Krugman: No Bill Is Better Than a Weak Bill

By James Kwak

Paul Krugman begins this morning’s column this way:

“So here’s the situation. We’ve been through the second-worst financial crisis in the history of the world, and we’ve barely begun to recover: 29 million Americans either can’t find jobs or can’t find full-time work. Yet all momentum for serious banking reform has been lost. The question now seems to be whether we’ll get a watered-down bill or no bill at all. And I hate to say this, but the second option is starting to look preferable.”

Krugman says he would be satisfied with the House bill, but that the need to bring moderate Democrats and at least one Republican on board in the Senate could lead to a severely watered-down bill, in particular one without a Consumer Financial Protection Agency. Instead of accepting such a deal, he says:

“In summary, then, it’s time to draw a line in the sand. No reform, coupled with a campaign to name and shame the people responsible, is better than a cosmetic reform that just covers up failure to act.”

Krugman recognizes that this is structurally different from what he said about health care reform. In Larissa MacFarquhar’s recent profile of him in The New Yorker, discussing health care, he said, “There’s a trap I’ve seen some people fall into — you let your vision of what should be get completely taken over by what appears possible right now — and that’s something I’m trying to avoid.” Now he’s avoiding it.

I generally enjoyed that article. For one thing, I remembered that Krugman and I had a similar perspective on the 2008 Democratic primary (Obama was the most conservative of the major candidates and spouted a lot of “feel-good stuff about hope and dialogue and reconciliation”); both of us supported Edwards, although he switched to Clinton when Edwards dropped out and I switched to Obama.

For another, there’s something else we have in common. Explaining why, after the fall of the Berlin Wall, he didn’t set out to consult to post-Communist or developing countries, Krugman says, “I know what Jeff [Sachs] does and I couldn’t do it. Taking transport planes, living on yak meat for days — no. But I do write faster than anybody. You’ve got to figure out what you should be doing.”

Anyway, getting back to this morning’s column — I’m with Krugman. There are certainly things that would probably make it into a compromise bill that are better than nothing. Resolution authority would be better than nothing, although far from a perfect solution. Systemic risk regulation would be better than nothing — though perhaps not much better, depending on who is in charge of it. But frankly without the CFPA and without a real solution to banks that are too big to fail, it seems to me we will have avoided solving the biggest problems.

If we want change, someone has to be willing to stand up for it. If you want to win a negotiation, you have to be willing to walk away. If you can’t do that, you will get rolled on every issue. The Democrats need to force the Republicans to make a public choice on the CFPA, instead of negotiating against themselves and taking the issue off the table. Voters will be upset if Congress does nothing about the financial system, but the Democrats should have the courage to point out why they couldn’t pass anything. Taking a stand on consumer protection should not be that hard a position to take.

55 thoughts on “Krugman: No Bill Is Better Than a Weak Bill

  1. Governing, it seems to me, is a balancing act carried out in a constantly changing world. We pass a law; the world changes, and the mechanisms of the law need to change with it.

    To be effective, government ought to be constantly re-examining and refining legislation. (Yes, this opens the door for constant regulatory capture, as well. Transparency seems the correct response.)

    If I were a Republican in the Senate or House, instead of obstructing health care reform, I’d be working to include metrics, a schedule for review, and a method for backing out portions of the bill if they proved ineffective.

    I’d like it if Dems viewed the work as a beginning, and did the same thing — set up a mechanism for improving and refining.

  2. I’ll add that Medicare Advantage — that portion of Medicare law that allowed private insurance — is a great example. It cost more than government-provided Medicare, it’s proved to be wasteful, and Obama and the Dems are correct; it should be cut.

    Legislation with a review process to back out experiments like this that don’t work would be a good thing.

    And one thing I heard loud and clear at the health-care summit last week was this: private insurance for medicare didn’t work; the ‘free market’ cost more.

  3. I though it was useful of Krugman to point out that sometimes it is better to do nothing than do “something” just so you can satisfy yourself that you did. So often the latter is the path taken.

  4. Yup, nothing like negotiating with yourself for getting much less than you should.

    W had horrible policies, but had a fine sense of raw power.


  5. good point. Unforunately, election cycles have trumped their actual function of legislating. Voters need to make sure that they punish obstructionist in the next lessons.

  6. The key point that Krugman makes, which is correct, is that with health care, doing something is better than nothing now because the bill’s weaknesses are exposed immediately, and subsequent improvements to the bill are possible and can be pushed for with public support.

