Welcome to firedoglake – so glad you could join us today!

Welcome, Rob, so great to have you here.

I should mention, this entire series was inspired by an email Rob sent me, highlighting that they’re considering another $750 billion to bail out the banks, and still no oversight.

How are you feeling about things these days, Rob?

Rob here. Happy to join you all.

I am feeling rage and opportunity in the same breath. Since the October bailout citizens have gotten more angry and more aware. The AIG bailout in particular highlights the unfairness. Bailing out financial institutions while hiding who gets the money (Because we have to protect their privacy from us when we pay the bills???) There is a lot of distress and loss in this society and the contradiction between the pain and who is getting pain relief is now plain to see. So what are we goint to do about this injustice?

The Banks loaned money to the hedgefunds at $30 to every $1 of assets the hedges had so now that the hedges collateral has dropped in value why are the banks not asking the hedges for more collateral?
Unless the Hedges bought Credit Default Swaps from the banks in case their collateral would ever decline in value?
Or is there an other reason why the banks are not asking for more collateral from the hedgefunds now?

Very good question. I’ve asked others, and I’ll ask you — if you could make three changes tomorrow, what would the be?

It appears, from watching Jamie Dimon, the CEO of JP Morgan/Chase and reading Lloyd Blankfien of Goldman Sachs, that the major financial firms do not want to do very much to change the rules that imbed financial institutions in our social framework. Who can blame them? They get the upside and we take the losses. See Dimon’s speech on Bloomberg.com to see his confidence.

It appears the government policy is one of forbearance. They plead fear of renewed danger of a Lehman episode if they restructure Citi, or AIG or others. They are tacitly extending the protection to all creditors and counter parties of banks and hope that that will calm things down and bring them back to health. They run the risk that things get worse and that the taxpayers will ultimately pay a much bigger bill. One that could stress the quality of Uncle Sam’s credit. A dangerous game is being played with our money and the Wall Street stockholders are the beneficiaries.

thank you, sir. that video was very illuminating.

do you think the money going to foreign institutions as part of AIG bailout is the administration’s way of getting leverage with european and south-east asian governments to overhaul the financial regulatory system? how else can one rationalise it?

The changes I would make Jane are as follows.

1. Change legislation to permit the FDIC to take over financial services holding companies rather than just banks.

2. Take the largest firms into FDIC restructuring together and sell them off in pieces so that we did not have “too big to fail” anymore.

2b. Leverage limits and eliminate the off balance sheet vehicles that allow banks to get increasing leverage and avoid capital set asides. Both of these reduce the size of the spillovers that could harm the economy.

3. Stop the commingling of risky activities with the vital plumbing of the financial system. Core institutions are like utilities and they should not be taken down by being commingled with casinos. Overall I am saying that finance becomes again subordinate and servant to the real economy and not the master.

Would getting rid of Credit Default Swaps end the danger of this ever happening again? Any chance of that happening without waiting for the market to get worse?

To Things Come Undone.

I am under the impression that the hedge funds are getting much stricter terms from the banks and in fact they are being forced to reduce leverage and pay more to their prime brokers who settle their trades and positions

How much should we limit leverage? Why do the big guys get leverage and us little people do not get credit like they do 30 to 1 leverage on assets is a lot.

To what are they smoking.

I sense that the leverage the US government gets can take place across a whole myriad of issues related to geopolitics and other concerns. My impression is that the USA is most resistant to financial regulatory reform. So maybe that is one way they keep the Europeans from demanding more from them.

So is this why the Dow was going down recently or was it as the right suggests all Obama’s fault? Is there a third reason?

Again to TCU. (Things Come Undone) I think that officials have found that the Too Big and Intertwined to Fail aspect of the octopus of CDS makes it very difficult for them to shut down institutions. CDS are insurance contracts on other peoples events. They are called swaps to avoid insurance regulation. In real insurance, it was found out in the UK, when you allow people to insure events on others that problems arise. Many used to take out insurance on warships where they had no cargo. They found out that the French were being tipped off that those ships were at sea and as a result many were sunk. The tipoff artists were the ones who bought insurance. As a result insurance was reformed to require that you have a loss potential to insure against. CDS has many of the same manipulative potentials.

Thank you for joining us this afternoon Robert [struggling to avoid making Blues jokes].

I have been following how the G20 nations are starting to hammer the countries like Switzerland and Lichtenstein over the bank secrecy laws and hiding of tax avoidance dollars.

When will Wall St bankers realize that the transparency being required of countries long famous as over shore tax havens is also now required of them? Or have they been so far up in the clouds that they still don’t understand that the rules are changing, even for them?

Technical note: With each comment there is a “Reply” button in the lower right hand. By clicking on the Reply button, the comment will prefill to whom you are replying and the original comment number (and save you some typing) :})

Mr. Johnson, what is your perspective on Ellen Hodgson Brown’s perspection that the FED should be nationalized?

TCU I would limit leverage to about 10 to 1 for financial institutions with some other regulations that would limit it more in some areas. If you look at the problems in order of when the erupted from Bear Stearns to GSE to Lehman To Merrill to AIG to Citibank it is almost in line with their leverage ratio at the start of 2008. UBS was in there just after Bear Stearns too.

and hope that that will calm things down and bring them back to health.

This crisis was based on too many people not paying their home loans.
It could take 10 years for home prices to get back to where they were when inflation is factored in.
Never mind the interest above the inflation rate I hope we taxpayers get back from the banks.
So just how does any bank Bailout plan pay us back or are we talking decades of wait here?
Selling the banks assets off in this economy will not do it the banks will not get prehousing bubble prices for their assets.

Please Digg this post.

The Dow I believe went down for several reasons. One is that it went up after Obama was elected on the grounds that the Best and the Brightest would in fact come in a do concrete things. When they were small and late on stimulus and also very very murky on financial resolution those hopes dissipated. Secondly the strangling of the non financial economy is becoming more and more apparent. Was it Obama’s fault in the large. No that is propaganda from the other team in my view.

