Nouriel Roubini's Global EconoMonitor

‘Nationalize’ the Banks

From the Wall Street Journal:

Dr. Doom says a takeover and resale is the market-friendly solution.

Nouriel Roubini is always dressed in black-and-white.

I have known him for nearly two years, and have seen him in a variety of situations — en route to class at New York University’s Stern Business School, where he’s a professor; over a glass of wine in his boyish loft in Manhattan’s Tribeca; at an academic conference, seated sagely on the dais; at a bohemian party in Greenwich Village, at . . . oh . . . 3 a.m. — and he always, always wears a black suit with a white linen shirt.

And so, in black-and-white he was, earlier this week, when he rushed into the office of Roubini Global Economics, his consulting firm in downtown Manhattan, and offered a breathless apology to this correspondent, who’d been waiting for half an hour. “Really sorry I’m late! Charlie Rose taped for way longer than he said he would.”

Mr. Roubini — a month short of 50 — is in huge media demand, the nearest thing to a rock-star among the economists who hold our fate in their hands these days. The peculiar thing, of course, is that he’s in demand because he specializes in predictions of gloom. (He has earned himself the sobriquet of “Doctor Doom.”) In person, though, he’s anything but a downer.

The man has instant impact on public debate. An idea he floated only last week — that our “zombie banks” be temporarily nationalized — aired first on, where he writes a weekly column. It has evolved, in the space of just a few days, from radical solution to almost received wisdom.

Last Sunday on ABC, George Stephanopoulos asked Lindsey Graham, the conservative Republican senator, what he thought about all this talk of bank nationalization. Mr. Graham said that he wouldn’t take the idea off the table. And on Wednesday, Alan Greenspan told the Financial Times that “it may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring.”

Mr. Roubini tells me that bank nationalization “is something the partisans would have regarded as anathema a few weeks ago. But when I and others put it in the context of the Swedish approach [of the 1990s] — i.e. you take banks over, you clean them up, and you sell them in rapid order to the private sector — it’s clear that it’s temporary. No one’s in favor of a permanent government takeover of the financial system.”

There’s another reason why the concept should appeal to (fiscal) conservatives, he explains. “The idea that government will fork out trillions of dollars to try to rescue financial institutions, and throw more money after bad dollars, is not appealing because then the fiscal cost is much larger. So rather than being seen as something Bolshevik, nationalization is seen as pragmatic. Paradoxically, the proposal is more market-friendly than the alternative of zombie banks.”

In any case, Republicans must now temper their reactions, he says. “The kind of government interference in the economy that we saw in the last year of Bush was unprecedented. The central bank — supposed to be the lender of the last resort — became the lender of first and only resort! With our recapitalizing of financial institutions, and massive government intervention in the markets, we’ve already crossed a significant bridge.”

So, will the highest level of government be receptive to the bank-nationalization idea? “I think it will,” Mr. Roubini says, unhesitatingly. “People like Graham and Greenspan have already given their explicit blessing. This gives Obama cover.” And how long will it be before the administration goes in formally for nationalization? “I think that we’re going to see the policy adopted in the next few months . . . in six months or so.”

That long? I ask. “Six months from now,” he replies, “even firms that today look solvent are going to look insolvent. Most of the major banks — almost all of them — are going to look insolvent. In which case, if you take them all over all at once, you cause less damage than if you would if you took over a couple now, and created so much confusion and panic and nervousness.

“Between guarantees, liquidity support, and capitalization, the government has provided between $7 trillion to $9 trillion of help to the financial system. De facto, the government is already controlling a good chunk of the banking system. The question is: Do you want to move to the de jure step.”

Yet another reason why bank nationalization is a good idea, Mr. Roubini continues, is that “we started with banks that were too big to fail, but what has happened, in the process, is that these banks have become even-bigger-to-fail. J.P. Morgan took over Bear Stearns and WaMu. BofA took over Countrywide and then Merrill. Wells Fargo took over Wachovia. It doesn’t work! You can’t take two zombie banks, put them together, and make a strong bank. It’s like having two drunks trying to keep each other standing.

“So if you took over a big bank, and you split the assets in three or four pieces, maybe you create three or four regional or national banks, and they’re stronger! Nationalization — or ‘temporary receivership,’ if you like, if the N-word is a political liability — is an occasion to undo the sort of consolidation that has created an even bigger systemic problem. And the only way to do it is by essentially taking them over and breaking them up.”

Here, I ask Mr. Roubini whether he has been more right — more prescient — in his reading of the economic downturn than all the other famous bears in America. After all, judging by the attention paid to him in the press, it is hard not to conclude that he is the leading guru of the current recession, or “near-depression,” as he often calls it. My question, remarkably, induces in him some diffidence. “I don’t want to personalize the analysis, you know . . . because, first of all, there were many people who got many of the elements right.

“People like [Robert] Shiller were very worried about the housing bubble. People like Steve Roach were worried about an economy based on asset bubbles leading to consumption bubbles that were unsustainable. People like Ken Rogoff talked about global imbalances in the current account deficit not being sustainable. Nassim Taleb has been worrying for a while about ‘fat tail’ events . . . . So lots of people signaled concern about things. I was one of those who put the dots together and thus gave a more fleshed-out picture.”

To Mr. Roubini, the most interesting question isn’t the one of who got it right. Instead, he asks why we “over and over again, get into these periods of irrational exuberance, when not only is there an asset bubble and a credit bubble, but people believe these are sustainable over a long time — Wall Street, policy makers, rating agencies, academics, journalists . . . .”

What exactly is Nouriel Roubini’s economic philosophy? “I believe in market economics,” he says, with some emphasis. “But to paraphrase Churchill — who said this about democracy and political regimes — a market economy might be the worst economic regime available, apart from the alternatives.

“I believe that people react to incentives, that incentives matter, and that prices reflect the way things should be allocated. But I also believe that market economies sometimes have market failures, and when these occur, there’s a role for prudential — not excessive — regulation of the financial system. The two things that Greenspan got totally wrong were his beliefs that, one, markets self-regulate, and two, that there’s no market failure.”

How could Mr. Greenspan have been so naïve, I ask, hoping to get a rise. “Well,” says Mr. Roubini, “at some level it’s good to have a framework to think about the world, in which you emphasize the role of incentives and market economics . . . fair enough! But I think it led to an excessive ideological belief that there are no market failures, and no issues of distortions on incentives. Also, central banks were created to provide financial stability. Greenspan forgot this, and that was a mistake. I think there were ideological blinders, taking Ayn Rand’s view of the world to an extreme.

“Again, I don’t want to personalize things, but the last decade was one of self-regulation. But in the financial markets, without proper institutional rules, there’s the law of the jungle — because there’s greed! There’s nothing wrong with greed, per se. It’s not that people are more greedy now than they were 20 years ago. But greed has to be tempered, first, by fear of losses. So if you bail people out, there’s less fear. And second, by prudential regulation and supervision to avoid certain excesses.”

How does Mr. Roubini think the media has covered the financial crisis? “The problem,” he says — after first stating to me that he intends “no offense!” — “is that in the bubble years, everyone becomes a cheerleader, including the media. This is the time when journalists should be asking tough questions, and I think there was a failure there. The Masters of the Universe were always on the cover, or the front page — the hedge-fund guys, the imperial CEO, private equity. I wish there had been more financial and business journalists, in the good years, who’d said, ‘Wait a moment, if this man, or this firm, is making a 100% return a year, how do they do it? Is it because they’re smarter than everybody else . . . or because they’re taking so much risk they’ll be bankrupt two years down the line?’

“And I think, in the bubble years, no one asked the hard questions. A good journalist has to be one who, in good times, challenges the conventional wisdom. If you don’t do that, you fail in one of your duties.”

Originally published at the Wall Street Journal and reproduced here with the author’s permission.

293 Responses to “‘Nationalize’ the Banks”

GuestFebruary 21st, 2009 at 11:03 am

That’s just for television. And I love Roubini in white — he gets better looking every day. As Varadarajan says, he’s the “nearest thing to a rock star among the economists who hold our fate in their hands.” Or anyone else, for that matter.

GuestFebruary 21st, 2009 at 11:12 am

The thing that leaps out for me in this interview is Professor Roubini’s statement that it may be up to six months before nationalization occurs, but that when it does it should not be on an individual bank basis, but, rather, on a large scale basis and all at once. Shock and awe! Who goes down? Everyone who got TARP money?

GuestFebruary 21st, 2009 at 11:14 am

In Ty Andros’ “2009 Outlook,” January 30, 2009, he graphed the “Total Credit Exposure to Risk Based Capital %” for the top five banks in the forth quarters from 2001 to 2007, and in the first three quarters of 2008. The graph shows that the percentage of risk based capital for all five in 01Q4 was $185.2%, and by Q3 in 2008 was 317.4%. It also shows that JP Morgan leads the pack in risk capital. My question is, why is JP escaping a BAC-style implosion?Here are the 08Q3 risk based exposures: JPMORGAN CHASE–400.2%; BANK OF AMERICA–177.6%; CITIBANK–259.5%; WACHOVIA–85.2%; AND HSBC–664.2%.It is worth noting that JP’s exposure in 2001/Q4 was 438.8% as compared to BAC’s 94.7%.Says Andros: “These banks are representative of the problem they all face: INSOLVENCY. For a complete look at the picture, you can link to this report from the Office of the Comptroller of the Currency Administrator of the United States outlining the unbelievable LIABILITIES and LOSSES these banks face. This is a nightmare on WALL STREET and MAIN STREET.”He also notes that “Obama’s ‘Economic Recovery and Stabilization’ stimulus package which spends 12 cents of every dollar on economic stimulus and 88 cents for sustaining and enlarging government spending and programs [is] a perfect name to DUPE America the Illiterate.”It also would be interesting to have the figures on our new bank holding companies: Goldman Sachs and Morgan Stanley. In truth, there’s no way to know how they are doing except to say they are probably insolvent, too. For it was Goldman was it not that was using the most leverage on the upswing, Goldman that was out the farthest on the ledge?

GuestFebruary 21st, 2009 at 11:34 am

I think the professor is cognizant of the fact that Geithner and Summers will try their Private Public Investment Fund format, and the repugnance of its guarantees to private capital and the leverage that will be offered to private capital will bring up great scrutiny and it will be dropped as an idea as the First Quarter earnings bring disaster earning reports for the banks. This will force nationalization. The longer they wait the worse it will be, but the pigs will try to feed at the trough on last time, before political backlashforces a change. Remember the Lone Star/Merrill Lynch model. The private capital types will wantfinancing to get leverage and government guarantees of no downside like Merrill gave Lonestar. If they really try this the Tea Partywould be justified, not on the mortgage bailout plan.Somebody tells Santelli to get the Fesces off his nose! The Homeownership Affordability and Stability Plan is just a debt slave plan and heknows it. The refinancing portion covers few borrowers. Somebody tell him to put on his cajones and question the Financial Stability Plan with a Tea Party if the taxpayers gets royally reamed. These CNBC actors should begiven an academy award for running the longestcomedy in history. Feaux populism is disgusting!Take on the big boys Santelli! You sycophant!

GuestFebruary 21st, 2009 at 11:52 am

Varadarajan is a colorful writer and he’s met his match in a colorful subject – Nouriel Roubini. The combination is so electric that the “Wall Street Journal” plugged the interview on its front page and featured it on a full half of page A9, with a black and white water sketch of that now-famous pose of Roubini peering up over his rimmed reading glasses, signed by Terry Shoffner. The WSJ piece is truly a collector’s item.There is good reasoning in this interview, throughout. Best of all, should nationalization take place as Roubini envisions it, and breaks up the banking behemoth into different parts, it could simulate a bit what happened with the break-up of Standard Oil into 34 companies.The robber barons and their money monopoly must be curbed. Roubini is the man to do it.

blindman mikeFebruary 21st, 2009 at 11:53 am

@ “how is life irrational” from previous thread…g,rationality is linear. part of the human mind attempts to impose thislinearity on the experience of life as perceived by the human “being”, experience of “life”, consciousness is more like “being” than it is like a linear or rational conception, orset. life is bigger than our rational set, and bigger than our capacity tomake linear associations or connections in that set.also, rationality does not “normally” accept, nor can it fathom, integrate, or account for the irrational. the unknown ( resulting in fear, exaggerated swings and projections based on speculation and denial.) the light will obscure the dark, and visa versa, but neithercan eliminate the other, survive without the existence of the other. ( integrate concept of risk ).so we are necessarily , not machines, but human beings, being in the eternal moment. knowing that our consciousness is an emergent, in it’s current structure, temporal manifestation. projecting past and future abstractions onto this present moment, falsely, mistakenly, crudely, but to some beneficial effect, sometimes.! hallelujah.!the goal is to get better at it! by being more accurate, with more integrity regarding our capacity for understanding and perspective. better definitions of environment and self and their whole ness, connection, sameness. you arethat thing! you are that perception, out there, in front of you! you are it, it is you. in cyclic energetic creation. irrational. in consciousness, which is all we have, everything ( nature, god, life etc. ) is created the same exact way. irrational! it all defies explanation , it just is, but we insist on trying to explain.the great way has no gate…etc…so. he continued to uncertain mentioned elsewhere lincoln spent 4 of his six hours sharpening his!.so we ask? what is our axe! our lives! our rational minds and our irrational hearts and our prerational bodies.we need to look at the infinite, the sub-infinite and learn from them. they are there to inform us concerning the way here, in between. therein lies rational and irrational instruction, when properly understood and integratedwill show us just how much like paradise this human life was designed.become a student of i think pjb was thinking along these lines but would not claim to speakfor him or even to really understand/comprehend how his mind works. entirely.psss.hardwired risk. beings, energetic, have need ( demand )of energy. volition to satisfy perceived and real deficits, survival, in a dynamic and competitive there is the natural dynamic, built into the system of life, of doom, ( destruction of temporal consciousness, impending ) and volition to stave off doom. fear being the guiding principle of rationality, as experiencing total destruction in the effort to satisfy perceived need of energetic deficits isneither rational, irrational, or prerational. it is just stupid.( integrate concept of freedom / responsibility here.).pss. guest, i hope this helps more than it hurts. ?this is why my wife doesn’t let me play with sharp objects.!!

