Podcasts - Global Economy Monitor by Franteractive

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WEEKLY PODCAST (9th August 2009)

In this podcast, we delve into the following data, axioms, proofs, and analysis…

1. July Unemployment Data: 247,000 jobs were lost for the month. Whereas at the end of June, the official unemployment was at 9.5%, and at the end of July, the official rate improved to 9.4%! In any case, this recession has taken its toll on the American jobs lost: employment has fallen by 6.7 million (including 2 million jobs lost in factories) since December 2007. Our analysis on this and on JEC (Joine Economic Committee) Chairwoman Congresswoman Carolyn Maloney’s optimistic response to the BLS (Bureau of Labor Statistics) jobs report? More Americans are unemployed, month-over-month, and not headed to work. Also, if you include the underemployed, real-unemployment is closer to 25%. In other words, one in four Americans is out of work or almost out of work!

2. What do the revenue projections of CISCO Systems tell us? CAP EX is reducing; in other words, the I component in the macroeconomic equation C + I + G = GDP is going down quarter over quarter. This will not help the GDP to come back up? So what will? Listen to our Action Item directed to the Obama Administration towards the end of the podcast for the right answers to this difficult question.

3.Personalities who made the headlines this week included the good (Sonia Sotomayer), and the bad (Hank Paulson). While it is refreshing that a great Judge like Sotomayer ascended to the US Supreme Court, what is chilling is the fact that ex-Goldman CEO Hank Paulson talked to Goldman CEO Lloyd Finklestein at least 24 times in the thick of the financial crisis, after getting an ethics waiver. We emphasize the recent grilling of Hank Paulson by Congressman Cliff Stearns. In particular why did Paulson not recuse himself when Lehman, a Goldman rival was let go bankrupt, and when Merrill, another Goldman rival was allowed to be gobbled up by BofA? This looks like solid conflict of interest! We at Franconomics.com think that a Pecora II investigation can help all Americans, send guilty bankers to jail, and prevent another asset bubble in the very near future.

4. Economics is all about economic self-interest, right? Some self-interest is required to survive, and thrive. But should self-interest be the one driver that makes the economic world go round? Well, we posit an axiom in this podcast: WHERE THERE IS A LOT OF SELF-INTEREST, CORRUPTION SETS IN. We prove the axiom by using economist Simon Johnson as the guinea pig. Mr. Johnson recommended in a blog this week that Geithner would make a good federal reserve chairman and a good regulator. Please! We give six or seven reasons why Secretary Geithner should never become the Federal Reserve Chairman, and prove the axiom by speculating that did a Guru like Simon Johnson make this blunder, for he sits in Washington DC even though he teaches in MIT Sloan (from where the podcaster earned his MBA degree); because now he wants a powerful position in the Obama administration?

The podcast provides much needed action items for the following stake holders:

1. The Obama Administration: You can’t blame businesses for laying people off and not investing in CAP EX. Please boost the G portion by investing in core infrastructure such as more efficient Internet Super-Highways side by side our Interstates (i.e., hard-wired PCs or computers connected to the Internet as public service Internet booths) in the rest areas nationwide. This will also create massive employment in the construction sector. To generate cash for these ventures, instead of taxing the over-burdened American taxpayer, taxing the Goldman Bonus of 2007 and 2008 at 100% and pulling it back into the U.S. treasury could be a good starting point.

2. American Taxpayers (Disclaimer: RECOMMENDATION IS NOT ADVICE): The Government is Full of Wall-Street Insiders, who will try their best to jack up the stock market. But markets do not go up, up, up. The go Up, Down; Up and Down. We recommend that you sell your stock into the rallies, specially those on which you are making money. (Note: the podcaster personally does not sell stocks that are making losses, he holds on.) Also, for non-retirement accounts, where you have to pay capital gains tax, selling stock after holding them for a while ensures you pay lower taxes. For those amongst you facing foreclosures, extended unemployment etc., do lobby with your congressman to get the Pecora II started as soon as possible, so that bankers and other financial criminals who put you in this mess are brought to justice ASAP.

3. Congress: Keep the jack-hammer on the Hank Paulsons and the Libby’s of the world. Please bring on the Pecora II ASAP, and please make it a hard grind on the people who participated in the 20 trillion dollar value drain, as in robbing the poor, gullible, foreclosed, unemployed or under-employed American. As a first step, please put Goldman under the comp czar’s scrutiny by passing legislature, and please consider pulling back the Goldman bonus paid in 2007 and 2008 by taxing it at 100%.

