Who Is Too Big To Fail? (Weekend Comment Competition)

In 2004, Brookings  published “Too Big To Fail: The Hazards of Bank Bailouts” by Gary Stern and Ron Feldman (paperback edition 2009).  There is a great deal of sensible thinking in this book, as well as much that now seems prescient – particularly as they have been presenting and publicly debating these ideas at least since 2000.

Some of it also seems a bit dated, but in an interesting way that tells us a great deal about how far we have come.

On the basis of their qualitative assessment, reading of the regulatory tea leaves, and a deep understanding of the available data, Stern and Feldman construct several lists of banks that may be considered (in 2004) Too Big To Fail.  The most interesting names and numbers are in Box 4-1 (scroll to p.39 in this Google Books link) (update: or look at this pdf version), entitled Organizations Potentially Considered Large Complex Banking Organizations.

Here’s this weekend’s competition.

What strikes you about their list?  Who do they miss and what can we infer from that?  And should we, like them, also consider foreign banks active in the United States as potentially Too Big To Fail?

By Simon Johnson

92 thoughts on “Who Is Too Big To Fail? (Weekend Comment Competition)

  1. Simon,
    It seems that the Google Books link only covers through p.18 and hence Box 4-1 is not accessible. Is this box “Too Big Too Reproduce” directly in your post?

  2. It’s a moot point. The financial sector has failed completely in bestowing upon the people (as opposed to the rich and big corporations) all the benefits which were supposed to “trickle down”.

    On the contrary, where it came to the people the main activity of the banks has been to help destroy decent jobs and all socioeconomic happiness and stability, on a massive scale.

    Even proximately, the bailouts were supposed to solve an alleged “liquidity crisis” and “get the banks lending again”, which would trickle down to “Main Street”. It was the prospect of this not happening which was alleged to make these things “too big to fail”.

    Yet every word of it was a lie. There was never a liquidity crisis; the banks are bankrupt. They cannot lend and never intended to lend, and there’s no one to lend to anyway. The handout was simply to be hoarded and used for acquisitions, disaster capitalist style.

    Meanwhile unemployment goes inexorably up, while public spending and programs everywhere are decimated. And for good measure we’re insulted and laughed at with taunts like “green shoots” and “recovery”. The truly demented can even speak calmly of a “jobless recovery”, an atrocious oxymoron if there ever was one.

    So we see how every cent of the bailouts was not just a pure loss to us, but how that money is being used as a weapon against us, as the feudalists further entrench their position. We’re already sustaining the worst. Having let the entire big banking “industry” go down could not have harmed us worse.

    The big banks have never added social value, only destroyed. From the social point of view, they were not only never Too Big to Fail, they were always too predatory and destructive to be allowed to exist.

    So my list of banks “too big to fail” would be the null set.

  3. If any of these banks is too big to fail it should be strictly limited to banking activities. Instead they are permitted to gamble in the financial markets on a heads their executives win tails the taxpayers lose basis. What should be done with each of these problem banks is to purge all of their top executives, split off their gambling activities complete with toxic assets, stock shares and unsecured debt. Leave the executives and stockholders and unsecured creditors to argue about the value of this drek for the next twenty or thirty years. Now in the case of each bank (or perhaps taking all banks together) you have left the deposits on one side and the actual loans on the other side. Cut these up into manageable pieces and float them as IPOs under charters which limit banking to the business of taking deposits and lending money. Of course, you will have to limit lending to industrial and commercial activities. I don’t think you want banks lending to hedge funds buying credit card loans but perhaps you do provided the leverage is strictly limited. Short answer: you cannot allow institutions to gamble with insured deposits. Making loans is risky enough.

  4. MrM
    I added a pdf version; hopefully this helps (although as far as I can see the Google Books link works).
    Thanks
    Simon

  5. What strikes me about the list is the traditional view of the banking/financial system. What about insurers like AIG? Or other entities, both public and private, such as Fannie Mae or Goldman Sachs?

    Too Big To Fail is an argument for systemic stability. If we are going to address this, we can’t afford a narrow view of the financial that ignores all the big concentrations of money and risk (shadow banking anyone?).

    The concerns of counter-party risk, over-leverage, and all the other source of financial risk to the system — if they reach a certain scale — can’t be ignored just because the institution is not nominally a bank. Or if its not an institution but thousands of small players behaving in the same way.

  6. Missing from the list: Bear Stearns, Lehman Brothers, Goldman Sachs, Morgan Stanley. So much for importance of pure investment banks for the overall financial system as perceived in early 2000s. MetLife and Northern Trust were viewed as more important to monitor and regulate than Lehman or Goldman. Glass-Steagall anyone? (with apologies to Larry S.)

    Then again, including US-subsidiaries of foreign banks makes it for an interesting conversation at G-20.

  7. AIG, Fannie, Freddie and all the old investment banks come to mind. Also missing is GE Capital and GMAC. What about every public and private pension fund? They are as involved in the financial markets as any bank, and their failure would be disastrous on our economy. Should the state of California be on the list?

  8. I’ve been a consumer banking of Key and US Bank, and a small user of Schwab’s brokerage service. I am unlikely to do business with any of them again–thre freezing contempt their business policy-makers had for the small investor has seen to that. And–Countrywide?

    Is “too big to fail” a synonym for “corrupt and arrogant?”

  9. Why isn’t Goldman Sachs on that list?

    Wondering why the bank that got so much money though they continue to claim they never needed it is missing from the TBTF banks.

    Strange that the G-men not only didn’t need the billions in TARP and TALF and warrants and AIG payments that it received, but it’s not even considered TBTF….

    Funny, the profits they’ve reaped from all that federal funding they didn’t need or deserve.

  10. Maybe we should get creative & start a pool where a million of us can contribute $10, $20 or even $100 each to give to the person or group who can figure out a way to shut down Wall St. Surley there’s some creative intellects out there who could figure out a way to shut Wall St. down for $100 million. And surely there are a million people who would pay them to do it.

  11. I agree that any bank judged by the government to be too big to fail has been proven, in this last year, to be a serious threat to the nation. And should be busted up.

  12. I feel this whole situation shows that industry groups: banking, pharma, healthcare are in fact far better at politics then politicians. They so perfectly captured the government that the democrats may berate them in public hearings (barney frank), but when it comes to actually doing something with substance, it is never done. These people have essentially rented the US government(campaign contributions/ect) and use it as a tool of profit maximization. How this gets resolved with the two parties in power, I dont know, they are both beholden, perhaps it is finally time for another party, but I am sure that rather then focusing on the raping of their republic the US populace will continue to be informed about Wacko Jacko and John and Kate. Good to know that the people are serious!

