What you state is indeed superficially correct and on target, but it doesn't take into account that the banks are in reality still lending, only doing it at the upper stratum of multinationals and Wall Street.

All those securitizations, and layer upon layer of securitizations, is still taking place. Just note all the new credit derivatives (Pinnacle Notes, AIG's securitized notes repayment to the gov't.) and the latest in derivatives, mortality derivatives, mortality-linked securities, etc., along with the big push in the carbon derivatives generation.

Also, as I previously mentioned in that private equity book review (The Buyout of America), banksters are giving leveraged loans to private equity firms to buy back their leveraged loans.

They are simply not lending to Main Street, but still greatly increasing the oncoming Uncertainty...what they continue to refer to as Risk.

Bob,

I haven't spent enough time with the data to give you an intelligent answer on jobs, but I think the problem is one of scale and the culture. On scale, the money going into jobs is just too small. Companies have found that they can get by with more machines, fewer workers, and can outsource cheaper. The Fed has no problem creating huge amounts of money for its constituency, and the net result is arbitrage. The Treasury, on the other hand, has to ask Congress for the money -- and it is not enough to address the problem, and not enough targeted toward jobs. As Yogi Berra said, "We're lost, but we're moving faster." Besides, Treasury seems to think its constituency is Wall Street and the banks.

As for the culture, people are learning not to trust the system. People with wealth gone and mortgages they can't pay see a broken model as banks dither over mortgage modification. I was intrigued by what one of the Atlanta Fed's John Robertson said about declining labor force participation among young (college age) people. Not a good sign, IMO.
Frank T.

or saved. story here.

Ok you guys, who wants to take this one? I frankly do not believe it.

Now I believe true Keynesian can create jobs....

God, I just do not want to touch this, who wants to prove/disprove it, maybe someone who supported heavily Obama during the election (I didn't like anyone)....

They were chronic even before the crisis. Now we have the Baby Boomers retiring.
While the deficits will come down in a relative sense, I don't expect the deficits to fall in a historic sense.

Fed has not really been 'printing money'. Where is the growth in the money supply? What has been happening is the excess reserves have shot through the roof but that doesn't mean that inflation is right around the corner. Unless, of course, we believe what Milton Friedman said (which I don't).

Just because excess reserves are extremely high doesn't mean that banks will lend money that will drive spending and that will result in inflation. Right now banks are not lending so money generation that leads to inflation is not happening.

This is what I think:

Actually, the Fed's tool is price, not quantity, of reserves. When the crisis hit, the Fed should have opened its discount window to lend reserves without limit, to all comers, and without collateral. That is how you stop a run. The Fed's dallying and dillying about worsened the liquidity crisis, but it eventually provided the reserves that the financial institutions wanted to hold and its balance sheet eventually grew to $2 trillion. Banks are still worried about counterparty risk and possible runs, so they remain willing to hold massive amounts of reserves. When they decide risks have declined, they will begin to reduce reserve holdings. This will not require any special practices by the Fed. Banks will repay their loans from the Fed, using reserves. This automatically reduces reserves and the size of the Fed's balance sheet. They will offer undesired reserves in the overnight, fed funds market. Since many banks will be trying to unload reserves at the same time, this will put downward pressure on the fed funds rate. The Fed will then offer to sell assets it is holding to mop up the excess reserves (banks will use reserves to buy assets the Fed offers). This will also reduce reserves and the size of the Fed's balance sheet. All of this will happen automatically, following the same procedures the Fed has always followed. All it needs to do is to watch the fed funds rate, and when it falls below target the Fed will drain reserves to relieve the downward pressure on overnight rates.

The banks will do what PIMCO did - they will buy treasuries or maybe MBS. But only time will tell who is right.

RebelCapitalist.com - Financial Information for the Rest of Us.

..is the largest American intel contractor: NSA, CIA, DIA, FBI, and CIFA.

Meritocracy? We haven't had even a semblance of any meritocracy for over thirty years or more, now...assuming anything like it ever existed.

The important thing is that SAIC is supposed to have coded most of those "security patches" for the voting machine companies. Evidently, those actually work!

Stay calm, though. Stephen Friedman, Goldman Sachs guy who left the NY Fed due to the "appearance" of insider trading, is still on several of Obama's intelligence oversight boards.

And still with In-Q-Tel. And still with the Center for American Security. And still with.....

SAIC?? Isn't that where the TIA is supposed to be managed?

Over the last fifteen years I, along with others, have tried in vain to get some sort of viable numbers on this, but they are purposively not recording any.

Back in the earlier part of this new century, the GAO (or was it the CRS?) made a half-hearted attempt to gather some stats, but was hamstrung by having no legal power in the matter.

The asked the Fortune 500 for a voluntary response in the matter, and so very few actually responded (it was in the single percentage digits) and their insipid response couldn't even be verified!

One can occasionally gather referential data; tracking company layoffs, then attempting to track the corporate movement of those jobs to other sites, such as offshore, by examining their local newspapers. But it is highly spotty and unreliable at best. (Not to mention expensive and time-consuming.)

I'm fairly shocked CNBC would bother to call it...so I agree, if CNBC admits this is bad news....it's really bad news!

I love Ponzi Economy and this is even in the "real production economy".

I just talked to a head hunter (I don't use these people) but was asking just how these Indian body shops manage to get these huge contracts and this includes also other contracts, royally screw them up, cost more and yet get more contracts! I mean it's like nobody is even cranking the numbers to show the costs do no add up, never mind they didn't deliver on the contract.

Same is true with U.S. companies who also offshore outsourced a lot of their staff (Accenture, IBM, HP, etc.)...they are not delivering.

I just saw a 60 minutes special and no surprise here that the great "virtual fence" S. of the border of course doesn't work at all, there is billions of dollars spent. Then the FBI paid $1.5 billion dollars for a SAIC contract to meld their databases....not a single line of usable code.

There are tons of these stories, so how are these companies, body shops etc. getting these contracts, both private and government?

It's like the real production economy, there too, it's flimflam sham man with large financial decisions going on fictional management results.

That's really not good when it comes to advanced production and so on.

This was a $12 trillion fiasco and who has been held accountability for it?!! Nobody. Even Fuld (Lehman Bros.) walked away with millions in pre-bankruptcy bonuses.

RebelCapitalist.com - Financial Information for the Rest of Us.