By Simon Johnson. My testimony to the Senate Budget Committee on these issues is available here: https://baselinescenario.com/2010/08/05/its-hard-to-take-the-fiscal-hawks-seriously/.
There are three main views of the financial crisis and recession of 2008-9. In the first two views, the debate over the fiscal deficit is quite separate from what happened in the crisis. But in the third view, the financial crisis and likelihood of fiscal austerity are closely linked.
The first is that something went wrong with the financial plumbing central to the world’s economy. Failed plumbing is a serious business, of course – great real estate can be ruined by a burst pipe. But it’s a technical issue; nothing deeper is at stake.
The Dodd-Frank financial reform legislation ended up addressing a myriad of technical issues. Clearly, “fix the plumbing” is Treasury Secretary Timothy Geithner’s interpretation of what we need to do – he insists that making the system safer just requires “capital, capital, capital.”
The second view is that the financial system is more deeply broken. Opinions vary in terms of the relative importance of various elements, including too-big-to-fail incentive problems that encourage banks to take on excessive risks – and to be supported by the credit markets when they do.
The first and second views are mutually exclusive – either our financial system is badly broken, or it is not and technical fixes will suffice. Both focus primarily on the nature of the financial system, somewhat in isolation from the rest of the economy. But a third view is increasingly emerging that implies both the first two views are too narrow.
This deeper critique is posed probably in its sharpest form by Arianna Huffington in her new book, “Third World America” (in the spirit of disclosure, please note that I am a contributing business editor at the Huffington Post). Her point is that we should not think of the last financial crisis in isolation, but rather as the outcome of a longer-run pattern of behavior. Excessive consumer debt is an outcome of prolonged inequality – in trying to remain middle class, too many people borrowed too much, while unscrupulous lenders were only too willing to take advantage of such people.
Raghu Rajan, the former chief economist at the International Monetary Fund, and Robert Reich, the former Labor Secretary, also have new books with related themes that link persistent inequality of income to the onset of financial crisis through various mechanisms – Mr. Rajan’s “Fault Lines” is more about the global economy (and overspending at the level of the US economy); Mr. Reich’s “Aftershock” focuses on the social and political impact of the crisis (and why, without addressing inequality, our financial problems will recur).
The distribution of income in the United States is undoubtedly becoming more unequal. Specifically, over recent decades, it has become harder for people with only a high-school education to build a secure middle-class future for their families.
We can argue about proximate causes, including the relative roles of new technology and globalization, but there is no question that unionized jobs, well-paying assembly line work and prosperous small-business niches have all tended to disappear.
The financial crisis may be behind us, but the link to the likely intense debate this fall regarding fiscal policy is direct — we are told that fiscal austerity requires outright and immediate further cuts in the benefits previously promised to people at the federal, state and local level.
Never mind that this is simply not true – at least in the form currently presented (here are a primer on short-term issues and another on the longer-term perspective). A vocal class of people – including some at the upper end of the income distribution – incessantly insist that “entitlements must be cut” while refusing to address the real causes of both our recent surge in government debt (the financial crisis, caused by perverse incentives in the financial system) and the genuine longer-term issues we face (which are about controlling the future increase in health-care costs – not cutting the level of benefits today).
The self-described “fiscal conservatives” really cannot be taken seriously – in the financial reform debate, they either didn’t show up or preferred to keep the existing system in place, and they refuse to put serious health cost-control measures on the table.
If the “conservatives” don’t really want to reduce the shocks that have caused government debt to explode recently – or to deal with the underlying, longstanding health-care cost issues in a reasonable fashion – what exactly is going on?
That’s a question they should answer for themselves, and hopefully they will be pressed on this in public debates during the run-up to November’s elections. But there is a striking similarity between the longstanding stated intention to “starve the beast” (meaning press for reduction in government by creating binding constraints, like a perceived crisis) and what we are seeing play out today.
And there is very real danger that this strategy will work, in the sense that the contours of a coming “fiscal crisis” – what will be discussed and how the issues are framed – will largely be structured by scaremongers who wish to cut pensions and health-care benefits for middle Americans in the years ahead and who will work hard to keep meaningful tax reform off the table.
People who push for this view are not being fiscally responsible, and they are well down the road to exacerbating third world-type problems in the United States – and to creating the conditions for another financial crisis.
As drafted for the NYT’s Economix blog; used here with permission. If you would like to reproduce the entire post, please contact the New York Times.
The Baseline Scenario 
You are way too generous to the middle class here. You can be middle class and still be greedy.
It is sad that your well-informed and reasonable economic arguments tend to devolve into political finger-pointing. It’s not very academic, and frankly, difficult to take seriously.
In addition to “It’s different this time” and “Self sufficiency is an out-moded concept” one of the deadliest assumptions is “That can never happen here.”
Morgan Stanley yesterday said what we have all known for some time. There will be government defaults of various types on debts which have become unmanageable.
In a story from the UK Telegraph yesterday, a report claims the Tories are placing the greatest pain in managing their budget gaps on the backs of the less well to do, presumably protecting their more well to do constituency. No surprise to anyone if it is true. And yet this may not be enough unless the economy recovers and the great mass of the public can regain some reasonable level of organic economic activity.
In the States, the uber wealthy will be spending large sums to lobby against new taxes, and even removing tax cuts that were known to be untenable, and based on false economic assumptions, at the time they were passed under Bush. Instead they will point to more broadly public and regressive taxes such as VATs, and seek to curtail public programs like Medicare and Social Security, while leaving their own subsidies and welfare, such as those in the financial sector and corporate and dividend tax breaks, sacrosanct.
In the US the broad mass of consumers have been the economy’s golden goose, and after decades of median wage stagnation, neo-liberal economic policies, and overseas military expansions and expeditions, that goose looks cooked.
But at the end of the day this soft class warfare, despite its vicious hypocrisy and pettiness, is all intra-murals, as the real defaults and debt reconciliation will most likely be in the form of artificially low bond rates accompanied by devaluations in the Western fiat currencies. I have been trying to figure out a way that a selective default could be accomplished, but have not quite muddled through that yet.
The limit of the Fed’s and Treasury’s ability to monetize the debt, which is a form of default through a true monetary inflation, is the value of the dollar and the bond. People who have never lived through it will begin to finally understand this in the days to come.
Witness the climax chapter of failure for the current fascist Business Model. The US banker brain trust, which possesses only a modicum of economic wisdom, analytic prowess, or foresight, finds itself in a desperate corner. Their talk of an exit strategy in the last several months was summarily dismissed as nonsense, propaganda, and wishful thinking by many on a consistent irrefutable basis. The US Federal Reserve is ready to embark on the second round of Quantitative Easing. The monetization of US dollar-based bonds of many types will be done on a second initiative, on cue. Here is the irony, the stupidity, the insanity, the recklessness, the tragedy. What failed, they will do again, maybe even bigger! At risk is global confidence and trust, hardly a zero cost item. The QE2 is pure cancer within the monetary body. Foreign creditors are walking away, making distance from the US Treasury’s, and especially the US Agency Mortgage Bonds. The Fed and US Treasury are therefore being isolated. Their US Treasury auctions are often disguised failures, but with the benefit of a falling US stock market, the bond demand has risen. The cancer of QE2 cannot be emphasized enough.
The Fed balance sheet will NOT be reduced. Interest rates will NOT be permitted higher. The nitwits will have an embarrassing About-Face in policy, and a hasty desperate announcement and implementation of a powerful new round of Quantitative Easing. We are seeing it unfold, exactly as forecasted. In fact, my call is for ZIRP and QE, the cancerous twins of Zero Interest Rate Policy and its printing press twin, to become permanent residents of the White House and US Fed, an incredible pox, blemish, and badge of shame to the nation. The twins scream rot and ruin.
That’s the most foolish thing I have ever heard, Bond Girl. You are clearly a Republican, and a member of a party at war with everyone earning less than a quarter million a year. The upward income transfers that have deprived the middle class of the benefit of its increased productivity for the last thirty years are proof enough of that. Reagan promised that cutting taxes would make the economy prosper and the rising tide would lift all boats. It hasn’t. Instead, it has sunk millions of boats, all of them small or mid-sized. And what do you Republicans do about it. You point fingers at everyone but yourselves. It was your free market ideology that did it, and Greenspan and Stockman acknowledged it failed. So when will the rest of you do so< and issue you mea culpas? We might as well wait for Godot.
Are you Jesse?
Jest askin’…
My alta ego and perspective from Europe is quite different. The message is the same..:)
You can be middle-class and greedy, but since you control relatively few resources you can do very little damage to the overall economy. Not so with the wealthy, powerful, and greedy, who control substantial amounts of resources. That is the true danger of unequal distribution of wealth; failure (a natural and desired feature of capitalism) at the upper levels is catastrophic. A more equal distribution removes single-failure collapse points and provides a more stable and robust economy.
And I believe Professor Johnson is pointing fingers in equal measure to non-political actors also engaging in faux fiscal conservatism (Roubini and Taylor come to mind). And he is not partisan in a strict sense, either; I see his criticism leveled at Treasury and the Fed as well.
I don’t see political finger pointing going on here, ‘fiscal conservatives’ populate both dominant parties and they are responsible for what SJ is alluding to, the manufactured crisis to promote an attack on health care programs and Social Security, dreaded big government. Democrats, the neo-liberal enthusiasts, have participated with the Republicans in the demolition of the American middle class over the past three decades and may, despite all the evidence against such ill conceived plans, join in with the final deconstruction that is, as SJ says, well underway.
Words used well:
“Excessive consumer debt is an outcome of prolonged inequality – in trying to remain middle class, too many people borrowed too much, while unscrupulous lenders were only too willing to take advantage of such people.”
“But there is a striking similarity between the longstanding stated intention to “starve the beast” (meaning press for reduction in government by creating binding constraints, like a perceived crisis) and what we are seeing play out today.”
Prolonged inequality. Creating binding constraints. Perceived crisis. Yes. That’s the whole thing, for decades. We’ve known this but we missed it. We understood race and gender, or at least we argued a lot about it. But the rug, our socioeconomic fabric, was pulled up beneath us. We sort of thought something was wrong. But we didn’t understand. We still don’t really get it. But these are good, useful words. Thanks for doing all of this. It’s hard work and it matters. The rest of us cannot figure this out on our own.
If the “conservatives” don’t really want to reduce the shocks that have caused government debt to explode recently – or to deal with the underlying, longstanding health-care cost issues in a reasonable fashion – what exactly is going on?…
People who push for this view are not being fiscally responsible, and they are well down the road to exacerbating third world-type problems in the United States – and to creating the conditions for another financial crisis.
This is being made needlessly complex, and that obscures the truth.
We are under assault by organized crime, nothing more and nothing less. Neoliberalism is the ideology of legalized gangsterism, corporate welfare is robbery, the Bailout was stepped up robbery (facilitated by the intentionally engineered crash and crisis), and now the calls for “austerity” are simply another robbery gambit.
All of this is crime, period. The finance and government elites are criminals, period. We should never let ourselves be distracted from the criminological view of this.
Would you stand and listen to someone literally breaking into your house explain abstruse ideological angles on the event? We the people shouldn’t do that with these equally brazen but infinitely worse robbers.
Incorporation makes better sense, cents, the biggest why: “If you are not incorporated, the landlord could sue you personally for the money, and you personally would be on the hook. And if you are unable to pay, the landlord could garner your wages, attach your bank account, put a lien on you house, or employ many other methods that would both make you life miserable and damage your personal credit.” Mortgage refinancing rates are at another historical low, industry average of 3.90 (4.36 according to MSNBC) on a 30-year fixed rate; though, only honest, credit worthy responsible applicants need to apply at your nearest TBTF financial institution.
“though, only honest, credit worthy responsible applicants need to apply at your nearest TBTF financial institution.”
Good luck with that! Talk to veteran real estate agents and you’ll hear the same story over and over again: even borrowers with near impeccable credit history are having a lot of trouble securing mortgage financing.
The TBTF just cannot be bothered lending. It is much more profitable to trade with HFT computers.
What is impossible to take seriously is you transparent attempt to skirt entirely the problem of income inequality, as if it was a pre-ordained consequences of the natural order of the universe.
“It’s not very academic”
Newsflash! The time for academic discussions is over, and has been over for quite a while. The question is: What kind of country do you want to USA to be? A banana republic with entrenched crony capitalism a la South America? Or a solid, caring democracy with large middle class, a financial sector servicing the economy (as opposed to an economy being sucked dry by a parasitic financial sector) entrepreneurship galore and opportunities for ALL?
