



Kevin Depew's Five Things You Need to Know to stay ahead of the pack on Wall Street:



1. Under TARP, Neither a Borrower Nor a Lender Be



Apparently those U.S. banks funded by the Troubled Asset Relief Program (TARP) are actually lending less than those without access to the program. Treasury, the sugar daddy in charge of this program, isn't going to like this news, which just goes to demonstrate the unyielding truth of the ancient saying, "pimpin' ain't easy."



According to Bloomberg, 51 lenders who got TARP money reduced total loans by $92.9 billion, or 2.5 percent, in the fourth quarter from the prior quarter. Their smaller peers who didn't apply for capital or declined cash infusions curtailed lending by $1.87 billion, or 1.3 percent, the article said. Fifth Third Bank (FITB), Capital One (COF) and KeyCorp (KEY) were among those receiving TARP funds that curtailed lending the most.



Meanwhile, the news that banks are not lending is infuriating Washington, puzzling the Fed, baffling Treasury and mistifying most economists. Why? Because none of the tried-and-failed Kenyensian models allow for any of what is happening. It's like using a road map for Oklahoma to drive down the east coast. Every turn on the map is wrong... because it's the wrong map.





2. Maxed Out



There are only two things you need to know about the financial crisis to be able to successfully cancel your newspaper subscriptions and ignore the evening television news: 1) there is too much debt in the system, and 2) it is being supported by too little real income. That is all ye know and that is all ye need know.



Of course, there are many incentives for politicians, credit pushers and economists to make it more complicated. And indeed, it is a smidge more compicated than the way I described above. How so? Time preferences.



A Kenyensian view of the state of being "maxed out" with respect to debt ignores the psychological aspects of credit and time preferences. The structural shift in consumption and savings attitudes we are seeing take place before our very eyes makes certain that our 20-year love affair with credit and debt won't get rekindled for many, many years.





3. Drug Money



According to a recent news brief in the International Herald Tribune, as the global financial crisis spiraled out of control in the second half of 2008 drug money became one of the few sources of liquid investment capital.



"The United Nations Office on Drugs and Crime had found evidence that "interbank loans were funded by money that originated from drug trade and other illegal activities," [UNODC Executive Director Antonio Maria] Costa was quoted as saying in an interview with Austrian weekly Profil. "There were "signs that some banks were rescued in that way," the IHT reported Costas said.



Well, I suppose that's one way to do it. It also shows the depths to which our finance-based economy and society has plunged. Even The Godfather, Don Corleone, had issues with getting involved in the narcotics business.



In this famous scene from The Godfather, Don Corelone, played by Marlon Brando, explains to Virgil "The Turk" Sollozzo, played by CNBC reporter Charles Gasparino, why he won't fund his narcotics scheme.



Don Corleone: I said that I would see you because I had heard that you were a serious man. A man to be treated with respect but I must say no to you and I will give you my reasons. It's true, I have a lot of friends in politics. But they wouldn't be so friendly if they knew my business was drugs instead of gambling which they consider a harmless vice but drugs, that's a dirty business.



Sollozzo: Don Corleone...



Don Corleone: It doesn't make any difference to me what a man does for a living, you understand, it's just that your business is a little dangerous.





4. Correction



EDITOR'S CORRECTION: We have been informed that the role of Virgil "The Turk" Sollozzo in The Godfather was not, in fact, performed by CNBC reporter Charles Gasparino, but by veteran character actor Al Lettieri. We regret the error, but damn, were those dudes separated at birth or what?!







5. The Return of the Blue Collar Worker

When most of us under the age of 45 were kids, the career goals our parents outlined for us were relatively simple and consistent: go to college, study hard, get a white collar job that pays well.

Times are changing. A recent New York Times piece observed that bad economic times are spurring a flight to blue collar jobs, "shunning white colar jobs."

"Laid-off workers are flocking to the schools to retrain for other occupations, and young people are enrolling in greater numbers to avoid the higher tuitions of a four-year college, said James Jacobs, president of Macomb Community College in Warren, Mich.," the Times reported.

Several aspects of darkening social mood - insecurity, uncertainty and caution - will combine to help displace the dominant role that so-called artistic producers have enjoyed over concrete producers, all courtesy of a positive wave of social mood that has now crested and is in the process of breaking.

What does that mean? Think of it this way: there are essentially two types of producers, concrete and artistic; concrete = those who can increase their revenues by making more widgets, and artistic = those whose revenue is entirely dependent upon uncontrollable variables in valuing their work.

White collar work, in general, is heavily burdened with the economics of artistic production; its value determined by a myriad of variables that producers have very little control over. Consequently, as uncertainty and insecurity take greater hold over social mood, there will be a yearning for work that is based largely on the production of concrete, visible things.

Even in the face of deflation - and, ironically, a long-term contributing factor in perpetuating it - there will be a resurgence in the popularity of the blue collar worker, the producer of tangible items whose value, even if deflatiing, can be more easily discerned and relied upon in securing an income stream.