PeteCAFebruary 21st, 2009 at 12:16 pm

Let’s pick up a couple of comments …”CAN ANYONE tell me why all the assets (private and personal) of the decision makers at Bank America $3.61/sh and Citigroup (1.95/sh)and others should not be frozen and seized immediately considering they have already been guaranteed over $200 billion of taxpayer’s money between them?”Good point! A LOT of Americans are going to get really fed up with this situation now. Why are we still throwing exorbitant salaries and taxpayers bailouts at these two banks?The fact is this folks … the rising tide of insolvency has now reached two of the very largest banks in America. This is the point where our banking system in the USA is going under. Period. Not long ago (a few weeks) it was revealed that last September the global banking system almost came to a complete standstill. Of course, authorities didn’t tell anyone at the time. And why? Really, it was all due to the fallout from the Lehman collapse. Well … we’re looking at a situation that’s an order of magnitude worse right now. Not that the Government is ever going to tell a soul. They WILL announce some sort of rescue plan. But when BoA and Citi reach the chopping block, we have reached some very serious times in America.”It also shows that JP Morgan leads the pack in risk capital. My question is, why is JP escaping a BAC-style implosion?”Because JPM is the poster child of the current financial elite that’s trying to run this country. JPM is the last institution to go down … and if it does then their whole empire is gone. So’s our immediate future, by the way. You’ve got to understand that the Fed is knee deep in this mess. How do you think they adjust prices on US bonds if they really need to? How do they do market interventions? A lot of this underhanded stuff gets routed through places like JPM. That’s why when big banks like Lehman fail, they throw the few good assets into the coffers of JPM (and toss the bad assets onto the US taxpayers). JPM is their cornerstone.The American people need to understand. The Fed was set up to protect the US banking system – warped as it may now be. The Fed was never set up to protect US taxpayers. This is not a fair fight, and it was never intended to be. The best chance that the American people had was Barack Obama. He did promise change and he is supposed to answer to the people of this country. Unfortunately, his current economic policies have been hijacked by Keynesian economists who are playing with drastic policy interventions in a situation that is getting further and further out of control. It’s possible that Mr Obama will eventually realize his mistake … but a lot of damage will have been done by then.PeteCA

AnonymousFebruary 21st, 2009 at 12:37 pm

So everything is planned and nothing by accident. Let’s all face the ultimate conclusion to this sordid tale: this entire catastrophe cannot now be fixed without a complete consolidated global-wide currency revampment – in effect, the Globalists are winning. Conspiracy theorists aside, what we have is the protracted but inexorable enactment of a ‘Plan B’.Nothing happens ‘accidently’ to the truly wealthy and powerful. And they will survive no matter what it takes.AM

GuestFebruary 21st, 2009 at 12:37 pm

Dear People! I must rant! George Orwell must have believed in cycles of irrational human behavior, and his math gave him the approximate beggining of a cycle of “doublespeak” and the power of the media. The media is the fourth estate and should be a pillar of democracy. We don’t have a fourth estate today!We have a circus of distraction. TRILLIONS have beengiven to the banks without conditions and Santelli wants a Tea Party to bring a REVOLUTION against theidiots who were sucked in by BIGGEST SECURITIZATIONFRAUD IN THE HISTORY OF MANKIND! I suggest Santellishould become an investigative reporter and tell uswhy Cuomo gave the Rating Agencies Immunity? Why didCuomo give Clayton Holdings who did due diligenceon mortgage securitizations immunity? Why the Securitization process has not been investigated under the New York Martin Act? Why is the FBI notsearching through all the Investment Bank files tosee if the Executives knew the extent of the intentionally fraudulent mortgage backed securitiesthey were passing on to unsuspecting world clients?The fact that the government has to make like theyare truly helping morons who took out mortgages thatGreenspan recommended does not lead me to a Tea Party. The affordability portion of HASP will givefixed, fully documented with tax return refinancingsto people who are not underwater more than 105%. They must have good credit. With mortgage levels as high as they are, I think this will only help the people who are well off. The modification section lowers the payment for 5 years without reducing principal. These morons should walk away! There isno principal reduction to remove debt overhang.Let us have a REVOLUTIONARY TEA PARTY ABOUT THEGREATEST INVESTMENT BANK THEFT IN THE HISTORY OFMANKIND! The powers that be are even appropiatingthemselves of the word “revolution”. Don’t use that word lightly!I am not a candidate for HASP, so I don’t have a dog in this fight. I don’t like hippocracy!

SoftwarengineerFebruary 21st, 2009 at 12:45 pm

IS ANYTHING LIKE NATIONALIZATION OF CITI AND BOFA GOING TO BE SEAMLESS?I’m just day-dreaming now, albeit a banker type on this blog brought this puzzle piece to my attention; and the threat of nationalization appears like arsenic to the stock market this week too.Are the bank doors going to be closed for a few weeks as the new government management takes over? What’s to stop mass panic and a run on the banks if that happens? Soothing fireside chats by Obama to not to worry about your rent and mortgage payments?Would if the nationalization transition process takes months? Do riots in the streets break out then?Just some soothing thoughts to make your weekend enjoyable….lol….by the way, I’m paying my mortgage principle off ASAP, I’d suggest the rest of you do the same if possible, unless you believe the fireside chats will calm us all down with the nationalised bank doors potentially get closed.

AnonymousFebruary 21st, 2009 at 1:21 pm

I’m paying my mortgage principle off ASAPWorst. Idea. Ever. Pay on schedule and no sooner.And there will be no bank runs as FDIC guarantees would preclude them.

BrianFebruary 21st, 2009 at 2:03 pm

Are you kidding? Bank runs are already happening. And if you are talking about BofA and Citi, will anyone believe that FDIC will insure them? People will pull cash just to have Paper Cash at home (as I do, and as most of us on this blog do) in preparation for a total bank shutdown of a week or potentially much longer.Take a look at the charts at the bottom of this page: failure won’t be smooth, either. Bank nationalization at least will be smoother that random bank collapse. But no serious investor is going to keep large sums of money in either BofA or Citi.One final note, whenever the President of a bank comes out and says, “We’re doing great! We don’t need any (more) help.” that has been a signal that the bank/financial institution will fail in days or weeks. At least, that’s what we’ve seen happen before each of the spectacular failures so far. BofA is on script for failure any time now.–Brian

MedicFebruary 21st, 2009 at 2:18 pm

The FDIC has less money than I do. Their backing does not make me feel better.Take your money out of the large banks – put it somewhere safe like a local bank or CU (or under the mattress) and move on. The big boys are toxic.As an aside – BOA called me yesterday (I have a credit card from them) and offered me life insurance for free thorugh 2010 – I asked the sales person if she thought they would still be around in 2010. Before she could answer, I began laughing and hung up.

GuestFebruary 21st, 2009 at 2:52 pm

Pete, the question has been asked, was the Bank-of-America-Merrill-Lynch-Merger … a merger or an acquisition – or a “shotgun merger”?I have long believed BAC either was deceived or forced into the merger: BAC always has been a step child, never a blood relative, of the closed family of Money Men. “The Bank, once considered one of the winners and healthiest survivors of the 2007 credit crisis, plunged in market value after its purchase of Merrill Lynch. It is now considered by some to be a ‘zombie bank’ (along with Citigroup), kept alive only by government TARP money,” says Wikipeidia. BAC, therefore, was destroyed by Merrill Lynch – always a favored child of the Money Men.Bank of America’s homegrown roots go back to the Bank of Italy, founded in San Francisco in 1904 by Amadeo Giannini, catering to immigrants. Giannini was supported and was loved by the people.Said Charles A. Lindbergh, Sr. in 1913 of the Money Men – “When the President [Woodrow Wilson] signs this bill [the Federal Reserve Act], the invisible government of the monetary power will be legalized….the worst legislative crime of the ages is perpetrated by this banking and currency bill.”

GuestFebruary 21st, 2009 at 2:59 pm

The impression I got from Frontline’s take on the meltdown was that it was essentially forced, but I might have misinterpreted.

DocBergFebruary 21st, 2009 at 3:13 pm

Why do we have to have all of these overly complex and expensive “solutions” to the problem that most of our major financial institutions are insolvent? Certainly the degree of difficulties for these institutions is well known to our regulatory agencies. After all, they have been carefully looking into fraud in the operations of Madoff and others for years, but have failed to do their obvious duty despite considerable evidence. If these financial firms are insolvent, as is becoming increasingly obvious, then seize them and run them through the bankruptcy process. Many thousands of individuals and corporations do this every year. It works. Those assets that have suitable value can be sold to others who are still solvent, and the rest written off. Fraud and malfeasance that is uncovered should be prosecuted. Instead of wasting trillions of borrowed taxpayer dollars to prop up a bunch of zombies, the only public cost should be for the salaries and expenses of judges and prosecutors.

GuestFebruary 21st, 2009 at 3:20 pm

“the only public cost should be for the salaries and expenses of judges and prosecutors”Why stop there? Make them eat all related court & prosecuting costs as well. Surely many of them can well afford it.

GuestFebruary 21st, 2009 at 3:25 pm

So Wall Street and the FED caused housing prices to sky rocket with easy lending, low interest rates, and a bogus derivatives market and now we find out the truth that homeowners can’t really afford the fictitious housing prices caused by Wall Street and the FED/Banksters. So of course the only fair thing to do at this point is to let the markets work and kick families out of their homes in the name of some ideologue capitalistic religious crap!(that surely wasn’t adhered to on the way up when Santelli was all smiles) Denninger and Santelli are not smart enough to be opening their mouths!!!!!!

WalkerFebruary 21st, 2009 at 3:32 pm

We are getting closer to some viable solutions now. Without nationalizing the banking industry, insolvent banks may be taken over and the debt converted to equity for purchasers. Then, a new solvent bank can emerge. This can minimize our tax dollars.

MedicFebruary 21st, 2009 at 3:37 pm

Isn’t there some sort of three strikes and you’re out rule here? How many times does JR need to get kicked off the island?

GuestFebruary 21st, 2009 at 3:46 pm

“The budget should be balanced,the Treasury should be refilled,public debt should be reduced,the arrogance of officialdomshould be tempered and controlled,and the assistance to foreign landsshould be curtailed lest Rome become bankrupt.People must again learn to work,instead of living on public assistance.”Marcus Tullius Cicero(106-43 B.C.) Roman Statesman, Philosopher and Orator

Ed BeaugardFebruary 21st, 2009 at 3:56 pm

First, I’d like to say I mean “no offense”, and I’m an admirer of Roubini, but as a recent refugee from New York City, I’d like to say that the phrase, “bohemian party in Greenwich Village” is nonsensical in the Wittgensteinian definition of nonsense. To be more exact, it’s self-contradictory since there are no Bohemians in Greenwich Village, just Trust Fund children and other wealthy people, in other words, the idle rich.If Mr. Varadarajan had instead used Bushwick as the location of his bohemians, that would be a bit more creditable. But really, New York is no longer a center for art or artists. I always tell people not to bother with New York, rather go to London, Berlin or even Portland, Oregon as much better places to live that kind of life, instead of the inhuman, awful place that New York City has become.

GuestFebruary 21st, 2009 at 4:06 pm

I don’t understand. How is it not fair to let someone, who can’t afford the contract that they signed, lose their house? Does this mean that there are no other housing options? Does this mean that they can’t rent? Did they really not know that they, at some point, might not be able to afford it? Did they not question (as I did, and I know nothing about real estate or finances or economics) how ridiculously priced the houses were becoming? Did they read and understand what they were signing? Had they done all of their own calculating to determine what they could comfortably afford, and not just take someone’s word for what could qualify for? Were they really not aware that, should they lose their job(s) or have an accident or develop a serious medical condition, that they might be forced to default (as it would be for any other time in history, not just during a major financial crisis)?As for what was going on “on the way up”, there’s plenty of blame to go around for that. It’s not like there weren’t people sounding the alarm long ago, were anyone (public, corporate, or government) paying attention, seeking out the information & opinions, and generally educating themselves.

