August/2010 - Miami, FL Economic indicators are still pointing toward the resurgence of the great recession.
Some said we were never out of a recession in the first place, though many who believed we were are now accepting that we may be headed back in that direction.
Many judgment errors have facilitated this return, mostly as a consequence of government regulation.
Among them the imposition of HR (Frank-Dodd) bill 4173.
The bill will further tighten an already stingy lending system and will undoubtedly force banks to raise their fees on all the wrong customers.
The fees will be concentrated primarily in checking and savings accounts and force many who keep a loan balance in addition to checking and savings accounts to move their money elsewhere.
This migration out of larger banks will initially affect nearly 10 million accounts nationwide.
Those who do not move their accounts to smaller, local community banks will move their cash to prepaid debit cards, check cashing services or into lock-safes within their homes.
Already, nearly 40 million Americans do not keep their money in a bank; HR bill 4173 will definitely keep them away.
Roughly translated into money, we are talking about $120 billion never submitted to banks and never will be submitted as a result of government "safeguards" against the banking sector.
How will this adversely affect our economy and potentially facilitate the resurgence of the great recession? Take this example and scale it to the second, third and fourth powers.
If 10 million bank customers pull their money out of banks and make them for all purposes invisible to bank actuaries, you take nearly $30,000,000,000 out of the economy at one time, further drying up liquidity and potentially causing a crisis in monetary policy.
This will result in not only a second recession, but a chaotic and toxic fiscal environment to boot.
Frank-Dodd Bill HR 4173 and Resurgence Without getting political in an economic article, it remains incumbent upon me to identify some of the less talked about items included in the new bill as I am of the belief that these inserts, among other less conspicuous ones, will further cripple our recovery.
Principal among them is a measure to make it easier for unions, environmental groups and other activist organizations that hold shares in organizations to put their representatives on the boards of directors of every corporation in the United States.
The so-called "proxy access" provision, which activist groups say they will use to try to improve oversight of corporate financial practices, has provoked a backlash from various groups both on Wall Street and those not on Wall Street.
"This legislation includes provisions totally unrelated to the financial crisis which may disrupt Americas fragile economic recovery and "lead to increasing political battles in the boardrooms," said John J.
Castellani, President of a political roundtable.
Additionally, as stated in the Frank-Dodd bill itself the bill would create more than 20 "offices of minority and women inclusion" at the Treasury, Federal Reserve and other government agencies, to ensure they employ more women and minorities and grant more federal contracts to more women and minority-owned businesses.
The minorities and women hired would have direct say on "...
all matters of agency relating to diversity in management, employment and business activities, including the coordination of technical assistance in accordance with such standards and requirements as the Director of the Office shall establish.
" I am neither anti-woman, nor am I anti-minority, though the scope of these 20 offices are obviously limited as many in the majority will be excluded from these discussions and decisions.
Still billions of tax dollars that the US does not have will most likely be misallocated in these offices.
This will further slow our recovery and may cause a crisis in monetary policy.
Fading Consumer Confidence and Resurgence Reports released Tuesday July 27th showed U.
S.
consumer confidence sank in July to its lowest since February amid job market worries that are underscoring the slow path to economic recovery, and rising home prices in May without justification or with signs of a sustained rebound.
In fact consumer confidence fell to 50.
4 from 54.
3 in June and below forecasts of 51 for the month.
Also consider that with the failure of a fading stimulus package, the lack of growth in the private sector, two quarters of slowed GDP growth dropping 1.
3% since March, a slowing of car sales, factories keeping inventories low for fear of further reduction in liquidity, and new home sales at their second lowest level since 1963, there is nothing tangible on the horizon that we can point to that will keep us from re-entering a recessionary situation.
Clearly without radical change aimed at revitalizing most of American businesses, mainly small and medium sized, our country will continue to plummet down into the death spiral and may follow such examples as Spain, France, Portugal, and Greece.
Indeed over the past 18 years we have been witness to radical changes that eventually weakened our thriving economy while further radical changes over the past 18 months, I fear, have now crippled our own recovery.
Small and medium business owners need to remain steadfast and follow more traditional methods of business practice by limiting exposure to liability, stockpiling cash, giving individuals more responsibilities and making alliances with overseas partners to hedge further losses incurred on behalf of repeated flawed attempts to make our economy "safer.
" All the efforts to "safeguard" us have actually exposed us to the greatest dangers since the great depression.
