Cartoons - All Comments

re: Losing Investor Trust

cartoon — Thu, 20 Nov 2008 15:09:26 GMT

Sharapora: So many things have happened recently. So far we have witnessed the rescue and sale of Bear Sterns; the fall of Lehman’s Brothers; the acquisitions of Merrill Lynch by the Bank of America; the intervention and support of Fannie and Freddy by the government; and the rescue of AIG.

Shalene: Yes, but neither the rescue nor the takeover and restructuring of financial corporations has worked so far.

Sharapora: I think once Paulson and Bernanke realized that what had been done didn’t work, they thought about the $700 Billion rescue package.

Shalene: That same week the New York stock market had its worst week in 75 years. Since the market’s fall has continued, the crisis has extended all over the world.

Sharapora: The $700 Billion rescue plan has not been implemented yet because it became evident that banks were not going to open up and make credit available to clients, in spite of the rescue measures. Also, there is pressure to apply at least $25 Billion of the $700 Billion to save the vulnerable automotive industry, even though secretary Paulson is against it.

Shalene: The federal government has reduced their interest rates continuously and on October 21, it became 1%. So far this measure has not helped to reactivate the economy.

Sharapora: Some of the problems we are experiencing remind me of the recession of the 1990’s in Japan. Japan’s Central Bank was not able to make things better.

Shalene: We need a very large fiscal spending package to stimulate the economy. However, the fiscal deficit is so high that there is not enough money left to work with. Also the G-20 gathering looked like it was something positive but nothing concrete came out of it. I think investors and citizens in general have lost trust in the markets. There are so many traps and worthless financial instruments hidden in banks that no one wants to take a chance. The risks are just too high.

re: Wallstreet Pirates

cartoon — Wed, 19 Nov 2008 23:03:57 GMT

Paul: This whole thing seems like a sham. Private investment companies like hedge funds and equity corporations used huge leverages in their financial deals, sometimes with dollar ratios of 28 to 1.

Paulene: Also by using complex investments that hid the worthlessness of their financial instruments, they were able to get away with murder.

Paul: So they made these enormous deals by relying on massive leverage and complex instruments. It could be said that they rely on virtual stuff to make real profits.

Paulene: The worst part is that the money is gone now. They put it in safe places and let the rest of the structure fall apart like a house of cards.

Paul: Their most commonly used instruments were based on genetic algorithms that were so complex that most of the CEOs dealing with them didn’t understand them.

Paulene: The executives of many companies invested in derivatives of different kinds, and participated in hedge funds. At the time the pay seemed good and they didn’t know it was a hoax. They thought they could trust the market’s investment leaders.

Paul: It’s no wonder Warren Buffet called derivatives and hedge funds “Weapons of mass destruction”. I don’t see a difference between those responsible for the financial crisis and the pirates of the 17th and 18th centuries, or the ones who now operate off the coast of Africa.

Paulene: We should make a new pirate movie about the crisis. It should be like Wall Street, but this time instead of Michael Douglas, we should have Johnny Depp play the leading role as Captain Jack Sparrow.

re: How Bad is the Economic Crisis?

cartoon — Wed, 12 Nov 2008 23:10:58 GMT

Tina: I am so tired of this economic crisis. All I hear all day is bad news.

Jane: Well, the economy is in the worst recession we have seen in the past 25 years. There is always the possibility that it could get worse, perhaps even as bad as the depression of the 1930’s.

Tina: Yes, that’s the worst part. I hear the bad news and know it could get even worse than it is now. The commerce department said that the GDP went down 0.3% between the second and third trimester. In October we lost 240,000 jobs. We lost 90,000 in the manufacturing sector and 49,000 in the construction sector.

Jane: I know. So far this year we have lost 1,200,000 jobs. Unemployment is up to 6.5%. This is the worst it has been since March of 1994. The number of unemployed workers is over 10.1 million, and may grow as much as 8-10%.

Tina: Consumer confidence keeps dropping, and this is causing consumer spending to decline. Retail sales went down 1.2% in September. In October the sales level was perhaps the worst it has been in the last 35 years. The economic contraction is just terrible.

