Econ OH OH ONE
82
Pat Hines
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Where the US is - and Where the US is going ...
Transcript of Econ OH OH ONE
Pat Hines
THE CONSUMER DEFICITTHE CONSUMER DEFICIT
THE GOVERNMENT DEFICITTHE GOVERNMENT DEFICIT
THE LEADERSHIP DEFICITTHE LEADERSHIP DEFICIT
THE ECONOMIC STORM
The Rainier Group … complex analysis resulting in …simple solutions
… Strategic Investment Advice
WANT TO GUESS
WHY ?
THE ECONOMISTS SAYTHE ECONOMISTS SAY
•Elasticity of consumer demand relative to the elasticity of supply was perverted by hyper credit
•Causing the deterioration of the multiplier and the debasement of the savings rate.
(Parallel phenomena existed at the Federal level ).
WE SPENTWE SPENT
THEY LENT THEY LENT
OR IN ENGLISH
MADISON AVENUE (media)MADISON AVENUE (media)
CREATED THE FANTASY… CREATED THE FANTASY… (WE HAD TO HAVE (WE HAD TO HAVE ITIT NOW !) NOW !)
THE BANKS CREATED THE MONEYTHE BANKS CREATED THE MONEY
AMERICA AMERICA LIVED ON CREDIT LIVED ON CREDIT
SAVING NOTHING…SAVING NOTHING…
SAVINGS 0%
Credit ( Debt )Credit ( Debt ) has to be repaid ! has to be repaid !
we ran out of time we ran out of time
and moneyand money
THE ECONOMY GREW ONTHE ECONOMY GREW ON CONSUMER DEBT –CONSUMER DEBT –BASED ON CREATED DEMANDBASED ON CREATED DEMAND
TVCREDIT CARDS
AMERICAN GROSS DOMESTIC PRODUCT
““ !BUY NOW ” !BUY NOW ”
GEE NOW I CAN’ T
CONSUMER DEBT EXPLODED !ANDWAS NOT REPAID
This could
not be sus
tained!
This could
not be sus
tained!
NO SAVINGS NO SAVINGS
DEBT COULD NOT BE REPAID DEBT COULD NOT BE REPAID DEATH OF THE MULTIPLIER DEATH OF THE MULTIPLIER DENIGRATION OF MONEY DENIGRATION OF MONEYSUPPLYSUPPLY
SAVINGS RATE USA
WE SPENT THE FUTURE
NO SAVINGS !NO SAVINGS !
ECONOMY CRASHESECONOMY CRASHES
NO MONEY IN SYSTEMNO MONEY IN SYSTEM
BUT BUT
THE ECONOMY… THE ECONOMY…
DID NOT CRASH WITHOUT SAVINGS !DID NOT CRASH WITHOUT SAVINGS !
WHERE DID THE MONEY COME FROM ?WHERE DID THE MONEY COME FROM ?
BANK’S FOUND A WAY TO BANK’S FOUND A WAY TO KEEP LENDING KEEP LENDING
NO SAVINGS NO MONEY TO LENDNO SAVINGS NO MONEY TO LEND BORROW FROM THE FEDBORROW FROM THE FED BUT THE FED CLOSED THE WINDOWBUT THE FED CLOSED THE WINDOW
FED CLOSES WINDOW
12 USC 82 CEILINGS
SECURITIZATIONSECURITIZATION
WAS THE ANSWER !WAS THE ANSWER !
FANCY WORD FOR HOCK
SO… SO… BANKS HOCKED THEIR BANKS HOCKED THEIR
MORTGAGES …MORTGAGES … AND AND CREATED CREATED MONEY!MONEY!
LENDING STANDARDS TAKEN OFF
LENDING TAKES OFF !
THE “BANK”THE “BANK”
WALL STREET WALL STREET BUYS LOANSBUYS LOANS “ “ PACKAGES” LOANS PACKAGES” LOANS
SELLS – QUICKLYSELLS – QUICKLY
TO ?