  13. “Who Is Too Big To Fail?”

    Me. Now give me back all the money you took from my retirement and savings accounts. Make my salary commensurate with the amount I need to live decently. And make my house worth something again.

    Easy question.

  14. Hello, apologies for this digression. I have attempted to define “shadow banking system” in a brief and succinct way. Did I get it right? Improvements and comments welcome.

    SHADOW BANKING SYSTEM
    an estimated 60% of investment banking transactions in the United States occur in the “shadow” of the regulated banking system. Here financial transactions occur outside regulatory authority. For example, Goldman Sachs packaged billions of dollars worth of mortgages in a financial instrument called a Consolidated Debt Obligation. CDOs were sold to investors who earn interest and assume the risk in the event a default. The profit to the shadow bankers are the fees and commissions associated with their intermediary role.

  15. Russ: “Even proximately, the bailouts were supposed to solve an alleged “liquidity crisis” and “get the banks lending again”, which would trickle down to “Main Street”. It was the prospect of this not happening which was alleged to make these things “too big to fail”.

    “Yet every word of it was a lie.”

    A white lie, maybe. Paulson knew the banks would not be lending any time soon. That’s one reason that was not part of the deal he made with them. But they will lend eventually. And without the bailout they would not be around to lend.

  16. If more lending is really what we need (a proposition I find extremely dubious; the debt model is itself the problem, not a good thing which somehow lost control of itself), and the government had all that “liquidity” available, that doesn’t mean for a moment we needed to funnel it through the insolvent big banks.

    Two alternative options:

    1. Apply classical triage, certify the healthier among the smaller banks, and use those as the lending middlemen.

    2. Lend the money directly. (If anybody would really be silly enough to say, “the government doesn’t know how to lend money”, the obvious and unanswerable retort is that, just as with running banks, no one could possibly be less competent than the private sector. That’s now been proven.)

  17. I wonder if it might not be better to attempt to identify functions too important to allow to freeze up rather than banks too big to fail. The justification for identifying institutions as too big to fail is the systemic risk their failure would pose. But events last fall demonstated that, even though propped up, the institutions began failing to perform the tasks that supposedly makes them systemically critical.

    Without getting into the morass of ongoing commercial lending (or lack thereof) to actors in the general economy, a few of the situations last fall that demanded immediate and decisive intervention were: the failure of the commercial paper market (even as auction rate preferred was allowed to seize up), discontinuities in the interbank lending markets (opening the window, converting Morgan Stanley and Goldman more or less instantaneously into commercial banks) and holding the buck for virtually all money markets (with a very few exceptions).

    It’s probably way too idealistic to suggest this approach, given the presence and power of the agents of the financial elite among the political class and the federal technocrats, but on a blank slate, it might be a better way to start.

  18. I am not sure that we should infer anything from the institutions that were left off the list, except that the authors were apparently unaware of the shadow banking system, which does not make their analysis very useful if you are trying to understand systemic risk.

  19. Simon:

    It does not list a single sovereign state. California, which was at one point the world’s fifth largest economy all on its own, is teetering on failure.

    California is too big to fail, but can only buy 2 senators, unlike those banks who can afford 100.

  20. We have come a long, long way since prudent man rules governed banking and investing (whereby stocks were once an unthinkable asset for pension funds); add to that erosion the dissembling public language of policy, the gutting of FASB standards and the ever greater abilities of financial innovations (the raising and structured use of capital and assets) to accelerate transaction based fees and the oligarchic financial industry has become incredibly more efficient in moving from scalping rent from hundreds of millions of businesses and family households in back alleys to baldly swigging it down in broad daylight on main street.

    1. Apparently “Too Big To Fail” is being marketed as a left side balance sheet exercise: let’s keep the focus on corporate assets. Why should we focus on what a company owns, isn’t what they owe and to who they owe it (in terms of liabilities and owners equity) what really matters as regards systemic risk?

    2. What if every single LCBO on the list failed? Failure is about the consequences of unmet liabilities and owners equity. The mitigation of such failure is then sought on left side of the balance sheet: the assets of LCBOs that includes profitable divisions, subsidiaries, goodwill and talent. Such assets would do just fine if sold off whenever an LCBO “fails”. The public function of delivering value from such assets would continue (perhaps absent the damaged brand) and enable the global financial system to continue to do its job. We would would be much better served by such failures and the ensuing transparency they create in these times of mark to market uncertainty.

    3. The LCBO list conveys that the government is now hardwired to respond to market prices divergences in predictable fashion: when share price moves owners equity to the upside on balance sheets we loosen oversight and celebrate capitalism; when share prices diverges to the downside we must indulge guarantees based on fears of market vulnerabilities from excessive speculation, criminal malfeasance and “too big to fail” nomenclature. Why the lopsided put option bias of government?

    4. Isn’t it interesting that CIT, which serves liquidity and factoring services to millions of small businesses across the country is not on the roster of “Too Big To Fail”; they certainly qualified on an asset basis and even more so on liabilities, owners equity and the public welfare of serving main street commerce.

    5. The concept of “Too Big To Fail”, if ever considered a reasonable conversation amongst sentient beings, can only make sense in the limited focus of an oligarchical industry striving and managing to solicit and mainstream US government subsidies and corporate welfare. Realistically, for our society as a whole and the better welfare of us all, “Too Big to Fail” is absolute intellectual fallacy as an abstraction, and utter bullshit as an enduring reality in a free market democracy.

    Tell them to get smaller and help them along if need be.

  21. Agreed. Just more Kabuki.

    Curious though — can’t find published numbers for Barclays. What were there official assets then and now?

    Barclays, Barclays, Barclays… always so much we don’t know about you.

    Fun reading: the end of this article…

    http://en.wikipedia.org/wiki/Barclays

    Btw, anyone know anything about a company called “EuroInvest” based in San Marino? Who invests with them, exactly? Who do they bank with?

  22. Both Stern and Feldman work at the Minneapolis Federal Reserve bank. I get “The Region” through the old post mail for free. It used to be you could get all those regional publications in the mail for free, most of them only send e-mail free now.

    I mean, I think we’ve pretty much beat this topic TBTF to death now haven’t we??? This horse was beat to death weeks ago. And 95% of the people on this site agree. Yet we never talk about Gramm-Leach-Bliley Act of 1999 which is what caused this mess to start with.