GuestFebruary 21st, 2009 at 4:28 pm

And, after all is said and done, how much are most of these people really out? Those who put no money to 3% down are out virtually nothing on say, a $200,000 median priced home. And of those paying only 3% preferential interest on their “mortgages,” that’s only a little more than $500 a month — cheaper than rents for most people. As for property taxes, if these owners can claim low income, most get a property tax break — to be paid by the rest of us — as they do on utilities (in my area 20%).So what’s the beef? For most, other than a bad credit rating — and I’ll bet a dollar to a donut (not a bad deal these days) that it will forgiven — it wasn’t really such a bad deal. The mortgage bailout is for the bankers, IMO, and probably will bypass those who really had their lives tied up in their homes and are legitimately hurt. They will be designated too well off to qualify. Follow the money and the political clout.

GuestFebruary 21st, 2009 at 4:33 pm

What’s not fair about it is that the banks/FED themselves with the full backing of the SEC/government bid up the value of houses to extraordinary unaffordable heights but people bought anyway because they trust the FED to create a stable economy which they couldn’t be trusted to do. in fact they bid up the value of all kinds of assets and now when they finally inevitably crashed by tightening their lending the people lose their assets but all the profits made in banking bonuses and commissions(trillions) are theirs to keep forever and to add insult to injury they further steal from the tax payer by being too big too fail and demanding bailouts. It’s a total scam don’t you see?The other thing that I find terribly wrong with this is that the banks typically loan money to people for homes because they trust the asset/home will gain positive equity, their decision to lend or not is primarily based on the confidence that the housing market will remain stable and move in a positive direction not on a persons income bla bla like they claim. What’s ironic is they’re also entrusted (the banks and the FED) to maintain stability in asset prices which they clearly failed to do! Now on the downside the people who can least afford to take the loss is the little guy homeowner, and it’s completely unfair. When a bank loans a business money and the business declares bankruptcy the bank takes a huge hair cut but the business comes out intact usually and in that case the banks take a shared liability with the given credit. However with regards to homes the homeowner assumes all liability in that he loses the house entirely in the event of insolvency or hardship. It’s one big scam and Santelli is obfuscating the issue and pointing the blame in the wrong direction!

Ed BeaugardFebruary 21st, 2009 at 4:40 pm

Thanks for the compliment(I assume you’re referring to me). I’m not a writer, although I’d like to write more, mostly about art. I might have a short piece on Richard Serra appearing soon on the site,, if you’re interested.Thanks again.

PeterJBFebruary 21st, 2009 at 4:43 pm

“Hillary Clinton has told China that the US considers human rights concerns secondary to economic survival. “ obviously is the basic belief of the Obama Administration and by all accounts, we all ought to be scared to death; IOW, “we are dinner”.OTOH there are numerous reports of blame on Bankers, millionaires, billionaires, CEO’s, CFO’s (etc.), bureaucrats, politco’s, economisto’s, et al, or essentially “leadership”, you know, that incompetent lot that suffer with the much sought after disease and elixir of life, known as “Moral Hazard”.IMMHO we are not going to like that which Messrs. Geithner and Summers dredge up from the bottom of their respective mental sewers but I’m sure that it will please their handlers and ilk to no end.From a rational point of view, all of the above are the signature of revolution, which I’m sure “leadership” can see clearly and hence Madame Clinton’s ‘carte blanche’ for anything that the Central Government may like to implement, as has been its habit of the recent past; it appears clear that the US “leadership” want, nay desire, pray even, for the China Authorities to whack the unwashed masses so hard, that the events to follow in the US (and elsewhere), will appear somewhat civilized and respectful of Law and “human rights”. Don’t bet your lot on this clampdown being civilized as “leadership” is rapidly going into the advanced state of “extremis”. Desperation, fear and panic are clearly the State of the Norm (SON)in “leadership” circles around the globe. (Time for a Rebirth;)However, these false prophets and perverts of Justice believe that their precursor will be a predictable China Government clampdown. Me? I’m not so sure as an Empire-less Throne and Kingdom of the Sun Gods is openly and totally defenseless against the exploded energies of rage of its people, and the China “leadership” know this and fear… fear albeit for themselves, and are starting to feel the warm trickles of bodily fluids on their legs and the rising stench of their own boiling excrement. The games of power between two or three contenders to the Throne is nowhere similar to a general uprising, now overdue, in the Lands of the Far East.This all leads me to believe that Madame Clinton, a most horrible woman of indescribable machination, carries with her to China, and plays with the fires of hell, that ill-construed pill that is hoped will explode the whole of Asia into a fury of revolution, so that those in power in the USA, can do some, er, comparative crowd control – and thus hoping to sustain the ‘status quo’. This ill-gotten Clintonian US strategy is 100% neoconservative compliant and is intended to be a precursor for more War by the USA but on an enemy that is entirely weakened; it is the strategy of cowards and persons that know not honour, courage or compassion; only self.As PeteCA so correctly observes – from above:”This is not a fair fight, and it was never intended to be. The best chance that the American people had was Barack Obama. He did promise change and he is supposed to answer to the people of this country. Unfortunately, his current economic policies have been hijacked by Keynesian economists who are playing with drastic policy interventions in a situation that is getting further and further out of control. It’s possible that Mr Obama will eventually realize his mistake … but a lot of damage will have been done by then.”Mr. Obama has the support of his people, which appears to be rapidly dwindling away; if he has the courage and the opportunity, he could grasp the moment and throw the parasites and ghouls of his administration off the steps of the White House.He could win the day as he has the power, which no other leader in the World today has?I will not hold my breathe… but in my World, anything could happen and if it changes the World, then it will be a very small happening.Ho hum

GuestFebruary 21st, 2009 at 4:50 pm

The “just trust fund children” was a classic.Bring back the arts or bring back humanity that will save our economy more than Obama can.

GuestFebruary 21st, 2009 at 4:52 pm

Yes, I understand all of that, and I agree that they (banks/fed/etc) ought to take on a large amount of the blame. The oversight, or lack of it, is criminal in my opinion. But how does it make things fair to force the taxpayers to help keep these people in their homes?

blindoneFebruary 21st, 2009 at 5:01 pm

g,i saw it too. they mis represented the story. the banks are behind this entire fiasco including the “bailout”. the program implied that the fed and treasury had to bring the “bankers” into a room anddictate to them and inform “them” that there is asystemic crisis at hand. really? like they had notknown what was going on in the world for the last 30 years, plus. what a load of dung that is. they were innocently going along making money, billions,but, unbeknown to them, there was a burgeoning problem developed from some mysterious and previously undetected flaw in the system, the oneexplicitly designed by and for their profit and well being.if the program had explicitly stated that the fed is run by and for j.p morgan etc. and they nowrun the treasury, have always, and the executive branch, and intelligence community, and military, congress, and well the hearts and minds of the people as they / we all worship their crazy paper,then, i think, the show would have lived up to thetitle..” inside the meltdown “.but no.

GuestFebruary 21st, 2009 at 5:07 pm

The fairest thing to do is to let bankruptcy judges lower the principle on mortgages, that would go along way to putting a celling under house pricesNext have congress pass a law that allows losses to be passed down to debt holders so we can stop bailing out the AIG’s etc.And third have Rick Santelli focus his rage on the real culprits of the problem not the innocent home buying sheople.

GuestFebruary 21st, 2009 at 5:07 pm

Don’t get me wrong–I wasn’t buying much of how they represented the way everything went down. My spouse & I viewed it as almost something of a comedy of sorts (maybe a tragic comedy). It was just that one part about BoA taking on ML that I wasn’t sure about, as I haven’t read or heard anything but opinion on exactly how it went down, apart from how MSM portrays it.For the record, I completely agree with your take on it.

Octavio RichettaFebruary 21st, 2009 at 5:14 pm

Actually, a very smart idea. Converting debt to equity immediately improves the bank’s capital situation.

GuestFebruary 21st, 2009 at 5:15 pm

The only reason tax payers are being asked to pay anything is because investors and bond holders refuse to take any losses. The economy is being held hostage to the bond market!Allow the sovereign funds and Pimco’s alike to lose their shirts they have the reserves to lose, tax payers don’t!

Octavio RichettaFebruary 21st, 2009 at 5:16 pm

Walker, U remind of of Marti! I am looking forward to a better week than last week. Which isn’t much to ask!

GuestFebruary 21st, 2009 at 5:17 pm

Floors & ceilings cause disruptions, overages and shortages, as my spouse is explaining to me. He’s an econ major and a financial analyst.And again, not all of the home buyers are ‘innocent’ in all of this. Where is the logic, the common sense, the personal responsibility?I am not ignoring the banks/feds/etc, but if we constantly focus on only one part of the problem, we risk creating further problems. So in that, I could agree with you partly about Santelli, but he knows that the average audience grasps simple ideas better & faster, which is probably why he only focused on a small part of the problem. As best I can tell, his beef is that the taxpayers shouldn’t have to foot the bill and, in that, I agree.

C. L.February 21st, 2009 at 5:28 pm

Markets and economies can fail and we cannot avoid it. Greenspan got it wrong on this score. Roubini and Soros have it right. A useful analogy for me is Kurt Godel’S Incompleteness theorem and its related indeterminany principle. Both were derived from his analysis of the relatively simple system of arithmetic. Applied to a much much more complex system known as an economy, the logic of analogy would say:Incompleteness analogy–No matter how much we put in place in the way of laws and regulations, bad outcomes can still result. Cynics say Wall Street and lawyers will eventually find their way around them. But, at least better/newer regulation can prevent or at least impede yesterday’s problems from recurring.Indeterminancy analogy-No matter how good a new financial construct sounds, we can’t be sure of what it might lead to. The outcome may be very good or very bad, maybe even some of both. Loan securitization is a perfect example. Derivatives in general may be even better.I realize purists will say the above logic is too loose for a mathematician’s taste, perhaps even too loose for an economist’s, but it seems quite appropriate to me.

GuestFebruary 21st, 2009 at 5:34 pm

To be fair, the home buyer might ultimately be out a lot, depending on how things wind up. I don’t know if this is wholly accurate or if it varies from state to state, but it’s my understanding that if you default and the bank sells your house to someone else at a loss, you become liable to make up the difference between what the new buyer paid and the price that you had originally agreed to pay. If my understanding is faulty, I invite someone else to step in and clarify.

blindmike er, manFebruary 21st, 2009 at 5:49 pm

pjb,sub-small? tiny? neutrino small? smaller thanthat?the proverbial black cat in the coal cellar at midnight small?

HayesFebruary 21st, 2009 at 6:22 pm

via CRObama to Unveil an Ambitious Budget PlanBy Lori Montgomery and Ceci ConnollyWashington Post Staff Writers (consider the source)Saturday, February 21, 2009; 3:00 PMPresident Obama is putting the finishing touches on an ambitious first budget that seeks to cut the federal deficit in half over the next four years, primarily by raising taxes on business and the wealthy and by slashing spending on the wars in Iraq and Afghanistan, administration officials said. …

PeterJBFebruary 21st, 2009 at 6:31 pm

Speaking of nationalizing Banks er, temporarily and being the first to put the dots together:I believe Lyndon LaRouche was publishing his thoughts around the Haunted Hallowed Halls of Incompetence (HHHI – a sort of stuttered greeting) and peddling his proposals to place the Banks in Bankruptcy (that has a nice ring to it:), protecting US assets by ring fencing and bringing about a rebirth of the US financial system – er, over 12 months ago.SOoooo, there is nothing really new here.But I am somewhat reminded of analysis of the Ancient Egyptian Writings of The Ten Plagues and its impacts on Nations as well as people – in the scientific context – and believe that the USA has reached this point in time, sadly. Jung appears to have also grasped at this but primarily his source would be the Torah which then depends on which opinion he grasped.Ho hum

subgeniusFebruary 21st, 2009 at 6:33 pm

…meanwhile, the BBC has this “President Barack Obama has said US tax bills will begin to fall from April, hailing a tax cut he called the fastest ever to take effect.” one hand gives, the other takes away?

MorbidFebruary 21st, 2009 at 6:37 pm

pjb,I recall that during the Clinton presidency Hillary blasted China for its limiting one child per family. That was a human rights violation in her mind. So, this current business is a real turn-around. I guess she has been told to butter up the Chinese so that they will continue to buy our debt!

GuestFebruary 21st, 2009 at 6:43 pm

Direct hit. Santelli is barking out of the wrong side of his mouth. Populist class envy. Whenever the middle class bitches about the rich, it is class envy. Now the rich are envious of the middle class getting some of their own money back. Pathetic. When the rich conduct wholesale fraud and theft on the grandest scale in the history of the world, they have some loud mouth like Santelli float a false populist mantra about not supporting our neighbors, like our neighbors are the culprits. Bullshit!!! This is no more than a grand diversion, as evidenced by Larry Kudlow arrogantly wanting to speak at the Chicago Tea Party without being asked. Where ever Kudlow is watchout! Where is goldie locks and mustard seeds now? Yes the new whipping boy of the rich is now our neighbors, (ever hear of divide and conquer?) not the real criminals of the massive corporate and government fraud and racketeering that has looted the treasury of this once great country, yet are the recipients of the monsterous double dip at the expense of tax payers TARP funds as well. Jees, they stole trillions and we’re given them more trillions for their trouble. How dumb are we!!!!!They must be laughing out loud at our stupidity. We are unable to enforce our own constitution against them, yet we fight amongst ourselves at their delight. We are the other 99% who own only 20% of the assets. I think I am going to be sick.

