In order to save the Dow Jones Industrial Average, the Bush administration seeks boundless power that cannot be reviewed by federal courts.
Didn’t we try this already at Gitmo, and it didn’t work out so well?
from Bloomberg:
Treasury Seeks Asset-Buying Power Unchecked by Courts (Update2)
By Alison Fitzgerald and John Brinsley
Sept. 21 (Bloomberg) — The Bush administration sought unchecked power from Congress to buy $700 billion in bad mortgage investments from financial companies in what would be an unprecedented government intrusion into the markets.
Through his plan, Treasury Secretary Henry Paulson aims to avert a credit freeze that would bring the financial system and the world’s largest economy to a standstill. The bill would prevent courts from reviewing actions taken under its authority.
“He’s asking for a huge amount of power,” said Nouriel Roubini, an economist at New York University. “He’s saying, `Trust me, I’m going to do it right if you give me absolute control.’ This is not a monarchy.”
Gee, libertarians. You got your way. Clinton and Congress repealed Glass-Steagall in 1999, allowing the magic of the unregulated marketplace to create all these wonderful new “financial instruments”. That worked out real well, now didn’t it?
Obviously enough laws haven’t been repealed yet.
I hope you mean this ironically.
opps
Libertarianism has nothing to do with the problems the U.S. faces today. Quite the contrary.
“Free market” happy talk is very much at the root of the problem, and libertarians thoroughly subscribe to that, dear.
clinton was’nt in power in 1999! he was elected in 1992
Doug,
Clinton was in office from 1993-2001.
I am not a young man, but never in my lifetime have I seen anything as reminiscent of Hoover’s Great Depression as America today–banks failing and hundreds of thousands of Americans losing their homes. For the first time in my lifetime, people are worried about whether the money they have in the bank is safe.
This nation cannot afford four more years of Republican rule. And there’s one big reason.
Forget personalities, inexperience. racism, sexism, and war hero talk. It’s the ideas that the candidates and the parties cherish that really matter.
The same ideas that produced the Hoover Depression are alive and well in today’s Republican party–no taxes for the rich, subsidies for big corporations, no government regulation by the federal government, and the supremacy of states rights.
Change the name from Hoover to McCain to Palin on the economy, and the answers they give are interchangeable.
I’ve shortened my comments here because I know I’m blogging, but if you want to see more on this subject, go to a great website I found with the url http://www.howtotalkback.
I personally heard Rush Limbaugh say that it was his goal to undo everything that FDR did.
Now it’s no secret that nobody has more influence over Republican thought than Rush. And it’s no secret what Rush believes: government is bad and federal regulation is a plague.
But I wonder if Rush realizes that the FDIC–a program of the federal government put in place by FDR–is the main thing right now that’s keeping America from an economic collapse.
One of my friends asked me why I wasn’t voting Republican. “Don’t you want to keep more of your money?”
My answer? If Republicans continue to rule, and they follow the Hoover, McCain, Palin script, AND THE BANKS FAIL, neither she nor I will have any money to keep.
What we need is a President who sounds like FDR, not a Hoover sound-alike.
–Will C. Justice
Americans wealth and her people are what’s made America–the land of the brave and the free? When times get tough ‘how much was hype?’. In Great Britian we had a show called blank-it-ti-black cheque book and pen I new it would be an hit in a America one day.
This fiasco stems from the 1999 repeal of the Glass-Steagall act under Clinton, and it’s further proof that the biggest problem with the Democrats is that since Reagan they too often have gone along with catastrophically bad right-wing policies. “See, we’re fun and ‘innovative’! We’re not those tweedy old leftist intellectuals! We understand that the unchecked greed of the wealthiest few is all the economy needs to produce the greatest good for all!”
In a self-governing society, the government is our collective brain. When you refuse to use your brain, assuming everything will work out with no “interference” caused by thinking, planning, or restraint, disaster results. The anti-regulation mantra amounts to the same approach, in the realm of public policy. When society refuses to use its government to keep its economic house in order, things run off a cliff. That was the lesson of the Great Depression, and it’s why we have banking regulation. In forgetting this lesson and repealing Glass-Steagall, we have brought on a new disaster, same as the old disaster.
Oh really? It was the American government that helped cause and exarcerbated the depression. The Smoot-Hawley tariff act crippled global trade.
Smoot-Hawley was enacted under Hoover’s watch along with tax increased to balance the budget.
Eric,
I’m afraid you are right, Eric, and your reasoning is precisely why no one here should be looking to anything in the way of meaningful change from Obama and the Democrats. The Democrats ARE the Republicans and the Republicans the Democrats, and that’s nor true only of the origins of this dilema, but of the face they put on foreign policy as well. Here is the system and it is ready to burst and we have no genuinely free access to unsuppressed alternatives. Those that speak for authentic change are manhandled by the election processes, by a cheerleading media and by a thoroughly witless electorate. The only thing wrong with the caption to this article is the word “seeks”. The regime doesn’t seek, it takes! Bush proposing that Paulson be given free reign in these circumstances is like Hitler assigning Schacht to the task of directing the National Socialist economy. I sincerely doubt that the new proposals will be sufficient to stave off a catastrophic collapse because the government simply hasn’t either the assets or the credit worthiness worldwide to prevent it. They haven’t yet come for your credit cards. They will.
“Bush proposing that Paulson be given free reign in these circumstances is like Hitler assigning Schacht to the task of directing the National Socialist economy.” You’ve got that right. This is not just stupid, corrupt, counterproductive and ineffective, it is treason against the population and the constitution. $700 Billion (and you can be assured it will be a LOT more than that in the end) with no judicial oversight to bail out the cannibals that have looted, rationalized and de-industrialized this country! Overseen by the very people that got us in this mess. This is insanity and if it allowed this country is finished. The financial oligarchy aims to use national governments to destroy any ability of any gov’t to work for the common good. Their end-game is a kind of international feudal world order run by central banks, investment banks, hedge funds, the IMF and the uber-rich. A few billion useless eaters will have to be eliminated as they are economically superfluous and too much overhead for the new system to carry. Look for hot wars coming soon, as Russia and China will not simply roll over and accept this fascism that will be coming after them in short order.
This all started with Nixon sinking the Bretton Woods system in ’71. Every Admin since then has been complicit in deregulating everything in sight and dismantling all New Deal protections. Yes, bring back Glass-Steagall, but more important put the whole floating-exchange rate system thru bancruptcy proceedings. Just write off the 100’s of trillions of dollars of derivatives and exotic and toxic bad gambling debts, which are worthless and unpayable anyway. Then outlaw those instruments. That will crush the locusts. Then create a new Bretton Woods fixed rate system and start over by issuing credits to re-start productive investments in food production, large scale energy and transportation systems and other needed infrastructure. Anything else will doom the planet to a new dark age.
The $700,000,000,000 billion does not include interest which will at least double the amount. This along with the $3,000,000,000,000 trillion for the Iraq war is at least %5,000,000,000,000 trillion which will be doled out to the CORPORATE WELFARE KINGS WITH THE INTEREST AND PRINCIPLE PAID BY THE AMERICAN TAXPAYERS.
Unmitigated Audacity,
Think we’re pretty much on the same page here.
Leave it to these reptiles and a mess will be made of things. Already they have the wrong focus. Bovard referred to Noriel Roubini whom I respect and he’s called for an entirely different approach than the one now being consided, tracing the solution to limiting household debt where it ought to be. It probably would oversimplify his concept to put it this way, but he looks to solving the debt burden of individuals and families first as a firewall against further disaster. I mean that’s who’s defaulting on these loans, individuals, and to a very great extent to reduce the debt burden on individuals means to limit the risk of banks. The regime sees the problem of the lender as being the greater priority and that of individuals as subsidiary if at all. Where’s the talk of limiting the usurious interest charged on credit cards by Bank Of America? If you’re trying to create liquidity, limiting these criminals to 4% on these cards would create it, enormous amounts of it. Obama, Oschmama, a Democrat in the White House, despite all the talk of protecting the taxpayer, would never dare defy their paymasters in this way. Biden represents Delaware and his beholdeness to MBNA is legendary. They’re filth, these people, filth. Here’s something on Roubini’s thoughts:
http://marcelinopena.wordpress.com/2008/09/19/home-home-owners%E2%80%99-mortgage-enterprise-nouriel-roubini-solution/
Noriel Roubini whom I respect and he’s called for an entirely different approach than the one now being consided, tracing the solution to limiting household debt where it ought to be. It probably would oversimplify his concept to put it this way, but he looks to solving the debt burden of individuals and families first as a firewall against further disaster. I mean that’s who’s defaulting on these loans, individuals, and to a very great extent to reduce the debt burden on individuals means to limit the risk of banks.
Nope, John, “individual debt” is not the main problem, at least not as phrased.
And it is not the “individuals” mainly who have “defaulted”.
Thatcherism was a fraud from the getgo. Still is. Just another version of Greater Fool Theory.
And indeed, there may be an unlimited or close to unlimited pool of greater fools left in the the US today.
The problem is, they are broke, and even their time and mindless “labor” (what Paul is really after cornering) is worth spit.
