling
the middle-class life the generation entering
adulthood during World War II achieved.

    The consequences for this country are grave.
Yet somehow, we do not consider this an emergency.
It is only treated as a crisis now because the
rest of the economy is in crisis. Wall Street and
big banks, despite being at the root of the
turmoil, still manage to rule.

    The cool calculation with which President
Barack Obama signaled that he was willing to let
automakers go bankrupt but would not contemplate
the failure of big financial institutions is one
marker of his first 100 days in office. If he
manages to rescue the auto industry, the callous
double standard will be forgotten and forgiven.

Not sure about forgotten and forgiven. We will see come the next
election. But I digress.

    What should not be forgiven is the three
decades of public and political indifference about
those whose life paths and prospects do not
include college. Despite decades of national
effort to make higher education more accessible,
only about a quarter of Americans 25 and older now
hold a bachelor's degree, according to the Census
Bureau.

    The work force breaks down into four segments,
roughly evenly divided, according to Harry J.
Holzer, a Georgetown University public policy
professor who specializes in studying the labor
pool. A quarter drop out of high school, another
fourth earn high school diplomas, another fourth
get some further education but not a college
degree, and the top quarter earn bachelor's
degrees or higher.

    "We have really let go of career and technical
education in the United States," says Holzer, a
former chief economist at the U.S. Labor
Department. "There are millions of kids on their
way to prison who could have been electricians and
plumbers. We all wrapped our heads around this
idea that only if you go to college and get a B.A.
are you a success. As a society, we demeaned
people who worked with their hands."

This is so true. An attitude held by those with some sort
of a degree who call themselves progressive. Totally snotty
but they themselves would be hard pressed to have to build
or wire or plumb anything. Even in their own fields there are
those who I would rank as low grade morons.

    Republicans took the view that anyone can make
it if only he tries and ignored the tsunami of
global economic change that drowned old
assumptions and became a riptide pulling down the
wages and job prospects of average workers.
Democrats, particularly liberals, denied the
reality that some students aren't equipped
for or interested in college, and came to view
vocational education as a form of unacceptable
"tracking" with racial implications.

Not just that but the occupations themselves have disappeared
and those that still exist pay horribly.

    So what, now, is the policy - of either
party-toward the three-quarters of Americans who
remain unlikely to get a four-year college degree?

    For as long as I can remember, politicians
have decried the decline of American manufacturing
and the good jobs that went with it. In the 1980s,
Democrats warned that we must not become "a nation
of hamburger flippers." The lament more recently
has taken form as a complaint about the Wal-Mart
economy, a place where the giant discounter
thrives in part because it helps to drive wages
down - and in turn, low-wage workers become a
growing pool of customers.

    Holzer advocates direct policies to link
skills training with economic sectors that are
expected to grow - such as health care - to create
a pool of what he calls "middle skilled" workers.
Though this is being done in some states, no
integrated, national policy that would effectively
accomplish this match has been developed.

And here is the crux of the problem. As a society we have
constantly demeaned those who aspire to skills other than
some hoity-toidy degree and real world experience. And pay
those who do go into the technical or skilled areas a pittance.
So fewer and fewer do. Don't believe me ?? Try to find a good
mechanic these days.

C