Ours is a consumer driven economy. Household spending accounts for about 70% of our GDP. Graph:
Since 1999, American households have been spending more money than they have. We are running our own deficit spending programs. Isn’t it beyond obvious that when the credit runs dry, GDP will collapse? See charts and analysis of household deficit spending:householddeficit.pdf
Categories: Economy · GDP · consumer spending · consumption · contraction · credit · credit crunch · current account deficit · deflation · downturn · economic outlook · economy 2008 · macroeconomics
It’s no secret anymore that the monolines really don’t have the wherewithal to properly “insure” credit derivatives such as CDOs. And the first hand evidence is piling in that the monolines apparently knew all along what they were doing — and kept right on “insuring” CDOs and other junky derivatives. Why? Profit, of course. Where did all that money go? Wherever it went, it’s high time for someone to go and get it back.
My idea: let the ratings companies (Fitch, Standard & Poors, et al.) who bestowed AAA ratings to this mess. Perhaps they should disgorge all the revenue they collected as a result. Seems as if they were unjustly enriched at the expense of …. all of us?
So - who spilled the beans? Well, for one, former ACA Capital honcho (now literally put out to pasture?) as quoted at length in Bloomberg:
“Municipal bond insurers such as MBIA Inc. and Ambac Financial Group Inc. had a good thing going. For years, they earned some of the highest profit margins in any industry — by writing coverage for securities sold by states and cities to build roads, schools and firehouses.
Categories: 401(k) · CDO · benefits funding · collateral · credit derivatives · deleveraging · derivatives · downgrade · fund closure · historial prices · investment bankers · macroeconomics · mark to market · market crash · markets · monolines · munis · pension funding · pensions · rating agencies · subprime · suing monolines
Update: What About the Munis? → good article: http://wallstreetexaminer.com/blogs/winter/?p=1348
Is the current credit crisis and resulting loss of asset valuation having an impact on pensions and healthcare benefits?
Yes - see two preliminary reports below.
pew.pdf ← The Pew Center on the States released a report in December 2007 highlighting the perilous footing of the states’ funding of their long-term retiree benefits (both pension and nonpension). Click through to full report.
Categories: Economy · benefits funding · credit crunch · economic forecast · economic outlook · economic stimulus · economy 2008 · fiscal burden · macroeconomics · monolines · munis · pension funding · rating agencies · real estate · subprime
Tagged: state pension funds
by Danny Schechter
Categories: Economy · Fed · bush economic plan · economic forecast · economic outlook · economic stimulus · economy 2008 · federal reserve · fiscal stimulus · macroeconomics · stimulus package · tax breaks · tax cuts
Robert A. Kezelis in Capitol Hill Blue
Tax breaks? No, no, no! a thousand times, NO!
Categories: Economy · bush economic plan · economic outlook · economy 2008 · fiscal stimulus · macroeconomics · tax breaks · tax cuts
Categories: Economy · Housing crisis · credit crunch · economic forecast · economic outlook · economy 2008 · macroeconomics · markets
