Economy

As this article by Michael Hudson (former
Wall Street economist and current professor) makes clear, in the US
more than $1 trillion in official money has been applied to the
‘situation.’

Once again, we find what seems to be a more
honest appraisal of the potential impact of this crisis from foreign
sources; this time from Germany.

Lots of articles have recently come out about
food shortages, riots, and rapidly climbing prices. Last August the
Federal Reserve and European Central Bank started lowering interest
rates, pouring liquidity into the world marketplaces, and trading
prized treasuries for near-worthless debt. Food riots and central bank
maneuvers are more closely linked than you might suspect.

The US government says that food inflation is
up 4% over the past year. The Farm Bureau, which simply measures prices
and does not statistically manipulate prices via substitution or
hedonic adjustments, measured an 8% gain in just the last three months.

Our money system requires that ever larger
amounts of new credit be issued or else the banking system becomes
really unhappy. Consumers with credit cards is one form of credit,
mortgages another, but the a really, really huge piece of the credit
pie is the corporate debt markets. This article points out that a
massive shortfall in this arena has happened.

Are we in a recession, heading towards one, or
not? The stock market seems unconcerned with the Dow rising 3.2%,
S&P up 4.2%, and the Nasdaq 4.9%. This collection of news items
will help you sort this out.

On the one hand, the stock market continues
to climb against all odds….on the other hand, record numbers of
Americans are bankrupt, in foreclosure, receiving food stamps, or all
three.

The Fed cut rates yesterday, although not as
much as ‘expected’ (read: ‘hoped’) by the ever hopeful stock selling
industry. Nonetheless stocks rocketed higher by a huge amount. Did this
make sense? Not if these data mean anything.

Horrified traders soon grasped the reality: the Fed had been forced to
throw out four decades of monetary history in order to support Bear
Stearns. Its justification was not that Bear was too big but that it
was too "interconnected" to be allowed to fail with the markets in such
as fragile state.This is a fascinating tale of just how
serious the Bear Stearns event was and the political and financial
machinery that was brought to the table to sculpt a solution.