This guy is or was high up in the Fed. The fed is a PRIVATE bank, despite the lie on their website. The fed is owned by private stock and the US government owns none of that private stock. http://www.frbatlanta.org/publica/eco-r … hriszt.pdf
Except for the fact that the President appoints the head of the Fed. Nope nothing governmental about that at all. Oh and the Senate confirms the choice. What else do we do that for....Supreme Court Justices, Cabinet Appointments, and Generals. Nope nothing governmental here.
Try getting information from any of the Federal Reserve Banks under any freedom of information act. You can't. They are private. The fed can hide anything it wants in those banks and does. They are privately owned. You should study Andrew Jackson and the federal bank sometime. Also the revolutionary war was fought because the federal Bank of England (a private bank) took away their currency.
Be certain of this, the Federal Reserve deliberately looked the other way when the Basel 2 ponzi scheme was allowed to reach our shores. The people who did this need to be prosecuted.
BTW, Ben Bernanke is paid through interest earned by the fed on the national debt. The fed will never accept an audit because they hid money that should have gone back to the treasury. They hold a mountain of US debt.
I've been to the Federal Reserve Bank in Boston dozens of times. I've never had them fail to answer any question or even keep us from observing any section of the work space (as far as I know).
Come on man, the real world can be interesting too.
You obviously don't read the news: http://www.bloomberg.com/apps/news?pid= … x7XNLnZZlc
The federal reserve does not divulge who the private stockholders are nor do they divulge any audit information.
I thought they were never audited also until I found this -
"it appears everyone recently is looking for an audit of the Federal Reserve to be done. All you had to do was ask, they have provided one each year for the last 96 years."
Read it and weep
I have two problems with this. First, if most of the interest on the national debt is returned to the federal government, ie to the treasury from the fed, then why is the payment on the national debt such a big part of the budget of the federal government? Second, I have read where the fed owns only around 10 percent of the national debt. While that is better than 50 percent, 10 percent of 12 trillion dollars is a lot of moola, 1.2 TRILLION dollars. And growing.
Where does the interest on that 10 percent go? It must go somewhere. Some say that the fed is owned by the member banks. Yet the member banks pay dues to the fed! Also, the fed has power to regulate and did not regulate when the housing ponzi scheme came on the scene! Why not? Did they have friends they wanted to protect? Was it in the financial interest of the fed to protect certain interests?
Even if you debunk most of the conspiracy, ie the fed holding 50 percent of the national debt, 1.2 trillion dollars, and interest collected on that debt yearly is a LOT OF MONEY. Even those who argue against a conspiracy to keep most of the treasury bond interest admit that the fed is privately owned, they just can't prove who owns the fed. While I don't post my other sites here, this is I believe, a fair assessement of the fed's role in the New World Order. Notice that I did not accuse the fed of keeping all the interest of the bonds it issues on behalf of the US government. I only accused them of allowing the ponzi housing scheme by looking the other way and of orchestrating the takeover of failed banks which caused BAC shareholders to be thrown under the bus: http://www.dontpaycreditcards.com/NWO.html
You're right, it's more of one of those public-private entities. It's a public entity when it comes to who controls the process. It's a private entity when it comes to providing information to citizens. It's a consequence of how people had to set the Fed up, because at the time a proper central bank would never have been allowed. That's why there's so much mystery surrounding the Fed. Resistance to a central bank goes far beyond Jackson, it's has its origins in this country with Hamilton/Jefferson.
Now you'll get no argument from me that what central banks do are criminal and benefit bankers at the expense of everyone else. They are the cause of booms and busts. Few people will argue today that the housing boom and bust was caused by the Fed dropping the interest rate to 1% in 2001. However, that being said, I don't believe it was the bankers who wanted to do that. The reason being, bankers live in fear of hyperinflation. Keep the rates down to low for too long and prices skyrocket. Central bankers like to keep inflation as low as possible so people don't notice it. The decision to drop the rate as low as they did was a political decision in response to the crashing stock market and 9/11. Left to their own devices, I doubt bankers would have cut that deep for that long.
Of course, neither the Fed nor Congress want anyone to see the inner workings of the Fed. If people realized how much they were being ripped off for how long, there would be blood in the streets. It's that bad. I truly hope that Congress is ignorant enough to pass Ron Paul's measure, but I think criminals like Barney Frank or Christopher Dodd are going to kill it.
bgamall - keep raising the flag. Even if it is already too late! Thanks.
in on this, good thread and timely what with Ron Paul's legislation in Congress now determining whether there shall be an audit of the Fed (Bernanke has thrown a public fit).
Bernanke says if Congress audits the Fed, the entire U.S. economy will fall apart.
My question is... why?
Because if you could get auditors in there to poke around the Fed and report on what actually goes on, people would flip out. Plus you'd have economists all going over how the Fed works and why it's good or bad. When you couple what the economists would say with what the auditors found,well some high ranked bankers might get the Mussolini treatment.
The Euro seems to be working out reasonably well.
The "Federal Bank" is as Federal as Fedral Express. Its like changing your name John Federal Jones, that doesnt make you a Government entity.
And its not that you should be worrying about most. Its the "Climate Bill" they just past through your "Congress" after only letting anyone read this 1000+ page bill half an hour before the vote.
Go here to fill your self in on the Climate Bill that you and everyone else has missed whilst they snook it in thru the back door of Mj's death.
http://www.infowars.com/house-passes-th … d-to-read/
I just want to know what is in the bill that is NWO. I couldn't get it from the article.
I'll tell you what's in it, the biggest tax in our nation's history.
The conspiracy nut is as zealous as any religious fanatic on earth.
There you go again. Here are some questions for you troll:
1. Who owns the private stock of the federal reserve?
2. Why did Thomas Jefferson warn against a central bank?
3. Why did Barron Rothchild boast that owning the debt of nations gives a person control over that nation?
Can you answer any of these questions Troll?
There you go again. Here are some questions for you troll:
1. Who owns the private stock of the federal reserve?
2. Why did Thomas Jefferson warn against a central bank?
3. Why did Barron Rothchild boast that owning the debt of nations gives a person control over that nation?
4. Who allowed the off balance sheet shadow banking system to reach the shores of the United States from Basel 2 in Europe?
Can you answer any of these questions Troll?
Just a note: Bloomberg is a pretty well known mainstream financial rag.
Hmmmmm wonder what that means????
The bar brawler is...well, just a bar brawler.
You don't have any questions about the aliens from Area 51 who shot JFK and faked the Moon landing?
..........paging Mr. Jones...
Just answer the questions. If you can't just say you can't. Be a man.
I'm just waiting for a fax from Agent Scully with all the answers.
Would you care to answer bgmall's questions? Or is this the limit of your knowledge? Shall we counter a guess?
TK has found another eye to blacken... Usually, though, he likes fighting with girls.
You are free to disagree on any topic, just try to control yourself.
He won't answer the questions because he would rather troll and flirt. I don't care if he flirts, but trolling is boorish.
Ehhhhcckk. I assure you, if that 'flirting' is anywhere directed next or near or around me I'm extremely unaware of it. I've seen his act so often with different people I have decided to parallel it...as they won't get rid of him.
He won't answer the questions because he doesn't know anything about it (dumb is the least attractive trait I can think of).
Hey fed lovers. Check out this: "Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders."
– The Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s
Come on, why does it have to be all or nothing? We got a central bank in the first place because before that we had so many boom/bust cycles that it was a destabilizing influence on the whole economy and people were sick to death of it. Banking is by its very nature destabilizing.
I'd like to see retail and investment banks separated once again and some decent financial regulation put in place, but instead we get more power handed over to the Fed, which as you point out, is a lot like handing supervision of the chickens to the head fox.
But I don't agree that the Fed is this demonic secret cabal.
The Fed is privately owned, yeah. I hate to break this to everyone but the US is privately owned now and has been for quite awhile. We have a government by and for any corporation big enough to pay for it. We--you, me, our neighbors--are mostly privately owned. It's a problem.
IMO that's the real issue, not the Fed.
Pam, the fed has private stock. No one knows who owns this private stock and the US government owns none of it. The basel 2 scam of allowing off balance sheet shadow banking caused liar loans and is ripping the heart out of poor people in California and elsewhere. The scam was permitted by the fed who looked the other way. Demonic is too kind a word for these predators.
Right you are. But don't you think the larger problem is in where power is located? If the Fed has become power broker to the uber-powerful and they are busy enriching themselves at our expense (and they are), then clearly government as we were raised to think about it no longer exists. What we have now is corporate governance of individuals and communities, not government by the people for the people. The Fed's activities are a symptom not the disease.
Why, for example, have "too big to fail" companies like AIG and Citi not been broken down into companies small enough to fail and go away for good? Because we have no government. The 'too big to fail' corporations ARE the government. The Fed is just their errand service.
I agree with that Pam. It is a fascism, ie a corporate socialism which is, in effect, welfare for the rich. Geithner is literally raiding the treasury of the United States. And the system does not want the bondholders of the big banks to take a hit because those corporate bank bonds are held by the hedge funds leveraged 10 to 1 for what now is a certain, no risk, return.
The hedge funds are from well placed money, from some of the richest of the rich. They leverage the bonds, and they leverage the stock market and can push it up or down.
I'm not at all happy with Geithner, Bernanke, or Obama for how this is being handled, I just don't like the conspiracy theory flavor of some of the Fed stuff and of propaganda like that Zeitgeist movie, because I think taking that approach promotes a certain kind of hysteria and distorts the issues.
Mostly I think you and I agree, I just think the conspiracy stuff is wrong and counterproductive. We've got all these people now running around with one-note solutions to a symphony of financial chaos. It's the Fed! Bring back the gold standard! Make everybody wear red hats! Or whatever.
I am pretty much at the "let it all fall down" level of thinking at this point. It will, too. Just might take another year or two.
I never saw the movie. I believe that there is a true "Christianity" but that the fusion of church state and all the evils produced by that is not the truth, or representative of Christ.
I believe that 9/11 was facilitated by the US government.
I believe that the federal reserve banks bankrolled both sides in a war, and some have said that they provoked WW1, which led to WW2. We know that Prescott Bush, grandfather of George W. Bush bankrolled Hitler, but there is no evidence he supported his cause. With the Bush's it is all about the money and about war profiteering. It is in their blood.
But one thing is clear, war has permitted the federal private banks to force nations into more debt, and therefore into more dependence upon them. That, Pam, is fact.
It is unfortunate that many who saw through the moneychanger's lies were also racist. They very mistakenly condemned groups in blanket fashion when they should have focused on the men doing the evil, rather than the entire ethnic group that these men belonged to. This is very unfortunate because it actually weakens the case for the truth in the matter.
McFadden was totally capable of understanding the truth. His solution was to support Hitler, which was a big mistake and weakened his place in history and the truth that he gleaned as chairman of the house banking committee.
Dude, you need to take off the tinfoil beanie. Wall Street financed the Allies because the Allies didn't have the money to finance the war, being limited by the gold standard. So they borrowed Wall Streets gold. The Central Powers, on the other hand, lacking access to American gold, inflated their currencies. The economic collapse of Germany at the end of the war wasn't only from the blockade, the Mark was worthless. I mean, France was the battleground for virtually the entire war, Germany was hardly touched. They still had factories and domestic raw materials, what they didn't have was a sound monetary system. Well that and food.
Fast forward to Hitler. The Fascists had many admirers in the West prior to the outbreak of war. The successfully convinced people that they were the only defense against the Red Menace out of Moscow. So yes, businessmen admired the Fascists, but that was before the inevitable outbreak of war. Those men were so admired that even here in the states, FDR attempted to nationalize all industries. Look up the Blue Eagle, than God those Supreme Court Justices struck that one down. That was probably the last time the Supreme Court actually did its job. All of this stuff is out there, but conspiracy theories sound so much more mysterious and sexy that most people don't concern themselves with the facts.
