I’m serious. Mary Bottari’s article yesterday in The Huffington Post is indeed worth reading. The article, “Full Catastrophe Banking in 2011”, outlines eight potential disasters waiting to happen. You may or may not agree with her assessment of these potential disasters but I think you’ll have to agree that the potential to cause havoc with an already weak economy is real. Here is a synopsis of the eight things worrying Ms. Bottari:
1) The Demise of Bank of America WikiLeaks founder Julian Assange is promising to unleash a cache of secret documents from the troubled Bank of America (BofA). BofA is already under the gun, defending itself from multiple lawsuits demanding that the bank buy back billions worth of toxic mortgages it peddled to investors.
2) Robo-signers Wreaking Havoc With lawsuits abounding, new types of fraud in the foreclosure process are being uncovered daily, including accounting fraud, fake attorneys, destroyed promissory notes and false notarization
3) MERS Madness
In addition to outright fraud, numerous state Supreme Courts have questioned the legal standing of the Mortgage Electronic Registration or “MERS” system. MERS is listed as the mortgagee for 60% of U.S. mortgages.
4) Flash Crash Calamity The “flash crash” of May 2010 rattled the markets and caused a stunning 700 point drop in the Dow within minutes. Regulators think they know what occurred, but they are moving too slowly to put the brakes on hair-trigger trading
5) Bigger Behemoth Banks The Federal Reserve is planning to “stress test” the big banks again. The same 19 banks that underwent the first stress tests in 2009 will be tested again, but this time the Fed says it won’t release the results. Why not?
6) Foreclosure Tsunami Housing foreclosures may top nine million in 2011 and [[Goldman Sachs]] predicts the number will reach 12 million in the next few years. The result will be another significant drop in home prices in 2011 and even more families underwater.
7) Bankrupt Cities and States Meredith Whitney, a research analyst who correctly predicted the credit crunch, is now warning that over 100 American cities could go bust next year. She anticipates billions worth of municipal bond defaults and warns: “next to housing this is the single most important issue in the U.S. and certainly the biggest threat to the U.S. economy.”
8) Gas Prices above $4.00 The price of energy and other commodities shifted into high gear in late August when the Federal Reserve Chairman decided to stimulate the economy with quantitative easing. Speculators quickly began bidding up the value of asset classes like crude oil, metals and food commodities.
This is truly scary stuff and I don’t think Ms. Bottari is exaggerating the seriousness of these threats to our economy.
The first seven items reek of a soon to come call for more bailouts and more stimulus by the Fed. Not exactly what you want to hear when we are talking how to reduce the deficits. Maybe it is time that our government, in a non-partisan manner, decide to take drastic action to kick-start economic growth and job creation. Something like reducing corporate and business taxes from 35%, the highest in the world, to say 20%.
Item eight, the harm to the economy caused by speculators, is a particular sore spot with me. I’ve written about it several times. Whenever speculators get between the producers and the consumers there will be terrible distortions in the market place. I’ve often quoted that in 2008 when oil was trading at $147 per barrel, a barrel of oil was changing hands 27 times before it finally was received by the consumer ( read refinery). When this happens, prices are no longer determined by supply and demand. Here is where I often receive flak from other conservatives because I’m in favor of using the capital gains tax as a tool to reign in the speculators. I favor very high capital gains tax on assets held less than say two years and then falling rapidly to near zero for assets held for a minimum of three years.
I’ll get off my soap box now. I’d lie to hear your opinions on Ms. Bottari’s article and/or my opinions.
2 thoughts on “A Worthy Read at Huffington Post”
“Something like reducing corporate and business taxes from 35%, the highest in the world, to say 20%.”
You know if the democraps and the rinos read that, they’d literally fall down gasping for air. Cutting taxes by 1 or 2% is like asking them to tell the truth, so a 15% drop would be like throwing them into a pit of angry, hungry crocs.
“…throwing them int a pit of angry, hungry crocs”, now there is a pleasant thought.