HayesFebruary 21st, 2009 at 7:04 pm

Right now on CNN — The Money Summit – hosted by Anderson Cooper -How the Stimulus will turn the economy around -I often wondered what it was like to have Pravda as your only new source

PeterJBFebruary 21st, 2009 at 7:21 pm

Yes, She really is pathetic / sickening: ‘we will allow you to violate your peoples as you like – as long as you don’t dump US Dollars that you need to do in order to survive’.And Yes, the only reason she had to visit Asia is this single moment; this message; what a witch.And she has ‘Clit’ (Bill) on a similar string so: How much for a stray blow job? Your life?Ho hum

GuestFebruary 21st, 2009 at 7:38 pm

This whole crisis is nothing to do with greed or regulation – it is a massive shift in trade imbalance and economic productive capacity and wealth from Europe/US to the rest of the world notable China / rest of Asia and other less wealthy countries. This is bringing down the average wealth of all and we will end with a downward spiral into a third world, world where every global citizen is an indentured worker of the free market ideology of an over populated and decaying global system and planet. Have you heard the GOOD NEWS?

Guest1984February 21st, 2009 at 8:08 pm

Is this true?”For those of you who missed it the Dow Jones removed all stocks in the industrial average priced under $10.00, effectively eliminating the crippled financial sector. Had they been left in the Dow would be lower and would have broken down below 7286. This is just more flagrant manipulation. Almost every day we see it in a number of markets. This week the Fed and the Treasury tried to push the stock market up and the commodities and gold and silver markets down but to no avail. Downside stock market volume has been some 65% of total volume and there are over 300 new lows almost every day.”

Octavio RichettaFebruary 21st, 2009 at 8:25 pm

Man robs San Antonio Brownie Girl Scouts selling cookiesAssociated PressFeb. 21, 2009, 7:16PM

GuestFebruary 21st, 2009 at 8:30 pm

Can you imagine the additional damage it’s doing to U.S. esteem, as if we had any to spare, sending this hated women into the world (including the US) as “secretary of state” – our highest-ranking cabinet secretary? And to think that the first Secretary of State was Thomas Jefferson.Secretaries of State who later occupied the White House included Thomas Jefferson, James Madison, James Monroe, John Quincy Adams, Martin Van Buren and James BuchananThis woman’s “duties” include negotiating with foreign representatives and instructing U.S. embassies or consulates abroad, whether they like it or not. She serves as a principal adviser to Obama in the determination of U.S. foreign policy and is responsible for overall direction, coordination, and supervision of interdepartmental activities of the U.S. Government overseas, excepting certain military activities.And, as the highest-ranking member of the cabinet, She is fourth in line to succeed the Presidency.I could howl in outrage at the deceptions Axelrod and his Chicago Gang have so blatantly perpetrated upon America and her people – by promising “change.” Are America’s great beginnings to end like this, at the hands of these fools? And anyone who thinks these people have the capabilities to outwit world economics by patching up the mess created by the Fed’s central planning and its self-serving power over the world’s fiat reserve currency, is a bigger fool than they.

PeterJBFebruary 21st, 2009 at 8:39 pm

Anomalous Data drawn from Bob Chapman’s article referenced above:1. SPDR Gold Trust, the ETF GLD, has added 200 tons of gold over the past six weeks and 62,000 ounces last week alone. We are very skeptical regarding GLD’s gold purchases due to a tight market and no reports of their purchases.2. The Chinese want out of the dollar as Mr. Obama prepares an offensive against China’s human rights and trade tactics.3. The G7 and G20 talks might just as well be called off – it’s now everyone for himself.4. For those of you who missed it the Dow Jones removed all stocks in the industrial average priced under $10.00, effectively eliminating the crippled financial sector.That should be enough to worry about on its own;-)>Ho hum

PeteCAFebruary 21st, 2009 at 8:43 pm

1. So the Dow eliminated all the broken banks and auto companies in the USA. That says a lot, doesn’t it.2. I’m not sympathetic to the Chinese at all. They know what they have to do.3. We could very well be reaching the stage of “everyone for himself” as far as central banks are concerned. It will show up as currency volatility and money madness.PeteCA

PeterJBFebruary 21st, 2009 at 8:44 pm

Apologies, I also posted this below – 30 secs after you:It sorta makes the mind boggle a mite and could explain those smooth SEX(y) graphic recoveries that go almost straight up without resistance?Ho hum

GuestFebruary 21st, 2009 at 8:52 pm

And GE, the only original Dow Jones Industrial Average member, tumbled 6.8 percent to $9.38 Friday, the lowest close since June 1995, and earlier fell as low as $8.98. It joined Alcoa Inc., Bank of America Corp., Citigroup Inc., General Motors Corp. among Dow companies to sink below $10.GE saw its market value decrease to $99.1 billion, falling below Google Inc., owner of the world’s most popular Internet search engine, during the last month. GE is now less than a quarter of its own $431.6 billion value on Oct. 2, 2007.There you have it, folks. It takes real genius to destroy a power house economy the likes of America’s. But Wall Street’s world-class gaming bankers, their outsourcing global welfare-corporatists buddies dealing in slave labor, and our penny ante traitors in Congress who did it all for a limo ride finally managed to do it.Now, instead of reaching for the moon and beyond in a robust industrial, high tech, research and development environment, we can all sit and google.

PeteCAFebruary 21st, 2009 at 8:53 pm

Yahoo News, Feb 21’st, South Africa Climate Conference:”But it was Stern, former chief World Bank economist, who on Saturday laid out a case to his stranded companions in sobering PowerPoint detail.If the world’s nations act responsibly, Stern said, they will achieve “zero-carbon” electricity production and zero-carbon road transport by 2050 — by replacing coal power plants with wind, solar or other energy sources that emit no carbon dioxide, and fossil fuel-burning vehicles with cars running on electric or other “clean” energy.Then warming could be contained to a 2-degree-Celsius (3.4-degree-Fahrenheit) rise this century, he said.But if negotiators falter, if emissions reductions are not made soon and deep, the severe climate shifts and sea-level rises projected by scientists would be “disastrous.”It would “transform where people can live,” Stern said. “People would move on a massive scale. Hundreds of millions, probably billions of people would have to move if you talk about 4-, 5-, 6-degree increases” — 7 to 10 degrees Fahrenheit. And that would mean extended global conflict, “because there’s no way the world can handle that kind of population move in the time period in which it would take place.”—————–Just one of the major world problems that we could be addressing right now … if we weren’t wasting trillions of taxpayer dollars on insolvent banks that followed ridiculous financial policies. The enormous bubble in global derivatives is not only an incredible force for destabilization … it’s also a catastrophic example of malinvestment.Growing climate problems. Energy policies that are heading towards a brick wall. Increasing unrest, food riots, and ethnic tensions.Great breeding ground for global war.PeteCA

blindclone, had to try this one.February 21st, 2009 at 8:54 pm

pjb,@ above link. not to be impertinent…1.”The Chinese want out of the dollar as Mr. Obama prepares an offensive against China’s human rights and trade tactics.”china wants out… si. that makes sense.obama prepares … not borne out by recent hillarycomments. insignificant observation? would not be the first time i made that error.2.”In 2010 economic and financial distress will worsen. Some countries will slip into chaos. The fabric of society is going to be torn apart.”.here is the thing. if, as has been aforementioned by many a source and seems to be generally accepted as true, the status quo can be generously characterized as unfair, corrupt, usurious, defective, deficient, deluded (etc. and other terms beginning with “d” and other letters, much worse) notwithstanding this condition, or, in spite of this condition, somehow a “fabric” held societies together. this fabric, i would suggest, must have either been so strong as to withstand an historically pervasive assault or this fabric is soiled and rotten and ruined. either way, i would imagine, conscious human beings will prevail. that may become common sense.?as for the shamans and witch doctors, they need to speak up and help us out, wherever they are. i always liked them the causal the authors of quote, i think, presume money,debt to be = fabric of society. if this is correct, they are correct, that is one thing…as money is the universal language, international but it refers to a prior fabric or element which is more local, language ( protectionist natural ). as one sense, say sight, weakens, deteriorates, another strengthens, hearing. or so the story goes.and life goes on.the fabric of globalization is torn because it was not ever really woven. where is the international automation, the center? the standard. are we seeing it’s birth? somewhere? the international, the other thing concerning obama. man and position, place in institutional identity. to a degree his nature and individual identity have been exposed to the public, vetted for institutional occupation publicly and also privately. now he has become the hinge. two great masses, or more, swing on this pin. and as in all times with leadership, the leader merely mirrors those that follow, or prop, or as they sometimes say, lead from the rear, or are driven to negotiate to relieve tremendous pressure, or become equally squeezed from so many directions as to be forced to make decisions based on latent integrity, other factors, pressures and forces being equal or equally threatening.while pressure builds….we wait for the wing of the butterfly.

MorbidFebruary 21st, 2009 at 8:55 pm

New DOW 30So who are the new players? Perhaps now we will see how the overall economy is reflected in the DOW. What is wrong with that? After all those financial Dogs of the DOW could hardly fall any further – skewing the DOW towards a floor that wasn’t very far away.

AnonymousFebruary 21st, 2009 at 9:01 pm

Marginal Revolution: A contrarian view against nationalizing the Big Banks by Tyler CowenTyler’s view is that hardly anyone is talking about the difference between banks and bank holding companies. Interesting to say the least and I think pertinent contrariness to the prevalent mainline reasoning that nationalization will solve the problem. I too have my grave doubts despite what the elite minds are saying.AM”Banks vs. bank holding companiesTyler CowenI continue to see many bloggers suggesting that bank nationalization is a fait accompli and that anyone who isn’t on board right now is in denial. It is far less common that bloggers give serious consideration to the difference between a bank and a bank holding company. In fact I usually don’t see that critical distinction……”

MorbidFebruary 21st, 2009 at 9:02 pm

Pete,Despite the “collective wisdom” on global warming being man-made it is not a consensus. As a scientist I have followed this “debate” and see no evidence for man-made global warming. The warming trend will come to a natural peak and then we begin to enter global cooling. God help us if something triggers another abrupt Ice Age, such as the sun being spotless much longer.We certainly have a lot of other pressing issues on our plate though – enough to keep one worried.

MorbidFebruary 21st, 2009 at 9:10 pm

It’s The Ross Perot GIANT SUCKING SOUND!In the 1992 presidential election Perot predicted that NAFTA, etc. would mean in about 15 years that the worker’s in the USA who were making $20/hour would soon have their jobs back for about $5/hour when everything collapsed to equal wages for all. Something like that. Lo, here we are.

PeterJBFebruary 21st, 2009 at 9:19 pm

Thanks for the link; good article, comments and references – I agree and accordingly classified the data as “Anomalous Data” – but then speculation appears as fact too often but then, that keeps us sentient, the way we should always be,… point taken with thanksHo hum

GuestFebruary 21st, 2009 at 9:49 pm

Being somewhat indirectly connected on the agricultural side, I myself after much study also concluded there is “no evidence for man-made global warming.” But, as it is such a big money-making political football, any truth or debate on the subject has been practically obliterated.

GuestFebruary 21st, 2009 at 9:53 pm

Hey come on you know free trade with dictatorship China is a noble thing to do all of our elected leaders and pundits have lectured us time and time again how important “free trade” was with dictatorship countries-it makes us all more free don’t you know. We’re all so much better off now and so much more liberated so be really careful all the economists tell us not to be protectionists in this economic crisis avoid the temptation of protectionism.Globalization is synonymous with freedom and liberty and justice for all, who cares if we all become slaves to the oligarch class we’ve got “globalization” religion to save us. The oligarch at least gave us something for our indentured servitude the gave us the religion and beautiful belief system of globalization so nobody worry anymore we’re all saved.

blindoneFebruary 21st, 2009 at 9:58 pm

speaking of tammy wynette..Sometimes it’s hard to be a womanGiving all your love to just one manYou’ll have bad times, he’ll have good timesDoin’ things that you don’t understandBut if you love him, you’ll forgive himEven though he’s hard to understandAnd if you love him, oh be proud of him’Cause after all he’s just a man.Stand by your man, give him two arms to cling toAnd something warm to come toWhen nights are cold and lonely.Stand by your man, and show the world you love himKeep giving all the love you can.Stand by your man.Stand by your man, and show the world you love himKeep giving all the love you can.Stand by your man..contrary to her protestations this lyric does describeour madame secretary. except, i think, she does understand.

GuestFebruary 21st, 2009 at 10:07 pm

I’ve just been searching for news stories on DJIA changes, but all I can find are a few changes from last year, Feb of 2008. The only current stories I could locate were pieces on how the DJIA should cut some of the dead weight, like this one:How long will the Dow keep its weakest stocks?Is there any other story on this, apart from personal opinion pieces?