Whatever you wrote here doesn't deny what you quoted from me. Each country had their own central banks, but they were controlled by the same people. There is no conflict between what I have said and what you said. So the tinfoil hat is totally inappropriate. You are trolling with a little content. So what?
And now we have a fed and we are inflating our currency just like the Axis. Again, what is your point?
And there is a push on now for one central bank, a multinational central bank. Think about it.
In essence you were lumping in all businesspeople in with the bankers. There are businesspeople and businesspeople. Most are hurt by the actions of a central bank. Also you consider the central bank a symptom, not the disease. All of our ills concerning boom and bust cycles can be traced back to central banks. Yes, even in the 19th century.
If I seemed out of line, that wasn't my intent. There's so much bad information out there about central banking, it's causes and effects that it's hard to get a clear picture. Also the dynamics of a situation change over time. You are, I assume, familiar with the industrial/military/Congressional complex? When Eisenhower first remarked about it at the end of his term, he noticed that the heads of government often times moved to become the heads of big business and vice versa. This is by design. This is the logical outcome of the formation of a central bank.
The problem is that central banks ruin the economy. Actually it's the result of fractional reserve banking, that's why there's been a call for a central bank since the dawn of this country. Now, however, rather than admit the failings of central banking, there is now a push for an uber-central bank. Namely an international one. That's why proper education is more important than ever. An international central bank will fail, just as have national central banks. The fallout from such a failure, however, will be disastrous on a global scale. We're talking orders above what we're seeing today.
Looking at history we may see several cases when Nature prevented some pretty bad things from happening, of course in its very perverted ways, like Hitler saving the World from Communism. I would bet the same mechanism will prevent the World Central Bank from appearing
OMG. I know we are in deep, weird waters when I find myself agreeing with Misha.
We can hope Misha is right. But with the current administration seeking to have the Fed be appointed as the regulator of all things financial, knowing their desire for a replacement for the dollar and the diminishment of the sovereignty of the United States, one wonders if it is too late.
I don't have that much faith in people today. Most people have had it too easy for too long and they want the good times to continue. They'll reach for anything that will provide them with such a promise. Look at the things people have put up with here just for the promise of a more normal economy. Things that would have been unthinkable a few years ago are commonplace now. That's due to people not understanding that the good times have gone away for now, now we have to roll up our sleeves and get to work.
Ooops, I forgot I did not write Hitler-Stalin hubs yet, and official history is not what I was talking about.
Well, the main premise would be that Hitler did not plan to save the World, he was trying to save his ass, and in the process managed to prevent Stalin from occupying the whole EurAsia and possibly Africa.
So the point is that it won't happen not because people will consciously oppose it, but because of some weird coincidence, which we have no idea what exactly it will be
PS Hi Pam *waiving his hand*
So we are in basic agreement. Yes, central banks take advantage of many businesses. Look what has happened to GE, and lending to small businesses has all but dried up. And yes, the central bank is a representative of international banking. I just wasn't sure what you meant by tinfoil hat. I am not trying to trace this banking cabal back to the beginning of time, but clearly these bankers have influenced governments for many, many years, in Europe, and then in the US.
Hell I must be seeing things now. The tinfoil beanie shot was in response to some crack about banks basically starting WW I and WW II and all kinds of other Majestic 12 kinda stuff. There's too much conspiracy theory, mason, illuminati stuff floating around here. It's not good for mental health.
By now it's a sort of inscestual relationship between government and banking. It was, however, politicians who set it up. A central bank could never exist without the faith and backing of a government. Both bankers and politicians get something at the expense of everyone else. The only way to kill central banking before total economic collapse is to kill it using some sort of political mechanism. We have the opportunity to do that, seeing as we elect our leaders, which is why education on the facts is so important.
Misha, I can hope, but seeing the barbarities central banks and central governments perpetuate on people, I don't hold out much hope. I could be wrong, but unintended consequences are surprises. You don't want to live your life wishing for surprises.
Hey Sufi, I hear you, that's exactly what I'm trying to do. Inflation kinda makes it hard to start a business, don't you know. If these idiots would get out of our way, we'd have things lined out within a year or so.
bgamall, watch the price of bread. Once that gets too high, people will decide they've had too much. I give it a year or so. We're not hungry yet, once people are hungry, things will change no matter what the political class wants.
I don't follow the illuminati thing. I just don't have enough evidence. It is a bit too abstract for me.
There is some evidence for the involvement of bankers in WW1. However, I don't know if it is conclusive. It is however a compelling argument simply because war profiteering and debt to central banks go hand in hand.
I would not be surprised at the possibility of banking involvement in the start of WW1.
It is interesting that most people who opposed central banks ended up assassinated. Some could be coincidence but I don't think all. We do know that some fellow who claimed to be backed by the European central banks attempted to assassinate Andrew Jackson after he kicked the bankers out. And he was acquitted for being crazy. Likely he wasn't.
Sure bankers were involved in the Great War. So was every other facet of society. Total war. That's one of the reasons it was so destructive. War profiteering was a term used by Progressives to confuse the issue of centrally planned economies vs free economies. Basically they made the claim that certain "capitalist" companies made money from death and destruction. What they didn't mention was the various boards that were set up by the government to control wartime production. All people did was meet the demand that the government had a major hand in creating. So it goes today with "speculators" and "foreigners" who supposedly ruined the economy. It wasn't the Fed, nor was it Fannie nor Freddie, which I might add are government enterprises. It's using people's ignorance against them and confusing the issue so they don't get called on it.
Well, certainly I would agree that it wasn't the fed directly. However, clearly, Ledenfsetech, the federal reserve bank deliberately looked the other way while the Basel 2 bankers established the off balance sheet banking at Citibank and others. That lead to securitizaton of crap CDO's while the rating agencies also looked the other way. If all our regulators look the other way at the same time, I would call that a conspiracy.
To an extent, banks didn't have much of a choice. By forcing them to lend according to the Community Reinvestment Act, banks had to originate loans they knew would not be repaid. All for a vote buying scheme and political correctness. Banks knew if they kept this crap on their books, they'd fail, so they bundled them up and sold them as "investments" rather than keep the liability. The Fed looked the other way because the Fed is made up of bankers. Plus they too knew what would happen when those loans would be defaulted on. Rather than sink the banks over a political deal, they looked the other way. The only problems from the banks point of view was that they started to buy back their own BS. Which is an oddly elegant bit of revenge, but the initiator of this mess were social engineers trying to out think the market. Nobody can do that.
So again, the problem is government interference in the marketplace.
But that community reinvestment act only covered subprime. The real problem facing us down the road for at least the next 3 years are the option arm prime and alt a loans that had nothing to do with Fannie or Freddie. Those were pushed by the investment banks.
Sure, but the subprime mess is what opened the door to option arm loans. Do you really think banks would have offered option arm loans had they not already had experience with the adjustable subprime loans. Holding interest rates down skewed the market so badly that people could no longer make informed decisions about how the market was going to look down the road. Some economists call this moral hazard. It's when government makes a promise or seems to make a promise that it will stand good for all losses. When that happens caution is thrown to the winds and all sorts of bad ideas are given the green light. It all starts with government policy, then it really gets bad. No government policy, this stuff wouldn't happen.
Who did hold them LDT? Not government or Fed, at least not directly. I did post a chart already, that clearly shows that FOMC set rate FOLLOWS the 3-months T-bills, not vise versa
For the most part, the FOMC uses the 3 month T-bill market as a bell weather indicator of increasing, decreasing or maintaining the rate. In normal times. That's why it looks like the FOMC follows the 3 month T-bills. Where's the chart, I'd like to take a look at it.
Oh no Pam, not you too! My fiance watches Ghost Hunters, it drives me nuts.
LOL I posted it a few days ago, but you were too busy talking to Idunn
Here it is again:
I am out for dinner, later
I LOVE Ghost Hunters! My guy doesn't 'get it' either.
Hey, they are PLUMBERS. Plumbers rock.
My point has always been that we still have to go back to Basel 2. If Basel 2 wanted banks to hide what they were doing they succeeded. The question is why. Why did they want banks to hide their poorly underwritten banking? Why did they want banks to hide their crap loans and do all this in secret?
I believe they did this to create a bubble. They must have seen some economic weakness if they desired to put this together in 1998, way before subprime even happened. Something to think about Ledefensetech. http://www.bloomberg.com/apps/news?pid= … PE735QhI8U
Nobody in their right mind wants to create a bubble because people lose their tails. As to why they wanted to do all of this in secret, well one thing fractional reserve banks must have in order to survive is the faith of people. People need to have faith that they will get their money when they demand it. Otherwise you have a bank run. That's the true reason why banks want a central bank. Now they're free of the worries of a bank run. Banks have runs, however, because they make stupid decisions and/or too many bad loans. By subsidizing that behavior we encourage it and ensure that booms and busts will continue to happen.
As for why they did this in 1998, well that one is simple. President Clinton decrees in 1997 that banks would have to lend according to the Community Reinvestment Act. Cause and effect. Government decree -> banks moving to limit their risk. That's why it happened. No crisis on the horizon, just social engineering. Why 1997? Democrats needed something that they could point to that would benefit the people who usually voted Democratic. Vote Democrat, get a house. Dear God, we have these people back in office now and the economy is in shambles, I have to wonder how much damage they'll do this time around.
I wish I could believe that but clearly some profit massively by bubbles. You just have to know when to get out. The bubble creators should be prosecuted. Yesterday.
And banks didn't limit their risk, they increased their risk. This was a European meeting. It didn't happen in the US and didn't just include the US. Real estate inflated all around the world. Just moreso here. And it isn't a Democrat Republican issue. The repubs voted to increase the investment bank leverage making it worse. They are all bought off and all in on it.
Had it just been subprime it would have been contained. That is what the bankers thought would happen. Also we are back to a new subprime with refinance at 125% LTV. That shows that the government is very desperate. Very. Carlos Slim says that we are at 1929.
Trillions, I mean trillions of dollars evaporated due to this bubble collapsing. Maybe one or two guys made money, but that was probably due to luck. If you can figure out when and where to get in and out of the market, me and millions of other people would like to know.
Of course the entire world was affected by the bubble. The dollar is the reserve currency. Everyone uses dollars. Most commodities are traded in dollars. So when the dollar inflates, prices for everything go up. Every other fiat reserve currency will do the same. It's a consequence of using paper money, not some dark conspiracy to lose trillions of dollars on the housing and stock markets. What you were told is that the bailouts would be needed to contain the subprime mess. What people haven't been told is that banks are insolvent. That will be proven when the alt-A loans reset. Instead of letting these companies die like they should have, we're keeping them alive so that when they do die, it'll be worse. I didn't mean to sound like a partisan, both parties are crooks when it comes to the nonsense they've been up to regarding the economy.
Carlos Slim is a bit off I'd think. We're in 1930/1931 when Hoover was pulling out all the stops to try to reinflate the stock market. That's what all the bailouts are all about.
Yeah but Misha, if the T-bill market led the Fed interest rate then the Fed interest rate would never surpass the T-bill market. Yet it did in 1995 and the late 1980's. So while the T-bill rates have led the Fed rate cuts, that doesn't mean there is a causal relationship. What I think has happened since 2000 is that people have been looking for a safe haven to put their money and, for now, at least that means dollars. So even though the T-bill rate should be falling, so many people are buying them, that the rates stay up even though the number of T-bills in circulation are increasing. Not that you're wrong, but you really have to look past 2000 to get a really good idea of how things work because the meddling of the government in business is unprecedented in US history.
Someone, if I ran, a coalition of bankers would waste me. Plus I'm not eligible for the office yet. In two years though....
The hedge funds started and pushed the current rally. They bypass the 50% margin requirements by getting loans from the big banks and leveraging 10 to 1. They have the power to push markets up and down. They are the cause of the current rally. They know when to get in and when to get out. In 1929 the insiders knew when to get out. Now they are sophisticated enough to drive the market up as well as down.
true and there is the off and on legality of short-selling which is like betting to make a profit off america's economic demise.
when it profits a person to bet on the downfall of their own country, something is seriously wrong with the game.