Politics is the next bubble!:)
Roubini Puts Chances Of Double-Dip At Greater Than 40%, Warns On Deflation
8/26/2010 8:09 AM ET
(RTTNews) – “Noted economist Nouriel Roubini sees a 40% or greater chance of a double-dip recession, noting that temporary measures to support the economy earlier this year have become “headwinds” to growth. Looking ahead, US growth will be well below 1 percent in the third quarter, Roubini argues.
“With growth at a stall speed of 1 percent or below, the stock markets could sharply correct, and credit spreads and interbank spreads widen while global risk aversion sharply increases,” he said in an email quoted by Bloomberg.
“Thus a negative feedback loop between the real economy and the risky asset prices can easily then tip the economy into a formal double-dip.”
Roubini suggested that quantitative easing would be of little use, given that banks remain skittish about lending despite sitting on a trillion dollars of cash.
With central bankers out of bullets, Roubini also repeated his warning that the US faces Japanese-style deflation.
Companies have no pricing power and employees have no choice but to accept lower wages considering slack in the jobs market, the economist noted.”
http://www.rttnews.com/ArticleView.aspx?Id=1402901
Stick with economics; stop the politics.
(The switch from economics to politics has forced Krugman to play the fool for years now; you don’t want that to happen to you.)
We are not so naive. Economics and politics are inextricably linked. The ideological basis for mainstream economics is manifest. The magic of free markets is nothing but a fig leaf for the enforcement of a right wing agenda. It is now and always has been. Thus it is not possible for Krugman to “switch” from economics to politics; just as it was always a ruse to call economics “positive”.
As for SJ’s point about inequality: after three decades of Reagan Illusion we are back to the 1920’s. Plutocracy and all. It’s as if the 1950’s and 1960’s had to be expunged from our history so the big people could party again.
Oh … but I suppose that growing inequality and a threadbare middle class must be an “efficient” outcome that we little people must somehow not understand the benefit of. How silly of us.
It seems to me that this blog has adopted a definite political slant. The arguments are less rigorously made. Several of the commenters I used to enjoy debating appear to have moved on. Just an observation for the proprietors, if they care, from someone who has enjoyed this blog and participated in the discussion for a long time now.
One middle class household cannot damage the economy, but a middle class mania can and has damaged the economy. There are two sides to a transaction. In many ways, the middle class bid up its own cost of living through its willingness to assume ever more debt. I’m sorry, but there’s nothing about people buying McMansions and tapping their real estate holdings to get a new boat, eating out regularly on credit cards, etc. that inspires a sense of class warfare in me or conjures up the sense that I am living in a third-world country.
And ask a renter how the government propping up house prices for the banks and the people who have already purchased homes has increased his or her social/economic mobility.
There is absolutely NO DISAGREEMENT among “We The People” about rounding up the criminals…can’t say we didn’t give them 2 years to change their ways…
Just War Doctrine from 900 AD (not all of the Roman Empire was lost) was copied in the Declaration of Independence 1776 and
we need to do it again – save “civilization” with a full on war against the criminal class…they are so totally out of control, it’s sick.
As a Canadian we endured the WSJ editorial in 1995 that Canada was a “banana republic” due to our deficits caused mainly by the Progressive Conservative in government in the 1980’s. In a matter of 3.5 years the Liberal government in mid 90’s vanquished the deficit. There was no rich upper class or business oligarchy telling the government they needed a tax cut…
Perhaps the problem here is one of semantics. I believe Bond Girl is confusing the middle class with the upper class.
The middle class uses credit to eat, but they are not eating at restaurants or buying boats. They are working their arses off and using their credit cards to keep up with the cost of living, which has soared because . . .?
Because we must have profits, m’dear, ever increasing profits. The small people just need to work harder.
Then perhaps you shouldn’t use Jesse’s columns as your own, nearly verbatim?
This is exactly the way I see things, too, Russ and Annie.
Don’t p*ss on my head and tell me it’s raining.
S&P To Hit 450 With U.S. Worse Than ‘Lost’ Japan: Strategist
Aug. 26, 2010, 9:29 a.m. EDT
WASHINGTON (MarketWatch) — “A noted bearish strategist said Thursday that the S&P 500 (currently 1053) will tumble to 450 because conditions in the U.S. are “much, much worse” than during the lost decade in Japan.”
http://tinyurl.com/36oefgo
I have to agree with Bond Girl. This blog has become anti-capitalist and anti-rich. Capitalism is inherently exploitatory; The middle-class is increasingly obsolete, but that’s not an indictment of the system. Before I go shopping, I will say I disagree with Bond Girl that academic arguments should be faux bias-free.
:-)
ECON is rewriting history. It was the Liberal Trudeau Government of the 70’s and early 80’s that committed Canada to deficit financing for the first time in it’s history.
When the Mulroney led PC’s attempted to cut spending in the mid-80’s you could hear Canada’s corporate welfare bums whining from the Atlantic to Pacific to the Arctic.
Canada isn’t a “banana republic.” It’s a “banana republic with cable tv.”
True, it was that great fiscal conservative Jean Chretien who produced a balanced budget in the mid-90’s. You’re 1 for 3 ECON.
Lopsided income distribution seriously impacts investment in new plant and equipment and hiring workers. Money is accumulating in the hands of the super rich, the group that has funds available to invest in new plants. They will not invest unless they can sell the output of those new plants.
The middle and low-income groups are the major customers of those new plants, But lopsided income distribution means those folks will not have enough income to buy what potential new plants would produce.
And so the super rich will not invest in those plants. They will park their money instead in government bonds, or invest overseas.
The primary need is to rebalance income distribution and put more income in the hands of the middle and low-income groups.
Re: @ hermanas____Wow…did you hit the nail on the head.
Chris Dodd is a useless putz who is letting his fragile 6 year old boy ego get in the way of a much better functioning CFPB with Elizabeth Warren at the Head. But at least he still puts on a good show of kabuki by inviting Professor Johnson on to discuss the problems he didn’t address in his mostly useless bill passed to placate his Republican pals. Hey Senator Dodd!!! Why don’t you just switch parties before you retire??? We all know underneath you’re a big bank loving Republican so why let the last bit of your useless piggy filth get smeared on your Democrat successor??
You might also ask Bernie Sanders why he doesn’t challenge his pal Kent Conrad publicly in the Senate and the media on Conrad’s behavior with Countrywide Mortgage. Is “Bernie” in his heart of hearts a “good ol’ boy” who cannot challenge the corrupt and sleazy behavior of his colleagues???? Hey Bernie, why not say something about Senator Kent Conrad using his power for sweetheart Mortgage deals while many Americans are being foreclosed on or evicted???? Many Americans are taking money out of their 401k to avoid being foreclosed on or evicted because they can’t make sweetheart “VIP” deals like Senator Conrad. You suddenly got quiet on political corruption and mortgages “Bernie”, when in the presence of Kent Conrad???
Professor Johnson, make sure to ask Senator Conrad how he got the sweetheart deal on his mortgage, and to share with his constituents in North Dakota how they can get that deal.
http://www.cbsnews.com/stories/2009/07/28/politics/main5192676.shtml
http://www.mortgagenewsdaily.com/6162008_Friends_of_Mozilo.asp
@ PR:
“Oh … but I suppose that growing inequality and a threadbare middle class must be an “efficient” outcome that we little people must somehow not understand the benefit of. How silly of us.”
You’re catching on, old chap.
Bondgirl,
Not everyone can match your academic “rigor”. Maybe Sarah Palin???
http://www.reuters.com/article/idUSN3125537020080901
http://www.mcclatchydc.com/2008/08/31/51273/palin-flip-flopped-on-bridge-to.html
Dick Shelby???
http://www.cbsnews.com/8301-503544_162-6177399-503544.html
http://emptywheel.firedoglake.com/2010/02/05/shelby-tries-to-shut-down-us-senate-to-benefit-foreign-company/
http://www.publicintegrity.org/blog/entry/1932/
Re: @ Bond Guy and Bond Girl____Unless your a “Billionaire”, you could in the not too distant future…be joining the non-partisan scherzo choir in your spontaneous salutations of remorse? PS. A despots tale of misguided fortune…”I cannot live in myself – my isolation has brought about destitution from words I myself cannot grasp, or even vaguely interpret from my past too this inevitable present – I have destroyed my internal rosetta stone that justifies my wretchedness – that of a failed being never having tasted remorse”
Yes, Bond Girl…
It’s gotten thin here, of recent. There’s a political
drumbeat in the background noise that does not ring like
Simon’s Atlantic Monthly piece, The Silent Coup.
….back when I started.
I find it anti-intellectual, backing reality into idealogy made to fit…
I *do*, however, hope and pray that Elizabeth Warren stays in Washington, head of the Consumer Finance Protection Agency.
This blog has lost something… unsure, when, where…. but it’s gone… at least for now.
Best. ….Lady in Red
@ Earle
Thanks for your 2 cents. LOL
a middle class mania can and has damaged the economy. There are two sides to a transaction. In many ways, the middle class bid up its own cost of living through its willingness to assume ever more debt. I’m sorry, but there’s nothing about people buying McMansions and tapping their real estate holdings to get a new boat, eating out regularly on credit cards, etc. that inspires a sense of class warfare in me or conjures up the sense that I am living in a third-world country.
Not sure which middle class mania you refer to. As productivity and profits have increased over the last few decades middle class income has stagnated. In order to keep up with rising housing and medical costs two incomes became necessary where one was once enough. Even then credit card debt and home equity loans were required to put kids through college, etc. Middle class prosperity was replaced by middle class debt.
Pockets of third world conditions, 30% unemployment and severe poverty and homelessness exist now in the US, you just have to keep your eyes and mind open too sense it.
Maybe, it’s the air in Cambridge, Massachusetts that’s
infected the brains of Simon and James….?
When you swim in the same water with the same fish, it
is easy to lose an ability to see outside your fish bowl…
It wasn’t until, as a girl, I left my “dream job” at WGBH-TV that I could begin to think… outside and beyond the smug, supercilious, all-knowing crowd that
people the world of public television.
I think it was Pauline Kael — no dummy! — who gushed in amazement, “I don’t know anyone who voted for Reagan!” …smile.
Glenn Beck’s Restoring Honor in America — no signs, no political candidates — will be interesting to monitor on Saturday.
The times they are a changin’ …Lady in Red
You make a good point. What you fail to point out is that a Canadian member of the Conservative party is more like a Democrat in the US.
So, ultimately, your point is moot.
Somewhere in you post there is a point.
What the little people want this country to be does not matter and has not mattered for a very long time. Otherwise, the 1.4 trillion donated to the banks would not have happened.
Obviously not in you (sic) mind. …smile. L in R
I rather agree with the sentiment that anyone here with less than a few billion in the bank calling this site “anti-rich” is truly cutting off their nose to spite their face. Is the slant here anti-rich? Not that I can tell. It really seems more anti-unlimited-greed than anything else.
And how is it “anti-capitalist” to want STABILITY in the infrastructure underlying a reasonably capitalist system?
You joking or seriously seeing a benefit to the destruction of the middle class?
Actually, paying for a college education is probably the best example of what I am talking about.
Do you know why tuition is high? Because colleges are deep in debt themselves. Do you know why colleges have assumed so much debt? Because they are in facilities construction races with each other. Do you know where the facilities construction races came from? Student expectations. Your middle class students do not want dorm rooms with bunk beds; they want private suites. They want student activity centers with rock climbing walls. The best sports facilities. And so on. Colleges know they can raise tuition sky high because it will get paid, with debt. Who is going to object? They aren’t paying for it now. And your government makes it very easy for them to borrow. In fact, you are heavily subsidizing this nonsense.
The current unemployment situation is our country sleeping in the bed it has made. And it was not just the values (or lack thereof) of the elites that was responsible.
Amen.
LOL, I haven’t heard that one since the 70’s. Try traveling west of Ontario for once in your very sheltered life.
You couldn’t be more correct, pj. I had lunch with an insurance executive here in Denver recently and when I mentioned that the mean wage in US hovered around $44k, she became irate and told me I didn’t know what I was talking about. I asked her what, then, is the mean wage?… and she replied, “I don’t know exactly but its about two-hundred thousand.”
The excessive borrowing was encouraged and enabled by those in charge. Besides you now need two incomes to support a family, and just for a modest lifestyle, sans McMansions, whereas 40 yrs ago a single wage earner without an education could support a family in a detached house and the kids could even go to a good public college or university.
Here’s their LOGIC in a nutshell:
Economic problems are/were caused by people using capital to do what they know how to do in the way of food clothing shelter and medicine – an EDUCATED LABOR force – the Middle Class.
Sucking up the fruits of thousands of years of progressive civilization at nanosecond speeds via computers to feed psychological soylent green into a perpetual p-ssing match in the Middle East (WAR)
is NOT THEFT by mechanistic psychos, but “capitalism”.
