One of the central themes of the current economic crisis has been the cozy relationship between “Wall Street” and Washington that resulted from both ideological convergence and old-fashioned campaign contributions. Another theme, as Simon discussed yesterday, has been the absence of a simple left-right axis for opinions to coalesce around. If you think that fixing the banking sector requires a government conservatorship and forcible balance sheet cleanup – rather than periodically dribbling large amounts of cash into institutions and management teams that have already failed by any free-market measure – it’s not clear who your advocates in government are.
Tomorrow, however, you can stand up and be counted. A New Way Forward is organizing demonstrations all around the country, most at 2 PM Eastern Time. The basic message is simple: “If it’s too big to fail, it’s too big to exist. Dismantle the power of the financial elite and make policies that keep a new crop from springing up. We want our economy and politics restored for the public.”
And don’t forget your pitchfork. (Just kidding.)
73 thoughts on “The Economy and Popular Democracy”
GEITHNER WILL COST OBAMA THE PRESIDENCY
I predict that Obama will be a one term president. The policy course set out by his Secretary of the Treasury will assure that.
The WFC results preview really convinced me of that. Here we have a bank posting RECORD profits after some very accommodating treatment by our government. Some other big banks are very likely to also have great profits in this quarter, largely based on mark-to-model, re-financing fees, and interest rate spreads that allow them to pay depositors next to nothing for the use of their money. In WFC’s case, we also have the lowest loan loss reserves of the big four subtracting minimally from those record profits.
Furthermore, we have the PPIP fiasco on deck. As you all know, PPIP is a government backed transfer of risk which allows the banks to saddle the taxpayer with their worst junk at par prices. I personally think the banks and their SIV’s will be the only participants, outbidding anybody else at the auction, to include Bill Gross and Wilbur Ross. Additionally, banks like Citigroup and Bank of America have been scooping up even more of this crap in the secondary markets, aiming to sell it to each other at outrageous profits. This, in turn, will lead to another quarter of record bank profits. Eventually, however, the true toxicity of these assets will leak through the mirage and taxpayers, via the “zero risk” FDIC, will be left holding the bag.
The situation at GM and Chrysler adds more weight to my argument. These two large employers of middle class families in Democratic states are at great risk of bankruptcy. For Chrysler, this fate is essentially a given. The government will probably eventually put them into a DIP program. Then we will see what happens to these companies’ bondholders. As you all know, the taxpayers have already advanced several billion dollars to these two firms. Normally, those taxpayer funds have first priority of recovery in a DIP bankruptcy, crowding out bonds held by JPM, GS and others. However, as Tyler Durden at ZeroHedge points out in his post “Is the Government Trying to Lose Taxpayer Money in its GM Investment?” http://zerohedge.blogspot.com/2009/04/is…. the crafting of the loan recognizes the presence of other bondholders who may have rights in a DIP recovery. Thus, the government may allow taxpayer bailout funds to become equitably subordinated with lower ranking bonds. If that occurs, the whole auto industry bailout will have been nothing more than another conduit transfer to taxpayer money to the banks. But this time it will be seen in the context of hundreds of thousands of newly unemployed auto workers, car dealers, and parts suppliers.
Another reason for bank profitability has been the massive transfer of taxpayer money via AIG. Many Americans probably don’t understand this one, with their attention having been diverted by the administration’s short-lived “furor” over relatively miniscule AIG executive bonuses. However, I am sure Obama’s opposition will make a point of educating these Americans on this point in the next election.
While big finance has clearly been the recipient of exceedingly generous public largesse, precious little has been done for the public at large. Meaningful mortgage loan modifications have been essentially stalled by the financial lobby and its friends in Congress. Unemployment is accelerating. Pension plans are grossly underfunded while corporations are being allowed to defer contributions. Large employers are at risk of collapse. State and local government programs and services continue to contract due to budget shortfalls. As a result, state and local taxes are beginning to rise, at least partially offsetting the impact of federal stimulus. And, of course, we have the coup-de-grace – the enormous tax burden assumed with the public bailout of Wall Street.
When the next election rolls around, Obama’s opponents can cite the corruption, fraud, and ill-gotten fortunes brought about by Mr. Geithner’s policies, contrasting that with the plight suffered by those on Main Street. The record bank profits, the AIG conduit, the PPIP’s successes in enriching banks at taxpayer expense, and the potential for further bank profits from a GM and/or Chrysler collapse will be difficult bullets to dodge.
One of those demonstrations is about 20 min from where I live.