Eugene,
An economist, I’m not, but Roubini is and he sees the debt burden of individuals as being the source of the problem. Limit the exposure of individuals, limit the exposure of the lending institutions. This approach, if considered two or three years ago, might have averted this crisis. Now all it can achieve is limiting further damage but that’s better than a poke in the eye with a sharp stick. Take the power to steal away from these institutions and nothing will be pilfered. What’s your take on Roubini? He’s quite well regarded.
“This approach, if considered two or three years ago, might have averted this crisis.
Let me be enigmatic again. When sub-prime collapsed (which I began predicting as early as 2005 month by month) I was given a very long report, which a particular bank, along with most others, purchased periodically for a large subscription fee.
Like many of these reports it was mostly water, but I went through it line by line, and and having prophesized in great detail what had already occurred, in a concluding section advising what steps might be taken, it made the same Thatcherite (in my peculiar lingo) recommendations.
This I found hilarious and duly passed it on.
Most of the people I passed it on to did not follow the joke.
That was a few years ago. When subprime collpased I predicted that “good mortgages” would soon follow.
Again no one could follow why, though it was very simple.
One of the problems is that, even was this very expensive report worth the paper it was printed on, it was being addressed to the wrong people.
Theoretically what you say may be partly true, but the key point, which I iterate, is that it is not the individual borrowers, even most of the sub-prime borrowers, who have defaulted.
Yet.
Nor did they default willingly save at the high end–to wit, those few speculators in real estate who “owned” two or a score of properties to play with and who, seeing the handwriting on the wall, defaulted on one or more of them almost immediately with the collapse of subprime.
There are several recursions (about five distinct ones, perhaps more to be identified) going on, which even most economists don’t understand, partly because they are paid not to understand them.
Consider this: about 66% of the US economy depends on domestic consumer spending.
How do Americans spend? The use credit. When there is a credit crunch, consumer spending contracts as does the US economy.
Okay, now take a recursion the oil companies, who do understand recursions, use to their advantage.
The price of oil on the global market rises. The US oil companies raise their prices accordingly. This effects consumer spending since transportation (even getting to work) and food are immediately affected. This also effects real estate and mortgages. As the crunch gets worse middle and lower classes are increasingly squeezed. The Bush admnistration hears their plea and give them a tax rebate. The tax rebate is then spent to cover the higher cost of food and fuel, that is, it immediately goes into profits for the oil companies.
The oil executives laughs. They were likely the ones who suggested the rebates in the first place, or one of their tools.
Everyone happy now?
Corn-based ethanol is another recursion. Corn-based ethanol takes more petroleum products to make (fertilizer, insectide, fuel) than any “energy ” (read oil) saved.
Make ethanol, use oil.
The oil companies laugh. Not only do they sponsor corn-based ethanol, they invest in the “technology”.
Woudn’t you?
The rich economies have lived off the backs of gamblers and cheats in the financial markets since adam was a boy.
Capitalism is a free market? for thoses who are in the club. The system as worked in part, thats why we can communicate and live a relative nice life. When the system is challenged its dog eats dog but all our economies are linked with the system and the fall guys are the guys (you and me) All foriegn polices are controlled by market forces. Therefore it is not supprising that conflicts occurs in countries who want a piece of the action!! and the circle continues. The small players we all know the main ones are hidden. Probable we may have to go back to the beginning of the Greek gods and let Chaos take control and then we all could be (primus inter pares)first amoung equals?
The problem is not deregulation. The problem is that the whole system is based on jockeying to get a regulatory structure in place to benefit one group at the expense of another. The costs are socialized and the rewards are privatized. That is what the federal reserve system does. No doubt, the actual repeal of the Glass-Steagall Act had certain people licking their chops because they could see that the total regulatory framework was not really made into a free market but rather opened up opportunities for swindlers to steal from everybody else. Just because it is touted a free market economics does not mean that it is, anymore than the IMF, World Bank, or the many other intergovernmental trade agreements are real free market policies. The same thing happened, from what I understand, in Russia, posing as “deregulation”.
The idea that a government is our collective brain is quite reactionary, medieval, and autocratic. Not to mention incorrect. The government is a group of people with individual brains acting for their own purposes. Electing someone does not magically or mystically alter the government agents brain into some omnipotent instrument of the illusory general will of the people. Structurally, such an idea reminds me of the idea in Buddhism of the Boddhisatva who transcends the ego but stays in the world, rather than departing to nirvana, in order to aid humanity. It is structurally like the Christ/Messiah narrative as well. Electing someone does not turn that into the Messiah, Jesus Christ, or a Boddhisatva, but merely gives a regular, and probably more sociopathic than average, human personality, more power than the rest of us. If the people are so screwed up that if left to act freely, the economy would run off course, how exactly does voting enable them to act so as to stay on course? It must be more magic. Do the people suddenly become economic and moral geniuses who then elect a Boddhisatva/Christ as their overseer, then revert to their former degraded selves after that? Is the ballot box the magical device of super-wisdom? Do people running for office undergo a similar transformation, being mere humans until placed in office, at which time they are endowed mysteriously with the power to run the economy, determine right from wrong, and otherwise guide us toward a higher good, and perhaps part the Red Sea and stop the rotation of the earth? Government is not a brain and not a mind. The people are not the body of a society whose mind is George Bush or Jobarhnack McBama. This is so obvious as to not need stating, other than to statists who always resort to mystical and intuitive metaphors to promote the brutality of the state. ‘Collective brain’ is an oxymoron. Furthermore, the free market is not unregulated or unguided. It is guided by the interactions of all individuals making non-violent choices.
Sean,
Please with the Boddhisatva/Christ equation. Given their self-definitions, the two aren’t even close to being an equivalence. Stick to economics, you’re stronger there.
Mr. Lowell,
Thank you for the paternalistic “your stronger there”. You must be a college professor. It may offend you somehow to compare religious traditions but in the grown up world people do this. Of course in the current infantile discourse from the postmodern and sociology-of-knowledge left and fundamentalist right this is not considered proper, and therefore when such things are pointed out one gets accused of all sorts of bad things, from ignorance, to anti-christian bias, to intellectual imperialism. People have, however, been doing this at least since the 16th century, including numerous Buddhists and Christians. In the 20th century for instance there were Thomas Merton and Daisetz Suzuki. There are also the phenomenology of religion scholars such as Eliade and van der Leuw. Some early church fathers themselves explicitly recognized the similarities between their own religious imagery and that of Greco-Roman religions like the Eleusinian mysteries and philosophies such as Neoplatonism. Did this mean that they gave up their faith or even gave tacit approval to non-Christian ideas? No, since they for the most part condemned other religious practices. Were they intellectually inferior? Were Augustine or Ambrose deluded when they expressed admiration for Plato?
Apparently it is in your interest that they be absolutely different, totally nonidentical, and therefore, any proposed similarity is equated in your mind with a proposed absolute identity (“equivalence”). This is the same mentality that leads to “if you are not one of us you are totally nonhuman”, or “if you are not with us you are the enemy”, “if you eat your bread butter side up, while I eat mine butter side down, then you must be of a completely different species, evil, and in fact don’t eat real bread at all, since real bread has the butter side up”. This is the narcissism of small differences. In fact I don’t recall making any equations. Perhaps you are going to become indignant if I imply that a chair and a couch are similar and accuse me of equating chairs and couches. Or the same with honeybees and bumblebees. After that the logical result would be to advocate the suppression of all thinking, since finding similarities is fundamental to the very possibility of orienting ourselves in the world. So, no, i don’t think I will stick to economics.
Were Augustine or Ambrose deluded when they expressed admiration for Plato?
Aurelius Augustinus was deluded till the end.
Merely by the way, he seems to have known no Greek.
Peter Brown wrote a saccharine biography of this Augustinus, though the scholarship was good.
Ambrose is much more interesting fellow–hard bit, lapidary, aristocratic.
Important in hymnology, chant, and music as well.
Poor Theodosius.
In this corner, in the checkerboard tights, Ambrose of Milan! In this corner, in the harlequin tights speckled with cherry red and pistachio green, Quintus Aurelius Symmachus!
Sean,
Here’s the equation:
“Structurally, such an idea reminds me of the idea in Buddhism of the Boddhisatva who transcends the ego but stays in the world, rather than departing to nirvana, in order to aid humanity. It is structurally like the Christ/Messiah narrative as well.”
What arrests the mind is how facile the statement is, how much is presupposed. In fact, absent these presuppositions, one might have a real struggle convincing oneself that there exists even a scintilla of similarity between “the idea in Buddhism of the Boddhisatva who transcends the ego but stays in the world, rather than departing to nirvana, in order to aid humanity” and the so-called “Christ/Messiah narrative”. In truth, the two are entirely dissimilar, actually. You’ll understand, then, my disappointment when you announce that you’re not planning to stick with economics as I’d proposed.
John Lowell: a “mind arrested”.
