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Posts Tagged ‘bailout’

Financial crisis humor with just a slight touch of irony.

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Americans Are Starting to Save

Americans are starting to save, so what happens to the idea that its citizens should spend more to stimulate the economy? Peter Schiff advocates saving and let failing companies go bankrupt. Some people advocate spending so that there will be more jobs. Which is right?

See what the speaker says at 5:07

I think the average American consumer understands, that we have to pull back, not borrow more, they’re saving, they want to de-leverage.

…and the government is borrowing more, and wants us to do it, no no no. The American consumer has the answer. They don’t want to do it. They understand that’s not the way to go. 

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In this clip, Yaron Brook of the Ayn Rand Institute and Peter Schiff of Euro Pacific Capital explain why the new mortgage reform bill wil hurt housing market and economy. The discussion hints at restrictive regulations in the wake of irresponsible actions of the U.S. government.

Government intervention is contrary to the principles of free market capitalism and the new proposed regulations impinge on individual rights which the essence of a free economy.

In his article: The High Cost Of Washington’s Price Manipulation Policy, Dr. Brook expounds on his view of the need to remove government intervention particularly in the mortgage and housing markets in order to allow capitalism to resume its healthy flow:

Maybe it’s time for a new approach. How about we start thinking of ways to address this crisis by getting the government out of the business of price manipulation–and let prices, from home values to interest rates, be determined by people’s free choices and the law of supply and demand?

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An interesting panel: Peter Schiff author of “Crash Proof”, Dr. Yaron Brook from the Ayn Rand Institute, Victoria Barrett associate editor for Forbes Magazine, and Gary Kaltbaum of garyk.com. The panel criticizes the actions of the U.S. government, Federal Reserve, and discusses the future of the economy.

Watch Peter Schiff plug in Ron Paul and Yaron Brook remind the audience of what should be government’s core functions with regard to individual rights under capitalism.

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The Ayn Rand Institute is an organization which provides material on the author Ayn Rand’s works and philosophy: Objectivism. Dr. Yaron Brook is part of the Ayn Rand Institute and along with his Objectivitst colleagues, a vocal critic of the U.S. government’s actions to date in response to the economic crisis.

Dr. Yaron Brook explains that the only way government can help the economy is to liberate us from “environmentalist restrictions on oil drilling and energy production”, Sarbanes-Oxley, the “semi-socialization of the health-care market”, the Federal Reserve, and “other forms of government spending”, not “stimulus packages”.

More of Dr. Brown’s thoughts in this interesting article:  Stop Blaming Capitalism For Government Failures

This is just the latest example of a pattern that has been going on since the rise of capitalism: capitalism is blamed for the ills of government intervention–and then even more government intervention is proposed as the cure. The Great Depression? Despite massive evidence that the Federal Reserve’s and other government policies were responsible for the crash and the inability of the economy to recover, it was laissez-faire that was blamed. Consequently, in the aftermath, the government’s power over the economy was not curtailed but dramatically expanded. Or what about the energy crisis of the 1970s? Despite compelling evidence that it was brought on by monetary inflation exacerbated by the abandonment of the remnants of the gold standard, and made worse by prices controls, “greedy” oil companies were blamed. The prescribed “solution” was for the government to exert even more control.

Visit the Ayn Rand Institute here.

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Out of all the videos of Peter Schiff, this set as of now seems to be the most informative for me. The videos show how Peter Schiff figured out the idea of the financial crisis in the U.S. several years ago. He also explains what he thinks the U.S. government will do and what they should do. 

Right now as I’m writing this, I’m listening half way through the video, goodness, this guy is so specific. He should run for office. 

I have talked with a number of people in the banking economy and have gotten different opinions on a variety of issues. 

1. Should a recesssion actually be embraced as opposed to be fixed so that the economy will not shrink. Peter Schiff explains that one should have a recession in order to have bubbles dissappear and have a real economy, as opposed to  a fake economy. 

2. Should bailouts actually be given? Peter Schiff is against bailouts, he wants the businesses to fail, even at the expense of thousands of people losing jobs. 

