79 percent of the American public is in favor of auditing the Fed, according to a new poll by Rassumussen. Because another 14% are not sure, that leaves only 7% opposed to an audit. And as Rassumussen, the support for auditing the Fed is nonpartisan and very widespread:
Unlike many issues tracked by Rasmussen Reports, there is virtually no partisan disagreement on the issue of auditing the Fed.
Similarly, investors and non-investors are equally supportive of the idea. Generally speaking, there is overwhelming support for such auditing across all demographic categories.
Rasumussen also points out:
Americans continue to be critical of another key player on the economic front, Treasury Secretary Timothy Geithner. Forty-two percent (42%) of Americans say Geithner has done a poor job handling the credit crisis and federal bailout programs. Twenty percent (20%) rate Geithner’s performance in these areas as good or excellent.
Consumer confidence as measured by the Rasmussen Consumer Index has fallen to a four-month low.
Small Businesses Have Lost Confidence Also
You might assume that - despite the public's lack of confidence in Bernanke, Geithner and the economy - at least businesses are confident.
However, as Rassumussen notes:
After three months of gains, the Rasmussen Employment Index dropped more than four points in November to its lowest level since July. Just 14% of workers now say their employers are hiring, the lowest total since February.
Economic confidence among America's small business owners in the Discover (R) Small Business Watch(SM) index plummeted in November, as more owners cited serious concerns about cash flow and saw economic conditions for their own businesses getting worse.
Specifically, Discover reports:
Wall Street might believe that everything is grand, but small businesses are the engines which create job growth in America, and if they are pessimistic, they won't hire.Economic confidence among America's small business owners plummeted in November, as more owners cited serious concerns about cash flow and saw economic conditions for their own businesses getting worse. The Discover Small Business Watch index fell 12 points in November to 76.5 from 88.5 in October...
- The mood of small business owners generally has soured in November for three straight years, as economic confidence dropped from October to November in 2007 and 2008. The November 2008 index of 67.5 is the low point for the Watch since it started in August 2006.
- 52 percent of owners say they have experienced cash flow issues in the past 90 days, up from 44 percent in October. Forty-one percent of owners say they have not experienced cash flow issues, which is the lowest response in this category since the Watch began. The remaining 6 percent said they weren't sure.
- 53 percent of small business owners see conditions getting worse in the next six months, up from 43 percent in October; while 19 percent report that conditions are improving, a sharp decline from 29 percent in October; 23 percent see conditions as the same, and 5 percent weren't sure.
- 62 percent of small business owners rate the economy as poor, an increase from 55 percent in October; 30 percent rate it as fair, and 8 percent say it is good or excellent.
- 53 percent of small business owners think the overall economy is getting worse, up from 44 percent in October but still significantly lower than the 69 percent of owners who felt that way in February 2009, the last time the Watch index was this low. For November; 28 percent say the economy is getting better, down from 35 percent in October; 16 percent see it staying the same, and 3 percent are not sure.
The Economy Cannot Recover Until Bernanke and Geithner are replaced
As I have repeatedly written, the economy cannot fundamentally stabilize until trust is restored.
Former Secretary of Labor Robert Reich wrote that Wall Street's biggest problem right now is the collapse of trust:
The problem is, government bailouts, subsidies, and insurance aren't really helping Wall Street. The Street's fundamental problem isn't lack of capital. It's lack of trust. And without trust, Wall Street might as well fold up its fancy tents.
A 2005 letter in premier scientific journal Nature reviews the research on trust and economics:
Trust ... plays a key role in economic exchange and politics. In the absence of trust among trading partners, market transactions break down. In the absence of trust in a country's institutions and leaders, political legitimacy breaks down. Much recent evidence indicates that trust contributes to economic, political and social success.
Forbes wrote an article in 2006 entitled "The Economics of Trust". The article summarizes the importance of trust in creating a healthy economy:
Similarly, market psychologists Richard L. Peterson M.D. and Frank Murtha, Ph.D. wrote in 2008:Imagine going to the corner store to buy a carton of milk, only to find that the refrigerator is locked. When you've persuaded the shopkeeper to retrieve the milk, you then end up arguing over whether you're going to hand the money over first, or whether he is going to hand over the milk. Finally you manage to arrange an elaborate simultaneous exchange. A little taste of life in a world without trust--now imagine trying to arrange a mortgage.
Being able to trust people might seem like a pleasant luxury, but economists are starting to believe that it's rather more important than that. Trust is about more than whether you can leave your house unlocked; it is responsible for the difference between the richest countries and the poorest.