In Citi’s most recent 10-K, there is a list of subsidiaries 65 pages long. Here’s just one: Yugen Sekinin Chukan Houjin Amusement Holdings, incorporated in Japan.

It looks like it wouldn’t be that hard to break the company up, the list is a blueprint, which with some attention to detail, shows the logical division points.

I would be very careful here. The Wall Street guys might not have their heads in the clouds. They have run the game of money politics for years and laughed at the population as they have done the heavy lifting of fundraising for Dodd, Obama, Clinton McCain and others. The population is now incredulous. But they are not effective in countering the role of $$$ in Washington.

Also AIG never kept enough money in hand to pay in case the entire nation’s housing market went down. Would higher cash requirements have prevented the banking Crisis?
Or would they have made Credit Default Swaps to expensive? Also TCU is fine ThingsComeUndone is allot to type.
Hit the reply button at the corner of anyone’s comment you wish to reply too.

“The population is now incredulous. But they are not effective in countering the role of $$$ in Washington.”; and IMHO, THAT is what needs to be addressed yesterday.

Breaking up Citi is a gargantuan task. The Government better hire some experts and set up a Reconstruction Finance Operation like the RFC of the New Deal. Thousands will be needed to do all the work we need done. But the road map is likely in large part available. After there is a management running them now.

Robert,

What is your opinion of Geithner’s Public Private Investment Plan, which will reportedly use non-recourse loans?

I see it as a way to obfuscate taxpayers overpaying for toxic assets, and leaving them holding the worst of them.

How important do you think regulatory reform is, Rob? What about the conflict of interest between the bond ratings agencies and the companies who pay them? Or the balkanized regulatory network within the federal government?

I think the way to deal with future CDSs is to bring them under insurance regulation. This would effectively kill them.

As for those currently out there, I would nullify naked CDSs and amortize the risk on equity backed ones. I would also revalue them in accordance with across the board cramdowns and adust collateral calls accordingly.

This would all take legislation.

The myth of the free market as distinct from the government has just crashed and imploded.

it’s always been nothing but a marketing scheme, it can’t possibly be true

the very concept of money is regulation, ownership is regulation, intelectual property is regulation, the concept of property is regulation and the courts protecting property is regulation.

there can be no market without regulation

would a multiiparty system as they have in in other countries increase accountability? right now, we have two parties that behave more or less like each other.

I am not familiar with this proposal. I would be happy to read it and get back to you. William Greider has written extensively, including this week on the idea of representation and the Fed. There is currently even a fight brewing within the Fed as the regional banks and community banks do not want to pay big taxes and assessments to the FDIC to bailout the big NYC financial institutions who do not have deposits so much as wholesale liabilities. Those liabilities do not pay into the FDIC fund

Jane ,what about the conflict of interest between who owns the FED and it’s role in the economy and this mess?

and I would also like to point out that regulations are usually caused by the industry themselves, in most cases they refuse to address issues they themselves cuased and the regulation WAS the market deciding how to handle that issue

Would ending the wars in Iraq and Afghanistan plus a 20% drop in military spending help prop up the value of the dollar now that we are spending so much?
FDR cut military spending during the Great Depression.
Would spending all or part of that money on Stimulus be best or would National Healthcare be the best bang for the buck.
Healthcare emergencies are the number 1 reason people default on their homes.

Mr. Johnson, here is a link on the subject:
http://www.lonestaricon.com/ab…..#038;z=337

Using the leverage theory who then is next in line to fall?

I see it as a way to obfuscate taxpayers overpaying for toxic assets

All of the bailouts and even Obama’s $75 billion housing plan with its lack of cramdowns are schemes for overpricing the crap assets of banks.

I am not a fan of the current plan for public private investment partnership. It looks like Wall Street and hedge funds who are big campaign contributors get non recourse loans to bet on upside and hand the downside back to the taxpayer. The subsidy from the public pushes up the price that the private will pay banks, who want too much for the assets because marking them down makes them insolvent. This in some cases will make big investors like PIMCO, Carlyle, Blackstone and others some money and will not get to the heart of the problem. The only thing that could be said on the other side is that we already own the losses and maybe a few of the losses could be mitigated because the private guys put up some money. But if the prices are set too high instead of marking down the assets then it is not the case. Note people who specialize in distressed assets like John Paulson in the hedge fund world say there is an active market for all of these assets but they trade at prices the banks will not accept.

Good ideas but is anyone in politics pushing them?

Note: people who specialize in distressed assets like John Paulson in the hedge fund world say there is an active market for all of these assets but they trade at prices the banks will not accept.

So much for letting the market decide!

Thanks for being here, Rob. I look forward to becoming better informed through this discussion.

As for your question “what do we DO now?”…suggestions?

FunnyDiva

Or the balkanized regulatory network within the federal government?

i’m not sure i understand what you mean by “balkanized” here.

Jane comprehensive regulatory reform is essential. The rating agencies have had the wrong incentives. They got paid by the seller rather than the buyer. I read recently that there were about 6 AAA companies and about 50,000 AAA rated CDO securities. That is just plain silly.

We need regulation of conflict of interest, compensation incentives, size, leverage, balance sheet complexity and more.

Our society pretended that ex ante regulation was only a constraint and inefficiency of the free market. Wall Street lobbied to take them apart. Now ex post the external spillovers that threaten the economy are the reason Wall Street says they must be bailed out. This is inconsistent and the fact they will be bailed out is enough reason to restrict them ex ante.

Fair comment. These businesses are not individual, stand-alone enterprises. By design, they are inherently intertwined through ownership, debt, management, suppliers and customers, etc. They often involve de facto partnerships with key foreign players, commercial, military and governmental. A large percentage of Chinese businesses, for example, have Chinese military organizations among their “shareholders”. And as with pigs and laws, some shareholders are more equal than others.

I understand that they have the money and have bought the clout.