Jane: Car sales in October went down 32%. General Motors, the largest auto company in the country, is facing serious problems. The company put plans to merge with Chrysler on hold, and could even declare bankruptcy. Ford is also showing huge losses. The Federal government is definitely going to have to rescue them. The New York stock market lost 39% of its value in the past year. It has lost nearly 6 Trillion dollars in the last 10 months, and further chaos seems to be stalking the markets.

Tina: Well, we are still waiting for the application of the 700 Billion dollar rescue package that was approved by congress a few weeks ago. We are going to need a stimulus package to avoid further credit contraction. We need more money to increase consumption and sales. We also need to apply fiscal financial resources to create more jobs and improve the infrastructure of our country. The problem is that every time the Feds spend money to save the economy, the value and credibility of the dollar goes down. So far the dollar controls 65% of the world market, and the Euro controls 31%. When we put more dollars into saving the economy, the dollar becomes weaker. The percentage of our world share is being lost to the Euro and other coins. This could be catastrophic to us.

Eventually fewer countries will want to invest in us because of a weak dollar that lacks value, and returns them less for their investment. We could also lose a great deal of the money that we collect when other countries buy dollars. They buy dollars to be able to buy and sell things on the international market. The dollar is like merchandise that we benefit considerably from when it is sold. It is like anything else we sell or export in the world market.

Jane: The sad part is that if things keep getting worse and credit default swaps falter even further, nothing could stop the economic fall. Anyone that brought mortgage bonds from Freddy Mack, Fannie Mae, or any investment bank, and wanted to protect their investment, could have bought insurance (credit default swaps) to make sure that their investment was protected. Now some of those insurance companies don’t have enough money to back up their contracts. There are approximately 57 Trillion dollars in credit default swaps. This is close to the amount of the whole world’s GDP in one year. If only a fraction of this amount starts to go bad, it will create panic in the markets. That is going to be very bad news for us. The Federal government has already spent more than 400 Billion dollars in order to save AIG, and it recently spent 150 Billion more. This insurance company’s main problem was that it lacked enough funds to cover credit default contracts.

re: Narcissism

willburns1 — Thu, 06 Nov 2008 21:07:16 GMT

lol, that's kind of funny. I like the drawings.

re: Narcissism

cartoon — Tue, 04 Nov 2008 22:17:19 GMT

Rick: God I look so good women at the party are going to find that I am what they have been waiting for through their whole life

Tom: you are insane

Rick: well by working out at the gym I have developed a perfect body

Tom: you are really crazy

Rick: what about my personality I am charming, intelligent and with a great sense of humor

Tom: you lost your mind

Rick: well I know I am exaggerating but someone has to enhance my self confidence and if no one is around to do it I will do it myself

Tom: yes but everything you said makes me think you are identifying too much with my.

re: Global Financial Crisis

cartoon — Tue, 04 Nov 2008 22:06:11 GMT

Rita: Maybe this crisis is good after all. It might make the people react about the earth’s capacity to be productive. The planet can’t take it anymore. There will be 7 Billion of us in just a few years. Right now there are close to 1 Billion people that are going hungry.

Jackie: From now on the market should have real, solidly grounded bases, not symbolic financial ones disconnected from the real, productive assets.

Rita: After all, growth and real wealth has to be related to the scarcity of natural resources.

Jackie: Yes. Growth and wealth should be tied to carbon dioxide emissions and clean energy sources.

Rita: That’s right. Otherwise what kind of world are we going to leave our kids?

Jackie: Maybe we should start my making it unlawful to create financial instruments that are based on abstract theories and disconnected from reality. Financial instruments based on mathematical abstractions lead to speculation.

Rita: At least when our economies were based on gold they were attached to reality. Gold is a real thing and it costs money to get it out of the ground. Maybe we should consider going back to the Bretton Woods agreement.

Jackie: At least if we can tie the dollar to a lawful and productive economy, I will be happy. We can’t continue accumulating debt and having deregulated financial markets. Above all, we have to think about having a competitive economy based on clean energy, and the best educational system in the world.

re: Bank Bailout

cartoon — Tue, 04 Nov 2008 22:02:24 GMT

Peter: A few days ago we approved a rescue plan for $700 Billion to buy toxic bonds from banks that were in trouble. Before it even took off, we started with another plan for $250 billion to buy some of the same banks. I wonder what they are thinking up there. It doesn’t look too rational to me.