"If you take a broad enough definition of trust, then it would explain basically all the difference between the per capita income of the United States and Somalia," ventures Steve Knack, a senior economist at the World Bank who has been studying the economics of trust for over a decade. That suggests that trust is worth $12.4 trillion dollars a year to the U.S., which, in case you are wondering, is 99.5% of this country's income. ***
Above all, trust enables people to do business with each other. Doing business is what creates wealth. ***
Economists distinguish between the personal, informal trust that comes from being friendly with your neighbors and the impersonal, institutionalized trust that lets you give your credit card number out over the Internet.
Trust is the oil in the engine of capitalism, without it, the engine seizes up.And two professors of finance write:
Confidence is like the gasoline, without it the machine won't move.
Trust is gone: there is no longer trust between counterparties in the financial system. Furthermore, confidence is at a low. Investors have lost their confidence in the ability of shares to provide decent returns (since they haven't).
They quote a Nobel laureate economist on the subject:The drop in trust, we believe, is a major factor behind the deteriorating economic conditions. To demonstrate its importance, we launched the Chicago Booth/Kellogg School Financial Trust Index. Our first set of data—based on interviews conducted at the end of December 2008—shows that between September and December, 52 percent of Americans lost trust in the banks. Similarly, 65 percent lost trust in the stock market. A BBB/Gallup poll that surveyed a similar sample of Americans last April confirms this dramatic drop. At that time, 42 percent of Americans trusted financial institutions, versus 34 percent in our survey today, while 53 percent said they trusted U.S. companies, versus just 12 percent today.
As trust declines, so does Americans’ willingness to invest their money in the financial system. Our data show that trust in the stock market affects people’s intention to buy stocks, even after accounting for expectations of future stock-market performance. Similarly, a person’s trust in banks predicts the likelihood that he will make a run on his bank in a moment of crisis: 25 percent of those who don’t trust banks withdrew their deposits and stored them as cash last fall, compared with only 3 percent of those who said they still trusted the banks. Thus, trust in financial institutions is a key factor for the smooth functioning of capital markets and, by extension, the economy. Changes in trust matter.
“Virtually every commercial transaction has within itself an element of trust,” writes economist Kenneth Arrow, a Nobel laureate. When we deposit money in a bank, we trust that it’s safe. When a company orders goods, it trusts its counterpart to deliver them in good faith. Trust facilitates transactions because it saves the costs of monitoring and screening; it is an essential lubricant that greases the wheels of the economic system.Although it is easy to demonstrate that Bernanke and Geithner's actions have harmed the economy, it is not even necessary to show what a poor job they have done economically.
America knows that Bernanke and Geithner have acted in the interests of the largest banks, and have done too little to help Main street and the American people.
Trust will not be restored until Bernanke and Geithner are replaced with people whose loyalty is to the American public and small businesses, rather than the Wall Street giants, and whose track record demonstrates that they will put the American people and entire economy as a whole - rather than the big boys - first.
Trust? OMFG! For those people stupid enough to still have a mortgage on a house that's worth maybe, -on an almost impossibly good day- 40% of what they still owe on it, -gauging trust is simple. - Just call your banker, and ask them to trust you -that you'll catch-up on your mortgage after a few months, -you know- when the economy turns back around!
ReplyDeleteYou all can trust in this: electing some black community organizing -mobster- with a forty-carat diamond inlaid into one of his front teeth -from South Side Chicago, is hardly going to provide anything -anyone might consider trust.
Mr. Obama's handlers are daily trying desperately to figure out how to sell -decriminalizing illegal immigration- to the Congress -so they can consolidate their tenuous hold on the voter-roll-reins of this reckless runaway Republic.
The aging and increasingly feeble Reverend Jesse Jackson said it best -when he was heard through an open mike to say of Barack Obama, "I'd like to cut his nuts off." -Thank you, Jesse.- I hope we all can trust that is not another one of your own -Buckleyisms-.
Trust in history.
Neither has a freight train ever been caught in mid-air after it went off a railroad bridge, nor, has any effort in the economic sphere ever even slowed-down the forty-story plunge of a full-blown economic depression, like we are living through today.
This is the BIG ONE. It was long over-due.
A lot of people in our Republic get rich through graft, corruption and crime syndicates though. That's what we're increasingly seeing. It's called a -bailout.
There's also a lot of money floating around looking to get doubled, -ostensibly to replace what got lost in the first wave of financial implosion-swindles.
Most people, -never learn. You can take that to the bank, but even that's not a safe bet today.
-Trust- is what makes the current atmospheric phenomenon so dangerous and so profitable for those people with deep voices, persistence and an anonymity of character. The common financial adviser today doesn't just -look and sound- like a used car salesman saying, "You own it, buddy. The warranty ended the moment you drove it off the lot."
Those people who trust in anything, -are the source of the funds that are doubling the money of so many of these con men.