FOLLOW THE MONEYFOLLOW THE MONEY
to :
BANKS ?
`
HEY !!!!!!!!! WHERE IS MY HEY !!!!!!!!! WHERE IS MY MONEY !!!!!!!!!!MONEY !!!!!!!!!!
WHERE
IS OUR
MONEY !
NOW THAT IS A NOW THAT IS A HECK OF QUESTION !HECK OF QUESTION !
ANSWERANSWERWE SPENT IT WE SPENT IT
– - - - - ’ – - STARBUCKS BOATS VACATIONS EDUCATION MOVIES PIZZA S FURNITURE – - - - - ’ – - STARBUCKS BOATS VACATIONS EDUCATION MOVIES PIZZA S FURNITURE
- - - – – TRIP TO MONROVIA CAMERAS IPOD FACE LIFT NEW CAR ANOTHER NEW CAR - - - – – TRIP TO MONROVIA CAMERAS IPOD FACE LIFT NEW CAR ANOTHER NEW CAR– – - – – - - SECOND HOME CLOTHES SHARK TICKETS BOOKS JEWLRY CHINESE FOOD– – - – – - - SECOND HOME CLOTHES SHARK TICKETS BOOKS JEWLRY CHINESE FOOD
- - - – - TEETHWHITENING DIVORCE SETTLEMENT ICE CREAM CAKES RIMS PET - - - – - TEETHWHITENING DIVORCE SETTLEMENT ICE CREAM CAKES RIMS PET-ROCKS-ROCKS
- - - – HERMES TIES MONT BLANC PEN COHIBA CIGARS BOXTERS SURF BOARD - - - – HERMES TIES MONT BLANC PEN COHIBA CIGARS BOXTERS SURF BOARD
– - – – -YOGA LESSONS NEW KITCHEN NEW BATHROOM THE SHRINK ANTIQUES – - – – -YOGA LESSONS NEW KITCHEN NEW BATHROOM THE SHRINK ANTIQUES
- - - - - -LAS VEGAS FISHING GEAR FLY ROD EBAY DELL COMPUTER ORGANIC FOOD - - - - - -LAS VEGAS FISHING GEAR FLY ROD EBAY DELL COMPUTER ORGANIC FOOD
- - - - MASSAGE BURYING AUNT MAUDE NEW CAT BOTTLEDWATER- - - - MASSAGE BURYING AUNT MAUDE NEW CAT BOTTLEDWATER
- - - - ’ - - GAS LIGHTS NEW FRENCH LAUNDRY OPERA LUNCH AT SAM S CHARDONAY A- - - - ’ - - GAS LIGHTS NEW FRENCH LAUNDRY OPERA LUNCH AT SAM S CHARDONAY A- - …PORCHE HAIRPIECE OH YEAH CHARITY- - …PORCHE HAIRPIECE OH YEAH CHARITY
Where is their money ?
By The way By The way Where DID the Banks Go ? Where DID the Banks Go ? (Where did the BANKERS go ?) (Where did the BANKERS go ?)
They used to be consultativeThey used to be consultative
THEY MORPHED INTO SALES THEY MORPHED INTO SALES DRIVEN PAPER MILLS DRIVEN PAPER MILLS DRIVEN BY FEE INCOME DRIVEN BY FEE INCOME
THE ENTITLED SOCIETY
THE AMERICAN CONSUMER I WANT (DESERVE ) IT NOW
USING DEBT INSTEAD OF CASH
BUYING NOW AND NOT PAYING LATER !
YOU AND ME YOU AND ME
THE BOOMERS 1946 - 1964THE BOOMERS 1946 - 1964Generation X 1961 - 1981Generation X 1961 - 1981Generation Next 1982 – 2000Generation Next 1982 – 2000
BECAUSE WE WANTED… IT !BECAUSE WE WANTED… IT !
GAP CARRIED BY DEBT !
THE ECONOMY THE ECONOMY
WAS WAS FINANCEDFINANCEDAND WE HAVE AND WE HAVE
TO PAY IT BACKTO PAY IT BACK
BY THE WAY PAY BACK WHO ?BY THE WAY PAY BACK WHO ?