I’m giving everyone permission to ignore the noise and to not apologize for the NORMAL disdain one “feels” towards such 24/7 internet shooting-down-at-the-middle-class hooliganism to raise oneself up to get close enough to the “elite” to proudly wear a brown nose badge…
and you’re right, you don’t need my permission :-)
Instead of anti-rich how about anti-criminal? The disaster has been created by crime not capitalism. As Russ said we must not lose the criminological view of this.
Under the present ‘free trade’ regime those “new plants” will most likely be in China or India anyway, or wherever else the “super rich” can get nearly free manufacturing thanks to collusion between foreign governments and our bought-and-paid-for elected officials.
Auto loans as well.
“6 year old boy ego”
Nope. It ain’t his “ego”, it’s his wallet.
I wonder when Simon Johnson will be able to acknowledge the role of the mother of all regulatory failures; and which he finds so difficult to acknowledge since it goes against his agenda of more regulations.
I have nothing against regulations as long as these are sensible and developed in a transparent way, but I do object vehemently to stupid regulations resulting from an incestuous and exclusive debate among regulators who are all members of the same mutual admiration club.
Current bank regulations, based on capital requirements based on perceived risks, are similar to a strategic defense system that targets the furthest and least dangerous incoming missiles first, while providing improved guidance to those closer and much more dangerous missiles.
The higher the perception of the risk of default, the less dangerous it is to the system as a whole, because the less will be lent to it, and at much higher rates. On the contrary it is the lending or investment to those perceived as not being risky at all, at very low interest rates that do not compensate the unknowns which pose the greatest danger, since only these loans could generate a volume of exposure that could threaten the whole system.
Doubt it? Please find one single bank crisis in history where the above logic has not applied.
“refusing to address the real causes of both our recent surge in government debt (the financial crisis, caused by perverse incentives in the financial system)…”
This is just plain wrong. Anyone in high school civics knows the vast majority of our deficit and debt was caused by tax cuts and a couple of wars. The financial crisis is certainly is in the mix, but this is a distortion of reality to make a (tired) point.
I guess the “baseline” is now politics, not economics..
The issue is whether the economy needs a middle class. As capitalism evolves, it sows the seeds of its own destruction. Something about inherent contradictions….I don’t think we are going to contain those with regulatory schemes.
http://krugman.blogs.nytimes.com/2008/12/17/do-we-need-the-middle-class/
@ Bond Girl, and specifically about her remarks about education.
Yours is one way of looking at it, and there is validity to it. But I see it rather differently.
Back in the 60’s when I went to college, a year’s tuition at an elite private university was under $1,000. Student loans were essentially non-existent. Almost none were offered: if you couldn’t afford that you went to a public university, or you got financial aid as a grant, not debt.
Somewhere along the line that changed–and it changed as a result of government policy to promote student loans and to provide the banks with loan guarantees and profit guarantees. The banks responded and flooded the market with such loans. The universities were quick to see the big pool of money out there waiting to be sucked up. And suck it up they did. Yes they did embellish their product with some frills (though I can tell you that the three kids I have recently put through college at elite private schools did not get the kind of fancy amenities you describe), but there have been no improvements to the core product, education. In fact, education itself is, I think, of poorer quality than it was 50 years ago. Also getting in on the debt-fueled gravy train were a lot of fly-by-night “trade schools” offering bogus training that led straight to the unemployment line. And that is where we are today.
My perspective is that injecting debt into education fueled the price explosion and product degradation. In fact, that is what happens everywhere debt goes: prices go up, quality goes down, and people’s lives deteriorate.
There may be a legitimate role for debt in the financing of business: I’m kind of agnostic on that issue. But it seems clear to me that in personal finance debt is all downside with no upside. Whether the banks are more to blame for pushing it or the middle class are to blame for buying it is basically an ideological call. But to me, one need not even decide who is to blame to see the policy conclusion: the use of debt must be severely scaled back or eliminated if people are to prosper.
I would agree with your comments on the quality of education generally.
Financial officers at universities universally tell me that the competition for new facilities is vicious and that it is a struggle to match their competition for what we would call auxiliary enterprises (housing, athletics, etc.). In fact, there was a tremendous push in recent years for universities to bring in third-party investors to take those responsiblities off their hands, and to some extent they lose control over the costs there when they do that. This is also true of grand research facilities, although it’s difficult to pass judgment on that.
I’m not disputing your account, but I have not heard of a single university where this was not an issue. (Ask Larry Summers about the facilities races at elite private schools…)
It is not like the universities initiate development for its own sake, and it is not an accident as to the type of facilities they are constructing. Students are not just students, they are customers now. Where did they get this perspective?
Lady in Red wrote:
“I *do*, however, hope and pray that Elizabeth Warren stays in Washington, head of the Consumer Finance Protection Agency.”
Dodd Questions Elizabeth Warren’s Management Experience — A Concern He’s Never Raised Before
08-26-10 04:19 PM
“If the president wants to name her and it goes through the hearing process, then fine, he’ll have my support,” Dodd told the Courant this month regarding Warren’s possible nomination.
“But she has to tell me more than just she’s a good consumer advocate or that’s she’s got a great campaign.”
*Senator Dodd questioned Warren’s confirmability in published interviews with Bloomberg News and TPMDC. He questioned her capacity to lead the new agency in interviews with American Banker and the Hartford Courant. He raised both concerns regarding potential nominees in an interview with Dow Jones.”
http://www.huffingtonpost.com/2010/08/26/dodd-elizabeth-warren_n_694648.html
I didn’t think we had any Glen Beck fans on this site. Have you bought your overpriced gold and started your canned food collection for the apocalypse yet????
http://www.businessinsider.com/everything-you-need-to-know-about-the-glenn-beck-goldline-scheme-2010-7
Good luck monitoring the freaks club. Hopefully they’ve scheduled Saturday field trips at most of the psych wards or turnout could be low.
Re: @ Bond Guy____Your (at least you come across) Ultra Conservative rhetoric comes bellowing with winded breath of a Glen Beck/Rush Limbaugh A-type (correct me if I’m wrong?). The ones that like the hubris sound of “Imperalistic America Hegemony” – too crush all adversaries – even elected democracies? Ironically (no actually quite predictable) one of those guys that likes to have the US Military Complex used for…and only for Corporate Mercenaries” at the expense of the middle class/lower class that fight your ill-gotten wars (again correct me if I’m wrong)? Here’s an interesting piece of empirical data:___the US Military budget (on budget/off budget?) for 2010/2011 (US Federal Receipts $2.1bn/2009 with projected shortfalls for 2010, and perhaps 2011?) comes in at $2.4tn (that’s Trillions..one thousand billion if you can c…t?) and growing with Petreaus now wanting more troops (gotta love it). You do the math…and you’ll find that your mercenary military has squandered “10 plus years” of US Federal Receipts in two short years. Lastly,…if the middle/lower class stiffs (oh, those foolis plebians) don’t pony up their tax dollars – guess who Uncle’s gonna call? Truly,Cheers! ;-)
Mr. Johnson:
I agree with your assessment. It mirrors a blog discussion that “btraven,” “Annie” and myself had on July 12 and July 13.
July 12, 2010 at 5:32 pm
@ btraven
You have to determine whether capital market either needs reform as Congress proposes by amending the deterministic, one-size-fits-all, legacy system, or is it broken requiring fundamental repair.
If the latter, then adding regulation to existing legacy system eventually makes the system more toxic as evidenced by more frequent and larger economic crashes.
The fundamental change which I advocate is segmenting the capital market into predictable (money market instruments for which a separate regime already exists), probabilistic, and uncertain regimes.
Uncertain regime is needed to be consistent with underlying economic environment to limit non-correlative information that leads to category errors.
Stephen A. Boyko
July 12, 2010 at 7:02 pm
@ Stephen A. Boyko – Clearly the system (economy, finance & government) is broken and requires “fundamental repair.” …
@ btraven
To achieve “competition in our markets” the focus should be “randomness” (uncertainty, probability, and predictability) not scale. Taleb’s books Black Swan and Fooled by Randomness provide great references.
It is TRTR (Too-random-to-regulate) as in the expansion of CDSs that I believe should be the focus. 8/26/10 Added Note: Excessive consumer debt created a dysfunctional and discontinuous (i.e. using the home equity line as an ATM leading to foreclosure and possible bankruptcy) financial pattern for the middle class.
As soon as TBTF became the goal, the deterministic legacy system prevailed letting the financial suits set the terms of the engagement. Jamie Diamon et.al. are very smart people who can game the existing system better than Dodd and Frank, and even better than Messrs. Johnson and Kwak. So if you want change, advocate “REAL” change. That is why “We’re All Screwed” was written.
Stephen A. Boyko
July 13, 2010 at 7:58 am
Last time we checked Larry Summers refused to comment on those things, and with good reason:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aHQ2Xh55jI.Q
No mention there of “student activity centers with rock climbing walls” causing the problem, but I might have missed something. It’s difficult to imagine a $1.8 billion rock climbing wall though.
You can read more here:
http://blogs.reuters.com/felix-salmon/2009/11/29/how-larry-summers-lost-harvard-18-billion/
and here:
http://www.boston.com/news/local/massachusetts/articles/2009/11/29/harvard_ignored_warnings_about_investments/
How any of the above can be blamed on students wanting the best resources and facilities they can to prepare themselves for life, I’m sure “BondGirl” has an answer to. But I can’t say that I know. Blaming students for university administrators’ decisions is a new one to me.
Re: @ Bond Guy___”The Federal Pie Chart” – War Resisters League http://www.warresisters.org/pages/piechart.htm
Re: @ Bond Girl___From the now defunct “Commodities Higher Education” future’s market. PS. Community Colleges, and State Schools are wonderful no-name institutions, and actually quite superior to these Ivy League Schools whose administration and endowment programs dwarf all practicality. Harvard was always a dumb rich kid school, and that goes for Yale, (Princeton,Smith, etc.)…but their (Harvard/Yale) Libraries are #1 & #2 in the world except for Cambridge. Lastly…Mt Holyoke (the best of the best – misogynist need not apply) is the one exception…which has always been a world class “Rose” in a thorny bush? Sad you can’t comprehend,…?
http://www.prwatch.org/node/9388
There is a reverse scale that makes the greater part of blaming the middle class for greed simply ignorant rhetoric. If you took it seriously you might begin to see the forest for the trees.
Please visit the link above and generally assess the overall scope of the damages. Than decide which of the three main “views” are most comprehensive. It is outrageous to attempt to simply resort to an emotional tantrum of words as a substitute for critical or comprehensive “public debate.” This is not congress and the rhetorical “churn” being used to stall debates is not welcome. In the end, your comment says nothing, Bond girl, and I am neither shaken nor stirred by your remarks or prejudices.
Re: @ Stephen A. Boyko___Well said as usual – becoming more evident every hour that passes. “Yes,…We’re All Screwed” Stephen, so please never stop your brillant writing. :-))
http://www.prwatch.org/node/9388
I went to a small state university. I feel like I received a very good quality education (of course I’m biased). It was a good value for the time frame attended, and there were good quality instructors who sincerely cared about the students and many services were offered. I haven’t achieved many of the things I hoped in my life, but those are my downfalls as a person, not my university’s. An education is basically what you put into it.
“W” Bush went to Yale. Enough said??
“Corporations have no body to kick and no soul to damn.”
AMEN!!!! Nice, warm round of applause to Anonymous!!
The whole Reagan revolution thing has been such a complete failure that it is beyond me why anyone even argues about it. We can’t even keep libraries open for decent hours anymore. Case closed.
According to delusional Bernanke & Geithner the Pilgrims had their priorities all f**ked up.
They shouldn’t have planted crops, raised chickens cattle & horses & built homes & shops so they could build plows & wagons first. According to delusional Bernanke & Geithner the first thing the Pilgrims should have done was build a bank to securitize loans & sell CDO’s, ABs’s, CDS’s & other useless crap.
A brief recap: Over the last 30 years, Wall Street built a machine to create investments opportunities from indebtedness. That machine didn’t have a governor on it (see this link if you don’t know what a governor is: http://en.wikipedia.org/wiki/Governor_%28device%29 ). Over time, more and more indebtedness was needed to feed an ever expanding pool of these securities for which a voracious appetite had developed. That’s because the creation of these securities resulted in commissions and end-of-year bonuses that stuffed tens and hundreds of millions into the pockets of the developers/marketers of these securities.
Now, the only way to generate the necessary amount of indebtedness was to create an endless demand for it. That was done by encouraging anyone who could walk, crawl or stagger into a bank, or mortgage broker’s office to do so. That’s before we get to school loand or credit card offers.
Were people greedy? You bet. Were they stupid? Hardly. Everyone under the sun told them it was the thing to do. How else to feed the beast?