You have never been allowed to short the dollar though...at least not in American markets. But of course the "powers that are" play arbitrage with our currency on a daily basis through foreign accounts. As far as shorting individual stocks goes, I have no problem with that. As an ex-broker, it was an instrumental part of my business...to make money whether the market was going up or down. Although it is very true that there are those who manipulate the market for their own greed, the savvy investor can easily spot an over-valued stock sector and play on its imminent correction.
Cramer on shorting:
http://www.zimbio.com/Jim+Cramer/articl … +Money+Old
"This is the famous 2006 interview from TheStreet.com's "Wall Street Confidential" webcast which stirred controversy after it appeared on YouTube.com. In the video, Cramer described activities used by hedge fund managers to manipulate stock prices; some illegal and some debatably legal. He described how he could push stocks higher or lower with as little as $5 million in capital when he was running his hedge fund.
Cramer said, "A lot of times when I was short, I would create a level of activity beforehand that would drive the futures." He also encouraged hedge funds to engage in this type of activity because it is "a very quick way to make money." Cramer claimed that everything he did was legal, but that illegal activity is common in the hedge fund industry. He also stated that some hedge fund managers spread false rumors to drive a stock down: " ...it's important to create a new truth, to develop a fiction."
Cramer said one strategy to keep a stock price down is to spread negative rumors to reporters he described as "the Pisanis of the world". "You have to use these guys," said Cramer. He also discussed getting "the bozo reporter from The Wall Street Journal" to publish a negative article. Cramer said this practice, although illegal, is easy to do "because the SEC doesn't understand it."
I've seen this vid. It's unbelieveable that he would just come out and say flat out he fraudulently maniuplated stock, but he did. It's on youtube somewhere.
and caught by his own game, how short sellers took out Bear Sterns here:
http://www.deepcapture.com/did-a-cnbc-r … r-stearns/
"It’s April 2, 2008, and CNBC reporter Charlie Gasparino has just reported that Lehman Brothers CEO Richard Fuld claims to have evidence that short-sellers, who profit from falling stock prices, actively colluded to bring down Bear Stearns.
Indeed, the SEC is already investigating precisely this possibility. The regulator has said that it would like to know whether short-sellers circulated false rumors about Bear Stearns’ liquidity and credit risk in order to spark a run on the bank. And it has announced that it is investigating allegations that hedge funds engaged in “naked short selling” to drive down Bear Stearns’ stock..."
Excuse me? Buying any foreign currency is shorting the dollar. Come on, you are a former broker.
You're edging into tinfoil land again. The only person I heard of who got out in time in 1929 was Joe Kennedy. The story goes he was getting a shoeshine when the shoeshine boy tells him about a hot stock tip. When Joe realized that even shoeshine boys were playing the market, it wasn't a stock market anymore, but a giant gambling machine, so he got out.
What you're seeing with the hedge funds is people's wishful thinking. There's so much crap in the mainstream news about the rally and how the good times are here again, that people are investing like nuts, hoping to make it true. There is no solid foundation under this rally. What we're dealing with here is the delusion of crowds. Look at the mania over Tulip bulbs in the Netherlands or the South Seas bubble or the Louisiana company bubble for striking parallels with today.
In fact, that's why guys like Cramer are able to do the shady things they do. So many people are in the market that don't know what they're doing that this sort of thing works. Personally I'd be ecstatic if someone did that to my stock. Sure they might make some money shorting me, but as long as the fundamentals are strong, I could do a stock buyback, strengthen people's perception of the stock and not only rally the value, but make a killing in the process. You really can't fool the market for very long. And there's always a counter to cheap plays like Cramer.
Onthewriteside, nobody owns us. Do you really think the US is gong to make good on any of those debts? We're the US not the Dominican Republic, Mexico or some other banana republic. Who is going to compel us to pay any of that back?
Couple points: Yes Joe Kennedy was the most famous success but read this: http://www.straightdope.com/columns/rea … rket-crash For every sell there is a buy and vice versa. Some sold, and it was not just Joe.
Second, the market has had very low volume since the hedge funds pushed it up and some funds piled on. There are a lot of regular people who are being very careful here.
Third, we should have known the housing market was a bubble when pizza delivery men owned multiple houses. DejaVu all over again.
Fourth, it seems that Summers and Geithner want to put humpty dumpty back together. Instead of bailing out the golden goose of prosperity, the consumer, the idiots bailed out the useless insolvent banks who are scared to lend to their mothers. These idiots think it is all about loan supply, while forgetting that loan demand is tanking. They must have had surrogates take their tests in economics in college.
No, they really do teach this stuff in college economics. It's the Gospel according to John Maynard Keynes, pretty much every school of economic thought teaches the same thing, except the Austrian school: http://www.mises.org
The Austrian school economists saw all of this coming, and what's more their analysis of the Great Depression differs from just about everyone else's. Since the Austrian school's description of what happened is the closest to what historically happened, I'm inclined to believe them over the morons in charge at Treasury and the Fed.
But there is always the upside, LDT - some folks have seen through the BS and have rolled up their sleeves. Maybe not enough, but passive resistance has to start somewhere.
Because the U.S. economy is imaginary at this point. It's being held up by spit and the audacity of hope.
I have to confess I'd rather it be held up by something more substantial,like gold. Right, Pam?
I'm not sure that's accurate. This: http://bespokeinvest.typepad.com/bespok … targe.html
seems to suggest that there is a difference between the rates, and that rate cuts cause the t-bill rates to fluctuate. Indeed looking at over 25 years of data shows several times where the interest rate of t-bills exceeded those of the Fed. I'd suggest that happened due to the bond market attempting to put the breaks on the Fed's willingness to print money. I'd suggest that while your chart shows a correlation between the t-bill market and the Fed rate cuts, t-bill market might be reflecting economic conditions prevalent at the time like the stock market crash and 9/11 in 2001.
Well, I am pretty sure it is accurate. I am with those guys for almost a decade now, and never saw them lying. In fact the one you point to shows exactly the same picture, it is just not as clear because of the resolution.
So, looks like it was different in the last century, but since around year 2000 Fed clearly follows, not leads.
I used to have percentage stats on who owns our debt. Even if I find it that data is probably somewhat dated, but if I recall correctly, most of our debt is held by foreign interests, a small majority.
I'll run a google and see what I can find out for now.
That would be helpful. But I think Ron Paul obviously does not trust the Deloite and Touche audit. I think that is fair and lots of congressmen believe in backing him.
Ok, so far here's the quick data from a summary on a (subscription only) article by a Harper's economist:
"In the January 2009 issue of Harper's magazine, economist Joseph E. Stiglitz and reporter Linda Bilmes break down the government's revenue and spending during the George W. Bush presidency. The article is accompanied by charts (from NigelHolmes) that place the data into context. The article is available online to Harper's subscribers.
According to this analysis, the was a surplus of $283 billion before Bush took office and a deficit of $438 billion now. The Bush tax cuts reduced government revenues, and spending increased by 59%. Government revenue fell by about $500 billion because of the tax cuts."
"Read the Harper's article for a complete picture of who owns the debt and how the current debt fits into historical context. For example, according to the article, the national debt is now the highest proportion of the gross domestic product in half a century. The article also breaks down who holds America's debt, saying: The share of public debt that is owed to foreign nationals has risen from 31 percent in 2000 to 46 percent today. This means that every man, woman, and child in the United States owes $9,000 to some other country."
"According to the US Treasury Department website, 57% of the debt is owned by the public and 43% is owned by US government agencies.
Public owners include banks, private investors, pension funds, mutual fund companies, insurance companies, and state, local or foreign governments..."
I'll see if I can track the exact figures for which countries own how much some time tonight.
"The biggest chunk (about 25 percent of the $8.5 trillion total) is held by foreign governments.
Japan tops the list (with $644 billion),
followed by China ($350 billion),
United Kingdom ($239 billion) and
oil exporting countries ($100 billion)."
I think there was a big rise in Saudi holdings the last couple of years. I'll work on getting some more recent data than 2007.
Great site here:
http://useconomy.about.com/od/fiscalpol … S_Debt.htm
"The debt level is the debt as a percent of the total country's production, or GDP. Total economic output, or GDP, is $14.4 trillion. Therefore, the debt is now 73.6% of U.S. GDP, up from 51% in 1988. (Source: U.S. Treasury, Debt to the Penny; Bureau of Economic Analysis)The most recent budget forecast from the Office of Management and Budget (OMB) showed the deficit rising $1.7 trillion in FY 2009 and $1.17 trillion in FY 2010. This could increase the debt to over $13 trillion by 2013. This is a result of the economic stimulus package and the 2008 government bailout measures. It also assumed that the EGTRRA and JGTRRA tax cuts will not be extended and that the Alternative Minimum Tax would not be modified - both unrealistic assumptions."
who owns us? 2009 figures here:
http://useconomy.about.com/gi/dynamic/o … ic/mfh.txt
China, Mainland 763.5 767.9 744.2 739.6 727.4 713.2 684.1 618.2 573.7 550.0 535.1 503.8 506.8 502.0
Japan 685.9 686.7 661.9 634.8 626.0 625.2 629.6 617.5 630.3 637.6 628.0 580.4 575.3 588.8
Carib Bnkng Ctrs 4/ 204.7 213.6 189.1 176.6 197.5 205.0 203.5 169.3 132.9 117.6 106.6 122.4 104.5 117.4
Oil Exporters 3/ 189.5 192.0 181.7 186.6 186.2 187.2 176.7 171.2 169.6 162.9 159.5 170.3 164.2 153.8
United Kingdom 2/ 152.8 128.2 129.1 123.9 130.9 132.4 133.2 112.8 82.5 66.1 55.0 279.1 271.2 246.8
Russia 137.0 138.4 130.1 119.6 116.4 108.0 110.8 99.6 104.2 104.0 95.2 65.3 63.7 60.2
Brazil 126.0 126.6 130.8 133.5 127.0 136.1 141.0 148.3 152.6 154.8 158.0 151.6 151.4 149.5
Luxembourg 97.5 106.1 92.3 87.2 97.4 94.4 100.8 104.7 90.4 89.7 102.6 83.2 75.2 81.8
Hong Kong 80.9 78.9 76.3 71.7 77.2 70.6 69.8 65.5 65.8 65.2 65.8 61.2 61.4 63.1
Taiwan 78.3 74.8 72.6 73.3 71.8 70.2 65.9 63.0 66.2 67.9 66.5 39.6 38.9 42.2
Switzerland 64.2 67.7 68.2 62.1 62.3 63.8 62.0 49.7 45.9 45.7 45.1 44.3 41.9 42.4
Germany 54.6 55.0 56.6 56.4 56.1 54.0 53.7 51.6 51.8 51.7 51.6 40.8 44.9 43.6
Ireland 49.7 54.7 54.5 50.0 54.3 41.3 35.1 32.9 18.9 16.9 19.9 13.9 15.6 18.3
Singapore 39.7 39.1 39.4 38.3 40.8 38.8 34.0 32.2 31.9 32.8 31.7 30.3 30.6 33.5
India 38.5 38.2 34.6 32.5 29.2 22.3 18.3 20.3 20.2 19.0 17.7 11.7 10.3 10.5
Korea 35.4 33.1 33.3 31.3 31.3 32.7 36.2 40.2 42.1 39.4 40.6 36.4 38.4 40.4
Mexico 35.4 36.3 37.9 34.9 34.8 33.8 32.2 32.5 32.6 34.3 41.1 41.9 39.6 37.3
France 30.6 27.1 16.8 17.9 16.8 18.4 20.5 19.3 21.2 17.1 15.4 -- -- --
Thailand 28.5 26.0 39.7 37.2 32.4 33.9 33.6 27.4 30.4 30.6 31.2 32.4 32.8 27.9
Norway 27.5 26.2 21.1 21.9 23.1 20.2 11.5 13.2 2.4 2.8 4.4 43.3 47.1 45.3
Turkey 27.2 30.2 32.4 31.3 30.8 29.0 27.9 31.5 34.3 32.7 30.5 30.3 28.9 31.1
Israel 19.1 19.4 17.4 16.9 18.8 13.8 12.4 8.7 7.6 8.1 9.8 5.9 5.3 6.2
Egypt 18.5 18.5 19.1 16.9 17.2 16.8 16.7 15.5 14.5 15.1 14.1 12.3 12.8 12.7
Netherlands 16.5 17.6 16.1 16.8 15.4 15.6 15.7 15.6 16.9 17.8 17.8 15.0 15.6 15.5
Italy 16.2 16.6 16.5 15.6 16.0 15.9 15.3 11.6 12.9 11.0 11.4 10.2 11.3 10.3
Belgium 15.8 15.4 14.5 15.5 15.9 15.3 15.8 15.4 14.8 15.0 15.4 12.4 12.4 12.5
Chile 15.1 15.5 15.2 15.2 15.2 15.1 15.4 13.4 13.0 13.6 12.2 11.7 11.1 10.2
Canada 13.1 11.9 10.9 9.0 8.2 12.7 14.0 16.0 23.5 22.3 23.8 28.4 30.3 25.8
Sweden 12.7 12.5 12.7 12.4 12.7 13.1 13.5 13.6 14.7 14.4 14.4 12.4 13.2 13.1
Philippines 12.0 12.4 12.6 11.6 11.7 11.5 12.1 12.0 12.3 12.4 12.4 8.8 9.0 9.9
Malaysia 11.6 10.6 8.4 8.0 8.4 8.8 8.6 9.4 10.1 10.5 10.4 8.3 8.5 8.7
Colombia 11.4 11.2 11.4 11.3 11.1 11.5 11.3 9.9 9.0 9.3 9.2 7.6 7.6 6.5
All Other 153.5 156.7 164.9 162.5 156.5 156.2 149.1 137.8 139.2 135.6 134.7 118.3 117.7 119.1
Grand Total 3262.6 3265.2 3162.0 3072.2 3076.9 3036.6 2980.3 2800.1 2688.4 2624.0 2587.2 2633.5 2597.5 2586.5
So it's China, followed by Japan, Carribean banks, then middle east oil nations, then U.K. and down the line.
