OK don’t let the economic charts turn you off. This is important to understand and actually is very easy to get. This is a chart of what is referred to as M3. M3 is simply the broadest measure of money in our economy. It shows how much money is out there and available.

An increasing M3 typically accompanies inflation. However, in deflation (when prices fall), you see a declining M3. Now back in 2006, the Government said that it just was too expensive to continue publishing and measuring M3. Imagine that, the Government not doing something because of cost. Actually, I guarantee you that cost had nothing to do with it. They just didn’t want anyone to see the manipulation of the money supply by the government. So, the best solution is to not show anyone.

Fortunately, there are sites like www.shadowstats.com that does publish the calculation. The above chart is from their site.

There are various ways to interpret this chart. The bottom line is that a declining money supply is not good for an economy trying to recover.

Tags: Bob Brooks, economy, Government, M3

We have talked many times on the radio show about the real problem that ignited the financial crisis. The financial system was allowed to practice acts of greed and take advantage of an unregulated system. As a result, there are trillions of dollars of losses for which the consumer/investor paid the price.

The politicians in Washington are charged with the duty to monitor these systems to make sure that this type of thing is not occurring. They are charged to write laws that protect consumers from greed and dishonest business practices. Unfortunately, politicians do what works for them politically, which means, they don’t bite the hand that feeds them. If campaign contributions are involved, they turn the other way.

For years they turned the other way and let Wall Street, Credit card companies, and the real estate industry create an enormous mess. If you were paying attention (and they are charged to pay attention) you could see this train wreck coming a mile away.

So, the best way to reform the system is to reform Washington. You do that by taking away the conflict of interest. More needs to be done to diminish the effect of campaign contributions and lobbyists in Washington. One shouldn’t have power, influence, and special favors just because they can write a check. Well, yesterday the Supreme Court made that much easier.

A divided Supreme Court struck down limits on corporate political spending, overturning two precedents in a ruling likely to affect campaigning in the 2010 elections. The 5-4 decision rolls back at least two decades of restrictions on what unions and corporations can spend in elections and frees special interest groups to unleash a flood of advertising to sway the outcome of races close to elections.

Now it appears that corporations can spend freely to get whatever they need from their politicians. It is amazing to me that our highest court just threw gas on the fire.

The most interesting aspect of this Supreme Court decision is the timing. It sure is convenient timing since we have crucial elections in November where it appears the democrats are in trouble. Imagine that……politicians getting a little boost just days after they received the reality check that the November elections might not go their way. Who would have ever imagined that the Supreme Court might also be in the special favor game?

Tags: campaign contributions, financial crisis, lobbyists, Supreme Court

I routinely get asked questions about the Bernie Madoff scandal. How could Bernie Madoff get away with running a ponzi scheme for decades and defraud investors of billions of dollars. It was the biggest fraud in the history of the markets. Well, I start to answer that question by explaining what investors missed and how there were no checks and balances. Then I get to the part about the SEC and I have no explanation. How does the SEC not catch this fraud?

The SEC just released a statement that the staff missed numerous chances to uncover the scheme by approaching investigations “too narrowly.” They claim inexperience, delays for failure to see red flags.

That still is not a good answer. How does inexperience and approaching an investigation too “narrowly” explain the following?

In November 2005, the SEC received a full report entitled “The World’s Largest Hedge Fund is a Fraud.” This report was written by a seasoned Wall Street analyst. This report detailed every aspect of Bernie Madoff’s scheme. Yet, nothing was even done about it. This is the equivalent of receiving the smoking gun with the finger prints on it and a video of the gun being fired. You can see the report by clicking here.

I don’t buy these excuses for one minute. No one is that incompetent. Besides, the SEC would never turn down an opportunity to bust someone. Could it be that they were playing within the bounds of the good ol’ boy network and protecting their own? After all, Madoff was a huge player on Wall Street. Could the fact that a senior SEC examinations official was dating Madoff’s niece during part of that period and is now married to her?

You can be the judge. It does not make sense at all and no amount of excuses work in this case. The Government failed those investors and allowed thousands of lives to be permanently ruined. They should all be held responsible for those losses.