But it seems that now that they are shown to be idiots in many ways, as well as liars and crooks with so much of their supposed economic brilliance built on thin air, they still act as if they are the only ones who can be “trusted” to fix things and that we should all just keep our place and not to worry our little heads.

When even Jack Welch is admitting that he was an idiot, surely the folks on Wall St can’t believe that they can still get away with the con?

And would you not agree that all the current discussion about changing ‘mark to market’ is the result of “they trade at prices the banks will not accept.”?

Plus those in government now making policy.

I would bet on Contintential European banks. Goldman Sachs has gotten down from 33 to 1 to about 21 to 1. Morgan Stanley is similar. Citi is still on the moon at a reported 55 to 1 because the share price has fallen so much. But European banks have done much less than US banks to shrink their balance sheets.

Mr. Bush treated American taxpayers as he treated his father’s friends: as assets to be stripped. Depressingly, Mr. Obama seems nearly as unwilling to be more forthcoming about what he wants to use our assets for.

I would like to have seen the Obama plan reduce some of the principal outstanding of the mortgages. It is a start but only a start.

What does transparency mean if the one central fact that transparency would reveal is that all the large banks are insolvent?

How can there be transparency when the bank managements that created this mess and paricipated in the widespread fraud that underlies it remain in place?

How can the government engage in these proposed public private ownership schemes with hedge funds without knowing how solvent, or more likely insolvent, those funds are?

Where do you find these numbers?

I think you will be continuously surprised by Wall Streets audacity.

Send me an email at rajshaman@mac.com and I will work with you a bit on this.

Here’s what I’ve always thought was the irony – we who are middle class or poor are the ones who have all the votes. Why don’t we use them in a way that promotes our interests? You’d think that would be the natural thing to do. Yet we keep electing politicians who do what the rich say and tell us to pound sand.

Based on what emptywheel wrote yesterday about the Obama Administration’s feelings about signing statements and transparency, it’s now clear to me that little has changed there.

When we can answer that question, I suppose we can figure out what we’re going to do about the injustice, because unless that changes, the injustice will just happen again.

I do not for the most part think it difficult to see if funds are solvent. Hedge funds are much more disciplined than large mulitpurpose institutions in marking positions. They must reveal to the Treasury their current condition to be allowed to play in TALF I believe.

On transparency. They should be thoroughly examined by US government officials and brought out into the open. There is a great history of forbearance in Japan, and in the USA during the LDC crisis of the early 1980s where they just warehoused the losses and did not mark them down. But in each of those cases the world economy could be counted on to tow these assets and regions back to health. The danger now is the USA is the center of the world system that depended upon our consumers as the buyer of last resort. That system is exhausted and collapsed and there is no big engine to drive us out of the rut. Hence forbearance is now a two sided bet. Heads the banks stockholders win and tails we the taxypayer loses even more

I recommend every one read Mancur Olson’s fine book entitled “The Logic of Collective Action” to understand why the middle class is not getting traction.

Ok we are in agreement we cannot fix things if we are not allowed to know what the problem is.
The elite think that we cannot handle it. We of course after getting burned will not invest in the banks or start spending again until the economy picks up and, or we see a bank bailout plan we trust that means the banks have to open their books.
The elite assume that things will get better because we will invest in the banks.
The elite do not seem to realize that we do not trust them, so bank investment and consumer spending will not rise.
The economy will get worse. I would then want a second no tax cut stimulus plan.
But what do the Elite have planned a Glen Beck March 13 Shock Doctrine coup? More Do Nothing and wait for the business cycle to change Hoover economics? What is there plan?

I agree and the citizens will sit in their chair for only so long. Obama is a smart man. He wants to survive. I recall LBJ and FDR telling progressives to go out there and “make me do what I should do” The deepening crisis, disillusionment and rage are going to test President Obama in my view. I believe popular action now is feared by the elite leadership. I also have to say I have a tinge of fear inside of me about right wing populism and authoritarian responses. Reading about Europe in the 1930s like Alan Tooze Wages of Destruction and others shows how economic and social stress can send us onto the wrong trajectory.

I do not for the most part think it difficult to see if funds are solvent. Hedge funds are much more disciplined than large mulitpurpose institutions in marking positions. They must reveal to the Treasury their current condition to be allowed to play in TALF I believe.

But what is the Fed accepting as proof of solvency? From what I can tell, its standards have been lax.

The financial industry also pushed through laws limiting the ability of investors to sue the people who violated what was left of the regulation of the industry.

Thanks just sent:)

Permit to provide two ‘contexts’ to this economic accountability. The first ‘context’ does not fit neatly into this thread, but still, permit me to do so. And I ask for the Managers’ applied consideration, in this regard.

I am a person who has the current familial history for being a Yaqui Indian due to my father, and due to my mother, I am also an Apache, and located here in the Sonoran Desert. And yet, I much prefer to think of myself as a Chicano. Why? I and we (my family, was agricultural/migrant-oriented, and consequently, did not learn to read and write English until the third grade while residing in Sidney, Nebraska. Thus, I learned English and ’sewing’ while sitting in the back of class room and my book for learning was Laura Ingalls “Little House on the Prairie”. And lest I forget, the acquired skill set for sewing paid a big dividend when I enlisted in the armed forces. And when I arrived into Alamosa, Colorado for the lettuce crops, I caught the tail end of the Sixth grade, and where I was tested. After the summer, I was enrolled in the Seventh Grade and placed into the “A” class students grouping. However, shortly thereafter I moved to Sargent, Colorado, ‘to do’ the potatoes. And while in high school in Monte Vista, Colorado, I had myself tested for reading and the comprehension for what I had read. Thus, girls, booze, and drugs, in that order was my all-consuming motivation, and of course, the proverbial rich girl and who’s father owned the liquor, was my lusty imagination. Therefore, this Reading, showed me that I would succeed in whatever I would venture into later in life, and looking back, this Reading test, was my approach to measuring Ambition, and which is never measured in our existing educational systemic.