Bernie Madoff even took Zsa Zsa Gabor's money. Poor Zsa Zsa. She'll have to go back to turning -tricks-.
I do not think more than a very small handful of people on the planet actually understand the extent of the depression-related-devastation that has occurred and continues to occur.
A depression is not merely an economic phenomenon.
A depression is much more of an epistemological implosion of all the wrongly assumed and the all too commonly untenable beliefs in society that have been built up through decades of puffing.
If your own beliefs are getting a little wobbly around the knees, -you can trust in this about government, and how the recovery-hype is going.
When you are told to do something, -you should do it, -because those orders when given by government -are ultimately backed up by some low-browed cretin with a very limited vocabulary and an even smaller cogent use of it, -most often wielding a side arm.
Just be thankful, even hopeful, you understood what it is he's telling you to do. That pistol quite often has dumdums in it, -and his taser is set on "FULL CARDIAC ARREST".
The best quote I read recently was Lewis Mumford quoting Herman Melville. "Trust not good luck is judgment and discretion."
It's an able statement about the infinite complexity of reality, the backdrop against which -all our most cherished assumptions must be placed.
Include the Congress and Executive in this analysis too. To allow Enron style accounting fraud and legislation that pounds citizens into the dirt but gives big players a free ride does not ensure trust in the system.
ReplyDeleteThe FED has been do a heavy fraud to the USA People robber U$S 9 trillions was if we add to the Donald Rumsfeld U$S 2.3 trillions Pentagon Robbery, we have U$S 11.3 trillions to recover by the FED HR 1207 audit Bill and the U.S. Congress Budget Committee investigation of Rumsfeld figure heads, to the all America's People Money Recovery was can pay the USA External Debt. Include the G20 U$S 10 trillions was did give to the IMF, what not use for give a World Banks low rate public debt emission swap tip credit offer, to get back all money was I'm speaking to the New World Order Devil followers pedophiles by quiet to the final NWO many Death Penalty charges prosecution and punishment U$S 21 trillions poll, to detain the WWIII NWO detonation over the world peace balance maintenance joint effort work!
ReplyDeleteGreat post. I, too, have lost trust in the financial sector, in the corporations, and in the elected politicians. It looks like the game is rigged, and who wants to play a rigged game? I've decided that rather than have the financial sector steal the money I invest while they give themselves huge bonuses for poor performance, I won't invest with them at all. (That's probably partly why unproductive Gold is going up in price.)
ReplyDeleteI don't know if the game is more rigged now than it was in the past, but the greater amount of information available to citizens certainly makes it appear worse.
I agree with your statement that trust needs to be restored. However, I predict that it will be very hard to find an honest man in politics for a long time. The most important thing to a politician is to get re-elected, and it is easier to get campaign contributions from corporations than from individuals. Because they can accept money from non-voting entities, our politicians represent corporations rather than voters or the common good.
I don't see this changing. Some people talk about revolutions, but revolutions only occur when the politically powerful don't have money, and those with money don't have political power. Revolutions fix that situation, as the examples of the French, American, Russian, and now the ongoing Iranian revolutions show. In each case, the people who had money but no power started a "revolution" against those who had political power but no money.
Today, the people with money have bought the politicians and their political power, and so are comfortably immune to revolutions.
The last time America was in this situation, in the 1930's, reversing the concentration of wealth and generating trust among the people required the election of a man who was a traitor to his class; FDR. He came from wealth, but worked against the rich (when they were suddenly poorer and therefore more vulnerable) and improved the lot of the average citizen. His works lasted until practically everyone who directly experienced the (first) Great Depression died. Then, the wealthy reasserted themselves. What are the chances of breaking their stranglehold on government today, now that Goldman-Sachs runs the US government?
Furthermore, a Democracy is only possible in reality (rather than just in name) when everyone has nearly equal amounts of political power. However, Political Power follows Money (first you get money, then you get political power), so a true democracy works best when everyone has nearly equal amounts of money. This was the situation in 1770. It isn't even close today.
America needs another FDR. President Obama is an idealist, but he arrives at conclusions by consensus, rather than from conviction. This is not the way to break the abusive and economically destructive (to the average American) power of the rich.
Excellent column. It's a pity that so many crazy people read your blog.
ReplyDeleteYes indeed the destruction of Trust and the Rule Of Law in the US, is the most important economic element today. This is the first ball to keep one's economic eye upon. As this destruction continues and ACCELERATES, there will be no recovery, only a descent into Depression and Repression. Sadly, the US does not seem to have any Institutions capable of reversing this trend, least of all, Judicial Institutions.
ReplyDeleteIt is a great irony, of course, that Obummah, current front man for this destruction is a Constitutional Lawyer!