Tags: Analyst, Bernie Madoff, Bob Brooks, checks and balances, Deceptive Money, fraud, Government, hedge fund, investors, ponzi scheme, Prudent Money, report, SEC, Wall Street

“We are God’s partners in matters of life and death.”
President Barack Obama – August 20, 2009

A friend of mine sent me an e-mail with this quote and his reply – a new low. It came from this article. Everyday something unbelievable comes out of Washington. Let’s dissect this statement. We (you and I but mainly the Government) are partners (make decisions together – are equals) in matters (all situations) pertaining to life (killing babies) and death (determining who lives and who dies).

According to this article and many others that verify the statement, President Obama was on a phone conference with a group of rabbis yesterday morning. He was trying to get support for his healthcare plan. This is a frightening statement if he truly believes it.

Tags: Bob Brooks, death, Deceptive Money, God, Government, healthcare plan, life, President Barack Obama, Prudent Money, rabbis, Washington

I feel better knowing that our politicians will fly in the comfort that they deserve. The House of Representatives added $330 million to the defense budget to purchase 4 brand new planes for the Air Force “VIP” fleet. These planes are used to fly White House Officials and Generals around the world. They are also used by politicians on trips that need to be taken.

Of course, this is necessary. The House of Representatives state that they need to replace those “aging airplanes.” You know, the leather isn’t quite as comfortable. The planes are not as fast as the new ones. They are “last years” model. Plus, I am sure spouses (who get to fly for free) are just not as comfortable as they could be. I can completely understand the need to spend $330 million when Americans are suffering during the worst recession since the Great Depression.

Ok, politicians will be politicians and spend this type of money. However, it is the sheer arrogance of spending this type of money ($330 million – well I guess it isn’t a trillion) on a luxury item when this country is struggling. That should have every American in an uproar.

So, I have an idea. I think that the problem in Washington is simply that they are out of touch. Maybe given a dose of reality of how the common folk live might make them better lawmakers. It costs $6,100 an hour to fly these planes. How about saving taxpayers some money and make the politicians fly commercial with the rest of us peons. They can wait in long lines and endure air travel with the rest of us. They can even fly their entire entourage first class and still save money. Better yet, they can get to know the common folk while waiting in airports. After all, it is the common folk who put them in office. Surely, they are not so important that they need special air travel.

My second dose of reality is to remove all of the special medical serves that they have at their disposal 24 hours a day and make them use the healthcare program that they are ramroding down the throats of America.

Politicians need a dose of reality. The entitlement attitude is destroying this country.

Tags: Air Force, Bob Brooks, Deceptive Money, Generals, Great Depression, House of Representatives, politicians, Prudent Money, recession, taxpayers, Washington, White House Officials

What would a 21% decline in income mean to you? This is what is happening to the US Government. Tax receipts, the money that pays for all of the irresponsible spending in Washington, is down -21% from June 2008 to June 2009. Individual income tax receipts are down -22%. Corporate income taxes are down -57%. You have to go back to the Great Depression to see these types of numbers. This also takes a hit on Social Security and Medicare. Tax receipts are down for Social Security and could drop for only the second time since 1940 and Medicare is on track to drop only the third time ever.

It is estimated that Social Security is on track to run out of money in 2036. Oh good, just in time for me to collect my benefits. Of course, Medicare is in worse shape.

The federal deficit now sits at $1.8 trillion. The national debt exceeds $11 trillion and the Government wants to spend more and more money.

…and the Government wants to pass a health plan that we really cannot afford as well continue to bail-out the world. The more disturbing aspect of this news is that the media is virtually ignoring it. After all, broadcasting this news all over the front pages of web-sites and nightly news casts would not bode well for the politicians and their quest to ramrod this health plan down the throats of Americans.

Where will all of this money come from to pay for all of the socialism in this country? Well, there are two sources. First, the politicians are betting on a robust economic resurgence. Well, let’s take that one off of the table. How about the second solution? Get ready, because taxes are going up for EVERYONE. Don’t be fooled by a campaign promise to only raise taxes on Americans making over $250,000. It will take a huge tax hike on everyone to stop the bleeding in Washington.

Over the weekend, the biggest economic hitter of the Obama Administration, Treasury Secretary Tim Geithner indicated that raising taxes is still on the table. Of course, the White House rushed to do damage control on Monday suggesting that President Obama would never go back on his promise. Things happen for a reason in Washington and Geithner’s remarks were no mistake. Timothy Geithner might not be smart enough to pay his taxes however; he knows what to say and when to say it.