OH YEAHOH YEAHAND THE FEDAND THE FED
FED COMES TO THE RESCUE
CASH FROM FED !
THE STORM HAS HIT ?WHERE DID WALL STREET GO ( ) ?WHERE DID THE BANKS AND BANKERS GO ? WHERE DID CREDIT GO AVALANCHE OF HOME FORECLOSURES CREDIT CARD DEBT RIPENING TO LOSS NO SAVINGS AND HUGECONSUMER DEBT CONSUMER INDULGENCE -REGRET -DENIAL UNEMPLOYMENT STAGGERING POLARIZATION OF ELECTORATE – - RAGE IN AT WASHINGTON
PAY OFF DEBT PAY OFF DEBT INCUR NO NEW DEBT INCUR NO NEW DEBT INCREASE SAVINGS INCREASE SAVINGS INCREASE EARNINGS INCREASE EARNINGS EMBRACE NEW REALITY EMBRACE NEW REALITY
DEBT
… IS THE GREATEST THREAT
TO OUR FORM OF GOVERNMENT…
IT IS OVER
$13 TRILLION NOW
…… so WHAT is a TRILLION ?so WHAT is a TRILLION ?
1 million seconds = 12 days1 million seconds = 12 days 1 billion seconds = 32 years1 billion seconds = 32 years 1 trillion seconds = 32,000 years (that’s 1 trillion seconds = 32,000 years (that’s
approximately 30,000 years before Christ!)approximately 30,000 years before Christ!) 10 trillion seconds = 315,460 years10 trillion seconds = 315,460 years
$13,000,000,000,000
WHAT DID THE WHAT DID THE GOVERNMENT GOVERNMENT
( WE ) BUY ?( WE ) BUY ?
THE FEDERAL BUDGET …
Mandatory Entitlements
DISCRETIONARY
Where will we get the money ?
CREATE EMPLOYMENT CREATE EMPLOYMENT
AMERICAN INOVATIONAMERICAN INOVATION
RESPONSIBLE SPENDINGRESPONSIBLE SPENDING
REALISTIC BUDGETSREALISTIC BUDGETS
CULTURE OF MODERATIONCULTURE OF MODERATION
WE ARE FACING VERY
ROUGH ECONOMIC SEAS
DECLARE WARON
DEBT
‘29
WE CAN DO IT !
THE BUREAUCRATS AND ELECTED OFFICIALS
LACK THE WILL TO FIGHT THE DEFICIT
WHAT’S IN IT WHAT’S IN IT FOR THEM ?FOR THEM ? WHAT’S THEIR INCENTIVE TO WHAT’S THEIR INCENTIVE TO
SAVE ?SAVE ?
Let alone cut !
Our elected officials
…Spend their time getting re-elected…
SUPLICANTS TO SPECIAL INTEREST GROUPS
WITH OUT A WITH OUT A
REPRESENTATIVE REPRESENTATIVE
GOVERNMENT GOVERNMENT
WE ARE WE ARE
HELPLESSHELPLESS
WE MUST FACE THE WE MUST FACE THE DEFICITDEFICIT
TAX INCREASES TAX INCREASES
ENTITLEMENT REDUCTIONENTITLEMENT REDUCTION
CAN NOT BE AVOIDED CAN NOT BE AVOIDED
FEARLESS DRIVE FOR THE TRUTHFEARLESS DRIVE FOR THE TRUTH FORCING POLITICIANS TO CHANGEFORCING POLITICIANS TO CHANGE WE MUST TAKE BITTER MEDICINEWE MUST TAKE BITTER MEDICINE
YOU WILL DECIDE WITH YOUR VOTE
PROVIDES Unconflicted Investment Counsel
Independent investment analysis
CREATES - Business Wealth Transition Solutions
Econometric Modeling Common Sense
Pat [email protected]@rainiergroup.com [email protected]