Were the suits special people who were above all this, just meeting honest demand? You’ve got to be kidding. These are greedy freaks. And they’re downright stupid as well.
While they did record who was to get which portion of the money that flowed in as people paid off those debts, no one was actually tracking what was in those securities once they were sold off. I had that verified for me by people who knew.
This bit of financial insanity was compounded endlessly as networked desktop computing power provided every stooge in a suit with a ridiculously easy way to stoke the machine they’d created. They never dreamed the maw of that machine was gradually turning its focus on them.
You all can stuff your righteousness, please. I’m not a fool, thank you. The chicken and egg problem is easy here. Having dumped the real economy, a fake one was created. Wall Street dreamed it up and sold it to Main Street in the great tradition of P. T. Barnum.
The great hope was that stocks and investment funds would loosen the purse strings of the public. They’d pour billions into those vehicles and everyone would live happily after off the gains.
Not quite. Wall Street not only killed the golden goose, they plucked that thing while it was still alive. In doing so they proved themselves eternally unworthy of the trust they claimed they deserved to manage everyone’s money.
The only mystery is who they try to screw next.
To make the point another way —-
What would happen if we stopped producing CDO’s, ABS’s & CDS’s tomorrow – forever?
What would happen if we stopped producing crops tomorrow – forever?
I just think delusional Mr. Bernanke & delusional Mr. Geithner, et. al. have stupid priorities. And it’s hurting the whole country except for them of course & their fat cat friends.
The financial system is irreparably broken. It cannot be fixed under the current paradigm. The only hope and the only future is restructuring and the complete and total end to what was, and radical restructuring of what is to come. The past is perfidious, evil, toxic, cancerous. The future must be equanimity, equality, and the rule of law!!! If the predatorclass is allowed to shirk and obscure the law for predatorclass benefit, – the in practical reality – we have no law. There is no system! All that exists
are illicit mechanisms for the predatorclass to ruthlessly abuse and subjugate the masses.
The predatorclass must be defeated and put back in the keep, or there is no hope in hell for the future of America.
There are two sides to a transaction.
The US median (the definition of the middle class) household income has been stagnating for many many years and actually declined in real terms over the past decade. Yet the economy has been growing, the technology has been making progress, and that median household desperately wanted to enjoy the fruits. Hence it got addicted to debt. The rest of the story follows.
Think about prevalence of addiction to drugs and alcohol among the poorest segments of the society. Are these people the source of their own problems? Should they take the full responsibility over their problems? (I assume that if you do not have the first-hand experience at least you’ve seen The Wire).
Yes, there are two sides to a transaction. But are they always equally free in their choices and equally informed?
Currently if a bank lends to an unrated small business or entrepreneur it needs to have 8 percent in capital but, if it lends to the government of an AAA rated sovereign, like the USA, so that the bureaucrats of that government lend or give stimulus to their unrated small businesses and entrepreneurs, then the banks need to hold zero capital. Bizarre!
Why would a too-big-to-fail bank be more dangerous than a too-obese-to-succeed government?
please leave the issue of party out of it. To say the democrats haven’t played their role is false. they just have done less of it than the republicans.
You are falling into a false left right debate. think of it this way. the corporations that run both parties determine the spectrum of people we are allowed to vote for.
Clinton was the person who rolled back regulation, and he had a huge role in free trade not fair trade.
Obama appointed Geithner and reappointed Bernanke. Has Summers as a major advisor. Please……
If bond girl actually believes what she is writing this far into the crisis you are wasting your breath fighting.
Bond girl I have a great bridge I’d like to sell you.
Absolutely! There is a scarcity of problem-solvers and an overabundance of agenda-pushers.
I haven’t yet read all of the responses to SJ’s usual cogent article. All I can say is that day-by-day, month-by-month, and year-by-year, the US is looking more and more like the old USSR. As we move closer to losing even more of our freedoms that the Patriot Act started removing, and the mosque contoversy may finish, who knows, we have less and less say in who is running the country. It has literally been years since I went to the polls without thinking, on my way there, which of the candidates that I vote for is the LEAST OFFENSIVE. Long ago I gave up the idea that I was actually going to be represented, and that idea has almost completely vanished as the capture of our government representatives seems more and more complete. Just listen to the rhetoric, so inflamatory to its core. Listen to the useless dogma, in which there are no answers. While the Republicans love to talk about free markets, they devise regulatory regimes that still contain lots of bias and constraints, but that favor their supporters. Democrats love to talk about being the peoples party, and yet accepted $65,000,000+ in Wall Street contributions in the run up the the last election (the Republicans, a mere $53,000,000+). These folks all spend more than half of their time garnering support for their next run, leave their bills to be written by their staff and friendly lobbyists, and get their talking points before going to their hearings and voting the “party” line. Then they take a few minutes to give us sound bites filled with lies and half-truths, and then pass bills of thousands of pages which none has read or studied. Then, when the CBO has the sanity to grade their efforts bogus, they argue with a highly respected non-partisan organization and tell more lies to overcome the sanity. So, why would we expect sanity, honesty, or care for our welfare and this country’s future out of our elected good old boy plutocracy club?
Until we pass a Constitutional Amendment by holding a national convention (as provided by our Constitution) and change the voting laws (no electoral college, publicly funded elections, no hard or soft money, no corporate advertising), term limits (max two terms for any elected official), and lobbying laws (no government official may engage in lobbying activities ever upon leaving the government, including Congressional Staff). Until this is done, we won’t be represented, ever. Only those who have the riches to shower on those whom they pick will be represented. Otherwise, the power of the American Oligarchy will continue to grow until it subsumes all else. This is what happened in Russia. Out of 200,000,000 Russians, only less than 100,000 were allowed membership in the Communiist (only) party. Their dominance perminently deprived all others from participating in successful lives. Now they are getting closer to real democracy on a daily basis. They recently enacted a flat tax about three years ago, and their economy is in much better shape than ours.
It’s so sad that the American Dream now only belongs to about 1 in a 1000, and the rest of us are terrified.
I never bought that argument that students were “demanding” these facilities.
Show me the University that has seen it’s rankings or enrollment drop becasause they lacked a climbing wall.
This seems more to be the case of investing in luxury facilities so they can up their prices.
Bond Guy,
I have to believe that both you and Bond Girl have no real understanding or appreciation for our history or the psychology of man. If you did, you would clearly see the logical and inevitable end to such a society as the one you endorse so smugly and confidently.
I am not a religious person, but I will borrow a phrase from the King James version of the bible here:
“Pride goeth before destruction, and a haughty spirit before a fall.”
Seems especially apt here.
Seriously?
I guess it shouldn’t surprise me, but it does. It has been my experience that insurance executives tend to undervalue all things as a matter of rule.
Ahem.
CDO’s, ABs’s, CDS’s are best left to lose that can’t grow anything real – let them eat CDO’s.
Thanks Coyote Bill! (I didn’t intend to “hide” Anon but I upgraded my system and it didn’t recognize me on the reply).
Here’s a list from the link that requires public scrutiny and debate.
http://www.prwatch.org/node/9388
“Broad Array of Crimes Revealed
A review of the settlements shows an array of fraudulent and illegal actions.
* Predatory, deceptive and abusive lending related to mortgages
* Securities fraud, including creating investment vehicles designed to fail
* Accounting fraud
* Brokerage fraud
* Bribery of government officials
* Undisclosed conflict of interest in financial analysis and advice
* Lying to shareholders and investors
* Robbing consumers with abusive overdraft fees
* Robbing homeowners by overcharging them by hundreds or thousands of dollars, when they were already in bankruptcy and foreclosure
A review of cases reveals a pattern: no admission of wrongdoing, earnest promises to do a better job and a fine representing a fraction of the infraction. Because the fine is paid by shareholders, no one is held accountable and the whole incident is swept under the rug.”
http://www.prwatch.org/node/9388
I strongly urge people to read through the entire article and follow the links they provide. It is substantial and critically documented for a true public agenda.
We have just till November to be taken “seriously” and we must demand accountability from our Representatives who are …Too Afraid or Involved to Act…(TAIA)! If we do not act now we will lose the playing field.
History has demonstrated that the rise of this “OUTLAW” finance system rose on the nieve expectations of a middle class that they now want to use as a scapegoat for their own actions. Not so much for what they have done…but for what they continue to do and intend to do with OUR future.
History also demonstrates clearly that ALL revolutions that were successful were supported by a middle class. Liberalism itself was Middle Class! The British Civil Wars were coordinated and led by the MIDDLE Class. Let them keep pushing! The Middle Class of America is listening!!!!!
Bruce,
I can’t speak to anything else, but I can tell you that as far as the “accounting fraud” goes, the government insisted that GAP be changed from mark-to-market to mark-to-myth.
One could imagine scenarios in which the government encouraged such illusory practices for reasons outside our current understanding, reasons which might include deceiving one’s enemies.
Wounded warriors sometimes cover their wounds to avoid a show of weakness.
Forty years ago we were living in the Long Dark Totalitarian Night of LBJ’s Great Society when you had to stand in line for hours just to buy a Ford Mustang.
“A vocal class of people – including some at the upper end of the income distribution – incessantly insist that ‘entitlements must be cut’….”
Does any prominent person of average means (if such there be) insist on this? Does any person of modest means so insist? (Can anybody name a _poor_ person in the US who is famous and vocal on any economic or political issues? Is it fair to say that when a poor person becomes famous it is because he or she has won the lottery or been charged with a serious crime?)
@ Earle
Thank you, for those kind words. I can tell you from experience that “brilliant” is the sine qua non of a misplaced modifier relative to the name “Boyko.” That same experience also has taught me that if you advocate change without benefit of societal imprimatur, you had better be correct and; you had better be patient to outlast conventional wisdom trying to prove you wrong.
Problem identification
“You have to determine whether capital market either needs reform as Congress proposes by amending the deterministic, one-size-fits-all, legacy system, or is it broken requiring fundamental repair. If the latter, then adding regulation to existing legacy system eventually makes the system more toxic as evidenced by more frequent and larger economic crashes.”
discussed with “btraven” and referenced by Dr. Johnson’s testimony to the Senate Budget Committee was the easy part.
Problem solution
“The fundamental change which I advocate is segmenting the capital market into predictable (money market instruments for which a separate regime already exists), probabilistic (S&P500 for which a separate regime already exists), and uncertain (for which a separate regime needs top be developed), regimes.”
requires a little luck (the nexus of preparation and opportunity) which we have just received compliments of the US government and the GM initial public offering (IPO).
“The GM prospectus notes that “at least one federal court, in a case involving a federal agency, has held that the United States may assert its sovereign immunity to claims brought under the federal securities laws.” GM concludes, “Thus, any attempt to assert a claim … resulting from an alleged material misstatement in or material omission from this prospectus or the registration statement of which this prospectus is a part, or any other act or omission in connection with this offering, likely would be barred.”
Let’s use the contrapositive assumption for anti-fraud enforcement: if not a material misstatement then not fraud, to prove the existence of non-correlative information requiring the need for a separate “uncertain” regulatory regime. If the realm of uncertainty (unknown cash flow, unknown mark-to-model valuation) bounds the rationality such as to preclude knowing threshold for either “materiality” or whether a “misstatement” was made, what is the standard for “Scienter” in an inherently unknowable underlying economic environment (i.e. GM IPO)? Then by inference, the government barring a claim limits fraud to a deterministic realm and metrics (see pages 12-13 “We’re All Screwed”)? Thus the government recognizes an uncertain regulatory regime by their lack of proactive indeterminate governance much in the same fashion that scientist inferred the existence of the “black hole.”
If agreeable, would welcome a similar reference for the above paragraph by Dr. Johnson the next time he dispenses economic bromides on Capitol Hill.
@Bond Guy: elitist much? You do realize that unless you’re a part of the upper upper upper UPPER club right now, you will be stuffed in to the poor class as things continue to stratify right? And that stratification will make the possibility of leaping from poor to ultra rich more difficult than could be imagined.
I mean, ignoring the fact that the rise of the middle class was an essential ingredient for a consumer economy that MADE the modern upper class wealthy… I don’t think it’s a case of “needing” a middle class. I think it’s a case of wanting one as a way of avoiding a de facto caste system.
But hey, from the sounds of it, you’re already a part of that club or you wouldn’t advocate for the impoverishment of everyone except the multi billionaires. Congrats.
“Are these people the source of their own problems?”
No, they are not the source of their own problems. The core of the problem lies with the politicians and priests who are developing the weapons and are sending us on wars to fight the infidels (terrorists) untill this very day. Some parts of society have been receiving the SHARP end of the stick. Good thing is that they are starting to organise themselves. READ the text in the video, …I am down with the brothers all the way.