PeterJBFebruary 21st, 2009 at 10:20 pm

blindclone:History tells us that societies have been screwed up repeatedly since time immemorial and accordingly we find traces of tribal initiation procedures that basically determined function with the man /female in the hunter/gatherer types and even in the pastoral types but as societies entered into the grain type societies where excesses were stored in times of plenty and distributed in times of lack, determinism function/man broke down. We are here and slightly beyond.What is clear that there have always been those peoples that prefer to live outside society and rarely ask anything of society; these peoples are more oft termed shaman and it is most interesting to note that as ancient societies broke down (again and repeatedly) the wisdom (sic) er, advices of these persons, both male and female were sought.There is evidence that there are many well established societies that had reached profound levels of advancement to only suddenly disappear without trace. Perhaps they were so arrogant they did not seek the advice of the shaman, or his /her advice was not met with reason; this is understandable as arrogance is an extremely strong emotive.However, as I have written, it is clear that the forces that must be sought to fix a breakdown in the socio-economic societies of today are only to be found outside of those societies. It’s basic physics really, and there is little difference today to thousands of years ago; arrogance, incompetence and stupidity still rule the roost of flaring colours, beating of the wings and cock-a-doodle-doing.Ho hum

blinded half-mute.February 21st, 2009 at 10:24 pm

or,in no way do i support “hold ups” of any kind butthose cookies are making people sick and, frankly,they should be stopped! it is unfortunate thatthe wisdom of the market place is not doing its job.?

GuestFebruary 21st, 2009 at 10:57 pm

Well, if you truly are a scientist, you’ve just shown yourself to be a poor one. It is extremely well known that increasing carbon dioxide in the atmosphere will increase the temperature of the planet as surely as salt raises the boiling point of water. It is also well known that the amount of carbon dioxide we are pumping into the atmosphere is enough to change the average temperature of the planet.This is not really an issue that is debated by serious scientists any more than whether gravity causes us to stay on the planet. There are basic, well known facts governing the temperature of the planet.Unfortunately, it has become a political football. Not by scientists, who don’t have any stake in the outcome, but by industry and their political cronies who have a massive stake in climate change denial. Money is the cause of this pseudo-scientific debate.

mike peas. blindpeas.February 21st, 2009 at 11:29 pm

pjb,i hear you, always have, and am with you, remotely,so to speak in the physical sense, rationally interpreted.this physics basis you espouse is imo and to my rational mind exactly correct. economists discountthe essential. big mistake. no accounting for taste or basic physical survival is no accounting at all. physics does not have that blindspot hope, irrational perhaps, is that real pressure, naked fear, ( and naked fear is strong )will prevail. cut through all the arrogance, stupidity etc. and we can have that REAL moment where people open their eyes and see. see what is real. up and down the blog and on the street people are speaking a whole new LANGUAGE.personally, i attribute it to you…….allllllllll.pss.and i would like to post here lyrics fromjohn trudell, graffiti man.but these are rarer than the eggs of the great auk on this web. and i am not ready to do my own transcription. someday. exciting stuff.” i am just a human being trying to make it in a world that is very rapidly losing its understandingof being human.” john trudell..,i have not seen all this but if i had more than dial up 56 k i might have. but i have seen enough to know. if you have the time, this is worth yours. and i might add…as if i had not said enough to make enemies aplenty, these are the worlds real americans. to ignore them, marginalize them or denigrate them is to assassinate your own self and your children’s i say, verbewarp is f.. ing go.. mn brilliant?i should have!

VladFebruary 21st, 2009 at 11:51 pm

What exactly is Nouriel Roubini’s economic philosophy? “I believe in market economics,” he says, with some emphasis. “But to paraphrase Churchill — who said this about democracy and political regimes — a market economy might be the worst economic regime available, apart from the alternatives.>>Mr. Roubini belongs to what Marx called “vulgar economists.” These are the scholars who, unlike their great bourgeois predecessors from Adam Smith to David Ricardo, exist to provide the apology for and the smooth functioning of capitalist economy. Their intellectual and ideological space is “economics” not political economy. What makes Mr. Roubini and a few others somewhat different from the rest of the breed is that they try to keep personal distance from capitalists from their academic abodes. This allows them a degree of independence and the luxury of being “mavericks” – a status that bourgeois society reserves for those who represent the extremes of the ideologically permitted. Churchill’s cynical “wisdom” does precisely this: it circumscribes the outer limits of what capitalists agree to accept. Just imagine that the system that once more has put mankind on the brink of extinction and is going to destroy a better part of its productive forces in “deleveraging” is the best that human kind can hope for!

PeteCAFebruary 22nd, 2009 at 12:00 am

I will respectfully disagree on the subject of global warming. I think that it is happening, and I think there is growing evidence that human causes are a significant contributor. You could look, for example, at the changing climate in Alaska where longer times of warm temps are altering the forest patterns and increasing mosquito activity. Or perhaps more conclusively, the rapid erosion of ice shelfs in Greenland and the Poles. For me, the most convincing evidence is what I have seen over many trips to East Africa in the past 13 years. The glaciers on top of Kilimanjaro are receding and snow cover is reducing. Rainfall patterns are taking on a different character, and droughts appear to be getting more frequent and intense. This is causing a lot of problems for people in that region.Since climate patterns have a lot of variability, I accept that there will continue to be honest dissent and disagreement within the scientific community for quite some time. And further, since this is an economics blog this is certainly not the best location for such a debate.Even ignoring climate change, the sheer problem of population growth (and growth in needs for living standards) poses enormous problems for the world.PeteCA

blinded half-mute.February 22nd, 2009 at 12:05 am

….and yes, i think it all may hang on nothing morethan that slight disturbance…”A breeze made by the wings of a butterfly and just as noticeable.” pjb..hinges, causal moments, behave as such…no?

blindmike er, manFebruary 22nd, 2009 at 12:33 am

s,thanks. i need some new ones. got any funny suggestions? i live on divergent and stimulating”input”, for lack of a better term. when and why didwe stop creating anew our world? oh yea, it wasbecause of the money issue! almost forgot. …………………………………

PeterJBFebruary 22nd, 2009 at 12:38 am

With respect Mr Guest:Morbid is correct, however human beings being somewhat filthy creatures as they are, just love to pollute and I believe it was Mr L Summers that got the bright idea to export the USA pollution to third world countries in the guise of raising living standards. Which living standard he was trying to lift, I am not sure but he certainly exemplifies the filthy little traits and guise of “leadership”.And, let me add that there are very few scientists on this whole planet that understand atmostpheric sciene or even the essential fundamentals of same. A simple test then for your amusement.The Prime Maxim of Science is that Theory be independently tested through prediction and demonstration.Fact: Today it is still impossible to predict with 95% accuracy the weather conditions anywhere on the face of this planet – 24 hours in advance. In fact, try 50% accuracy. Its all guess-work honey and you call it science – utter rubbish!By the time you get to 72 hours, science has shot its bolt and you may as well throw bones if you want a decent forecast!There are 3 computer simulation modeling systems in the World today that can get 50% accuracy over 24 hours and even that is stretching it; 1. UK, 2. France and 3. Suisse and all they do is model past conditions with computer systems and algorithmic manipulating teams costing billions of dollars to operate and maintain per annum. And, none are worth a cracker.This pitiful little human thingy with the arrogance of a Universe or two, thinks that he, the “six-inch standard (3 inches) man”, can rule it over Nature? I would suggest that before you start calling people derogatory terms associated with their profession or anything else, er, that you get an education, or at least your facts right.I would like to add that the reason for all the pseudo-scientific debates is due to all the pseudo-scientific so-called scientists trying to prop up their failed theories that they cannot prove, don’t want to test, ram down every bodies throats and sell themselves to the highest bidder! All pseudo-scientists have stakes in funding and outcomes and mostly act like cowardly warrior priests that would stick it to their Mothers if they had a chance of grabbing their pensions.Science throughout the World is run on the same Principles as Institutional Religion and that’s a fact.Now, Weather Theory is the largest failed Theory in the whole library of failed Theories and Climatic Change is undeniable. But nobody wants to go here as it is a political and tenure is involved. Global Warming ain’t caused by filthy little economists, er, human beings; sadlyTry to read something else beside the Readers Digest.Ho hum

PeterJBFebruary 22nd, 2009 at 12:59 am

blindpeas;-):Thank you for the link to john trudell – i have played quite q few of his youtube videos/music – can feel the pain…Physics is real and the rest… merely the opines of little men from the lowest-common-denominator quarter.You speak of the blind side of Physics and it is so, but only in the position of the observer and the fact that our scientific institutions today have become corrupted beyond belief; it is another fire of hell raging across the economy.Whatever, while we are here, so too is all knowledge of the Book.Ho hum

slfFebruary 22nd, 2009 at 1:01 am

Suggestions from someone unoriginal enough to resort to initials?! Besides, for a blind man, I think you have a great deal of vision and sight, moreso than most–what to name someone like that?

GuestFebruary 22nd, 2009 at 1:17 am

Thanks. So, if I’m understanding the article correctly, there haven’t been any actual changes apart from two last year. Reading the last few comments, I was under the impression that those ‘underperforming’ names had been replaced very recently, like in the last few days or so.

mike peas. blindpeas.February 22nd, 2009 at 1:48 am

pjb,not to be dim, but directly, link, or otherwise state, location or other access to the knowledge of the BOOK. as i am most definitelyin want of same. please be as direct as required in such circumstance. i would prefer not to speculate. possible? or no? it me or does the warp warp every time one enters? it seems to be such? organic, but surreal. ??

PeterJBFebruary 22nd, 2009 at 2:22 am

blindman:”pjb,not to be dim, but directly, link, or otherwise state, location or other access to the knowledge of the BOOK. as i am most definitelyin want of same. please be as direct as required in such circumstance. i would prefer not to speculate. possible? or no? it me or does the warp warp every time one enters? it seems to be such? organic, but surreal. ??”@ mike peas. blindpeas. on 2009-02-22 01:48:15The Book, my friend, is life within the Universe(s) and its physics! Observe and live and you shall learn. Mind you, picking the cat up by the tail is the hard way to learn.There are only one set of Laws; your scale will vary, so then stick to Principles; Cause and Effect; Verbe and Noun.That’s it!Shakespeare said something like ‘life is a stage and we are all actors’ – correct, but with the exception that one is NOT an actor – You! Everything and everybody is there for you!That is the Book. And, you are the main character.And every Platonic Year or partition of the Zodiac measured one type of Consciousness, the chosen animal as symbol, and its opposition, was no mistake or flippant choice and where when one Epoch finished, it was called a Seal! All this is clear and validated by independant evidence ubiquitously available for all that seek the why(?).This from a Heretic and Pagan;-)>Ho hum

AnonymousFebruary 22nd, 2009 at 2:26 am

Well, let me just say this: the best thing the Al Gore’s of the world have hoped for has already happened; the industrialized nations have started to involuntarily and significantly curtail their CO2 emissions as a result of the current economic malaise. In fact if this economic malaise continues to amplify beyond Al Gore’s most wild imaginations he may someday plead that we all start burning more fuel to heat up the G-damn planet.We may also be on the verge of a mini-ice age too boot if as some scientificos are predicting that the worrisome decrease in recent sunspot activity is a harbinger of things to come. Brrrrrrrrrrrr.So be careful what you wish for. We may not yet be ready to play God with our own devices.AM

AfAFebruary 22nd, 2009 at 2:28 am

Select headlines from Bloomberg:• Obama Plans to Reduce Budget Deficit to $533 Billion by End of First Term• Clinton Urges China to Keep Buying Treasuries, Boost U.S. Economy, Market• Bank of America Chief Kenneth Lewis Says He Can Go It Alone as Stock Slips• Madoff Left No Sign of Thousands of Reported Client Trades, Trustee Says• Soros Says Crisis Marks End of Free-Market Model That Started Under Reagan• Dodd, Frank Clash Over Need for Obama Administration to Take Over BanksInsanity in its finest. People are really losing their heads. Do they actually believe in what they are saying or are they just trying to fool someone?Can we call it the Obama Syndrome?