Tags: Bob Brooks, Deceptive Money, federal deficit, health plan, income, Income Tax, Medicare, National Debt. Government, Obama Administration, politicians, President Obama, Prudent Money, raising taxes, Social Security, Tax hike, taxes, Treasury Secretary Tim Geithner, White House

If you want to see Government efficiency at work, look no further than the “cash for Clunkers” program put together by those brilliant politicians in Washington. This is a good example of why we DON’T want politicians making decisions for us, for our future, and especially for our healthcare.

According to the AP, they will be halting the program that began just barely a week ago at midnight on Thursday. If you were going to take advantage of that offer, I hope that you made it down to the midnight sale at your local car dealership.

This program was designed to help give auto sales a boost and get some of the old gas guzzling cars off of the road by offering incentives of $3,500 to $4,500.

Through this past Wednesday, 22,782 cars have been sold and $96 million of the $1 billion allotted for the program was spent. According to dealer surveys, dealers are concerned that they might have already gone over the limit of cars allotted for the program because of the severe backlog in getting cars approved on the Government level. Imagine that…the Government putting out a program that they were ill-prepared to administrate. Maybe those in charge should have read the details of the program first.

There might not even be funding left for the deals that have already gone through the system pending approval. Congress is acting fast. They want to approve more money for the program. Now there is a surprise – Congress wants to spend more money. They are so excited to see something that they have put together work so well. “Let’s spend billions more no trillions more…give free money to the people!!” Sorry, I got a little carried away.

Of course, now they have all of these cars to dispose of which should be a concern for the EPA. Is it pure speculation or is getting rid of 250,000 cars sort of a problem?

Close your eyes and imagine the politicians making decisions on your healthcare.

38.9 billion dollars…This is the estimated revenue that the banking system will make this year in overdraft fees. Overdraft fees have become an enormous revenue producer for banks.

The Federal Deposit Insurance Corporation estimates that 81% of all banks now allow customers to exceed their account balances. Most banks in America will automatically sign you up for overdraft protection. Then, you are protected against embarrassment in the event you pull that debit card out to pay for a transaction and there is no money in the account.

What’s worse, Bank of America has a policy that they will approve up to 10 overdrafts PER DAY. Last year, their policy only allowed for 5 daily overdrafts.

In a USA Today article, a spokesperson for the American Bankers Association states that banks adopted this policy as a “convenience” for customers because they didn’t want transactions denied. A survey conducted by the Center for Responsible Lending showed the exact opposite. The CRL states “most people would prefer that the bank deny their withdrawal or purchase when they don’t have the money to pay for it.”

Investigations into bank practices also have found that banks are clearing checks and debits based on the size of the transaction rather than the order in which they arrive at the bank. A big transaction has a better chance of putting a customer into an overdraft situation then a smaller transaction. So, if that $100 transaction puts a customer into an overdraft situation, the next 2 to 3 transactions of $10 to $15 will rack up overdrafts fees ranging from $50 to $70 dollars depending on the bank’s fee schedule.

In 2004, the Check Clearing for the 21st Century act has increased the ability for banks to clear these checks and debits much more quickly as well as to practice “check and debit ordering.” Prior to the passing of this act, the process of clearing transactions took a very long time. This act speeds up the process. However, the act does not force banks to post deposits at a faster pace.

It is no wonder that since that act has passed overdraft fees have increased almost 4 times. Banks made $10 billion in overdrafts fees in 2004 compared to the estimated $38.9 billion that will be made this year.

Don’t fear because Congress is going to fix this problem. They are trying to pass new legislation to make banks stop with this abusive practice. They will spend tons of time in committees and in discussion crafting out new legislation. Basically, they will waste a lot of time while looking like they are doing something for the American voter.

To our politicians in Washington who continue to allow these abuses to occur:

Pass a new law that simply bans overdraft protection. It can be a one page act. If consumers don’t have the money, then banks shouldn’t allow the transaction. It really is that easy.