“If it’s too big to fail, it’s too big to exist. Dismantle the power of the financial elite and make policies that keep a new crop from springing up. We want our economy and politics restored for the public.”
That’s an excellent header. Now what we need is to build, from the bottom up, rhizomatically (H/T to Jeff Vail for that term), the kind of movement which really could restore economy and politics to the people.
This necessarily means facing up to the necessity, both practical and moral, for an energy transition beyond fossil fuels, a food production transition beyond industrial monocrop agriculture, and an economic transition beyond growth and exponential debt.
Only relocalization can develop the decentralized, deconcentrated, resilient, locally diversified social and economic structures equipped to navigate Peak Oil, energy descent, and general resource depletion.
Things little people like us can do.
1. Move ALL of our depository accounts to local/regional banks.
2. Stop using ATM’s from the Big Four.
3. Write our elected representatives.
While I agree that Geithner and Lawrence Summers should be replaced as quickly as possible, it’s still only April of Obama’s first term and a while before the next election. More worrisome is the notion that Obama is almost certainly the best the US can come up with. As intelligent and well-intentioned as he may be, he is a product of a culture where free enterprise is sacred and socialism is a dirty word. “Redistribute the wealth” would seem to me a better slogan for a New Way Forward, but it is obviously far too revolutinary for Americans.
I am heading to Kinko’s in a couple of hours to make my poster.
(Personally, I prefer torches to pitchforks.)
Certainly Geithner and Summers are the core of the problem, but Obama is getting to the point of “owning” their actions. If their policies are allowed to play out, Obama’s only way to political redemption will be to:
1. Get rid of Geithner/Summers.
2. Break up the “too big to exist” financial institutions.
To this admittedly older reader, denunciations of big corporations and calls for less concentration conjure up Goldwater more than SDS. Is big always bad? Isn’t the Federal government big? Should it also be broken up?
The problem is not size but power. If big business is allowed to dictate policy, it is because government is weak. That weakness, from this vantage point, seems to have as much to do with a lack of ideology as with anything else. What do the Democratic and Republican parties stand for? Think back to the presidential debates: did either candidate take a firm stand on issues that really matter today? Have Americans wasted enough time debating religion and sexual orientation and can they now move on to more substantive issues? Will the crisis make it OK to discuss scary topics such as “nationalization” or “income redistribution” just as the taboo on oral sex was removed by Bill Clinton?
At some point, I heard Obama say, in London, something to the effect that free enterprise (or market) was the best system in the world. I can’t think of a single European leader, regardless of how conservative, who would say the same thing in a discussion of the economy. It’s like saying “I think people are basically nice”.
The utopia of a return to a “small” market economy, with mom-and-pop stores and a kindly town banker lives only in the minds of Americans. No one else, as far as I can tell, is so… optimistic? naive? unsophisticated?
I couldn’t agree more with Simon’s assessment that we’re being ruled by an oligarchy of greedy, pompous, parasitic bankers & their greedy, pompous, parasitic friends in the White House & Congress. We voted for change with Obama but we got gullibility instead. He listens to Geithner & Summer’s ridiculous sermons just like he listened to the Rev. Wright’s ridiculous sermons.
What else can we do but protest in the streets? This is getting VERY BAD.
Originally, Simon and James pushed nationalization of banks and insisted to everyone that nationalization is important to the US economic recovery. Simon and James pressed hard.
A few days ago Simon has to debate his colleagues Mike Mussa at the Petersen Institue. During the debate, Mike Mussa conclusively demonstrated the illogic of Simon’s view on economic recovery and banking industry health. Simon had to admited he was wrong.
“I agree with Mike that fixing the financial system is often not necessary (or actually sufficient) for a rapid economic recovery” – Simon.
I learn a lot from listening to the original debate instead of only reading Simon’s one sided summary of the debate. It is a very good debate!
It is now even clear to Simon that the use of the recovery as an excuse to nationalize banks is an illogical non-starter. Simon and James now argue the banks should be broken up. There were multiple thoughful posts from different folks that point out the fallacy of that logic.
Unfortunately, it seems Simon and James are trap by their own dogma.
Simon and James, I have the following question:
1. Did you guys already made up your mind that US banks are too big and too powerful even before the financial crisis?
3. Bush not only ignored facts but used false information to justify the Iraq war? How are you guys different from Bush?
The blog was an interesting blog on matters of economic. It is now a populist driven political blog. How sad.
The sad fact is Simon and James are manipulating the populists on this blog and the populists don’t even know it! Oh well, everyone manipulate populists. It is the populists’ lot in life! Populists have weak mind that are very prone to Jedi mind tricks!