SpanishFebruary 22nd, 2009 at 3:08 am

How many people would like to work in a Nationalized Bank? Take a look UBS as exemple; the employees problems that UBS has generated and the uncertain about the future of the institution. I don´t believe that Bank Nationalization´s will be a great idea. Sweden in 90´s did not have the world in a recession. Think about this point…

mike peas. blindpeas.February 22nd, 2009 at 4:02 am

pjb,gracias senior. bene.i am inspired to find a poem from umbria for this occasion , from my elbert hubbard scrapbook. itgoes as follows…..”the lady poverty” by evely underhill.i met her on the umbrian hills,her hair unbound, her feet unshod;as one whom secret glory fillsshe walked alone-with god..i met her in the city street;oh, changed was her aspect then!with heavy eyes and weary feetshe walked alone-with men…but…compelled to page 63 it reads…from “the wine press” by alfred noyes…a murdered man, ten miles away,will hardly shake your peace,like one red stain upon your hand;and a tortured child in a distant landwill never check one smile today,or bid one fiddle cease..the newsit came along a little wire,sunk in a deep sea;it thins in the club to a little smokebetween one joke and another joke,for a city in flames is less than the firethat comforts you and me..the diplomatseach was honest after his way,lukewarm in faith, and old;and blood, to them, was only a word,and the point of a phrase their only sword,and the cost of war, they reckoned itin little disks of gold…and then to page 228….” the open road ” by walt whitman …afoot and light-hearted i take to the open road,healthy free the world before me,the long brown path before me leadingwherever i choose..henceforth i ask not good fortune, i myself am good fortune;henceforth i whimper no more, postpone no more, need nothing,done with indoor complaints, libraries, querulouscriticisms,strong and content i travel the open road*******************all seems beautiful to me.i can repeat over to men and women,you have done such good to me i would do the same to you, i will recruit for myself and you as i go.i will scatter myself among men and women as i go,i will toss a new gladness and roughnessamong them….walt. he, too, was a great heretic. among legion.

rohelioFebruary 22nd, 2009 at 4:30 am

Unnoticed, a Black Swan hovers over amber waves of grain.What has sickened me about American dollar hegemony is the ruthless destruction of culture and personal freedom worldwide over the past century. The gluttons who own government have stolen their wealth on the backs and lives of working people around the globe under various guises of ideology, trade scams and IMF schemes. Americans have lived in blissful ignorance and disregard for the bloody dealings in all the Latin Americas and wherever else one looks.Recently, Americans have swallowed another lie. The war on terror is a great delusion that justifies endless profiteering on WMD and continued state terror with no end in site.Presently, the WMDs are turned viciously back on the last people standing…the clueless American clinging to a borrowed hedonistic lifestyle. The gullible masses foolishly wish and hope that government is working to solve this crisis for a common benefit. This current crisis will end intentionally not before trillions more are stolen.By their actions we can see they are working greedily to extract an even larger dept. There is no end in sight. Every second that ticks between now and whenever is more time to embezzle more salary, bailouts, and criminal fees with which they can further manipulate the markets. They want more time to allow smaller rivals to fall, more time for resource rich countries to default, more time to shuffle their billions. And while we rant, the gluttons are getting first leap on a new heap of Fed dollars.Behind, they will leave a sulphurous stench and heaps of soiled paper…another grotesque reminder for generations to follow.Hug our children….teach them about a natural abundance to be shared and sustained.

PeterJBFebruary 22nd, 2009 at 4:38 am

Aye, the USA is dying and there is no time to remember those greats of its past when you can hover over the abundant shallow pimp and whores er, heroes of present day.Begone;-)>And blindman and Jason BSOL ;-]>ho hum

edwardbFebruary 22nd, 2009 at 4:55 am

I’m not a scientist but consider these facts:- CO2 is a greenhouse gas- CO2 levels are up 40% since the industrial revolution- from Greenland and Antarctic ice cores the current levels are higher than at any time over the past million years.- these CO2 levels are the result of human activity- AUTUMN temperatures in the Arctic are at a record 5C above normal, and the arctic ocean will be ice-free in summer within a decadeNo on disputes that there are many factors which affect earths climate and temperature, but the only one we can influence is the one for which we are responsible. ‘It’s unwise to carry out an unregulated experiment on the only planet we have’.

MorbidFebruary 22nd, 2009 at 5:40 am

I Recommend Reading CHILLING STARS, 2nd Edition (2008)This is an economic forum and that which effects things economic are worthy of discussion.This subject is very complicated and tossing around tidbits does it no justice. Hard experimental data is painstakingly being gathered by real scientists – not all this blather that AlGore likes to do and win the Nobel Price in the process.CHILLING STARS shows what real science is about and they conclude that CO2 will have about a 1 Degree effect on climate by 2100. The rest is natural forcing, via the SUN and the strange amplifying effects it has on warming/cooling.The subject is way to complicated to have a meaningful discussion here – as usual one must be responsible for what one finally believes by doing their due diligence – like reading around on the subject.

PKBFebruary 22nd, 2009 at 7:45 am

OK, Let me see if I understand…If we take out the dogs of the Dow and replace them with healthier stocks, the index will not fall as much and we can all rejoice that the economy has been saved?I have a great idea…let’s put gold and silver bullion into the CPI basket so that we can stop the deflationary cycle!Puleassse!PKB

GuestFebruary 22nd, 2009 at 7:57 am

Global Warming, Americans do fall for almost anything, you don’t even need proof just say, its hot out side today, and those who would like to see all human existence except their own, wiped out to protect mother earth are instantly onboard. If we are every hit by a comet from space I am sure the humans of this earth will have in some way brought this on ourselves.

GuestFebruary 22nd, 2009 at 9:12 am

I saw a black swan for the first time in my life on Lk. St Clair in Michigan, a place where there aren’t supposed to be any. It was hanging out with about 200 white swans, this was early to mid July 2008 it hung out for a few days and was gone. Could be an omen only a couple months before the start of the crash.

GuestFebruary 22nd, 2009 at 9:52 am

Basic Economics:For whatsoever a man sows, that shall he also reap.Beware of false prophets, which come to you in sheep’s clothing, but inwardly they are ravening wolves. Ye shall know them by their fruits. Do men gather grapes of thorns, or figs of thistles? Even so every good tree brings forth good fruit; but a corrupt tree brings forth evil fruit. A good tree cannot bring forth evil fruit; neither can a corrupt tree bring forth good fruit. Every tree that brings not forth good fruit is hewn down, and cast into the fire.For what shall it profit a man, if he shall gain the world, and lose his soul?This from an Orthodox and Christian. 0:-)

GuestFebruary 22nd, 2009 at 10:01 am

Obama, Clinton, Madoff, Soros, Dodd and Frank – the Obama Syndrome, truly the symptoms of a morbid, dying state.

AndreFebruary 22nd, 2009 at 10:06 am

Roubini always wears black and white? Does he like briefs or boxers? Do you have his shirtless picture a la Jennifer Aniston to put on my wall? In the article called “Nationalize the banks” there is no single argument on what exactly will be done in nationalization and how it is done better if the government manages banks, after it makes game changing decisions violating rights of current debt and equity holders, US contract laws. Tunku, you went to B-school and to boyish lofts in Tribeca, you must have heard some arguments on economics there too?Only thing that i see that nationalization could do it to screw debt holders big and fast by selling assets at prices some bureaucrat deems ok at the moment and restructuring debt. Since equity holders don’t presently have any claims on cash flows as BoA and Citi pay zero dividends, and preferred dividends are negligible, these companies are run for debt holders that could take them to bankruptcy courts or deal otherwise with companies within the boundaries of existing law. If you don’t like the law, change it so that it is easier for bondholders to take over the company and run it in their interest. Giving the government a free option to choose when and how they declare a company bankrupt and work out asset sales with no regard to debtholders interests is how you enrich bunch of bureaucrats and their buddies and make sure investors stay away from investing in bank debt for next 15 years.

edwardbFebruary 22nd, 2009 at 10:16 am

The possibility of human induced climate change is accepted by a majority of scientists (and people). The Koyoto protocol recognizing the issue was signed by a majority of countries but not implemented by the U.S., Canada or Australia among others.

edwardbFebruary 22nd, 2009 at 10:26 am

Most people accept that climate is influenced by many factors including distribution of land masses about the earth, Milankovitch cycle, sunspot activity etc.

PeteCAFebruary 22nd, 2009 at 10:47 am

Hugo Salinas Price has an interesting article here … essential point is this … The US economic system got into this terrible mess over decades by going LONG on debt and SHORT on cash. In order to get out of the hole, we must reverse the positions now.Naturally, the terrible strain to pay off debts and raise cash actually falls on US workers. The Gov’t isn’t doing it – they are just going deeper into debt, printing money, and spending more. Unfortunately, workers and families don’t have the freedom to print money, so the hardship falls completely on us.The imminent demise of BoA and Citi make the situation worse, because of the threat that many more debts will go unpaid. Assets will be written off … derivatives deals dumped. Little wonder that ownership of precious metals is soaring – it’s one of the few things that people can hold and know that no-one else has a claim to the value of the asset (or a way of destroying the value).I’ve noticed lately a new trend amongst people to just start to consolidate whatever personal effects they can still own. And be done with it. Someone recently said to me this past week … “well I took the cash from the divorce settlement and bought a townhouse – because at least I’ll own that free and clear. I don’t know if I’ll have anything else. But that will be mine.”People are just locking down on whatever tangible property and belongings they can still own and hold onto. But their economic future is tremendously uncertain.PeteCA

MorbidFebruary 22nd, 2009 at 10:49 am

OmenYes, it very well seems to have been. Such things happen – but most of the time they go unnoticed. Interesting that YOU noticed! It’s one way the “other side” tries to help us “see” but these days – who even believes.It would be interesting to know the dreams that people have been having, especially the repeating ones and the apocalyptic ones. For surely they try to warn one and the world of the danger, and its extent.

MorbidFebruary 22nd, 2009 at 10:55 am

Yeah,And Roubini was laughed at after his 2006 Davos talk about the coming crash. Nobody believed him either but he had his facts straight. Following the herd is easy, being an individual takes a lot more consciousness.

GuestFebruary 22nd, 2009 at 11:08 am

Global warming: Since water in the atmosphere contributes some 95% to the total greenhouse effect and that 97% of the total annual emission of CO2 into the atmosphere comes from natural emissions of land and sea; human beings add a mere 3% which is responsible for 0.12% of the total greenhouse effect! So for those who want a major reduction in global warming, pray for all of our lakes, rivers and oceans to dry up and for a 100 year drought!

GuestFebruary 22nd, 2009 at 11:27 am

Whatever Sweden does, doesn’t count — the whole country is nationalized. Sweden has fouled its nest with non-producers and socialism and, now, is trying to clean up the smothering mess, to survive.The question is, can the banks be broken up, letting the law of economics deal with their shareholders, without nationalizing them and putting taxpayers at risk? America needs a Congress that isn’t in the pocket of the Money Monopoly, an honest government to break up The Monopoly by law, as was done with Standard Oil – without the monopolists ending up like John D. as “the richest man in the world,” only to strike again through his son, David.Monopoly charges, anti-trust litigation and breakup (from Wikipedia)By 1890, Standard Oil controlled 88% of the refined oil flows in the United States. The state of Ohio successfully sued Standard, compelling the dissolution of the trust in 1892. But Standard only separated off Standard Oil of Ohio and kept control of it. Eventually, the state of New Jersey changed its incorporation laws to allow a company to hold shares in other companies in any state. So, in 1899, the Standard Oil Trust, based at 26 Broadway in New York, was legally reborn as a holding company, the Standard Oil Company of New Jersey (SOCNJ), which held stock in 41 other companies, which controlled other companies, which in turn controlled yet other companies. This conglomerate was seen by the public as all-pervasive, controlled by a select group of directors, and completely unaccountable.In 1904, Standard controlled 91% of production and 85% of final sales. Most of its output was kerosene, of which 55% was exported around the world. Standard’s plants were about as cost efficient as competitors’. After 1900 it did not try to force competitors out of business by underpricing them. The federal Commissioner of Corporations concluded that beyond question, Standard’s dominant position in the refining industry was due “to unfair practices, to abuse of the control of pipe-lines, to railroad discriminations, and to unfair methods of competition.” Standard’s market share fell gradually to 64% by 1911. It did not try to monopolize the exploration and pumping of oil (its share in 1911 was 11%)…In 1909, the US Department of Justice sued Standard under federal anti-trust law, the Sherman Antitrust Act of 1890, for sustaining a monopoly and restraining interstate commerce…The government identified four illegal patterns: 1) secret and semi-secret railroad rates; (2) discriminations in the open arrangement of rates; (3) discriminations in classification and rules of shipment; (4) discriminations in the treatment of private tank cars…The government said that Standard raised prices to its monopolistic customers but lowered them to hurt competitors, often disguising its illegal actions by using bogus supposedly independent companies it controlled…On May 15, 1911, the US Supreme Court upheld the lower court judgment and declared the Standard Oil group to be an “unreasonable” monopoly under the Sherman Antitrust Act. It ordered Standard to break up into 34 independent companies with different boards of directors…Standard’s president, John Rockefeller, had long since retired from any management role. But, as he owned a quarter of the shares of the resultant companies, and those share values mostly doubled, he emerged from the dissolution as the richest man in the world.

GuestFebruary 22nd, 2009 at 11:37 am

It’s bond holders who need to be wiped out in all this, right now they’re holding the real economy hostage. The big threat is if the government nationalizes then bond holders won’t buy gov. debt and cause a major bond sell off(so what nationalize everything then re-privatize)! Where else are they gona put their money? Maybe this would force them to start businesses instead of trying to collect easy rent money. Make it super risky for investors to collect easy rent money and they’ll be forced to invest in industry. The bond holders should be sacrificed in all this because they’re the only ones with the money to sacrifice. Or better yet the government should bailout out only bondholders in industry-no finance companies, then watch the country flourish!

economicminorFebruary 22nd, 2009 at 11:51 am

You guys are so insecure!Why should anyone even read anything you write when you won’t even take on a simple moniker? You GUESTs all blend together into a huge nothingness. You act like children arguing and competing to be first and then have absolutely nothing to say.Grow up!

GuestFebruary 22nd, 2009 at 11:52 am

Wonderful name. The Chicago cancer has mastisized to the heart, to the Capitol of the body. Prognosis: malignant and deadly.