The podcast ends by elaborating the Thought of the Day theme on the home page of Franconomics.com on how to help the homeless titled WOULD YOU LIKE MILK WITH THAT? Please tune in to enjoy…

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WEEKLY PODCAST (2nd August 2009)

In this podcast for the week ending August 2nd, we formally announce that Sam Mishra's forthcoming book coming soon as a Paperback this Christmas is titled The 20 Trillion Dollar Value Drain - How Goldman and Other Banks Robbed America, and Why They Will Do it Again. We also analyze the following:

1. The government announced that the second quarter this year shrank at an annualized rate of 1%, quarter over quarter. The GDP declines for the last four quarters have been -2.7%, -5.4%, -6.4%, and -1.0% annualized, respectively. Since the Great Depression, the economy has declined for four consecutive quarters FOR THE FIRST TIME! The revised data show that the economy grew only at 0.4% in 2008, and not the originally estimated 1.0%. We analyze all this data and provide our opinion on where the American economy is headed...

2. Bank of America settled with SEC by paying a fine of only $33 million over bonus payments to Merill bankers in 2008. Merill pocketed billions from AIG, and BofA pocketed billions of TARP from the government to acquire Merill Lynch. The Merill bankers digested more than $5 billion in bonus payments, and all the administration got back was $33 million in fines! We look under the hood for such abysmal negotiation on the part of the administration.

3. Home price data compared for June of 2009 vis-a-vis June of 2008: Mortgage delinquencies are 10 to 13% nationwide. Media home prices are down year over year nationwide. home resales are down in 3 regions and up in the west (good news, new home sales are down in 3 regions and up only in the mid-west. New homw construction is down. Our analysis: does not matter what Larry Summers says, we are still in the middle of a recession...

4. Geither hints at future tax raises to take care of the balloning federal budget deficit of 1 to 2 trillion dollars. Our take: let's pull back the Goldman and Merill bonus of 2007 and 2008 as a starting point.

The podcast also includes the following action items for the various stake holders:

1. Congress: Focus on the American Consumer. How will he be able to spend and boost the C component of the basic macro-economic equation GDP = C + I + G, if he keeps losing money on his home investment, or if he gets foreclosed, or if he loses his job. Support issues like Cash for Clunkers, and to get the federal budget balanced, please demand that all the Goldman and Merrill bonus payments of 2008 and 2007 be pulled back by taxing it at 100%.

2. To the Bankers and their planted reps in all levels of administration: Pecora II is coming, so change radically now. Stop looting the main street folks in the name of crony capitalism. You will not be able to financially engineer fraudulent derivative schemes which allow for coming with begging bowls to bail you out. Also, in the short run, stop jacking up interest rates on credit cards, maintenance fees on bank accounts, etc. Everyone knows what you guys are doing.

3. American Consumers (DISCLAIMER: RECOMMENDATION IS NOT ADVICE, PLEASE READ OUR TERMS OF SERVICE): Educate yourself, and don’t jump in with both feet to buy that new home simply because the government is giving a tax benefit of 8K USD. A mortgage is a loan, and nationwide, delinquencies are as high as 10% at least, and 12% on the average. That works out to 1 in 8 homes is mortgage delinquent, as in, they can’t pay the mortgage. And the government is not going to bail you out, like it bailed out Goldman, or Citigroup, of BofA. The Wall Street bankers, because of their greed, have placed you in this mess (delinquent mortgages and falling home prices). Soo, please ask your favorite politician what he or she is doing in terms of pulling the Goldman and Merill bonus of 2008 by taxing it at 100%, and preventing Goldman executives from consuming multi-million dollar bonus hand-outs again this year, as they have recently announced.

The podcast ends with an advice on how to help the homeless: Give them milk and cookies, and not money. They will use the money to buy alcohol. But if you give them milk and cookies, it will nourish their body and soul in a positive way.

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WEEKLY PODCAST (for the week ending July 26, 2009)

In this 16 minute long podcast, we analyze the following:

1. DOW breaks past 9000: What does it mean for the economy, and what can an individual investor do?

2. Goldman bought back its warrants by paying the full market price (and interest). But who are they trying to fool? Not the American public! A persuasive case (also partly done in the ACTION ITEMS below) for CONGRESS to pull back the 2008 Goldman bonus for violating the PCA - Prompt Corrective Action Law.