Good job, Sean!
xearther,
I know, there you were worried that I’d offended Sean’s exquisitely delicate sensibilities and you felt you just couldn’t bear not rushing to his aid. Did you want to touch Sean too, xearther? :-)
I realize now that this is a hopeless cause. Your response is completely without substance. You give no examples, do not analyze any ideas, but simply restate your opinion, and accuse me of making facile statements. Well, they are facile because they are true. To claim that “it reminds me of” means “I think they are absolutely identical” is ludicrous. I just saw a guy walking on the street who reminds me of my father, yet I managed to maintain my sanity and refrained from asking dear old Dad how he had managed to return from the dead. I agree that your idea of the Christ narrative may not have a scintilla of similarity. However, your idea must rest on the complete evisceration from Christian history of the entire Neoplatonic tradition, the practices of the early monastics such as Evagrius, both of which have the most blatant similarities to ideas and practices in India and may in fact have been influenced by Indian thought and practice at the time. To deny that the incarnation is absolutely unlike the innumerable images of Indian gods taking on human form is plain silly. Monastic Apathie was the state of being indifferent to the world, i.e. of transcending it, in imitation of Christ in several ways, including the temptation narrative and the act of God humbling himself to become man in order to save humanity from death, imagery quite similar to that of a transcendent Buddha remaining in the world to aid others to escape the round of birth and death. That in pointing out these similarities I am thereby equating them is pure nonsense, since I could equally well point out numerous dissimilarities, as for example: God actually dies according to Christian theology while Boddhisatvas are not required to die in Buddhism (as far as I know). Also,the enlightened Buddhist is assumed to transcend even the gods. Very few Christians have gone that far, although Eastern practices on the fringe of accepted practice have discussed apotheosis and there was Eckhart’s idea of going beyond God as image to the ‘nothing’ that is the ground of being identical to the ground of the soul beyond all forms.
The influence of platonism is evident in the Gospel of John. Origen was influenced by Neoplatonism (and may have even been a student of the founder of that philosophy). The fact that Christian tradition itself, especially the Roman Catholic and Eastern forms have practiced various forms of asceticism in order to negate or overcome selfishness so as to live in the image of God is so obviously similar to eastern practices that to deny it requires an advanced degree in self-contradictory cultural relativism. Of course one can deny that these are real forms of Christianity and only ones own secret version is real Christianity, but at that point communication ends, which would explain why your response contains no actual information.
Though you may not quite yet realize it, your dignity as a human being isn’t engaged here, only certain of your presuppositions as I’d suggested earlier. Why don’t we get you started with the basics, the Catechism of the Catholic Church, and when you’re comfortable with the Catechism’s content, we can then expose you to some interpretive materials that will enlarge upon the catechetical teaching as it specifically bears upon the themes in question. No sense in getting ahead of oneself, eh?
To be considered by all of the above:
One obvious semantic equivalent of “mystery” is–“I don’t know.”
My word, and no one has yet mentioned, Socrates Scholasticus, Sozomen, Athanasius, Themistius, Libanius, or Julian.
In regard to Julian, one of Gore Vidal’s real accomplishments, which I came to from a completely different perspective when I was working in the Fourth Century AD, was that Julian, even thinking he was a pagan, remained a “Christian” in his underlying ideology.
Plotinus, Porphyry, Iamblichus, Apollonius of Tyana, Philostratus, Eunapius–that should keep you fellows busy for ten or fifteen years at least.
Eric: Our economic problems all originate from the mother of all economic evils, the progressive era spawn – The Federal Reserve and fractional reserve banking. The Fed, so the nation was told, would iron out the business cycle and protect the value of the dollar. The reality is that the dollar has lost 96% of its value since 1913. Regardless of their official missions, the true purpose of all central banks is to transfer wealth from creditors to debtors, from the public to the political and banking classes via credit creation (monetary inflation), aka counterfeiting.
Without exception, all credit fueled booms are artificial and are followed by busts exposing misallocation of capital in need of liquidation. The Great Depression started out as a typical economic contraction tampered with first by Hoover and then by FDR. The liquidation agony was dragged out and greatly amplified because corrupt politicians and power hungry bureaucrats labored mightily for the benefit of politically connected interests to prop up artificially high prices of investments, commodities, goods and labor. The New Deal was every bit as fascist as the European varieties.
Today nothing has changed. Fed credit creation under Greenspan first puffed up the equity markets culminating in the NASDAQ bubble. Attempting to avert a serious recession when that bubble popped, yet more credit puffed up real estate and then commodities. The explosion of these bubbles, especially the real estate one, have exposed massive misallocation of capital in need of liquidation. The government sponsored rescue packages are today’s version of the New Deal fascism which greatly prolonged the 1929 recession. Except for their magnitude, nothing is new.
So it is clear that the non-free market creation of government, the Fed, is the cause of our pain. It looks like the central bank experiment is on a trajectory to the trash heap of history. Statists everywhere and always love central banks and hate gold money. Gold limits government spending to whatever voters will tolerate in taxes. Counterfeit money via central bank credit expansion allows the political classes to levy a hidden tax which the public perceives as price inflation and blames on everyone except the true villains.
Glass-Steagall, a political product of the rivalry between the houses of Rockefeller and Morgan is inconsequential. It’s at best a float thrown to someone drowning in a hurricane. Gold money and not more regulations and central planning, which got us into this mess in the first place, is the working man’s salvation.
Gold won’t work. Silver won’t work. Wampum won’t work. Iron spits won’t work. Shells won’t work. Cattle won’t work.
Plutonium might work, but Geez, the shielding is so heavy.
Until nanotechnology paves the streets with gold and everyday is a Sunday, with a Kruggerand or Maple Leaf in my pocket, I know I can always approach a street vendor in Tangier with (mutual) confidence. As the slide continues, the day will soon arrive when the merchant tells me to stick Abe “where the sun don’t shine”. But gold? The Moors (and all of Humanity) will always have a smile. Yesterday, today, and tomorrow.
The statists’ nightmare and the freedom lovers’ wet dream: private, free association and exchange by the medium of gold and silver coin. Is there any doubt who will win in the end?
Mark Twain reported (“The Innocents Abroad”) how the rich of Morocco used to hide their wealth from the Emperor. Sometimes vanity would get the better of them and they couldn’t resist “flaunting it”. Some things never change (page 45):
http://books.google.com/books?id=H7kvAAAAMAAJ&pg=PA42&source=gbs_toc_r&cad=0_0#PPA45,M1
I really do want people to think “gold won’t work”, Eugene. Such thoughts will continue to make me rich(er) (“Give me your ‘worthless’ gold and silver! Here’s some funny money!”).
But I will admit, I do get a little excited about plutonium. There is something that can be done about the radiation and it does not require heavy shielding. Also, the best days of Canadian and Australian uranium mines are yet to come with the Chinese banging on their doors, shouting, “I need more POWER, Scotty!” Another time…
As always, thank you, Eugene, for your extensive contribution to Antiwar.com. Your entries are always a thoughtful and entertaining pleasure.
At the moment oil is in effect the virtual world commodity currency.
You are confusing two different things–gold as an investment, and gold as the basis of a commodity currency.
It is no longer clear how much gold the US has, and were the USD to be based on it would disappear into Asia faster than “a monkey over a cupcake”, or have I in effect reversed the gist of the figure?
In and of itself, it is not the paper that is the problem. It is what is behind the paper.
Moreover, gold is subject to manipulation as well, though of a different type than fiat paper.
What a missed opportunity in relation to depleted uranium. Instead making it into munitions that, exploding, irradiate everyone ad everything in the area, the US mint, instead of a nickel coated laminate, might have made those Eisenhower dollars for the slot machines of Las Vegas out of real heavyweight metal.
That’s one problem. As soon as you deregulate, the guys in charge quickly get the hang of it and degenerate into a colluding set of thieves. Now, if you allow them to print money, things get even more hairy, right?
Printing money through fractional reserve banking is exactly what the Federal Reserve, a product of government regulation of money and banking, allows banks to do. So how is more regulation the answer to regulation run amuck? The solution is to dismantle the Federal Reserve and prosecute counterfeiting, wherever the source, as the serious crime that it is. Unfortunately, the will is simply not there because all political factions hope to harness the counterfeiting power of the Federal Reserve for their agendas.
MetaCynic–the Federal Reserve IS counterfeiting.
You may or may not follow this, MetaCynic, and I offer no detail, but the present US currency in is some important aspects not even a genuine fiat currency.
Mussolini said it best; “War is the health of the state”. People in power always want MORE power.
Randolph Bourne said this, not Mussolini
While chasing after the mirages and red herrings of the various “isms”, what the USA in fact does is oscillate from one extreme of the relation between people and state to the other extreme, without ever finding a medium. This is because the USA is afflicted with a sort of arrested development regarding liberalism and its contradictions, beyond which all the European nations passed a century ago.
Bush Co wanting more power with no oversight – who would have thought!
American financial systems – bankrupt.
American political system – bankrupt.
American foreign policy – bankrupt.
Or as my rightwing ultra-conservative neighbor puts it, “Obama and the liberals will ruin everything Bush built.”
Randolph Bourne said, “War is the health of the state.” Mussolini only proved him right.
The US is currently doing a very good job of imitating Mussolini.
Mussolini? The present US elite cannot even do a passable job of imitating Mussolini’s mistress.
Nothing to get overexcited about yet. After all, “In God We Trust” is on the currency, isn’t? And the bonds and certificates and the banks are all backed up or otherwise insured by–what was that phrases again–oh, yes, “THE FULL CREDIT OF THE UNITED STATES GOVERNMENT”.