Clyde: Maybe the first plan could have worked well by itself, but we never gave it a chance.

Peter: The problem with the second plan is once the government owns even part of the banks, they stop being profitable.

Clyde: Right! Banks make financial decisions to make a profit. Once the government, whether Democrat or Republican, gets into their decision making process, decisions could be taken away for political reasons.

Peter: I think Mr. Paulson and others up there are responding on the volatility of the markets rather than sticking with the well thought out ideas they originally had.

Clyde: Well, if what matters is how people feel from moment to moment, instead of what will truly save the markets, maybe we should call a shrink instead of an economist.

Peter: God knows what will happen. Maybe buying the banks could work after all. Do you have any idea what to do?

Clyde: Yes I do. I am going to church to pray. Maybe that will work.

re: Economic Collapse

willburns1 — Tue, 04 Nov 2008 21:20:54 GMT

No. I don't

re: Economic Collapse

cartoon — Tue, 04 Nov 2008 21:17:21 GMT

The Need for Economic Change

Joe: Do you know that according to Bernstein, an economist at the Economic Policy Institute, our real unemployment rate is 9.2% if we take into consideration the jobless who are longer looking for employment?

Margaret: Yes. We have lost 62,000 jobs in the month of June.

Joe: Millions of families have lost their homes because they can’t pay their mortgages.

Margaret: There are also more hungry people, and the cost of living is considerably higher now. Food and gas prices have risen especially high.

Joe: What’s amazing is that the economic pain is not shared by everyone. During George Bush’s presidency, 75% of all increased earnings went to only 1% of the population: the “wealthy.”

Margaret: It’s been a great transfer of wealth from the poor to the wealthy in that sense. Taking into consideration the income inequality, it’s worse than the economic crisis of 1928 before the great depression.

Joe: You know, the real salary of average workers has increased only 1% since 1979 in spite of the fact that we had a productivity increase of 60% during that period.

Margaret: I know. For example, the real financial benefits in 2005 went to 20% of the homes in our society, according to Thomas Frank in a recent Wall Street Journal article. We really need a change in this country, one that could bring more economic help to the middle class and the poor. Do you think Obama could do it?

re: Economy

cartoon — Thu, 23 Oct 2008 18:36:59 GMT

George: I don’t understand my dad. He said that Paulson thought he could get away by letting Lehman fail, but Paulson was wrong. Those that betted on Lehman’s side were trapped and couldn’t get out. Then he told mom that all this created panic, which has grown worse.

Kathy: Maybe your dad is part of a secret organization. It sounds like a horror story.

George: He went on further. He told mom that the crunch was spreading to everyone else. He said that many wouldn’t be able to raise the amount they need to survive because there is no credit available.

Kathy: He must be talking about a catastrophic disease of epidemic proportions.

George: I don’t know what employment and industry have to do with it. My mom said that industry and employment are going down, indicating that things are getting seriously worse in spite of the approval for the rescue by congress.

Kathy: Your parents are definitely weird. God only knows what they meant.

George: He said it sounds apocalyptic, and that several of the most brilliant economists thought it was too. He said on Thursday, a blogger named John Jansen declared that current conditions are “the financial equivalent to the reign of terror during the French Revolution”. Joel Prakken of Macroeconomic Advisers says that “the economy seems to be on the edge of the abyss” and that we need an economic stimulus plan to push back against the slump and put money where it is needed.

Kathy: Now he is mixing economics with medicine. There is definitely something wrong with him.

re: Saving the Economy

cartoon — Thu, 23 Oct 2008 18:30:41 GMT

Robert: Do you think the $700 billion rescue plan will get us out of this mess?

Gerald: It might do some good, but this crisis goes beyond what that plan can do for us. The main problem is not liquidity or cash savings options for banks that are in bad shape. We need a plan where home owners can pay for their mortgages. That way, bad debts will see some reasonable improvement.