Tags: account balances, American Bankers Association, Bank of America, Banking System, banks, Bob Brooks, Center for Responsible Lending, checks, Congress, debit card, debits, Deceptive Money, Federal Deposit Insurance Corporation, legislation, money, overdraft fees, overdrafts, Prudent Money, transaction fees, USA Today

If you were to listen to the political sound bites, you would think that the politicians have done an amazing job protecting the American Consumer through the credit card legislation that was passed in May and goes into effect February 2010. Just like everything in Washington, the sound bites don’t reflect reality. Politicians have done it again. They have opted to protect those who contribute to their campaigns versus passing legislation that protects the American people.

As I have pointed out in past writings, there are a ton of loopholes in this legislation. One of the more disturbing aspects of this bill is the lack of protection for the small business owner. The bill excludes protection for any small business that has credit card debt. I have yet to see a statistic that shows the amount of credit card debt that applies to small business owners. However, I would suspect it is a large percentage.

The National Small Business Association’s latest survey (2008) states that credit cards are now the most common source of financing for America’s small-business owners. The survey showed that 44% of small-business owner identified credit cards as a source of financing that their company had used in the previous 12 months. This was more than any other source of financing.

Business credit was probably one of the easiest forms of credit to obtain prior to the debt bubble bursting. Opening up lines of credit through a credit card in the name of business was very easy. Although the business owner was personally responsible for it just like a personal credit card, the item never was reported to the credit reporting agencies and was never reflected as debt which could lower a credit score. It gave a small-business owner the ability to hide tons of debt within the business without it ever being reflected on their credit score. This enabled small-business owners to obtain large amounts of debt. Of course, the credit card companies aggressively went after small-business owners giving them ample lines of credit through credit cards.

For many credit card companies, this is a big percentage of their business. It is also a big percentage that falls outside the new laws that were designed to protect card holders. Unfortunately, a small-business owner is not considered worthy enough to be protected from the abuse of the credit card industry. Score one for the credit card companies and the politicians that protect them. I wonder what it would be like to actually own a politician?

Tags: American Consumer, bill, Bob Brooks, credit, Credit Card Companies, credit card debt, Debt, Deceptive Money, financing, legislation, National Small Business Association, politicians, Prudent Money, small business owner, Washington

New Debt Tip!

I don’t think that many Americans understand the latest attempt by the Government to garnish more control and push us closer to socialism.  This 1000+ page bill was given to the house of politicians at the last moment with the expectation that it would be read and the politicians would be ready to vote.  Of course, that is a joke.  This is another bill that was voted on and not read.  Meanwhile, American citizens are dazed and confused by the massive amounts of legislation being forced down our throats at once.  The Government gets everyone focused on healthcare and then slips a dangerous piece of legislation through the back door.  They even vote on this legislation at the end of the day on a Friday, limiting the amount of media attention.  What is even better is that this country is so absorbed in the death of Michael Jackson that no one is paying attention to anything that the Government is doing.

The cap and trade legislation is all about giving the government control to over-regulate the energy industry and solve all of the global warming problems.  According to 31,478 scientists specifically trained in “global warming”, the Government is trying to fix a problem that scientists prove we don’t even have.  It is referred to as a huge power grab for the Government.  Always remember that this is about the socialist agenda. 

Further it was reported on Fox news this morning that a 38 year veteran of the EPA wrote a report that specifically disproves the global warming problem in this country.  A supervisor shelved the report stating in an e-mail that it would do more harm than good.  Normally that report would have been submitted.  Did I go to sleep and wake up in Russia?

This cap and trade system has been tried in Europe and was a massive failure.  However, if passed in America, there are many people who will make a fortune, grant the Government massive amounts of power, and leave the American people holding the bill in the form of taxes. 

For example, Heritage Foundations estimates that the cap-and-trade Carbon Tax will:

“Destroy up to 2.5 million jobs in some years”

“Raise electric rates 90%, gasoline prices by 74%, and natural gas prices by 55% after adjusting for inflation”

“Raise a typical family’s average annual energy bill by $1,500.”

Why would the Government do something like this?  With every attempt that the Government makes to gain power, the American people become the casualty.   It is a consequence of the transition to socialism.  We are the casualties in the political power grab. 

Just imagine what this country will be like if the healthcare bill passes and this cap and trade legislation passes?  I don’t want to even think about that future for my children.