Now, to the second ‘context.’ Today, I have three college degrees in business, am a licensed mortgage banker and have been on the commercial side of this ledger for these past 20 years and where the majority of this time has been spent doing the biz in the Latin America Region, and consequently, I am language proficient and culturally assimilated. And which brings me to my less than lengthly observation.

Newt Gingrich sees American history starting from the year of 1607 and America’s demise occurred in 1965 or the Lyndon Johnson Era. I see it differently, and which is that LBJ instituted a ‘participatory’ Democracy that was predicated on the Economic Opportunity Act of 1967. Thus, the elderly and the poor were given the opportunity to determine their future, either collectively or individually. Consequently, when I think of our economic disaster of today, I see accountability from the standpoint of the LBJ Era.

To wit, Ambition, is fine and wonderful, but not necessarily rewarding for America, when the most Ambitious among us brings about our economic collapse. America, being a highly wealthy nation, we can afford the humongous debt–given the existing borrowing rate of 3% so anything over 4% will quickly repay itself–that will have to be utlized to repair our ship of state while in drydock for this Agenda of Repair. And this Agenda must include some innovative approaches to re-regulation, as well as building a few more prisons to toss these highly-ambitious bums into, in order to cool their jets down for all time. And of course, I am angry.

Why?

Today, our Educational Systemic will suffer the consequences. Here in Arizona, there is one school that is ‘innovating’ as a charter school. Take, for example, in the morning, a foreign language systemic is utilized, and the English language systemic is employed in the afternoon, and thusly, self-reinforcing. Unfortunately, the Stimulus Plan will not perpetuate this innovative thinking nor perpetuate these subsequent processes. And that leaves no monies for the future. And from therein, is my anger for these economic scoundrels, and who willingly, and intentionally, never had a nary thougt for the rest of us and who aspire to implement the Ambition, as well.

And more on Accountability. I have always seen the bail out of AIG, given that the foreign nation’s had their Soverign Funds embedded in our too large to fail banks, as well, and simultaneosly invested in our commercial property systemic, and which has yet to come to the forefront to be adequately addressed, and which will cause the taxpayers to contemplate and cogitate a passive or ostracized revolt of our misguided leadership in Congress and at local, legislative,and municipal bodies too, and which started when Reagan took the controls off of Capital without taking the controls off of Labor.

And if this post, is seen as a vent, it was not meant to be. Regardless, my thanks to the Managers should they not put their thumb on the delete button.

Jaango

I believe that the NGO sector and foundations and well meaning philanthropists are called to build a powerful media amplification engine to raise these issues and press them on the mainstream commercial media. There are plenty of ideas and scholars and experts. It is who gets into the bloodstream of perceptions that matters. George Soros did an interesting conference last year on Orwell. He spoke of the cognitive information function(to learn) and the manipulative function ( to persuade) and it is the latter area that needs a lot of attention. Secondly I feel a massive campaign of talking points and distilled ideas need to be disseminated to the grass roots. Paul Hawken wrote Blessed Unrest. I would like to see his roster of organizations holding real meetings and convenings on these issues with real people. Relying on the inside the Beltway crowd to respond out of the goodness of their hearts is a bit too romantic despite the fact their are many well meaning and capable people in Washington in the civil service. The nodes of power respond to money.

I believe popular action now is feared by the elite leadership. I also have to say I have a tinge of fear inside of me about right wing populism and authoritarian responses.

on both of these points, i am in strong agreement. and we have almost no progressive populism in place to counter the right wing populism.

You may be right. I cannot tell for sure anything but that the Fed is overwhelmed.

Thanks; hadn’t heard of it and it will go to the top of ‘to do’ list as ‘gaining traction’ is somehting that MUST be done.

From your #13 response “My impression is that the USA is most resistant to financial regulatory reform. So maybe that is one way they keep the Europeans from demanding more from them.”; the latest news re the G20 meeting supports your perspective:”However, while US President Barack Obama was this week stressing the need for urgent fiscal action to contain the global economic slump, European leaders were questioning the push for more global pump priming and instead arguing for stepped up market reform.

Read more: “ANALYSIS: Divisions loom over G20 economic crisis meeting” -

Popular action, by definition, would be fragile and unwieldy, and too easily interpreted as being “lawless” by a self-protecting elite that is using public resources to shore up their private, profligate losses in order that they can continue to play the same asset- and industry-stripping game on an even larger scale.

Mr. Obama ought to get ahead of the game, not sit in his chair and wait for the tide to come in to demonstrate how little he can do about it.

Good Vent the late late night posts you can go off topic all you want

The ‘wrong trajectory’ is of considerable concern.

And either Obama realizes this grim ‘possibility’, very soon, or he will be contributing to the rise of hateful and destructive demagoguery.

Obama has basically shut out economists such as Baker, Galbraith, and Stiglitz, and has made quite clear that, far from wanting us to ‘make’ him do what’s necessary, he would rather we all just shut up and went away.

We won’t, of course.

By the way, Robert, thank you for joining us, today.

DW

This is a very powerful set of observations. On LBJ versus Newt Gingrich I would recommend you read the preface of the book “Revolution in the Head” by Ian McDonald. It is about Beatles music but the preface is about the ironies of freedom and the new right and Gingrich. There he discusses the desire of the counterculture to be left alone transforming into Get Government Off Our Backs in the dark frustration of the 1980s. He also talks about how the right used the idea of freedom to demonize those who wanted to use the government apparatus to impose their will. Courts, Civil Rights, Reproductive rights etc. Isaiah Berlin has an old essay on two types of freedom too. Freedom from intrusion by others including the state and freedom to do what you like without restraint. How those are balanced is at the core of social architecture. Wall Street’s recklessness certainly intruded on everyone’s well being recently. As David Smick says in his excellent book “The World is Curved” “Make no mistake. These problems were caused by bankers and investment bankers.” And government did not protect society and citizens and the developing world from the fallout.

Jaango,
Oh I would really like it if you would write a diary, a series of diaries on this please? Oxdown Gazette. If you need help with codes or embedding images just ask.