Perhaps you don’t understand that lots of “middle class” folks lived for a few years in luxury mansions and drove pimped-up SUVs, all with borrowed money. They didn’t pay for any of it, just defaulted on the loans. Something for nothing.
What’s more, many are still living in the houses without paying anything, bidding their time until evicted.
They got something for nothing, clear?
Also, if anyone thinks that wages are too low, feel free to start companies, hire people and pay them more. Easy, just do it yourself! PROVE IT CAN BE DONE
How many people have you hired Mr. Johnson? At what wages?
OK, how about banning all credit cards and unsecured loans in general.
That should help with the “addiction”.
What’s the middle class going to do next in order to stay in the middle class?
Regardless of what you call it, many Americans it seems have swallowed the prevailing acceptance of living on debt. I well remember about 15 or so years ago, hearing ads on radio about taking the equity out of your house and using it to buy that car you want, that plasma tv, remodel your kitchen, re-finance your credit card debt, etc.,etc.
That was sucker action that many people bought into. It represents an attitude of not wanting to wait for something and ‘saving’ your money, but get it now and pay for it later.
There’s lots of blame to go round. I feel no sympathy for the banks; they made risky investments, I don’t have much sympathy for the individuals that bought into the debt-burdened lifestyle. The piper has arrived and now its time to pay.
The exuberant or robust (an overused word) economy was a fake.
As Mr. Kwak in an article on this site said, the value of owning a home has always been exaggerated. The value of being able to deduct mortgage interest way overrated. If you at the 15% rate and your interest is $3,000, wow you save $450, but it cost you $3,000 to do it. Better to have invested that money.
The only reason to own a home is because you want to be able to decorate it the way you want, perhaps you value a garden; it was stupid to consider it as an investment.
Geez, you guys are not nice, picking on bond girl.
I share at least SOME of her points of view.
It always takes two to tango. Responsibility is never one sided.
If you look long enough, and far enough, you will always see how it is shared.
On crony capitalism… anybody see “Mr Smith Goes to Washington” ?
I’m pretty sure THAT film was made A LONG TIME before LBJ came onto the scene.
Nothing new under the sun, said the man, and he was right.
This crisis is a civilizational one. That’s why there are record numbers of people not just on unemployment, but on antidepressant drugs.
Decadence is the name of the game. Lack of imagination. Lack of.. courage and discipline. Collective and individual laziness. (Even the poor are lazy, not to mention the rich… compared to our ancestors, that is. Think about life before the washing machine came onto the scene.)
Bond Guy – you do realize that “capitalism in inherently exploitatory” is Karl Marx in a nutshell (except Marx would likely have said “exploitative,” that being an actual word)? Free market capitalism, a system that history has shown to be highly efficient at producing widespread wealth for most people and that I strongly believe in (but that we no longer have in this country), is not exploitative. Exploitation, according to Merriam Webster means “to make use of meanly or unfairly for one’s own advantage.” The concept of capitalism is arms length bargaining for mutual advantage. A neccessary precondition is the rule of law – a set of trade rules that are percieved as fair and reasonable and a sovereign to enforce them. What most commentators here seem to be saying is they don’t believe the current system is either fair or free market capitalism. What you’re defending is crony capitalism – the rule of the club. Is that really what you believe?
This is a shopping Mall mentality when we are talking about the survival of the greatest economy and democracy on the face of the earth.
PJ: I respect your caveat but respectfully add that the same is true of confidence men and the process of WWII American defense front has long since lost the luster of any integrity. One can not arue from the particular to the general when the facts of observable deceit have become so obvious. I only wish we could derive comfort from a warrior’s code. I am with you on that…Brother!
Like any large debacle there are many causes.The reform bill made a stab at trying to address the issue. But, may have complicated it and weakened likelihood of preventing the next crisis.
If you compare Canadian banks to American ones you can see that Canadian banks did better not only this time around, they did better during S&L crisis and also during the Great Depression. Why?
With a fragmented regulatory framework there is also a potential for things falling through the cracks. That possibility is kept alive and well even after the Financial Reform.
The regulator that I like best in US is not at the federal level it is at the state level. It is the NC-LGC. As its absence in other states comes to haunt investors wondering will their investments tank via a default, a bankruptcy, during supervision process- as bond issuers have gotten a tad reckless (to put it mildly)- not only investors but citizens are teetering on the precipice.
Anyway, there will be an entitlement haircut, simply because the ‘brown’ generation will not be earning enough to keep paying for the entitlements of the ‘grey’ generation. The ‘grey’ had their time to prevent this from happening by investing in the ‘brown’s’ education prospects, which they did not do so. Hence, when they are vulnerable they will find it is too late to cry over spilt milk and time to deal with the result.
The health of a society has much more to do with the nature of the distribution of a currency: the how’s and why’s of that process as well as the degree of concentration than current theories seem to recognize. (Currency here is viewed as a storage and allocation mechanism for social energy*.)
*social energy: individual and collective decisions operating within the limits of available resources and natural law which (quite literally) result in the product you see as a civilization. A decision here is defined as an idea + an action. Decisions can be motivated by any number of factors. Technologies result from previous decisions thus becoming available resources. And decision here is defined broadly… everything from “Let’s build a pyramid for the pharoah!” to “I’ve got a headache I think I’ll lie down.” All we see that is a civilization can be most fundamentally defined as a product of decisions: ideas + actions.
If you think about it you’ll realize that all you see made by mankind can be nothing else.
“Money” in this context then can be seen as an inherently imperfect allocator of this ‘social energy’…
It can be seen as a store of ‘decision right’s’…
Decision Technologies: Currencies and the Social Contract
http://culturalengineer.blogspot.com/2010/07/decision-technologies-currencies-and.html
This is “foundation” talking…HERE! HERE!!!
Who do you work for Bond Guy…? I have seen your footprint before! The professional misdirect? Is it possible that you and Bond Girl are one and the same?
The truth of the matter is that “Private Equity” etc. is slashing you down, buying you out; and selling us all out under the premise that profit is royalty.
Asymmetrical Knowledge started with Insurance not the University of Chicago. They have become the masters of deceit. The U. of Chicago simply refined it to a level of political economic expediency.
whee in the world are the other suppressed SEC regulators that have substance to offer?
where in the world are the other suppressed SEC regulators that have substance to offer? Why are you a stand alone attorney for correction?
Tom: As you yourself may realize, currency is a tool in several different hands. You are definitely “on the money.” The problem is similar to city kids growing up thinking that supermarkets “make” meat. It is almost trauma when they find out that there is life and death involved. The current distribution of resources are “coded” as wealth. The process of allocation is a closed syustem while the demand is an open one. The rest is systemic and systems theory. You are UNIQUE!!!
“……… we are told that fiscal austerity requires outright and immediate further cuts in the benefits previously promised to people at the federal, state and local level.
Never mind that this is simply not true – at least in the form currently presented….”
Read today’s WSJ OPED by Schwarzenegger to see how utterly and completely wrong Johnson is, at least on the state level. .
You can be wealthy and powerful, and still find it necessary to wage economic war to assure those at the other end of the pecking order remain there. It’s so normal in society that it appears as our wallpaper. It’s only when the other end of the order fights back that “class warfare” is alleged to occur. Simon Johnson’s analysis is as rigorous as any analysis needs to be in this area. If one chooses not to see the wallpaper when it’s pointed out, that’s not a form of rigor in analysis or observation, either one.
“Segmenting the capital market into predictable (money market instruments for which a separate regime already exists), probabilistic (S&P500 for which a separate regime already exists), and uncertain (for which a separate regime needs to be developed), regimes.”
That is ok but, be careful so you do not have unsupervised regulators imposing their own biases on the markets, between these 3 separate areas, because, if so, you will only end up even worse than where you started.
The worst part of the one size fits all deterministic system as you call it, was not that it was a one size-fit-all deterministic system but that it was such an incredibly stupid system… and that fact is what the society finds so hard to deal with.
You see for Simon Johnson and many others the fact that the regulators, many of them their buddies, were just too stupid, is understandably something very hard for them to swallow… especially when doing so reflects badly on them too.
re: “starve the beast”
Who are the Koch brothers? Charles and David Koch are the owners of the privately held Koch Industries. Koch industries has annual revenues of $100 billion. Together the personal fortune of Charles and David Koch is $35 billion. They are prominent philanthropists. They are also one of the biggest supporters of Tea Party activists via the Americans for Prosperity Foundation. The also fund many nominally non-partisan non-profit “think” tanks which produce right-wing, libertarian publications. They are disciples of F.A. Hayek and are a libertarian’s libertarians. They are the most unabashed deniers of global warming, which is not surprising since oil production is their primary business.
Here is an excellent expose’ on how these two brothers have manipulated the thinking of millions of Americans over many decades through their enormous wealth.
http://www.newyorker.com/reporting/2010/08/30/100830fa_fact_mayer
So, if you think the Tea Party “events” are a result of grassroots activities, think again. The Koch brothers are in fact the puppet masters of the Tea Party puppets. They are the financiers who keep the Tea Party activities going.
I leave you with a thought which is one that is in opposition to the teachings of F. A. Hayek.
Individualism describes a society where each and every thought and action of each member of society promotes the greatest achievement and fulfillment for every individual within that society. Individualism is loving one another. Individualism is loving all manifestations of God’s creation. Individualism is creating Heaven on Earth. The 21st century will be known as the Age of Individualism. This age will be characterized by the engagement of each individual in the promotion of fair, ethical, and rational policies directed at the betterment of each and every individual.
@ John Malloy: Indeed! Sounds like basic economics to me! So what happened? Why is this basic understanding so difficult for policy makers to understand? So policy makers have/are killing the goose (balanced income distribution) that has laid the golden egg (and economy that benefits EVERYONE).
@ Bruce E. Woych (2)
First and foremost, I am neither an attorney nor Ex-SEC. I worked for the NASD (12+ years after grad school) in various capacities (see N2K website management).
Secondly, I work in the industry for 25+ years and liked very much what I was able to accomplish. Note also that there are no violations on my CRD file (although the same could have been said for Madoff at one time). Five years of this time was spent travelling to and from the Ukraine helping to build their capital market.
Lastly there are others who speak.
Former SEC Secretary Jonathan G. Katz commented, that when “the SEC adopts a rule, it believes it has solved whatever problem it is addressing. … The solution is to rethink the rulemaking process. Instead of assuming, as lawyers do, that rules are self-effectuating, the SEC should adopt a scientific approach.”
I may be somewhat more forceful (contentious nature aside) inasmuch as I know what questions to ask given the different perspectives from work experiences. I do not know whether my assertions are correct, but I know the legacy system is broken and its proponents are wrong. Therefore I do not to get caught in the trap of conventional arguments (e.g. TBTF was a non-starter relative TRTR).
These are conventional people who get well-rewarded for packaging orthodoxy. It is just too easy to get along by going along. I sincerely wish that I knew how to do it. There is a reason why I helped financed entrepreneurial firms and tilt at regulatory windmills. But these same traits make me know and the bureaucrats know that I know that the legacy system is broken.
But before we get too far down the runway selecting the most challenged regulator, do you want to nominate your former IMF (?) colleague, Jeffery Sachs, who was somewhat less than accurate in his developing Eastern Europe capital markets.
See Odom’s Russia
http://articles.findarticles.com/p/articles/mi_m2751/is_2002_Spring/ai_85132096/print
Unfortunately, Western reformers treated the post-Soviet world like an inefficient market. When the Soviet Union collapsed, thousands of intricately linked state-controlled enterprises were atomized. Western advisers assumed that these enterprises were embryonic capitalist operations that had simply been constrained by an inefficient market. Donor agencies provided regulatory infrastructure that, in some instances, made already Byzantine bureaucracies more burdensome and further constrained entrepreneurial initiative. This was not so much a question of right-vs. -wrong, but a matter of selecting firm-vs.-market remedies to be the independent variable for economic development.
Reformers emphasized market rules that permit voluntary exchanges between consumers, workers and owners of production. They ignored the need to make firms commercially viable. Ultimately, firms are the actual economic units that develop skills to produce goods and services. Soviet firms were not encouraged to be competitive. Innovation was not rewarded. The apparatchik culture favored political rather than business entrepreneurs. The entirety of the old Soviet corporate culture needed to go.
Since Poland was a notable exception, I will give you the credit.
Seriously, Dr. Sachs is an all too common example of good intentions getting the details right (i.e. market regulations) but missing the firm-market distinction.
It all has to start with avoiding one size fit all typical regulators because even the smartest persons can make crazy decisions if they surrounded and isolated with likeminded. Diversity is the name of the game… and diversity would have stopped the financial regulators in the Basel Committee from regulating without even defining a purpose for the banks.
