Friday, September 2, 2011

Bad Economy: A Cure Must Have A Nexus To A Cause

When a person is ill the doctor first determines the cause before administering a treatment plan.

The cause is determined by an analysis of the ill effects, the symptoms, which is part of a map of sorts.

Through experience and education, which develop the ability to read that map, the doctor follows the trail that the symptoms will leave.

The exercise involved in any such analysis is to follow the trail across the map all the way back to the cause.

That cause will then be the key determinant for developing the cure or treatment plan.

The treatment plan is, then, nexus based, meaning that it is focused on the trail, the link, from the symptoms back to the source, back to the cause of the illness.

The basic treatment strategy is to remove the cause which will axiomatically remove the ill effects, the symptoms.

Why would that diagnostics first then treatment later process not work (knowing the cause, not just the symptoms) for an economic illness, such as a recession or depression?

The symptoms of national economic illness are high unemployment rates, a drop in output showing up as a decreasing Gross National Product (GNP), home foreclosures, an imbalance in debt-to-income ratios, an unprecedented disparity between the wealthy 1% compared to the unwealthy 99%, and a general consumer spending decrease.

What are the causes?

There can be no effective treatment or cure of any economic malady absent a tracing of the contours of the nexus from a symptom back to a cause.

In the Dredd Blog post Add It Up And It Still Smells (April 2009), we explored an alternative treatment plan.

Instead of the give it all to the banks approach, Dredd Blog came up with a trust the people approach.

That approach functions as a grass roots up economics approach which is admittedly biased in favor of the betterment of the public (99%), not the 1% who actually own the country.

To the contrary of the Dredd Blog approach, the government chose a trust the banks approach that functions as a trickle down economics policy, which failed, so now the government is suing the banks:
The agency that oversees mortgage markets is preparing to file suit against "more than a dozen" big U.S. banks, accusing them of misrepresenting the quality of mortgages they packaged and sold during the housing bubble, the New York Times reported on Thursday.
(News Daily, see also Huffington Post). Is something wrong with this picture in the sense that the policy has been to dump hundreds of billions of dollars on those banks, but to now sue them?

The economic policy concerning "Too Big To Fail" banks, since the 9/11 trance set in, has been "Ready, Fire, Aim" in place of "Ready, Aim, Fire".

The government lawsuit mentioned above, so far contains the following specifics:
The Federal Housing Finance Agency (FHFA), as conservator for Fannie Mae and Freddie Mac (the Enterprises), today filed lawsuits against 17 financial institutions, certain of their officers and various unaffiliated lead underwriters. The suits allege violations of federal securities laws and common law in the sale of residential private-label mortgage-backed securities (PLS) to the Enterprises.

Complaints have been filed against the following lead defendants, in alphabetical order:

1. Ally Financial Inc. f/k/a GMAC, LLC
2. Bank of America Corporation
3. Barclays Bank PLC
4. Citigroup, Inc.
5. Countrywide Financial Corporation
6. Credit Suisse Holdings (USA), Inc.
7. Deutsche Bank AG
8. First Horizon National Corporation
9. General Electric Company
10. Goldman Sachs & Co.
11. HSBC North America Holdings, Inc.
12. JPMorgan Chase & Co.
13. Merrill Lynch & Co. / First Franklin Financial Corp.
14. Morgan Stanley
15. Nomura Holding America Inc.
16. The Royal Bank of Scotland Group PLC
17. Société Générale

These complaints were filed in federal or state court in New York or the federal court in Connecticut. The complaints seek damages and civil penalties under the Securities Act of 1933, similar in content to the complaint FHFA filed against UBS Americas, Inc. on July 27, 2011. In addition, each complaint seeks compensatory damages for negligent misrepresentation. Certain complaints also allege state securities law violations or common law fraud.
(US vs THEM, PDF). As Dredd Blog has pointed out ad nauseum, we entered the Age of Plunder (see Series Page under "PLUNDER") during the Bush II regime, and it may be the last age of MOMCOM, if we consider that it also includes the Peak of The Oil Wars and The Peak of Sanity.

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