Friday, January 21, 2011

MEREDITH WHITNEY/ "CBS 60 MINUTES" ... on America's $3 TRILLION "Municipal Bond's" Market ... and ... "How to Privatize America PT.1"

What partly inspired this is in my last posting about China, where I had a lil concern about the municipal bond market's. But this isnt because strictly the analysis of Meredith Whitney only, but I did catch this video below the week of Christmas 2010, which also gave me concern, and the reason why, is the reason I done so much whining and bellyaching in the beginning of this journal over former Treasury Secretary Hank "Bank of Hank" Paulson and the bailout money he was trying to get locked in before the last administration (Bush/ Cheney) left office, and Hank's Xmas Drive for the Needy , which they succeeded at of course. I was at that time whining also, that we should first give the State of California at least $20 billion in stimulus ... and I know how insane that must have sounded ... I mean .... why bail out a state like California who clearly has went on an over spending spree for year's, and would probably waste it? (more of the fiscal conservative mind or response) ... but I was looking at how importante the State of California is to our nation, and figured they learned also a hard lesson, and would use it wisely from their experience ( alot more wisely than investment banker's would offshore with 5X time's that amount ), and I still feel that way till this day. But also Wall St sure didnt like this analysis of Whitney either to say the least, calling it basically rubbish. But I do know that Whitney has been fairly accurate on some warning's she gave as well, maybe not pin point accuracy, but enough to consider looking at certain issue's before they arise and/ or take shape. And of course alot of Wall St folk's are going to hate any talk like her's, as much as a person standing by a gambling table on the Vegas Strip who would tell people that they are mostly pissing in the wind, and that the game's are designed in the house's favour (you can bet that security will escort them from the casino).

You see .... what upset me most about the bailout money ... was because it was only going offshore to make good only with those who hold our debt's such as China, Japan, and U.K. ... which I understand is fair to those countries, however ... it wasnt America that created this credit/ borrowing debt with those nation's ... it was solely investment banker's and associate's, that let hedge fund's run wild off of it, and insurer's who couldnt cover thing's like when the housing market burst. You had people gambling and trading off paper that didnt have any capital yet in existence ... the thing was so deep and a mess actually after studying what the Hell went down, bottom line. So when this bailout came up, I was pissed basically, despite covering the asses of those who made bad move's in the market's, because this same administration (Bush/ Cheney) already had used all the nation's surplus, which also mostly went offshore, at least $20 billion of shrink wrapped cash till this day is unaccounted for that went to Iraq, when the bank's were inoperable because of the war, then the SSI fund's were also being dipped into for emergency wartime need's ... so I was totally against what was going on in all of that.

Basically what concerned me was ... if we distribute all our collateral/ revenue offshore, what happen's if we have a domestic crisis here financially? Where do we get money from to cover it, and who if any country, will we have to get to bail us out? or will they even do that to begin with? I just had a Hell of alot of question's. I wasnt totally against bailout's ... as a matter of fact I did fully support funding General Motors US for instance ... and reason was because their China Division of GM was booming in production and sales, but wouldnt give any of the fund's to the GM America Division, although it was the same company ownership. So this issue here below was a concern to me, because of how many folk's portfolio's and retirement's in this nation are full of these type investment's, that their portfolio management investor's prepared for them, and of course if they lose money, they still have to pay the management fee's, because they hired those investment planner's to handle their retirement investment's, because most folk's dont have time or even some knowledge on what's best to get into. I didnt want to see another hit like this basically, after so many took such hard hit's here in USA during the 2008 recession ... some losing up to 50% of their retirement account's/ investment's ... I personally know a few folk's who lost 10's of thousand's myself. Plus also I see this slippery move that now is going to be pushing a privatization of Social Security in the next couple year's, which will be top's on the Republican's agenda once they figure out a package that dont present it as what it truely is, if they can figure out a way to do it. So again ... I have many question's only. I dont look at Whitney's talk as doom and gloom talk, but talk to at least bring some awareness and to inspire discussion, planning, and problem solving is all.

What Whitney talk's about below though isnt just about the retirement's and investment's that I talk about, but also a look at many cut's, from service's, to employment, and a list that will create itself if any of this fail's with it's own ripple effect. Of course Whitney is correct that folk's only pay atencion to these thing's basically when it hit's home. You sure as Hell wont hear many politician's talking about this either. But it is something that folk's should be aware of, especially those who invest in these bond market's, that your told are the "safest" investment's these day's (which of course, they are NOT) cause those who make a living on managing your portfolio's/ investment's are not gonna mention a peep of these possibilities either ... it put's skepticism in folk's investment confidence into their market's is why. Then maybe this is all paranoia, and not a thing will happen, and everything is on an uphill swing (which I still dont feel much confidence in, still 3 year's later looking at the current math) ... however ... I would look closely at what you invest in these day's anywayz ... and listening to Whitney doesnt hurt a thing. You see, whether Whitney is correct or incorrect in her analysis, it is importante to openly discuss these issue's right now, before they even materialize as a precautionary measure. In other word's ... have some plan's in place, as you would for a fire drill, or any other emergency or catastrophic issue that could come up. But we avoid these thing's in our culture and government even, usually for political reason's or correctness, it become's difficult to talk about. But by pushing these issue's to our rep's, it force's them to deal with it, especially when it come's time for them to take vote's on what money/ fund's go where.

But another reason why I am not confident that we will get bailed out of any of this, is for one, this will create a massive political gridlock, and nothing will get agreed on ... also the whole agenda of the "right wing" (their already banking that they will have full control after 2012) in this country for instance is to try to privatize as much of everything that they can, being that "if" push came to shove and we couldnt get money to our state's, the state's would be almost forced to privatize everything that was government or public, from education down the line. And of course for your mega investor sector's and Wall St, investment banker's, etc ... that would be a dream come true, because they would then control everything through the market's only. Resulting as well ... as the people having nothing left, but to depend on them for a lifeforce, without no more voice left at all in government. People would have to drop their wage's, retirement's, and many other benefit's just to even have enough for the necessities, at least for million's and million's of working class citizen's ... and it would effect even those in higher wage categories. Or you would have to have a historical tax increase to just stay above water.

Which is also the other twist to this, like I was talking about in an earlier posting, that the way for instance that you can definitely privatize social security would be to make it fail, then it would have to go to private investment's. The same here applies, if so many government service's were to fail, with a population like USA, what other way would you fund these service's? My point is ... when all of our revenue's, surplus, were soaked and taken out of the country, it left us with nothing, meaning that the government cant possibly function or take care of what it need's, to what capacity we need. Now that would be a Hell of a conspiracy story .... that we were purposely milked not just to pay off foreign debt's, but to get the money and to cause government service's to fail so that the private sector could take it all over. After all ... ... what do conservative's of today say they see as the answer to America's problem's (Tea Party or any other)? Exactly ... to reduce government and let the flow of business take care of everything, and what they term as free market, except ... it really isnt free market, but more of a monopoly of sort, get my drift?

***** UPDATE 12 March 2012- CNN/ MONEY: Meredith Whitney was right

To my suprise in this video, the frame at 3:26 of the view of Chicago, is the neighbourhood that I lived in, seeing the old apartment building I lived in, and the L-Train I used to catch daily to go to work down in the Loop! :)

State Budgets: Day of Reckoning ... Thanx to CBSNEWSONLINE


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