http://www.americanthinker.com/2009/05/the_top_ten_reasons_obamanomic.html
By Mikiel de Bary
A brute inflationary monetary policy of the kind we are experiencing today can hardly avoid leading to a growth in GDP that, after all, is largely a record of consumer spending. But we cannot judge an economic policy to be "working" simply by detecting such an increase in GDP. Nor may we say policy has "succeeded" just from increases in government jobs or government-subsidized jobs. An economy's success, properly speaking, is one that increases long-term levels of production with robust private sector employment. In short, inflation and public sector growth do not mean a policy has "worked." As the essence of Obamanomics is easy money and government aggrandizement, there are lots of reasons for pessimism. Here are ten of them
10. The Obama economic team really does not know how we got into this mess. For example, Christina Romer, chair of the Council of Economic Advisors, claims that the "fundamental cause" of the current economic downturn is the decline in asset prices from the levels reached in 2006 and 2007, i.e., from the peak of arguably the biggest and broadest asset bubble in history. In other words, she believes that the retreat from absurd valuations is giving us problems.
9. Obama himself follows the scapegoating line initiated by Bush. He blames both the general asset bubble and its collapse on insufficiently regulated companies, rather than on fiat money and central banking -- the sacred institutions of the failed macroeconomic establishment -- which financed every aspect of the Great Bubble.
8. Larry Summers and Ben Bernanke consider credit and liquidity to be the "lifeblood" of the economy. So they will supply untold quantities of it to somehow "restart" financial markets. They are unaware that economic freedom -- let's call it the "oxygen" of the economy -- makes possible credit, liquidity, and financial markets.
7. The Administration tries to meddle with private contracts -- see its attempts to pre-empt the bankruptcy courts and undercut the functions of mortgage foreclosure clauses. For a few cosmetic results, it chills confidence in all future investments.
6. The federal government burdens what is now left of free markets by raising its own spending and borrowing and, of course, by planning to increase taxes and regulation.
5. Government creates a new welfare system for union members when it preserves zombie auto companies in order to save "jobs." It creates a sham "financial system" when it bails out "systemically important" banks and insurance companies -- those that are too embarrassing to fail.
4. The Administration's efforts to manipulate prices upward (as in the markets for residences and "toxic" securities) are irrelevant, at best, and are more likely to delay a return to normal functioning in those markets.
3. President Obama apparently believes that increasing taxes on some of us and then redistributing the money to favored groups and promoters somehow "stimulates" the economy. Who besides macroeconomists (and their former students) believes this?
2. The Federal Reserve Board has transformed itself into an obedient appendage of the Executive Branch of government. Few seem aware that it is managing our monetary system more recklessly than ever in its history. The historic quattuordecupling of bank reserves in the last six months (that's a multiplication by 14) sets the stage for a doubling or more of the money supply. (The Fed has never before dared to promote annual money supply increases of more than around 10 percent.) When and if a bogus "recovery" does actually begin under these conditions, remnants of sanity will force the Administration to reverse its easy money policy. (Reluctantly, to be sure. Romer recently warned of the dangers of reversing too soon.) That reversal, of course, will bring on still another economic relapse. So, American entrepreneurs, are you feeling brave?
And the number one reason Obamanomics won't work:
1. You can't push off the costs to our descendants. Many Americans worry that their "children and grandchildren" will suffer the economic hardship of repaying the Bush-bama trillion dollar deficits. But they won't. (The little darlings will repudiate the debt one way -- monetary depreciation -- or the other. Explicit repudiation. They will, that is, if the present generation doesn't do it first.) The current follies of economic policy are not an extravagance for which we can charge someone else in the remote future. We are the ones who, passively allowing this conversion to a command economy, will experience the deprivations it supplies to all but the politically connected. The transition starts now, with the private sector mired in paralysis and Washington, D.C., beginning to flex its muscle in earnest.