Selise, here is the wiki about Mr.Johnson’s suggested reading; can explain a lot(still need to read the whole book); certainly explained to me why there are so many different ‘activism groups’ per issue(such as voting integrity).

Yes the European reaction may reflect the awareness that they have one hell of a large bank bailout to do. Portugal Spain Italy Ireland and Greece and Austria and Eastern Europe are all in very severe strain. Follow the recent writings of Evan Ambrose Pritchard in the Telegraph for a sense of this building storm. BIS data (bank for international settlements) also shows the picture.

In the end the debt to GDP ratio maps the capacity to pay and these bailouts in the UK, Austria, and Switzerland may overwhelm the public fisc’s capacity to provide credible guarantees. So stimulus is resisted to maintain capacity for bailouts that are looming

lol – already ordered it. looked like it was right up my alley.

Wall Street has not just spilled all over onto our economic well being. The harm is enormous. The interest on the debt on 2.5 trillion of losses could pay for national health insurance forever!!

Perhaps the Republicans thought that by putting all that debt on the government’s books we couldn’t afford to do health care reform. But, the problem with that is we still have a dysfunctional health care system which needs to be reformed. All the Republicans did was add another problem (the huge debt) which needs to be fixed (over time).

Our big problem with health care system is that the ‘free market’ approach presumes firms will compete and offer (at the doctor’s or hospital’s choice) lower prices to keep customers, but that isn’t working very well. How can we create downward pressures on prices for health care industry firms?

I’d suggest that schools which produce more doctors would naturally create more competition for existing doctors. Until the ratio of doctors to patients changes there won’t be any systemic reason doctors should consider lowering prices. Related to that is a system or environment where a patient can easily pick between doctors or clinics instead of always being fed into the one big hospital where your doctor may be chosen for you. Having many clinics competing instead of one (or a very few big hospitals) might help. Having more general practice doctors doing early prevention work might also get ‘least cost’ care more often with those doctors competing for patients at ‘least cost’ to the patients. We might also ensure more students become g.p. doctors by closing the pay gap between those and specialists.

The only other major change we could make is to ease the economic costs to doctors, clinics & hospitals, so their costs go down and they might pass along some of that to patients (or at least not increase costs so rapidly).

Doctors costs can go down by easing the costs of medical school, ending the nightmare of having to deal with insurance companies in general and of committing them to ‘best practices’ instead of ‘do everything’, so they won’t be found liable of under-caring in a malpractice court case.

“Best practices” depends a lot upon common knowledge (a base) within the medical profession of what works and ensuring everyone has access to the base during work and is required to use it as a matte of routine. The “best practices” base of knowledge should be created and maintained by a government/medical industry group which gathers information from all sources and analyzes it regularly. We need to apply our IT abilities in a more all-encompassing way than we did 20 years ago.

Joseph Stiglitz, with whom I work on the UN Commission of Financial Experts on International Monetary Reform is not only brilliant but courageous. He wrote a book called “The Roaring Nineties” which, before any of this was unraveling, showed the power of Wall Street, free market fundamentalism, and other ideas were misguided. He is said to be very much despised by the Summers Rubin team which is in power. I can understand that because Joe is a Nobel Prize winning genius who has stood up to their beliefs. People do not acquiecse to right and wrong. They want to win. By the way Joe just made a wonderful film with Jacque Sarasin entitled Around the World with Joseph Stiglitz. It is about Gary Indiana, China, India, the Amazon, Botswana and globalization. Just a great artistic effort.

He spoke of the cognitive information function(to learn) and the manipulative function ( to persuade) and it is the latter area that needs a lot of attention.

At the Lake we talk about Cognitive Dissonance allot to Explain…how, why the GOP thinks like it does sociopaths looking to justify themselves to the public and the guilty looking for excuses to not feel bad about partaking in Bushschadenfreude
(my own word) the enjoyment of making money off of someone else’s misery.
If the only way you can make money is to hurt people, exploit, cheat or pollute them (which is why Newt and the Chicago school of economics is so anti business regulation.
Effective Regulations stop that,) then you have no business in business.
Because you are not smart enough to be a businessman.

I’ve just been lurking and have now ordered Olson’s book. Being a peace activist I need all the help I can get.

Thank you Mr Johnson.

From the Michael Parenti interview yesterday on DemocracyNow, “That means that even in the social democracies in Western Europe, there are going to be cutbacks, there’s going to be privatization, deregulation, greater—growth of inequities, rollbacks of human services and such, in countries that were pretty decent, countries where capitalism was reined in and held in line, to some degree, anyway.”

There would seem to be international pressure by those with the money to minimize as much as they can ’social welfare’ and it would appear as though Western europe is resisting as much as it can given the issues they are having to confront over Eastern Europe.

So I suspect that is part of the ‘pushback’ regarding more ’stimulus’.

Freedom from intrusion by others including the state and freedom to do what you like without restraint.

I’m all for that as long as noone else gets hurt. The GOP believe we should ignore the hurt if there is a buck to be made.

We’ve got Mr Stigliz’s back. I think I can safely say most of us here despise Summers and Rubin.

See Maggie Mahar’s fine book Money Driven Medicine and the film of about it. Maggie also writes a fine column for The Century Foundation. I ask will the public get access to the same policy that Congressmen and Senators get?? If so it will do a lot to discipline pricing in the private sector. Also one must ask the fundamental question. “Are you a consumer or are you a patient when you seek medical care?” I do not comparison shop emergency rooms when I am knocked unconscious. There is a lot of nonsense in the economics of healthcare

“People do not acquiecse to right and wrong. They want to win.” ; people had hoped that Obama wasn’t ‘one of them’; looks like they were mistaken. Money talks, ethics walk.

Just arrived and haven’t read all the comments so ignore this if it’s been covered. In the video you seem very encouraged by Obama’s words, but why? The evidence so far suggests he is not trustworthy in economics matters. For example, his economics team were part of the problem and can’t possibly contribute to the solution. The stim is too small and Obama let the Rs jerk it around. There is just as much lack of transparency under Obama as under W, but Obama hides what he is doing thru the cynical use of words. Why do you trust him?