Tags: bill, Bob Brooks, capand trade system, Deceptive Money, FOX newstaxes, Government, healthcare bill, legislation, media, Prudent Money, socialism

New Stock Market Alert – Price Level Alert

OK, let’s see if the CZAR system really works.  Remember there is a CZAR appointed by our Government for everything.  The latest and maybe my personal favorite is the Salary CZAR, who dictates the executive level pay for anyone receiving money from the Government.  Mr. Salary CZAR, let’s see what you are made of.

It is reported that Citigroup plans to raise workers’ base salaries by as much as 50% this year to offset those poor small pitiful bonuses.   I do feel so sorry for those employees.  Those mean old politicians would not let them take billions of dollars in tax payer money and give bonuses at the time.  So, what is a company to do?  Give the bonuses through increased salary. 

Goldman Sachs is on pace to pay out record level bonuses.  Let me say it another way.  Goldman Sachs, former TARP recipient, who needed the money, is going to pay THE MOST money in bonuses to employees than it ever has before.  Even in the middle of a financial crisis, these people are living large.  Don’t forget that Goldman is always protected, since it seems like the prerequisite for being appointed to a cabinet position is being a former executive of Goldman.   

Nevermind that the Government has conveniently arranged it so that these banks can create profits by hiding losses in their accounting systems.  No, those problems didn’t just go away.  They are hidden for later.  If you have a problem, don’t take the loss and just hide it.  I wish that I could take my checkbook and add 7 zeros to the last number. 

It wasn’t even 3 months ago that Citigroup was on the verge of going under.  Now, they are increasing executive pay.  Oh, and through “creative accounting” they are now profitable.

Yes, these companies represent the greed and the aggressive sales and marketing that helped create our unemployment problem, our foreclosure problem, the global recession, the increase in taxes that is coming to pay for all of this, the mortgage future of the next 3 generations, etc… 

So, Mr. Salary CZAR, what gives?  If (when) Goldman Sachs needs help from the government again, will you make them give those bonuses back?  I am still having a little trouble with the Citigroup deal.  It was my understanding that our money is still funding their operations.  I want a little socialism and I want it now.  You can’t practice capitalism when it is convenient and it helps the Wall Street boys who put the politicians in office. 

There is no doubt about it!  Something stinks!!  The politicians are getting away with murder while the American people watch.  I don’t know why I am getting so bent out of shape.  I need to do my part.  I don’t mind helping to fund the lifestyles of these executives.  After all, President Obama said that we all need to sacrifice.

Tags: Bob Brooks, bonusus, citigroup, CZAR, Deceptive Money, financial crisis, Goldman Sachs, Government, increased salary, politicians, President Obama, profit, Prudent Money, Salary CZAR, TARP, Taxpayer Money, Unemployment

When the Government released their plan, which is intended to help a projected 9 million homeowners prevent foreclosure, I was very skeptical that it would actually work.  

The trend with our Government is to release all of the media sound bites concerning the solutions that they are coming up with to fix the crisis.  However, when you read the fine print of the solution, you quickly realize that there is no solution and that all of those political “sound bites” were nothing but talk.  

The politicians follow a strategy.  They always look like they are doing their job to protect and help the American people. They hold press conferences telling you all of the wonderful things that they are going to do.  Then they go so far as to pass legislation, create new programs, and sign new laws.  Unfortunately, these wonderful “solutions” are nothing more than window dressing.  The only people that they protect are the ones who donate to their political campaigns.  

All you had to do was read the fine print of the mortgage modification program to know that there was no way that they were going to help 9 million homeowners.  This plan was projected to cost 75 billion dollars.   

Law Professor Alan White came up with some interesting statistics.  His analysis shows that mortgage modification was actually down 11% in May.  If the plan was working, wouldn’t we be getting more of these plans done each month?  

In May there were 32,267 foreclosed properties and only 19,041 mortgage loans modified.

The statistics get even better.  His analysis shows that 27% of the loans modified caused the payment to increase rather than decrease.  The reason that homeowners need their loans modified in the first place is because their payments are too high.  

If you read the fine print, you will realize that there are 100,000’s of Americans that cannot even apply for the program.  Dick Morris reports a disturbing list of reasons why you cannot even qualify:  

     -You have lost your job;

     -You owe more than 5 percent above what your house is worth;

     -You are already in default;

     -You have not yet missed at least one payment;

     -Your lender does not want to participate;

     -Your mortgage is not one of the half of all mortgages insured or owned by Fannie Mae or Freddie Mac;

     -The reworked mortgage payment would come to more than 31 percent of your income;

     -Your mortgage is over $759,000;

     -The home is not your primary residence.