There are several of these that seem to think everything is cut and dry. On #10 if the "retreat from absurd valuations" didn't happen then we wouldn't be in this mess for a little longer :D And if it happened over a longer period of time it would have been absorbed much better.
If all you can do is cut and paste with no comment then your position is null and void.
Quote from: joiei on May 05, 2009, 08:49:44 PM
If all you can do is cut and paste with no comment then your position is null and void.
I'm sorry if I offended you. That was not my intent.
I post items I find interesting. There are some great minds on this forum and I have found over the years that a person learns more by listening to what intelligent people have to say on these weighty issues facing our country.
I started this thread to spark a discussion and to learn from that discussion.
If you don't like what I post, then simply ignore it.
We will both be a lot happier in the long run.
Quote from: unreliablesource on May 05, 2009, 09:31:34 PM
I'm sorry if I offended you. That was not my intent.
I post items I find interesting. There are some great minds on this forum and I have found over the years that a person learns more by listening to what intelligent people have to say on these weighty issues facing our country.
I started this thread to spark a discussion and to learn from that discussion.
If you don't like what I post, then simply ignore it.
We will both be a lot happier in the long run.
Whatever....
Why tend to blame Obamanomics when it is congress that is owned by the banksters.
We print more money and we don't worry about the trouble the great grand kids will have footing the bill.
To create discussion how about giving your opinion of the editorial you have posted? What do you think about it, how does it effect you? If you just cut and paste then we have no place to start a civil discussion. I realize that sometimes civil discussion is hard to find on this board, but if you present a logical and thoughtful position then we have no reason to toss you to guido or FOTB. I appreciate a good argument well presented. I might not agree but I do respect the author.
See, you presented a reason to give an answer to your post, not the original but the response. Now, What do you think of the original post, do you agree or disagree? And why. What are the weaknesses and strong points.
I appologize if I offended you with my curt response. It was rude and uncalled for.
I can just shake my head at the posting that happened while I was trying to write a civil and meaningful post to answer a very important question by unreliablesource in this thread.
Here. Read up! Looking like a long hot summer.
From The Business Insider, May 5, 2009:
http://finance.yahoo.com/tech-ticker/article/241266/Roubini:-Dont-Believe-the-Stress-Tests-or-the-Bank-Rally
Roubini: Don't Believe the Stress Tests or the Bank Rally
"Dr. Doom has an op-ed in the WSJ today. It's basic message is: The rally is an illusion and the stress tests are a fraud due to overly optimistic assumptions. If you thought nationalization or bondholder restructuring were off the table, you were wrong. The banking sector, he says, will lose a total of $3.6 trillion, meaning it's basically entirely insolvent.
He proposes three things. One is a renewed emphasis on getting the PPIP going. He's actually been pretty consistent on this, since the program has such vociferous critics.
True, the program offers cheap financing and free leverage to institutional investors, which will lead to the investors overpaying for the assets. But it does promote price discovery and remove the assets from the bank's balance sheets -- necessary conditions to move forward.
And to minimize the cost to taxpayers, banks must not be allowed to cherry-pick which legacy assets to sell. All the risky loans and securities banks were never meant to hold should be on the block. With enough investors participating in the PPIP program, the prices of the assets should be competitive, and there should be no issue of fairness raised by the banks.
Second, we need to end with the various no-string-attached guarantees and loan programs that are propping up the banks
Finally, he says the Congress must fast track a law that would give the government the authority to unwind or restructure complex financial instrements
And we shouldn't hear one more time from a government official, "if only we had the authority to act . . ."
We were sympathetic to this argument on March 16, 2008 when Bear Stearns ran aground; much less sympathetic on Sept. 15 and 16, 2008 when Lehman and A.I.G. collapsed; and now downright irritated seven months later. Is there anything more important in solving the financial crisis than creating a law (an "insolvency regime law") that empowers the government to handle complex financial institutions in receivership? Congress should pass such legislation -- as requested by the administration -- on a fast-track basis.
