There’s been so many, ‘Tempests in Tea Pots,’ these past few years that mine finally cracked. Mixing metaphors with great gusto here, it’s as if our financial Humpty Dumpty was pushed off the wall a few years ago, is smashed to pieces on the ground, and our elected officials walk on by howling up at the moon.
The latest tea pot squall is President Obama’s new rule for immigration: don’t arrest kids who were dragged over the border by their parents. It’s a good and fair rule, but our President forgot to include the US Congress in his calculation. He’s supposed to enforce the laws of the United States, not circumvent the ones he doesn’t like.
Most likely, there’s a few immigration Bills gathering dust in some committee room or other, as Members of Congress follow their own myopic agendas to keep themselves in power. The media is currently touting every possible viewpoint on the subject, while weeds grow over the Humpty Dumpty of our broken financial system.
Another little tempest was the trading loss of $2 billion by JP Morgan Chase, the largest bank in the world. The media went nuts predicating a second financial crash. The bank had a $19 billion profit last year, even though an obscure IMF missive reports that approximately $14 billion of that was in U. S. government subsidies.
I watched a portion of the CEO of JP Morgan Chase, Jamie Diamon’s, testimony before the Senate Banking Committee. It was a nauseating display of ass kissing by US Senators, who looked like valets outside a Vegas strip joint, simpering away in front of the blow-dried, rock star banker. It was obvious that they had no clue about the derivatives market as Senator after Senator stumbled while reading questions written by their staffers.
Apparently, JP Morgan’s trading portfolio is still heavily weighted in mortgage backed securities. You know, Virginia, all those mortgage loans that were pooled into trusts and sold just like stocks worldwide, where thousands if not millions of borrowers on those loans have defaulted. They’re called, ‘derivatives,’ because they’re derived from mortgage loans. Nonetheless, Dimon is convinced that his bank really is too big to fail because they have hundreds of $billions in capital. He also said that his bank was forced to take TARP (Troubled Asset Relief Program) money that they did not need at the time. What? Why are they taking $14 billion a year?
It’s estimated that 12 million mortgages nationwide are underwater; meaning the home values are less than the loan amounts owed. Dimon wants the Congress to work with the big banks to, “fix the mortgage market.” Perhaps Congress will actually get some smarts and make a law, like the trashed Glass-Steagall Act, that prevents banks from gambling/trading with depositors’ money.
Unemployment is said to be a little over 8%. When you take into account the underemployed and those folks who’ve just given up looking for a job, it’s probably more like 14% or 15%. Couple that with the falling value of the US dollar and we’ve got big problems. Our US Treasury Secretary and the head of the Federal Reserve Bank are printing money like wall paper, thereby devaluing the dollar.
A very real, big fat tempest hanging over the horizon won’t fit in any tea pot: other countries are looking to get rid of the devalued US Dollar. Last summer a group of Asian countries announced their intention to form a trading block that excludes the USA. The Chinese are now arguing for the US dollar to be dropped as the world’s reserve currency. Currently, most international trades are done in dollars, a fact that keeps costs down for Americans. The Chinese are now insisting that trade with them is done in their currency, the renminbi, commonly known as the Yuan. Recently, they have opened a trade with Japan where the Japanese Yen is traded directly with the Yuan, thereby ignoring the dollar completely.
China now has a bigger military, more reserves in cash, and more natural resources in terms of mines and oil wells they’ve bought around the world, than the USA. China’s policy is that any company doing business in China must give over their proprietary technology as a condition of doing business there. Our spineless Congress has done nothing to curtail China’s infringement on US technology because the US government is in hock to the Chinese by continually borrowing money to keep on spending. Instead, they grind out more and more repressive regulations for American businesses to follow.
Meanwhile, back at the ranch, the inventory of homes for sale is dropping like a rock. Banks aren’t releasing their foreclosures onto the market because they’re scrambling to make sure their paperwork was correct when they foreclosed. Bankers and their attorneys can now go to jail in Nevada, with perhaps more states following suit, if it’s shown that they have a history of using false documents in foreclosures. I’m not holding my breath for common sense to come out of Washington, D.C.; I’m trying to find a new tea pot.
As a writer, who has a day job as a Realtor, politics and banking are looking like a Middle Earth version of Sesame Street these days. You just can’t make this stuff up like a character for a novel.