Naked short selling is different than regular short selling. Naked short selling requires no stock to short, just a promise to supply the stock. That should be illegal. But I am pretty sure Cramer had friends who did this. This appears to be possible illegal activity by Cramer on Mad Money:
http://www.metacafe.com/watch/1413243/j … e_illegal/
If he does this to sound stocks, he better know when to get out or he'll lose his rear end. If he picks a weak company or one that doesn't have anything to back its numbers, well then he's doing a service by exposing those weak companies. That's the benefit of short selling. They cut through the crap of quarterly reports and can give you some idea of whether a company is worth investing in. Like I said, if Cramer shorted me, I'd let him. Chances are pretty good he'd not be able to time the market and get out in time. As long as your company is fundamentally sound, you don't need to worry about short selling, naked or otherwise. It's the unsound companies or the companies that are trying to hide bad news that need to look out for the short sellers. Or are you telling me you're not planning on shorting bank stocks?
No I don't short. I just want people to know what the banks are up to. I think they are wrong and that people should be warned. So, no I lost some money already and capital preservation is the best.
Yes the Austrians probably don't put much faith in stimulus, I just don't agree with them or the black swan guy that random events caused the ponzi scheme. It was an intelligent, planned, and applied scheme to keep bad loans off balance sheets of the banks.
An Austrian would be the first to tell you that CDO's were a banks defense against having to make loans they knew would not be paid back. You don't seem to understand that it wasn't the banks, but the politicians who created the scenario by trying to do something for social, not economic reasons.
An Austrian will also tell you that all of the ills in the banking industry, even the financial industry as a whole can be traced back to fractional reserve banking. It's this sort of banking that caused the creation of national central banks and is now pushing for the creation of an international central bank. Which will be impossible unless there is some sort of central government. All central banks require the power of monopoly that government gives them, otherwise people look to alternatives to fake money and dishonest banking. So along with some super-central bank, there will have to be a push for political union.
That's why I'm not sure such a thing will happen. For one thing, we're not Europeans. Most Europeans who believed in liberty emigrated here back in the 19th century. So we have a natural aversion to authority that I think modern Europe lacks. What remains to be seen is how Papa Obama reacts when his stimulus policies fail and people realize that the trillions he's wasted on them are gone forever.
Interesting points. Here is my concern. The banks took out CDO's and allowed off balance sheet banking everywhere, including in Europe. So, the Europeans didn't have liar loans and yet real estate was driven up artificially with easy money. Also CDO's were labelled AAA and sold abroad. These were frauds. So you are saying that the banks committed fraud knowing that they would make crap loans that wouldn't be repaid. Is that a correct interpretation of your statements?
I suggest that off balance sheet banking allowed the crap loans and the CDO fraud. The root cause of crap loans and CDO fraud was a plan put in place at Basel 2. They used the wishes of politicians to scam everyone. These bankers wanted to experiment with fire, thinking that nothing could kill the economy. Now we face massive deflation. Loan demand is way down.
Also, what do you think of this website: http://www.webofdebt.com/ and specifically: http://www.webofdebt.com/articles/quant … easing.php
Also Led, how much of the national debt interest each year is returned to the treasury department and besides the foreign interest payments, where does the rest of it go?
The reason European banks got into the act was due to the "return on investment" that American banks were reporting. Also you need to consider the fact that with the dollar being the reserve currency, Europe too had to create credit to keep up favorable exchange rates with the dollar. If they didn't keep up, Europe would soon not be able to export to the US due to the decline in the purchasing power of the dollar. So again political pressure was brought to bear against the banking system to keep the current exchange rate between European currencies and the dollar. Since US banks were having so much "success" with subprime loans and repackaging them as CDO's European banks followed suit, in a bid to keep inflation in check, they diverted the inflation into real estate rather than a general increase in prices. We opened the door and the Euros followed us through it.
The big problem here is that we're dealing with natural law. You cannot do fractional reserve banking or fiat money generation without seeing the problems we see today. Because so many of our leaders are either ignorant or care only for the power fractional reserve banking and fiat money gives them, they don't see what's on the horizon. Mises called it a crack-up-boom, which is what you say in Germany during the 1920's.
Ellen Brown makes several good points. She even quotes Bill Bonner. I read his Daily Reckoning, so I understand quite a bit about what she's talking about. She does make the common mistake of calling the Fed a private cartel. Government controls the cartel. By feeding into that nonsense, Ellen is doing what the creators of the Fed intended. No politician will be called to account for the creation of the Fed, nor its actions because speculation will swirl around this "private cartel". Incidentally Bill is also an Austrian economist and a major gold bug. I so wish I had the money to invest in gold right now. That's the only thing that's going to hold value over the coming years. In fact that was the power the Congress was given, not to allow the print of paper money, but the establishment of weights and measures and minting money. Mint. Gold and silver coinage. Not paper. Commodity money is much harder to inflate than paper. The Founders, with their experiences with the Continental, were loath to give Congress the power to print money. They knew paper money destroyed wealth. The money Ellen quotes in her essay? Didn't ever really exist. Most of that was "paper value", true value is established by what investors are willing to pay for a thing. Concerning CDO's investors decided that the value of those "investments" were zero. Banks just deluded themselves and their investors into thinking they held something of vale when they did not.
It's misleading to think that the current Treasury has any money whatsoever. In fact the taxes we pay are used much like the Feds deposits into the fractional reserve system. The IRS only collects about 200 billion in taxes. Yet we've routinely seen budgets that exceed this amount, year after year. Think leverage. The government has about 200 billion in "real" money yet has created 10 times that amount to pay for all of these welfare programs. It's not where the money goes that is important, it's what effect this will have on prices in the economy. That's what the American people are not being told. A dollar today only buys 0.80 cents of what it would have bought in 2000. That's just due to the results of the Bush years. Imagine something 10 times that amount over the next few years. Pennies on the dollar takes on a whole new meaning.
That's why I'm such a gold bug right now. Inflation is going to happen. It's effects have been hitherto masked by the depression we're in, but once we hit bottom, you'll see prices skyrocket. When the price of food goes up, you'll see rioting in the streets and martial law in effect. That is what's in store for us. So you can understand that I'm less concerned about pointing fingers at yesterdays news and more concerned about what is on the horizon.
I have been wrestling with the idea of whether Krugman is right or Schiff is right.
Krugman says that all the stimulus has gone into a black hole, and the money supply is shrinking. Therefore deflation is the gorilla that will take us down.
Schiff, on the other hand, believes as you do. He believes that massive inflation is inevitable. The question remains, who is right. Certainly, stimulus that does not circulate becomes a problem. The banks have accumulated 830 billion of excess reserves. They never had excess reserves. That money is just sitting there. And it needs to be more.
So, I don't see inflation unless they burn through that money. I can't see inflation even if they burn through the money if they only use it to cover their toxic debts.
So, until deflation dies, there may only be speculation and not inflation. We will see.
I don't think the government controls the cartel. I believe that the government does what the cartel wants. The cartel wanted to be able to leverage 40 to 1. The government went along.
why not some of both. I admire krugman and I know schiff is sharp.
can't we see deflating elements in the economy along with inflating elements creating a mix that is next to impossible to either interpret or predict?
that said don't mistake correction for deflation. they aren't the same thing. I tend to be more worried about lack of correction where even sitting still is still inflation. I would side with Schiff here.
THIS is why econ is a soft science. there is truth on both sides but how is it going to play out?
I think if Obama is brave enough he can approach that 'lack of circulation' by the banks with various legislation.
In short. No. The only time you see inflation is when the monetary authorities make more money. Today it's easy, create more paper money or credit. Back in the day, kings had to actually collect all the gold in the kingdom and clip the coins. They would, for a time, circulate at their old value, then as people became wise to the clipping, the value would fall causing prices to rise. Kings found this useful for paying for wars, so it was a somewhat common practice for kings to engage in when they couldn't find a moneylender to extend them any credit.
Today the value principle works the same, so that when a bank creates credit it circulates at the old value, but by the time it gets to you and I, it has lost part of it's value. That's why in newspapers they say 1990 dollars when talking about something that was paid for 20 years ago. There's the loss of purchasing power right there in black and white. We're getting poorer all the time due to inflation, but it's unremarked among just about everyone.
Trust me, it's not circulation that's the problem. Just because you spend money, that doesn't mean that you're spending it on something useful or something that's going to give a return on your money. Dear God, you thing people would have figured this stuff out during the dotcom bubble. Then you had people investing in companies just because it had dotcom in the name. It didn't matter if they made anything or sold anything, all you needed was dotcom. People lost their ass then too. Housing, same problem. At the height of the boom people were just buying houses to flip. The problem was that fewer and fewer people could afford to buy the house after each flip. Price soon had nothing to due with the value of a home. A home is a place to stay, not an investment. Apartments and townhouses, now those are investments. Homes are places you live in.
Too much money makes people think crazy things like that. Papa Obama is going to try to bring the good times back, but he's going to fail. Just like trying to reinflate a popped balloon, a bubble, once popped, doesn't inflate again.
I also don't think you understand. Banks are insolvent. They have no money. As soon as the Alt-A resets hit, the banks won't have any more money for reserves which means that they won't be able to cover deposits or withdrawals. I hope like hell you have less than 100k in the bank because if you have more, you can kiss the excess goodbye. And that's as long as the FDIC has enough money to cover every deposit in this country. It doesn't. That's what they are so desperately trying to cover up and that's why they're willing to destroy this economy. They're running scared. As they should be. This is completely unprecedented in the history of the world. We're about to see a nation's entire banking industry go under all at once.
