on the list of thinking big, is there any interest in pushing (by citizens, i’m not asking what the dems want us to do) for single payer healthcare instead of pre-compromising to the insurance and big pharma industries?

Sending in an army of auditors [#2] is what we need to do. As masaccio’s excellent Oxdown diary suggests it is essential that we do our very best to figure out what these ‘toxic assets’ are worth. Until that happens,
we are in a BS swirl.

http://oxdown.firedoglake.com/diary/3584

Citizen Ian:

What a great start to a conference…Alan Brinkley knows his “depressionology” I jest wonder however if the window has not already closed on real recovery if we don’t get aid to the states back into the stimulus bill. I guess what I’m sayin isit’ll all be academic in a few months.

It’s also helpful to be able to understand (a) how these toxic assets came to be in the first place, and (b) how they were allowed to accumulate and be passed along to unsuspecting others.

Getting a handle on these two things — with all the supporting data a good auditor can give you — will go a long way toward designing the appropriate regulatory safeguards to prevent this from happening again in the future.

In deflation keeping both prices and wages up is one approach (and one I favor) and the other is to start slashing wages and prices.

I prefer slashing prices and leaving wages

During the GD farmers dumbed raw milk into steams to protest low the farm gate price of milk. This was the beginning of the price supports for Ag products, which has over the past 60 years morphed into corporate welfare for Ag corporations.

Today the farm gate price of milk has again collapsed below the cost of production, yet supermarkets have not lowered prices to consumers. Collapsing prices can also be found in many sectors of the economy, housing, raw materials, services, wages, etc.

Price supports may well be needed if the pace of this financial collapse increases.

Can do that, everything needs to deflate proportionately. Suppose you are selling products that require labor to produce, if you slash the sell price and maintain the labor price cost you might not be able to stay in business.

We need RATIONAL wage scales.

A tip of the hat to Paul Rubin, Phil Graham and their acolytes for deregulation and allowing Banks to become Las Vegas casinos (without the show girls).

Since we went off the gold standard we are now on the It’s Better Than Anyone Else’s standard. Let’s take advantage of this and start printing $1,000,000,000 Dollar bills with FDR’s picture on it. As I guess it’s still required to print money, we’ll make it half the size of present currency thus saving paper, ink and storage space. We pay off all the Shit the Banks thought they could hide, pay excessive “Retention Bonuses” to keep the streets safe for our kids and citizens by keeping these financial whiz kids employed. Since money has no intrinsic value, after we pay off the Mob and their bad debits, support the downtrodden stock holder and increase CEO benefits, we just burn the money and pretend this fiasco never happened. Lo and behold, no increased taxes, no long term debit, and our currency is still Better Than Anyone Else’s.

As a slice of GDP, the stimulus is not as big as what FDR did. And that’s all kind of irrelevant isn’t it. The question is what kind and size of stimulus do we need now? I would further like to know how many of these people are thinking about depression and what they think the odds are of us staying out of one. It would make for a quick rule of thumb to evaluate their credibility.

this would be a great economic stimulus as well b/c it would employ many in the accounting field who are out of work ;)

it’s bob rubin. and don’t forget larry summers.

“Bigger” than the New Deal how, exactly?
iirc, the comparison of 1936 dollars and population has been discussed here in another thread, and “2009: It’s Bigger!” was not the conclusion.

FunnyDiva

If we can’t Send in the Clowns, the next best thing is Send in the Auditors. Big Audit has severe conflicts of interest. The top firms’ relationships with their audit clients is lucrative and still yields advising and other relationships whose revenue can dwarf audit revenue. Moreover, top audit relationship managers can become de facto permanent advisers, privy to a company’s top secrets, which pits promoting company goals against more intrusive audits. Like a foot in glove, the two rarely go hand in hand.

Audit firms, especially their junior managers, who do the legwork on audits, work under considerable pressure to keep relationships smooth. The relationship is not analogous to prosecutor and target, or even witness. It’s closer to Father Confessor.

Who knows what rewrites might be necessary, if the business goes elsewhere. All of that is subtext, a possibility, and firms deny it like the Air Force denies its secret weapons and inexplicable phenomena.