I sense you are right. I remember giving a powerpoint to the Tuesday Group in Washington DC the week after Bear Stearns. In trying to show that more was on the way I created a slide that said we would be seeing budget wars. The IOUSA efforts and other entitlement reform efforts are likely to gain energy now. I ask one question to all of these groups. What are you prepared to sacrifice to meet your noble public concerns?? Carried interest tax at the capital gains rate is one that Pete Peterson could have offered to enhance his credibility. By the way that is in the Obama draft budget and I hope activists will work very hard to keep it there in the final bill. Watch Senator Schumer on this question very closely.

True we still need to think for names to replace them when they get the blame for the economy getting worse. Try as the establishment might to keep them Obama will have to sacrifice them to public opinion and back us and our people.
Or he can deal with Glen Beck.

Joseph Stiglitz, with whom I work on the UN Commission of Financial Experts on International Monetary Reform

can you give us any update on that front?

As David Smick says in his excellent book “The World is Curved” “Make no mistake. These problems were caused by bankers and investment bankers.” And government did not protect society and citizens and the developing world from the fallout.

Won’t Thomas Friedman be shocked to learn the Earth is NOT Flat? Heh.

We’ve had an imbalance of power fed by the Reagan Revolution and it got so out of whack that they took over some of government and ran the truck into the ditch. Now they’re in disrepute and the balance is being restored.

I think Congressmen and Senators should get paid 10-20 times what the average worker not management gets in their state and have the same benefits.

I would emphasize that Obama’s desires and his ability to deliver and survive may be different things. I would hate to be cynical and resign ex ante. Let’s push him and find out if he is a great leader or merely a salesman for power. Obama is coming to a crossroads (after all my name is Robert Johnson blues fans!!) Is he a salesman or a leader. David Foster Wallace, god rest his beautiful soul, wrote a lot about this in his book McCain’s promise. At his funeral service in NYC I saw an author, I believe it was George Saunders read a passage. Wallace was the Bob Dylan of literature in recent years. He said

“
“Now you have to pay close attention to something that ’s going to seem obvious at first. There is a difference between a great leader and a great salesman. There are also similarities, of course. A great salesman is usually charismatic and likable, and he can often get us to do things (buy things , agree to things) that we might not go for on our own, and to feel good about it. Plus a lot of salesmen are basically decent people with plenty about them to admire. But even a truly great salesman is not a leader. This is because a salesman’s ultimate overriding motivation is self interest-if you buy what he is selling the salesman profits. So even though the salesman may have a very powerful, charismatic and admirable personality, and might even persuade you that buying is in your interests( and it really might be) – still a little part of you always knows that what the salesman’s ultimately after is something for himself. And this awareness is painful… although admittedly its a tiny pain, more like a twinge, and often unconscious. But if you’re subjected to great salesman and sales pitches for long enough- like from your earliest Saturday morning cartoons, let’s say – it is only a matter of time before you start believing deep down that everything is sales and marketing, and that whenever somebody seems like they care about you or about some noble idea or cause, that person is a salesman and really ultimately doesn’t give a Sh** about you or some cause but really just wants something for himself.”

If it is value for service I disagree. If you say you want public financing of elections I would say that the losses in finance just cost about 2000 years of elections and we would be better off insulating them from financial need.

Jane has a new post:
Why was Citi’s Deborah Weinswig the Only Analyst to Downgrade Walmart on Employee Free Choice?

oops
New post

Are European banks too big to rescue?

“Let’s push him and find out if he is a great leader or merely a salesman for power. ” exactly and that is why I wrote this diary titled “When are Obama’s Feet Going to be Held to the Fire?”

It would be easy to dismiss today’s rant (however spot-on it might be) by New York Times columnist Thomas Friedman as yet another ideological tirade against the U.S. automobile industry. But based on the bad news coming out of shopping-mall owner General Growth Properties [GGP], it is no wonder Friedman is feeling crankier than usual. That’s because the author’s wife, Ann (née Bucksbaum), is an heir to the General Growth fortune. In the past year, the couple—who live in an 11,400-square-foot mansion in Bethesda, Maryland—have watched helplessly as General Growth stock has fallen 99 percent, from a high of $51 to a recent 35 cents a share. The assorted Bucksbaum family trusts, once worth a combined $3.6 billion, are now worth less than $25 million.

http://www.vanityfair.com/onli…..broke.html

My bold Have you not heard the good news Workers screwed by outsourcing World Wide are doing the Snoopy Dance:)

The Commission met in Geneva the last couple of days. I am not the communication channel to reveal the results of our deliberations and agreed to that as a condition of membership.

Qualitatively we are discussing the impact on developing countries of a crisis that emanated from the USA and the UK. We are worried about how to recycle resources to them so that they do not suffer as credit is cut off. The group is also very concerned about representation on the forums and international financial institutions. If they are financiers committees they will be geared toward the concerns of finance and balance sheets rather than the concerns of people in the periphery.

We are also concerned about bailout structures in the USA and elsewhere where the banks weighing very heavily in the crisis resolution designs and we are very concerned about OTC derivatives regulation

I do believe that TCU is right that we can help Obama by resisting things and raising the tension. This relief that the Bush/Cheney guys are gone and wanting to be supportive has to end soon and real struggle has to be conducted in tension.

“Crossroads”?

The devil, you say?

I like your humor quite as much as your stellar insights, Robert.

(Long-time blues-lover here …)

;~D

DW

I want politicians to be motivated directly to provide for the people in their state. Any other ideas on this subject are welcome. But I still stick by my idea.
Value for service works when they do not lie about the issues to the American people to aid the rich.
Still it was a great talk good to meet you.

Mr. Johnson, I am in awe of your insight and intellect and thank you for coming here today and sharing it with firedoglake.com. I also applaud the efforts of FDL to keep the truth and information flowing!