The mere threat of this law could be a powerful catalyst in aligning incentives. As the potential costs of receivership are quite high, it would obviously be optimal if the bank's liabilities could be restructured outside of bankruptcy. Until recently, this would have been considered near impossible. However, in 2008 there was a surge in distressed exchanges of debt for equity or preferred equity."
Re: the original post:
The author attacks "Obamanomics" (which is really modernized Keynesian economics) from the standpoint of a patchwork of conservative aphorisms, almost none of which have a real leg to stand on other than "Atlas Shrugged," Ron Paul's newsletters, and the Grand Ole Fear of Socialism.
Some bullet points:
-- Asset price collapse IS a huge problem, especially when that asset is real estate and the securities and mortages reliant on it. The only options are to let prices crash further or try to lend enough support so that there's a soft(er) landing. There's simply no evidence that engineering prices for these assets "are irrelevant."
-- While his tax policy isn't particularly redistributionist (oh the horror of returning to Clinton era tax levels!), Obama's idea of making more capital available to people who will spend it isn't a terrible idea. The alternative is to let more capital be silo'ed in individual fortunes, which might be plowed into the capital markets (long slow effect), rather than into the consumer economy (the most immediate effects).
-- Credit is in fact the lifeblood of our economy. There's just no way that we recover if cash (or gold, or bunny rabbits) are the only benchmark for investment. Think about all the purchases that wouldn't be able to be made without credit -- consumer or otherwise. That's an amazing amount of economic forward motion that would just disappear. Think also about the industries who rely on lending as their primary income streams . . . ie. the entirety of the global financial system. Are we ready for that to dry up and blow away in the middle of a recession?
-- The "Federal government shouldn't be meddling" argument is old and busted. I'm not saying our entire economy should be planned, soviet style, but in times of trouble -- especially in times when private capital markets are so scared they're immobile, like now -- the government is in a unique position to get things moving again.
-- Also, hey, it looks as if several huge cataclysmic trends are converging right about now, and Obama has decided to try and address them (because, let's be honest, we've been kicking the problems down the road now for a couple of generations). Health care, infrastructure rot, alternative energy investment -- all of these things need to be attacked, and the cost won't be cheap. The good news is, we won't just be pushing the costs on to our children, we'll also be handing them the fruits of these investments.
Just my $0.02.
Bush was the the bullet and Obama is the gun. The gun is aimed at the Constitution of the United States of America. These "crisis", we are now constantly in, are hoped for and expected to last as long as he can drag them out. "A good crisis should never go to waste". That's exactly what all dictators use to strengthen their position. I don't know if Obama plans to take total power though. I think he's building this empire for a consortium, with the Dim's heading up the American branch.
Obama's policies will collapse this nation and he will still be blaming Bush. Wemay already passed the point of no return. I never expected any single person to be able to so blatantly get away with the level of destruction he is trying to bring to this nation without being put to a firing squad for treason. He wants the nation to collapse and the United Socialist Republic of America to rise from its' ashes. No sane person can think we can spend like this without eventually collapsing under the weight.
Obama and all his sick followers disgust me. This country WILL get exactly what it deserves for voting this monster to power. Unfortunately, McCain was not a viable option, but the hero worship and most forgiving hand offered towards any President in history is where the true undoing will come to this nation.
To bad those of us who are not blind stupid fools will have to also pay the price. With the type of system he's trying to usher in, we'll be shoved to the front for the train wreck. Don't worry though, just because we will be eaten by the monster first, doesn't mean the rest won't suffer an even worse fate, well deserved for their willing blindness.
I just hope we can some how put a stop to this idiocy in the 2010 congressional elections. It may be to little to late. One day, when the table has been set and the world is in utter turmoil, it will be ripe for a new leader. If that leader can ease the pain and bring hope and change, the people will say, be he God or Satan, I will follow him. I think Obama is not this leader, but he sure knows how to set the table. I'm also certain he's not setting it for God.
