financeguy

purpleoscar

Interesting videos. International governments? Both of these guys exaggerate. Max is a little better than the other guy.

The solution is to enforce regulations to prevent government and the private sector from exchanging workers and developing cronyism. Then all the governments, (especially the U.S. and U.K.) need to stop spending on more entitlement programs and start slashing spending and keep their taxes as they are (or lower if possible) to balance the budget. That is how you have a sound currency, by having realistic fiscal and monetary policies. Gold is another option that I'll have to study further because couldn't the U.S. release gold reserves to inflate the currency again? World governance is just another layer of bureaucracy to pay for and who the heck trusts the Russians and the Chinese, who are even more corrupt and hello! dictatorships, for a basket of currencies?

The next thing is to look at removing regulations that incite banks to lend to risky borrowers. These "empty boxes" come from risky lending in the first place. If investors wouldn't willingly invest in risky investments the borrowers wouldn't get their loans nullifying the need for the CRA. To get housing to be affordable there has to be less regulations on building houses so more houses can get built or people should just move away from big cities with too much regulation.

financeguy

Do you include foreign wars among the entitlement programs?

It's the nature of the free market to allow investors with an appetite for risk to invest in risky assets. I see this as a sidetrack, to be honest. I have no problem with investors who seek risk being allowed to do so, probably the rating agencies need to get a lot more stringent however.

AliEnvy

Maybe when the market crashes nastily again in the next couple of months we'll smarten up and take the foxes out of the henhouse.

financeguy

I don't expect the market to crash.

purpleoscar

If the world was full of democracies with lots of peace yes, otherwise NO. They are starting to leave Iraq but the surge is needed in Afghanistan. Of course if they don't curb domestic spending (which is out of control) they may be forced to leave even if they don't want to. Even if they cut all military funding and left Iraq and Afghanistan ASAP the domestic spending would still have to be addressed.

There's definately a conflict of interest in the system that needs to be weeded out. I also wish there was some solution to get shareholders some corporate clout to stop useless bonuses on failed companies. When shareholders are diffuse over many companies each individual company feels they can work with directors to get whatever they want in bonuses regardless of results. You would think their large salaries would be plenty.

There are a lot of things in the air in the U.S.. Let's see if cap and trade passes congress and healthcare reform. If it doesn't there may be some hope for the U.S. dollar to stay the main backup currency. Otherwise they will be testing investors if 10 trillion is going to be added up over the years. What kind of interest rates would investors demand to buy those bonds?

anitram

I agree with you.

AliEnvy

No one expected it to crash last year either.

bigjohn2441

obama will fix everything

SethVincent

the sarcasm BigJohn

He will "fix" everything just as the Ding Dong before him & the Clown before him

LOL

Just give people the appearance of trying to "fix" things that is all they need

AliEnvy

Goldman Sachs "...a great vampire squid wrapped around the face of humanity...".

The Great American Bubble Machine : Rolling Stone

AliEnvy

Spitzer: Federal Reserve is "a Ponzi scheme, an inside job"

by Daniel Tencer
July 25, 2009

The Federal Reserve — the quasi-autonomous body that controls the US’s money supply — is a “Ponzi scheme” that created “bubble after bubble” in the US economy and needs to be held accountable for its actions, says Eliot Spitzer, the former governor and attorney-general of New York.

In a wide-ranging discussion of the bank bailouts on MSNBC’s Morning Meeting, host Dylan Ratigan described the process by which the Federal Reserve exchanged $13.9 trillion of bad bank debt for cash that it gave to the struggling banks.

Spitzer — who built a reputation as “the Sheriff of Wall Street” for his zealous prosecutions of corporate crime as New York’s attorney-general and then resigned as the state’s governor over revelations he had paid for prostitutes — seemed to agree with Ratigan that the bank bailout amounts to “America’s greatest theft and cover-up ever.”

Advocating in favor of a House bill to audit the Federal Reserve, Spitzer said: “The Federal Reserve has benefited for decades from the notion that it is quasi-autonomous, it’s supposed to be independent. Let me tell you a dirty secret: The Fed has done an absolutely disastrous job since [former Fed Chairman] Paul Volcker left.

“The reality is the Fed has blown it. Time and time again, they blew it. Bubble after bubble, they failed to understand what they were doing to the economy.

“The most poignant example for me is the AIG bailout, where they gave tens of billions of dollars that went right through — conduit payments — to the investment banks that are now solvent. We [taxpayers] didn’t get stock in those banks, they didn’t ask what was going on — this begs and cries out for hard, tough examination.

“You look at the governing structure of the New York [Federal Reserve], it was run by the very banks that got the money. This is a Ponzi scheme, an inside job. It is outrageous, it is time for Congress to say enough of this. And to give them more power now is crazy.

“The Fed needs to be examined carefully.”

Spitzer resigned as governor of New York in March, 2008, after news reports stated he had paid for a $1,000-an-hour New York City call girl.

At the time, Spitzer had been raising the alarm about sub-prime mortgages. In the wake of the economic meltdown triggered last fall by sub-prime loans, some observers have suggested that Spitzer may have been targeted by law enforcement because of his high-profile opposition to Wall Street financial policies.

Investigative reporter Greg Palast wrote that federal agents’ revealing of Spitzer’s identity as a call-girl customer was no coincidence.

Palast wrote that the principle of “prosecutorial discretion” is often used to keep the names of high-profile persons out of the media when they are tangentially linked to a criminal investigation. In the case of Spitzer, the Justice Department chose not to invoke prosecutorial discretion.

Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him in diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.

Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.

Spitzer recently told Bloomberg News that President Obama’s regulatory reforms of the financial sector are “irrelevant” because regulatory agencies have not been enforcing corporate laws to begin with.

“Regulatory agencies already had the power to do everything they needed to do,” he said. “They just affirmatively chose not to do it.”

financeguy

Spitzer? Jeez, wouldn't have expected that kind of talk from him, sounds like he's been reading some Austrian school/libertarian sites.

I really don't care what kind of conspiracies are involved, once I find out how to make enough money on guessing the markets to make a full time living out of it.

cstar

Matt Taibbi, who wrote the above article, was awarded with the Hillman Foundation Sydney Award: Rolling Stone Goldman Sachs Muckracker Wins Hillman Foundation Sidney Award | The Hillman Foundation

Truly, if you have not read Taibbi's article, it is a MUST READ.

I am glad to see that this story is not going away, as Goldman and their cronies wish it would. Check out Matt Taibbi's blog for updates and retorts to the critics: Matt Taibbi - Taibblog - True/Slant

melon

To comment about the Federal Reserve, I would happen to agree that it is at fault for these bubbles and bursts, mainly because the Fed has not taken up its historical responsibilities over the last 20 years. The Fed must certainly have known that persistently low interest rates during a time of economic prosperity was a ticket to disaster. These should have been moments that interest rates were slowly raised to more appropriate levels. Even going back to the 1950s, when the economy would heat up too much too quickly, it was not unheard of for the Federal Reserve to literally guide the economy into a mild recession through policy to prevent a deep recession later.

Unfortunately, prudent fiscal policy is now seen as political poison, ever since Bush I lost reelection due to recession. I would argue that the Federal Reserve has been a political, rather than an independent, non-partisan office, ever since, and we should probably evaluate ways to get this monetary institution back on track. One of the U.S.' persistent problems since inception has been figuring out the right way to manage monetary policy, and it appears that, after nearly a century of stability, it might be reverting back to historical pattern.

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