Hello, I am Sam Mishra, and welcome to the weekly podcast from Franconomics.com for the week ending August 2nd, 2009. In this podcast, we shall talk about and analyze the latest GDP data, and I will be talking more about my forthcoming book on the 20 trillion dollar value drain.


While Summers declared 2 weeks back that the economy was back from the abyss, Christina Romer, the chair of the council of economic advisers to president Obama, said this <quote>
“The slowdown is certainly slowing down, but we still have a ways to go before we hit bottom; Certainly it’s going to be a long, hard slog getting out of this.” <unquote>. Of course, she was referring to the GDP shrinkage of only 1% annualized for the 2nd quarter, which is from April to June, compared the two back to back 6% annualized quarter over quarter losses for the two preceding quarters. To be more precise, the GDP declines for the last four quarters have been -2.7%,   -5.4%,   -6.4%, and now, -1.0%. These are all quarter over quarter declines, and annualized. Also, the economy's growth in 2008, according to a revision released Friday was only 0.4%, and not the previous number of 1.1%. So, the recession continues, and for the first time since the Great Depression, the economy has declined for four consecutive quarters. Also, we worry at Franconomics.com that  real personal-consumption expenditures fell 1.2% in the second quarter, after increasing 0.6% from January through March. We have already touched upon the GDP = C + I + G equation to highlight how consumer spending powers two-thirds of U.S. economic activity. In particular, sales of durable goods-big-ticket items such as large appliances and wide-screen televisions-shrunk 7.1% from April to June after expanding at a 3.9% annual rate in the three previous months. Hopefully, the C component of the GDP will get a boost this quarter, thanks to the Cash for Clunkers program of the Obama Administration. Also, if you add the export-import trade surplus to our simplified GDP = C + I + G, as in GDP = C + I + G + Exports  - Imports, you will be happy, if you are an American, to know that the decline in exports this quarter was 7% compared to 30%. But it declined, right, and that is bad! The only silver lining in this whole 1% GDP decline, which by the way, might get revised downwards (or upwards) later, was that 0.82 percentage points: government spending added 0.8% to the change in GDP in the second quarter. Which means that without this significant government input, the downward decline would have been 2%. Good for our country, but once analyze how much of this government stimulus of 787 billion helped the financial industry and how much of it helped the main street, we will let you know. For now, please be happy that the rate of increase in federal spending in the second quarter was 10.9% over the first quarter.


OK, over and above these podcasts, I am also going to bring out my second book this Christmas, which is tentatively titled “The 20 Trillion Dollar Value Drain – How Goldman and Other Banks Robbed America and Why They will do it again? Those of you have read my 14 trillion dollar value drain article already know how this money changed hands from Main Street to Wall Street. Other folks like Barry have mentioned the same $$ amount in their books like Bailout Nation. However, Bailout Nation, though a good book by a Wall Street Insider, devotes a whole chapter to AIG but does not mention that the biggest recipient from the AIG bailout was Goldman Sachs. Maybe Matt Taibbi had a point, when he mentioned that Goldman is a big bubble machine. In any case, this week BofA setted with SEC, without admitting guilt, that they had authorized that Merill set aside more than 5 billion dollars in bonus payments to its executives, while they told their stock-holders otherwise. And the settlement amount, a paltry fine of $33 million. See how main street got robbed? The Merrill Bailout cost the taxpayers many billions, and a big portion was pocketed as bonus by the greedy bankers, and we get back only 33 million dollars in fines? It should have been at least a billion dollars, don’t you think. Folks, as long as Wall Street insiders are in charge of negotiating on behalf of the government, you think the bankers will pay the big bucks back? NO! WE NEED A PECORA STYLE investigation into this, and some of the financial criminals who have caused so much havoc on main street, from forclosures to unemployment, need to be put in JAIL.