What is the Government’s solution?  Well like everything else that they do. They hold press conferences, tinker with numbers, and tell you what they want you to believe.  There is nothing that a good Public Relations Campaign can’t solve.

Statistics Source:  Dr. Jerome Corsi read his articles on www.worldnetdaily.com   

Tags: Bob Brooks, crisis, Deceptive Money, Dick Morris, Dr. Jerome Corsi, Foreclosure, Government, Homeowners, loans, loans modified, mortgage, mortgage modification, politicians, Prudent Money

“Never tell anybody outside the family what you’re thinking again.”

“Today I settled all family business, so don’t tell me you’re innocent, Carlo.”

- Don Corleone, The Godfather

The headlines of the Wall Street Journal get better and better.  Let’s start with the latest addition to Obama’s “family.”  The Compensation Czar.  Yes, we now have someone who is going to determine the executive pay of anyone who took money from the “family.”  Kenneth Feinberg will be in charge of setting the pay for 175 top executives.  Do you wonder why every bank and financial institution that took money from the “family” is desperately trying to give it back? 

Do you recall that Secretary Paulson forced the banks to take the bailout money last year?  They had no choice.  Do you recall that now Secretary of the Treasury Tim Geithner gets to decide who give the money back and who has to stay indebted to the “family”?  Do you see a pattern?

It gets even better.  Today the politicians will be grandstanding on Capital Hill through a line of questioning trying to determine if Bank of America CEO Ken Lewis was pressured (threatened) in any way when trying to get out of the Merrill Lynch deal.   Back in December, Mr. Lewis attempted to walk away from the Merrill deal.  The “family” didn’t like that decision.  Here are some excerpts from the Wall Street Journal Article.

During the December standoff between the big bank and top government officials, Federal Reserve Chairman Ben Bernanke dismissed the pullout threat as a “bargaining chip.”

A Dec. 21 email from Federal Reserve Bank of Richmond President Jeffrey Lacker to Fed employees said Mr. Bernanke “intends to make it even more clear” that if Bank of America kills the Merrill deal, and later needs government assistance, “management is gone.”

Mr. Lewis testified to Mr. Cuomo that the Treasury Secretary at the time, Henry Paulson, pressured him to not disclose details about the government talks, and suggested Mr. Bernanke concurred.

The hearing today was expected to determine if Mr. Lewis was pressured in any way.  He stated exactly what happened. However, we wouldn’t use the word “pressure.”  So, Congress has everything they need.  Conclusion?  Our federal regulators are acting like a bunch of thugs and using pressure to get what they want. 

However, this hearing wasn’t about the advertized intention of determining if federal officials acted appropriately.  By the line of questioning used, the politicians are trying to discredit Mr. Lewis and draw the conclusion that he knew all along the Merrill deal was not a good one.  They are grilling the one who was bullied.  Remember the family always takes care of the family.

Tags: Bank of America, Bob Brooks, Capital Hill, Deceptive Money, Don Corleone, federal regulators, financial institution, government officials, Merrill Lynch, politicians, Prudent Money, Secreatry Paulson, The Compensation CZAR, The Godfather, Treasury Secretary, Treasury Secretary Tim Geithner, Wall Street Journal

New Stock Market Alert!

Have you ever heard of Stephen Friedman?  Mr. Friedman was the Chairman of the New York Fed.  At least he was until May 9th when he was forced to resign amidst speculation of insider trading.  The story started to develop last fall amongst the financial crisis.  The problem came about when Goldman Sachs officially became a bank.  Now that Goldman Sachs is a bank, Mr. Friedman has a problem as reigning Chairman of the New York Fed.  The Federal Reserve Act bars directors from owning bank stocks or serving as a director or on the board of a bank.   Mr. Friedman is on the board of Goldman and at the time owned 46,000 shares of Goldman Sachs. 

It makes sense.  Being in the position of Chairman, they are privy to inside information that could eventually affect stock prices.  At the time, Mr. Friedman was not in violation of any rules since Goldman Sachs was an investment bank and not considered a bank.  However, once Goldman became a bank, Mr. Friedman was in violation of the rules. 

