Value Drain™ II - The 14 Trillion Dollar Looting of America in the name of Capitalism, Meritocracy (aka Greed), and Free Markets
The Value Drain™ framework applied below is adopted from the classic Value Chain
analysis for businesses. In a value chain, each segment of the chain
adds some value, so that the customer enjoys a margin; i.e., Value Chain Margin = Value Delivered to Customers - Value Created by the Business. Similarly, the $8.7 trillion dollars (As of May 3rd, 2009) Value Drain™ chart below is self-explanatory:
The
above $8.7 trillion dollars that the Wall Street Banks and other
Financial Institutions have been able to successfully extract as of this writing (May 3, 2009) are as follows:
$8.7 trillion Value Drain(tm) = $4.8 trillion Federal Reserve Asset Buying Program + $1.9 trillion in Loans like TALF promised by the Federal Reserve + $700 billion Paulson Bailout + $300 billion (from the $787 billion Obama Stimulus) + $1 trillion estimated from Treasury's pPiP program
If you add $5 trillion from the deflated markets (currently in disequilibrium, will reach equilibrium once the Dow Jones is up another 20% from where it stands today at the time of this writing - May 3rd, 2009), you arrive at the figure of $14 trillion. To read the complete article, please click here...June 21 Update: We are now projecting that the total value drain is much more than the US G.D.P. If you add the 6 trillion dollars lost in home value to the 14 trillion dollars, you arrive at the figure of 20 trillion dollars looted by the toxy-morons. We will delve deeper into this, for the housing crisis actually brought this financial meltdown, in the third of our Value Drain series of articles.
THE CURRENT LOOTING OF THE AMERICANS TO THE TUNE OF 20 TRILLION DOLLARS, WHICH WE CALL THE 20 TRILLION DOLLAR VALUE DRAIN, HAD ITS GENESIS IN THE $700 BILLION (OR THE $785 BILLION) DOLLAR BAILOUT PROPOSED BY THE BUSH ADMINISTRATION, AND PASSED BY THE CONGRESS. TAKE THE POLL BELOW AND LET US KNOW WHAT YOU THINK?
PODCAST: Sam Mishra expands his Value Drain Analysis framework by touching upon the following:
* Recaps how the Value Drain Analysis is similar to the Value Chain Analysis businesses use, and the genesis of the 787 billion dollar bailout / Value Drain
* Explains why the $500,000 executive compensation cap will not work (Since the banks will re-price the stock options for their executives, if required)
* Touches upon how the fat-cats in other industries (like the Auto industry) are enjoying billions in bailout stimulus, after having enjoyed hundreds of millions of dollars in compensation in other industries
* Why even though President Obama means well, it will be difficult for him to pull America out of this financial disaster (since ex-bankers are now in charge of auditing these banks)
* How corruption still plauges our Political Economy
Listen >>
(9/22/2008) Coughing up the cash for the 800 billion dollar VALUE DRAIN
Socializing the proposed eight hundred billion dollar bailout is not a good idea. If
Lehman went bankrupt, it is the fault of the management --- for it made
fat brokerage fees while selling bonds derived from pooled mortgages,
and its bankers got thousands of dollars each in cash bonus. Same
with Bear Stearns and Merrill Lynch. Executives and bankers from these
and other financial institutions involved with Mortgage backed
securities should be bearing the bulk of these bailouts in taxes, and
not the rank and file American. The proposed bailout will drain at least $10,000 from each American household. This is nothing but a value drain to the
tune of 800 billion dollars, so who should cough up how much cash should be a matter of vigorous debate.
Read more …
(3/26/2007) Using the broader market returns as your investment benchmark is Savvy Investing
... This was back in early 2000, when the markets were at the top of the world, and Wall Street money-managers were like little gods. The answer the executive gave is endemic of the problems that plague the whole Wall Street money community to this day: "Well, we have our own benchmark within the mutual fund industry. As per the latest data, only 65% of the funds trail the bench-mark. So, 1 out of 3 money managers is actually beating the benchmark." Read more...
(3/2/2007) The Dow 400 Point Plunge, 10% to 15% correction likely
A historical perspective on corrections can serve as a good primer in the aftermath of the recent Dow 400 point plunge. Remember Alan Greenspan and irrational exuberance, in late 1996, 10 years ago? What was happening to the markets then, and where we are headed now? Let's analyze...
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