I could not agree MORE. This entire mess has thrown public authorities out of control... if only it was an "out of control" that was relatively costless to the taxpayer, but such is not the case. This "anything goes" approach WILL have consequences. The very fundamental rule of economics, even more basic than supply and demand is that there is no free lunch!
Can we stop spending thousands of billions of taxpayer dollars (and next-generation real disposable incomes) on trying to fix an unfixable mess (while millions if not billions "fall through the cracks" and end up in private pockets of well-connected Wall Street people) and concentrate on padding people and businesses against the consequences of the necessary but painful global deleveraging that is taking place? The Warren Buffets of the world are positioning themselves in preparation for the Bailout Mania windfall but not much else is happening on the positive side.
We need to accept the very basic truth here: the West has been living beyond its means for 2 decades now and this shows up in aggregate private market credit as a % of GDP which has reached historical proportions now and has been on a tear for 2 decades. Although there may be some “structural break” in the world economy that could explain PART of the phenomenal increase in the credit market debt-to-GDP ratio, but I strongly doubt this “structural break” could entirely explain the observed changes of the last decade in the 1920-2007 series (see graphs).
This “living beyond our means” has been made possible by borrowing (in fiscal and environmental terms) from future generations and from Asia. We are now literally throwing free money at the very people who should get as little as possible, thus structurally integrating moral hazard to the long term mess as well, but that is so “old school”, right? The slogan currently should be “if you want money, you have to be bankrupt or close to it”, and all the large mismanaged corporations have certainly caught on to this. Now everything goes and more dumping on the taxpayer will soon come – auto loans, credit card debt, almost free transfers to large automakers, etc.
Of course "punishment" is not a responsible economic policy - I agree and I totally understand the issue of "clogged" credit markets. But pragmatism IS essential to good economic policy. And using thousands of billions of taxpayer dollars (still not enough relative to the size of the problem) in what seems like ad-hoc "tests" and “approximate” policies with very unsure results that benefit few at the expense of many seems quite un-pragmatic and irresponsible to me.
The reality is that there are 2 types of recessions: one is due to the Central Bank slowing the economy to decrease inflation (Romer and Romer), change inflationary expectations and “anchor” expectations and policy credibility, and to keep the economy "close to potential." The other type of recession is due to massive misallocation of resources, dislocations in interest rates and prices, and poor risk assessment – all are essentially the same thing. The recession just starting now is a "type 2" recession and standard policy will not work. We (especially the USA and Europe) will spend astronomical amounts of taxpayer dollars and, Central Bank “printing of free money”, and policy credibility erosion while discovering this and running into a liquidity trap. We will then wake up in a few years with very serious fiscal issues which will limit the intervention ability of the public sector when it will be really required and useful.
Pascal Bédard, Montreal
bacalove
· 1 year ago
The modern Buddhist teacher and scholar, Joanna Macy, often speaks of the Prophecy of the Shamballa Warriors as told to her by her teacher Choegyal Rinpoche. It speaks of a time when the world is in extreme danger, when so called "barbarians" of east and west have gathered great wealth and built unimaginable weapons of mass destruction and developed technologies that can "lay waste our world". It is at this time, when life seems to be hanging in the balance, that the kingdom of Shamballa begins to emerge. This kingdom is not an ecotourism destination, a place you can find on the map, but an inner kingdom, an interior state of mind and heart existing within the "warriors". These Shamballa warriors are the people who understand without question that all life is interconnected and that all life is sacred. You wouldn't recognize them on the street because they have no badges, no uniforms and no leaders. They walk in the lands of the barbarians, holding no territory of their own and are called on to act with moral and physical courage, to go into the center of the controversy and dismantle the weapons of mass destruction, the systems of chaos and materialism.
Important information here. Charles R Morris should be a guest host on CNBC.
jackball
· 1 year ago
bacalove,
you mean: ...one of us...one of us...one of us...
you're awesome...keep on believin'
Jon
· 1 year ago
So... if you were the fed and you needed to shrink the money supply to prop up the sinking dollar, how would you do it without asking citizens to give their dollars back?
Simple, sell a financial crisis to Americans and congress:
Then, after the fear mongering on Capital Hill two weeks ago, the 'Commercial Paper' market freezes up and the Fed makes moves to take that over. One more option for them to collect interest from banks and corporations that need to borrow massive amounts (we're talking billions and trillions here) of short term funds.
Now, private banks are consolidating and being bought up by the fed.
How is this good for America?
Marnie
· 1 year ago
Hey where were you? That $650B was in the news, the day after the first nay vote of the House. Yet hardly anybody has talked about that freebee given by Bernanke/Paulson. So this whole give away started at $1350B.