I guess this is the populists versus the oligarchs then?
It is not the populists vs someone else since the populists are always manipulated to do someone else’ bidding and they don’t even know it. The populists are the pawns on the chess board.
It is good to have a healthy dose of skepticism. It is good to evaluate the facts on your own instead of accepting someone’s reasonable sounding narrative.
I’ve posted about Simon and James behavior above. Evaluate at the facts for yourself instead of accepting Simon and James narrative at face value.
By the way, I think it is the dogmatic academic ideologues vs bank oligarchs.
Most people, including myself, just want to fix the current crisis quickly and live a less stressful life.
I’ve noticed Simon almost never answer anyone’s questions. Many have ask him. Many also challenged his point of view.
This is plain elitism. The fact is the comments in aggregate are more valuable than Simon or James’ writing and both Simon and James have acknowledged they learned a lot.
Yet, Simon can’t be bothered to have a real intellectual exchange.
Simon you should keep snubbing your reader! It is good for the community!
Dear Mr. Silly Things,
Most people, including myself, just want to fix the current crisis quickly and live a less stressful life.
Ever heard of: “Millions for defense, not a penny for tribute”?
How about: “We do not negotiate with terrorists”?
Compare these with your words. If “fixing the current crisis quickly” means handing over 20% of the nation’s GDP to the wealthiest class in our society — the same people, by the way, whose unrestrained greed created the crisis — then I hope and pray that you are wrong about “most people”.
But I fear you are right, and most Americans do just want to go back to watching American Idol. Seeking something a little better for my country, even if it means some personal discomfort, makes me one of the weak-minded populists, I guess.
It is indeed hard to fathom why O why Obama and Crew are impoverishing the taxpayers to save the Big Five banks.
But only hard when viewed within a national perspective. Viewed within our borders, America could fix this quicker from the ground up.
Viewed internationally — the Big Five sit atop the biggest economy in world history, which itself sits atop the world like an octopus with myriad tentacles that reach into the economic heart of every one of 192 nation states. International trade, law, and regulatory and lending institutions all bear the American stamp, and carry out America-friendly policies. America’s economy remains the 800-pound gorilla, and has an appetite to keep its girth.
Now, who would want to give up this catbird seat atop the planet?
To America’s elites, staying ‘uber alles’ requires reinflating and reestablishing the status quo circa 2007 — lots of wide open financial speculation, all of it leading to ever greater American advantage.
“Trust us,” they cajole. “The taxpayer may well get some table scraps out of these shenanigans, if any of it works.”
Before this is over silly things’ paymasters will be mowing the lawn at Butner like Milken denuded of his curly toupee, and silly things will have sung like a canary to the Feds. Still, he’ll have to find a new industry, ideally one that’s also based on fraud.
Mr. silly things,
What about those who actually produce all your food, clothing, shelter, transportation, energy & health care? Suspect any might be populists with weak minds? Of course you don’t care. You just demean anyone who you think might be a popupist. Sounds pretty shallow.
When you say you are just kidding about the pitchfork, you mean I should bring my gun instead, right?
I want to make sure I don’t commit a faux pas here…
Is big always bad? Isn’t the Federal government big? Should it also be broken up?
Yes. Yes. And Yes.
The utopia of a return to a “small” market economy, with mom-and-pop stores and a kindly town banker lives only in the minds of Americans. No one else, as far as I can tell, is so… optimistic? naive? unsophisticated?
Chesterton might have something to say about that, but guilty as charged, boss.
I often find myself wondering if any of these “brilliant” economic minds were in fact “short” the entire mortgage and finance industry back in say, 2007. If not, what are we listening to THEM for? If they were so in tune with economics, they should have seen this disaster coming, and gone short everything financial. Did they? I don’t think so. So…..what are we listening to them for?
And you all said I was tough on everyone in here….sounds like there’s someone trying to take away MY job in here!!
Let me ask you all something, seriously. Do you REALLY think the Washington and Wall Street crowd CARE about all your protests and Tea Parties? These guys are ruthless, brutal people who are devoid of any ethics or morals. They’re laughing at you. They COUNT on your pacifism. They bank on it in fact. They fear only two things: 1. An outright revolt by the citizens, complete with impeachments 2. Losing their wealth and power.
You need to start hitting them on BOTH fronts mentioned above, anything other than that, you lose….they win.