AndreFebruary 22nd, 2009 at 12:52 pm

It’s not the business of the government to select companies to bankrupt and select workout amounts for bondholders. Bondholders should acquire assets and sell them, or decide to run the company and accept less interest or whatever they decide. Any rule that makes is faster and easier for them to do so is good for everyone.Giving government bureaucrats a power to rob stakeholders of private companies at their will and transfer assets of the companies to their buddies for direct or indirect kickbacks is called robber capitalism, it’s what was done by Eltsin after breakup of Soviet Union. Maybe it’s a great deal for distressed debt firms to buy off mortgages at 5 cents on the dollar and wipe out debt holders. Why are you sure that all these robbed investors from Singapore, Dubai, or pension fund managers who manage saving of old US savers would buy into banks again? What if housing falls another 10%? Should the government then rob investors again even from the option to manage their capital?

economicminorFebruary 22nd, 2009 at 1:06 pm

Don’t forget to add GS to this.We are witnessing the ultimate Monopoly Game.Has anyone figured out how this Stimulus Plan or how the new Housing Revitalization Plan fits into all of what Pete writes about? Will the game winner get most of it? Is that what’s going down? I say this because I can not figure out how most of what the Obama and Congress are proposing does anything to fix the underlying problem of to much debt being carried by the underclasses.The talking heads all say the same thing. That we are in trouble and something needs to be done. YET all that is done costs me. I invested and saved and didn’t buy what I couldn’t afford. Low interest rates do not reflect the cost of risk nor do they reward people like me who were savers.They say that falling property values hurt us all. Yet if you own and do not need to sell, it doesn’t matter to those people. Even if they did sell, they could repurchase at a much lower cost so it is meaningless to them. It only affects those who are in extreme leverage. So why are the prudent being asked to benefit the imprudent?As PLAN after PLAN is rolled out at the expense of future tax revenues which are declining and IMO will continue to decline for a generation, it just appears to me that we got rid of one group of talking heads that all read from a prepared script to gain another group that do the same thing. It appears that no one can think for themselves any longer. Where is the quality analysis? Where is the thoughtfulness? Where is the ability to think outside the box? Has America really devolved into two insane competing entities who just say the same thing over and over, even if it is total BS, so often that they just all believe what is unbelievable?I fell more and more like a total outsider. Common sense, real integrity, the ability to think for oneself all seems to be lost in the US’s upper management. I think at this point, we are going to have a depression that is much worse than the 1930’s, not because there is no way to avoid it but because those in charge are unable to think for themselves or think outside the box they have found themselves in.I see nothing in any of the plans that have been presented that are really different than what was done in the past to get us into the mess we are in. Trying to artificially support housing when it has two structural problems that are driving it downward is ludicrous. House prices are to high, especially considering the job losses but also because we have to much inventory of the wrong kinds of affordable housing built in the wrong places to be sustainable. There is NO WAY to support or stabilize this. House price are going to fall to a sustainable level and that will be determined by the stability of the underlying economy.And that economy is totally affected by the business climate. The government can not employ us all or be the main stream employer. That is part of the existing problem. Government got to big in the wrong areas and cost to much and didn’t support itself with increased taxes but by issuing debt that created rising costs which then disrupted the stability of the economy and caused massive mal-investment which caused massive losses and unemployment… And the gubbermint thinks they can fix it by just doing more of the same?INSANE! Either them or me!

economicminorFebruary 22nd, 2009 at 1:12 pm

Is this guest answering himself?How can any of us tell one guest from another?You obviously do not think we should reply to you as don’t want to be an individual. Just a face in the crowd yelling. You may be coherent but until you have a name, I for one will not take the time to read your posts as you do not think enough of yourself to even put a name to your comments.

Octavio RichettaFebruary 22nd, 2009 at 1:17 pm

CNBC is difficult to beat on bailout weekends!Wall Street Is Missing the Point on Banks: OfficialTopics:White House | Politics & Government | Economy (U.S.) | BankingSectors:Financial Services | BanksCompanies:Citigroup Inc | Bank of America CorpBy: Steve Liesman, CNBC | 22 Feb 2009 | 01:35 PM ET

GuestFebruary 22nd, 2009 at 1:18 pm

Democrats had better enjoy their reign because when all is said and done it will be hard to find many left in government. If stakeholders of private companies get wiped out but have earned more than 200 thousand for the year will they still owe the new tax rate on their lost earnings as well.

nvFebruary 22nd, 2009 at 1:28 pm

Santelli’s rant, as I see it, is more about bailing out people who made bad investment decisions and paying for it by taxing the savers. In effect, savers are being punished.A correct solution could be to bundle the equity of all savers into many “good banks”. These good banks could then buy up all the “good assets” from the toxic entities. For example, all homeowners with positive equities could be brought together as a “Home Owners of (state) Bank”. The rewards then go to the savers. And will cause a change in behavior for the better for banks and individuals.

GuestFebruary 22nd, 2009 at 1:29 pm

Well I guess we might as well give the bond holders government guarantees on all existing debt and just wait for them to start printing Zimbabwe dollars to pay them off with. If their gona hold the economy hostage then give them the worthless paper they’re gona get.

economicminorFebruary 22nd, 2009 at 1:31 pm

The people Obama picked are all insiders who know and understand the complexities of the mess because they have been involved in creating it.Things are really complex. This is more than about the banks. The banks packaged and sold off the loans to FNM and FRE who repackaged them into MBS and sold them off to others who repackaged and reshuffled the MBSs into CDOs and CDS and CLO and …. and sold this off. Everyone make money on the entire process but the process of fractional reserve banking done by non regulated entities created a lot of credit that was spread everywhere.This process grew house prices and commodity prices and CRE values and even stock values waaaaaaay up… UNTIL the defaults started.Now we have this structure built on credit supporting pension funds, hospitals, insurance companies, auto sales and so much more that is collapsing. So the brains in charge, who allowed or created the complex structure are all still in charge and their solutions are to create a complex structure of solutions to fix their unsustainable mess…

GuestFebruary 22nd, 2009 at 1:34 pm

It’s funny how the government forces industry bond holders like GM to take huge losses but is doing everything to preserve the debt of toxic derivatives for real estate. It’s a sign we’re doomed because still yet again the landlords are having their way by demanding rent instead of investing industry. PIMCO takes all they’re money and buys junk Fannie may debt because it’s government backed , how’s that gona create jobs? We’re doomed!

GuestFebruary 22nd, 2009 at 1:37 pm

Nothing like a tax increase to pull us out of a depression.The twin Obama tax proposals would result in an increase in federal income taxes for self-employed people earning over $250,000 of about 39% and would take the top federal tax rate on self-employment income to its highest level since 1971. It would also take the top marginal tax rate (federal and state taxes combined) in some states to over 57% on self-employment income. For employees, the top federal tax rates would increase by about 30%.Only once since 1917 has there been a tax-rate increase equal to or greater than the two twin tax proposals being made by Obama. That tax increase, the Revenue Act of 1932, was proposed by Herbert Hoover. The result was an even greater budget deficit, plummeting tax revenue and a lengthier Great Depression.

GuestFebruary 22nd, 2009 at 1:52 pm

Considered starting your own business? Obama clearly states it will be best for you to wait 4 to 8 years before starting your business, Note: if you are successful half of your income is already gone.

GuestFebruary 22nd, 2009 at 2:13 pm

Gasoline taxes they realy hold off on these taxes? I would guess not.LaHood spokeswoman Lori Irving said Friday that the secretary was speaking of the idea only in general terms, not as something being implemented as administration policy.Most transportation experts see a vehicle miles-traveled tax as a long-term solution, but Congress is being urged to move in that direction now by funding pilot projects.The idea also is gaining ground in several states. The governor of Idaho is talking about such a program. A North Carolina panel suggested in December the state start charging motorists a quarter-cent for every mile as a substitute for the gas tax. Rhode Island’s governor, however, has expressed opposition to a panel’s recommendation in December that the state charge motorists a half-cent for every mile driven in addition to the gas tax.I wonder if those who purchase solar panels and wind turbines will be charged earned income taxes on the money they save each month?

GuestFebruary 22nd, 2009 at 3:02 pm

More deliberation is coming from the White House, markets are really gona love that.Let’s be honest the franchise of the FED is at stake here and policy makers will deliberate till they’re blue in the face and we’re all starving on the streets before they risk the franchise of the FED by nationalizing the big boys. Rome is burning!

GuestFebruary 22nd, 2009 at 3:07 pm{B2185C67-1192-4109-A85D-23D9F4D54D9E}&siteid=YAHOOBObama to raise tax on “individuals who make more than $250,000 a year” to balance social welfare program and deficit. my suggestion for anyone about to making more than $250K a year, take easy, dont work too hard. ask your employer if you can take more day-off than more pay. i sure will. Yeah, tell your boss, give me more day-off, not more money.

GuestFebruary 22nd, 2009 at 3:09 pm

if you are small business owner, then close saturday, sunday, and maybe friday off, so you will not go over $250k. American Dream.

GuestFebruary 22nd, 2009 at 3:14 pm

raise tax on over $250 -> raise small, medium, any business TAX. raise gasoline tax. raise dividend tax, raise short-term and long-term tax, raise security transaction tax. let raise tax to balance deficit and boost social welfare spending. yeah!!! OBAMA OBAMA, YES WE CAN RAISE TAX!!!! AMERICAN DREAM

piperFebruary 22nd, 2009 at 3:17 pm

In order, Earth’s most abundant greenhouse gases are:* water vapor* carbon dioxide* methane* nitrous oxide* ozone* CFCsWhen these gases are ranked by their contribution to the greenhouse effect, the most important are:* water vapor, which contributes 36–70%* carbon dioxide, which contributes 9–26%* methane, which contributes 4–9%* ozone, which contributes 3–7%

GuestFebruary 22nd, 2009 at 3:22 pm

I’m sorry but kicking families out on the street and giving them a black eye with regards to their credit rating is pretty unjust when you consider the home will resale for 50% of the debt owed after foreclosure. It’s also risking the entire system as foreclosures create a never ending deflationary spiral that would ultimately wipe out bond holders and all banks altogether.Just allow bankruptcy judges like they do with any business bankruptcy modify the debt owed and everyone will be saved including tax payers. Otherwise we’re all in for a nasty wake up call tax payers included. It’s all about picking the least of the worst. We all need to get off the religion and start being smart about this, it’s no time to be making moral points especially as it pertains to the poor.

GuestFebruary 22nd, 2009 at 3:27 pm

If you make over 250k a year I promise not to shed any tears for you especially considering the average American makes about 30k a year.The sad thing is that Obama is screwing up once again the taxes should be on capital gains not on small buisness. He’s hitting the medium range earner and he should be going after the ultra wealthy.

GuestFebruary 22nd, 2009 at 3:30 pm

Finally some fairness but he should have left businesses alone and went after capital gains, that’s how you create jobs and end the Wall Street ponzi scheme!

AnonymousFebruary 22nd, 2009 at 3:42 pm

Speaking of $250k – I had occasion this afternoon to speak with a real estate agent at a high end home here in Naples, FL. He asked for my outlook on the economy and I responded we are in uncharted territory but that we could well see a 20% pop in the markets beginning even as early as this week (if Obi doesn’t screw up his speech Tues) followed by a descent into the abyss by summer.The agent responded “amazing you said exactly what another fellow told me earlier this week from JPM – I can’t tell the person’s name but he said exactly what you said”Isn’t it nice to know that the banksters who received TARP are:A) looking at $10mm homes andB) see the future the way many of us here see it.

HayesFebruary 22nd, 2009 at 3:48 pm

Nice tactic by the administration – make like an Ostrich and tell everyone the banks are just fine (Große Lüge) – Perhaps we’re going to see mark to market rescinded as an interim measure – (reading between the lines it may be that the banks are in such horrible shape that doing nothing is the best option)

GuestFebruary 22nd, 2009 at 3:52 pm

If they convert debt to equity as it sounds like is being discussed wouldn’t that put our banks and FED under the control of sovereign wealth funds? Do we want communist China owning our banks?

GuestFebruary 22nd, 2009 at 3:56 pm

95% of small business are below 250k a year, but those 5% of businesses above 250k hire more people than the other 95%, and raising taxes on them means losing more jobs.

GuestFebruary 22nd, 2009 at 4:06 pm

How long before the levy breaks?Let’s really boil this down:We’re in the midst of a war between debt holders and tax payers. IMO the end game is either massive socialization or a return to the dark ages, those appear to be the two inevitable outcomes. This will ultimately become a question of politics not economics.

nvFebruary 22nd, 2009 at 4:10 pm

Who is talking about kicking homeowners from their “inflated” properties?All I am suggesting is that the savers become the lenders to these homeowners. This way you are rewarding the savers. Currently we are throwing money at the very people who caused the problem.

GuestFebruary 22nd, 2009 at 4:12 pm

Yea I’m agreeing with you, certainly taxes need to be raised on the rich but not in the form of business taxes because that creates unemployment. The taxes should be raised on capital gains so the wealthy can’t make easy money and are forced to take more risk on job creating industry. If anything we should be cutting taxes on businesses. It’s another example of how Wall Street is setting the agenda in Washington.

Jason BFebruary 22nd, 2009 at 4:22 pm

They are trying to maintain the value of the debt for debtholders. And raising taxes to pay for it.I see a debt revolution.I dont appreciate paying taxes to bail out Citibank, while Citbank raises my interest rates for no reason. I am getting screwed going both ways! Anybody who can is trying to extract their pound of flesh.They think they can squeeze me with higher taxes and userous interest rates, and I will take out more credit to buy stuff I dont need to boost the economy! Insanity!ENOUGH! NO MORE!PAY OFF DEBTSKEEP YOUR MONEY IN LOCAL CREDIT UNIONS!SHOP LOCALLYBARTER WHEN YOU CANBUY ONLY WHAT YOU NEEDLET THEM HAVE THEIR GREEN PAPERSTARVE THESE PARASITES TO DEATH!!!!!!!!