    Ok continue running out the same tired dog and pony show. Enjoy. Maybe we can turn it into some kind of cottage industry of useless banter. Banter doesn’t harm the environment does it? I guess it does if you have to flip on the computer to banter.

  23. Of course, the real issue is “what does ‘fail’ mean?” If any would fail in the traditional (FDIC) sense, it would not be a major problem. Yes, there would be lots of pain and economic echoes, but with an orderly takeover, that adjustment would happen quickly. I am still, and have been, since the ’90’s, an advocate of reinstating Glass-Steagall (taxpayer) protection, always feeling that when one combines too many financial services under one banner, it makes their control and regulation almost impossible. So my shortlist is zero. Sorry, you abusive, greedy, banking oligarchs, I can’t save any of you if I am in charge. Too bad, so sad!!!!

  24. “I am not sure that we should infer anything from the institutions that were left off the list, except that the authors were apparently unaware of the shadow banking system…”

    What is interesting is that in 2004, the shadow banking system wasn’t even on the radar as to be included in a discussion of TBTF – and the assumption was that “banks” – not shadow banks – would be the recipients of a federal bailout.

    And look who gobbled up so much of the bailout? Those unregulated companies.

    Bond Girl – did you see the Mother Jones story on Goldman? http://www.motherjones.com/politics/2009/07/how-you-finance-goldman-sachs’-profits

    Talks about how the fed investment in Goldman was clearly far more than the $10 bil TARP loan they “begrudgingly” took from Paulson. And that despite becoming a bank holding company, they struck a deal with the feds to continue using its much riskier VaR risk model to determine capital reserves instead of the fed’s Market Risk Rules. Their “profits” are coming from the same risky endeavors that got us to this point.

    Curious about your thoughts on this story….

  25. I have found myself sucked into the ongoing tragedy that is the US financial empire dying of its own hubris. It is not so much wether any of the oligarchs instruments are too big to fail, but wether the whole system is too corrupt to maintain.
    If we wish to return to the 1990s wealth and stature world wide, we will be unable to pass anything on to our children. If we devote our energies to refuting all arguments from Wall Street and Madison Avenue and restricting consumption with the aim of reducing the accumulated trappings and traps of a global military/financial hegemony, there may be a way forward.
    I can not see a way that the current power structure continues to hold sway but at the barrel of a gun. I maintain hope that mass refusal to buy into the existing structure will eventually reduce it to the pile of steaming excrement we all know it is. The Emperor has no clothes!

  26. This whole TBTF mess might be more palatable if banksters lost their jobs. Bail them out, but make sure they NEVER WORK AGAIN. Personally, I’d like to see them jump (with help, perhaps) from their ivory towers, but I’ll play nice.
    Everywhere I look, people are worried about losing their jobs or are unemployed. It seems that revenues on Main Street are down about 30%, but the fu- er, folks that contributed to (if not caused) this disaster are still working. How? Why? Corruption is the only answer that makes any sense. I’m afraid this will end in bloodshed, either through civil unrest or world war.

  27. Russ,
    “jobless recovery”
    I know this expression from Daniel Gross at Slate.com and I must defend him against the charge of being demented
    – Gross does not like jobless recovery which in his opinion already occurred when the techno bubble burst and according to Gross the after a delay following recovery created replacement jobs quite lower on the social ladder than those lost which I guess will happen again this time around.

    – He is in my view genuinely feeling for the plight of the unemployed or those reduced to not previous standard of living supporting wages by which I mean he never forgets to spell it out and he never sounds sugary about it the way German’s public voices almost invariably sound if they are not blaming the unfortunate for their own bad luck

  28. surprised as always when I stumble on the information at how prominently Deutsche Bank figures on the list

    – if you could understand only German you would guess that it is just another of our claiming to be homely Volksbanken getting big-headed and pretending to be a global player

    Amazing how much language barriers still matter

  29. Tippy
    I think most problematic is that they also created in that context off-shore outfits about whose balance sheets nothing is known and which operate under no powerful regulations whatsoever
    – Gretchen Morgenson at the NYT is my preferred explainer during the podcasts of Weekend Business and sometimes Today’s Business. I like my informants refreshingly blunt and she often is.
    http://www.nytimes.com/ref/business/morgenson-bio.html?scp=1&sq=gretchen%20morgenson%20market%20watch&st=cse

    Since I seem not to be able to fight the addiction to this blog for the time being, can somebody tell me where I can learn to make my links as elegant as yours?

  30. Uncle Billy
    neither Canadians nor the Dutch are known for cutting Bella Figura and if you expect to have to pull the wool over people’s eyes every now and then it is good to have somebody who delivers
    … or can you imagine
    “the woman was 6 foot 2 and had arms like a longshoreman”*)
    being tolerated in public today in a woman and unfortunately the men seem to be catching up fast in aspiring to sanitized sexed-up looks

    *)quoted from Michael Pollan about Cooking Shows

  31. Ted
    yes it can get repetetive but when you have a situation that’s not salvable and in one form or another has apparently never been salvable in the past (accumulation of power at people where it is supposed not to happen in a legitimate way) isn’t it better to keep gnawing at it in the hope that some wedge might emerge than giving up right away

    I for one again and again opt for the strategy “I know I haven’t gotten a chance but that’s the one I grab/take advantage of” (Ich weiß ich habe keine Chance aber die nutze ich)

  32. Bayard,
    I wish I could agree with you but what about the political fall-out

    “the US crashing the world economy card house”

    the idea of that scenario/mind-set – unrest at the most unlikely places for reasons probably nobody is capable of imagining today …

    and I do not mean the Chinese creditors of the US who according to one report I heard are dependent on US wheat supplies which presumably means they are not really as free in their financial power wielding as is always told i.e. I do not mean the more or less rational participants on whom you can count up to a point at least as not to lose sight of their own advantage

  33. Redleg

    NEVER WORK AGAIN.

    read and “enjoy” but keep your stomach medicine on the ready
    it is not so much that the guy is a ruthless exploiter which upsets me personally it is the entanglement the interconnectedness the interweavedness or whatever of the system

    by the way I share your fear of some day somebody showing up who is able to gather the ever increasing number of the furious behind his banner and initiates another bloody desaster
    – the possibility and the masses are more and more available all it needs is the nut case who knows how to get them going. If the past can teach anything watch out for the intellectuals getting enthusiastic about some guy promising to save the world and improve mankind or parts of it. They seem to have been always the first to jump on the band-waggon.