You’re probably right. They are using Obama, and he’s probably too blinded by his new fame and position to realize that fact just yet. He’ll be the fall guy, that’s for sure. And you can bet he’ll cash out after he’s no longer in office, just like all the rest. Amazing.
Is Microsoft, therefore, to big to fail? How about GE?
I read their stuff because I want to learn knowledge. However, having knowledge vs. having the imagination to apply the knowledge is two very different thing.
So far, Simon and James are stubbornly dogmatic. I also think they lacked objectivity. The fact is Mike Mussa at the Petersen Institue was able to over turn what Simon and James have vehemently argued for recovery and bank nationalization with just a historical facts.
Is that the quality of a MIT trained economist that heads up IMF’s economic research? Really Simon doesn’t already know the simple trivia that Mike Mussa point out?
At the end of the day I have learned from Simon and James. I’ll contribute back with the following:
There are 4 common mistakes that leads to bad decisions making.
1. misleading experience – past experience that doesn’t necessary apply to the current situation.
2. attachment – attachment to a situation that bias decision
3. pre-judgement – mind already made up and refuses to adopt or change as data come in
4. self interest – not necessarily good for the big picture
Simon and James erred on 1,2 & 3. Well, I hope they can grow beyond their limits.
Too many take infinite armchair quaterbacking liberties with the fact that their analyses come after a critically short period has passed during which the major financial instutions in question were in fact NOT allowed to fail.
If the major financial institutions had been allowed to fail, I strongly suspect that the analyses of the lot of you would now be to the effect: If only President Obama not allowed those institutions to fail.”
Such is the nature of what too frequently passes as meaningful public discourse.
It is the fate of too many to simply be ho-hum captious critics, rather than be ones with the power to effect any change in the direction of policy. Without power to effect change, captious critics’ analyses become merely academic and ineffectual.
OK. Now, either find a way to effect change or you might as well retreat into a dark corner and debate yourself ad nauseum.
You categorized banks with terrorists. I don’t agree and nor do society as a whole. I bet most people that visit this site and it owners disagree with you too.
Rather someone is a populist depended only on rather he can think critically and independently. How this person makes a living is not a factor. For those that can think clearly, this country offers plenty of upward mobility.
Nemo and Chas,
Honestly you guys are just too easy! Yet you guys talk with so much conviction! It is halarious seeing you guys getting bent out shape because some guy you never met crafted some reasonable sounding narrative. Have you tried to get all sides of the story before forming your own opinion? Simon misled you with bias information and you don’t even know it. Granted, I don’t believe Simon intentional misled. In fact, I think Simon fooled himself too. The entertainment value of you guys getting bent out of shape is very high!
Alas, there is a way out with education, practice critical independent thoughts and a healthy sense of skeptism. Like most things, you get better with practice. You can also learn from others by reading those that are more critical of Simon and James. Good Luck!
I’m sitting here trying to decide which is worse, your grammar or your logic.
The symptom is the financial/economic debacle, but the disease is political. For example, change administrations (along with political affiliation) without a noticeable change in policy…
Fascism was a major factor that brought parts of Europe out of the great depression, so why is it surprising that an economic recovery is possible without breaking up the corporations that are calling the shots? I think that the more important question is whether or not the eventual recovery involves war…
It must be my grammar. I can out think most people. However, I can’t be bother with mundane things that mundane people cares about like grammar.
We know they don’t care. We kind of hope that they continue not to care, so we can surprise them when the time comes – first against the wall when the revolution (2.0) comes and all that…
Keep in mind that there are a lot of veterans that have been adversely affected by recent events. We took an Oath to defend the Constitution from all enemies, foreign and domestic.
This is the greatest mystery and intrigue since Water Gate was unraveled. The Great Bankster Swindle is so much bigger than Water Gate but there is so much less action from the U.S. Congress and serious investigation committees. This is the greatest Bank Robbery ever and the greatest coverup, ever. It just keeps getting worse and worse.
When will the other shoe drop and heads start to roll? I guess the congress is so tangle in this mess that only a “Ken Star” investigation is the only possible way.
I forgot to ask where is my logical error? I am thankful of people that correct my mistakes.
You got your facts wrong.
Banks are extremely profitable. All the money used to bail out banks will start to be pay back by the end of this year. In a few years, all the money used to bail out banks will be pay back. This includes a hefty profit for the tax payer in the form of interest too.
The cheapest way to fix the banking system is to help them earn their way out.
Is the USA too big to fail?
From a 2009 book co-authored by Clayton Christensen, a Harvard Business School professor who originated the canonical Model of Disruptive Innovation:
“Regulations ultimately change in reaction to the innovators’ success in those markets.”