Some said we were never out of a recession in the first place, though many who believed we were are now accepting that we may be headed back in that direction.
Many judgment errors have facilitated this return, mostly as a consequence of government regulation.
Among them the imposition of HR (Frank-Dodd) bill 4173.
The bill will further tighten an already stingy lending system and will undoubtedly force banks to raise their fees on all the wrong customers.
The fees will be concentrated primarily in checking and savings accounts and force many who keep a loan balance in addition to checking and savings accounts to move their money elsewhere.
This migration out of larger banks will initially affect nearly 10 million accounts nationwide.
Those who do not move their accounts to smaller, local community banks will move their cash to prepaid debit cards, check cashing services or into lock-safes within their homes.
Already, nearly 40 million Americans do not keep their money in a bank; HR bill 4173 will definitely keep them away.
Roughly translated into money, we are talking about $120 billion never submitted to banks and never will be submitted as a result of government "safeguards" against the banking sector.
How will this adversely affect our economy and potentially facilitate the resurgence of the great recession? Take this example and scale it to the second, third and fourth powers.
If 10 million bank customers pull their money out of banks and make them for all purposes invisible to bank actuaries, you take nearly $30,000,000,000 out of the economy at one time, further drying up liquidity and potentially causing a crisis in monetary policy.
This will result in not only a second recession, but a chaotic and toxic fiscal environment to boot.
Frank-Dodd Bill HR 4173 and Resurgence Without getting political in an economic article, it remains incumbent upon me to identify some of the less talked about items included in the new bill as I am of the belief that these inserts, among other less conspicuous ones, will further cripple our recovery.
Principal among them is a measure to make it easier for unions, environmental groups and other activist organizations that hold shares in organizations to put their representatives on the boards of directors of every corporation in the United States.
The so-called "proxy access" provision, which activist groups say they will use to try to improve oversight of corporate financial practices, has provoked a backlash from various groups both on Wall Street and those not on Wall Street.
"This legislation includes provisions totally unrelated to the financial crisis which may disrupt Americas fragile economic recovery and "lead to increasing political battles in the boardrooms," said John J.
Castellani, President of a political roundtable.
Additionally, as stated in the Frank-Dodd bill itself the bill would create more than 20 "offices of minority and women inclusion" at the Treasury, Federal Reserve and other government agencies, to ensure they employ more women and minorities and grant more federal contracts to more women and minority-owned businesses.
The minorities and women hired would have direct say on "...
all matters of agency relating to diversity in management, employment and business activities, including the coordination of technical assistance in accordance with such standards and requirements as the Director of the Office shall establish.
" I am neither anti-woman, nor am I anti-minority, though the scope of these 20 offices are obviously limited as many in the majority will be excluded from these discussions and decisions.
Still billions of tax dollars that the US does not have will most likely be misallocated in these offices.
This will further slow our recovery and may cause a crisis in monetary policy.
Fading Consumer Confidence and Resurgence Reports released Tuesday July 27th showed U.
S.
consumer confidence sank in July to its lowest since February amid job market worries that are underscoring the slow path to economic recovery, and rising home prices in May without justification or with signs of a sustained rebound.
In fact consumer confidence fell to 50.
4 from 54.
3 in June and below forecasts of 51 for the month.
Also consider that with the failure of a fading stimulus package, the lack of growth in the private sector, two quarters of slowed GDP growth dropping 1.
3% since March, a slowing of car sales, factories keeping inventories low for fear of further reduction in liquidity, and new home sales at their second lowest level since 1963, there is nothing tangible on the horizon that we can point to that will keep us from re-entering a recessionary situation.
Clearly without radical change aimed at revitalizing most of American businesses, mainly small and medium sized, our country will continue to plummet down into the death spiral and may follow such examples as Spain, France, Portugal, and Greece.
Indeed over the past 18 years we have been witness to radical changes that eventually weakened our thriving economy while further radical changes over the past 18 months, I fear, have now crippled our own recovery.
Small and medium business owners need to remain steadfast and follow more traditional methods of business practice by limiting exposure to liability, stockpiling cash, giving individuals more responsibilities and making alliances with overseas partners to hedge further losses incurred on behalf of repeated flawed attempts to make our economy "safer.
" All the efforts to "safeguard" us have actually exposed us to the greatest dangers since the great depression.
Source...