  34. This NYT article shows the problem of moral peril coming and going:

    Phibro and Hall were not taking advantage of the American public the way that the US government does in handing out corporate welfare. Nobody can argue that someone that does well should be paid, and if your compensation is a percentage of the profits than the incentive is to do as well as you can. The fact of a trading house is simple: you make money by being smarter than other traders making stupid bets and provide commercials an opportunity to hedge their operating risks (or as is more likely in more recent events in real estate, gamble with their companies business)

    The US Government, or any government, has NEVER succeeded in equitably setting prices. However much centralized control can help us in times of extreme emergency to regain our economic footing and fiscal balance, the day to day operation of price setting is ALWAYS better set by a free market of unfettered participants. Change those rules and you simply change the game for insiders with access to win even more…

    There is so much intellectual fallacy dribbled out in times of excess and resulting backlashes that we are in perilous danger of further bankrupting our system with misplaced reforms… but reforms are necessary and wise. Just not these type of centralized control of executive pay.

    Just let them earn as much as they want and simply tax the bastards.

  35. Yes, I didn’t mean everyone who uses the phrase, which has been all too accurate for the “boom” since the dotcom bust.

    I meant all the cheerleaders who crow about how every indicator is looking up, we’ll be back to infinite growth in no time, but who only grudgingly acknowledge unemployment, as an afterthought, about which they don’t really care.

    Probably the same sociopaths who crow about how “free trade” is good for “the economy”. They intentionally obscure the real questions:

    Good for whom? (There is no such thing as “the good” in itself.)

    Whose economy? (No such thing as “the” economy.)

  36. Rob H.
    if you could come up with a tax system that does what the Zero at roulette does for gamblers …

    … and always keep in mind that they couldn’t get a hold of Al Capone before they went via taxes – so even if these guys are only criminal by our little people know nothing gut feeling why not try that route to teach them some manners

    because all economic theories aside this kind of money making can just not be acceptable in “polite society” as it according to Jane Austen and Edith Wharton once existed ;-)

  37. “What is interesting is that in 2004, the shadow banking system wasn’t even on the radar as to be included in a discussion of TBTF – and the assumption was that “banks” – not shadow banks – would be the recipients of a federal bailout.”

    I don’t know… I think the collapse of Long-Term Capital Management put derivatives and systemic risk on everyone’s radar (including the possibility of a bailout), especially regulators. But what event happened back then with respect to the regulation of derivatives, and which players were involved?

    I was actually going to make the same observation regarding Goldman et al in response to a comment above – calling these institutions bank holding companies is a front; the nature of their operations has not changed.

  38. In all of this ongoing debacle we never seem to see alternative options defined and costed prior to being fed the chosen national expense to ‘bailout’ yet another TBTF bank!

    How come Mr.Bernanke does not show us the costed alternatives before spending other people’s money?

    Even an after the event costing of each now historic spend?

    It seems we have bankers using our money to ‘rescue’ their TBTF banker buddies who celebrate with unearned zillion dollar bonuses!

    Maybe our repected Johnson, Kwak or Statsguy can explain why we don’t get the options but just the bill for the latest Bernanke spend? Seems just spin is delivered?

    I have yet to see one costed case to prove tbtf!

    Why should not Bank America be split into say four banks?

    Anyone got the missing info at their finger tips? Maybe a hotlink?

  39. While the folks like Mr. Hall are gaming the system and making sure that the laws are written in their behalf, there is a real and heart rending fallout because of that system. States are going bankrupt and passing that insolvency along to cities and towns. What tiny remnant there was left of the safety net after the Reagan/Clinton years is disappearing as we watch.
    The choices being presented to voters by both parties are to abandon the lower class totally or to abandon the middle class lifestyle to rapidly escalating taxes and fees. Neither choice is valid, since they do not deal with the underlying issue, our financial system is a house of cards based on excessive consumption. It cannot be maintained in its current form. We produce almost nothing but import and consume vast quantities of stuff.
    Until we come up with a way to reward production rather than speculation, we are trapped on a razors edge with all options leading to a worse outcome.

  40. the more I think about it it is not only who is to big to fail it is also what cluster of habits, beliefs, rules and regulations has become so big, so entangled it cannot be fixed by adjusting it

    but how overturning such a cluster which is interwoven with all the other clusters keeping society in working order would be manageable without the bloodshed of revolutions or wars? -( I do not count the collapse of the Soviet Union I think that was more of a migration and we are far from having seen the end of it in one direction or another – the Russian Empire took centuries to grow before it turned into the SU and what is an interval of less than a 100 years in the life of an empire …)

    For one I am on the look-out for the famous butterfly wing getting a hopefully healing process into motion somehow somewhere; the other is this Yin/Yang image my favourite explanation of which goes roughly as follows: things start small swelling to big and then they go over into another small one swelling again and both always contain the seed of the other (Robert van Gulik, Learned Lover of Gibbons and author of a bunch of Judge Dee novels which leave you feeling that you have learned something about Confucian society)
    http://www.bing.com/images/search?q=yin+yang&go=&form=QBIR

    so in accordance with that explanation of Yin/Yang I hope that once inanity has swollen enough, reason and/or a set of plain good manners will be able to assert themselves again

    at least one change is on this blog already –

    – just a short time ago if you dared to voice the gut feeling of being disgusted by the out of all proportion pay schemes you had outed yourself as an ignorant non-entity who had no idea of how the new world order functioned to everybody’s everlasting benefit – so now we can talk about it again in a mostly respectful manner let’s hope some genius finds the seed for the rescue

  41. “the more I think about it it is not only who is to big to fail it is also what cluster of habits, beliefs, rules and regulations has become so big, so entangled it cannot be fixed by adjusting it”

    Exactly. But how do you fix culture?

  42. Such literary polite society simply kept largesse discrete from the masses and discreet in consumption, except in the unveiling and displaying of power to keep said masses in their place.

    And from that royalty of inbred “politeness” evolved the more competitively vulgar and ostentatious displays of consumption, the modern day proxy for power. Though they are related they are not the same.

    Tax the outliers and windfalls in a sane but judicious way and earmark such taxes for relevant public goods (not government largesse), AND BE SURE to fall well short of politically hammering working class society into a bounded range of a single economic class. We are not evolved enough yet to harness the sweat of our creativity and innovation simply to reap the rewards of coach class, or suffer on cross continental busses with chickens in our laps. No, not just yet.