In the absence of evidence that refutes the above, then, ANWF’s future efforts should center on helping banking entrepreneurs (e.g., by advocating for a government-funded VC firm that can be similar in form to In-Q-Tel, a VC firm that is funded solely by the CIA).
Feel free to contact me with any questions about pursuing this course.
We’ve evolved beyond pitchforks. The uncalculated factor is abuse. How much abuse are we willing to take? How much theivery collusion, monopoly, oligarchy, nepotism, cronyism, insider trading, fraud, tyranny, pillaging, malfeasance, and perfidy are we willing to tolerate and accept?
There comes a point, (and this threshold is fast approaching), where a criticality event is breached, and the people refuse from that moment on, to tolerate or accept the oppression and abuse under any circumstances, and the people react in unpredictable unknown unknown ways.
If the authority of the government is not derived from the consent of the governed – IT’S NOT DEMOCRACY!
DEMOCRACY demands and compels a repudiation of any concentration of wealth and power in any single authority, oligarch, cartel, cabal, church, clique, klan, fraternity, or tyrant. Our founding fathers imbedded into the structure of our government separations of powers, checks and balances to promote and protect the peoples best interests and prohibit kingrights, or aristocratic fuedalism that repeatedly crushes the pursuit of life, liberty, and happiness.
We can ignore our legacy if we choose and relinquish our unique place in the pantheon of nations as defenders of the downtrodden and champions of the week, or we can lay down and bow to the financial oligarchs and titans who dominate us. The striking choice is clear and present, and one we all must make.
Go quietly to the flame, or stand up and say NO! NO MORE DEBT HOISTED UPON MY CHILD! NO MORE FAVORTISM, GOVERNMENT LARGESS, OR BAILINGOUT FAILED INSTITUTIONS, AND FAILED MANAGEMENTS BRUTING FAILED MODELS!
The people, NOT corporations are the great value and worth of America, – and any corporation that distorts this reality must be mercilessly punished, dismembered, and reconstituted.
Socialism, or some variation thereof is the future. The oldworldways are miserable failures and diseased, ill, corrupt, polluted, toxic, and malignant models.
It is time for a new socialist paradigm!
Whatever “the cozy relationship between “Wall Street” and Washington” produced to create this crisis it pales in comparison with what the Basel Committee backed up by their friends in the IMF did.
It was Basel Committee on Banking Supervision and NOT Washington that authorized banks to a 62.5 to 1 times leverage when lending to corporations that were rated AAA or AA-(like AIG) by some human fallible credit rating agencies.
There is nothing Washington did that comes even remotely close to having the same explosive consequences as those stupidly naive regulations that came out of Basel. Those who ignore it do so because that does not fit their agenda or they try to hide their own responsibility.
And by the way… where were the whole tenured academic community that also has a role in alerting the society?
I totally agree (almost). I think alot of the TARP money WILL comeback. The banks will be able to pay it back because the government is:
1. Back-channelling billions in conduit payments via AIG bailouts.
2. Will probably back-channel billions more through government loan subordination in the GM/Chrysler bailouts.
3. Using the PPIP to allow banks to transfer enormous downside risk to the taxpayer, and make a big profit while doing so.
4. Keeping interest rates at zero, allowing banks to make even heftier margins on their lending activities.
I am not sure C and BAC are going to end up paying back everything from TARP, but I think the others will, given 1-4 above.
Hey silling things,
3. What is the false information? As far as I can tell, you are accusing Simon of reaching the wrong conclusions based on valid information. Even if I accept that for the purposes of argument, how is that using false information?
Although I agree that the Basel II recommendations are absurd, it should be remembered that the BIS is an association of central banks and that it doesn’t dictate policy but rather reflects what its more powerful members advocate. As such, it issues guidelines, not regulations, and capital adequacy standards are not enforceable “authorizations”. Also, I never heard of the Fed objecting to the suggested ratios.
Be a bit careful about advocating pitchforks. A bystander at a peaceful G20 demonstration was struck and killed by a masked policeman. Of course, nothing was captured on the ubiquitous CCTV cameras but the event was filmed on a phone, see here… http://www.guardian.co.uk/uk/video/2009/apr/08/g20-police-assault-ian-tomlinson-video.
Moving on, please support Mike Morgan versus Goldman Scahs (see http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5137489/Goldman-Sachs-hires-law-firm-to-shut-bloggers-site.html) and his blog: http://www.goldmansachs666.com/
As I have said here before, modern thought is that evil is not the exclusive domain of sadistic demons, otherwise banal people who act with no heed to the consequences are just as wicked. Ask the three billion poor.