    With financial reform, the bill’s weaknesses aren’t exposed until it’s too late…until the next crisis hits.

  7. Of course one has to stand against a bill that does not even acknowledge the most serious problem of the current financial regulations, namely that as its most fundamental pillar it discriminates against risk-taking… that risk-taking that is needed to create jobs and take the world forward.

    On February 26 the European Commission initiated additional public consultations on changes to the Capital Requirements Directive for banks (CRD). The following was my response It is just as valid for the US.

  8. Mr Krugman wrote:

    “The question now seems to be whether we’ll get a watered-down bill or no bill at all. And I hate to say this, but the second option is starting to look preferable.”


    “A placebo is a sham medical intervention that produces a placebo effect. In medical research, placebos depend on the use of controlled and measured deception.”

  9. All this assumes that there is a real difference between Dems and Reps with the former sincerely wishing to solve the problems and the latter rooting for the status quo.

    We all know that both Reps and Dems take money from the banks. Neither really want to do anything. That’s why they will compromise and present some cosmetic fudging as real change.

    I don’t know why seemingly intelligent people still talk about Reps and Dems as if they were real adversaries.

  10. I commented at Calculated Risk ( back in December that if Obama was serious about financial reform and standing up to the “fat cats” as he termed the bankers after his December meeting with them, then he should announce that he will VETO any bill for financial reform that didn’t enact REAL reform.

    I also wrote that he should take a good hard look at his economic team (which many here were already complaining about).

    Since then, Obama has:

    * pushed through Bernanke despite having an opportunity to scuttle the appointment after Massachusetts;
    * announced the Volker Rule, with what seems to be little follow-thu and (not surprisingly) little more than lip service from Geithner;
    * announced that he will get “every dime” back of the taxpayer money given to the banks – which is basically a recipe for letting the banks off the hook for a disaster that is of many times that magnitude.
    * rejected taxing banker bonuses, even defending them by reference to the salaries of high-paid athletes.

    I am glad that Krugman vocally supports strong reforms, but I think he could have been more forceful about the issue (for example, at first he meekly says that no reform is “preferable” to watered down reform; and he lays the blame on the Senate instead without mentioning Obama and his administration). The accounts that I have read indicate the financial industry will accept some minor reforms in an attempt to scuttle any serious reform. Obama’s best chance for real financial reform is to “go populist” by making the issue very public. I just don’t think we can expect it because he doesn’t have the balls or the heart (take your pick) on this issue.

    I really believe that we will not get financial reform “we can believe in” until and unless Geitner and Summers et al are shown the door. We can debate economic policy all we want but its just rearranging the deck chairs until we deal with crony capitalism (euphemistically termed “special interests”).

  11. I think Krugman is right. If he is right we are doomed.

    Let’s see invest in America little guy.
    I read something about a new way the banks are selling bad dept to each other to make money. How do they lose at that?

    So the little credit Unions become big.

    Chaos is not good for depositors.

  12. I think that the Dems are ill-advised to be trying to craft omnibus legislation in this political environment when it is not necessary and can be done with bills addressing individual issues that the opposition cannot afford to oppose because they have so much unqualified public support. Of course, that wouldn’t work for health care given that a comprehensive solution is required. But financial reform could be handled this way to a great extent, since there is no chance of passing comprehensive legislation in the face of huge bank opposition and public confusion on the complexity of the issues, given abysmal media coverage and Dem wonkiness. The Dems need a better strategy based on simple explanations of problem and solution as each issue affects the public.

  13. The Consumer Protection Agency is pointless to slightly bad idea. It is pointless because it will not protect consumers, the same way the vaunted “bond rating agencies” did nothing to “protect” bond investors.

    it is slightly bad because it may prevent real reform from happening and give ppl false sense of security or progress.

  14. A Consumer Protection Agency that does not want to question the issue of whether the credit scores reflect realities or are just a tool to extract unreal rents, is as useless as a healthcare reform that does not dare to include tort-reform.

  15. Well put, bungalobill.

    There is only one party in US Politics (I am a life-long Canadian), and it’s the money party. It’s been in power a very long time. It was in power when Eisenhower made his farewell address (1). It was in power in 1901 when Theodore Roosevelt assumed the presidency, and as one of his first acts as President delivered a 20,000-word address to Congress asking it to curb the power of large corporations (called “trusts”). This from a man who was “bumped upstairs” to get him out of the hair of the corrupt “machine politicians” of New York. (2)

    Presidential Candidate Obama managed to organize a fund-raising operation more independent of the “moneyed interests” than anyone previously. The rest of the Democratic Party certainly did not.