Quote from: Crash Daily on May 07, 2009, 11:38:30 PM
Bush was the the bullet and Obama is the gun. The gun is aimed at the Constitution of the United States of America. These "crisis", we are now constantly in, are hoped for and expected to last as long as he can drag them out. "A good crisis should never go to waste". That's exactly what all dictators use to strengthen their position. I don't know if Obama plans to take total power though. I think he's building this empire for a consortium, with the Dim's heading up the American branch.
Obama's policies will collapse this nation and he will still be blaming Bush. Wemay already passed the point of no return. I never expected any single person to be able to so blatantly get away with the level of destruction he is trying to bring to this nation without being put to a firing squad for treason. He wants the nation to collapse and the United Socialist Republic of America to rise from its' ashes. No sane person can think we can spend like this without eventually collapsing under the weight.
Obama and all his sick followers disgust me. This country WILL get exactly what it deserves for voting this monster to power. Unfortunately, McCain was not a viable option, but the hero worship and most forgiving hand offered towards any President in history is where the true undoing will come to this nation.
To bad those of us who are not blind stupid fools will have to also pay the price. With the type of system he's trying to usher in, we'll be shoved to the front for the train wreck. Don't worry though, just because we will be eaten by the monster first, doesn't mean the rest won't suffer an even worse fate, well deserved for their willing blindness.
I just hope we can some how put a stop to this idiocy in the 2010 congressional elections. It may be to little to late. One day, when the table has been set and the world is in utter turmoil, it will be ripe for a new leader. If that leader can ease the pain and bring hope and change, the people will say, be he God or Satan, I will follow him. I think Obama is not this leader, but he sure knows how to set the table. I'm also certain he's not setting it for God.
I vote this post for tinfoil hat post of the week.
Quote from: unreliablesource on May 05, 2009, 09:31:34 PM
There are some great minds on this forum ...
Thank you.
Here is Tapper's take on the monumental 1/2 of 1% budget cuts Obama is proposing:
http://www.eyeblast.tv/public/checker.aspx?v=yd6UZuqG8z
Cutting $17B in a $3.6T budget, that's the sort of change I can believe in.
Quote from: guido911 on May 08, 2009, 10:05:44 AM
Thank you.
Here is Tapper's take on the monumental 1/2 of 1% budget cuts Obama is proposing:
http://www.eyeblast.tv/public/checker.aspx?v=yd6UZuqG8z
Cutting $17B in a $3.6T budget, that's the sort of change I can believe in.
As I've said for over a year, Chump Change was coming to Washington.
Great news, unemployment up to 8.9%. More change we can believe in. :D
http://www.cnbc.com/id/30638052
I know, it's Bush's fault.
Quote from: guido911 on May 08, 2009, 11:54:43 AM
Great news, unemployment up to 8.9%. More change we can believe in. :D
http://www.cnbc.com/id/30638052
I know, it's Bush's fault.
Are you implying that it's someone else's fault?
Quote from: Townsend on May 08, 2009, 12:00:24 PM
Are you implying that it's someone else's fault?
Well gee, I thought Obama said that if the stimulus bill passed then Caterpillar would rehire laid off workers:
http://www.cnbc.com/id/30638052
Well, the stimulus bill passed and were these workers rehired? Uh, um, NO. In fact more were laid off:
http://www.streetinsider.com/Corporate+News/Additional+Caterpillar+(CAT)+Layoffs+A+Blow+To+Obamas+Stimulus+Plan/4492812.html
That's Bush's fault? I thought that electing Obama and passing the stimulus bill would change everyting. I'm mean, this woman did?
http://www.youtube.com/watch?v=P36x8rTb3jI
Quote from: guido911 on May 08, 2009, 12:16:10 PM
Well gee, I thought Obama said that if the stimulus bill passed then Caterpillar would rehire laid off workers:
http://www.cnbc.com/id/30638052
Well, the stimulus bill passed and were these workers rehired? Uh, um, NO. In fact more were laid off:
http://www.streetinsider.com/Corporate+News/Additional+Caterpillar+(CAT)+Layoffs+A+Blow+To+Obamas+Stimulus+Plan/4492812.html
That's Bush's fault? I thought that electing Obama and passing the stimulus bill would change everyting. I'm mean, this woman did?
http://www.youtube.com/watch?v=P36x8rTb3jI
So are you implying it's someone else's fault or are you just spewing out the same stats you've spewed on other threads to spew?