And that means….
http://i1.iofferphoto.com/img/1158994800/_i/14293634/1.jpg
I don’t know about Mussolini’s mistress’s talents, but the US is clearly imitating his talent at losing wars. Unfortunately there is no Hitler to bail out the US in Afghanistan and Iraq as he did Mussolini in Greece. Although war was ultimately the undoing of Il Duce, the health of his fascist state apparatus did prosper for a while.
Perhaps Bourne’s observation can be modified to “war is the health of the state if it doesn’t last too long, your state is not on the losing end and your leaders and their mistresses don’t end up hanging from meathooks.”
Yep. Originally a socialist and always a nationalist, he could not resist Hitler’s offer to divide up Austria.
Ethiopia was half the Kaiser in Tanganyka and half Cola di Rienzi.
Italy did actually have a modern navy but with no radar so it had to stay in port.
The Italian Army also was not bad, but Italians are a very wise people, and did not want to fight.
I knew an Italian radio operator in North Africa who over several years gave me his story of World War II.
It was a little Catch 22, except it was not fiction.
For all that Mussolini, as is sometimes not remembered, lasted a quarter of a decade.
Had he been a little more like Franco–who knows?
corr: “quarter of a century”.
Clara Petacci–a very sad story. She clearly really loved him and chose to die with him apparently, though some of the details are in doubt.
Or maybe not so sad. Who knows?
Made of sterner stuff than, say, Perle, eh?
How many of today’s neocon journalists and editors would volunteer for combat duties in a war which they championed as the socialist Mussolini had done in WW1?
They are trying to keep the wheels from coming off before the election. If they do come off prior to it, the Dems will win. Not that it makes one bit of difference.
More reason to vote for anyone but Obama or McCain. Like choosing between the Dracula or Frankenstein.
Corkey,
Yes, indeedie!
They have done a good job of selling the deregulation story. They had to find something to blame that wasn’t the Federal Reserve Bank.
Fiat money creation is the root cause and more fiat money is not the solution, though it may paper over the problem for long enough to get by the election. The analogy of giving more alcohol to an alcoholic in withdrawal is quite apt. In both cases, the immediate emergency response makes the problem worse. The bad investments need to be liquidated and the alcoholic must go through the horrors of withdrawal sooner or later.
The holders of the bad debts must accept the losses and our society must learn the lesson of the dangers of fiat money creation. To prevent a recurrence and to improve everyone’s standard of living, we must start using gold and silver as money and any paper used must be fully exchangeable warehouse receipts for the metals.
If you fall for the deregulation excuse, society fails to learn any useful lesson and this sets us up for a replay in the next generation.
Another site debated this question of Glass-Steagall’s repeal being the cause of the current liquidity crisis.
The strongest argument stated:
“None of the commercial banks that now have investment banking capabilities following the repeal of the Glass-Steagall Act are in trouble (e.g., Bank of America, Citibank, J.P. Morgan Chase, etc.). The fact that these large commercial banks are now buying the failed investment banks (Bear Stearns, Merrill Lynch, etc.) is the strongest evidence possible of their relatively good health in this mess. They have succeeded, in part, because they have a much more diversified business model, thanks in part to the repeal of Glass-Steagall.”
See the posts from
ThenDepressionSetIn
here
http://www.marketwatch.com/news/story/past-time-reinstitute-glass-steagall-protections/story.aspx?guid={4250CCCE-C00A-4A8C-A6B2-2466AB511469}&dist=TNMostMailed
Excellent comment – thanks for the facts & the link.
You seem to exclude the banks around the world that this has affected, not to mention WAMU, wACHIOVIA, Indymac. Your myopia and mental midgetry are astoundingly shallow. If it had worked so well why is their a world wide crisis? This just means that the CORPORATE WELFARE KINGS will reap the loan proceeds for which the principle and interest are paid for by others, the individual taxpayers. This whole crisis is engineered by and for the RICH SOCIALISTS. It’s Socialism for the rich and capitalism for the poor.
No one is arguing that there is not a crisis.
The question is whether it was caused by the repeal of Glass-Steagall. The facts do not support the hypothesis.
A clear understanding of the cause is important so that market mechanisms can evolve to minimize the chance of it happening again.
Paul Craig Roberts cites Glass-Steagall as causative, you can argue with him about the “facts”.
Centrally important observation, Haigh.
Let’s see, comparing June, 2007, stock prices with those before Thursday evening’s announcement and the panic buying Friday, we see BAC was down 50%, C down 70%, JPM down 30%. A truly stellar performance.
Yup, Glass-Steagall allowed them to be “diversified”. They have the rock solid backing of their depositors, who are insured up to $100,000. So they haven’t had to go begging for capital so far. When they do go under like Indy-Mac, FDIC (you and I) will have to cover their butts.
Teddy Roosevelt always clamored for more war. He had said repeatedly that “this country needs a war”. I guess Bourne and Mussolini clarify why. McCain is of the same mindset. War is a necessity for victory, according to McCain who thinks we need victories.
Everyone should now be immune to the economic right/libertarian happy talk about how the unregulated market magically produces the greatest good for all. These people should be totally discredited. They should shut up and stop pontificating to the rest of us; they should feel themselves terminally disgraced. But the economic right-wingers are just like the neocon foreign policy “experts”. They are never ashamed, no matter how wrong they are, now matter what catastrophes they cause. They just keep going and going. For one thing, because they own our “free” press, they never have to say they’re sorry. America will continue to be ruined for the benefit of a tiny Wall Street clique and for the benefit of the state of Israel – and there’s a lot of overlap there, by the way.
Everyone now should be so disgusted with the colossal incompetence of the Federal government and the extraordinary success of the free market, as best represented by your local supermarket, that they should all be voting for the third party candidate that best articulates their view of small government.
No one will claim the free market is perfect. It’s as messy as us humans. But it has better mechanisms for correcting itself than does the government. When a company subject to the free market screws up it goes bankrupt. When a new initiative of the government screws up it gets more funding.
This is complete crap. These companies subject to the “free market” screwed up and they were bailed out, because they had produced disaster on a scale that threatens everyone. You “free market” fundamentalists are simply immune to shame.
If I were a Wall Street “master of the universe”, I’d think twice about walking down a public street these days. You “anti-government”, “free market” thieves had better be very glad that the government is there, in the form of the police, to protect you from your fellow citizens, who might, in a truly “free” society, be at liberty to express just how they feel about you.
“These companies subject to the “free market†screwed up and they were bailed out…”
if
Bailed_Out == TRUE
then
Subject_to_Free_market = FALSE;
If you are subject to the free market, then should you fail, you die! Gov’t bailouts and free markets aren’t the same thing. Gov’t bailouts are generally the result of whining lobbyists getting politicians to spend my money and yours on things that weren’t really run well enough to deserve to survive. Just how is that like the free market?
You are retroactively declaring these firms to have been government initiatives because they were bailed out by the government in the end, when they failed. This is crude verbal game-playing. The bailout was a government initiative, but the firms were private.
The fact is that libertarian platitudes about allowing “private” failures to happen ignore the very public consequences of private failure on this scale.
In the libertarian imaginary universe, people are little isolated islands of financial success or failure. You might feel, but if you do, that’s never my problem. This is idiotically simplistic. When “private” entities like these collapse, they fall on the rest of us, wiping out potentially an entire economy. This is why these very large financial concerns must be regulated all along – so that they don’t collapse like this and threaten to wipe out everyone else.
This is the lesson of the 1930s, which Republican and libertarian propaganda has striven mightily, and successfully, to erase from the American memory, allowing it to happen all over again.
Typo: I wrote “. You might feel, but if you do, that’s never my problem.” I meant, “. You might fail, but if you do, that’s never my problem.”
Eric:
Why do you think that Fannie and Freddie ended up holding and or guaranteeing half the mortgages in the US? Because they were so much better managed than their competitors or because their ties to the government implied that they would be bailed out in a crisis? In a mixed economy, political entrepreneurs such as Fannie and Freddie will grow and prosper at the expense of economic entrepreneurs.
Fannie and Freddie and their ilk would have perished in their cradles years ago in a truly free market environment. It is the statist Federal Reserve along with government regulation of the economy that has allowed the growth of “too big to fail” behemoths.
Look here. Bank of America didn’t have to get bailed out. Because Bank of America has FDIC insurance, and thus has to abide by GOVERNMENT REGULATIONS, which don’t allow it to do dabble too crazily in all those bogus “financial instruments”.
Thus, BOA was able to swallow up the “free market”, unregulated fiasco called Meryll. Yes: “government interference” – in the form of the FDIC and associated banking regulations – is why we have at least Bank of America still standing after that avalanche of “free market” garbage laughingly referred to as “securities” buried Wall Street.
You make a good point about Bank of America. They have had some very forward-looking policies, not only for the last decade (how they used debit cards, for example) but for most of their history.
On the other hand, there is no such thing as a “free market” or a “controlled economy”–in origin or in practice.
It is a bit like “choosing” between “free will or determinism” or “nature and nature”.