Banks ARE insolvent. I read last week a summary that said 47 were insolvent last year and expecting considerably more this year.
I know we are in inflation. Doesn't take a lot to figure out that if wages for a 7$ an hour job leave you with only rent and no bill or food something is seriously out of kilter.
Housing was the start of this new batch of inflation. They inflated something people couldn't just up and quit. They have to live somewhere. Oil did the rest.
We need what some people are calling 'deflation' to bring cost of living back in tune with wages again. Either that or wages need to increase to cover cost of living. A country where an average job doesn't pay you enough to support yourself much less a family indicates a government that needs to be removed. If it's by the people, of the people and for the people, then making sure there are jobs for them and they pay well enough to live on has to be part of the deal. Primary reason for government, that and national defense.
You don't get it. Some banks have had to close their doors and run to the government for help. That's not what I'm talking about. I'm talking about every bank in the US closing down one Friday and not opening up on Monday, nor will they open ever again. Totally insolvent means totally insolvent. No more banks in the US, no more money. I'm not even sure how we'd recover from something like that, I mean we've always had money.
What we need to do is stop printing money like it's going out of style and get back to something you just can't produce out of thin air. I suggest gold because it holds is value through just about anything. Wars, famine, plague, industrial revolution, nothing really batters the value of gold. An ounce of gold would have bought you a good suit in 1909 and today the value of gold will buy you a good suit. Think about the ramifications of that for a minute and think of how better people would have it if the value of their labor were paid in something that holds it's value like gold and doesn't lose something like 95% of its purchasing power over the last century. How much easier could you live if you didn't have higher prices chipping away at what you earn, costs rising higher and higher while the value of your paycheck goes down every year. How much better off would you be?
Krugman is an idiot, but what can you expect. Few people realize that his Nobel Prize was started by the Swedish Central Bank. Of course they're going to award it to a central banker. True, two Austrian economists won, but the prize has been around for about forty years now and only two free market economists have won.
Schiff is the man. He saw this stuff coming years ago and warned people. Sure he was on CNN and Fox and all the news channels, but they treated him as a crackpot, not someone who knew what he was talking about. I tend to listen to winners. Schiff was right about the bubble, he's probably right about what's going on now. Krugman is nothing more than the governments mouthpiece.
Banks are holding on to that money because of the coming reset of the Alt-A adjustable loans. The banks know there's going to be another round of foreclosures and they need that money to stay solvent. The big question is: Will it be enough? I don't think so. Unlike the subprime mess, we now have massive unemployment and are in the middle of a Depression. People are already stretched too far. This shock will bury the banks.
What I'm unclear about is the effect of the insolvency of the banks. I think I hope that the banks will fail. If they don't then I believe we will see an increase in credit which people will not be able to afford, and that credit will go elsewhere, probably commodities and we'll start to see the effects of inflation. Namely prices will rise. Actually I don't think it will matter what happens to the banks.
If they are insolvent, the bailout money will go to their creditors and thus circulate. Which will have the same effect as if the banks survived and began expanding credit again.
What it comes down to is one simple question. Does spending drive a sustainable economy or does saving and investing those savings drive a sustainable economy?
That is where Krugman may have some insight. See I am not so sure that deflation is conquered. It doesn't seem to be conquered if prices for housing still are going down, if unemployment is still going up, if the banks' excess reserves are not enough. Essentially that is the Krugman argument. It isn't that inflation cannot be a problem down the road but it is not written in stone. If there is no loan demand, if people cannot afford to borrow, then it would seem that deflation is a threat for some time to come.
The Krugman argument is that you must spend at the government level to make up for the citizen. Now I agree with you that this can only be temporary. It will not be sustainable.
I guess what I am saying is that Krugman says try to spend. Apparently when Roosevelt stopped spending in 1937 the depression grew worse. Krugman's solution is to kick the can down the road and buy time. The problem is, we have never tried Schiff's way of letting the banks just implode.
So, my idea is that the government should have taken the 800 billion and started new banks. Then there would have been power to lend. There would have been no reward for the banks who leveraged up and took massive risk. That, in my view, would have been better than just to let the banks go under without plan B.
But by saving the worthless big banks, like Bank of America, JP Morgan and Citiscum, the government has not properly assessed the hurt put upon the engine of world growth, the US consumer. I have been advocating a massive walking away from debt, because if the consumer does not regain the power to spend, the economy could throw the world into a mega depression. If people do as I have advocated, we may just see how the destruction of the big banks will impact the economy. But the consumer is more important to the recovery than the banks. That has been underestimated by our government.
Krugman was wrong about FDR and his spending. Spending too money that otherwise could have been invested in productive businesses and instead spread it out among people just to spend. If that's all it took, then the Depression would have been over by 1933. It wasn't. By stealing from the most productive members of society, FDR held back true recovery for a decade and a half. A similar problem engulfed the US in 1920. Harding, however, did nothing and the effects were so slight that people don't even remember the recession of 1920 or they deal with it as a footnote to the Great War. I'll have to look back at the cause of the worsening of the Depression in 1937, I assure you it wasn't due to any cut in Roosevelt's spending. Taxes I think that one was, the highest bracket went to something like 97% or something.
Deflation is no the enemy. When you realize that at the height of the boom less than 20% of Californians could afford the median price of a home that things had gotten out of hand with the loose monetary policy of the Fed. Rather than try to stop deflation, we need to encourage it because then prices will reflect a more rational price. Of course that means that we can no longer use our homes as ATM machines, but that's all to the good.
The worldwide superdepression is pretty much inevitable. It's like putting pressure on a spring. You can twist and twist and twist, but sooner or later the spring will untwist. By flooding the market with money, the government has been twisting the spring harder and harder. We've now reached the point of no return and the spring has broken. You can wind a broken spring. New banks would have changed nothing, it's the entire system that's flawed.
It's going on right now. In fact I'd say that the emerging countries are busy retooling away from selling exclusively to the US and looking at alternatives like their own people or China or India. Goods usually flow to where there are a lot of people. Man do I wish I could figure out a way to sell to the Chinese, all my worries would be over.
So we are in a worldwide superdepression right now?
Not yet, it's not like you're in a depression and then you're not. It's kind of like ripples when you throw a rock in a pond. You have an event, which has consequences, which triggers other events, which has other consequences, etc. Some countries are better prepared to weather these conditions than others. Countries who make things, for example. They can always find new trading partners. I believe they will find plenty of customers in the newly emergent middle classes in Asia.
Now the West? That's a bit different. By offloading our manufacturing capabilities, we really shot ourselves in the foot. "They sweat, we think" indeed. I imagine we'll be in trouble until we can reinvigorate our anemic manufacturing capabilities.
Ok, so when will economists worldwide be declaring this superdepression you see? Give me a time frame.
There are economists who will swear on their eternal souls that we're not in a depression right now. So expecting economists worldwide so say in one voice we're in a superdepression will never happen. As for a time frame, only a fool will give you a time frame. Economics can tell us the outcome of certain actions, but it cannot tell you when they will occur. I wish I could. To be able to correctly divine the stock market would make me rich beyond dreams of avarice.
Anyway it all depends on what the people in power do. If they're smart they'll let it alone and things might last a year, more likely two with the damage they've already done. If they react like FDR or like Japan did in the 1990's, well FDR kept us in the Depression for about 17 years and Japan is still going through their depression and it's been almost 20 years, so there's really no telling.
yeah, noted economists have their own slant, all of them.
FDR pulled us OUT of the Depression. I don't keep up with Japan enough to know why they are still reeling somewhat, but I do know that the housing bubble put them into their recession. Housing prices fell for like 13 years. That could happen here if we keep trying to stabalize them too high for real cost of living with pretend money. Bailout is the worst thing they could have done.
No, WWII got us out of the Great Depression.
Not housing specifically. Real Estate did play a big role though.
I assure you, my dear, he did not pull us out. Things were worse in 1937 than they were in 1932 because of the New Deal. His Treasury Secretary lamented in his diary in 1937 that they practically destroyed the economy and things were worse then than at the bottom of the stock market in 1932.
PS: The slant of a particular economist often times has something to do with the school the economist was trained in. Think denominations of religion and you'll get an idea of how schools work in economics.
To contrast, Warren Harding was faced with a depression in 1920. He did absolutely nothing about it. It lasted about 10 months. The Great Depression lasted 17 years. What you've been fed in school is union propaganda. Teachers love FDR because he gave unions power over employers. Public school teachers are union. Therefore they sing the praises of FDR.
Of course you do. Look it up for yourself. I'm really not making this stuff up. Go ahead, try it.
I am not convinced that Led is right about how quick the depression would have been over in the 30's. Depressions in economics is like psychological depression. It is bad, and it is related to expectations as well as the availability of money. I see deflation and the access to money going away. So I agree with Led that we have some severe deflationary tendencies. There is too much money at the top that is leveraged to commodities and too little for everyone else.
This is a very sneaky depression Tskensie. I marvel how spending holds up in government figures while states are going broke because they cannot collect enough sales tax and income tax. Someone is lying and I think it is the government.
I believe that the consumer will not return to past glory and that there has to be something else come along to take the world economy out of this skid. And I hope it isn't war because it could be WW3.
One more thing, Led, the Bush admin tried tax cuts and tried to put more money into the hands of entrepreneurs, but it didn't work. It pushed more money to the top and caused all kinds of speculation on oil, housing, etc.
So then the bottom line is that, as that Davidowitz said one time on CBNC, the Chinese make things and we sell each other insurance. I don't think massive leverage is the answer for America, and I don't know what is unless a new industry takes hold to save us money and lower the cost of living.
The depressions and Panics of the 19th century were as nothing compared to the misery of the Great Depression. Which is where it got it's name. It's surprising to me that few remember the big argument for the Fed was to eliminate the Panics and consign them to the dust bin of history. Not 16 years later. The Great Depression. Not Panic of 1909, Panic of 1837, but Great Depression. Much worse than anything that had come before. I might remind you that expanded credit then also fueled a boom in the stock market that proved unsustainable and the value of the market fell to about what it had been at the start of the 20th century.
We need to start an economy that actually makes things that people want to buy. Davidowitz had a point. That was the whole idea behind the "They sweat, we think" buzzword of the 1980's. Everyone heralded the service industry as the next great thing in American economic thought. If anyone had paid attention, they would have realized that it was a step back, not a step forward. If you make it hard for businesses to do business in your country, they go elsewhere. The lucrative, low skill jobs like factory work are the first to go. Then the higher skilled jobs like programming. Sooner or later you'll get to the professionals like doctors. Lo and behold, Obama is trying to control their wages. Looks like we'll be seeing less of them over the next few decades.
Just because Bush tried to get more money into the hands of entrepreneurs doesn't mean he picked the right ones. Look at the success rate of the Small Business Administration. 85% of all the businesses they help fail within the first year. I don't see how you can't help but call that a massive failure by any measure of the word. And more taxes aren't going to help. That will take even more money from investors and fritter it away on things like GM. Or do you really think that buying stock in GM was a good idea for the government. Do you really think the taxpayers are going to see a dime of that money back? That money is gone, forever. When I think of the few thousand I need to get a small marketing plan and some stock for my business, I get really really pissed. And these slope brow Mongoloids are frittering away billions on schemes that can't possibly work.
Ok, so experts in the field will not say and you will not give a time frame. What does that leave us with to support your position?
Well I personally have studied economics for years know and in doing so have drawn certain conclusions. If you won't take my word for it, we'll just have to see who is right. Time alone will tell us which school of economics predicted the future course of the economy. I can say that Keynsian and neo-Keynsian schools are always nonplussed when things like this happen because the data does not fit their models. Rather than change the models, they try to force the data to fit their models. Free market economists take the changes into account and change their models to accommodate new data. Not that it happens much, except in the area of "public goods" the classical economists pretty much had it down pat. I'm not exactly sure why they didn't study public goods but that was the avenue of attack Marx and other later economists used to try to overturn the works of the classical economists.