3. Analysis of the Humphrey-Hawkings semi-annual testimony by Ben Bernanke. Congressman Grayson grills him on the half-a-trillion dollar lending to foreign banks. Of course it is part of the $620 billion in expansion of SWAP lines that we cover in the 14 trillion dollar (now 20 trillion) Value Drain or looting of the American taxpayer by the fradulent rich bankers, which we have covered in sufficient detail in the Value Drain-II article (please read it up from the home-page of Franconomics.com, if you have not done so). Also, Bernanke discussed in his article titled "Fed's Exit Strategy" in the Wall Street Journal, and mentioned it to Congress / Senator Chris Dodd that the TALF program will come to the rescue of insufficient credit on Main Street. FRANCONOMICS.COM take? See below under action items...

The podcast ends with a summary of action items for the main stake holders:

1. American Investors (DISCLAIMER: RECOMMENDATION IS NOT ADVICE, PLEASE READ OUR TERMS OF SERVICE): Consider taking profit on your long-term investments by selling into the rallies. Dow is at 9000. But the real economy sucks: unemployment is going up, not down; foreclosures are going up, not down; and house prices are plummeting, not climbing.

2. Congress: Pull back the Goldman Bonus by taxing the 2008 Bonus at 100%, these bankers colluded with Paulson to subvert the PCA - Promt Corrective Action Law, and paid themselves massive bonus. Also, if you allow Goldman to pay its executives big bonus in 2009, no one will want to work for Citi. When the financial system was bailed out as one black box, the black box included Goldman, JP Morgan, BofA, Citigroup. So, how come Goldman is dodging the compensation Czar.

3. Federal Reserve: Don't compete with the U.S. Treasury in terms of sucking up to the banks. Consider lending to the small businesses directly; don't try to fill up the black holes in the balance sheets of banks with scams like TALF; LET THESE BANKS FAIL!”

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WEEKLY PODCAST (for the week ending July 19, 2009)

The crux of the podcast is an analysis of Dr. Summers‚Äô vision as he doled it out in a Progress Report / speech at the Peterson Institute on July 17th: The rebuilt American economy must be more export-oriented and less consumption-oriented, more environmentally-oriented and less fossil-energy-oriented, more bio- and software-engineering-oriented and less financial-engineering-oriented, more middle-class-oriented and less oriented to income growth that disproportionately favors a very small share of the population. We delve into the hypocrisy manifesting in the last three of the four phrases here, and ignorance of basic macroeconomics in the first (which we solve as an action item below); we analyze each of these phrases in detail... We also touch upon the following points, and provide our analysis, and what it means for the American and Global Economy:

1. JP Morgan‚Äôs Blow-out Earnings Report: Is the Government subverting the Anti-Trust laws by allowing these already "too big to fail" banks get even bigger - - - for JPM gobbled up Washington Mutual and before that, Bear Stearns. Can JP Morgan and Goldman pose systemic risks again?

2. Why did the pPiP plan fail? Our theory: Probably the ‚Äústreet‚Äù heard that Goldman was shorting the toxic waste. Nobel Laureate Krugman reported in his July 14 article titled The Joy of Sachs that Goldman Sachs made money both ways here, initially by peddling the MBSs, and when these toxic derivatives got way high in valuation because they hyped it up, Goldman short-sold those before they crashed, reaping huge profts again. So why would anyone buy it up, when Goldman was shorting it, in spite of the extra-ordinary pPiP leverage?

3. Choicest words thrown at Paulson in his recent congressional testimony: Congressman Frank: If you had come up here with Mr. Bernanke and said, ‚ÄòI have got a plan, I want to take $800 billion in taxpayer money and I want to give it to my pals in the nine biggest banks of America,‚Äô how many votes do you think you would have got? Congresswoman Kaptur, in reference to her constituencies facing foreclosures and eviction: You ought to come visit Ohio and see the results of your handiwork.

The podcast ends with a summary of the analyses, as in action items:

1. Congress: Thanks for roughing up Hank Paulson. Now, repeal the Gramm-Leach-Bliley Act. And don't wait for Pecora II to end. Do it now.

2. MIT Sloan and other b-schools: Instead of peddling ‚Äúfinancial engineering‚Äù courses, give more courses focused on ‚Äúlaw‚Äù and ‚Äúethics,‚Äùif you want to create better leaders.

3. Summers & Co: Please understand that GDP = C + I + G. Unless you focus on C, as in the American consumer, which constitutes 70% of the GDP, you have no chances of coming out of the ‚Äúabyss.‚Äù

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WEEKLY PODCAST (for the week ending July 12)

This 12 minute long podcast covers the following issues:

1. Goldman Sucks: As per an ex-treasury secretary, the current treasury secretary Mr. Geithner works for Goldman Sachs. No wonder the bank’s “risk management” skills are way above competition, as per a BofA analyst.

2. TARP COP’s July Oversight Report: taxpayers lost $10 million by letting 11 small banks buy back their warrants at 66% of market value.