The whole dyad, and the mythoi and slogans surrounding both sides, are ill-conceived and a waste of time.
corr: “nature and nurture”
Government creates (charters) limited liability corporations. Government creates currency and therefor all non-barter markets. Following libertarian economic principles consistently, both corporations and government minted money should be abolished. I don’t think we want to undergo that particular transition.
On the other hand, if government is going to create corporations and markets, it has an obligation to police them and regulate them to prevent fraud and unfair business practices made possible by industry consolidation. This is particularly true of “natural” monopolies, market sectors where cost of entry or the natural tendency to consolidate for efficiency leads to domination by one enterprise. The obvious examples are railroads, highways, pipelines, air traffic control and local utilities. I would argue that insurance is also a natural monopoly because efficiency is always gained by spreading risk across an enlarged pool.
The extreme consolidation that’s taken place in many industries in the US, including the auto industry, is a result of market distortion caused by many years of the capital gains tax preference vs corporate dividends. Investors wanted capital gains instead of dividends, which resulted in mergers and acquisitions. These industries are not natural monopolies and in fact size and a top-heavy management structure are impediments to efficient operation.
What absolutly “knocks me out” is a that Govt. would pay out many hundreds of billions to prop up an obviously failing financial system but will not ensure that children recieve good quality health care, because that would be socialism right?
Your Govt. has effectivly Nationalised Wall Street by using public funds(your taxes at work!)
Socialism for the extremely wealthy.
Oh man, It could only happen in America! (Nth. that is)
Feeling really happy down under.
Look at the product of government run and financed public schools. Why should government provided health care be any better? Maybe you should visit a veterans’ hospital to further acquaint yourself with government provided anything. I know, I know. The failure of any government enterprise no matter how extravagantly funded is always the result of meanness and insufficient money.
Treasury Secretary Henry Paulson aims to buy the bad debt, at what price nobody seems to know yet, and later make a profit on this purchase when the economy moves into black which on its own is bad news for home buyers, and hence the general economy, anyway. And the American congress is just loving it; it is funny, it is not done before, and it shows what great power America is, and it shows Bin Ladin and all the terrorists of the world that there is more where that came from. Yet for such august body that the American congress really and truly is, perhaps it would be more robust, while achieving all the above in one fell swoop, if it rigorously goes ahead and legislate for red to be called black, and black to be called red until further legislation.
Indeed, Ali, several years ago I suggested that the President sponsor and the US Congress pass a law against Hurricanes.
At the time Clinton was bringing up the sun every morning and lowering it every evening.
It was natural, therefore, that Republicans, including Ron Paul, be intensely interested in his peccadillos at lunch.
In any case, no one took me up on the suggestion.
When hurricane Katrina struck, the neighboring states set up roadblocks to prevent the hurricane struck people of New Orleans traveling of foot to cross into neighboring states. A true act of sovereignty by any state, one can say. And when George Bush’s mother honored with her visit the home broken people from New Orleans who had been taken to a refuge set up in a stadium in Texas, she said that although the hospitality of the Texans is superb, the people from New Orleans should not take it for granted and must return to New Orleans as promptly as possible. With people like that who needs legislation against hurricanes. Perhaps, your proposal would have been better received if it was for ‘selling’ the American bound hurricanes.
Had the President and Congress outlawed hurricanes, they could then have moved on to earthquakes, tidal waves, flash floods, forest fires, climate change, and so forth.
Instead, preparing the ground for Iraq, the US attacked Yugoslavia.
And the enigma for today is, “Fair-Isaac Formula”.
All this is tinkering. Debt creats FIAT money: interest does NOT! Interest grows in an accelerating curve when compared to debt. That’s why we get 600B budjets. 45 trillion debt securities & swaps; and 455 trillion in all exchange slaes volumes. It doesn’t matter HOW big the bail-out; or whether total exchange is 455 trillion, a thousand trillion, or a million trillion – the system still crashes. Bush/Paulson are just staving; then taking over financials & canceling election; then declaring martial Law – where it already HASN’T been declared! 200 milliom bodies in pits, will then “relieve the system”. The military will continue to provide assistance – right up to and including the final incineration of bodies (for “health” reasons!)
Actually, you have it arseyversey, and even that way it is not necessarily so.
But no, I am not interested in debating the point.
Will,
Why, yes, of course. Why hasn’t this been mentioned earlier? Its Cheney’s dream come true, an opportunity to justify cancelling the election, to declare a state of emergency, and to embark upon the realization of the “New America”. And just exactly who would oppose it, Nancy Pelosi or Harry Reid? I see.
Not to worry, John, even if tried, it won’t work (the Cheney option I mean).
This latest $800 billion, with the earlier bailouts, comes out to a total of a trillion and a half or more.
But that is only the opening score.
It is not static but is subject to interest and maintenance, if they go through with it.
Over five years I peg that at, say, $5 trillion minimum.
So in effect, the Federal Government will have in its possession a whole collection of failed and failing financials, with a debt which will cost an arm and a leg to service.
Meanwhile, all the huge profits of past years will be in the hands of those who did the thieving.
If this is not Corporate Welfare what is? The Corporate Fascism will be clearer when these same people begin declaring, backed by police Brownshirts, property rights sacred.
Even were Obama an economic genius (which he does not seem to be) there’s nothing much that can be done over the short-term.
And to be enigmatic again–conservatives and rightwingers who are not Neo-Cons might get down on their knees and pray that, if Obama wins, he actually is a secret Socialist or Communist.
At minimum it would mean he knew some economics.
Unfortunately I don’t think he is.
At any rate, I am sure Paul Craig Roberts appreciates the bon mot.
The fact is that libertarian/conservative platitudes about allowing “private†failures to happen ignore the very public consequences of “private” failure on this scale.
In the libertarians’ imaginary universe, people are little isolated islands of financial success or failure. You might fail, but if you do, that’s never my problem. This is idiotically simplistic. When “private†entities like these collapse, they fall on the rest of us, wiping out potentially an entire economy. This is why these very large financial concerns must be tightly regulated all along – so that they don’t collapse like this and threaten to wipe out everyone else. This is why banking deregulation was wrong, and it’s why libertarians and other “free market” fundamentalists are full crap.
This is the lesson of the 1930s, which Republican/libertarian/right-wing propaganda has striven mightily, and successfully, to erase from the American memory, allowing it to happen all over again.
The lesson of the 1930s is that government intervention to prevent business failure squandered enormous capital which could have been employed by entrepreneurs to quickly rebuild the economy as had been done in earlier economic contractions. This attempt by Hoover and then FDR to resist losses failed and only served to prolong and deepen the agony of the 1930s. And of course all this pain was the predictable blowback of the planners’ and regulators’ creation – central bank credit expansion – championed in 1913 and still today by people who describe themselves as progressives. Today, as back then, crippled free market capitalism is the scapegoat for all these unintended but inevitably disastrous consequences.
As for the hilarious notion that national economies can be successfully regulated for the public interest by disinterested “experts”, one need only turn to the Soviet Union for a refutation. As the chains of that heavily regulated socialist paradise pulled it beneath the waves, the people’s selfless managers, planners and regulators, later popularly known as oligarchs, were, unsurprisingly, absconding with the people’s patrimony!
Belief in central planning and regulation is analogous to the belief in creationism. The religious creationists cannot imagine how complex life forms can ever emerge, evolve, morph, pursue their individual well being and interact with each other, all spontaneously, to form a stable but continuously changing bio system without the guiding hand of a supernatural planning authority. Likewise the modern, secular creationists cannot comprehend how a stable civilization can spontaneously emerge from the trillions of actions of billions of individuals, each in pursuit of their self interest, while voluntarily interacting with each other to not only produce and trade goods and services but to create standards, firewalls and rules to minimize and handle breakdowns, all without the guiding hand of omniscient planners and regulators.
When, as it inevitably happens, the regulators are not omniscient enough and something big goes “poof,” they, instead of waiting around to evolve bigger brains, deflect the blame and shamelessly demand bigger guns so as to boss around even more of us.
MetaCynic–I am curious–have you read Lem’s short story, “Doctor Diagoras”?
metacynic: I’m not the doctrinaire one here, bud. I certainly would never advocate that the economy be entirely or even mostly conducted by central planning and regulation. I’m not even sure what that would mean. But it’s you free market fanatics who are the dogmatists, frothing at the mouth against any government planning or regulation. Look, when you have a business that is the size of a colossus like AIG, your private economic success or failure is not just your private business. It’s at least partly a public matter. And SOME public exercise of control over what you do with this enormous power is in the public interest. And the proper instrument for the public to exercise that control, in a self-governing polity, is the government. That’s just common sense. But you care nothing about that. All you care about is your simplistic anti-government dogmas.
Eric:
It must be warm and comforting to believe that through letter writing, phone calls and voting, the public can convey its interests to its elected officials who will then animate the bureaucracy to protect it. If your notion of government responding to the will of the people is valid, then the US would no longer be in Iraq. All evidence suggests that belief in a responsive representative government is not the common sense you claim it to be. It is a fatal delusion.
Who regulates the regulators? Who decides what plans and regulations are in the public interest? What constitutes the public interest? Is it the democracy of two wolves and a lamb voting on what to eat for lunch? Have you or anyone you know been consulted for your opinions on protecting the public interest? I sure haven’t been.