    Those dismal realities are the rewards of any society that erodes incentives for entrepreneurs to be the engines of social wealth creation through personal wealth accumulation as their rewards.

    As much as I may love you and everyone else, I place greater faith in my knowing my own best interest than you knowing it for me.

  43. Bond Girl: “Exactly. But how do you fix culture?”
    Toynbee’s answer in his “a study of history” in short was religion (horrible thought to a European verbally militant agnostic) http://en.wikipedia.org/wiki/Arnold_J._Toynbee#Works

    – the image he used I remember is of a few smart ones climbing a mountain reaching a ridge and then making the masses follow via the rope of religion.

    What keeps nagging at me from that read still today is that he concluded that civilizations had progressed only in one aspect i.e. making their religions more transcendent i.e. first the god was an owl than the owl became an attribute of Athena
    – I don’t remember the next step but I’m sure you get the picture
    – reminds me quite a bit of the financial market: first there was the merchant who risked his all with the ship he sent trading, then there were merchants who pooled money to equip ships and so on and so on

  44. Rob H.
    of course I know that it was all camouflage – I thought the smiley took care of that
    and I am the last one who wants people back who believe that their birth certificate or any other such thing ENTITLES them to anything maybe except citizenship

    but having to keep up appearances especially if they are consensus within your peer group constitutes a form of regulation
    – doing things on the sly is strenuous and time consuming

    and as far as classes are concerned I am wary of any kind of group consolidation but a gut feeling is a gut feeling and I will not give up mine for one side or the other and I will not accept the purely competitive point of view just as I have never accepted the pitch of German unions that the employer is evil incarnate

  45. Clearly the definition of “recovery” needs to include “jobs”. Until there are jobs (and not just at Wal*Mart), there is, as you say, no recovery.

    I don’t blame messengers – most like Krugman are not happy about the status quo. However it is an Orwellian feel to the idea of people talking about “recoveries” that entirely ignore the general public. It also says a lot about the press that their metrics are the same as the landed interests – not employment and standard of living, but profits and the stock market.

    It’s sick really.

  46. Good Morning,
    Although already mentioned, I believe the Chinese Banks are the most important of banks left off the list… Other foreign banks, European, Canadian etc, came to the US to acquire assets. The Chinese banks on the other hand were courted for money. If I understand the ‘asset – liability dynamic’ (hope I’m not being too simplistic), this means they have a huge amount of new liability which needs to be matched by the creation of new assets. Thus, they are now scrambling to lend money…(eg. http://www.google.com/hostednews/afp/article/ALeqM5g8fSWmuI3QgdFiAk11BjyZ15DTtQ )
    …albeit in as regulated a manner as possible.
    So, the foreign banks on this list are part of an ‘old boys network’ for the purpose of legitimizing and enacting any TBTF related policies. The Chinese Lenders don’t quite fit in at this stage of the game. It will be very interesting to watch what happens to Chinese banks’ assets in China and how this plays into the geo-political panorama.

  47. Absolutely excellent post–top to bottom! Says more that’s right than all the huffing & puffing from Washington or Wall Street.

    Thank you and, yes, the “the financial sector has failed completely” and the “list of banks TBTF would be the null set.”

  48. …I agree that we can’t afford a narrow view of the financial sector, but that is exactly what we’ve done: Reinforce the existing system of extremely flawed players without considering fully other means for dealing with the crisis–like “pre-privatization” to use an ugly term.

    In short, the TBTF argument–banks or other players–is an argument for the status quo, the narrowest argument one can offer.

  49. My apologies on missing the sarcasm; have yet to be good at reading emoticons…

    The new royalty is just as inbred as the old, but resulting less of high birth and more of simply low morals: isn’t it funny how the same families keep popping up in democratic leadership at the highest levels… well, perhaps it’s just our experiencing such as a recent 100 year old phenomena here in the US–we have to relearn history the hard way. Even though it began tolerably enough, when Teddy inspired Franklin Delano’s ambitions he coveted power to distribute power widely, but has evolved to so much less so and into the simian brains of George H and W and Jeb… and Bill to Hillary, et al… those knuckle draggers that covet power simply to purloin riches to cronies and display arrogance to all others… what dreck.

    As to economics and incentives, life is barely livable at the extremes. The challenges are less to define absolute balance (there is never any such thing on a ship at sea) and more in finding harmony. As for a ship it is harmony of present course with emerging conditions, and one needs helms-people skilled enough to let the balance of the ship shift as it may to stay the course and deliver all on board safely and secure to whatever distant shore they booked passage for…

    As to our free economic society, it is suffering from an abundance of dissembling about current and emerging conditions conjoined with a despicable folly of blaming the galley crew for a drifting helm while the captain and mates argued over how to divvy up the cargo. It’s the worst of times–hands-off skippering and shitty food. Even Dickens would wretch.

  50. That is a very interesting thought about the progression of the financial markets, except it probably works in the reverse: in trying to reduce (disperse) risk, financial innovations make risk immanent.

    Pretty much everything about this crisis makes me think of Nietzsche’s Genealogy of Morals. Religion is a natural device for supplanting a master morality…

  51. Mc Morley
    I read an article that the Chinese are actually ordering there banks to lend lend lend to the point where the banks have problems finding worthy borrowers and asking people to please come and borrow

    I wouldn’t that consider “regulated” that is – if it is true and not exaggerated by the NYTimes.com? to make Americans feel happy – commanded what we call with derisive intent Kommandowirtschaft = commandeered economy(?)

  52. I think many of the comments while of value miss the greater context. Those thought to be “Too big too fail” of all stripes, the big banks, the investment banks, the big Corporate financing arms, Fannie and Freddie, et all have heavily leveraged their power over Congress, the Executive Branch, the Fed and the Regulators to thoroughly corrupt the entire financial system. The financial system has become a vast criminal enterprise. It is not a functioning free market any longer. As Ted Kaufman (D-Md) puts it:

    Efficient and free capital markets are essential to all that makes America great: investment in private enterprise, the availability of capital to expand and grow our economy through innovation, and the ability to save for retirement in hope our investments will support us in later years.

    Regrettably, we now have an unfair playing field for investors. This leaves us with, in effect, two financial markets: one for powerful insiders, who use high-speed computers and privileged access to information to exploit loopholes for profit, and another for the average investor, who must play by the rules and whose orders are filled almost as an afterthought. This situation simply cannot continue. It is the financial equivalent of “separate and unequal.”