3. Fiscal Budget Deficit: Now at $1 trillion and will climb to $1.81 trillion by Fiscal year end.

4. Foreclosures and Home Prices: Between the 1st quarter of 2008 and 1st quarter of 2009, foreclosures jumped 36%. Nationally, home prices keep falling, and have fallen by 33% since 2006. Housing affordability is increasing, as a consequence.

5. pPiP plan: It has failed?

6. G8 Summit: France supports China in undermining the US Dollar and says that “the current international system is outdated.”

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WEEKLY PODCAST (for the week ending July 5, 2009)

This is an aggressive podcast, which gently begins with a definition of Value Drain vis-a-vis Value Chain analysis, for what is being analyzed week after week in these podcasts is the 20 trillion dollar Value Drain from main street to wall street! In short, the podcast touches upon the following key points:

1. In response to the recently published Rolling Stone article by Matt Taibbi titled "The Great American Bubble Machine", Goldman asserted: “ We are painfully conscious of the importance in being a force for good.” So, if being a force for good gives them pain, by their own admission, being a force for evil must give them pleasure. Since it is logical that every living thing (including humans and bankers) seeks pleasure and avoids pain, Goldman has tacitly admitted that they are a force for evil.

2. When Goldman claims that it does not profit from bubbles, they lie. For the dot-com IPO bubble which started with the Netscape IPO in 1995 helped Goldman go IPO at the peak of that bubble in 1999.

3. Application of the Law of Prompt Corrective Action: When Goldman paid its employees good cash bonus in 2007 and became undercapitalized by 22.9 billion dollars (for it took $12.9 billion dollars from AIG and $10 billion from the Paulson TARP program), it broke the law. So, the minimum the current administration can do is to pull back the Goldman bonus of 2007 and 2008 by taxing it at 100%. Also, did Hank Paulson break the law when instead of taking undercapitalized Goldman (and Citi) into receivership, he bailed out AIG (so that Goldman could be saved by pocketing $12.9 billion from the AIG bailout of $85 billion) and subsequently created the 700 billion dollar TARP account (from which Goldman received $10 billion)?

4. Almost 500 thousand jobs were cut in June 2009, as per the Department of Labor. This brought the official unemployment rate to 9.5%, a 26 year high. That means a real full-time unemployment of 15%. In other words, for every 17 Americans who are working, 3 are not!

The podcast ends with a definition of HAPPINESS, which the podcaster experienced in the form of four black boys who had a dollar each for a burrito, but no money to order a coke, so they all ordered a glass of water each along with the burrito. Nevertheless, the happiness they shared while eating that one dollar burrito eludes the morally corrupt greedy Wall-Street bankers, for these greedy Friedmenites / law-breaking Goldmenites are not happy with the million dollar bonus of yester years, and want more of that this year (2009).

Truth, even if it hurts, needs to be told. Hence this somewhat unusual podcast, even by the strict analytical standards of FRANCONOMICS.COM. Hope you enjoy it, and act upon it by printing out this podcast transcript (and relevant transcripts of prior podcasts) and mailing these to your congressman / senator. Thank you.

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WEEKLY PODCAST (for the week ending June 28, 2009)

1. Moral Hazard of letting Goldman pay back the 10 billion TARP money: Citi and the others will use the excuse to hike up the base pay (to go past the bonus constraints) with impunity, citing concerns that Goldman and other firms not under the scrutiny of the Compensation Czar will lure away their best and brightest (what best and brightest run a business into the ground and need almost 50 billion dollars to keep the business afloat) unless they do so!

2. Why the real unemployment is at least 15%? Because the 9.5% only includes those who are drawing unemployment, it does not include those who are past that, those who are dejected and not looking for jobs any more, those who are in jail, those who are homeless, and those who would like to work but are forced to be “home-makers.”

3. Are the BRIC (Brazil, Russia, India, China) economies really decoupled from the West? If so, how will they pull us out of the ditch we are in? Also, if they are really decoupled, why do those stock markets go down 40 to 50% when Dow goes down 40%? Is it prudent to invest in BRIC stocks?

4. Dr Bernanke’s recent thrashing at the hands of lawmakers during his Congressional testimony regarding BOA's acquisition of Merril Lynch: It feels good to know that some bankers (as in the CEO of BOA) got thrashed by the Fed, but did Dr. Bernanke and other Federal Reserve executives prop up the worse bankers (as in the employees of Merrill Lynch) in the process?

We analyze all the above in enough detail to keep you entertained throughout this 20 minute long podcast.