Quote from: Townsend on May 08, 2009, 12:18:05 PM
So are you implying it's someone else's fault or are you just spewing out the same stats you've spewed on other threads to spew?
I believe that Gweed is an....wait for it....
(http://i369.photobucket.com/albums/oo138/lisadispennette/AttentionWhore2.jpg)
(the photo I had orginally chosen was a little..ummm...racy, so I changed it).
Quote from: Townsend on May 08, 2009, 12:18:05 PM
So are you implying it's someone else's fault or are you just spewing out the same stats you've spewed on other threads to spew?
You know darned well what my point is. Everything was Bush's fault when he was president. Now, nearing four months in, this country has the highest unemployment rate in 25 years-despite spending trillions of dollars in stimulus and bailouts after Bush left. You suggest that it's Bush's fault without assigning any responsibility to Obama.
Quote from: guido911 on May 08, 2009, 02:16:43 PM
You suggest that it's Bush's fault without assigning any responsibility to Obama.
Hey, it worked for Reagan when he blamed everything on Carter for two or three years. Not that I'd disagree, either. Poor-performing predecessors have long-term consequences.
Quote from: guido911 on May 08, 2009, 02:16:43 PM
You know darned well what my point is. Everything was Bush's fault when he was president. Now, nearing four months in, this country has the highest unemployment rate in 25 years-despite spending trillions of dollars in stimulus and bailouts after Bush left. You suggest that it's Bush's fault without assigning any responsibility to Obama.
I'm not suggesting jack.
LOL at thinking everything happens in a few days.
Quote from: guido911 on May 08, 2009, 02:16:43 PM
Now, nearing four months in...
Bwa-ha-ha! Good to see things haven't changed much in the last couple weeks.
Nearly a 2 Trillion dollar deficit this year.
http://finance.yahoo.com/news/White-House-Budget-deficit-to-apf-15199183.html?.v=8
Quick, tax the rich, tax the rich...
Quote from: guido911 on May 11, 2009, 09:21:42 AM
Nearly a 2 Trillion dollar deficit this year.
http://finance.yahoo.com/news/White-House-Budget-deficit-to-apf-15199183.html?.v=8
Quick, tax the rich, tax the rich...
Whew, good to know it's not Obama's fault:
http://www.reuters.com/article/marketsNews/idUSWBT01121120090511
Quote from: rwarn17588 on May 08, 2009, 02:58:56 PM
Hey, it worked for Reagan when he blamed everything on Carter for two or three years. Not that I'd disagree, either. Poor-performing predecessors have long-term consequences.
+1. Beat me to the punch.
Quote from: USRufnex on May 13, 2009, 02:27:22 PM
+1. Beat me to the punch.
Biden's take on the stimulus effect scrutinized (I know, it's from that biased, anti-Obama AP):
http://www.google.com/hostednews/ap/article/ALeqM5gII_eXwpVyrwITxM1gouPdCc--RgD985HVI00
I love this part:
THE FACTS: Since February, the nation has lost more than 1.3 million jobs, according to the Department of Labor. To make the case that the country created jobs over that same stretch, the White House has put forward a benchmark of jobs created "or saved." The argument is that the job numbers would have been even worse had it not been for the stimulus, and the difference between those numbers is a net positive.
To visualize that disconnect, consider this: The administration has promised to create or save 600,000 more jobs in the next 100 days. Even if the nation loses another 5 million jobs during that span (a highly unlikely prospect) the White House could still claim success.