Thank you!

thank you. is there a website i can go to for an official report/announcement when something is released? those are issues i care about.

thanks again.

I’m glad someone is looking at this as the ‘lines of credit’ the Tresury has extended seem only to be focused on “where the banks weighing very heavily in the crisis resolution designs”.

I have read of Freidman’s family stresses. I would have to say that I do not think that is contorting his vision. I have talked with him many times and I only wish he was vigorously suggesting the same discipline be applied to Wall Street executives and stockholders as is being applied to Detroit. He differs with me in that however undesirable he feels Finance could bring us all down and we cannot impose a great deal of discipline. Besides I am from Detroit, though I worked at GM out of college and left for grad school as I saw them doing styling, lobbying and marketing. Not much engineering in the late 1970s. What I find very hard to accept is the tension of asking Ford and GM workers to sacrifice pensions, wages and health benefits while letting Wall Street pay bonuses. Trust and fair play are shattered and I find that undervalued by many, perhaps including Tom Friedman in this period.

Sounds familiar to Dimon’s ‘when the vilification stops’ rant.

On a blues note. Willie King, an artist that was on my label Rooster Blues, died last Sunday. I would recommend his record “Freedom Creek” to anyone who loves the blues. His Living in a New World also has a great cut called Terrorized. As my friend the Baker says, Willie will be terrorized no more. God rest his soul. The buddha of Alabama.

Yes, thanks for coming by. There are solutions to these problems and it is heartbreaking that they are being ignored, sidelined, derided in order to prop up a corrupt, bankrupt, and unsalvageable system.

Likewise, I think we are very much aligned on the proper role of public servants

Send me an email at RAJSHAMAN@MAC.com and I will send you what we release. There will be something next week that reflects the most recent meetings.

Ditto (*G*)

Willie King … is among the best, Robert.

Our ‘wavelengths’ be modulating in much accord …

DW

If you work with Stiglitz, is there any effort underway to come up with a liberal consensus on what is needed for the economy and financial industry?

I am late to the discussion and trying to catch up on the comments. Thanks so much for coming. Had I made it earlier I would have asked about the Glass-Steagall Act. It seems the arguments made back in 1987 to preserve the Act made a great deal of sense.

I would hate to be cynical and resign ex ante. Let’s push him and find out if he is a great leader or merely a salesman for power.

with regard to obama, i am very cynical – but it does not follow that i would withdraw because of that. it is only when i am told it is impossible to oppose obama, or that there are topics which can not be discussed fearlessly and frankly am i tempted with resignation.

thank you, i will do so today.

That is the glove slap to the face of America and now it is up to us to respond. I have always said that America’s strength comes from the tension between our principles (Declaration of Independence and Bill of Rights Primarily) and our actions/outcomes. We have a parallel sensibility about our economy in this capitalist democracy. After all capitalism gets its legitimacy from the notion of being governed by Democracy. When the rules of the game are bought and sold like commodities then it somewhat destroys the legitimacy of capitalism. We are facing a crisis and I do not want the result to be that people who adhere to the bill of rights or economic fair play are laughed at as foolish romantics. Then all principle looses traction and we have no focal points of trust to lift ourselves from the muck of anarchy. Trust matters.

Ha. You just get yer back up. *g*

Never give up.

Well said. Thank you very much.

There are lots of efforts to come up with a Plan B. Paul Krugman does excellent writing in this area. Stiglitz, myself, Simon Johnson and others. Many are dismayed that the resolution of some of the zombies has not been done more promptly and transparently. For a very clear and sensible discussion of why they may not have moved see David Smick’s OP ED in the WASH POST last Monday.

Buffett calls this a Pearl Harbor. I believe that we need to be much more vigorous and forceful right now to put this behind us. Plan B may yet emerge from a group. By the way there are many on the right who are doing very good work. Luigi Zingales John Makin Alex Pollack Chris Whalen are people who would call themselves Republicans that have done very good work and I would like them to be part of any plan. The Democrats, when it comes to finance, are no cleaner, if as clean as their opponents

yes sir!

you are, of course, 110% correct. but that doesn’t mean that some days aren’t a bit harder than others. thanks for the pep talk.

For Margo@73

Thanks for the invitation. Time permitting, I will make a cautious attempt. :-)

And my thanks to Robert Johnson, for taking his invaluable time to make this subject, both informative and educational.

Jaango

The Democrats, when it comes to finance, are no cleaner, if as clean as their opponents

The lure of vast wealth can cross all types of lines.

I think arguments to mitigate conflict of interest by separation and arguments to segregate risky activities from vital activities make a great deal of sense and always have. But industry power and profitability pushed in another direction. The pendulum may have just stopped out on the swing to the right. We will see. One of the real big problems is that we resolve failures through mergers and make institutions bigger and bigger and too big to fail. Once the market knows that you are too big to fail the risk premium in funding falls. That creates more leverage and more competitive advantage for the big and fosters further concentration. That creates the perhaps unresolvable mess we now have. Compartments, breakups and restrictions on conflicts of interest are really a sign of a healthier future. Besides big big financial institutions gain too much political power.

it would be extremely helpful if there were some group plan B (not a compromise, but something that encompassed differences in viewpoints if possible) that you could explain in some detail and that activists could then organize around. stiglitz particularly has a tremendous amount of credibility in the activist community – and right now i think we need that synergy.

just a thought….

Trust is fundamental.

We have not yet had genuine participatory democracy in this country, but we’re getting closer …

More people are aware than ever before (I’ve been paying close attention sine the early sixties), and they are not happy with the powers that be …

Hopefully Obama will realize this or he will be the last of the traditional ‘politicians’.

Better he choose to be the first of a new ‘breed’ of more resposive and responsible leaders.

It is not, any longer, “business as usual”.

We shall see just how wise he is, very soon, one imagines.

Thank you, Robert for joining with us in this struggle.