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WEEKLY PODCAST (for the week ending June 21, 2009)

This weekly podcast for the week ending June 21, 2009, explores the downward economic spiral millions of Americans are going through because of increasing foreclosures, joblessness, homelessness, and friends-and-family-lessness. It does so in this episode by delving into the following:

1. Campaign finance (discussed in depth in the last podcast): It is a social evil, so what can you do? Don’t contribute to it, for the politician will take your 25 dollars, but since the banks have contributed more, will favor the banker. Proof? The Gramm-Leach-Bliley Act of 1999, of course.

2. Analysis of the 101 page Financial Regulatory Reform document: The report is a summary of why the financial meltdown occurred. It promises future benefits to consumers through a Consumer Finance Protection Agency (CFPA); but the Indy-Macs of the world are bankrupt and gone. What could have been a better boost to “C” or Consumer spending in the macroeconomic equation GDP = C + I + G? The report also talks about a new Financial Services Oversight Council, which will be chaired by the Treasury Secretary. But the current secretary has a track record of supporting banks like Goldman. Is the needed Will lacking in the current administration to do meaningful reform?

When the intent is not right, how can the results be? When the dust settles, the bankers will gather again and say: Let’s make some more money. They will appoint a few hundred lawyers to find loop-holes in the laws, so that they can bypass the regulations, if at all there will be any. If the past is any indication, the treasury secretary will join the party, just as Rubin and Summers have done in the past. Where is the fundamental change that President Obama promised the people? Listen to the podcast, which is less than seventeen minutes long…

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WEEKLY PODCAST (for the week ending June 14, 2009)

This weekly podcast for the week ending June 14, 2009, delves into the following:

1. Goldman returned the $10 billion from TARP, but when will the bank return the $12.9 billion from the AIG handout? The bank escapes the authority of the newly appointed compensation czar, and is on course to pay nice bonus to executives who mis-managed the business...the government is giving up $1.8 billion in interest payments from these banks? So what did we the people gained by helping banks like Goldman? Foreclosed homes making us sleep in our cars? 20% of us digging into our retirement savings to get by? While our tax dollars go towards the payment of the Goldman bonus?

2. Campaign Finance Reform needed: In 1999, members of Congress who supported the Gramm-Leach-Bliley Act received twice as much money from commercial banks, investment banks, and insurance companies as those who opposed the measure. This act de-regulated the banks, which were being regulated by the Glass Steagall act since the great depression. Result? In 10 years, we have the great recession! As long as the financial institutions keep placing the politicians in power, the main street will keep buring.

3. The neighborhood stabilization program is worth tapping into for buying foreclosed properties. However, home prices are declining, and the government will not bail you out if you falter in your mortgage payments. Tread with caution; buying foreclosures also means shouldering the underlying hidden debts attached to the property!

4. At 8800, Dow Jones is 37% down from its all time highs, and 37% up from its 52 week lows of 6440. Before getting excited about the stock markets, let's research whether in the long run, bonds have out-performed stocks (we will bring the results of this research in a future podcast).

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WEEKLY PODCAST (for the Week ending June 7, 2009)

This weekly podcast for the week ending June 7, 2009, touches upon the following:

1. GM Bankruptcy: At $91 billion in assets when going bankrupt, GM was way behind Lehman Brothers, which, while going bankrupt, had assets worth $651 billion! Hummer sold to Chinese machinery maker. GM Michigan jobs decimated 90% in last 30 years.

2. Analysis of the 100 day report from the US Treasury: Taking $27,000 per person and giving back only $65/month? And the rest goes to Bankers' bonus payments etc.? Is giving each American a $27,000 bailout a better option instead, for it will bring up the C in the macroeconomic equation GDP = C+I+G? Also, will the $8000 tax credit for first-time home-buyer a fail-safe plan, like the TARP bailed-out Wall-Street Banks' escapades?

3. Unemployment is now at 9.5%, foreclosures keep rising (1 in 73 homes), and another 1.5 million to join the ranks of the homeless in the next 2 years. So what does uncle Ben mean when he says that the economy is improving?

4. Introducing APT (Arbitrage Pricing Theory), and application thereof to two job-loss scenarios: software jobs going to India and auto manufacturing jobs (the latest being Hummer from the bankrupt GM) going to China. In which scenario can the administration do something meaningful?

5. Defining the greedy parasites / hypocrites who set policy as toxic oxymorons or "toxy-morons" and appealing to their higher natures not to loot the working poor and not to give the loot away to rich bankers.

We the People are suffering, but the policymakers in Washington believe that looting from the working-poor and giving to the rich-bankers is the way to improve the economy! Listen to the podcast for the details...

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