    Some see cycles, I see deviations from a trend. Consider the likely effect of the recent US Supreme Court decision w.r.t. campaign spending limits by corporations and other organizations. Cui bono?

    There is no negotiation to walk away from. There is only a puppet show that keeps everyone distracted.

    And nevermore will there be a VP candidate with a history of taking on entrenched and corrupt interests.


  16. I think it is wrong to think that Republicans are against banking reform. 2big2fail that means bailouts are a hot button for republicans. consumer protection is the reverse hot button, as it implies government micromanagement, which is considered an evil. I bet republicans would agree to CDS regulation similar to insurance regulation (you can’t insure your bosses life.)

    But the democrats dig in their heels when it comes to increasing the size and role of government, no consensus is possible.

  17. notHere4alongtime wrote:

    “Eisenhower made his farewell address …”

    To be more specific……

    “This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence — economic, political, even spiritual — is felt in every city, every statehouse, every office of the federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society. In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes.”

    Dwight D. Eisenhower,Farewell Address to the Nation on January 17, 1961

  18. If consumer protection implies micromanagement then I do not want it either. Consumer protection is to help the consumers to avoid being micromanaged through devious tools such as credit scores.

  19. Well, Krugman gets it half right.

    He gives no rationale for why phony health racket bills are different from phony finance racket bills.

    I always go with Smash the Charade over the craven, wretched “let’s get some kind of crumbs and try to make a meal out of it years later”. So kill both bills. It’s insult added to injury. Make them own their shame, as Krugman correctly says about the finance bill but fails to say on the health bill.

    And the health fraud is actually far worse. So far as I can tell the finance sham would mostly confirm the status quo ante and not add much in the way of new assaults.

    But the health racket bailout not only entrenches the status quo, not only lies about cost controls and extending coverage, but would very aggressively attack the people through this tyrannical mandate. The intent is to round up a conscript market, so that the antitrust-exempted rackets, who already face no market competition, would also no longer have to compete with non-participation. They would then have total freedom to raise rates however high their pleasure dictates. The IRS would be the hired thug collecting these extortion payments.

    And the implications go much further than that. If this mandate to purchase a worthless private product could pass constitutional muster, it’s difficult to see how the government could be prevented from mandating any purchase of any worthless thing from any well-connected corporate interest.

    Forget the CFPA – how about an agency mandating that individuals buy mortgage securities? If we don’t all personally support housing bubbles we’re being antisocial, right? Obama certainly thinks so.

    I think Krugman maintains some level of independence where it comes to direct “economic” issues (that is, independence of the Dem party line, not of the corporate system line), but on anything which spills over into the broader political realm, like health racket bailouts, he’s a mere Democratic Party hack.

    (Another example – after his opposition to Bush’s private Iraq war, K’s silence on Obama’s private Afghan escalation, not to mention O’s backpedaling on Iraq withdrawal, speaks volumes.)

    It’s also funny how he has to find a way to explain why he didn’t join in the post-Cold War plunder raids on Eastern Europe and Russia without morally disavowing them, but also (I assume he hopes) not causing people to think he’d have been a joyful pirate if he had gone over there.

  20. I disagree. The Banking Act of 1933 was a compromise. Viner, for example, wanted more and expected more to come. Sadly, it never really materialized. That compromise included Deposit Insurance & Glass-Steagall. Would we have been better off without them? Also, at the time, no one really knew how they would turn out, which is the same situation we’ll be in even with a less than perfect plan.

  21. “The first Glass-Steagall Act of 1932 was enacted in an effort to stop deflation……The second Glass–Steagall Act (the Banking Act of 1933) was a reaction to the collapse of a large portion of the American commercial banking system in early 1933…..”

  22. The complicit parrots in the socalled MSM and the wingnut fascists bruting the beckian, limbaughian, gospel according to fox pimp this nonesense of bipartisanship and reaching across the isle as some sacred writ sent from on high. In truth, the gop does no reach across the isle or offer bipartisan support to ANYTHING!!! NOTHING!! The gop are lockstep partisans!

    Until and unless democrats and the Obama government take a stand, hold to that stand and those underlying principles, – and force the fascists in the gop to publically admit they are working against the American people are exclusively for the predatorclass – there will be no change. The TBTF oligarchs must and the predatorclass must be put back in the keep.

