1. Eminent economist Paul Kasriel explains how trends in consumer borrowing, spending, saving, and net investment point to a future with a likelihood of declining growth in spurious consumer expenditures. Needless to say, the extreme lack of consumer savings, spurred on and encouraged by horribly ill-conceived Federal Reserve and other Federal Government policy, has created a vacuum that needs to be filled. At this point, our economy desperately needs added savings. Unfortunately, our policy makers operate with such a backwards, short term economic philosophy, that we will likely see more inane policy ideas aimed at foolishly discouraging savings, and ignorantly stunting long-term economic growth.

2. Our good analytical friend Mish highlights troubles in the more risky “money-like” investment vehicles at a number of major investment houses. To put it simply, many funds that folks have considered to be “safe havens” have instead been wracking up risky bets. Do not fall victim to unwitting risk. Take a special look at Mish’s key terms to be on the look out for.

3. The current short term sentiment in the investment realm has turned back positive. The impetus has been the very risky and bold activity taken on the part of the Federal Reserve to rapidly back stop major investment brokerages. Aside from the fact that tax payers and US Dollar (Federal Reserve Note) holders are bearing the risk of the Fed’s activities, this action has, in fact, spurred short term relief. The problem is, this rally exists within a secular trend change that appears to be setting up for real market carnage. These types of rallies are known as “Bear Traps” sucking in unwitting investors seeking to “buy the dip”. With so many longer-term bad bets currently coming home to roost, it may not be advisable to jump back in the pool so rapidly. Risk remains elevated at the time, in spite of the short term market boost. Check out this article to help yourself stay ahead of the curve and, meanwhile, be aware of the “pump and dump”.

4. Major Wall Street banking institution Goldman Sachs is forecasting a total of $460 billion in total Wall Street losses associated with the sub-prime and ultra-leveraged credit market shake out. For this Wall Street centerpiece to project such losses is very telling and throws some cold water in the face of the short term market bounce and the perma-bulls spurred on by Federal Reserve moral-hazard-inducing activity. During the past five years, these firms have exploded in market capitalization and helped lead the overall markets higher. The problem is, they became extremely leveraged in the process. Now, many face an extremely hazardous road ahead.

5. The failings of the various markets right now are being blamed by many on free markets. However, with the massive government institutions such as the Federal Reserve System constantly acting to try to micro-engineer short and long term economic outcomes, the baked-in government action has created a situation of such deep moral hazard that it is truly impossible for any aware individual to call our current economic system “free market capitalism”. Given the actions of the current strain of “leadership” in our bloated government sector, my favorite current term is Crony Casino Corporatism (”CCC”). CCC is an economic system that is rife with injustice and batters the common folk and honest, productive, taxpaying individuals most especially, for the benefit of leveraged and connected economic and political actors. CCC is something that needs to go. The Federal Reserve System is a good place to start.

6. Again, with a full five years in Iraq, it is important to reflect on what has been spent (in lives and productive capacity) to fund such a hazily justified war, occupation, and nation building effort. The pre-eminent advocate for a foreign policy of freedom, peace, commerce and honest friendship, Ron Paul provides insight into the highly questionable effort. And remember, when unscrupulous individuals are in charge, and Crony Casino Corporatism is the modus operandi, war can be a serious racket. Wake up to the idiocy/ill intent (which is it?).

Filed under: Politics, Social Mood, Economics, Six Packs