That's what I'm saying, but you gotta give me a range within which you are either proven right or admit you were wrong. Otherwise, it's like saying "the world is ending!" and counting yourself correct if that end comes some 7 billion years from now.
A couple of things you can watch for. Even if there is a leveling off there could be no growth:
1. Government budgets and tax collecting declining or leveling off. receipts have to go up based on the same taxes for growth to occur.
2. House prices declining or leveling off. Prices have to slowly go up and not just in foreclosures, for growth to occur.
3. Watch interest rates. If the government cannot sell the treasuries, and rates go up, the housing market will remain comatose. I think the government is aiming for a Japanese style Malaise rather than a Great Depression. That would be a "victory", lol.
4. Compare the charts of the banks excess reserves found on the fed website I think, to the amount of lending banks are doing. If lending does not go up, and the excess reserves decline, we are in big, big trouble. If lending does not go up, and excess reserves increase, then we have bought more time. Whoopee.
Is that a secret code or are you trolling me again? The federal reserve bank in England is private and so is this one. I once thught the owners of the private stock were the member fed banks which are private as well, yet they pay dues to the fed. So, I would like to know who owns the private stock of the fed. It is not told to us, and if it is like the central banks in Europe it is owned by the Rothchilds. I am not saying it is, but I am saying that you have shown no proof of who owns it.
Unless you, Tskensie, or Led are prepared to tell me you have proof of who owns the fed, I will assume you are like the rest of us and don't know. If you don't know Tskensie, then don't be a troll. I need proof, not a bunch of hot air from you Tskensie.
Led here are Bernankes comments on the fed audit. http://www.ronpaul.com/2009-06-26/ben-b … d-economy/
Clearly the fed bank that Andrew Jackson wanted to abolish was controlled by a guy named Biddle and was private. There is absolutely no proof, Led, that this has changed in any way. Ron Paul makes the assumption that the current Fed is a private bank.
Here is a majority of congressmen including Paul and Kucinich who want the fed audited: http://www.wnd.com/index.php?fa=PAGE.vi … eId=100855
And here is the 9th circuit court maintaining by law that the Federal Reserve bank is a private corporation: http://www.globalresearch.ca/index.php? … p;aid=8518 The federal reserve banks are not federal agencies according to the court. The court says they are owned by the member commercial banks. I would like to see the title to that stock and a more detailed view of that. Also the fed is lying on their website when they make it sound like the private banks are not really private. They lie and it is obvious.
Also the major commercial banks in NYC include JP Morgan/Chase and that is the big elephant in the room with certain major ownership of its corporate bonds by European central bankers. If JP Morgan/Chase is then the primary owner of the New York fed that is a major conflict of interest. The New York fed is the major decision maker of the fed and has many of the government programs within its authority.
You can say private bank all you want, but in the end the Chairman is the one who calls the shots and he is appointed by the President with the consent of the Senate, just like any other high level Presidential appointment. Now that's not to say that private banks don't have a say in how the government does things. But that doesn't give them total power. If they had that kind of power, the CRA would have died a quiet death and subprime loans would never have been made. Since politicians has the power to force banks to make these loans, they must be the ones calling the shots. CDO's were created as a last ditch effort to avoid the effects of the CRA, given a choice no banker would have taken on that sort of risk if they could avoid it.
Also don't get me wrong. I'd love to see an audit of the Fed, for personal and professional reasons. I'm sharpening my knives as we speak. I'd like to see a real audit not that weak piece of crap they did in 1978 and we should hold the Fed to the same standards that they hold private businesses. It's only fair after all. If these high minded "public servants" claim they have our best interests in mind, then surely the cannot fail to pass the rigorous audits they force on the rest of us.
I don't know how much clearer I can be. Economics can tell you what happens not when it's going to occur. Kind of like in quantum physics. You can tell where a particle is or where it's going, not both. Economics really isn't about charts and marginal this and utility good that, it's about people and their decisions. There's an awful lot of decisions that people can make in a given day, over a given life. That's why it's impossible to give time frames. The best you can do is look back, analyze what was done right and wrong in the past and attempt to reconcile that with what you see going on around you.
green energy might be part of what fits that bill. a whole new industry and then the need to replace everything that works off of oil. a lot of employment, a lot of growth possible in that.
I think Obama thinks so and I like to think it's possible.
oh and I agree pretty much across the board with your above post, bg
Economics again, my dear, I'll have to do a write up about it sometime, I'm getting a bit foggy, it's late here.
Wow...I thought we came to an agreement on this thread a few days ago? I guess I'll have to back-read a bit now....
The 'Federal Reserve' is NOT federal.
The 'Federal Reserve' is NOT a bank.
Why do they have such power over our money's value? Blame the sheeple mentality.
One point I think you are missing with the CRA. The credit crisis was contained, and Paulson said it was contained when it just applied to the subprime loans made by Fannie and Freddie. But here is where the right and Fox News are wrong, the real meltdown occurred because not only did subprime fail, and they perhaps were expecting that, but alt a and prime are failing through the investment banking securities that came through Countrywide and others who were permitted to write crap loans for prime and alt a jumbo mortgage holders. That is where the crisis is along with the failure of the banks to even soundly underwrite credit cards and commercial loans. They are all crap loans that will fail and the subprime crisis is separate from all that has come later and has put the banks in jeopardy.
The banks did not have to use the poor underwriting similar to subprime in order to please the government. They evidently planned to do this with people who had good credit as well based upon flawed models that they would pay the loans back.
Sure they were going to stick Alt-A and Prime borrowers with ARM's. After the "success" with subprime, they were more than willing to give people a cut rate today for increasing the rate tomorrow. That was a direct effect from the housing boom. Interest rates act as a signal to the market. When they're low, capital is easy to find. This makes people reckless so after a time interest rates increase as people become concerned and charge more for investment dollars. This is proper and good. What happens, though, when the Fed arbitrarily lowers interest rates and keep them there below market value. Don't you think that had something to do with the whole mess. Again it's the moral hazard argument. The government by forcing banks to lend subprime, opened the door to letting banks do that for everyone. Just like Bush's bailout last fall opened the door to Obama's monstrosity that we're going to pay for soon. Moral hazard and the governments ability to create money out of thin air is what caused all of this.
Yes, Led, I agree that low interest rates for so long helped. But also no money down and piggyback mortgages were essential. It was cheaper to buy a 400k house than to rent! In Cali you needed the first and last to rent, lol.
But this must be repeated, the Fed banks are owned by the local banks in their area. From the 9th Circuit Cour of Appeals: "Each Federal Reserve Bank is a separate corporation owned by commercial banks in its region."
This does not seem to jive with the false statements that the fed makes on its website. And remember, since the New York fed has JP Morgan as the big elephant in the room, the Rothchilds could control the New York fed through JP Morgan. Interesting that Citibank, the other big elephant with its hands on the New York fed is intertwined with the Rockefellers who owned Chase. The New York fed bank is the fed bank with the most power.
According to Wikipedia there is a very close relationship between the Bank of England controlled by the Rothchilds and JP Morgan. They have been each others "fiscal agents". It is also likely that the Rothchilds, along with Chase owners, the Rockefellers, own much of JP Morgan stock. If that bank goes down will the house of Rothchild go with it? I doubt it.
So then, clearly, it makes sense that the New York fed would make arrangements for the US government, without congressional oversight, to help European central banks. It is a conflict of interest and an abuse of the sovereignty of the United States. Ron Paul is right to ask for an audit of the fed. And it is not just a libertarian issue as many house members from all political views support Paul.
I agree it's a mess. But that's the way the Fed was conceived. By BS the population in regards to who owns, makes decisions etc. the creators hoped to create confusion enough to allow the Fed to continue to function even with the scrutiny it lives with today. True it is a consortium of bankers, but the power of even such a consortium pales before the power of government. The way the Fed is set up, bankers get protection from market forces. The Fed will lend money to banks in case of a run. Therefore banks no longer have to fear runs. In addition these extra funds give benefits to banks when they make loans. Rather than pay the market rate for credit, they can rely on the Fed to artificially hold interest rates down, which is extra sugar for the banks as they don't pay as high an interest rate as they would had they been forced to pay their depositors interest on their accounts.
So what does the government get out of all of this? Control over the banking system. The only reason we've been able to pay for FDR's New Deal and Johnson's Great Society is because the setup of the Fed allows the government to monetize the federal deficit. Much like coin clipping kings, governments today also get a benefit when they inflate the money supply. For a time the new money circulates at the value of the previous money supply. That's how they pay for all of their programs. The problem is that the value of currency falls. Thus they have to create more credit to pay for all of these programs, which causes monetary value to fall further, which necessitates a further increase in the money supply and now we're stuck in a downward spiral.
The reason most of this passed unnoticed is because, for the most part, inflation was kept at about 3% a year. The major problems occurred during wars. Oil was not the only reason for the problems we had in the 1970's. Oil was the initiating event. Vietnam and the Great Society set us up for stagflation. Likewise Bush's war and the Clinton stock bubble were the causes of our current problems. Oil prices again were the initiating event, but they didn't cause the underlying weakness that is strangling our economy.
And I really need to stop feeding the trolls. You'd think I'd have learned by now.
There is a good reason for the independence if the
Fed from the party in the White House and the Congress. This is designed to avoid any tendency of the party in power to press the Fed to keep interest rates lower than advisable for political purposes and contribute to inflation. That's why the Fed chairman's term isn't co-terminous with that of the President.
Except Ralph, that it is now used for more than just monetary independence. The fed pushes around Bank of America through the treasury secretary, gives money to central banks in Europe without congressional authorization, etc. That needs to be stopped and investigated, not necessarily in that order. No that is the correct order.
And yes, Led, if we feed a troll like Tksensie he will only want more. I think trolls are one brick short of a completed wall. Or maybe two bricks. Some of them are many bricks short of a completed wall. We wouldn't want to stereotype all trolls. Misha knows about trolls as he is an expert on these boards.
Oh yeah, and conspiracy nuts have really got it all together.
The Bank of America deserved to be pushed around. They are a bunch of incompetents who took crazy risks and ran the bank into the ground. The government should have nationalized B of A and CitiGroup. Or, rather, they should never have been allowed to grow to be "too big to fail."
Repealing Glass Steagall was a big mistake.
Interference in the marketplace was the big mistake. Without people being lulled to sleep by "government oversight" more people would have been diligent about their finances and we wouldn't be in this mess.
I happen to agree with you on that, but it's also been shown that when you subsidize something, you get more of it. If you subsidize people into being drones, you'll get more drones than would otherwise be the case.
The average man was competing against very sophisticated players who change rules to suit the insiders. Paulson and Rubin should be prosecuted and if you threw away the key less people would take a chance on scamming. The worlds biggest ponzi was not Madoff.
You're right the biggest Ponzi scheme is Social Security.
it wouldn't be if they quit stealing from it. it's not even in general revenue, ffs.
The definition of a Ponzi scheme is paying past investors with current investors money. Social Security has been doing that since it's inception. It was put into general revenue for a purpose. Then politicians could get access to more money without raising taxes. All dipping into Social Security does is hasten the day it will all fall apart. Even if SS had it's own account and was never dipped into, sooner or later the fund would run out of money.
not anytime in the near future and that's even if you put it in a normal savings account. receipts still far exceed expenditure. this is a manufactured crisis to forward a non-viable agenda. consdier bush's desire to push socsec into the stock market.
I'd just rather have the 40% of my paycheck they take for benefits I'll never receive and invest it how I choose. Sooner, rather than later, we're gong to have to learn to let people live by the consequences of their decisions. If you don't prepare, don't complain when things go bad.
this one is more spiritual but jesus said not to worry about tomorrow. I think in a practical way it makes sense, as we have no control over everything that can happen. we have to have faith god will provide for us. sorry for the tangent but this is a strong part of my belief system.