    Thefew have robbed and pillaged toomuch, from way toomany!!! Until and unless Americans force our socalled leadership to right this pernicious wrong, – nothing will change for America’s poor and middleclass. In fact, if we don’t change this newevilworldorder the world as we know it, which is already harsh and brutal, – will be grow far more harsh and much more brutal going forward.

    Democrats need courage and principle and commitment to help us. The gop is working in lockstep unison to advance the predatorclass and predatorclass oligarchs exclusively on one hand, and seeking to destroy America and to impoverish, silence, and enslave every single poor and middleclass American!!!

    The predatorclass and predatorclass oligarchs must be defeated and put back in the keep.

  23. Tony Foresta wrote:

    “The predatorclass and predatorclass oligarchs must be defeated and put back in the keep.”

    But they have the Ring!

  24. That’s great! Goes along with “…get rolled on every issue.” These both pretty much define the democrat existence. They are such weasels.

  25. Obama has everything he needs to fire Geithner.

    if you think he or democrats are serious about financial reform, that will be opening act.

    in the meantime, democrats are just whining about republicans to cover the fact that they are bought and paid for by financial industry. CFPA is part of that beard. And all of you are falling for it so GULLIBLE!

  26. The CFPA need not (and probably should not) be the centerpiece of reform.

    The foundation of reform shou1d be, in order of importance:

    – reinstatement of an updated Glass-Steagall*, with the “shadow banking system” (e.g., money market funds) declared to be banks and treated as such.

    – hard limits on the size of financial institutions, with any existing institutions that exceed those size caps being broken up immediately

    – a permanent resolution authority for any institutions that manage to slip through the cracks and become TBTF despite the above two reforms

    *By “updated Glass-Steagall”, I mean I would go a step further than dividing commercial banks from capital market firms. These non-bank financial firms need to be further segmented into: true investment banks (underwrite new offerings and provide advisory services around M&A and such), true broker/dealers that execute customer trades and make markets, registered asset managers (those who offer wealth management services to the public, would be highly regulated), prop trading/hedge funds. Firms in the latter category would be largely unregulated except that: 1) they would not be allowed to be publicly traded corporations and would have to be organized as partnerships, 2) they would not be allowed to borrow money from banks, the commercial paper market, or the bond market. Take as many risks as you want, so long as you’re doing it with your owners’ equity.

  27. Obama’s financial reform: Calling bankers “fat cats” and feigning resolve with: “that’s a fight I’m willing to have” about tightly focused, lay-up financial issues – lending more to small business, volcker rule – while letting Geithner and Summers to pull strings in the background.

    They’ve been *talking* about reform now for more than a year.

    The repugs are not much better but Obama is the leader of the party that controls both houses and he has the bully pulpit.

  28. Once again, Prof. Krugman is peddling reformist (“liberal”) illusions. Says he: “The problem, not too surprisingly, lies in the Senate, and mainly, though not entirely, with Republicans . . . . it [is] important that this [consumer financial] protection be provided by an independent agency . . . .”

    Why is the Senate problematic? Because the Senate, like the state apparatus generally, serves the dominant socioeconomic system called “capitalism”–a term that Prof. Krugman is afraid to use. (They don’t give out Nobel Prizes in Economics to radicals, you know.)

    Why is Krugman’s advocacy of an “independent” agency to protect consumers against Big Finance a reformist illusion? –Because the “independent” agency would work for those it is supposed to police, just like the other “independent” agencies that have come down the political pike; such as the Federal Reserve, which Krugman admits is a handmaiden of Wall St.

    Prof. Krugman wants us to believe that, with the right reform, This Time Will Be Different. –Haven’t we heard something like that before?

  29. I disagree. The most important part is eliminating the concept of capital requirements that add on an additional layer of artificial discrimination of perceived risk, on top of what already exists naturally in the market… completely distorting capital and risk allocation systems.

  30. What are you talking about? Stricter capital requirements will wreak more havoc? Isn’t that akin to telling someone with a drug problem that the issue is that they haven’t taken ENOUGH drugs?

    How many times do banks need to behave badly before your philosophy would allow for you to actually regulate them to ensure they don’t do anything stupid/greedy enough to mess up the global economy?

  31. Read! What I talk about is capital requirements that do not discriminate in favor of what is perceived as less risky… the reason so many followed the AAAs over the cliff.