    Every day we learn more about the features of this two-tier system. Dark pools, collocation of high-speed computers at the exchanges, flash orders. Abusive short selling, the loophole of choice in 2008, was only the first sign of how the powerful on Wall Street make profits unhindered by the rules the rest of us must follow.

    The activities listed by Senator Kaufman are criminal under current statues. They should be prosecuted. The tentacles of this criminal activity are long and connected to powerful entities and people. The political will to prosecute these people will be difficult to come buy, but not impossible. What is important first is to fully inform the public about the full extent of this mess to build support for the necessary prosecutions. No sacred cows can be left untouched. Many of you repeatedly fail to mention Fannie and Freddie, CRA, ACORN et al, as if they were not involved. They were big time. However, that being said, there are plenty in both parties and those not only in the current Administration but at least the past three administrations who have facilitated wrongdoing. Time to get on with it.

  53. Easy competition! Nothing is too big to fail. And fail they all will, given time. That time may not be too long (< 2 years) if we consumers don't regain our confidence and start spending again. Which, of course, requires the global economy to start growing again so all those who lost their jobs, and all the millions more who are fearful of their jobs, can relax and be relatively assured of a financial future.
    I hate to say this (because of the pain yet to come on millions more people) but this crisis is a very long way from bottoming. We should (sort of) be grateful because Too Big to Fail is really Too Big to Exist. They have to fail so that this 'boil' is well and truly lanced.
    Read the comment from Anonymous again.
    "“Who Is Too Big To Fail?”

    Me. Now give me back all the money you took from my retirement and savings accounts. Make my salary commensurate with the amount I need to live decently. And make my house worth something again.

    Easy question."
    An honest and integrous society shouldn't result in this happening.

  54. Well, here are the HTML codes but sometimes the blog will read it as spam and then your comment gets bounced.

    (a href=”URL of link”)Text in which the link is nested here(/a)

    But in order to make it work use these brackets, , and not ( ) as used in my example.

  55. Paul
    Daniel Gross
    from Slate.com does tend not to believe in criminal activities with tentacles but in quite normal dumb human fallibility. (his book’s title is “dumb money”) – up to now I tend to agree, cabals are somehow different by that I do not mean to imply that “they” do not synchronize their views when “they” meet socially but I cannot discover anything smelling of concerted action – that the government does the bankers bidding is probably mostly owed to the fact that they are in possession of very effective blackmail arguments and the government cannot trust the people who are after all in its care to bear with it if it walks off the table and lets “them” crash and probably take the economy with themselves even more than now – I see it more of a terrible dilemma for the good guys (government) which the ruthless ones exploit, but each person or outfit on his own

    Gillian Tett
    whose book Fool’s Gold is often approvingly mentioned by columnists and who looks at “it” also with an anthropologist’s eye agrees with you on the drifting apart of them, the “experts”, and us, the ordinaries. She tells a nice and to me highly plausible story of how when she interviewed a banker he said about information of the public “but it is all on Bloomberg” and was according to her quite surprised when she told him that not everybody has access to Bloomberg (whatever that is)
    If you want to listen to both of them talking to eachother
    http://itunes.apple.com/WebObjects/MZStore.woa/wa/viewPodcast?i=55112203&id=288947288
    and here is Tett’s long version at the London School of Economics
    http://itunes.apple.com/WebObjects/MZStore.woa/wa/viewPodcast?i=54570898&id=279428154

    isn’t the internet heaven on earth for an eager to learn retiree?

  56. A just god would produce crowds with pitchforks, but the only forks in sight are weilded by Lou Dobbs & Co.

  57. Too big to fail should simply mean too big period. No company should ever be regarded as too big to fail. Even entertaining this concept suggests a serious lack of attention by industry itself, regulators, and legilsators.

  58. I said the same, but less succinctly!, about 20 minutes ago, but my comment has gone into a virtual hole for the time being.
    We can only hope that the forces that are now at work finish the job in bringing down Too Big to Fail. But the consequences for the ordinary peeps are tough as anonymous says so lucidly earlier on.

  59. If you are wondering why some institutions were on the list and others were not, look no further than page 3 of the Google Books version (page 1 of the print version) and the explanation provided on page 39.

    Footnote 1 says “We use the term bank broadly to describe depositories whose liabilities are backed by implicit and explicit government support as well as their holding companies.”

    Footnote 2 says “Although TBTF terminology has been applied to nonfinancial firms and subnational governments, we focus on banks and explain this decision in chapter 2.” Unfortunately, chapter 2 is not available in the limited preview provided by Google.

    In the explanation provided on page 39, the authors make clear that the only banks (as defined above) that are on the list are (1) banks that the Fed has already identified as LCBOs, (2) banks that were reviewed by the Fed but just missed being labeled as LCBOs, and (3) the top ten foreign banks.

    What does all of this tell us? The authors intentionally limited their discussion to (1) insitutions governed by the Fed whose deposits were backed by the SIPC and/or FDIC and (2) foreign institutions of a size to imply government backing.

    Since the authors are focusing on depository banks that have government banking, it makes sense for the list to include large foreign banks.

    The reason that Goldman Sachs is not on the list is because, at the time of publication, they were not a bank holding company governed by the Fed. That happened last year. If the book were to be updated today, Goldman Sachs would be on the list.

    One of the things that I am a bit dubious about is the notion that government insurance programs such as the FDIC and SIPC somehow cause these financial crises, which seems to be the central thesis of this book as well as that of Barry Ritholtz’s latest offering. History shows that similar financial crises have occurred in the absence of both a central bank and government insurance programs (e.g., the panic of 1907). In fact, the government insurance programs were created to discourage bank runs by panicked depositors, which tend to be infectious and bring down banks that are perfectly solvent but simply lack liquidity (again, see the panic of 1907).

    I just don’t think “TBTF” had much of a role in the current financial crisis or the credit crunch that precipitated it. Yes, “TBTF” was the argument used to secure bailouts, but let’s remember that many of the companies that got bailed out had no reasonable expectation of securing government backing. AIG? Not covered by the FDIC or SIPC, and not governed by the Fed. Goldman Sachs, Bear Sterns and Lehman? While their private wealth management groups held securities that were protected by SIPC, they were otherwise in AIG’s boat, i.e., not “TBTF” as the authors of this book define it. (FYI – our life savings were in securities held for us by Lehman when it went under; since none of the securities were missing, our savings were safe without SIPC kicking in. I really don’t think SIPC backing of our securities incentivized Lehman management to take mad risks in other business areas.)

