The banks are doing great. The stock market is up 25 percent. Happy Days Are Here Again.
Ladies and Gentlemen, welcome to the White Star Titanic. We are not sinking, there are plenty of lifeboats, please go back to an evening of fine dancing.
If you're happy with that, maybe you shouldn't listen to this edition of Radio Ecoshock. We're going to hear other voices, outside the mainstream box.
Famed ABC producer, author and blogger Danny Schechter will lead off the charge. He claims the financial system is riddled with fraud. We'll hear snippets from insider business Bears Ian Gordon and Meredith Whitney, the one-woman force who broke out the truth about Bear Stearns. Whitney ends up advocating relocalization, and warning you - that credit card you've counted on may go bye-bye.
Our mystery guest is Ilargi, from the popular financial blog The Automatic Earth. And we have an earthquake from within the Obama Administration itself. Elizabeth Warren heads a Congressional Panel overseeing the TARP funds. She questions the whole program, wondering if Tim Geithner's Treasury has any real strategy. Based on the experience of other countries, the U.S. is going the wrong way down a one way street. Warren sounds like a mother to America, as she explains this whole crisis. You'll hear the best of that.
Here are all the links you'll need for this week's Radio Ecoshock Show:
Danny Schechter's blog: http://www.newsdissector.com/blog/
"Bear Attack" on BBN - 4 financial bears: Nouriel Roubini, Eric Sprott, Meredith Whitney and Iran Gordon. http://www.bnn.ca/8430.html
TARP: Elizabeth Warren Congressional Oversight Panel Chair - April Report shows very different approaches from that taken by Treasury Sec. Tim Geithner. Revolutionary talk from inside Washington in this 8 minute You tube video (easy to understand!)
Elizabeth Warren's explanation of the foreclosure crisis - also easy to understand, if very sad.
http://cop.senate.gov/video/index.cfm - tab10 (8 minutes on You tube, and from this government site.
The Automatic Earth blog - headed up by "Ilargi" our final guest on Radio Ecoshock this week.
So let's get going. Here is my interview with Danny, the News Dissector.
[Interview: ES_Schechter_090412_LoFi.mp3 24 minutes]
This is Radio Ecoshock with Alex Smith - it is free and commercial free. Find all our past programs at ecoshock.org.
How bad is it? One in nine U.S. homes is empty. Hugely over-built, at great cost to our forests, mines. The phony construction bubble poured more greenhouse gases into the atmosphere, and built out into farm-land, for gas guzzling super-commutes. As James Howard Kunstler has been saying for years, the suburban experiment, based on cheap oil and throw-way values, was a failure of civilization.
And don't forget Kunstler's weekly blog - Clusterfuck Nation. It's the saddest funniest writing out there, coming up every Monday morning. Find that link in the Radio Ecoshock Show blog.
Are you sick of the Geithner Summers axis handing out your billions to the banksters? It's really just a continuation of the George Bush TARP plan cooked up by former Goldman Sackster head, turned Treasury Secretary, Henry Paulson. Funny how his company instantly became a bank, got $25 billion from TARP, and then another $12 billion from the AIG bail-out.
It pays to get your men in the right places.
Not everybody in government is in love with the Troubled Assets Relief Plan. Congress appointed a panel to review TARP - and the results have rocked Washington's boat. Congressional Oversight Panel Chair Elizabeth Warren openly questions whether the Treasury strategy is working. She suggests there are other options, including firing the heads of the big insolvent banks, and breaking them up. That's revolutionary talk.
Let's hear this government revolutionary, Elizabeth Warren describing how this whole mess got going.
[Warren clip on Foreclosures] http://cop.senate.gov/video/index.cfm - tab10
That was COP Chair Elizabeth Warren speaking on March 9th, 2009. Doesn't she sound like your mother explaining your allowance? Where is the double-speak and the financial language meant to shut the rest of us out? I like Warren. Find her original videos at cop.senate.gov.
The Panel even flew in witnesses to describe how other countries have handled their banking disasters. Dissenting panel member John Sununu thought this was a waste of time. Judge for yourself, the whole 99 minute hearing is available at the web site. Maybe take the time to educate yourself, as I did.