“As such [The Basel Committee] issues guidelines, not regulations, and capital adequacy standards are not enforceable “authorizations”.
Friend your are wrong about this and I guess you should look a little bit more into the Basel Accord, of 1988, and of which the US is a signator
Wow! I didn’t know Baseline Scenario was a nutroot site. Here’s some truth. “A New Way Forward” is the response by the radical Left to what they see as a very real Tea Party threat to the Obama program of Big Government, increased private sector regulation, and high deficits/taxes. The Tea Party organizers have rejected advances from politicians to participate. It’s appears really grassroot. A New Way Forward will attempt to distract public attention from these grassroots efforts. Look at the link. Who are the people and organizations involved? Joe Trippi, Bill Moyers, public sector unions, Progressive Democrats for America, Code Pink (!!!!), Democrats.com. Yeah, they don’t have any agenda! Wake up and smell the coffee, people. Find out where your community is organizing for an April 15th Tea Party. Be there, don’t be square!
Simon and James —
Its your blog so you can make it to be whatever you want. One choice of course is to make it a forum for serious economic discussion. Given Simon’s background and stint at the IMF, I, for one, am clearly interested in his views on that count. And that is what I, and a lot of others, come to this blog.
The other choice is to become a political organizer and a rabble rouser — it seems to me that is what this post is all about. Nothing wrong with that, but that would be simply very disappointing. There are plenty of sites that just do that, and such an approach would be very unsuitable for someone with your experience and intellect. Nothing much to be gained by becoming the Rush Limbaugh of the left. Instead, Krugman is a far better model.
One of the problems of monetary reform is that the average american has such a poor understanding of the monetary system and how it works.
That is not because ordinary citizens are not smart – because they are; it is because the education system never teaches anything about money or what money really is. Personally, I never learned squat about money until I got into the advanced college economics classes. Even then, the concept was still hard to grasp.
Wouldn’t it be useful for primary and secondary education systems to teach that money should represent a stored value of real and actual work? People are taught that money is something printed by the governnment in those stock videos. Perhaps if our nation had the real concept of money at our disposal, we’d have more respect for money and less respect for bankers. Afterall, bankers are not geniuses. They simply are getting rich of the general public’s ignorance of how money is created.
Isn’t that essentially what most climate scientist are doing with regards to global warming?
In theory, there’s nothing wrong with combining expertise with advocacy as long as there’s not a conflict of interest (by being a paid public official for instance). Advocacy inflames passions however and does it taint one’s expertise over the long run?
The parasites’ shills are out in force with their new catchword, ‘rabble’ (presumably livingston et al are the chump traders with their 2nd-tier schooling who are beginning to suspect that they’ve lost their one slim chance to make it big). These forlorn aspirants don’t seem to understand that non-governmental organizations are an integral part of any IMF poverty reduction strategy in kleptocratic banana republics like ours where the parasites have corrupted both parties beyond hope of reform. So by all means let’s have a new way forward or tarring and feathering or mob rule or whatever it takes to pass the worm bolus that is American banking.
If given the choice, would you rather have socialism or national socialism? Currently, these are the only options on the table, and national socialism has a huge lead.
Climate scientists, along with most geologists, hydrologists, ecologists, etc. push the global warming issue because there is a very large body of independent, peer reviewed, tested evidence from all of these fields that shows it is happening, and at what rate. Since they live on Earth, they advocate for things that might mitigate the damage regardless of ultimate cause of the warming.
What I see Johnson and Kwak doing here is no different – they see a body of evidence that the US Government has abdicated its responsibilities to certain corporations. They aren’t the only ones who are pointing this out – there are others that have come to the same conclusion via different lines of evidence. The media in this case IS the peer review and testing, partially because that is the media’s job (media including blogs) to question the status quo, but also because the rate at which the takeover is occurring is increasing making time of the essence. Testing would, ideally, come via the US Justice Department. It may yet happen, but it sure doesn’t look likely. Since Johnson and Kwak live here, they advocate for things that might mitigate the damage regardless of ultimate cause.
Besides it is their blog…
Contrast The BaseLineScenario’s broad target references such as
“the banking sector”,
“institutions and management teams that have already failed”,
“the the power of the financial elite”
with the distinctly narrower target of A New Way Forward: just the (presumably private) “banks”.
What might that tell us?
