Comments on: Bush Is Becoming Hoover; Where is FDR?

By: MarkH

MarkH — Tue, 18 Mar 2008 01:04:57 +0000

That’s our money not being offered to bailout the biggest Wall Street Firms. Are we in the process of nationalizing Wall Street, without admitting it?

Yes indeed. But the difference between what the Fed is doing and nationalization is that we derive none of the benefits of nationalization, such as they are. It’s American Capitalism at its finest: Privatize the profits, socialize the risks.

If we had properly regulated (including slapping Bill Clinton’s hand for the Banking Modernization Act) we might have avoided this and any major recession/depression which will hurt so many people.

Liberal regulation to prevent bad things doesn’t prevent good business activities.

By: MarkH

MarkH — Tue, 18 Mar 2008 00:59:43 +0000

where the FRIG are the democrats calling BULL CRAP on this president

as SOON as assign blame where it belongs the call for impeachment will ring DEAFENING

Oh, we clarified that long ago. It’s the Vast Right-Wing conspiracy and Bush is their public face.

But, that doesn’t mean it’s of any use to continually pound him. There are bigger problems important to real people which have to be dealt with.

However, that said, it would be nice to have this administration kicked about before it walks out 1/20/09. If we don’t punish them some way or other, then we’re just begging for somebody else to do it in the future and we’re essentially accepting what they did in our names. We must punish them somehow.

By: MarkH

MarkH — Tue, 18 Mar 2008 00:53:49 +0000

For good reason Fear is justified when times are uncertain.

And, times are always uncertain!

By: earlofhuntingdon

earlofhuntingdon — Mon, 17 Mar 2008 21:11:27 +0000

Agree, but not an American phenomenon. What may be uniquely American, is our willingness to pretend it isn’t so, just as we imagine – thanks in large part to our early schooling – that we are and are perceived by others as a disinterested force for good in our international/economic relations. The French and English admit to being monopolistic, imperialist bastards on occasion, as long as they make money at it.

By: Dakinikat

Dakinikat — Mon, 17 Mar 2008 19:46:47 +0000

Well, my hope is that part of the BS deal, is to publicly tar and feather the senior management and ride them down wall streets hog-tied. Unfortunately, there’s a lot of things tied up in the Putnam group, one of their subsidiaries, that would severely hurt a lot of ordinary savers. I’m less concerned about hedge fund holders and the investment banking arm. Their biggest asset is the Putnam funds … this is what JP Morgan wants … believe me.

By: Dakinikat

Dakinikat — Mon, 17 Mar 2008 19:43:44 +0000

You wouldn’t have banking if there was a 100% reserve requirement, besides this isn’t a banking crisis per se. The problem is with asset managment financial institutions. Derivatives have been used successfully for awhile also. However, since Bushco have taken a complete handsoff approach, we’ve seen absolutely no policing of new instruments and since they got rid of glass-stegall, there has been increasing market concentration of investment banking and brokerage firms. This is ALWAYS a bad thing because concentration of holdings in a few hands means if one guy goes down, he takes a good portion of the market. We can’t continue confusing capitalism with out and out monopoly and market control. Free markets are not monopolies that are free to eliminate their competitors by out-lobbying economics-stupid congress. We need government to pay attention to the man behind the curtain. The republicans basically look the other way.

By: Alicia

Alicia — Mon, 17 Mar 2008 18:39:03 +0000

That is the pithiest and best assessment I’ve heard of our situation. You are exactly right. It’s just faith-based economics.

By: earlofhuntingdon

earlofhuntingdon — Mon, 17 Mar 2008 18:22:51 +0000

I think that’s why Krugman describes this as a solvency crisis – do liabilities exceed assets – rather than a liquidity crisis – is cash coming in adequate to make payments on time. Which is why, I presume, K was dismissive that the Fed injecting the equivalent of cash (liquidity) into the market would mitigate this crisis.

Yours is a good point I think Krugman has also made: currently solvent and/or well-managed firms – the potential white knights who would take over failures and keep the industry going relatively smoothly – are few and can’t assess the solvency of big-time players they might lend to (or buy).

I gather the Fed dealt with that in the BS deal by giving JPM guarantees, in effect, making good – JPM’s favor – $30 billion of BS’s losses with taxpayer’s money. Bernanke can only do so much of that socialist corporatefare before he needs to come back to Congress, hat in hand, and beg for more money. Congress ought to start hearings now in order to consider what it ought to do before it does it. Thankfully, an election is coming, which gives progressives slightly more voice than they’ve had in the past seven years.

IMHO, the BS deal is a bad template: it bailed out the baddies. Taxpayers should object to that, and say it in the ballot box.

By: SanderO

SanderO — Mon, 17 Mar 2008 17:22:15 +0000

Derivatives have to be severely regulated. There are all sorts of bizarro financial instruments which wall street created to be traded for fees.

In addition the fractional lending system must be ended and banks need to have 100% reserve, not 10%.

By: Dakinikat

Dakinikat — Mon, 17 Mar 2008 16:38:02 +0000

Really good point that one … they could transfer some of the assets to Freddie MAC and ncourage them to renegotiate the loans based on some kind of subsidies. Problem is most of the banks still don’t even know which of these loans are actually bad because they bought the credit derivatives to remove the risk and it’s very tough chasing down the owners of those things …