    The panic of 1907 and its source (the unregulated trust companies) points to the real problem, which was the 1999 repeal of the Glass-Steagall act, which recreated the environment that led to the panic of 1907. Traditional banks occupy a unique position of trust that is central to a functioning economy. Allowing riskier financial institutions to mix and match investment banking and hedge fund activities with traditional banking activities is a recipe for disaster.

  60. the book we are talking about is just 9 years old and already those of you who are in the know say that the forecasts did not work out but oh miracle there is a book by who else Ayn Rand the sales of which are soaring and who forecasted it all correctly more than 50 years ago – here are infobits for the ones who love her and those who think her a nut case alike

    the story that Greenspan was her lover is not repeated therefore we get this juicy bit
    “dark, kinky and weird, but not in a good way,” in which normally tough businesswomen melt under the steely gaze and rough hand of übercapitalists.

    well well – somehow that reminds me of something
    (when Hitler was taught manners in the salons of Munich he used to carry a riding whip and on his fotos as a young guy he was at least in profile quite an eyeful)

  61. There is one way of making sure the instigators of this mess never work again: Jail.
    Fraud is illegal and carries jail time, or at least it is supposed to, so by locking up those who are committing fraud they will never work again. And it is completely legal within the spirit and letter of US law. Its also much less bloody, yet still equates to justice (more or less). But i suppose that makes too much sense.

    Enforcing existing laws by sending fraudsters to jail will prevent The Nut Case from hitching up the band wagon, while at the same time release populist tension since populist anger is more about blame than losing money.

    This economic failure is also a political one. They are correlated, but did one cause the other?

  62. Please, let’s not imagine or allude to Ann Rand and Alan Greenspan as anything else but fully clothed… for the love of god.

  63. Change culture by replacing the people propagating it.
    US culture has changed significantly since I was a kid. There is a huge cultural difference between millenials and baby boomers.

    The one obvious advantage of replacing management with any bailout is the culture can change quickly if people that represent the new culture can replace those who are sacked. While I hope it doesn’t come down to this extreme, look how fast the culture changed in the USSR after Stalin’s purges in the 1930’s and in Mao’s China. My point is that culture can be changed much faster than one might think – for better or worse.

  64. well … according to Daniel Gross there is probably very little punishable fraud about
    – “they” may be acting dumb with money but “they” sure know how to use loopholes at least they do it with this new super-computer-high-frequency or so trading
    – being faster than the others by milliseconds
    – the spirit of it is said to be against the law but this special action was not foreseen and so probably cannot be prosecuted

  65. “I just don’t think “TBTF” had much of a role in the current financial crisis or the credit crunch that precipitated it”

    TBTF (as most people here probably understand) represents the concentration of political power. This power not only secured bailouts, but also took down the regulations that would have mitigated the damage caused by failure. In some cases (*cough OTS *cough) the regulator actually helped commit fraud!

    This is just as much a political crisis as a financial one.

  66. @Redleg,

    One of the problems associated with trying to diagnose the cause of a crisis that is still unfolding is the tendency to adopt a meme that different people understand differently. TBFT, which is used in a variety of different contexts around the current crisis, is one of those memes.

    The issue that I have is that the book explicitly defines TBFT as something entirely different than what some people seem to believe it means. Different people using the same words differently does not make for a very fruitful conversation.

    While the undue concentration of political power is a problem exemplified by TBFT institutions, TBFT is first and foremost identified as a moral hazard that encourages execessive risk taking by TBFT institutions that, in turn, causes crises such as the one we are experiencing. I simply don’t accept that the excessive risk taking that caused the current crisis was a result of TBFT, in part because the risk-taking entities that got us in this mess did not have an implicit or explicit promise from the government that they would get bailed out, a hallmark of what it means to be TBFT.

  67. First, for those who despair of continuous blogging without effect, remember that nothing good happens without nagging.

    Second, the government is in the process of placing most, if not all, of the shadow banking players under regulatory supervision. Bernanke doesn’t want to break up the holding companies, in part, because under the regulation he envisions, the holding company structure neatly brings investment banks under his regulation. Hence his reluctance to endorse the return of Glass Steagall.

    I disagree with this. I’d prefer the regs just include investment banks. Period. No holding company necessary.

    As for the trader who is to make $100 million, I don’t care as long as it’s his money at work. The old way was that way. The investment banks were owned by those running the company. It was their principal at risk.

    Build a glass wall, again, around “narrow” commercial banking and thus deposits. Enforce leverage regs strictly. And make criminal any efforts to avoid the regs. Not civil.

    In 2004 the SEC exempted five firms from leverage limits. They were Bear Stearns, Lehman Bros., Merrill Lynch, Goldman Sachs and Morgan Stanley–all investment banks. In other words the government was complicit in the excesses.

    Financial innovation has made way too much money for way too many powerful insiders, including some in government. So it will be brought down only by further disaster, or anti-trust type of action by Judiciary and/or big state Attorneys General.

    So nag, nag, nag until we can’t nag no more. And gin up the criminal investigations along with some real prodential regulation reform.

  68. Scot Griffin
    “excessive risk taking that caused the current crisis was a result of TBFT”

    as an example as I understand it the mortgage based financial stuff created such demand because it was insured against default by AAA rated AIG and AIG in turn owed its AAA rating to an implicit government guarantee
    and because it created such a demand and there just were not enough solid mortgages around to be packaged and diced and sliced the suppliers of these mortgages into the system had to weaken their standards in order to satisfy the demand

    if that is basically correct then I have a question:
    isn’t the purpose of the market that goods are getting more expensive when they become scarce instead of being replaced by diluted stuff? If suppliers did that with the milk you buy you would somebody expect to go after them.

  69. I’m generally with with you on all counts.

    I’d go one step further and question whether any enterpise engaged in plain vanilla banking should be allowed to be a publicly traded company.

    The management of public companies are forced to focus on short term issues because stock price is the metric of success. Generally, though, depositors are not shareholders, and it is the trust of depositors that must be maintained to avoid a breakdown in trust that cripples the economy.

    While I believe that plain vanilla banks can and should remain privately owned enterprises, I doubt that they should be publicly traded because the short term focus on stock price creates actually pits the shareholders’ interests against the depositors’ interests, and the shareholders will always take precedence when a substantial component of management’s compensation is company stock.

  70. Didn’t Toynbee say something like: great civilizations are not superseded or wiped out by other civilizations, they commit suicide.

