Posted on 11/11/2009 11:15:15 AM PST by blam
Continuing Deflation In The “Real Economy”
By Bill Bonner
11/10/09 Montevideo, Uruguay – Financiers have the world’s financial system in a “doom loop,” says the Bank of England. We’ve thought so ourselves. The bankers take money from the government and use it to speculate, not to lend. “Excess” reserves are at a record high as consumer credit continues to decline.
Most people find it both galling and absurd to see the bankers getting $10 million bonuses while there is 10% unemployment.
Here at The Daily Reckoning, it’s just a matter of curiosity. You’d think there would be more wage competition to drive down bankers’ compensation. Why doesn’t Goldman go to an unemployment line and make an offer…
“Any of you guys want to earn a $9 million bonus?”
Surely there would be a few takers. And Goldman would save $1 million.
Of course, we’re joking. Banking is not a trade you can pick up just like that. Borrowing from the Fed at 1%…lending back to the Treasury at 4%…hey, it must take a few days of training to be able to turn around money like that.
On the other hand, there are periods when speculating for a big bank is a breeze. Over the last 7 months, for example, there was almost no way fed-financed traders could lose money.
They borrowed dollars – the new carry-trade funding currency – at next to zero interest. It didn’t matter what they did with it…they could trade it for Brazilian reals…or buy stocks in Singapore…or buy gold. Almost everything went up against the dollar.
[snip]
“Banking is not a trade you can pick up just like that.”
Really? The scheming, corrupt Banksters of today sure make it look easy!!
Hmmm, Deflation in the “Real” Economy, I believe that is an oxymoron.
Hmmm, Deflation in the “Real” Economy, I believe that is an oxymoron.
Hmmm, Deflation in the “Real” Economy, I believe that is an oxymoron.
In "Rich Dad....Poor Dad" a book that I hated....his big schtick was that you can't be a wage earner and get rich....you have to speculate, and borrow, and borrow and speculate to get ahead...that may all be true....
but the millions upon millions that basically do the grunt work for this economy shouldn't be punished for it.....
maybe not all of us grow up hoping to scheme our way into a billion bucks...maybe most of us just wanted a decent life with family....and we're getting creamed for it...
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