Robert: Well, since the late 70’s, our main means for economic growth has been centered on the bubble model. This model centers on getting into debt to finance economic growth in unproductive ways. We have dismantled whole sectors of the economy to finance projects like house building on a large scale, far beyond the real demand of the house market. That is why our marketing percentage of the GDP today is only 10%.

Gerald: So debt and speculation worked side by side?

Robert: Yes, global banks weren’t concerned about the repayment of loans. Instead they thought of loans as investments to be later sold to other institutions at a profit. In the past 7 years, private debt in our country has more than doubled. Today it is over $14.5 trillion. The federal government’s debt is only $9.3 trillion. The sum of public and private debt is approximately 169% of the GDP. These numbers have not been seen since World War II.

Gerald: That’s interesting. I know that from 2001 to 2008, debt was accompanied by a 2.57% rate of low economic growth. We were only capable of generating 6 million new jobs, and of that number only 4.3% were related to productive investment from the private sector.

Robert: So this debt we have gotten into has not been applied to productive investments?

Gerald: Right. We need a macroeconomic model and policies that will help us to increase the well being of our society. We also need a powerful new industrial and clean national energy model, and projects to get away from the present greed based model. We need to reinvent ourselves.

re: Causes of Economic Recession

cartoon — Thu, 09 Oct 2008 22:03:52 GMT

Mary: I believe the history of the financial crisis started in 1985 with Reagan. It was then that the Plaza agreement took place. Secretaries and economic ministers from the G7 got together at the Plaza Hotel in NYC and decided to install a new parity exchange program where the monetary units of some of the most important economies around the world were going to keep their value higher than the dollar so that the USA could have higher exports, higher revenues with sustained solid economic growth. At that time the US was borrowing heavily to keep the Star Wars program working in order to drive the Soviet Union bankrupt through the arms race. The Plaza agreement was the contribution of European countries like Germany and Asian countries like Japan to help finance this program.

Nancy: I know that’s why Clinton in 1995 had to payback those countries by raising the dollar’s value so that their economies could start growing again.

Mary: Yes and then Asian nations began to do very well and to have large excess revenues investing large amounts of money in us every year. This money became available at low interest rates and helped later to create the internet bubble and market crash. During that interval of time we started to raise our imports from China and Japan considerably, therefore our commercial deficit grew way beyond reasonable expectations. And as you also know after the internet bubble crash it came the mortgage bubble.

Nancy: Globalization together with the privilege nation status we gave China in the early 80’s, after doing something similar with Japan, helped dismantle whole sectors of our economy that moved mainly to Asia and in particular to China because of the cheap labor they had to offer. Also of course we shouldn’t forget Clinton’s and Rubin’s changes to the laws of the Federal government, creating the condition for the mortgage bubble and the speculation related to that sector of the economy.

Mary: I think there were three factors that since 1995 contributed mainly to the crisis. First the large level of liquidity which generated economic growth and prosperity. It was the Federal Reserve with Allan Greenspan who were responsible for allowing the availability of such a large capital flow without doing something about it to regulated.

In spite of all this money flowing we had no inflationary problems because China, Brazil and India brought in their labor force to the world markets doubling labor’s world supply in between 1990 and 2005. This brought in turn a growing demand of goods and a growing supply, keeping the world’s financial markets in good shape and creating economic stability mostly due to cheap labor and American buying power, with borrowed money of course.

We have to remember that under a normal economic cycle, in any country, as production factors as labor, run out due to growth there is an incremental increase in labor’s salary that eventually brings higher prices of goods and services because workers have more buying power which in turn causes inflation and the raise of interest rates by the feds to stop the spiral of salary growth and inflation from getting out of control.

Nancy: Yes and the cheap labor of China, Brazil and India did not allow for the normal cycle you just described to occur because these countries had so many people unemployed that they were eager to work for very low wages. I believe that I know now what the third factor is: the technological revolution that brought the computer and satellites allowing almost instant investments in between world markets, as well as the transfer of technology through the internet around the world

Mary: Yes you are right, and all of these factors brought the large period of economic expansion that generated high levels of spending and consumption due to the abundant amount of flowing cash in the world. From 1980 to 2007 GDP growth went from 163% to 346% and it was American families who contribute most to this growth and hence their debt grew from 50% to 100% during the same period while the financial sector debt grew from 21% to 110% for the same reasons.

