TruthSavvy

Can a government fall after just three weeks of protests? People who were ignored when they predicted these things even a year ago look really wise today. While the future of Egypt is very uncertain, dramatic and unexpected changes have arrived.

Paul Farrell provides ten worthwhile observations in his forecast of a coming banking crisis. Essentially, he argues against buying stocks in an environment where market indices are about 70% off their lows. He sees two stock markets in America — one for the rich and another for everyone else. He explains how Wall Street skims from Main Street, rigs markets, and grasps vast winnings from socially worthless activities.

There is a lot of untapped potential for addressing the nation’s crumbling infrastructure when 9 million Americans are picking up June unemployment checks. So what’s missing? When the financial crisis hit in 2008, Wall Street’s biggest concern was a survival plan for Wall Street bettors, not Main Street jobs. Inscrutably, when the Obama administration took power it veered toward the financial intelligentsia’s “recovery” plans, not a technologically robust infrastructure overhaul vision.

Many taxpaying Americans are understandably concerned about a congressional leader’s trial balloon proposal to hike the normal Social Security retirement age to 70. (The proposal would apply to workers at least 20 years from retirement.) Millions of Americans over age 55 cannot find suitable full-time work. A higher retirement age may mean more years of trying to get by on marginal employment.

Investment markets have been unsettled of late, resulting in the worst quarter for major American stock indices since 2008. Are European G20 leaders correct in declaring there is too much debt in the world? Or is President Obama’s team right in pushing for more stimulus? Who holds the real economic insights? Those who say we must borrow our way forward to recovery?

The market’s recent plunge to new closing lows complicates the recovery picture for many market bulls, including people who believe the regulatory reforms underway will eventually cure whatever ails us. Recent market action — including the May 6 ‘Flash-Crash’ — should be unsettling to individuals who think free market mechanisms are all we need.

Congress appeared taken by surprise in October of 2008 as the financial crisis on Wall Street unfolded. Congress was in a state of shock and awe, amazed to see their policymaking implicated in the speculative bubble and its collapse. But why were they surprised? How did these legislative engineers fail to see the hazards of their fiscal deficits? Had they been pawns? Were they errantly advised? Or were they led astray by false theories and their own greed?

A contradictory investment climate exists because the Fed is feeding Wall Street with so much money. Hedge funds and investment banks don’t care that short-term Treasuries pay next to nothing. They buy Treasuries as collateral in up-leveraging speculative plays, especially in commodities. Wall Street elites expect to recoup the losses of 2008 as well as to grasp massive new profits, even if major indexes top out short of their former highs later this year or next year.

Is there a global debt bomb waiting to be detonated? If so, will it create rampant anarchy in America? Maybe in Great Britain, too? Does an apocalyptic world await? Is the coming world worth fighting for? Increasingly, people believe these questions are worth exploring, evidenced by the size and nature of audiences generated by writers like Marketwatch’s Paul Farrell.

A nation borrowing its way toward financial insolvency is not staging an economic recovery even when GDP picks up and the stock market rises. Some people talk about the “recovery of growth” like it is the ultimate goal of American life. What is this recovery that we supposedly need? It is nothing but debt facilitated GDP growth and asset inflation to create a built-in reward for leveraged mega-investors. That’s how Wall Street banks “create” the money to pay big bonuses.