Bush would have had us invest in the stock market. But it is a bubble and the rich bankers like Goldman Sucks would have just raped the pensioner.
I say boycott stocks and debt. Neither can be trusted because they are being administered by swindlers. You didn't read the goldman sachs article did you?
Honestly, I stopped reading after the Rolling Stones dude started talking about how we live in a free market society. I really didn't have to read any more after that because the gist of his argument would have been that free market economics is to blame. He made a poor assumption about our economic system, so the rest of his reasoning is flawed. Once he starts with the right assumptions, he'll have a better argument.
What I'd like to see is people themselves put in charge of their own retirement accounts. You'd see all the get rich quick and crazy schemes go by the wayside pretty quick. When you know that it's only you, not you and everyone else, you're much more careful with your funds than if you think it doesn't matter.
Debt is a stupid thing to get into unless you get into debt to start a business or something, then you're using debt to create an asset. Any other use of debt is stupid. Likewise investing in the stock market is stupid, unless you know what you're doing. Most people don't, that's why they lose playing the market. If you don't want to lose, don't play.
No, you are missing the important issues, the continual scamming of the investment banks, making it impossible to trust Wall Street. He is saying that Goldman Sachs plans were just that, preplanned. I have been saying that the ponzi housing scheme was no black swan random event but was preplanned.
not sure if you're implying wide conspiracy planned or just a bunch of greedy ethicless individual plans that happened to come to forefront because of the economic landscape. I don't think there was a wider plan. I think it was individual people sharing a circumstance that was an error of judgement by other flawed individuals.
this isn't totally unreasonable. Acorn does much the same thing. it charges people money for what they could have done for themselves for free. it's something of a scam and I would know because years ago I offered to work for them and found out it's all sales and marketing. imagine this idealist's unhappiness with that information. but what they found is that if people have a personal investment in something, they will work harder. clearly they didn't do what they needed to for free, they had to pay to get that incentive... stuff like getting stopsigns put up at unsafe crossing and drug houses shut down.
however I don't think that is the be all end all. I still don't think enough people are logical and rational enough to serve their own interests best.
Lol, but the biggest private and prosecutable ponzi scheme was the housing bubble.
Too bad that little protection failed. Politicians as a whole benefit from taking control of the economy, which is what the creation of a central bank allows them to do. Party doesn't matter. All the party decides is where the output of the economy goes. For the fascists (Republicans) the output of the economy goes to their cronies in big business. For the Communists (Democrats) the output of the economy goes to their cronies in the unions and those on welfare. Every one else loses. Make no mistake neither of the party's leadership want to see the Fed go away. That would destroy their hold over the economy.
Now that most people are coming to the realization that the fed is private, people want to make them into heros:
"Marta sees only two entities with the ability to bail out Uncle Sam - "savings glut countries" like China and the Federal Reserve, a private organization."
http://finance.yahoo.com/techticker/art … -Uncle-Sam
Dire Straits interpretation: Bailouts for everyone and the chicks are free. (My attempt at early morning humor)
aw, it wasn't criticism. it was more a statement on my a.m. functionality.
Guys and gals, this is a must read mega important articl. It exposes Goldman Sach's involvement in the ponzi scams, from the great Depression through the dot com bubble through the ponzi housing scheme through the bailout of the banks. Paulson and Rubin surely can be prosecuted. http://www.rollingstone.com/politics/st … le_machine
I say, boycott stocks and debt. Walk away from all of it or else the consumer will never win against the big banks.
Rolling Stone? Really? Sometimes you have to look at the source of your information. We live in a free market? Really? I've refuted that so many times it's gotten old. We live in a mixture of a fascist and communist system. Period.
Please read the following for a more scholarly aspect on governmental economics: http://mises.org/story/3497
it's really the most valid and honest way to get on track, boycott the corruption. I agree. Will check the story out in a bit.
Sorry dear, I'm in a bit of a foul mood today. I've hit my limit of ignorant comments for the day in other areas, and I'm afraid it's spilling over here. I think I need a vacation.
no offense on this end. you are unfailingly courteous to me. hope your day gets better though...
I'm sure this will still be going on when I return
I have to get to my house and errands. have fun, you guyz.
No I believe it was a planned financial ponzi created at Basel 2. I believe that the necessity for easy money to fund the Bush administration caused the regulators to look the other way, offering bad loans to all the people even with good and bad credit. It was not a black swan event, it was planned. The actions of Rubin, Gramm, Paulson, Frank and others facilitated the system of off balance sheet banking. Rubin went from treasury secretary to head of Citibank and the fed looked the other way as they Sived their way to prosperity, a false one.
It's a thought to consider. Up to now, I haven't thought about it in those terms, but there's no way I would know for sure. You could well be right.
You're still putting cause and effect backwards. The problem with your conspiracy theory is that it doesn't answer one simple question. What purpose would bankers have in destroying their own banks? Using Occam's Razor, it's a much more plausible hypothesis that the bankers were aiming for one end, but due to the unintended consequences of they way our monetary and banking system is set up, what they got was an entirely different outcome. Basically, despite the Ivy League education of all of these idiot-savants, they screwed the pooch and pretty much destroyed the American economy.
Also what you and the Rolling Stones author see as preplanned can be explained by people just taking advantage of the system as designed. Most people don't understand how the banking and monetary system in this country work, so they immediately ascribe conspiracy theories to them. The problem with that is people don't focus on the foundational problems, and keep whacking at the symptoms.
The regulation began in the early 90s, Bush had very little to do with the actual crisis besides invoking the war on terror...
...the laws, bills, and acts that caused our troubles in America today began passing most prominently in the Clinton administration.
You are only partly right. The Clinton Admin set up the subprime mess, but the investment banks took it to prime and alt a crap loans. Investment banks processed all the alt a. Freddie and Fannie were not allowed to be players. Alt a is a major disaster that will cause a foreclosure tsunami and put the banking system into danger. I see on two blocks up the hill in my city, 6 800k houses for sale with no buyers. There is no market for houses over the 729k limit. The market is virtually frozen.
If you listen to Fox News, as distinguished from Fox Business News, you will never get the true story.
ledefense, I'm not above thinking it's at least possible some individuals sold out long term health of a business for short term personal gain. (in regards to why would they crush their own banks)
You hit the nail on the head. This was a scam to post profits, get out, and let the carnage happen without hurting your profits. They were already earned. You are absolutely correct. Led is just too trusting of the financial sector. These are smart people, maybe the smartest. They set this up for short term gain because they know bubbles and how they work, and fiat money and how it works. Led would agree on that, probably.
you and I are tending to agree on this issue for the most part. I'm curious too if ledefense will cede this part of it to our shared view as a tenet of capitalism... human nature and greed combined with shortsightedness and a lack of social responsibility.
No, this is a consequence of regulation. There is no way any regulator can keep up with the myriad ways in which people come up with to evade regulations. It's like trying to stop drug smuggling or evading taxes. People will always try to get something through and something will always work. When regulators shift, people shift. Regulators are always fighting yesterdays battles, they have no ability to preplan anything.
And now you're reaching. Some unknown, long term benefit, to selling out their bank? True conspiracies are easy to figure out. If they figured a way to get some sort of benefit from destroying their own banks, other people should be able to figure it out. I can't and I read about economics, banking and monetary policy all the time.
Also I don't think you consider this fact. If they are working according to a plan, then why is their economic policy the same as it was before, to wit, print more money? Anyone even superficially familiar with these matters knows it won't work, those more versed in these matters knows that the end result will be the destruction of the currency. It's happened many times in the past. Nobody wins when a currency dies. Especially not bankers. No, the evidence points to these guys being technically competent in their respective areas, but not a one of them has the ability to step back and look at the big picture. If there's one thing we have a glut of, it's specialists and if there's one thing we have a shortage of, it's generalists.
that's like saying why have a law against murder since we can't prosecute it until afterwards.
it's deregulation that caused this mess, not regulation. true of the '29 crash (lack of regulation) that caused regulation to be added to protect investors and which was stripped out later resulting in this mess we have today.
Now you're comparing apples and oranges. Murdering someone is a whole different order of violating someone's right to life and property. You can't really compare the two.
As for regulation and the lack of, look up the Tulip mania, the South Seas bubble and the Mississippi company. We're in this mess in large part because the common (wo)man didn't bother to read up on the subject they were dealing in. Regulators do not take the place of due diligence, in fact often times they encourage people not to look out for their own interests; after all the government is looking out for me. They're not. Government regulators only care about pacifying people and keeping them from thinking too hard about how they're getting screwed by the politicians.
At least until they pile up enough mistakes to cause something like this to happen.
I'd also like to note that what we saw was not true deregulation. While some of the oversight was discontinued, the barriers to entry were still in place. That is not the way a free market runs. A free market would have eliminated the oversight and the barriers to entry, so that new players could enter the market and that would have kept the big boys honest. Nothing like having a competitor breathing down your neck to keep you focused on pleasing your customer. Who was it that said the "threat of hanging concentrates the mind wonderfully"? Free markets always concentrate your mind on how best to lower your prices and please your customer. After all if you can't do it, someone else surely will.
That's a much more effective way to police the market than hiring an army of regulators who often times don't know how the market works and often times bail from government service to work for the very people they're supposed to regulate. That, in a nutshell, is why regulatory oversight fails.
I don't see why not. The basis of your argument here is that if we can't control it, why bother to pass a law to try to stop it. We have laws against stealing, murdering, slandering, and a whole host of other bad behavior. In reality, we can't stop a single crime by making it illegal. What we can do is use legislation to set out a cause and effect, crime and punishment.
And yes, it's a weak argument in some way, ie we all have some area we feel like this about, for example I don't like passing laws against victimless crimes. But stealing through fraud isn't victimless. And it's not a weak argument as in comparing two different things. That part of it is sound, imo. Deregulation leaves a huge opening for violation of someone's property (their investments).
I'm familiar with the tulip bubble but not aware of the others. Assuming similarities to the tulip, housing or other similar, my point would be. I never said deregulation was the only thing to cause bubbles, just that it has been, in this case, part of this bubble. Rampant speculation for any reason can cause a bubble.
I saw a nice piece on this I'll see if I saved later... meltdown 101: how likely will it be for more ponzi schemes to come up... something like that, you can probably google it.
lol, thx on the female ref. but I don't take offence if you say man anyway. hehe.
I can agree people often don't bother to educate themselves on really really important things, like politics and finance and it's to their own detriment. So you have that. However, I disagree that it's because they think government is going to take care of them. I don't think I know a single person who trusts the government now or even before this mess.
And I'll come back to agreeing again on the statement about the concept of any kind of protection that seems to be in place for the average citizen is probably a smokescreen to keep us from noticing the government screws us all on a regular basis.
And here is the part we agree on again and by far the best part of your arguement. I wouldn't disagree with you that competition is absolutely necessary. I don't have the education in the specifics but if there is a hurdle to allowing competiton in the financial market, I would probably agree with you that it should be removed. I'd have to look at the particular legislation and study it to really have a good opinion.
I think as far as influencing pleasing the consumer or customer you are being idealistic. I think corporatism has made these conglomerates so huge, they could care less. In fact, I think a horrible decline in national ethics has also contributed, a decline led in by the "me" generation thing of the 1980s and the rise of yuppies.
What's the better way to police the market than setting regulations and having an agency big enough to inspect and enforce? Maybe I missed it, but surely you aren't suggesting the nature of the free market itself is enough?
tk, I second your pit bull stance from the other thread but I hate arguing with pit bull fanatics so I've avoided posting in the thread. I think I agree with your posts 100% on that subject, at least that I've read up to now.
I'll just throw it in here, since you're present currently, and continue to avoid that thread. Nothing good has ever come from me trying to argue about pit bulls on the internet and I'm sparing myself this time.