Nancy: The Keynesian laws did not take effect because world circumstances changed. And now we are in big trouble not only we over spent increasing our debt way beyond normal limits but also banks don’t lend money to other banks, something they did all the time, because trust is gone, many banks are holding toxic bonds and other kinds of investment instruments that lack value therefore healthy banks don’t know if they can recover their money if they lend to other banks.

Even the rescue package might not be good enough there are close to 57 trillion dollars in Hedge funds and Credit default swaps which have uncertain value. These over the counter instruments are handled through investment banks which are not the traditional banks we are acquainted with. Also many corporations can’t borrow because credit been so tight and they might fold weakening the economy considerably.

I guess it may get to a point where governments around the world will have to intervene and save almost everyone.

re: The Intrinsic Problem of Capitalism

cartoon — Mon, 06 Oct 2008 20:24:37 GMT

Mike: When the mortgage bubble burst, it had some very negative consequences on the economy. Beneath the mortgage crisis, which could have been avoided of course, there is a pervasive underlying crisis inherent to our system.

Rick: What do you mean by a pervasive underlying crisis?

Mike: Years ago, a brilliant economist by the name of Hyman Minsky noticed that crises in Capitalist economies were probably due to the relationship between two factors: the expansion of the financial sector and the evolution of the real sectors of the economy.

Rick: How are the two related?

Mike: Well, Minsky’s theory explained that when a capitalist economy is growing, investors have a tendency to overestimate and overreact to good news. This situation leads them to develop an overconfident view of the future. They get into excessive debt so they can have more money to invest. They end up investing beyond the real needs of the economy.

Rick: Do you mean that investors become excessively positive and think the good times are going to last forever, and over-invest in the economy?

Mike: That’s right. Investors get deeper and deeper into debt. The economy becomes unstable because of the excessive debts and investments.

Rick: I understand now. That’s how investors can make money by getting out of touch with the real needs of the economy. Some investors can purposely invest more into the market so that others see the market rising. They invest their own money into it, thinking there is still enough demand from the market triggered by real economic needs. Then the first investors sell their stocks at prices that are suddenly very high. They let the market flop, hurting a lot of honest investors.

re: Building Intimacy

cartoon — Mon, 06 Oct 2008 19:25:59 GMT

Virginia: I have a great need for Bob to be close to me, but we aren’t really that close. I don’t know how to bring us closer together.

Beatrice: I guess you’re just yearning for his intimacy.

Virginia: That’s right, but how do we get that intimacy?

Beatrice: Intimacy is built on mutual trust. The more you love and trust him, the more he loves and trusts you back. It becomes like a positive spiral of wonderful feelings of love, caring, and mutual consideration for each other.

Virginia: So all you need is love and trust to build intimacy?

Beatrice: Well you also need empathy. Believe it or not, pain and happiness can also help to glue a couple together.

Virginia: How can pain bring two people closer?

Beatrice: When people suffer together and have empathy for each other, they feel each other’s pain and do everything they can to help stop it. But even when they can’t stop the circumstances, they can echo, resonate, and reflect their feelings. Pain can bring acts of mutual, reciprocal love. This in turn increases the emotions and the cycle continues. The same thing can happen with happiness. Each person becomes happier because of what the other is experiencing. When you have true intimacy with your husband, you both become one.

re: Women's Rights

mike — Thu, 25 Sep 2008 16:52:28 GMT

I would go so far as to say that any country is severely stunting its growth by oppressing any social group. Sure, lots of prosperous civilizations throughout history were built on the backs of forced slave labor, but how many of them are still around today? Think how prosperous they would have been if these people were free and working hard to support their families.

I would even venture that America is as powerful and prosperous as it is mostly because we are a nation of free people. We can work hard to achieve our dreams and will put forth the effort to make them happen. I don't think we would have the same work ethic if we were working to make someone else fat and happy, and only putting forth enough effort to keep from being beaten. I just wish more countries would come to this realization.