When as an Executive Director at the World Bank (2002-2004) I tried to warn about what was happening (I was convinced the regulations doomed us to disaster) the main obstacle was in that the World Bank and the IMF, two entities that should be debating all the time the unsolvable conflicts between the need for economic growth or development and the need for financial stability, had decided to harmonize… which meant effectively silencing the debate… which meant effectively leaving the regulators alone to do what they wanted to do.
One day soon, when the story of this financial disaster is recounted by academicians in an objective and detached manner the pure craziness of it all is going to be so embarrassing… for all. The way they structured the capital requirements for banks based on the ex-ante perceived risk of default… is so delightfully and innocently naïve and gullible.
Since we will need more and more international bodies such as the Basel Committee to coordinate an ever shrinking world we need to make ever more certain that these are constituted in such a diversified way as possible so as to be able to resists degenerative intellectual incest. And by diversity I do not mean from different countries… pure regulators (and Central Bankers) are much alike everywhere. By diversity I mean the representation of different interest.
If for instance to confront the environmental challenge the world faces we landed in the hands of solution providers like the Basel Committee, we would most definitely be toast.
(On a side note my only relation with Jeffrey Sachs is that sometimes, on my blog TeawithFT, I comment on what he writes in the Financial Times… sometimes approvingly other times disapprovingly.)
Who cares if it’s “very academic”?
Academics, that’s who.
The rest of us are living with the consequences of decisions made by people who are not only immune to the current economic doldrums, they are responsible for them.
That’s hardly “academic”.
It is “criminal” and until we, the people, regain control of our government we can expect more of the same.
If the choice is between a government-of-the-people and a government-of-special-interests I know which one I’ll choose.
Thieves always defend their “right” to plunder.
That doesn’t make them any less “criminal”.
Dress them up anyway you like and cite whatever “academic” theory suites you but denying that we-the-people have been victims of Grand Theft Financial at both a personal and federal level requires either massive ignorance or an unseemly devotion to the thieves themselves.
The very idea that this situation exists in some politically or ethically neutral space is ridiculous.
We need to point fingers, serve warrants and prosecute.
@ Per Kurowski
“Diversity is the name of the game… and diversity would have stopped the financial regulators in the Basel Committee from regulating without even defining a purpose for the banks.”
Sounds good, I am in agreement except that it doesn’t comport with my experience with human nature.
Consider the comments on this blog. People say, sincerely I believe, that they want to change financial governance to preclude the “banksters” from raping and pillaging the usual suspects. But the “change” they advocate concerns mainly the political power structure and not the principles by which the industry is governed (see Burton Crane’s “The Anatomy of a Revolution, from my antiquated college reading but still relevant).
Thus, conventional financial orthodoxy is packaged with self-righteous indignation in hope (see US Grant) of power structure change but with the usual results. The advocates of change keep losing 42-0 and they want to keep running the same plays. Al Einstein you’re proven correct again.
Earth to change advocates, as soon as, the deterministic TBTF Trojan Horse was championed, Jamie Dimon won. How? He convinced the change advocates to play by his legacy rules and he won fair and square. No surprise, the oligarchs are smart and have the resources.
If Baseline bloggers want change, change the terms of commercial engagement—principles for randomness not scale. Or some other metrics, but for God’s sake stop running the same plays that have been a loser since the 1960s.
Re: @ molecule___”they got something for nothing, clear?”…obviously your a myrmidon of Fox News/Radio and CNBC kinda guy, that views…”things, subjects, sensationalism, dramatics, fallacies ,and enjoys chiaroscuro journalism (there we have it?)” – a pure unadulterated ideopathic myopic – borne again through a tainted proverbial microscope whose spectacle` prism is incapable of your visionary arrogance as your pseudonym aptly suggest…mired in a petri-dish of discontent,…
“Thus, conventional financial orthodoxy is packaged with self-righteous indignation in hope of power structure change but with the usual results”
Again the more the reason for diversity.
What I really do not get to understand from what you say is whether you thing that the interference by the regulators was wrong and you want to correct the interference, which to me might only dig us deeper in the hole were in, or you believe, like I do, that there has to be less interference, more supervision and foremost better capacity of handling any bank crisis.
I have seen bank crisis from very close range and I still divide the costs of anyone of those crisis in three equal tranches. The cost of the stupidities that generated the crisis, the cost of the stupidities or lack of preparedness in managing the crisis, and the aftermath cost produced by anxiety and confidence loss.
It’s due to America being subjected to neoliberal policies (i.e. free market fundamentalism) which used to be only forced upon the 3rd world.
@ Per Kurowski
SAB: Good points! We are zeroing-in on the market segmentation thesis.
PK: Again the more the reason for diversity.
SAB: Agreed, but we need to be careful as to the definitional precision relative to: insure, hedge, and diversify.
We can insure (put options) and hedge (Ford and Exxon) risk. We can insure (natural disaster insurance) uncertainty, but we cannot hedge (Ford and pork bellies) uncertainty. If we cannot hedge, we cannot regulate risk and uncertainty in a one-size-fits-all regime due to non-correlative information. You can diversify risk in a portfolio of stocks as to unsystematic risk but not a portfolio of commodities (non-correlative information). See the blog post http://readingthemarkets.blogspot.com/2010/07/dodd-frank-fine-alphabet-soup-appetizer.html. If Citigroup’s one-size-fits-all financial supermarket did not provide a net benefit, I argue that the SEC cannot govern with a one-size-fits-all regulatory regime. If you can’t cross-sell, you can’t cross-regulate due to non-correlative information (discontinuous function).
PK: What I really do not get to understand from what you say is whether you thing (sic) that the interference by the regulators was wrong and you want to correct the interference, which to me might only dig us deeper in the hole were in, or you believe, like I do, that there has to be less interference, more supervision and foremost better capacity of handling any bank crisis.
SAB: I argue for a restructuring to align investor rights with investor responsibilities to achieve “less interference, more supervision and foremost better capacity of handling any bank crisis.” Otherwise:
• Investor rights greater than responsibilities enables free-riding by banksters and owner/renter speculation via no-money down liar loans, and,
• Investor responsibilities greater than rights promotes regulatory rent-seeking as opposed to stupidity. I argue what you call regulatory stupidity is self-serving behavior on the part of the federalis.
See GAAMA Model: Think before you regulate: Choose a better model, SFO Magazine, May 2009, Stephen A. Boyko, http://www.sfomag.com/article.aspx?ID=1338&issueID=c
PK: I have seen bank crisis from very close range and I still divide the costs of anyone of those crisis in three equal tranches. The cost of the stupidities that generated the crisis, the cost of the stupidities or lack of preparedness in managing the crisis, and the aftermath cost produced by anxiety and confidence loss.
SAB: But to gain the efficiencies that you seek, you first have to segment the market so that your information correlates as stated above by you.
1. The cost of the stupidities that generated the crisis or measurable, determinate predictability,
2. the cost of the stupidities or lack of preparedness in managing the crisis or measurable, determinate range of probabilities, and
3. cost produced by anxiety and confidence loss on not measurable uncertainty.
I think much of what you say has merit. We approach things differently given a different thought process. I believe in system building you have to reason from the top (FLITE model principles of fairness, liquidity, integration, transparency, and efficiency) down to rules. Thus I would argue that your meritorious points relative to capital rules would be better served if you first framed them from the principle of “liquidity”. This is not so much of a criticism as an observation and illustrates that we personify diversification.
See: Comments on Release No. 34-49695, File No. S7-22-04 (June 9, 2004)
Click to access saboyko060904.pdf
Click to access OP-1189_1_1.pdf
the Reagan revolution worked fantastically. everyone but the rich got screwed with their “voodoo”. to say otherwise is to lie outright. my gosh these thieves were good at selling the Black vs White /us vs them mantra to the idiots who wanted to be “rich.”
such a wonderfully effective plan to rob the poor and destroy the middle classes. i would have to look to Weimar Germany to see such ruthless/rightwing politicians. Fascism is fascism no matter the language or PR campaign.
we are headed for the final crash. i just hope the Rich decide to leave America for the tax shelters they have in other countries.
when the middle class wake up, zombies from the Reagan Revolution, it will be way too late for them.
it really has been amazing to see the stupid white people follow the Republicans all these years. i am amazed at how gullible these stupid white people are. of course, living down in the South here, i can see how fear has been used as a tool to divide and conquer, which the REpublican party has used since Lee Atwater, and now Fox and Friends.
American deserves to crash hard and fast for following the Republican lies for the last 40 years. i mean, how ignorant can you be and still expect not to get screwed. lol
the American experience will be one of fast times and even faster thieves. lol.
The regulators have NOT earned the right to dressed in their white coats in the Basel Committee now try to correct it all by tweaking some knobs on their utterly failed regulatory robotic machinery.
We have too much urgency in getting the banks to work for us!
I would require them to immediately reset to zero any differentiation in the capital requirements of banks based on perceived risk of default of the assets (something which I remind you of is already built into the risk-spreads) and then have the regulators dare to come out and defend openly and transparently any new differentiation.
When enough of the people with power in a country decide they only care about themselves and not the country, that country is in trouble. 30 years ago I discussed with friends that I thought we had started down a long road to the Mexiconization of America. Why does Mexico never get anywhere? Because a few people have everything and most people have nothing. ‘Trick down economics’ is the path to Mexico. It was my opinion that this would take decades or maybe a century, but the direction was clear. We haven’t changed course yet.
We’re getting close to the “serve warrants and prosecute” part because of the criminal investigations-like discipline of many posters over many months (too many because of the abuse of “academic”-like discourse).
msn.com this morning was giving advice on how to leave USA – “credit scores don’t matter…” Indeed. So I’d say that many more will follow Prince of Xe fame to Abu Dhabi or wherever the cash got stashed for the mercenaries under the fog of war. And yes the teabaggers have such twisted sister-christian values that they call conscientious objectors to war “bad” and MERCENARIES “good”…
This IS a criminal investigation, was from 911 and MANY professionals would have had it all wrapped up by now had it not been for the Patriot Act which created a whole fake army protecting “homeland” security who checkmated the hard-earned LAW and ORDER professionals that the MIDDLE CLASS created….if you spit on honest labor as stupid, what are YOU?
Trillions stashed somewhere – let’s see where they go…we’ve got Prince, more to follow….
Who is the Federal reserve firing up the printing press for – the ex-patriots fleeing like rats from a sinking ship
or for circulation in USA?
If it’s for ex-pats, don’t let them leave the country…we’ll be left with their hysterical convoluted shape-shifting regulatory paperwork saying “nothing is real” and they’ll be using ATMs in the Middle East where you get nuggets of gold instead of paper…you can continue to broadcast across PRIVATE airwaves in USA 24/7 that NO ONE IS USA is smart enough to “protest” – so that pernicious piece of insult can be done from a global position…they ARE using classic anti-insurgency techniques against the stupid Americans all day every day – did YOU pay taxes for some cabal to create a daily insult media machine?
@Per
You have a reasonable approach. My only suggestion is that you need an “elevator pitch” as a 3-miniute hook to your prospective audiencein. That is why I suggested the top-down liquidity principle to capital rule approach.
Good luck
Thanks Stephen… think on how you would write up a 3 minute message on what I want with your top down approach, and that somehow I feel might confuse the issue by sending the very wrong message that there are fixes that the Basel Committee could apply within their current paradigm.
Re: @ Annie___Your words are that of a “Polaris-Sonic Boom” – a poignant accurate thrust of selfless integrity – a shattering of the “Smoke and Mirrors” – a diaphanous desideralum expose` of the “Vulpine’s Hermetic Quark”! Bravo Annie:-))
Are you referring to that neo-liberalism that after the signing of the Basel Accord in 1988 meant that if a bank gave a loan to a local business or entrepreneur it had to put up 8 percent in capital but if it instead lent the money to the government it needed no capital at all?
History is history and future is future, and these agenda pushers, casted as great intellectual heroes, like Noam Chomsky, are with the way they interestedly recount their truths, obscuring the ways forward and gratuitously providing ammunition to populists like hugo chávez. Make real sure you are following the right flag!
apologies for a couple of typos :-)
quivering with indignation when they DARE to put on the holier than thou mantle of elitism…typing becomes IMPERFECT…
Per, “The worst part of the one size fits all deterministic system as you call it, was not that it was a one size-fit-all deterministic system but that it was such an incredibly stupid system… and that fact is what the society finds so hard to deal with.”
Maybe it is a chick thing, but “forgiving” stupidity is the easiest kind of forgiving to freely give because it is a NATURAL act of human “mind” intelligence to want to fix the problem of stupidity and move forward.
Yes, the most important question is what is the role of banking? Some of us have also been delusional in that we viewed banking from a renewable biology perspective instead of theoretical quantum mechanics searching for metaphysical power to be held in the hands of a Big Giant Head tyrant channeling a Supreme Being. Why abuse imagination by inventing ever more unmanageable sacred cows to throw all over the village so that no one can help but step on one and start a war by doing so?