3. Exactly what are bailouts?  Taxpayers will definitely pay for bailouts through their taxes, but when a company is bailed out, will the same management run the company after the bailout? When a company is not a bailout and it fails, exactly what will happen to the company, will it be up for purchase or what?

4. The United States is supposedely capitalistic. Are bailouts against capitalism?

5. Peter Schiff has predicted the housing bubble and its crash. Peter Schiff has also predicted a rise of gold and a crash of the dollar which currently isn’t happening. He claims that the dollar is currently going up due to deleveraging. In short, americans and american businesses are selling their assets abroad and of course getting foreign currencies for it. After this they will replace their foreign currencies with dollars. This purchase of dollars is raising the price of dollars. Once the foreign assets have been sold, and the foreign currencies exchanged to american dollars, the dollar will start to crash.

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citibankJust a couple of days after I heard that rumor on the Philippine operation of Citibank, today’s financial newswires are outlining the unfavorable situation of Citigroup.

The Financial Times, Bloomberg, and Reuters articles today are writing that Citi’s top brass are mulling “options” for their business following the dramatic slide of Citi shares in recent days. Serious actions reportedly being considered by management include further job cuts, potential mergers, and fire sale of assets.

The likelihood of a government bailout by the US was one of the items mentioned by the news, as Reuters writes:

Citigroup “will get bailed out, and that’s another unfortunate strain on the U.S. government,” said Saj Karim, an investment adviser at Cannacord Capital in Waterloo, Ontario.

News of Citigroup’s woes is simply the most recent in a series of events which include the bailout request by the US Big 3 automakers (GM, Ford, and Chrysler) and the bailout of large financial institutions such as AIG in the wake of the financial crisis following the burst of the housing and mortgage bubble.

I personally wonder how many more popular names will get dragged into the news as the US economic recession gets underway. Really very interesting times.

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In these times of crisis, there’s an ever growing risk of making snap judgements based on present concerns without regard for longer term ramifications.

It’s only been two months (since September) that Congress debated and passed the original bailout plan proposed by US Treasury Paulson and Fed Chairman Bernanke. In this segment from Charlie Rose, Rep. Barney Frank expounds on the criticism of the bailout plan and its implications.

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Just yesterday, an ABC News article blasted the CEOs of the Big 3 automakers, GM, Ford, and Chrysler, for flying in private jets to Washington to ask for a government bailout. This was considered the height of hypocrisy:

“This is a slap in the face of taxpayers,” said Tom Schatz, President of Citizens Against Government Waste. “To come to Washington on a corporate jet, and asking for a hand out is outrageous.”

Seems like flying in a private jet is an easy bait for criticism. In the global warming and climate change sphere, environmental critics have blasted green lobbyist Al Gore’s carbon footprint which includes among other things: flying around in a private jet.

Private Jets Magazine listed a number of celebrities who rack up as carbon footprint hypocrites, all in meager defense of private jets:

At this point, you may be feeling that your use or possession of a private jet will leave you in the cold amongst your environmentally responsible friends.  However, you can always point to the following celebrities who no doubt cut a bigger carbon swath through the environment than you:

What is it about private jets that draw such bad rap? Is it the outrageous cost–to the point of decadence? Left Coast mentions it “a gross display of self indulgence of flying around the world in a personally chartered jet”. Hip-hop artist, P. Diddy’s cost cutting involved the ditching of his private jet.

Lesson: Before you get philosophical, fly commercial.

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Like the story of Chrysler in the 70s, Nelson Schwartz’s article on the New York Times is an appropriate history lesson for these times:

PARIS — A faltering auto giant whose brands are synonymous with the open road. Hundreds of thousands of unionized workers with powerful political backers. An urgent plea for the government to write a virtual blank check.

This is not the story of Ford and General Motors, but British Leyland, a car company that went through £11 billion of inflation-adjusted British taxpayer money, or $16.5 billion, in the ’70s and ’80s before going out of business. All that is left of the company now are memories of cars like the Triumph, and a painful lesson in the limited effectiveness of bailouts.

The British Leyland bailout remains the classic example of a futile government intervention. The tight cooperation between governments and automakers on the Continent has produced happier results.

The full article here.

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