Bottom line is that if the Feds — in reality, America’s overstretched taxpayers — are going to pump hundreds of billions or trillions of dollars into “private” firms, they ought to insist on independent audits so that they know what they’re buying.

That inevitably leads back to what Ford would call, Job One: Americans, acting collectively through their government, ought to own a controlling stake in any firm it saves from the scrap heap. Just as they should remake their boards and reassign or fire top managers whose “unique skills” led to needing billions in taxpayer money.

David Brooks would call that socialism. Eewww. “Capitalism”, on the other hand, is capitalists acting collectively through a controlled government. Examples are pre-Castro Cuba, its fruit- and tobacco-filled Latin American neighbors, pre-WWII India and China, and in many ways, les Etats Unis.)

But think about this. The great capitalists, Rupert Murdoch and infamous “private equity” financiers, wouldn’t give these dollar, a pound, a franc or a Euro or an Rmb to a needful company without first stripping its assets, extracting its cash potential and obtaining control over any expenditure larger than a bagged lunch. Taxpayers would be suckers not to do likewise. They, of course, would be more passionately conservative about demanding blood from a stone than their private sector peers. Big Banking should be grateful.

At the today’s banking hearing, these guys are spinning a story that they are unwilling to sell their products at lower than market prices and that the capital is not in the market to buy their assets. The issue of the ‘actual’ value of bad assets is completely avoided. They have no plan.

Lowering prices while keeping wages steady is exactly

not

what to do, because it reduces the demand for labour. This is the heart of the Conservative critique of the New Deal. It was — God bless their little hard hearts — also Keynes’s critique of British policy in the 1920s. The notion that the economy can be restarted by general deflation is based on the odd notion that your money is worth more when the price of everything is lower. Of course, this is simply a logical proposition drawn from the theory of general market equilibrium, and has no practical significance. Nevermind, say the reactionaries, we don’t need no stinking ’significance.’

The correct policy is reflation — rising prices and stable wages. It’s a lot easier on the workers, who don’t have to renegotiate their mortgages, rents, and other fixed payments to get them in line with their lower money income, and it’s something government can do. The problem right now is that we can’t get the reflation going because the money is simply being held in ‘idle’ balances until the dust clears, which may be a while. That leaves government spending and helping the poor. God forbid we do anything so sensible!

excellent point.

The Great Fear about public ownership of banks and other failing institutions is not cost. Taxpayers will bear that anyway. It’s not how to unwind a company if it can’t be saved or how to resell it to “the market” if it can. Mechanisms readily exist to do those things. It’s not the added government bureaucracy that would be needed, or the fact of “public” ownership, both of which are anathema to many conservatives, and the likes of David Brooks would equate them with the Russian Revolution or Maoist China.

I think what scares the silken drawers off these people is the idea that public ownership might require managing these companies with an eye to public interests. Keeping their promises to governments, communities and workers instead of skipping out on them or rewriting them thanks to a few well-placed donations. Willfully paying taxes and complying with environmental laws and best practices. Not resorting to firing union members as the knee-jerk reaction to a downturn in business. Why, an insurance company might have to pay off a valid claim immediately, instead of spinning it out for years.

Oddly, as competitive and sometimes ruthless as European firms are, their managers wrestle with these issues all the time. The public doesn’t come out on top all or probably most of the time. But they’re in the fight. American bidnessmen laugh at that. It doesn’t fit their ethnocentric definition of “business”, and they lack the required skills to do it and still make money.

Scarier still, what managing companies with a fuller eye to the public interest might also lead to is running our government along similar lines. Now that would be a revolution that would make David Brooks very afraid.

I think what scares the silken drawers off these people is the idea that public ownership might require managing these companies with an eye to public interests.

Yes, that would threaten the established interests of the rich and powerful. It continues to surprise even someone as cynical as myself that these guys would rather risk the collapse of the whole system than accept limitations on what they can and cannot do.

Bankers might say today there’s no capital to buy the toxic assets, but if those assets are insured by the Fed, then there will be buyers.

If bankers don’t want to sell, then they should be asked when they’re going to resume normal lending. If they won’t sell or lend, then perhaps they should be nationalized…or at least the assets should be.

I love what Claire McCaskill said. It’s so appropriate in almost any situation where Wall St. comes up. These guys are idiots. What planet are they from?