The regulators and other so called public servants are drawn from the same greed contaminated gene pool as the rest of us. What suddenly makes them so smart, selfless and ethical once they are installed on the public payroll? If humans cannot be trusted with the power of peaceful persuasion via free market activity, then who or what will keep them smart, selfless and ethical once they hold the powerful regulatory gun of government? Letters to Congress? Coercive power does corrupt, you know.
My point is not only that all government regulations fail in their stated objectives thus necessitating a cascade of further intervention, but that established players in regulated industries welcome such oversight because it cripples newer or less politically adroit competitors. How is this in the public interest? Furthermore our present economic agony is not the result of a dearth of financial regulation but of a surfeit, starting with our central bank, the Federal Reserve system and its toxic fiat money and credit creation. The Fed is not a product of market forces. It was brought into being by legislation intended to protect the public but in reality for the benefit of the federal government and the banking industry. It is kept alive not by market forces but by the gun of our “representative” government. How will additional gun waving regulation protect us from the horrors of Fed induced consumer price inflation and asset deflation? The only common sense answer is to kill the monster.
The free market is persuasion. Government is coercion, and the power to coerce attracts psychopaths. We can ignore all free market business pleas and enticements to part with our money, and we will be left alone. For one to ignore a government order to do anything is a potential death sentence, and regulations are orders. If one looks behind the scenes of any regulatory apparatus, one will see the hand of political entrepreneurs manipulating the controls of coercion at the expense of market entrepreneurs. And why not? Seeking profits in the open market by competing to satisfy the needs of customers is difficult work. Nothing is guaranteed. It seems that the last thing that people, including businessmen, desire is to compete for anything. We all want a sure thing. It’s no secret that regulatory agencies eventually come under the control of the industries which are ostensibly regulated in the public interest. What business wouldn’t jump at the opportunity to control the gun of coercive regulation so as to guarantee its markets and profits? So, what’s the point of the public championing such a lethal tool in the first place when it’s almost certain to be turned against us? It’s counterintuitive, but in reality, the best protection is usually no regulation.
Did AIG, Fannie and Freddie become earthshaking, “too big to fail” colossi because they were so much better managed than the competition or perhaps because they were so much better at being regulated thus bloating their market share and size? The “too big to fail” crisis of today is not the result of libertarian fanaticism. It is the result of insufficient libertarian fanaticism a century ago.
If you fear that free market fanatics are about to drown the government in a bathtub, please visit this site to cheer up,
http://www.akdart.com/gov1.html
Frankly I find surfing it as daunting as acknowledging each grain while sifting through a bucket of sand. Aside from the DOD and the shady security agencies, every federal agency, sub-agency, department, sub-department along with their bosses, sub-bosses, assistant bosses, associate-bosses and every imaginable hanger-on position is listed. Each position on this endless list was consciously spawned over the generations by someone in order to make the McCitizens feel good about being saved and protected from something or other which exists now or threatens to exist in the future. Each position has a staff, a budget, a mission, reams of paper defining its rabble impressing power and, of course, a gun to enforce that power. Our government is clearly alive and well, sneering at bathtubs as it confidently lurches through category 5 hurricanes.
The fact is that if a “private” business entity is “too big too fail”, i.e., it’s failure will cause a mass catastrophe for hundreds of millions of Americans, then that entiity SHOULD NOT EXIST, or it should not be allowed to operate without intense public oversight. You libertarians, as I said before, imagine that the economy consists of a bunch of isolated individual economic destinies, with each person failing or flourishing according to individual merit. That’s laughably, childishly simplistic. I don’t understand why you don’t shut up for shame, but in that respect, you’re just like the neocons: immune to shame.
Eric:
You’re right, a sickly too-big-to-fail business entity should not be allowed to exist, and it would not in a free market system. Incompetence would be punished by losses and bankruptcy long before things become too big to fail. It is the use of the government’s regulatory gun that has protected such creatures from the rigors of competition and allowed them to become so unnaturally big.
Rich kids, Fannie and Freddie, were born with taxpayer financed silver spoons in their mouths under the gaze of “intense public oversight.” They became sickly and obese because they knew that whatever happened, their mommy and daddy in government would always welcome them back and nurse them if they were too undisciplined and incompetent to make it on their own. The twins’ friends recklessly showered them with money because they knew that mommy and daddy would steal from the taxpayers to pay off the twins’ debts. Not exactly a rags to riches, rugged individualist story here.
Despite the nation having spent oodles of billions on him every year, where is there evidence, anywhere, involving anything of your superhero, “intense public oversight?” We see none of it in the operations of the Federal Reserve under whose “oversight” the dollar has, not unexpectedly, lost 96% of its purchasing power. It is nowhere to be found in the halls of the people’s Congress which passed the jackbooted PATRIOT act and where, over generations, war making power has been ceded to the President. How about the FDA, a regulatory body meant to make our healthcare safe and effective? Nope, no hero there. If anything has become too big to fail but which is now crashing down, it is the obscenely expensive, false medical paradigm of treating symptoms instead of causes. The FDA, supposedly under “intense public oversight,” has used its regulatory gun to spawn this murderous monster and to protect it from competition which effectively treats causes. Certainly we’ll find the masked crusader competently guiding the world’s most expensive public school systems. Youz gots to bee kiddink! Day iz nots enuf moneys fur notting.
“Intense public oversight” is the adult equivalent of a belief in magic embraced by those who are looking to others to take care of them. Such frightened adult/children’s response to the inevitable failure of their Superhero to show up is always to argue that he will come if only more laws are passed. What could be more “laughably, childishly simplistic.”
The shame here is not in pointing out the fact, as I and others have done, that the gun of government regulation protects and encourages incompetence and criminal behavior thus inevitably leading to the present financial crisis. The shame here is in clinging to a repeatedly discredited magic belief system that politicians and bureaucrats can be handed a gun called “intense public oversight” and expected to selflessly use it to manage some aspect of our lives for our benefit.
Display of unaccountability defines status as a member of the elite.
In order to be unaccountable one must err or transgress.
For unaccountability to be displayed error or transgression must be displayed.
Genuine incompetence is the most reliable path to error and transgression and their display.
Ergo: Given competition and over time the elite will approach and display complete incompetence in all its acts and their immunities.
[EAC 2008 06 24]
Hopefully that means that they will be too incompetent to master the automatic act of breathing.
One thing is for sure – our children and grandchildren won’t pay for this mess. They won’t have the means; we will leave them ashes. It will just all get blown off and the devil will catch the hindmost
One source of funds to lighten the bailout burden is to dismantle the useless military industrial complex by shutting down all overseas bases, bringing the troops home and negotiating global nuclear disarmament. Another source is for the federal government to auction off the 1/3 of the US land area which it “owns.”
Of course, no such stuff will happen until our collective financial pain becomes unbearable.
I agree with all this but it will not be easy and will have to proceed step by step.
Nuclear disarmament is key.
Auctioning off federal land–when and to whom? You see how that is connected to the currency collapse?
There should be no new drilling offshore or in Alaska until oil is nationalized.
But there again, nationalize it in the wrong way and it is just another disaster, though even the Pemex way, which is a mess unto itself, is beginning to look comparatively good.
RON PAUL HAS JUST ENDORSED CHUCK BALDWIN!
http://www.campaignforliberty.com/blog/?p=582
A fitting end to “Shmendrik Gate†and to the candidacy of Bob Barr. Such a schmegeggie.
Paul runs true to form–and the form is a type of hypocrisy almost unfathomable to the rational. It is also steeped in a constructed and parallel history.
Baldwin was an early operative in the Moral Majority and closely associated with Falwell.
Though the name was there before Falwell, Inc. bought it, both the Constitution and the Liberty they are talking about are closer to the plots and policies of Liberty University, Falwell’s BJU, than anything anyone else would easily recognize as “American history”.
Congressman Kucinich’s Bailout Plan:
Rep. Dennis Kucinich (D-OH) outlined a proposal he said would create “a genuine ownership society,” by giving taxpayers a stake in the companies the government will be saving with its proposed $700 billion package.
“Simply purchasing bad debt, ‘cash for trash’ and not receiving anything of value or giving $700 billion and not having a commensurate equity interest in Wall Street firms is unacceptable,” Kucinich said in a news release Monday. “No ‘cash for trash.'”
The former Democratic presidential candidate said he would be introducing a bill this week to create a “United States Mutual Trust Fund” to convert assets purchased by the governemnt into shares that would be distributed to every man, woman and child in the country. Every American would receive about $2,300 worth of shares because that is the cost of the bailout package to each individual, Kucinich said….</i?
Juliano The Raw Story, more at:
http://rawstory.com/news/2008/Kucinich_No_cash_for_trash_give_0922.html
Kucinich’s plan would make sense in post-Soviet Russia after socialism had crashed and burned. Since the means of production was ostensibly collectively owned, distributing shares to the Soviet people of all government property would position them to profit from future privatization. However, issuing shares of government rescued private companies to all Americans would position them to observe the spectacle of socialism in action as former silk purses, now sows’ ears, are further transformed into pig dung.