Here are a couple of quick clips from Elizabeth Warren in her April 19th COP report which shook the capital. She dares to say the Treasury could be doing things much differently.
[Warren clip on Bank insolvency options]
You are listening to Radio Ecoshock, as we thrash through this financial crisis. The next part is not for the faint of heart. But I think you need to know how bad this might get, and plan accordingly. Our next speakers suggest this Depression, and that is what we have, a Depression - might last until 2020. And, as financial insiders, they also suggest that the biggest American banks will fail, fall, and they should.
We'll draw from an excellent TV Special by a program called "The Close" on Canada's Business News Network, BNN. Four of the most famous market pessimists, the so-called "Bears" were appeared in a $3,000 a seat forum in Toronto. Then each appeared on The Close. The program was called "Bear Attack" and you can find it at the BNN site, bnn.ca, or link directly via my show blog. (see link above)
Yes Nouriel Roubini spoke - and you can find him everywhere. I want to focus on two other guests, the now-famous analyst Meredith Whitney, and the long-time pessimist and gold bug Ian Gordon of the Longwave Group. Gordon has been calling for a massive stock correction, and he means a big drop, since at least 2000.
How bad will it get? Here is Ian Gordon's view, from the BNN show.
[Ian Gordon - until 2020, Dow to 1,000, property down as well]
That was a collection of predictions by Ian Gordon. Let's imagine the stock market will drop, at least below the 5,000 mark. Even the cautious CIBC bank in Canada just predicted another big market slide.
How soon could this hit us? There are two major schools among these pessimists. The first is predicting a big economic hit in May or June, at least by this summer. The second school fears it will take longer, if Wall Street and the Obama magicians dance as long as they can.
Meredith Whitney has put out a report called "The Agony of Incrementalism" - everybody stalls by admitting bad debt just a little at a time. We'll hear that in the following clips from "Bear Attack" - plus her warnings about the credit you think you have.
[Meredith Whitney clips]
That was Meredith Whitney appearing on BNN's "The Close" on April 7th, 2009. I encourage you to go to bnn.ca to watch the whole program. It's a kind of education in horror - or is that reality?
Regular listeners know I like to pass on at least one useful tip, something you can actually do about this mess. I think Whitney has given us two important clues. Number one: the central financial institutions are likely to fail. They will be succeeded by local institutions who know their customers. I deal with a solid credit union.
While all that sorts itself out, I have to recommend gathering some cash at home. Remember, as Meredith Whitney points out, you may be relying on a credit card or line of credit to bail you out of some special expense, even a medical emergency or housing crunch - and find out it isn't there any more.
Every expert these days tell you not to rely on credit cards. Those days are ending. We will have to become our own banks. Easy to say, but how? Until now, as we teeter on the edge of some economic cliff, I advised people to scrimp and pay off all bills. But if you are just tuning into the reality of this Depression, step one is to collect some cash - and yes, stick it in a safe place in or near your home.
The situation is so serious, so near, I think, that people who are very tight for money should just pay the minimum on all bills, and stick any extra into your own piggy bank. If you have a great income, pay off all bills. If you are already feeling poor, pay yourself first. Everyone needs some cash, because the credit game could be called off at any time. Even if you can only save $25 a week, do that. Aim for three months of living expenses. When you have that, plus a three month supply of food, - THEN pay off all your bills as you can. Be your own bank.
I'm Alex Smith. This is a Radio Ecoshock special on the economic crash. If you are tuning in, we've heard from Danny Schechter of mediachannel.org, from Elizabeth Warren in the government's panel reviewing TARP, and two market Bears.
Next we get advice from one of the canny bloggers who knows the score, and writes anonymously as "Ilargi" at a blog called "The Automatic Earth". As incredible financial news washes in, Ilargi keeps a sanity I admire. I read his blog daily to get my bearings. Here is Ilargi, in his first radio appearance.
Find the link to The Automated Earth blog in my own Radio Ecoshock blog. Just go to Ecoshock.org and click the blog button. Look for the entry for April 16th, 2009, to find all the links for this program.