    The pushers, in this case, were the regulators!

  32. You left this out:

    “Literature in economics usually refers to this latter act simply as the Glass–Steagall Act, since it had a stronger impact on US banking regulation.[5]”

    I thought the earlier Act was called a Bill.

  33. James, I agree to an extent, but only because without requiring full tranparency on derivatives, AND a real solution to the TBTF problem, AND without a CFPA, we might as well wait, and point out that the R’s are balking at anything resembling real reform. It is just that I believe that the D’s are as tied to the Bigs as the R’s, having received so much lobbying and campaign financing that they are also a big part of our Great American Plutocracy. There will be no real reform of anything which will upset the vested, albeit unpopular, interests. The upcoming campaigns, as they heat up should tell us if we will have another plutocratically involved Congress next year, or if we will be sold down the toilet once again, to the highest corporate bidders.

  34. Speaking of Sachs, this country can use a little economic shock therapy of its own. But that would require playing hardball with the banks and various wall street firms whose operating policies place our economy in a constant state of systemic risk.

    Alas, our legislators are far too gutless to address the issues as they need to be addressed. And the really sad part is, the legislation that needs to be enacted is not at all unreasonable.

    So, what’s the takeaway…when Congress can’t even muster the character to pass reasonable legislation that is paramount for the country’s economic well-being, then we can all look forward to more of the same precipice-style boom/bust, heads-they-win/tails-we-lose operating philosophy that the jackasses who’ve been running our economy, in their infinite arrogance, for the past twenty years gladly accommodated.

  35. The most important parts are eliminating Fed absorbtion of toxic assets, all off balance sheet transactions, executive theft through stock option giveaways, credit default swaps and OTC derivative transactions, the only real purpose of which remains tax evasion, insider trading, accounting fraud, banker profiteering on the savings of nitwits desperate for return in a world of essentially limitless electronic money.

    Since none of this is likely to happen, we should not be surprised by a tsunami of bubbles, crashes, looting, gangsterism, fascism and war.

    I am not aware of Krugman expressing opposition to any of these blights on the financial landscape. He panders to the collectivist impulse, bleating endlessly about jobs, and would push things in exactly the wrong direction, since what we need are limited government, the rule of law and honest money.

    Politicians create only one kind of enduring job. Making war.

  36. Useful, maybe, but odd, given how consistently he has resisted that argument in connection with health care.

  37. Useful, but odd, considering how stubbornly he has resisted that argument in connection with health care.

  38. The FCIC now wants to hear from foreign regulators, the Consumer Protection Agency is to be shelved within the FED, no news of the Financial Stability board’s mission, clean, rinse, and repeat…

    As the blogger George Washington rightly points out:
    “As I’ve previously noted, the government created the mega-giants (they are not the product of free market competition), and their very size destroys the real economy like a massive black hole destroys the matter around it.And as Johnson and many others have pointed out, the very size of the giant banks enables them to easily capture politicians … about as easily as the Great Attractor captures galaxies.”

  39. BDS wrtoe:

    “Speaking of Sachs, this country can use a little economic shock therapy of its own.”

    Those events have only just started and will take on a life of their own.

  40. James Kwak, You are a man after my own heart! I too was an Edwards supporter, and didn’t realign until April ’08 when I read Obama’s impressive “Cooper Union” speech wherein he gave Wall Street hell (I thought) right to their faces. I then spent all my vacation hours and thousands of dollars on Obama and other Dems that year, and discovered on day after election he put Emanual in the driver seat. It was downhill from there with the big boys at Treasury Department, and the pesticide guys at the Ag Department. Not the change I waited for! Not to mention now privitizing out our public schools, and delivering chronic war. Krugman is right that Dems need to stick to their original demands, not compromise before they even start negotiating, but I’m not holding my breath – even though I’m a Dem official here in Bellingham, Wa. Pretty much all the other local Dems feel the same way I do, so where do we go?

  41. So, what are you saying…that because the dollar has turned to drek we should enact weak financial legislation? Or because the dollar is drek we shouldn’t have any finanical legislation? Or because the dollar is drek, we shouldn’t listen to Paul Krugman, even if he’s right about the issue in question?

  42. Demosthenes wrote:

    “All speech is vain and empty unless it be accompanied by action.”