I think you are misunderstanding the gist of Kucinich’s plan. Consider also this: what the thieves want the government to rescue for them is a lot of doubtful paper without any equity in what may turn out to be valuable.
But the doubtful aspect in much of it is short-run, which is why the British are trying to buy up some of it, especially in mortgages.
Over the long run even a defaulted mortgage can be very lucrative, bundled or not.
This is very complex, but Kucinich’s plan is sound–no rescue without real equity in the what is rescued.
At any rate, your perception of “socialism” is skewed by the American experience, which has never been “socialist” at all, but just another version of Fascism.
Would you call Ludwig Erhard “socialist”. I suspect so. Which shows the emptiness of the American ideological spectrum, which is mostly one Fascist calling another Fascist names.
The ideal free markets and capitalism of the Libertarians is as much a mirage as the controlled economy of the old Soviet Communists. With this difference–despite their brutality, the old Soviets accomplished a lot more socially and for the populus as a whole than predatory capitalism has ever done.
My watchword, which you can consider an enigma if you wish, is one Bastiat in every Socialist Cell.
I agree that American statism has generally been some shade of fascism. In my post above I was applying the common definition of socialism – government ownership and control of property – to the ongoing rescue operation. As I understand what’s happening, the government (we the taxpayers) will be the proud new owner of several financial companies. I doubt that the government will put its new acquisitions on a shelf and forget about them as they recover their health. However poorly they were managed in their former life, one can’t help but fear that their new owner will tinker with and intensely politicize their operation thus further eroding whatever value is left.
Yes, we can each receive shares worth about $2,300, but I suspect that real estate has not only a lot further to fall but that the fall will be helped along by bureaucracy’s heavy hand. So, I’ll take my shares, but as with most penny stocks, I remain pessimistic about their future.
Defaulted mortgages are not lucrative for most banks–that is true, partly because what most banks are after is a mortgage they can sell off immediately. But this hinges on a change in most banks to strictly retail beginning perhaps two decades ago.
If the banks go it will not be like a bank failure in the 30’s. Automatic bill payment through bank X or Y, for example, would make a general run in the 30’s look like a day at races.
Everything will be “insured” naturally, and everyone will get the paper they are due, in large bundles. On the paper will be numbers. All the numbers will add up, ore or less. And while you starve to death you will be considered morally and ethically wanting.
Meanwhile the likes of Hofmeister and pals are living off oodles of Euro noodles in Amsterdam.
Where will Bush and Cheney go into exile? Will they be entitled to their Secret Service protection in Paraguay?
It is still not too late to impeach.
The mess is mind boggling. And the more you know about it the more mind boggling it is.
Often thoughts of guillotines set up in public squares across the fruited plain come to mind.
But that is the Bastiat and Socialist Cell version.
If the predatory Fascist corporate capitalists, with the Libertarians naively cheering their empty slogans, get their way, the firing squad version, which does not include the Bastiat, is almost inevitable over the long run.
What Obama may or may to say about this plan will be intriguing.
corr: “What Obama may or may not have to say about this plan will be intriguing.”
Kucinich’s National Illness and Injury Insurance is the only proposal that will work and not cost an arm and a leg, and there is nothing whatever unconstitutional about the Federal government sponsoring a national insurance entity.
The devil is in the details. It must be kept out of the hands of the politicians, and it also must be run as an efficient public enterprise. It might even make a profit.
The main issue is what will be defined as “medical treatment”. If the the approach is competitive and latitudinarian it could actually lead to a vast improvement in American medicine.
Also Veterans and Military would be just other members of the pool, which would save trillions over the years just there.
With every US citizen and taxpaying resident in the risk pool the cost will be minimal, and less than any private insurance entity will offer.
Such insurance would also lift a huge burden on private enterprise and stimulate the economy.
This is in fact the root image behind many of the ideas of Der Dicke–the German economist Ludwig Erhard.
Just let the companies fail, use the 700 billion to pay back the Federal Deposit Insurance. The government encouaged all thes sub prime loans and the democrats have been using Fannie Mae and Freddy Mac as honey pots. Get rid of Frank Schumer Dodd and Rangel. both parties are to blame but the democrats are covered in dung here.
<i.The government encouaged all thes sub prime loans and the democrats have been using Fannie Mae and Freddy Mac as honey pots.
I have no brief for the Democrats, but neither of those statements is true.
In fact, if anyone encouraged subprime is was who you would likely glorify as “free market capitalists”.
Enigma reenigmatum: the Fair-Isaac Formula.
Another point of view regarding sub-primes:
http://www.wnd.com/index.php?fa=PAGE.view&pag…
Absolute nonsense. The fellow has no idea how loans are actually made, and the mathematical models are are used to make them.
He also has no idea who was in the subprime pool or how they got there, or which ones began the collapse and why.
The pressure of retail and competition, for example, led to laxer and laxer credit models.
But that is just part of the story.
This fellow is either a pure propagandist, naive, or both.
The hilarious part is that whole areas of potentially very “good loans” were ignored because of reliance on the mathematical models, many of which were either wrong or only a small part of the story.
A detailed treatment would take a volume and at the moment I have neither the time nor the interest.
Also some of the first troubles appeared among entities that had NO sub-prime.
You are welcome to your ideology, which is part of the problem, not part of the solution.
Actually, I could point to a dramatic collection of observed facts that is of considerable financial value for those who know how to use it, but why give it way free?
Too it hinges on understanding systems and and for most Americans that might as well be a gnostic text written in ancient Greek.
AHM:
http://www.usatoday.com/money/industries/banking/2007-07-31-american-home-mortgage_N.htm
Look at the date and read very carefully–almost no sub-prime.
Another thing: the whole “Community Service” initiative that many banks prominently advertised was, with very few exceptions (and some of those exceptions very successful) lip service and a fraud.
Another area–“Student Loans”, which banks found very lucrative: one of the greatest scams ever perpetrated on the public, students, and the economy.
Over time “students loans” were actually working to depress real estate values, and still are.
Here again the pressure of retail and adjustable rates, timed also to reset together, contributed to the spread of the collapse in its earlier stages.
What do most Americans think this or that College’s or University’s “assistant director of admissions” is, do you suppose, and why do I mention that in this context?
What the position actually is can be stated in three or four words.
And yes, there are instances of payola and kickbacks as well.
Assistant Director of Admissions = Student Loan Salesman. (Very few exceptions).
The difference between an Assistant Director of Admissions and a Bank Loan Officer?
The Bank Loan Officer makes a lot more money.
In effect, however it is arranged, both work on commissions.
Incidentally, the problem with student loans is not defaulting–just the reverse.
Milton Friedman originated the idea in 1958.
Naturally, like most economists, he had no idea what the long range consequences would be.
Kucinich is way ahead of the curve here as well–free education through college and beyond is economically the more productive measure.
From the article:
MONEYNETDAILY
Guess again who’s to blame for U.S. mortgage meltdown
Analysts point not to greed, but to social activist politics
——————————————————————————–
Posted: September 19, 2008
6:19 pm Eastern
By Drew Zahn
© 2008 WorldNetDaily
Stan J. Liebowitz
While many pundits are pointing to corporate greed and a lack of government regulation as the cause for the American mortgage and financial crisis, some analysts are saying it wasn’t too little government intervention that cased the mortgage meltdown, but too much, in the form of activists compelling the government to pressure Freddie Mac and Fannie Mae into unsound – though politically correct – lending practices.
“Home mortgages have been a political piñata for many decades,” writes Stan J. Liebowitz, economics professor at the University of Texas at Dallas, in a chapter of his forthcoming book, Housing America: Building out of a Crisis.
Liebowitz puts forward an explanation that he admits is “not consistent with the nasty-subprime-lender hypothesis currently considered to be the cause of the mortgage meltdown.”
In a nutshell, Liebowitz contends that the federal government over the last 20 years pushed the mortgage industry so hard to get minority homeownership up, that it undermined the country’s financial foundation to achieve its goal.
“In an attempt to increase homeownership, particularly by minorities and the less affluent, an attack on underwriting standards was undertaken by virtually every branch of the government since the early 1990s,” Liebowitz writes. “The decline in mortgage underwriting standards was universally praised as ‘innovation’ in mortgage lending by regulators, academic specialists, (government-sponsored enterprises) and housing activists.”
He continues, “Although a seemingly noble goal, the tool chosen to achieve this goal was one that endangered the entire mortgage enterprise.”
“As homeownership rates increased there was self-congratulation all around,” Liebowitz writes. “The community of regulators, academic specialists, and housing activists all reveled in the increase in homeownership.”
An article in the Los Angeles Times from the late ’90s praised the sudden surge in homeownership among minorities, calling it “one of the hidden success stories of the Clinton era.”
John Lott, a senior research scientist at the University of Maryland, however, claimed in a Fox News article yesterday that the success came at a great price.
According to Lott, the Federal Reserve Bank of Boston produced a manual in the early ’90s that warned mortgage lenders to no longer deny urban and lower-income minority applicants on such “outdated” criteria as credit history, down payment or employment income.
Furthermore, claims Lott, Fannie Mae and Freddie Mac encouraged and praised lenders – like Countrywide and Bear Stearns – for adopting the slackened policies toward minority applicants.