Banks distribute water and seeds – NURTURING life. Seeds produce product once a year, on schedule, when watered. Very PREDICTABLE and SUSTAINABLE “system”. Boring? Not really if you get up close to watch it all – birds, bees, flowers…perfection, actually.
When the crop is bountiful, peace reigns. Hunger will not darken the village. Winter months can be spent on hobbies – looming, ceramics, glass, metal, reading and studying, making plans for next cycle, music and storytelling. LIFE.
Who knows what improvements, and discoveries, and ambitions percolate in peaceful winter months free from hunger? Boyko’s “unpredictable” factor.
But always is the best science devoted to the greatest good for the greatest number because if you LOOK at it, Spaceship Earth does have that “model” already built in, no? Just keep the man to land ratio in check. Lots of people would rather spend time at their hobby wheel being productive than engage in behavior that leads to unwanted and unmanageable numbers of mouths to feed. NORMAL mind computations…
I do not know what to call the monstrosity that is a TBTF “bank”. All I know FOR CERTAIN is that it is a moral outrage to hold that monstrous sacred cow “safe” for “profit” totally derived from the math formula:
More misery for others = more money for ME ME ME
Since TBTF “banks” do nothing but provide a “water and seeds” MACHINE for death and wanton destruction, maybe first we need to call a REAL bank (water and seeds for LIFE) something other than a “bank” before we can leave the darkness of manufactured poverty and hunger in a history chapter titled, “don’t do this again”?
I’ll write that book this winter :-)
I’m working on “appeasing” my moral outrage at being made increasingly vulnerable to being thrown into the lion pit for the entertainment of PSYCHOS via a bunch of software programs calling THEFT “fees” that ended up funding the unfunded perpetual war machine. It’s not really “appeasing”, though. I’m all for working together with SANE people who want to come up with an answer to “what is the role of banking”?
Reducto absurdum is a VALID method of ACADEMIC debate when considering all dimensions of such a serious problem as a “bank machine” that seeds, waters and nurtures death and destruction FOR inhuman levels of PROFIT for the few psychos who surround themselves with sacred cows.
When gaining a higher degree in “Geology”, whoever provides the rock climbing walls to make sure the geologist has ALL the lab skills required cannot possibly be the cause of the downfall of the “economy”, but what a great example of stupid conclusion about a stupid system.
Anne writes…“Banks distribute water and seeds – NURTURING life”… and yet all that the Basel Committee cared about was for these nurturer´s not to default and in their regulations there is not one word about how to make sure that the nurturing is done right… on the contrary the capital requirements based on risk actually ordered the nurturers to poor more nutrients and water on those who already had enough and could find it elsewhere and to stay away from those who riskier really were the ones most important to be nurtured.
And Anne writes “forgiving” stupidity is the easiest kind of forgiving to freely give”… Not so because the least those who are to be forgiven want to accept is the truth that they were plain stupid. In fact most of the waste of time in moving forward is to be attributed to those who behaved stupidly now trying to hide it. And you will see and hear a lot of Monday-morning quarterbacks expounding their theories to serve precisely that purpose, and the old ones giving us their new Razzle Dazzle, Razzle dazzle ’em Bazzel III.
Banks are too important for our society to allow us to be too compassionate with the faulty regulators, especially since it also relates also to the basic malfunctioning of an international regulatory body and that is the least we can afford on our small planet. Can you imagine what could happen if we would tackle global warming with something similar to what the Basel Committee ordained? You´ve got it… we would be toast!
Politics and economics are inseparable. There’s a good reason why economics was originally called ‘Political Economy’.
You are too generous. Her post was pointless.
“I didn’t think we had any Glen Beck fans on this site. Have you bought your overpriced gold and started your canned food collection for the apocalypse yet????”
There’s no shortage of ignorance in America today.
Agreed. I received my MBA from U Chicago in the 1980’s. Even then I was amazed by how my professors applied over-simplified models to complex situations. Perfectly competitive markets, for example, can;t exist when there are economies of scale or patent protection. Yet the Boys from Chicago treat all markets as if they are perfectly competitive.
A good friend of mine (a Harvard grad) had a nice description of Harvard undergrads: 1/3 are smart, 1/3 are interesting, and 1/3 are legacies.
@ Per
Elevator pitches are personal. You have to sell your concept as well as your competency in a short period of time.
Therefore, rather than try to write your pitch, the following is mine. It is the third slide from a 12-slide, book signing powerpoint presentation.
Hope this helps.
@Per
Sorry for the blog Mulligan.
PK: Thanks Stephen… think on how you would write up a 3 minute message on what I want with your top down approach, and that somehow I feel might confuse the issue by sending the very wrong message that there are fixes that the Basel Committee could apply within their current paradigm. Per Kurowski August 29, 2010 at 9:09 am
SAB:
Per – Elevator pitches are personal. You have to sell your concept as well as your competency in a short period of time. Therefore, rather than try to write your pitch, the following is mine. It is the third slide from a 12-slide, book signing PowerPoint presentation. Hope this helps.
Markets are complex adaptive systems with dynamical and non-linear properties. If there is complexity, then there is uncertainty. If the dynamics of Citigroup’s one-size-fits-all financial supermarket could not produce a profit; then can the regulators govern market randomness with a deterministic, one-size-fits-all, legacy regulatory regime? If you can’t cross-sell, you can’t cross-regulate due to non-correlative information that produces a discontinuous market function. To correct market ineffectiveness requires planned change, or innovation, where uncertainty becomes risk through market segmentation of predictable, probable, or indeterminate underlying economic environments. To correct market inefficiencies in the “Conceptual Age” requires 3-D models (3-D GPS vs. 2-D Maps) for processing leverage. Otherwise unplanned change, or chaos, sees risk become uncertainty resulting in the troubling, non-linear trend of larger and more frequent boom-bust cycles.
I have to agree with Bond Girl – this blog as been “discovered” and the quality of respondents has dropped considerably.
I used to read it regularly after J&K first advanced the TBTF argument, and it was a fascinating read (for this non-finance guy) as much for the comments and arguments that followed as for the lead items.
I used to learn a lot from both. Used to. I find minimal value in the responses now – mostly just ego aggrandizing and one-upsmanship.
This is the downside to free-and-wide-open discussion; “just anyone” (like me) can chime in – and apparently do.
I think the reference is to the version of neo-liberalism that advocates deregulation so that the markets can work their special magic, (so long Glass Steagall hello Great Recession), the liberalization of trade that has allowed capital and technology to flit across borders while labor remains captured (hence the hollowing out of US manufacturing, hence the tragic consequences of NAFTA on Mexican subsistence farmers and the US/Mexican immigration debacle), the financialization of capital that has re-directed capital away from productive investment into derivative speculation.
Which flag is the right flag? Chomsky’s political work over the years, outside his important contributions to his primary intellectual discipline of linguistics, have been clear, rational and counter to the conventional wisdom that pervades the disastrous Washington consensus that has landed us in the midst of two wars and an economic meltdown. If there was any rationale to the Nobel Peace Prize he would surely have one.
Hugo Chavez, well certainly not a popular figure at the World Bank but perhaps more so among Venezuelan workers and other Latin American countries struggling to emerge from under the thumb of American corporate influence.
el Tombre writes “after J&K first advanced the TBTF argument, and it was a fascinating read”
How great it would be if that´s the first time the TBTF argument was advanced, but unfortunately, that happened long before and still we were not able to do something about it, probably because of being too reverent with respect of the experts.
Just as a curiosity in front of me I have the “Too Big To Fail” book written in 2004 by Gary H. Stern and Ron J. Feldman with a foreword of Paul A. Volcker… and as a much less important reference I have myself since 1998 published several articles on the issue that if we went down our current regulatory route we would end up with the last and only bank in the world.
One-upmanship? That is what the regulatory experts have subjected us to with the help of some of their admiring servants that are unable to accept the possibilities that the regulators have acted stupidly.
hugo chávez?… that petrocrat that sells gas at 6 US cents per gallon and thereby gives away about 10% of Venezuela´s GDP from those who have nothing of nothing to those who drive cars… you´ve got to be joking!
Personally I can offer evidence of having fought against more than any Venezuela against many elements included in the Washington consensus, before chávez arrived on the scene, and when doing so had direct negative implications for any professional…
and that might be a reason I was nominated an Executive Director at the World Bank… which does not stop me from fighting against the chávez imposition.
Per, “…on the contrary the capital requirements based on risk actually ordered the nurturers to poor more nutrients and water on those who already had enough and could find it elsewhere and to stay away from those who riskier really were the ones most important to be nurtured.”
So the deck is twice stacked against every other NEW or destroyed (WAR, floods, earthquakes, volcanoes, etc.) “garden”, one deck wall is through capital requirements, and the other is through outright subsidies – am I understanding it correctly?
You are right that they rather NOT be forgiven for their stupidity, they’d rather keep being stupid because they believe that “perception is reality”. So that’s a problem child that needs to be contained – “grounded” – so that further damage is not inflicted on themselves and especially on others.
If you can accurately mimic the complex system that sustains itself – seeds to fruit – than you have certainty. Otherwise – you have POINTLESS complexity which favors endless fraud – criminal utopia.
All the econospeak babel is fruitless in a system and a nation that is structurally lawless. Any law or regulation will be shirked, skirted, thwarted, or looped around, and the crimes will be cloaked or ignored.
If no one is forced to obey the law, – then in practical reality – there are no laws – and in a world where there are no laws – there are no laws for anyone predatorclass biiiiaaatches.
Amazing comment, really. Bond girl does a crass pseudo-psychiatric diagnosis for an entire class consisting of tens of millions of people by diagnosing a form of “mania” apparently related to consumption of luxury items and apparently spontaneous in nature, due to their immorality one has to presume since BG does seem to lay the blame entirely on them, and then complains about the lack of objectivity in the post.
Annie: “So the deck is twice stacked against every other NEW?”
Yes a NEW has to pay higher interest rates in the markets because as a NEW it is perceived and is naturally riskier… and that is ok… that’s life!
But then came the regulators and, on top of it all, slapped on higher capital requirements for banks when lending to “Riskier” than when lending to the “Not Risky” and so for this the NEW has to pay too. It is a regressive arbitrary regulatory discrimination. And if you need figures I have some very simple in http://subprimeregulations.blogspot.com/2010/07/basel-committee-makes-small-businesses.html
Annie: “If you can accurately mimic the complex system that sustains itself – seeds to fruit – than you have certainty. Otherwise – you have POINTLESS complexity which favors endless fraud – criminal utopia.”
Life and development is in itself very complex and so whatever we do there will be room for fraud and humanly strange human behavior… so we need to be careful that trying to reduce the complexities we do not leverage the dangers… in other words regulators need to be much less arrogant cause otherwise they become themselves the danger… as has happened.
Yes they need to be “grounded”… but for what they did… which implies there is no choice but denounce the stupidity.
The only way people will be able to understand how stupid it all is to maintain the explanations simple… not allowing the truth to be obscured by complexity.
and that might be a reason I was nominated an Executive Director at the World Bank… which does not stop me from fighting against the chávez imposition.
On the contrary, it’s in the job description.
Chavez may be a lot of unpleasant things but he is better than a lot of what came before. It still remains to be seen how it plays out.
Nominated 2002-2004… during and by the chávez government!
Forget it! The others were useless and bad, courtesy mostly from the oil-curse, but they did not seed that kind of divisiveness and hatred that a chávez who teaches the blaming all others for all bad does.
@ Per
The writings of Paul Dirac (1902–1984), a British theoretical physicist, Nobel laureate, and a founder of the field of quantum physics may be constructive to your discussion of differentiating determinate and indeterminate capital market information flows.
Per, “Life and development is in itself very complex and so whatever we do there will be room for fraud and humanly strange human behavior… so we need to be careful that trying to reduce the complexities we do not leverage the dangers… in other words regulators need to be much less arrogant cause otherwise they become themselves the danger… as has happened.”
So it seems more like baseball – THREE strikes to get you out if you are a New or Regenerating “garden” – higher interest rates, higher capital requirements, and no subsidies!
Seems like whoever is micro-regulating the seed is completely ignorant of the inner complexity of the seed! Yikes.
Look, quantum mechanics does NOT, I repeat, does NOT apply as a management technique for LIVING SYSTEMS.
back to the question – what is the role of a bank in LIVING SYSTEMS?
And stop subsidizing petroleum industries! They already have “grandfather” privileges…
Stop PRIVATIZING the profit and socializing the loses! Even if grandpa eats babies to regenerate until he can transfer all of himself into a mechanical device,
he’s still gonna die one day and look at this “jonestown” legacy he’s SELFISHLY leaving behind!