DW

A good thought and I will take it very seriously. By the way read the Congressional Oversight Panel on Tarp 1/29/09 report. Elizabeth Warren, Damon Silvers and crew are doing a great job. See also the reply in that report by Hebsarling and Sununu for a industry perspective.

just want to make sure to add my thanks before i forget.

robert, thank you for your time here today, it’s been an interesting discussion and i appreciate the recommendations for further reading.

An absitively and posolutely splendid (and necessary) idea, selise.

thank you again.

I’ve read reports that Treasury is ignoring the panel’s work.

Thank you.

I am very very emphatic about reducing the role of money in politics. Absent that one must pit the sectors of capital against each other. Right now if I was a community banker or a regional banker I would be mega pissed about FDIC premium increases to pay for the sins of the money center. See symptoms of this discord in the upcoming fights within the FED FOMC and the regional district bank presidents. Thomas Hoenig of the KC Fed has just written a great piece called “Too Big Has Failed”. Also I would really say if I were a venture capitalist I would be very very angry. Those people have ideas and they would like to monetize them. That is not going to happen as well or at all in the world of traumatized capital markets. Time to look for strange bedfellows to align with citizens and push this thing to a healthy resolution.

That would not surprise me at all. Though ignore is probably not the right notion. I suspect the are keenly aware and just avoiding the challenge. I have seen similar behavior regarding the ideas of Paul Volcker. His speech a year ago at the Economic Club of NY is classic and his G-30 report has some great ideas in it.

I had better close the book on this chapter of the discussion. Thank you all for joining me and please please please stay engaged.

Best,

RAJ

Thank you for your response @ 125 and also for your comment @ 65. Wisdom regarding methods towards mobilization (as Jane is working on with the petition and this series) the netroots on the grassroots level is an important move in working towards solutions.

Jon Stewart hit a nerve that is easy to carry to the everyday individual and hitting the nerve just might be the beginning of the watershed of growing economic activism. Putting “shoes” to the moment is where your wisdom carries the moment towards real solutions.

These guys at these companies were on a Sherman’s march through their companies, financed by our 401ks, and all the incentives of their companies were for short term profit. And they burned the f-ing house down, with our money, and walked away rich as hell. And you guys knew that that was going on.

In the Senate hearing yesterday the subject of the community/regional banks having to pay outrageous premiums to FDIC came up and Geithner said that those increases were written into the system and that Treasury would have to look into it.

Thank you for spending this time with us. It has been very enlightening.

Namaste

Wow, what a great thread.

The opportunity of those ‘alignments’ has never been better.

It is precisely the ‘political philosophy’ which you are articulating that this nation and its people so desperately need, Robert.

The founding fathers (and mothers) would definitely approve.

(Hamilton, not so much, but he as extremely wrong-headed, I suspect we would agree.)

Come and visit anytime, Robert, you shall always be welcome here at the Lake.

;~D

Indeed so!!!

thanks to all – great thread.

Can’t resist

Robert Johnson – Crossroad

and God Bless Jon Stewart. God puts truth in funny places. What an amazing joust he has had with CNBC.

Stephen Fraser has written a great book entitled Wall Street: America’s Dream Palace. I will close my close with his statement.

“Wall Street had proved itself not only ethically challenged and dangerously omnipotent but, more damning than that, omni-incompetent.”

“During the boom years of the 1920s, the white-shoe world of J. P. Morgan had accepted credit for the nation’s good fortune and been portrayed as a conclave of wise men. Now, under the new circumstances of economic ruination, that same world was treated as criminally irresponsible, pathetic even, an object not only of censure but of mockery. And there is perhaps nothing more fatal for the life expectancy of an elite than to be viewed as ridiculous.”

The elites have ‘earned’ the ‘right’ of being the butt of whatever jokes befall them.

They deserve to laughed ‘right’ out of ‘power’.

Thanks, Robert, once again …

;~D

Rob, thanks so much for being here today. You have shown tremendous leadership on this front and I trust your judgment and take the things you say very seriously. We really appreciate your time and thoughtfulness.

Laughter has brought down more Empires than Armies although the Armies would say otherwise:)

ThingsComeUndone

People are so worried about the banks and the problems we hear about with them that they forget that wall street and the stock market allowed the problems with those banks to materialize. It is the stock market that sells itself as the place to make money by buying stocks and has turned everything into stocks to find more ways to make more money. The banks went with the program and they bought and sold thinking this was the way to go.
Every body is hoping the stock market goes back up but they should be hoping the stock market gets fixed or shut down. It is a scam in it’s own right because we believe it is there to sell stock for companies and provide access to that stock for investors. Neither is true it is there to make money off of companies and their stock and to make money off of the investors.
It doesn’t care if a company is forced out of business because it’s stock price fell apart. It also doesn’t care if the investor loses his money because they get theirs. So really is is just a scam to make money,
There is no good reason people can’t be allowed to buy stock directly from a company other than the markets couldn’t get their hands on any of the money. This would be much better for the company because what the markets do wouldn’t have control over their stock price and their financial position would rely on the companies actual situation rather than what investors felt at the moment. It would be better for the investor because their investment would only be atributed to the what was happening with the company not market forces.
An example GE stock is trading for a couple bucks a share which would make one think the company is less viable and it’s future is grim. This is kind of a self fulfilling prophecy with it’s stock price down it looks that way so investors financial backers and even customers think twice about getting involved. If it stays down it could break the company witch would be a loss to many people and the country. All because skidish investors sold off because they were scared not by GE but by the mess the markets got us into.
People are such fools because they can’t see that everyone wanting to be your broker is not because they want to help you invest wisely as they say. They just want to get a hold of your money. Bernie Madoff told his investors the same thing let me handle your money and I will get you a great return and invest it wisely for you. All the money managers financial advisors and funds are not there to make you money they want to control your money and make money off of it. If you are lucky and found or had one that made you money and or is still making you money be thankful but remember they also are making money from you and the investments your money made.
So lose the infatuation with the markets and know them for what they are. They are that giant sucking sound that Ross Porrow used to say we would here from Mexico in New York City. Thier not sucking jobs but your money.