“Given these lending practices mandated by the Fed and encouraged by Fannie Mae and Freddie Mac,” writes Lott, “the resulting financial problems for financial institutions such as Countrywide and Bear Stearns are not too surprising.”
(Story continues below)
Liebowitz’ contention that lenders were under pressure to loosen their standards for racial and political goals was confirmed years ago by the companies at the heart of today’s crisis: Fannie Mae and Freddie Mac.
A New York Times article from Sept. 1999 states that Fannie Mae had been under increasing pressure from the Clinton administration to expand mortgage loans among low- and moderate-income people and that the corporation loosened its lending requirements to comply.
An ominous paragraph of the article reads, “In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s
Liebowitz likewise predicted in a 1998 paper the risk of sacrificing sound financial policy for social activism.
“After the warm fuzzy glow of ‘flexible underwriting standards’ has worn off,” Liebowitz wrote, “we may discover that they are nothing more than standards that led to bad loans. … It will be ironic and unfortunate if minority applicants wind up paying a very heavy price for a misguided policy based on a badly mangled idea.”
And though some have speculated that lenders in the ’90s dove into sub-prime mortgages in an effort to gouge new markets, the president and chief operating officer of Freddie Mac in 1999, David Glenn, confessed his company was pushed by a federal agenda.
“The mortgage industry intends to pursue minorities with greater intensity as federal regulators turn up the heat to increase home ownership,” Glenn said in his remarks at the annual convention of the Mortgage Banker Association of America.
“The federal government in the meantime has increased pressure on lenders to seek out minorities, as well as low-income groups and borrowers with poor credit histories,” Glenn said. “Fannie Mae recently reached an agreement with the U.S. Department of Housing and Urban Development to commit half its business to low- and moderate-income borrowers. That means half the mortgages bought by Fannie Mae would be from those income brackets.”
In that same year, Freddie Mac warned of the logical pitfalls of pursuing loans on the basis of skin color and not credit history.
The Washington Post reported that the company conducted a study in which it was found that far more black people have bad credit than white people, even when both have the same incomes. In fact, the study showed a higher percentage of African Americans with incomes of $65,000 to $75,000 had bad credit than white Americans with incomes of below $25,000.
Such data demonstrated that when federal regulators demanded parity between racial groups in lending, the only way to achieve a quota would be to begin making intentionally bad lending decisions.
The study, however, came under brutal attack in the U.S. Congress and was ridiculed with charges of racism.
A few years later, when Greg Mankiw, chairman of President Bush’s Council of Economic Advisers, voiced a warning about weakened underwriting standards, Congress rebuffed him as well.
The Wall Street Journal quoted Congressman Barney Frank, D-Mass., in 2003 as criticizing Greg Mankiw “because he is worried about the tiny little matter of safety and soundness rather than ‘concern about housing.'”
Frank, chairman of the House Financial Services Committee, rejected a Bush administration and Congressional Republican plan for regulating the mortgage industry in 2003, saying, “These two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis.” According to a New York Times article, Frank added, “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
More nonsense, and a complete waste of time.
If Liebowitz had a point, all he had to do was correlate the numbers in subprime with those in Fannie Mae and Freddie Mac, and establish a causal connection from the latter to the former.
He does not do that because he cannot. That’s not what the numbers say and that is not what happened.
Also note that he talks about pressure on “underwriting” without a word about credit rating formulae. Designing and selling credit rating formulae are completely unregulated.
In fact every statement in the article could be true, but not one of them means a bean in regard to the collapse of subprime.
Note also that Liebowitz and the others quoted say not a word about how much pressure the Patriot Act put on banks.
Conclusion: Liebowitz is a Neo-Con trying to the start a race war? Who knows?
What he isn’t is an economist worth to minutes attention.
The more telling figure, for those who know how to use it, is this:
January 2001 oil = $19 per barrel
July 2008 oil = $147 per barrel (high)
That has Bush and Cheney and the Neo-Cons and the Born Again Zionists and the Corporate Fascists written all over it.
Corr: “January 2002”
Eric and Haigh above mention Bank of America. BoA, by itself, stands as a complete and notable contradiction of what this moron Liebowitz says.
There are other examples, some of which have gone or are now going down, but for reasons someone like Liebowitz could not guess at in a thousand years.
In fact, they are going down because they were prudent, careful, and successful in their operations and were stocked with good paper.
Figure that one out (the model is very simple) and you win a free all-expense paid weekend in the Orkneys.
…Bernanke suggested buying the assets at a “hold-to-maturity” price, which would be based on an estimate of what the securities would eventually be worth as payments came in over the years.
“If the Treasury bids for and then buys assets at a price close to the hold-to-maturity price, there will be substantial benefits,” Bernanke said. “First, banks will have a basis for valuing those assets and will not have to use fire-sale prices. Their capital will not be unreasonably marked down.”
In contrast, if banks use existing “mark-to-market” rules that require them to value the holdings at what similar securities have recently sold for — in some cases pennies on the dollar — it could make the whole bailout futile because it would hurt many banks’ balance sheets, causing some to fail. “This creates something of a vicious circle,” he said…./i>
[Aversa AP September 23, 2008]
Note the asymmetry. “Benefits” for whom? Any questions about whom Bernanke is working for?
Kucinich may need to finetune his proposals, but he has the right idea. No bailout without equity. Also to buy any assets except at current firesale prices is lunacy. Buying them at firesale prices means that the Public Mutual Fund Kucinich suggests might actually make money.
Kucinich is unique in national politics, in my opinion, as a systematic economic thinker.
He was already much more sophisticated economically than most national politicians when he was mayor. He adds to great intelligence and insight, truly great courage to speak out.
He may not be right on every point, but his economic ideas are systematic, not catch as catch can, and they always make sense practically and in terms of the central issues.
That is exactly what is behind keeping him out of the public view and off the mainstream media as much as possible.
The incompetents can’t afford rationality in any guise, especially among the greater fools who are their constituents.
Ethically Kucinich is of Croatian origin. Despite this and despite being a Democrat Kucinich opposed NATO’s attack on Yugoslavia.
An account of what he did and what he learned is here:
http://findarticles.com/p/articles/mi_m1295/is_8_6/ai_55309047/pg_1?tag=artBody;col1
Only those who have some idea of the pathological hatred between Serbs and Croats can grasp the monumentality of Kucinich’s rationality and moral courage, to oppose many of his own relatives and constituents on this issue, and also his own party.
This is the same courage and rationality he displays, also against this own party, on impeachment.
The banks and the financials want the US (i.e. you the citizen) to buy all their bad paper at full value at term while they keep all the good paper. In short, you buy the bad loans and investments they made at full cost.
And, they are saying, if the Federal government does not do that, there will be complete financial collapse.
The pattern is similar to Israel’s threat against the US-attack Iran or we will nuke them ourselves creating an even worse disaster for the US.
With friends and allies and financial officials and a government like this, who needs enemies?
On the other hand, as with the Russians and the Iranians and Pakistanis, with the idiotic cooperation of the US government, they are also making more enemies for the US as well, not only militarily and in foreign policy, but financially and economically as well.
Eugene: interesting analogy, and very apt, between Israel’s blackmail of our government and Wall Street’s blackmail of our government.
And the Wall Street Journal’s editoral page happens to be just as vociferous in screaming militantly on behalf of Israel’s interests as it is in screaming greedily on behalf of Wall Street’s interests.
Coincidence? Only the American public would be stupid enough to believe that.
A few thoughts: First of all, there is plenty of blame to go around for this economic disaster. Most of the blame lies with the greedy banks and sleazy mortgage brokers themselves. But others share blame. The Republicans share the bulk of the blame, no doubt about that. But The Democrates as well, they were in charge of Congress for the last 2 years, what did they do about it? And how about the people who actually bought houses they knew they could not afford? Don’t they share a percentage of blame as well?
As to this 700 Trillion dollar bailout: It is an outrage! This is not a Socialist country. If these businesses failed because of their greed, then let them fail! This would be the greatest government bailout in American history. We simply can’t afford it. Maybe we could bail out some, and I repeat just some, of the companies that are vital to the economy, but why the hell they would consider a bailout like this is unfathomable. Paulson is a former CEO at Goldman Sachs and now he wants to take care of his buddies and he wants us, the American taxpayer to trust him and give him a blank check? I say, no way!
Last but not least: How about the top executives of these companies? The nerve of them! THEY got us into this mess and now they want us to come help them out. If they want a bail out how about they put up all of their bonuses, and 75% of their salaries, ( and maybe a few of their private jets) as collateral?
For his part, the Iranian President, Mahmoud Ahmadinejad argued that America’s military engagement around the world were to blame for the crisis on Wall Street. ”Problems do not arise suddenly,” he said. “The US government has made a series of mistakes in the past few decades. The imposition on the US economy of the years of heavy military engagement and involvement around the world… the war in Iraq, for example. These are heavy costs imposed on the US economy.”
[from the Independent story on antiwar’s fron page]/
Notice Mr. Amadinejad doesn’t mention the price of oil and world reserve currency. His scholarly and instructive lectures on that subject, which he knows inside out, are billed separately.