Realizing that Mr. Friedman was in violation, Treasury Secretary Geithner asked for a waiver which would allow Mr. Friedman to continue serving in the capacity of Chairman of the New York Fed and own Goldman shares at the same time.  There is nothing like creating and allowing a conflict of interest.

OK, so let’s stop the story right there.  If I were Mr. Friedman, I would just consider myself lucky if I could retain my shares and remain New York Fed Chairman.  No, he pushed the envelope.  Even with the waiver not yet approved, he started buying Goldman stock.  According to regulatory filings he bought 37,000 Goldman shares at an average price of $80.78.  After the waiver was approved in January, he bought another 15,300 shares at average prices of $66.19 and $67.12.  At today’s stock prices, he is sitting on roughly a cool 3 million dollar profit. 

If it weren’t for the Wall Street Journal investigating this story, none of this would have been reported.  You cannot tell me Tim Geithner didn’t know what was occurring.  Further, it is outrageous that he even worked to get an exception.  Should a Fed Governor even be allowed to stay on board while retaining director interests in Goldman Sachs and owning stock when privy to insider information?   Even more outrageous, should Mr. Friedman get special treatment and be allowed to buy stock of a bank with which his Chairmanship has conflicting regulatory interests?

So, what happens?  Just like every other scandal in the Obama Administration, someone resigns and then the story goes away.  I would suggest that Mr. Friedman, just like anyone else suspected of insider trading, should be investigated and tried and proven guilty or innocent.  This is just more evidence of Government corruption.  Does it surprise anyone that so many former heads of Goldman Sachs have Government influenced jobs?  Former Treasury Secretary Hank Paulson was the former head of Goldman.  It seems a little to cozy to me.  Everyone protects their own in Washington.

Tags: Bob Brooks, corruption, Deceptive Money, Federal Reserve Act, Goldman Sachs, Government, inside information, insider trading, Obama Administration, Prudent Money, regulatory filings, Stephen Friedmanm Chairman of New York Fed, stock, stock prices, Treasury Secretary Geithner, Wall Street Journal, Washington

I wrote about this on the stock market alert and thought it was worth repeating here, on the main blog.  The Government has a formula called the birth/death model.  This model “estimates” (note dangerous liberty to give any government based accounting system) how many jobs were either created or lost, that the Department of Labor measuring system didn’t count.

The economists felt that the job losses for April would be greater than 500,000.  Low and behold, the Government reported a better than expected job loss of only -345,000.  However, let’s take a look at how many jobs were added back into that number to get that “better than expected” number.  The Government estimated that 220,000 jobs were created last month.  That is on top of the 226,000 jobs that they estimated the prior month.

So over the last two months the Government “estimated” that 446,000 jobs were created that the Department of Labor missed.  How convenient for the message of recovery.  Realistically, I don’t see anything occurring that would account for a pick up in hiring.  I don’t see the layoff’s slowing down.  I see a lot of people depending on the Government for unemployment benefits…ah, the smell of socialism. 

I have to point to my favorite category of the “estimated” job creation number.  Let’s walk through a scenario for a second.  I think you would agree that people have a ton of discretionary income.  I don’t know about you but this recession has made me more likely to spend money on leisure activities.  In fact, I think that I am going to sign up for a new cruise.  After all, prices are low on cruises right now.  I know that you are probably thinking the same thing.  So, let’s just hope that the leisure and hospitality industry is ramping up employment for all of this new found demand.

Oh this is good. The Government estimates that 77,000 leisure and hospitality jobs were created last month.  That is on top of the 76,000 they estimated were created the prior month.  These types of numbers are an ultimate insult to intelligence.  It is amazing how dumb the Government actually thinks the American people must be to buy this garbage.

Well, the unemployment rate is now 9.4%.  Remember that the “stress tests” of the banking system looked at a worst case scenario of 10% unemployment and we are getting very close.  I still firmly believe that the stress test will play a big part in the Government’s move to nationalize the banking system.

Tags: American people, Banking System, Bob Brooks, Deceptive Money, Department of Labor, discretionary income, economists, employment, Government, job losses, nationalize the banking system, Prudent Money, recession, socialism, Stock market alert, stress tests, Unemployment, unemployment benefits