    (384 BC – 322 BC)

  43. Krugman should stop waivering; no reform is better than what now is on the table. What provision of any reform legislation, if in place 2 years ago, would have prevented the financial debacle all of us, except the banks, are experiencing?

    Does anyone really believe that a resolution authority would have acted to shut down or break up Citi, Goldman, B of A, etc.? Does anyone expect they will in the future? The poeple who made and will make such decisions will remain the same for years to come. Names may change but the decisions won’t because, as Peter Townsend tells us, the new boss will be the same as the old boss.

    If democrats were serious about financial reform, they would break these large and ponderous bills down to simple concepts. A new Glass-Steagall-type bill; full transparency for derivatives and swaps and a prohibition on their use for speculative purposes (as they divert needed capital from constructive investments, are potentially destablizing and amount to little more than high-stakes gambling); force investment banks to play with their owners’ funds and whatever they can borrow from sources that do not enjoy the advantage of deposit insurance; create an independent CFPA; break institutions down to size so they will not be TBTF or TITF etc. Force the pre-purchased legislators from both sides of the aisle to to vote in the light of day on each bill and too explain their votes to their constituents. But first, ensure that corporate political speech is not tax deductible and modify the proxy rules to allow shareholders to vote to ban all political speech by the companies in which they own shares.

    We all know this won’t happen. Instead, banks will continue to assist nations and companies conceal their true financial conditions. While doing so, they will bet against their clients in the swaps and derivative markets. They will develop magical solutions to the problem of underfunded pensions and the bill will be paid by future retirees. They will nurse and then fuel new bubbles, raking in huge profits while doing so. And taxpayers will once again be called on to bail them out when the economy, reacting to their perverse practices, once again goes into the crapper.

    Nothing proposed to date, with any hope of passage, will prevent such scenarios. So Congress should stop wasting its and our time. Stop the charade.

  44. Krugman has proved himself a corporate democrat that doesn’t understand the problems. All public ills lead to Wall Street and then the reason you can’t get cured leads right back there. Us mice need to stop electing cats to represent us. Blue cat, red cat, black cat or coalition poke-a-dot cats will not work. They are cats. They set rules for themselves only and then thrive on our misfortune. This experiment needs to collapes and the sooner the better cause it for sure is going to one way or the other.

  45. There’s a problem (new crisis), let’s form a committee and pass a new bill to prevent this from happening again. Repeat process. Well how did our problems start in the first place? The bundled mortgages went bad and it snow balled. Now let’s go back to where it started. Mid 1990’s, Clinton and Gore push for and got NAFTA and WTO bills through Congress, fast track (that means without much discussion or thought). Well, it took some years but eventually cheaper Chinese goods made there way to Walmart. American plants lost orders, laid off workers, local business activity also went down, and tax revenues were reduced. It took some more years to make investment, but eventually plants were built in Mexico and China, etc. More job loses and more reduced tax revenues. Then the American plants closed. While this process was going on Clinton and his housing secretary came up with 100% home mortgage financing. Job loses continue throughout the 2000’s and the bad mortgages started to mount. Then with all the jobs going overseas housing sales dropped, house prices fell, and now you had negative equity loans with people who couldn’t make the payments because they lost their job. Then the stress came first on Lehman’s and resulted in bankruptcy. Bill Clinton in 2008 during the campaign said, “NAFTA didn’t work out the way we though it would. Translated that means it failed. Also in 2008 Clinton’s housing secretary said in the NY Times that “the 100% mortgages didn’t workout the way we planned” Translated that means it failed. Now we have a mess created by government that is now being addressed with another government solution, unreal amounts of debt, which is tomorrow’s next problem, a financial storm. No doubt they will form a committee to investigate and regulate the problem which they created, and then pass a new bill so it won’t happen again. But know this, there are solutions. I know of a large metro area (county level) were it is happening. And you know, it’s not rocket science that you need to fix things any more than it take’s rocket science to understand how we got here. The question is do we want to, or do we want to continue to form committees to regulate problems created by government leaders repeating the process of makink poor decisions?

  46. With all due respect dlbnext, – and I agree with your entire post in spirit, – but we divide on the causes. “The bundled mortgages went bad and it snow balled” is, the result, not the cause. The cause of this crisis is firmly entrenched in wanton deceptions, abuses, and crimes; (fraud, PONZISHCEMES, bribery, insidertrading, taxevasion and other acts of treachery and skulduggery by a ruthless den of predatorclass vipers and thieves in the finance sector, and the socalled government regulatory bodies, and a “purchased government”. The worst financial crisis since the great depression was conjured and executed by predatorclass operators and oligarchs in the finance sector.