The politicized GSEs (Government Sponsored Enterprises: Fannie, Freddie) and their massive ongoing bailouts are sacrosanct and privileged to avoid any kind of chopping block.
That accords with the convictions of the technologists and organizers of grass-roots activity running A New Way Forward who appear to be trained and spirited traditional anti-private-sector activists.
I went to Lafayette Park, Washington DC, at 2 pm April 11 for the A New Way Forward event. I hadn’t brought a sign, and I wasn’t alone – that is to say, anyone else who happened to be there for the same purpose hadn’t brought a sign either. There was a man with a “Free Don Siegelman” banner.
The were Iranians demonstrating at Lafayette Park directly across from the White House, and the permanent anti-nuke tent people, but the group that gathered at the statue in the center of the park at 2 turned out to be a Smithsonian tour with the author of a new book on the Lincoln assassination. I listened for a couple of minutes, and then left and drove back home. I hadn’t expected a LOT of people, but I thought there might have been some, especially since Hamsher and Greider were supposedly going to speak.
I’m disappointed, and I’d need more inducement than just an invitation to come to any more ANWF “events.”
I come from a country that has been divided in two irreconcilable halves and where 3% fully enjoy the hatemongering that fosters and the rest 97% suffers in silence.
The saddest part is that both A New Way Forward and The Tea Party would find much common ground was it not because some actors will do their outmost to capture these organizations for their own agendas that prescribe precisely that there shall be no common ground.
Demonstrate, har, har. Just watch and wait till it’s time to dump every USD asset there is and short a bit of the worst clapped-out bank crap for fun. If the government’s too weak to break up the biggest Rube-Goldberg banks, it’s easy enough to make them collapse when the time is ripe. Watch as the invisible hand tightens on Mister Private-Sector Phony’s balls. We’ll see how much he likes the market then.
Hi James Kwak,
Thank you for your reply. Here is how I arrived at my view of Simon using false information.
Before the Iraq war, Bush and his team had the best information about WMD threats from Iraq in this country. However, Bush cherry picked the information that supported his view that WMD in Iraq is a real threat and must be neutralized.
Simon being MIT trained and a chief economist of IMF, should’ve known about the past recessions around the world as well as anyone. This includes the basic information Mike Mussa pointed out during the debate last week. However, Simon cherry picked the information that supported his view that fixing banking is critical to a quick economic recovery.
To be clear, I give both Simon and Bush the benefit of the doubt that they did not intentionally misled. I think what happened, and it is very human, is both Simon and Bush first came up with a reasonable sounding narratives. They convinced themselves their narratives must be true. As such, every piece of information that supported their thesis they latched on. Every piece of information that doesn’t, they find some excuse to discard.
Simon selective chose information to argue a point to a relatively uninformed readership on this blog. That is using false information even if he did it unintentionally. In the end, Simon fooled himself first and than fools others.
Anyone can come up with some reasonable sounding narratives. Just look at all the populists’ comments. The question is how do we do better? I hope my previous post on common mistakes can be of help. It does take a degree of self-awareness.
On the other hand, I do find the populists emotional platitudes and them benting out of shape extremely funny! Great entertainment! Hahahah!
By the way, I am really tired of this blog’s commenting system. The meaningless rants are overwhelming the few good discussions. You really need a system that lets people rant but also allow those that value their time to filter. Otherwise, you will not get the most out of the collective intelligence of the community. What is worse is it will turn good people away.
Silly, your comments are making me feel like I’m stoned…
but seriously, i think you need to read about the history of anti-trust legislation.
And, you might want to think back to the fall how the concept of “nationalization” was used to demonize the idea of EVER having to step into a toobigtofail bank, and instead, the fed and treasury in concert have convinced the country that the big bailout and all the trillions spent so far, and did all that they did for the good of the country….you just haven’t been paying attention…there is all kinds of money unaccounted for: the Congressional Oversight Panel found that treasury had pad 133% for the assets purchased in the first round of handouts, and that is just the beginning, not to mention the unbelievable 185billion fiasco and possible scam that AIG is turning out to be…that with the 400billion backstop on CITI and still, no end in sight for those two companies’ recovery…the money is gone forever, but to be repaid with future taxpayer money.
So, as far as first nationalization now break up the banks…they exist as one and the same idea. It was suggested here, if i am correct in my memory, that the banks should be “reprivatized” meaning, a temporary nationalization, but eventually, turn the parts over to private industry to manage…so, the idea has never changed.