You mentioned having more diversity in the field, Per. I agree. Throw in a couple of biologists, would you? Too many “black-hole” representatives, it seems to me.
Annie: “Throw in a couple of biologists, would you?”
Absolutely that is part of the diversity I beg for… and also some epidemiologists as they seem have much better understanding of the meaning of contagion than those we are currently saddled with in Basel.
exactly – two sides of the same banknote, or the left and right cheeks of the same arse…
student loan bubble… it was too easy to borrow for school and now college is too expensive. Higher education is as much of a bubble as real estate.
There was a most interesting article in The Economist about two years ago(?) on how an evolving middle class will significantly strengthen the overall economic health and sustainability of a nation. I am too busy to dig and create a link – perhaps some one else on this blog can complete this task the rest. It IS worth the ‘read’ for comparison to what is now happening to the American middle class. Apologies for not digging- not enough time. It’s portends registered in “my little grey cells”.
Re: @ cedar___Too Bad – I guess it stays in your little grey cells?
Let us please not make the mistakes of FDR – 1937 was the very year he trashed (such harsh language) stimulus spending, and joined the fiscal hawks by raising taxes prematurely, thus putting the United States into another ( I often wonder why such an obvious blunder??) recession. Currently at this very moment the country is on the fringe of a century long bubble that has mutated into a myriad of lethargic quadratic equations – small sphere’s making up its structure – where when one fails now, it has little or no reality on the big (so to say?) picture. This is a classical (it is a fixed probability period that unfortunately comes around cyclically, like it or not,a natural phenomenum with accurate predictability, think of it as a lunar cycle?) deflationary model our economy is faced with, not too mention all economic models in our financial “global” universe. Quote/WSJ Market Data Group____Henceforth – currently these are the *Seven-Worst* downturns in the DJI Avg. in the past 102 (2010 ends) year (% decline & days duration)___Start: History___#1/11:9/23/29-7/9/32 (-89%/1038 days); #2/11:3/10/37-3/31/38 (-48%/385 days); #3/11: 1/9/06/-11/15/07 (-49%/664 days…**Bush#43); #4/11: 11/3/19-8/24/21 (-47%/669 days); #5/11: 6/17/01-11/9/03 (-46%/ 874 days…***Bush#43); #6/11: 1/11/73-12/6/74 (-45%/ 693 days…Nixon/Ford); #7/11: 10/9/07-10/27/08 (-40%/383 days…***Bush#43); #8/11: 11/21/16-12/19/17 (-40%/ 392 days); #9/11: 1/14/00-10/9/02 (-38%/ 998 days…Clinton/****Bush#43); #10/11: 9/7/32-2/27/33 (-37%/172 days); #11/11: 8/25/87-10/19/87 (-36%/54 days…Reagan)….Finally I’d like to add this Source of Empirical Data: Bureau of Labor Statistics (the US jobless rate (% unemployment) at the Presidential swearing-in since 1977: #1/9: Obama 2009/ 7.2%; #2/9: Bush#43 2005/ 5.4%; #3/9: Bush#43 2001/ 3.9%; #4/9: Clinton 1997/ 5.4%; #5/9: Clinton 1993/ 7.4%; #6/9: Bush#41 1989/ 5.3%; #7/9: Reagan 1985/ 7.3%; #8/9: Reagan 1981/ 7.2%; #9/9: Carter 1977/ 7.8%;___Final Note: it is obvious that the data from the last “6” administration doesn’t bode well for the political hacks in Washington minding the store (planning committees/growth etc.) explicitly fortelling malfeasance. These figures don’t lie, nor does America’s new unemployment paradigm?
As a cell struggles to survive the massive corruption of its natural environment, so many natural biological processes are shredded – meaning that what should happen after the immune system does “A” in the way of defense does not happen so the redundancy/regeneracy cell survival loop comes back on line, except the cell is corrupt. Cancer 101…I wish that the systemic risk could be as simple as containing a virus or bacteria through quarantine! The diagnosis for the economy is definitely cancer, not a cold.
Greed and stupidity was introduced into the immune system through war.
Since is was all “fiat” paper to begin with and not grounded on even something like
paper $$$ issued = all the grains of sand on California’s beaches,
how much more sinister is the psyche ops part of the program which is seeking out for destruction any pockets of natural evolution housing uncorrupted cells?!
BIG problem.
Not sure WHY the project disappeared, but at one point in time, the IDEA was to use something akin to kidney dialysis for the blood/marrow – applying chemotherapy agents to the blood outside of the body, wash out the dead cells and then put back the “managed” blood with healthy cells on high alerts from the wash doing an uncorrupted sequence keeping the body healthy…
Instead, we seem to be even further into the grip of cancer cells overtaking the body…foreclosures spawned many “black markets” – jackals taking contents…ask anyone dumb enough to have a garage sale these days when the super-jackal mentality dominates everyone’s immune system.
I think that all force needs to be applied to the protection of the uncorrupted HUMAN beings from the psyche ops portion of the program, especially.
IT WAS PAPER OUT OF THIN AIR TO BEGIN WITH.
And please provide me with verse and chapter to go along with the POLITICAL interpretation of the “bible” – “Hate THY Laboring Neighbor”….LABOR is the fruit of all evil”.
One posting it today
– to Earle – more like a sleep cycle than a lunar cycle….but the reason there was so much “stuff” that had to be “consumed” was because of all the chemicals left over after Daddy Koch did his “magic”…and turned oil into life everlasting. Wish I could insert the roll-eye face here for emphasis…
WHY and how the “god particle” huddled together with other “particles” to become all that IS might be as simple as “because I could”.
However, I still would like to meet the ORIGINAL “particle” to ask why billions of years of so many different “atomic” processes of upstepping and downstepping just so I could accept the gift of a flower as symbolic of some one else “getting” the mystery of that choice of wanting to be a flower…
And then, just as you get all “awww, that’s so sweet…”
Here comes a lightning bolt to keep add another question :-)
Look, I’m okay with someone thinking things through so perfectly as to provide the seed and the “brain” to figure out how easy it is to just plant the seed – that’s all – the rest is “magic”.
WHAT IS THE ROLE OF A BANK IF IT IS NOT GOING TO BE USED TO SEED VIOLENCE AND ANARCHY WORLDWIDE?
I must add, it’s okay to so stupid that all you have to plant the seed. Thinking one is smarter than that is tragedy.
Ref: http://www.huffingtonpost.com/david-sirota/fox-news-historians-prett_b_153482.html David Sirota:Fox News “Historians Pretty Much Agree”
Ref: http://www.huppi.com/kangaroo/Timeline.htm “Timeline of the Great Depression”,Huppi
I apologize for all the comments – but, as the last paragraph states “People who push for this view are not being fiscally responsible”? There are fixes – although not obvious for history never-ever repeats itself exactly, whether it be the past milliniums or centuries, there’s always a (whilst one embrace thy ill-gotten fate with silensed scorn?) twist. “The Timeline of the Great Depression” is a wonderful antidote for constructive progressive/populus programs – don’t kid youself that things will get better just waiting out the storm. Those were the impotent arguments postured by President Coolidge,and President Hoover with their “laissez-faire” approach as mentioned in the “Timeline”! What I would like to emphasize is the passage of “The Smoot-Hawley Tarriff Bill” (June 17,1930) which was a moot bill…but if imposed today would greatly benefit our internals. Next the worst year of the great depression 1932 on its face is quite similar (not as dramatic as yet?) to the recent 2008/09 crash? Here’s a solution that I would take (presumably President Obama says he’s going to let the Bush Tax cuts end, let’s hope he follows through and doesn’t compromise!) and raise the top tax rate to 69%!!! Next, there was then and now a very biased supreme court for the wealthy – they vehemently showed open distain for organized labor, and women/chilren rights. Believe it or not the Keynesian deficit spending worked…but america was not in “Two/Three” con-current Wars as we are today (read on__Sweden/Germany/England were all solid now…but deficit spending starts up in Europe preparing for war) in the good ol` USA? Now…how does that parallel our current mess (crushing…quite the economic drag I’d say?) regarding our valuable Keynesian (QE1 / QE2?) resoures that the Federal Reserve has supported to date. There is a sad note to all this when DuPont, JP Morgan and other empires tried to solicit General Smedley Butler with a mercenary to overthrow the US Gov’t., and form a Fascist Regime Government in 1933! Finally the number of Large Corporation increased, while the others disappeared as increasingly today the weak are falling off the map…whereas today we’ve got a handful of industries controlled by just a few Large ( the Dirty Dozen total control?) Coporations! I would strongly suggest that the US Patent Office be totally overhauled, and patent pending be abolished so that discovery/invention can bring our country back into the 21st century – too be born again and not left on the shelf to rot in the big corporations closet of totalitarianism. Thanks Simon and James and never stop the “Good Digging for America’s Sake” :-)
RE: molecule
You don’t read much financial news or economist opinions. You can’t have been reading this blog for very long, If you don’t know that credit cards and unsecured loans with exorbitant fees and interest rates are where TBTF banks make their money off of the middle class. why do you think a credit card contract is 30 pages of fine print? That lawyers can’t figure out? TBTF banks don’t care about the money lent out. They can make a hundred times the principle on a loans after it is sliced and diced and packaged and repackaged into CDO’s CDS’s etc. the loss on the principal is someone else’s problem, to lose when they buy the crap they are selling. They are still doing what they were doing before the crash. There is no Law to stop them.
That is why it is called a “FREE MARKET”
They are “FREE” to do as they wish.
It is like Murder is a crime because there is a law against it. Murder is reprehensible, but that didn’t stop the Nazis from wholesale genocide of anyone that disagreed with them.
WSJ?! and Schwarzenegger?! You got to be kidding me.
Not even the Republicans take Schwarzenegger seriously.
Schwarzenegger! now there’s a Nobel winning economist!
He did such a great job in Caleefornya. Running against Grey Davis’ platform then doing everything Davis said he was going to do anyway, that made him so unpopular.
I guess you need to be a movie star to get away with it.
Do you have an issue with the facts of the article? Did you even read the article, or is this just another simplistic drive by posting?
Earle, We (human species)
REALLY are not smart enough to play god beyond the magic of planting a seed to feed ourselves :-)
So we made a few machines to take some sweat off our brows, and brought electricity under partial control, and got the flying thing down pat (adventure gene),
but trying to apply quantum mechanics to hide massive theft – well, here’s the theoretical black hole – cockroaches go in, but they don’t come out.
C’mon – the discussion MUST go back to what is the role of banks? And PLEASE, everyone get a grip about the “power” of CRAP
that we printed up
that is grounded on NOTHING real
that we worship AS A GOD – “money”…
It’s a puerile magic woo woo FETISH – this god-money.
My SURVIVAL as a contributing member of a great civilization has been ALTERED by booger eating computer geeks!
GET REAL, Earle…yes we’re all a bunch of smarty pants with big libraries, but that IS the bottom line…it’s ALL MADE UP CRAP.
Of course the mercenaries are a problem – protecting the booger geeks or threatening them…?
Re: @ Annie___”C’mon – the discussion MUST go back to what is the roles of the banks?” Indeed, you are spot on – therefore I’ve provided the inception for the deception by the Oligarchy – a 110 year old document of independence – the very atrophy of moral (back to the futures past serfdom) citizenry. Ref: http://www.bigeye.com/griffin.htm “The Creature from Jekyll Island, The Federal Reserve, talk by Edward Griffin”
My name is Mrs Marian Brown and life is worth living comfortably now for me and my family now and every day of my life now, i sit down and smile and thank GOD for saving us because i am a mother of three kids and i my husband encountered a terrible accident in the past that made him suffer from a serious spinal cord injury that have made him to be unable to stand, walk or work and his doctors states that he needs to undergo a delicate surgery for him to be able to walk again and we could not afford the bills for his surgery and his medications costs us so much weekly and i have been solely responsible for the up keep of the family ever since and life felt so hard and it to a point we have no funds for our rent we were about getting evicted from our house by our landlord and we felt so terrible as we could barely eat until one very faithful day, i was browsing through yahoo answers and i came across a loan lender Mr Clark who provides loans at an affordable interest rate and i have been hearing about so many scams on the internet but at this my desperate situation, i had no choice than to give it an attempt and surprisingly it was all like a dream, i received a loan of $450,000.00usd and we payed our rent and did not get evicted from our house and my husband had his surgery and thank GOD today he is okay and can walk and is working and the burden is longer so much on me and we can feed well and my family is happy today and i said to my self that i will shout aloud to the world of the wonders of GOD to me through this GOD fearing lender Mr Clark and i will advise anyone in genuine and serious need of loan to contact this GOD fearing lender via clarkloanfirm@yahoo.com
dream come to reality.