    Amerika has a problem recognizing the truth and facts, and prefers to worship propaganda, fairytales, fantasy, and naked lies. 9/11, Iraq, Afghanistan, the socalled neverendingwaronterror, the brutal rape, dismemberment, and reengineering of that thing we once called the Constitution, the quantifiable and massive widening divide between thehaves, and thehavenots, the “doom loop” bubblebust economies, culminating in the worst financial crisis since the great depression.

    Follow the money. Who profited wantonly every step of the way, while their fellow American were and are hurled into poverty? Who owns and controls the socalled government? Who has any voice in that government? Whose wealth is imponderable?

    It’s not the people.

    The predatorclass alone and exclusively is responsible, accountable, and culpable for the devastation of America.

    Crimes were committed!!!
    Crimes are being committed today!!!

    And we sit here and discuss reforms that will never happen.

    This evil – and it is an evil, – an injustice, and grotesque abuse of power, – must be confronted and defeated. Recompense and punishments must be administered according to the law. Simply walking away from these evils and crimes, and pretending all is well in the land of Oz, because pundits and parrots in the socalled MSM brute these lies, – dooms America to a path of deprivation, oppression, conflict, and wanton profiteering by thefew, the predatorclass.

    Nothing will change until the predatorclass is put back in the keep.

    The socalled government will not help us.
    The complicit parrots and propagandists, and disinformation warriors in the socalled MSM will not help us.
    The socalled judicial system (one of the most unjust on earth) will not help us.
    The pigs, – I mean lawenforcementofficers will not help us.
    The den of vipers and thieves in the sundry brood of Amerikan oligarchs and corporate titans will not help us.

    No one in government will help us!!!

    We must help ourselves, and stand in unison in defense of our children and the kind America we honor and defend.

    The predatorclass operators and oligarchs in the TBTF finance sector are a den of vipers and thieves, who have robbed and pillaged America and profited wantonly in and from the nefarious process.

    These criminals are accountable to the law, and the rule of law. Or in practical application there is no law, and no such thing as the rule of law. In a world where there are no laws, and no rule of law, – there are no laws, and no rule of law for anyone predatorclass biiiaaatches.

    “There will be blood”, and a reckoning, and a balancing.

  47. Here is my explanation of why it makes sense to pass the imperfect health care reform bill, but not the (far more) imperfect finance reform bill (as it’s currently looking).

    1) We don’t live in simple world where any optimizing rule has no exceptions. In a complicated world, or an extremely complicated world, often what optimizes is highly case by case, and simple minded rules with no exceptions often lead to extremely sub-optimal decisions.

    2) What are the specific arguments here? It largely comes down to expected public learning and response to a bills passing. If the health care reform bill passed. It would be an enormous step forward and it would really show the public that we can have a universal health insurance program, with subsidies that make insurance far more affordable, and sizable regulations and controls to lower costs, improve quality, and protect patients. We can do all this and not become socialist with some kind of caricature of Soviet medical care. It would enormously debunk Republican propaganda and outright lies through clear first hand demonstrations that every American would see often in their everyday lives. In this way it would be like the passing of Social Security and Medicare which the Republicans had scared so much of the public into thinking would be a socialist disaster, but once were actually tried the propaganda and lies almost instantly dissolved and there was no turning back; the programs were only steadily strengthened and improved greatly.

    A weak finance regulation bill by contrast, is something few voters could understand or feel its direct effects. Its weakness would lead to little improvement and another financial disaster, so then voters would not think much of financial regulation in general, or would even be convinced by Republicans that it caused the next financial crisis. So this is a bill that’s so weak, as well as techical and esoteric, that voters can’t experience its positive effects, so it won’t lead to positive feeling and learning about the concept. It’s almost certain failure could easily lead to the opposite. At the same time, if Republicans vote as a block against a good bill, resulting in nothing, this can really hurt their public support.

    3) The health care reform bill would do immensely more good than the kind of weak finance reform bills that are being talked about.

  48. “Alas, our legislators are far too gutless to address the issues”

    right but americans are gutless in their reaction to being raped and sold into debt slavery to by their leaders.

    if they had any courage they would close their 2b2f bank accounts, sell out of the market and invest directly in local enterprises. but that would take courage.

    regulation is written by the incumbents and is a barrier to entry to the market.

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