The reason you don't bother to pass laws against this type of thing in free markets is first, competition eliminates the benefits of doing this sort of thing. I've also mentioned partial deregulation in the past which is what we saw not full deregulation. Sooner or later regulatory agencies become staffed with people from the industry they're trying to regulate or people who want to go work for people in the industry they're trying to regulate. Regulations don't work in the long run. They can't. When you involve government and the economy, corruption runs rampant.
Just trying to be a more modern man. Hey women make up half of the economy, you cannot ignore their effects on it. It is a major reason why our economies tend to outperform patriarchal or matriarchal societies.
Sure they do. What's the first thing that happens when something occurs? Where was the FDA? SEC? FBI? CIA? Look at the salmonella poisonings last year. Everyone knows that the FDA cannot possibly inspect everything, so they have to prioritize. Sooner or later something will happen, it's just a matter of time. If companies are responsible for quality control, however, and there is no government to go to for help, they're screwed if anything happens so they do the best they can to make sure nothing does. The way things are now all they have to do is fool the FDA inspector and it's all good because if something happens, they can blame the FDA. So regulatory agencies deflect people's wrath from the offending companies to government agencies.
In addition, look up Underwriter's Laboratories. They're a private company that test consumer products for safety. Their brand is the little UL you see on things like lamps and such. There's no regulatory agency for lamp safety because of firms like UL. There's no reason that other industries cannot have companies offer the same service. Companies would then fight to get their brand listed because people know, for a fact, that whatever has that brand is safe. Companies like UL have an incentive to provide accurate information because if they slip up, they fail. The FDA being a public institution will never fail no matter how many times they screw up. So where's the incentive to work hard as a member of a government institution?
Of course I am. You've already agreed with me that government sets the rules of the marketplace. One government takes that power, it opens itself up to influence from the very industry it tries to regulate. The industry then rewrites the rules so that the players in the industry benefit. The first thing they do is strangle competition, because that's the biggest threat to them. Once they close them market, their customer becomes not central to their plans, but someone who pays them for the privilege of being a customer. Remember without competition, you cannot go anywhere else for service. Thus companies devote less resources to customer service and more to bribes and CEO salaries.
You cannot have both regulation and free entry into a marketplace. It'll never happen. That's why big businesses only put up token resistance to regulations because they know they have the influence of lawmakers, and if they don't win this one, they might the next. Governments are not meant to run economies. Every single time that has happened, the government has made a hash of it. You're unknowingly, I think, arguing a Progressive belief that only government is large enough and wise enough to run the economy. Government can force it's way into controlling the economy, but there is no way it can run an economy. We're seeing the effects of that all around us today.
you've made a good argument and I agree in some parts. however, I shall have to take it apart later as I'm already running late on my errands and don't have the time.
I shall return however and separate parts of your points and note points of agreement and points of disagreement on them then.
If the internet isn't for pointless arguments that will never be resolved, then I don't know what it's for!
gah, I don't have the energy at the moment to take this apart, but to say I stand by my position on most of the top sections - you've made your case, I just don't agree.
On numbers in the workfroce, I say society AND men AND womwn were better off when there were gender roles and people did what worked for a society and for families. Doubled numbers in the workforcew led directly to garbabge wages for everyone and offered even more ways for men to be irresponsible (bet you didn't expect that one). Let's not tangent on that here, (or anywhere, lol) but suffice it to say I don't agree.
I think companies would try to cheat consumers with or without government (like the peanut company and the salmonella in Georgia).
The UL deal just sounds like a way to create another invisible tax... companies get to produce shoddy goods and we put the burden on the consumer to have each item they buy tested by someone in the industry. Not just a tax but the probabilities for corruption are endless.
And the problems you describe in the bottom are ethical lacks and immoral choices, not some sure result from government regulation, yet... here you have that point again. That corruption is exactly what happened. I'm not sure at all that the point isn't... companies are corrupt, with regulation or without so let's regulate the hell out of them.
The reason it's so frustrating, my dear, is that you labor under a false assumption. Government solves all problems and private people are evil and need constant watching so they don't perpetuate evil on other people. Would that be accurate?
more like government is the lesser of two evils if the other evil is the greed of mankind.
actually I tend to think better of people than that generally, but in america in particular we have a political party coughGOPcough that has made a God out of greed. and it's not like americans didn't historically start with this concept from the Puritans who believed that poverty despite hard work was caused by God because the poor person was 'bad'.
I just think individuals deserve a relatively level playing field to combat the evils of greed and power and government is the vehicle for at least trying to help.
And the Democratic policies aren't evil. They want you to live how they think you should live, die when they think you should die. The only reason I have a shred of loyalty to the Republicans is because they have just a bit of the Old Right still active in the party. No one has the right to tell you how to live or how to die. That's your decision. Both parties take that decision away in different ways. That is where my hatred of them comes.
Led, you are not going to see government allowing the biggest banks to fail. That is the free market gone amuck. Since they will not fail, they have to be regulated. However, it probably won't work. Why not just separate banks and investment houses like they did in the 30's. It seemed to limit fraud.
Goldman Sachs offered dot com companies as IPO's against their own underwriting standards. They ruined the IPO market but not after they made a mint and people lost their shirts. Too much of that and retail investors will stop investing.
You can regulate this by deferring compensation. It would make for less fraud.
Unless all companies that are broke are allowed to fail, Led, you will only regulate these firms by regulating compensation. No other way.
Hell let them fail. I've always said that. What we're seeing with the "too big to fail" argument is what happens when you let the government get involved with the economy. Besides Krugman himself, argued that we should replace the dotcom bubble with one in housing. The great arch-interventionist himself said it several times: http://mises.org/story/3539
It's government run amok that we're seeing, however, most people won't understand that until the economy totally implodes. It's coming. Barring some miracle, we'll soon see hyperinflation due to the deficit spending and loose monetary policy of the Fed. That won't be free markets mucking things up, it'll be the direct intervention of the government.
Well, I don't peg you as a GOP. I think you slide more to the libertarian side.
I'm not exactly a dem either. I don't really fit anywhere. I am an economic dem, which is how I vote, and a social republican in value system, although I disagree with the GOP trying to legislate morality which is between a person and their own self imo.
I love the idea of socialism but not the practice of it and I live in terror of groups of people with a lot of power, something I equate with fascism. I think our 'new left' sometimes fits that category.
I find myself pretty homeless political party-wise, but I suppose I might be described as a conservative dem. I vote dem because I detest economic destruction which is what the GOP is trying to achieve and seemingly has succeeded leaving poor Obama trying to pick up the pieces.
It's really a shell game. It doesn't matter who you really vote for anymore, you get Communist and Communist-light. Look at how McCain ran his campaign, just like Obama, just not as much. It's the same party, different wings.
Don't the Dems try to legislate morality with their PC and attempting to scour our social lives of anything overtly religious. Look at the stupid Happy Holidays instead of Merry Christmas. Christianity evil, atheism good. Sounds like legislating morality to me.
And that's the problem. Both parties try to force their agendas down our throats whether or not we want that agenda. Our founders didn't set up government the way they did to provide a welfare-warfare state, they set it up to protect us from the creeping intrusion of government power.
As for being GOP, wiki the Old Right of the Republican party and I think you'll see why I'm a partisan of some of the GOP. Heck before 1890 I'd have been a Dem as opposed to a Republican and before that I'd have been a member of the Democratic-Republican party of Jefferson, opposing the Federalists.
I do have to question why you think people, at their base are greedy and grasping. If that is the case, how is government service any different than working for a private company? Why wouldn't government employees be as base and grasping as their private counterparts? Surely there isn't some mystical transformation upon entering government service that changes the nature of a person from being greedy and grasping to kind and benevolent. Is there?
you might be right about the shell game.
I'm an old school dem and I find the new left frightening for exactly the reasons you mentioned.
the religious right wants to legislate sexuality/bedrooms, the new left wants to become politically correct thought police and interfere with our freedoms on many levels.
you and I may not be as different as it seems, however I do continue to think government, done properly, can be an insrument of good.
Sure, government starts out good, even monarchies were preferable to aristocrats at the time kings were trying to accumulate power. Prior to that, aristocrats were defenders of the people against hordes of bandits and barbarians. Over time, all governments become oppressive and tyrannical. There is no "good" way to limit government, it always creeps.
The issue has become clearer to me the more I study economics. There really is no reason that governments deserve a monopoly on courts, police and military. There are several good alternatives to each of those cases. None require any sort of government at all.
One of the major hurdles you have to intellectually overcome is that government is needed to ensure quality. I suggest you look at publicly maintained roads versus toll roads. By all the accounts I've read, toll roads are much better maintained.
The reason being that road is an asset to a private individual. They have an incentive to maximize use of that road, so they will maintain it and attempt to make their roads more useful. If they do that, they make more money.
Let us now look at a public road. That road is a nuisance to the DOT because it requires upkeep which takes money from a budget. Government agencies are not in it for profit, so right there you have a situation where a road could be built that might not be very useful. In fact, due to bribes and other political games, funds are diverted from where they would be most useful to people who have given our representatives the wherewithal to campaign for office. Government 1, citizens 0.
Now most people wouldn't consider selling roads off, how crazy. People could refuse to build roads and cut people off and, oh my God, you'd have to pay for it. We pay for it anyway, we just can't account for the cost because the cost is spread out over everyone, even those who do not use roads. How fair is that? And as for the denying people the right to use a road, that argument is just stupid. As the owner of an asset, I want as many people as possible to use my road, so I maximize my income. So in that case you have greed (my love of profit) producing a good (people using roads for their cars). Free markets turn what would otherwise be an evil into a good.
I think you're more of an idealist than I am and I think you have a more optimistic view of human beings in general than I do as well.
Everyone thinks I'm the optimist, but socialism if it were done right would be the most efficient use of goods. On the use of public resources, God never put oil in the ground and tagged it out, ok, all the profit from this goes to soandso and the profit from rainfall belongs to GreedIsUs Inc and the profit from...
The resources of a country belong to ALL the inhabitants of a country. Efficiency can be dicated by equity and need, decided by those who have a clue and are educated specifically to read data.
I have no idea why this never works in practice, but it should.
Toll roads, gah. Your way entails so many hidden taxes we would end up like Calcutta, my opinion.
On taxes, I would like to see this... if you work for a living, you don't get taxed at all, regardless of income. No sales tax, no property tax, so if you own a home you own it, there is no reason you would ever lose it.
If you are a modern day vampire sucking off other's work via investments or capital gains, you should pay 75% tax for the benefit of being born into money and never having to work for a living. Let the loafers support the masses needs, they sure live off their labour and in high style. I'd link you to the L-curve but I'm sure you can find it on your own and I'm feeling lazy today.
Socialism is evil because it does not respect property rights. Property rights are the only thing that keeps us a free people. I don't particularly care about society as a whole, I can only be responsible for myself and my actions. As for whom the resources belong to, well that depends on who owns the land. Did you see what happened to those people who owned land near the Flight 93 crash site. The government condemned their land so they could take it for free, "for the good of society" so they wouldn't have to pay for the land. This was when the landowners were more than willing to talk to the feds about selling the land, but since the government hemmed and hawed about talking to the landowners and they wanted, for political reasons, to have a memorial ready for the 10 year anniversary, they just stole the land. Now that may be an effective use of state resources but it's not right to the people who own the land.
http://www.tribdem.com/editorials/local … 03028.html
So you'd rather now know how much you pay for roads. If you haven't noticed, the infrastructure of our roads are deteriorating quite quickly. I don't know about Calcutta, but I'd have to look at the setup. If it's not working, I'm sure there is a reason.
Investors are vampires? I rather thought investors were what made it possible for businesses to expand and hire more workers. Are you sure you have the definition of vampire right. I'd consider a vampire to be someone on welfare collecting a check and not doing anything else.
don't make me look it up. I've lapsed in my study. It doesn't help that I never got around to buying the Russian learner books.
Yet I just used this as a common nickname for a female socialist
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