Despite hopes that the Obama Administration would bring about some desperately changes on the economic front, nothing much has changed from the Bush Administration. Economic policy continues to be set by the powers that be on Wall Street.
Just look at President Obama's two key economic appointments. First is Treasury secretary Tim Geithner who many people are now seeing as a poor choice. After all, he was the head of the New York Fed and was supposed to be overseeing Wall Street. Mr. Geithner was either too inept or too corrupt to stop Wall Street bigwigs from robbing the country blind.
Then we have President Obama's top economic advisor - Larry Summers. Last year, Mr. Summers received $5.2 million in compensation from hedge fund D.E. Shaw and another $2.77 million from speaking engagements for various firms such as Wall Street giant, Goldman Sachs.
I'm sure that when he deliberates on important economic matters, Mr. Summers will be looking out for the "little guy". Or that he will object to many billions more being handed over, with no questions asked, to Wall Street.
Monday, April 6, 2009
Thursday, April 2, 2009
The Quiet Coup Article in the Atlantic
I urge everyone to read an article titled The Quiet Coup by Simon Johnson in this month's Atlantic magazine. Mr. Johnson is a professor at MIT's Sloan School of Management and he was also the chief economist at the IMF during 2007 and 2008.
The article goes into great detail about the current financial crisis. Professor Johnson says that we face two major interrelated problems. The first problem is a desperately ill banking sector that threatens to choke off any incipient economic recovery that the fiscal and monetary stimulus might generate.
The second problem is a political balance of power that gives the financial sector a veto over public policy, even as that sector loses popular support. Big banks, it seems, have only gained political strength since the crisis began.
With the financial system so fragile, the damage that a major bank failure could cause is much greater than it would be during ordinary times. The banks have been exploiting this fear as they wring favorable deals out of Washington.
Gee, what a suprise - Wall Street banks and exploitation! The article goes on say that if this were any other country, the banks would have been nationalized by now. That is the solution - remove the scum bag senior management and nationalize the banks now!
The article goes into great detail about the current financial crisis. Professor Johnson says that we face two major interrelated problems. The first problem is a desperately ill banking sector that threatens to choke off any incipient economic recovery that the fiscal and monetary stimulus might generate.
The second problem is a political balance of power that gives the financial sector a veto over public policy, even as that sector loses popular support. Big banks, it seems, have only gained political strength since the crisis began.
With the financial system so fragile, the damage that a major bank failure could cause is much greater than it would be during ordinary times. The banks have been exploiting this fear as they wring favorable deals out of Washington.
Gee, what a suprise - Wall Street banks and exploitation! The article goes on say that if this were any other country, the banks would have been nationalized by now. That is the solution - remove the scum bag senior management and nationalize the banks now!
Wednesday, April 1, 2009
Greenspan Is Guilty as Charged
The former chief economist for the Bank of International Settlements, William White, has been arguing for many years now that the root cause of our current economic turmoil lies squarely at the feet of the Federal Reserve and Alan Greenspan.
Here is some of what Mr. White wrote years ago: "How, for example, could a huge shadow banking system emerge without provoking clear statements of official concern? Perhaps it is simply that no one saw any pressing need to ask hard questions about the source of profits when things were going so well". Sad, but true!
Here is more of what Mr. White wrote years ago: "Virtually no one foresaw the Great Depression of the 1930s, or the crises which affected Japan and Southeast Asia in the 1990s. Each downturn was preceded by a period of non-inflationary growth exuberant enough to lead many commentators (including Alan Greenspan, I may add) to suggest that a 'new era' had arrived".
These comments re-enforce in my mind the total worthlessness of both economic forecasters and also technical market analysts. All the stock market chartists completely missed the 1987 stock market crash and also the severity of the current decline. People would probably do better consulting their daily horoscope than Wall Street chartists and technicians.
In fact, in 2003 Mr. White pleaded directly with Alan Greenspan to change course. Of course, he was fluffed off as someone who was trying to rock the boat of the US/Wall Street. Actions taken then and perhaps a short, shallow recession would have probably headed off the dire problems we face today.
Here is some of what Mr. White wrote years ago: "How, for example, could a huge shadow banking system emerge without provoking clear statements of official concern? Perhaps it is simply that no one saw any pressing need to ask hard questions about the source of profits when things were going so well". Sad, but true!
Here is more of what Mr. White wrote years ago: "Virtually no one foresaw the Great Depression of the 1930s, or the crises which affected Japan and Southeast Asia in the 1990s. Each downturn was preceded by a period of non-inflationary growth exuberant enough to lead many commentators (including Alan Greenspan, I may add) to suggest that a 'new era' had arrived".
These comments re-enforce in my mind the total worthlessness of both economic forecasters and also technical market analysts. All the stock market chartists completely missed the 1987 stock market crash and also the severity of the current decline. People would probably do better consulting their daily horoscope than Wall Street chartists and technicians.
In fact, in 2003 Mr. White pleaded directly with Alan Greenspan to change course. Of course, he was fluffed off as someone who was trying to rock the boat of the US/Wall Street. Actions taken then and perhaps a short, shallow recession would have probably headed off the dire problems we face today.
Subscribe to:
Posts (Atom)
Posts