    As The Economist could or should say, the US are now at a crossroads. They can either keep on going on the same road they have been since Reagan with minor tweaks, which is what the banks want and Obama seems happy with, or they can try to reverse the trend, redirect resources from finance to more creative endeavors.

    If 50 years from now, 2008 appears as the beginning of the end for the US, no need to invoke China, India or other BRIC. The choice belongs to the American people right now.

  71. Terry
    I agree that TBTF entrenches the status quo, not to mention the real problems moral hazard.

    Going forward, I’d be more than happy for any plan that removes TBTF institutions from our society. They have too much political power, and I can’t see how as a society we benefit.

    I’m for regulation, and anti-trust actions (i.e. break ’em up). I just want regulation to cover all powerful financial entities & interests, whether they are called “banks” or not.

  72. Silke- yes there was also mountains of just plain dumb behavior.

    But, there was also mountains of fraud. And sorting out the good guys, bad guys and innocent bystanders both on Wall Street and in Government will be difficult. Don’t give the government a free pass; much of lack of transparency was purposeful – to hide the evil doing. If you look at corruption in the big cities- pay to play- the politicians purposefully create difficult regulatory conditions in order to force developers, et al, to pay to get their projects done. The same thing is happening at the Federal level; just at a much more ominous and complex scale. Once the pay to play schemes get going it’s difficult to tell who are the good guys- many are pulled into situations where there are no good ways out.

  73. I have not been able to breathe since I read this:

    Investment banks usually keep their bonus data under wraps. But thanks to an investigation by Andrew Cuomo, the attorney general of New York State, the public is getting a peek at the eye-popping numbers.

    Mr. Cuomo’s report, released on Thursday, looked at the nine big financial firms that got the first round of aid under last fall’s federal bailout, and detailed how much each firm paid in 2008 bonuses. It also described how many employees at each firm got annual bonuses of $1 million or more.

    See the numbers below:

    Bank of America: 172

    Bank of New York Mellon: 74

    Citigroup: 738

    Goldman Sachs: 953

    JPMorgan Chase: 1,144*

    Merrill Lynch: 696

    Morgan Stanley: 428

    State Street: 44

    Wells Fargo: 62

  74. Selling a derivative in one room while shorting it at the same time in another is fraud.
    Marking an asset to fantasy, even though there is a market price, and then using that mal-marked asset value to skirt capital requirements is fraud.

    In a jury trial, these people would get off – not because they are innocent, but because they have more resources to defend themselves than the government has will to prosecute. They would get off on technicalities unless the gov’t case was absolutely technically perfect.
    This illustrates the problem with the US legal system. The rule of law only applies to some people, and is why this economic disaster is as much a political one. What will it take for the pols to throw oligarchs under the bus? See both Roosevelts, Chester Arthur, and Jackson vs. 2nd Bank of the US. there is precedent.

  75. @ Scot:
    I agree that excessive risk taking was not the result of TBTF. TBTF is the result of the concentration of political power that enables the risk taking, through the legal system and the revolving door with regulatory agencies.

  76. I think it is fair to ask the question:
    If not for US Government intervention, would these institutions be around today?

    If not, tax the so called bonuses 100%. My tax dollars (my CHILDREN’s tax dollars FCOL!) should not be paying for for anyone’s million dollar bonus (with the possible exception of anyone who delivers bin laden alive to a soldier or marine).
    If so, I’m fine with the ****s getting a bonus, but they need to fix how they are compensated so that a bonus is a bonus, and not a commission.

  77. @Redleg,

    “Selling a derivative in one room while shorting it at the same time in another is fraud.”

    Yep.

    “In a jury trial, these people would get off – not because they are innocent, but because they have more resources to defend themselves than the government has will to prosecute.”

    For now and for quite some time, this will be true. However, we are entering our first “jobloss recovery” (yeah, I replaced that e with an o). People just are not going to buy the argument that we’ve gained “productivity” any longer.

    The problem, though, is not really the U.S. legal system. Lawyers have and always will be the “enablers” in a codependent relationship. That’s one of the reasons I stopped being a lawyer (James, don’t stop pursuing the legal education, but don’t bother with being a lawyer; you get marginalized. Email me for more insight.) The rot is not in the legal system but in the mendacity of modern business practice informed by neoclassical economics, which promotes an ethos of self interest WRONGLY understood (hat tip to Toqueville).

    My only concern is that the predominant populism of our time is libertarian-right-wing instead of liberal-left-wing. Heck, I would have been happy with centrist populism. The problem is that the very same population that bought into the liberal-left-wing populism in the early 20th century now buys into the libertarian-right-wing populism today. Both extemes can never work, but it is extremes that incite and excite the masses. Communists are the extreme left. Libertarians are the extreme right. The pendulum has swung.

    We’ll see how it all turns out over the next decade. Personally, in the absence of a right-wing armed revolution, I expect to see some moderation.

  78. bungalowbill,
    I do not remember whether Toynbee called it suicide but as I am on the last pages of a three volume history of the Byzantine empire I would consider any single reason explanation wrong as wrong can be.

    From what I have learned there it seems to me that the greatest danger to an Empire is its attractiveness:
    everybody wants in, nibble at it, get chunks out of it, become the emperor himself and so on and so on

    – for example even though it would have been for centuries in the very best own interest of the “western” powers to fight the Ottomans and before them the Seljuks as a united force they were more interested in profiting and steeling from Constantinople even down to outright plunder keeping it going even when the Ottomans had already advanced into Serbia. Tellingly the last Byzantine emperors found sometimes better friends on the Ottoman side.

    So comparing the US to this and to all other empires before it I am impressed by the fact that geographically it combines a huge landmass with being close to an island which I think gives hope for endless possibilities of recovery.

    I just hope they do not decide to turn inward and give up on trading with the world though the excesses this has led to seem to have been very harmful to the US I am used to a life under US-hegemony and to date it has been a very good life.

  79. bungalowbill
    ooops forgot that taking means of transportation at the time into consideration the Romans probably had a kind of island too and look how long their empire lasted and how often it recovered to renewed prosperity and glory – so all my bets are still on the US

  80. You tell ’em Russ! How about if a million of us gave our time instead of money? One could consider joining those of us with A New Way Forward (http://anewwayforward.org), joining a similar organization (there are a few but not many), or leaving the country.

    Consider this a general challenge to all of us in the “commentariat”. Let’s start backing up all this intelligent talk with some equally intelligent action.

Comments are closed.