This whole give away was planned down to the dollar by the repocons and congress and the press just stood there and cheered.
Nobody has said. "Oooo, didn't they come up with a plan quick. They must have stayed up all night" They didn't have to. It was already in the print que ready to hand around.
George V. Williams
· 11 months ago
'REPOCONS', I really like that one. Congratulations. It is nothing short of BRILLIANT!
George V. Williams
· 11 months ago
At very least, we must accord some halting credit to the Bush Regime for consistency. As in so many other departments of government, at the Fed. and Treasury, he/they have put foxes in charge of the henhouse. I can, at the moment, think of no more egregious example of this near-CRIMINAL insanity than here, in charge of the very basis; the bedrock, of the American economy. The result, both short- and long-term, therefore, is both tragic and predictable.
All Comments
Can we stop spending thousands of billions of taxpayer dollars (and next-generation real disposable incomes) on trying to fix an unfixable mess (while millions if not billions "fall through the cracks" and end up in private pockets of well-connected Wall Street people) and concentrate on padding people and businesses against the consequences of the necessary but painful global deleveraging that is taking place? The Warren Buffets of the world are positioning themselves in preparation for the Bailout Mania windfall but not much else is happening on the positive side.
We need to accept the very basic truth here: the West has been living beyond its means for 2 decades now and this shows up in aggregate private market credit as a % of GDP which has reached historical proportions now and has been on a tear for 2 decades. Although there may be some “structural break” in the world economy that could explain PART of the phenomenal increase in the credit market debt-to-GDP ratio, but I strongly doubt this “structural break” could entirely explain the observed changes of the last decade in the 1920-2007 series (see graphs).
This “living beyond our means” has been made possible by borrowing (in fiscal and environmental terms) from future generations and from Asia. We are now literally throwing free money at the very people who should get as little as possible, thus structurally integrating moral hazard to the long term mess as well, but that is so “old school”, right? The slogan currently should be “if you want money, you have to be bankrupt or close to it”, and all the large mismanaged corporations have certainly caught on to this. Now everything goes and more dumping on the taxpayer will soon come – auto loans, credit card debt, almost free transfers to large automakers, etc.
Of course "punishment" is not a responsible economic policy - I agree and I totally understand the issue of "clogged" credit markets. But pragmatism IS essential to good economic policy. And using thousands of billions of taxpayer dollars (still not enough relative to the size of the problem) in what seems like ad-hoc "tests" and “approximate” policies with very unsure results that benefit few at the expense of many seems quite un-pragmatic and irresponsible to me.
The reality is that there are 2 types of recessions: one is due to the Central Bank slowing the economy to decrease inflation (Romer and Romer), change inflationary expectations and “anchor” expectations and policy credibility, and to keep the economy "close to potential." The other type of recession is due to massive misallocation of resources, dislocations in interest rates and prices, and poor risk assessment – all are essentially the same thing. The recession just starting now is a "type 2" recession and standard policy will not work. We (especially the USA and Europe) will spend astronomical amounts of taxpayer dollars and, Central Bank “printing of free money”, and policy credibility erosion while discovering this and running into a liquidity trap. We will then wake up in a few years with very serious fiscal issues which will limit the intervention ability of the public sector when it will be really required and useful.
Pascal Bédard, Montreal
http://www.worldservicegroup.com/bv-libra-2008....
you mean: ...one of us...one of us...one of us...
you're awesome...keep on believin'
Simple, sell a financial crisis to Americans and congress:
• Think about it, 8.4 trillion (http://news.yahoo.com/s/ap/wall_street) evaporate from the stock market this year! and still growing
also see - http://www.foxnews.com/story/0,2933,436435,00.html
• 6 trillion (est. http://news.goldseek.com/GoldSeek/1220622331.php) disappear from the housing market in the last two years.
• Untold trillions disappear from the financial banking institutions.
Then, after the fear mongering on Capital Hill two weeks ago, the 'Commercial Paper' market freezes up and the Fed makes moves to take that over. One more option for them to collect interest from banks and corporations that need to borrow massive amounts (we're talking billions and trillions here) of short term funds.
Now, private banks are consolidating and being bought up by the fed.
How is this good for America?
That $650B was in the news, the day after the first nay vote of the House.
Yet hardly anybody has talked about that freebee given by Bernanke/Paulson.
So this whole give away started at $1350B.
This whole give away was planned down to the dollar by the repocons and congress and the press just stood there and cheered.
Nobody has said. "Oooo, didn't they come up with a plan quick. They must have stayed up all night"
They didn't have to. It was already in the print que ready to hand around.