Maybe you could reread from the inception of this blogs articles and conversations, and see if that expands your understanding and will help you with your sadness or maybe yoga and meditation?
and what is so wrong with populist! pigeon holing people is a brother to bigotry.
you can lay the bait but i don’t think that anyone with a serious conviction would care who or what group embraced their ideas.
Redleg, you said it— if someone decided to give 185billion to an insurance company knowing that their former employer would be saved immediately, from going bankrupt, would this be considered a crime against our country? Even though that person might have said they had to do that to save the world as we know it?
Sorry Tony, although you may be correct on all the details of what has been going on, socialism is not any kind of natural automatic solution to bank cartels…with socialism then you have a government cartel…
we simply need to get back to our country’s roots, and they were NOT socialistic.
HEAR HEAR FATE!
The shills also like to throw out “populist” , “liberal”, and “left wing”. If that doesn’t work to scare away readers of this blog, they’ll maybe try “elitist” “ultra conservative” or “right wing”…it will be interesting to see their shallow work.
I say cheers to the populist, the liberal, the left wingers, the elitists, the ultra conservatives and the right wingers who love their country, and who are want to see a justice. And part of the justice comes from dismanteling the bank cartel.
I am so happy you noticed too!
Do you agree with the blogger “lets get back to the basics, we need to revoke the federal reserve act?”
Nationalize the pernicious criminal and FAILED banks, fire the entire FAILED management of those FAILED banks, – THEY FAILED!!!! Set of a resolutiontrustlikeentity to manage the FAILED banks dismemberment and reconstitution in the private sector. Bondholders and shareholder recognize the losses of their woefully FAILED gambling, and moveon, the tax payers are given preferred shares in the newly reconstituted institutions. Fierce regulations must be enacted by congress demanding real accounting standards, transparency, and discouraging speculative enterprizes by commercial banks. Clearly defined entities aligned with the Glass-Steagall models must form the banking sector. Offshoring is criminalized, and brutally punished. The predator class gives back to the rest of society, and recognizes that their wealth and health are safe only so long as the law protects the poor and middle class. It is the duty of the predator class to buttress and uplift their fellow Americans. For wealth is as much a quirk of the chaotic interminglings of nature, than of any great scientific or mechanical, or engineering achievement, and therefore wealth alone cannot be the metric upon which the value and mettle of a human being is measured or defined. The predator class assumes or presumes some obdurate numinous preeminance, – but they are wildly mistaken. The day of reckoning and balancing is fast approaching. Forget protests, peaceful demonstrations, acts of civil disobedience, – peacemakers are repeatedly and always slaughtered! Fire, kinetics, and combustion change the world – not idle chatter. Get locked, cocked and ready to rock, because this madness is going pearshaped. It’s only a matter of time. The people cannot tolerate any more abuse, we cannot tolerate anymore thievery, or treachery, or deception, or collusion, or monopoly, or oligarchy, or tyranny, or criminal abuse, – the people must reach out and touch their enemies and the fiends who seek their slavery, slaughter, and domination must be recognized and defeated. In a world where there are no laws, – there are no laws for anyone, predators!
Can’t say I care about the Federal Reserve Act.
There is nothing wrong with populists!
They are readily manipulated to do others bidding. They are great tools!
Yes Paris–the US Federal Govt is too large. It should be broken apart–perhaps into 6 regional governments.
As a Californian, I’m sick & tired of my state’s tax dollars (along with New York’s) supporting nearly all of the Federal expenditures in criminal high finance and military industrial complexity.
Frankly though, I’d prefer a California Bear Republic. The rest of the US can go and f**k themselves.
I’m not a lawyer, but I see handing out any large sum of public money to a former employer as a conflict of interest at the least (and more likely fraud) that should be investigated. However, if the intent was to transfer money from the US treasury to private hands by Americans I see that as treason, and if by non- Americans I see that as an act of war.
Just as there is truth in jest, occassionally the populist get it right, and their reactions represent an escape from the manipulation that was intended for their consumption–this is one of those times…it is like bigotry when one pigeon holes ideas in an effort to discount the idea…oops i guess that is your intention…i forgot silly things, you are a bank shill, but i dont’ think you are suceeding in your effort.
Looks like that is what happened when hank and ben refused to give Lehamn a 6 milliion dollar loan which effecively put the company forever out of competition, and then sent money straight through AIG to goldman and others…I wonder when the trial will begin?
Be smarter then the Crisis !
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“If it’s too big to fail, it’s too big to exist.” Yes! You guys must have read “The Power of Small”! ( http://tinyurl.com/cmdxg6 )
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