Yeah, they pumped his BS in the Tulsa World this morning as well. I trust nothing coming out of Biden's mouth.
Quote from: Conan71 on May 14, 2009, 09:26:26 AM
Yeah, they pumped his BS in the Tulsa World this morning as well. I trust nothing coming out of Biden's mouth.
Well well, another hater. Don't ya know you cannot be critical of Obama? Countdown til the usual "I wanna have sex with Obama" folks come to Biden's defense 3..2..1
It is impossible to tie metrics to something like tax cuts or stimulus packages. Bush did the same crap with his tax cuts. However, he claimed we would "create" x jobs in y time frame. Which we didn't even get close to that. Now we have the same thing with "it would be worse".
Quote from: Trogdor on May 14, 2009, 10:04:33 AM
It is impossible to tie metrics to something like tax cuts or stimulus packages. Bush did the same crap with his tax cuts. However, he claimed we would "create" x jobs in y time frame. Which we didn't even get close to that. Now we have the same thing with "it would be worse".
Okay, because Bush allegedly did this, then it's okay that Mr. "hope & CHANGE" does it. Thanks for playing.
Quote from: guido911 on May 14, 2009, 10:15:23 AM
Okay, because Bush allegedly did this, then it's okay that Mr. "hope & CHANGE" does it. Thanks for playing.
You're stupid just like your flock of sheeples....this did not happen over night. It did happen as a result of Reagunomics and repiglican legislatures...especially, Delay, Graham, and Newter. It will take years to recapture our lost fortune.
U.S. banking crisis may last until 2013: S&PBy Jonathan Stempel
NEW YORK (Reuters) - A day after saying big U.S. banks probably needed to raise only one-fourth the capital demanded by the government, Standard & Poor's said the nation's banking crisis has "merely entered a new phase" and might not end before 2013.
The credit rating agency said the industry is being propped up by hundreds of billions of dollars of government support, especially for lenders considered too important to the financial system to fail.
While efforts to spur lending, take bad assets off banks' balance sheets, and restart the market for packaging and selling securities may help the sector, S&P said banks will have a tough time surviving absent a bigger capital cushion than regulators require.
"There's nothing to say that this banking crisis can't go on for another three or four years," S&P Managing Director Tanya Azarchs said.
S&P did not immediately return a request for comment.
On Tuesday, S&P said major U.S. banks need to raise about $18 billion of capital to protect themselves from the economic downturn, though this amount could grow if conditions worsen.
The amount is well below the $74.6 billion that the government last week ordered 10 of the largest U.S. banks, led by Bank of America Corp and Wells Fargo & Co, to plug potential capital shortfalls.
These 10 banks were among 19 subjected to government "stress tests" to gauge their readiness to withstand a particularly severe recession in 2009 and 2010.
The other nine, including JPMorgan Chase & Co and Goldman Sachs Group Inc, got clean bills of health when stress test results were released on May 7.
S&P on May 4 said it may lower its ratings for 23 U.S. banks and thrifts, including 10 that underwent stress tests, citing concern about the industry's capitalization.
It said the 23 companies had at least a 50 percent chance of being downgraded within 90 days.
(Reporting by Jonathan Stempel; Editing by Richard Chang)The majority of ignorant American voters supported them. You get what you vote for.
How does your quoted story support your assertion that Repiglicans are responsible for the bank collapse? Delay? Gingrich? Grahamnesty? Can you quote a real article, not an op-ed that supports your partisan-challenged mind?
Try again...
Quote from: Conan71 on May 14, 2009, 01:10:57 PM
How does your quoted story support your assertion that Repiglicans are responsible for the bank collapse? Delay? Gingrich? Grahamnesty? Can you quote a real article, not an op-ed that supports your partisan-challenged mind?
Try again...
So, you can't understand how this country got into this fix?
Another example of what comes from a lousy educational system.....
Quote from: FOTD on May 14, 2009, 01:22:19 PM
So, you can't understand how this country got into this fix?
