Global Economy

[acharya]

American capitalism has died a sudden death in 2008. Just God knows what kind of economic system we have today in the United States.

Today the US government controls 90 percent of the mortgage market in the US. The US government also controls a large chunk of the banking system in the US. The US government was forced to nationalize the largest insurance company in the United States.

The estimated U.S. GDP for 2009 is estimated to be around $ 13.5 trillion dollars.

In April 2008 I started a thread at the Elite Trader Economic Forum - The US economy and the real GDP – And in that thread I explain why my friend and I believe that after you adjust the US government fairy tale figure the real GDP of the US economy might be on the range of US$ 9 to US$ 10 trillion – the difference between these figures are all the meaningless adjustments that they make to inflate the GDP figures calculated by the US government to show a better performance and a larger economy than the reality.

Let’s be conservative and after we estimate the real GDP of the US economy for 2009 after the number is adjusted for the meaningless information that they add to the GDP figures on a regular basis, and on top of that we take in consideration the economic and financial implosion that we had in the US economy because of a deep recession plus massive deleveraging with record high foreclosures, exploding unemployment, massive financial losses of all kinds – we are lucky if the US GDP still in the range of $ 9 to $ 10 trillion dollars in 2009.

As I mentioned above the US government controls a very large portion of the financial area of the US economy. And the US government budget for 2010 is estimated to be around $ 3.5 trillion dollars – That’s a very large percentage of the United States GDP.

It is just a matter of time for Zombie banks such as Citigroup, and Bank of America, plus the US auto industry to be fully nationalized.

Without massive US government intervention the rest of the US economy would have spanned completely out of control in a downward spiral.

For all practical purposes today we have an artificial economy and financial system in the United States that can’t survive without massive US government intervention in the financial and other markets to keep the US economy from sinking into the abyss.

The mainstream media in the United States can’t connect the dots even to save their lives and Americans make the same old mistakes over and over again, it seems to me that they are immune from learning anything from past experiences and they make the same mistakes over and over again.

Americans learnt nothing from the prior experiences with companies such as Enron, and WorldCom to just mention a few catastrophes.

The US government is trying to do everything they can by artificial means to keep the US financial markets from falling into the Abyss.

1) They are pumping trillions of US dollars (real money and US government guarantees) to keep assets in the US artificially higher than they would be under normal free market circumstances.

2) They are changing accounting rules (mark to market) to keep massive losses from being booked into the P&L – and to keep investors who invested in banks and other financial institutions in the dark.

In December 2007 I posted the following on the Elite Trader economics forum regarding the US pension funds system:

A few years ago the Bush administration came up with a great idea about how to fix the pension system in the United States. Now talking about a complete lack of common sense that eventually it will cost trillions of US dollars and it will have a major impact in the future of retirement in the United States – some moronic people changed the rules regarding pension funds a few years ago and they started letting the pension funds invest US government insured money in hedge funds as a quick fixer up to the pension funds that were underfunded to start with.

These fools let the pension funds invest in hedge funds in the illusion that these hedge funds above average returns would save the day for the pension funds. (The people involved in that kind of rescue plan for the pension plans are a bunch of morons who will cause the pension funds to lose even more money and be even in worse shape than before.)

I will not be surprised to find out that the hedge funds lost a fortune in new pension money that were gambled in the current sub prime mess – I am saying new pension money because the pension plans lost 2 trillion dollars during the last telecom and dot.com meltdown.

I wonder how much government insured pension money has been lost by the hedge funds in the current sub prime scandal?

I used to believe that the free market and Wall Street were the best vehicles for allocating scarce resources – but today I know that all that it was just a bunch of bullshit - and all I have to do is look around and remember a few fiascos that have cost trillions of US dollars of mostly pension money that disappeared forever here in the US such as: the savings and loans debacle of the 1980’s, the telecom and dot.com meltdown of the year 2000 and the complete lack of common sense related to the latest sub prime scandal.

There is one thing I know for sure these trillions of US dollar that have melted away are moneys that millions of Americans who still are working today are counting on that money in the future as part of the pension money to survive and they think that their money have been invested in a safe place.

Millions of Americans are going to have a nasty surprise regarding their pension money in the coming years.

Wall Street lost trillions in the dot.com fiasco, then they moved on and they raided the pension system of Americans. Then they took people from around the world for a ride with the sub prime scandal. Then they moved on and took the Foreign Sovereign Investment Funds for a ride. Then Wall Street started running out of suckers to take them for a ride and in the last year Wall Street finally started setting up its next victim to milk it to the bone – the US government.

Instead of nationalizing the Zombie banks immediately and cleaning up the balance sheet of these institutions of the toxic assets over a period of time at a considerable expense for the US taxpayer the Geithner plan is going to cost the taxpayer many times over the current losses since the hedge funds, private equity firms and other bottom feeders are going to take the US government for a ride and they are going to leverage the losses many times over and the US taxpayer is going to be left holding the bag for these scoundrels.

The Geithner toxic assets plan is a plan to screw the US taxpayer to the tune of trillions of US dollars and the hedge funds, private equity firms and other bottom feeders are going to laugh all the way to the bank and they will make a ton of money at the expense of these fools who are running these US government money give way programs.

The swindlers in Wall Street set their eyes on their next victim – the US taxpayer – and in the process they managed to get the US government to give more casino chips for them to continue their game through trillions of US dollars in new US government guarantees of all kinds, massive bailouts, and a transfer of trillions of dollars of toxic assets to the balance sheet of the Federal Reserve.

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