Another example of what comes from a lousy educational system.....
I understand quite well. Standing around with your thumb up your donkey blaming one political party or another for stupid bankers making even more stupid risks and a whole bureaucracy that encouraged it doesn't reflect well on your level of education.
Unemployment rate of blue collar males (previously known as "the working people") higher than the national average:
http://www.reuters.com/article/economicNews/idUSN1450507420090518
Nearly 1 in 10. Also read today that jobs will not be coming back this year.
Jobs will not be coming back for a long time....
If Obamanomics does not work it will be Hanky Panky Paulson and Benny Berneckie to blame.....along with a host of other cronies:
More read up from the news disector!
The Crimes of Wall Street: The Scam and Sleaze at the Top
by Danny Schechter
Global Research, May 20, 2009
So many of us know in detail about all the false warnings and exaggerated claims that were used to justify the war in Iraq. By now, six years later, and after many books, reports, news stories and films (hopefully including my two books and film, Weapons of Mass Deception), we see the pattern of lies and deception. We realize what a fraud was committed against the American people and what its consequences have been for the people of this country, Iraq and Afghanistan.
For many of the righteous among us who thunder against these lies, there seems to be a lack of curiosity about the costly frauds that flushed our own economy down the toilet. Here too, there is a tendency to focus blame on politrick(ians), and not look at the larger fraud behind the fraud, in part , because most economists and media outlets minimize its role.
First, its clear that, like on the war, government officials did mislead us, from original deregulators in the Carter-Reagan years to the financial "modernizers of the Clinton-Bush 2 era with their refusal to accept responsibility for the consequences of their free market fantasies, the gutting of rules and regulations and embrace of a phony "ownership society."
It is also now easy to blame the now self admitted "naivete" of Fedhead Alan Greenspan or the continued arrogance and bluster of Democrat turned Republican Phil Gramm who killed Glass Steagall and called fighters against predatory lenders "terrorists." It equally easy to scorn those who claim that our government is a "tyranny" and call Obama a flaming Socialist
Flash back with me now to March 2007, just a few months before the markets melted down. Slate reported then on testimony by the two top economy watchers in America. They insisted that problems that were unleashed like a tsunami had been "contained."
"Testifying on March 28, Ben Bernanke said, "At this juncture...the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained." The same day, Treasury Sec Henry Paulson told the House of Representatives that "from the standpoint of the overall economy, my bottom line is we're watching it closely but it appears to be contained."
In May, Bernanke returned to the containment theme, saying, "we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system." A few weeks later, he reiterated that "the troubles in the subprime sector seem unlikely to seriously spill over to the broader economy or the financial system." On July 26, Paulson told Bloomberg, "I don't think it [the subprime mess] poses any threat to the overall economy." In China a week later, he revised and extended his remarks: "I also said I thought in an economy as diverse and healthy as this that losses may occur in a number of institutions, but that overall this is contained and we have a healthy economy."
Duh? Wrong, wrong, wrong.
But, before you dismiss these two geniuses as dunderheads, let's consider what they knew or should have known. Or perhaps, like their counterparts in the Pentagon, they were blinded by their own assumptions and false "intelligence." As people with a strong memories of our volatile history of financial crises, they know it's not the just the government that should be indicted—it's the irrational system it upholds.
At that time, and for years leading up to the popping of an artificially created bubble, there was a white collar crime wave underway with large scale corporate fraud that was duly reported and duly ignored. In 2004, The FBI first reported publicly on an "epidemic" of mortgage fraud that had been going on for years charging 80% of the losses were the result of deceptive practices by lenders backed by our biggest financial institutions.
Criminologist William K Black, a former bank regulator and expert on crimes committed by the men at the top—so-called "control frauds" referencing the practices of CEOS in control at big corporations---studied these reports pointing out that by 2008, there were only 62,000 "criminal referrals" in this industry with only agencies reporting crimes "mandated" by law to do so. Only 1/3 of these illegal practices were even reported and, then, hardly any, in unregulated sectors which, in turn, dispensed 80% of them. These were the mortgages Wall Street bought, securitized, sliced and diced, borrowed against, and resold under false pretenses. Did they know? You bet they did.
He estimates there have been ½ million Fraudulent mortgage cases annually that should have been prosecuted but the FBI only has the capacity to handle 500 per annum because most of its white collar crime fighters were reassigned to the war on terror.
This is common says Sam Antar, a former, or maybe not so former admitted white collar criminal who laughs at government attempts to control the crimes:
" Because the government doesn't have the resources to do it, and the white-collared criminals know it. The government basically ceded complicated crimes right after Enron. They ceded prosecuting complicated crimes. You see today, like the AIG thing, uh, Andrew Cuomo gets up there in front of the microphone and says, "We're gonna get those bonuses back!!" Any schmuck prosecutor could've gotten those bonuses back. Where are the complicated crimes that are being investigated? All we're getting today is small dinky guys getting prosecuted here and there for relatively easy crimes to investigate."
The goal of control frauds are to defeat all attempts at controlling fraud, and artificially through accounting tricks to inflate the value of shares, promote a bubble or in short "Optimize the firm for fraud." He says the control fraudsters are the real super-predators producing greater losses than all property crimes put together.
He charges this is as part of creating a "crimogenic" environment dressed up in legitimacy.
This is just one fraud. Black cites others including insider trading and "tunneling"---using bank holding companies as conduits for monies transferred from banks to executives antheir underlings.
Two economists, one a Nobel Prize winner, George A. Akerlof, who along with Paul M Romer published a fascinating paper on deliberate looting using bankruptcies. Their thesis; 'Our theoretical analysis shows that an economic underground can come to life if firms have an incentive to go broke for profit at society's expense (to loot) instead of to go for broke (to gamble on success). Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations."
Sound familiar?
In a lecture he gave recently in Iceland, a country's whose government collapsed because of other frauds and speculation, William Black noted that ratings agencies involved in setting the price of assets never even looked at the loan files when certifying many of these deals as 'triple A" thus inflating their value, aided and abetted by phony appraisals. This is what was behind the rash of no-doc or "liars" loans that deliberately misled borrowers.
After securities based on this allegedly asset-backed mortgage paper (with no assets behind it) began to fail in large numbers, one agency, FITCH, went back and reviewed the underlying information only to conclude in a low key way that "the results were disconcerting because of the appearance of fraud in every file we review."
"Disconcerting?" How about infuriating, because more that $2 TRILLION dollars worth of these "toxic" assets were sold and bought contaminating the global economy. These crimes need to be fully investigated. A commission that investigated the S&L crisis concluded that in the big losses they studied "fraud was invariably present."
Three questions: why didn't anyone read that report? Secondly, what do you think an investigation of this crisis will reveal? And finally, why isn't William Black speaking more in America?
Mediachannel News Dissector Danny Schechter is making a film based on his book PLUNDER: Investigating Our Economic Calamity (newsdissector.com/plunder) Comments to Danny@mediachannel.org
Danny Schechter is a frequent contributor to Global Research. Global Research Articles by Danny Schechter
Quote from: Conan71 on May 14, 2009, 01:43:28 PM
I understand quite well. Standing around with your thumb up your donkey blaming one political party or another for stupid bankers making even more stupid risks and a whole bureaucracy that encouraged it doesn't reflect well on your level of education.
Go. Cast a vote....look how the fright wingnuts from Dumbf*kistan design a pole: http://www.personalliberty.com/poll/obama-bailout/index.php?SC=BEL1301
Great news, Obama says that the country is out of money. Didn't we just pay our taxes?
Have you heard?
All good.
Said it's all good.
People in the country, People on the land.
Some of them so sick they can hardly stand.
Everybody would move away if they could
Its hard to believe but its all good.
Yeah... [chuckles]