GuestFebruary 22nd, 2009 at 4:23 pm

If he raises taxes as he will, He will doom the party’s chance of holding power. Gas tax is for everyone and it wont stop there and if anyone thinks his taxes will not touch them then they had better open their eyes because its going to touch us all. The amount we average income earners will be taxed will be as hard to take as those making 250,000.00, don’t forget that state and local taxes will also go up when the tax man is unleashed. Those making 250,000.00 also spend a lot of money back into the economy and they have expenses just as we do and most have probably been hit with huge drops in their investments, we need these people to want to spend and grow there businesses as well as be some of the first to reinvest in the stock market. I have no hatred for those who have made it in this country and I do not think they are the sorry dogs so many try to make them out to be, Lets go with another form of tax like a fair tax or a consumption tax but keep it low. The government is the last place this taxed money will do any good for anyone.

Guest, ALSOFebruary 22nd, 2009 at 4:24 pm

On the contrary, if you own the business and get pegged with a higher personal tax rate, you simply “expense” more of your lifestyle and/or invest more of the profits into the business. In fact, you may well decide to hire more people.One of the great falacies foisted off on all of us and abetted by a lack of challenges from the media, is the idea that type A personalities are working for marginal dollars. We are not. Small business owners are working for the thrill and joy of building their own company, or of simply running their own show. Entreperneaurs are focused on goals, not marginal tax savings, confident that if their ideas are correct, the money will come. It is the greedy bastards running big public companies and screwing shareholders who whine and cry about the tax rates. The snot-nosed arrogant theives with none of their own skin in the game who sell the idea of ever-lower tax rates – that without being able to amass and keep vast fortunes, hell, they just might not properly do their jobs. Give me a big bonus! My compensation specialist says I might deserve it – because someone else in my industry got one.

LittleannFebruary 22nd, 2009 at 4:38 pm

I enjoy reading your “outside the box” posts immensely. My brother-in-law is a very well respected atmospheric scientist and would have written your post verbatim. Each time I call him about a climate or weather issue, his response is usually “we just don’t have enough information” or “your chances of getting the weather forecast correct beyond 24 hrs. is a “coin toss”. He thinks as opposed to parrots. Thanks!!

GuestFebruary 22nd, 2009 at 4:46 pm

People in California had better cross there fingers they do not have a earthquake, How much will taxes go up if they have another earth quake? See states everywhere will be raising taxes on everything they can get away with.Likening California’s budget troubles to an earthquake, Republican Gov. Arnold Schwarzenegger defended his decision Sunday to raise taxes, and said GOP party leaders in Washington should be “team players” with President ObamaAnd we had a $42 billion deficit. That’s the same as having an earthquake or some other disaster. It’s an emergency. And under those circumstances, we can raise taxes.”

GuestFebruary 22nd, 2009 at 5:00 pm

And do you notice there’s nothing said about the taxes relating to the cost of living in which people live? In my area on coastal California our numerous county public defenders earn about $230,000 in 4 years and retire in 30 years at age 52 or 53 at 75% of salary (I believe it was increased to 80% in January) and full family health benefits and annual 3% cost of living raises; police and firemen retire from their $110,000 and up jobs (sheriffs make about $130,000) and retire at 90% of salary after 25 years with health benefits; nurses earn $103,000 and want a June referendum to raise taxes to raise their salaries.And someone self-employed, taking risks, some years making $250,000, some years making less than $100,000, paying for his own health insurance and double self-employed Social Security taxes, making his own government-limited contributions to a 401k or SEP with no matching funds that few could ever retire on, is looking at working maybe for the rest of his life. I, myself, doubt that I will ever be able to “retire.”The people here who are so happy to see such a person crippled further, may wake up some day with no one to pay for their cushy government salaries and retirements from middle age to the grave.A San Francisco study a few years back on hourly pay, showed that school teachers in the area, by time worked, earned more per hour than physicians, second only to the hourly pay of university professors.

littleannFebruary 22nd, 2009 at 5:06 pm

I know the basics concerning Nationalization but what I would like to know are the finer details. Can someone compare the differences between receivorship, conservatorship and nationalization? Do the debtholders get wiped out in each case? What would happen to the CDS in each case? Maybe there are no simple answers. I beg your indulgence. Also could someone restate why the gov’t only took 79% of AIG. I know it’s an accounting situation but can’t remember what.

GuestFebruary 22nd, 2009 at 5:22 pm

Maybe some of those business owners making $250,000.00 will like to talk to the Chinese about purchasing there businesses before the new taxes kick in? China would probably be a good place to live.This is just the latest example in the Great American Sell-Off. The Chinese government, through its massive sovereign wealth funds holds more American debt than any other nation and has been increasingly honing in on American businesses to take over in recent years. While the government has been purchasing American assets for years, its citizens are now rapidly snatching up foreclosed American homes. The Great American Sell Off is a direct result of American trade policies that ship our nation’s jobs to countries like China, increase the nation’s trade deficit to unsustainable levels and arm our economic competitors with the means to buy our nation out from under us. Unless America makes a wholesale change to its trade policies, this is a trend that will only continue.

GuestFebruary 22nd, 2009 at 5:31 pm

Oh well, it is American Dream -> better to earn below $250K, work less, and hire less. YES WE CAN ALL BE UNPRODUCTIVE.

GuestFebruary 22nd, 2009 at 5:36 pm

no no no, we need to raise business where fairness is due. we also need to raise property tax. we need to raise all kind of tax. OBAMA OBAMA, YES WE CAN RAISE TAX!!!! AMERICAN DREAM

GuestFebruary 22nd, 2009 at 5:37 pm

we need to lower the tax limit from 250K to 125K. cut it in half, so we can tax wider range of people. OBAMA OBAMA, YES WE CAN RAISE TAX!!!! AMERICAN DREAM

Jason B SupporterFebruary 22nd, 2009 at 5:46 pm

agree, what dont want to maintain value of Treasury for China. Time to do Treasury revolution. We dont appreciate paying interest to communist China. Let default on Treasury and teach those Communist China who is boss.

GuestFebruary 22nd, 2009 at 5:49 pm

China only own worthless Treasury that USA can default anytime they want. China is stupid enough to not figure that out. Or they think they have no choice but owning Treasury. Stupid Communist China, you always have choices. It is matter if you take it or not. Chinese are stupid.

Octavio RichettaFebruary 22nd, 2009 at 5:51 pm

some facts about the S&P500 index and the financials within the index.At the peak, 10/10/07:,3,2,2,9,10,2007,0,0,0,0,0,0,0,0,0.htmlWe had that:1. The total market cap of the index, representing about 75% of US equities, was 13,8 trillion.2. Financials was largest segment accounting for 19.6%; 2.7 trillion USD market cap.3. 10 largest companies in the index included 3 financials: GE (#2), Citi (#5) and B of A (#6) (GE is classified as an industrial but we all know that is a joke).What do we have today:4. Index closed at 1565 on 10/10/07. And it closed at 770 last Friday: This represents a:(1-770/1531)*100=50.8% declineas of Friday,2/20/09,,3,2,2,0,0,0,0,0,0,0,0,0,0,0,0.htmlthe market cap of the SP500 was 6.7 trillion, financials in the SP500 were 616 billion, representing 9% of the index. So financials have declined more than twice as fast than the market!IMO, 2.7 trillion market cap for financials in 10/07 was way overpriced. But 616 billion market cap for financials today is ridiculous!US nominal GDP 2008 14.3 trillion (Source: the SP500 is currently valued at about 50% of GDP. Financials in SP500 are valued at 4.3% of GDP. this is plain ridiculous!SP500 YTD:-14.75% financials:-41%IMHO, financials are a SCREAMING buy! Some will go under but most will survive. Playing them via XLF seems wise (Disclaimer: This is not investment advice)

nik of jayFebruary 22nd, 2009 at 5:52 pm

he uses my ideas ideas in discussions when he’s trying to impress major heads of state or look suave on CNBC.He just regurgitates my wisdom,a lesser person than myself would get irate.

nik og jayFebruary 22nd, 2009 at 5:55 pm

correctthe crucial factor to address is that bank workers feel happy where they work.heaven forbid that all that “talent” should go to waste.

Octavio RichettaFebruary 22nd, 2009 at 6:01 pm

If you want another contrarian view not as original as the one above, IMHO, GLL (i.e., shorting gold) is also a buy.OK, OK, I am ready to be stoned by the Roubini bears(i.e., verb stone: To hurl or throw stones at, especially to kill with stones).Aim and shoot!Go ahead and have fun:-)!

GuestFebruary 22nd, 2009 at 6:02 pm

Thousands of Californians are moving out amid a sour economy and a housing meltdownThe number of people leaving California for another state outstripped the number moving in from another state during the year ending on July 1, 2008. California lost a net total of 144,000 people during that period — more than any other state, according to census estimates. That is about equal to the population of Syracuse, N.Y.The state with the next-highest net loss through migration between states was New York, which lost just over 126,000 residents.

GuestFebruary 22nd, 2009 at 6:09 pm

It was clear before his first day in office that Obama, backed with extremely large majority leverages in Congress, was going to bring in the tax and spend agenda. Perhaps the worst thing that the Republicans did was to facilitate this Democrat surge.And the excesses of Democrats riding the wave have always been something to be feared, as in the discussion of the income tax increases in this commentary. The problem is the Democrats’ lack of common sense about their economic proposals. Two examples:One, just before the midnight hour agreement of the California legislature, the Democrat and Governor Tax Package carried a 12-cents-per-gallon increase in the gas tax. Not 1 cent or 2 cents; 12 cents.Two, in Oregon where Democrats have the majorities and leverage in the legislature, they have decided to deal with the beer tax this year. The state’s beer taxes have not been increased on producers in 30 years and, in the meantime, Oregon has developed a tremendous micro-brewing industry that has been a tremendous employment and economic benefit to the state.So, would the Democrats raise the beer tax with their strong majorities maybe what would amount to 5 cents for every 12 ounces of beer because the current tax is under a penny per 12-ounces of beer? No, the Democrats are on a roll. So the tax they suggested would add 15 cents to every 12 ounces of beer brewed. The tax on Oregon’s beer producers would rise from $2.60 to nearly $50 on a 31-gallon barrel of beer. A 2000% increase! In other words, so what? And, maybe, they’ll have the votes. But, of course, it will wipe out the beer industry in Oregon.The reason that the 12 cents per gallon of gasoline didn’t make it in California was because of the few Republicans. And the reason that this beer increase has never happened before in Oregon is because of the few Republicans they’ve had.But this is an Obama year. And this is what Democrats do.

GuestFebruary 22nd, 2009 at 6:35 pm

maybe the average is 30k a year now but once hyperinflation hits, almost everyone will be making at least 250K a year and so qualify

GuestFebruary 22nd, 2009 at 7:07 pm

It took Republicans 8 years to destroy the country. Dont try to pass the buck. This is what happens to the country after 8 years of Republican rule

slfFebruary 22nd, 2009 at 7:17 pm

Why does it have to be republicans vs. democrats, who’s better & who’s worse?It’s not just republicans.It’s not just democrats.It’s the people who work for the banks & corporations, and they come from both sides of the aisle.Please stop the finger-pointing. It accomplishes absolutely nothing and only serves to obfuscate and distract from the issues at hand.

GuestFebruary 22nd, 2009 at 7:29 pm

The swans are coming back now to Lk St. Clair – saw about 12 here last weekend, look for the black swan again – maybe he’ll tell us some news.

GuestFebruary 22nd, 2009 at 7:34 pm

I thought it would be appropiate for an interdisciplinary art critic comment, since the Oscarswill be on soon. It has been said that Art predicts the advances in science and Artists seem to have a pulse of the collective unconscious of society. The unusual amount of Horror and Fantasy movies shows a citizenry craving to feel they are alive since their daily lives are too material. They live through shock and fantasy.The Slumdog Millionaire movie comes from Asia and it confronts us with the underbelly of the world we do not experience and we fail to acknowledge at our peril. Children are numerically enslaved more todaythan at the hight of the slavery trade. I submit to you that the child diving in fesces is symbolic of oursouls that know this is happening and ignore it. I have been examining the FSA and HASP potential planby our Banking Masters and they have become much moreeducated in deception. They learned from Hollywood that you need to give the people a good show. Theyhave studied the Depression and have learned thatthey cannot allow for populism to develop or elsethe creditor mentality will be supplanted by thementality to reduce the debt of the population. Theywill never be called “Banksters” again by a sitting President. The sitting President will be vulnerableand they have the methods to strike back at any suddenpopulism. The New Deal will not happen again. It willbe the Raw Deal. We will eventually experience that feeling that the orphans had while sleeping in the garbage dump in Slumdog. We will trust human beingsthat seem to have our best interest at heart and theywill metaphorically blind us and work us to pay thetax bill they will create with excessive bailouts ofthe fraudster banksters. You feel so distant from therealities of female slavery, child slavery, and the”Rogue Economy”(Napoleoni), but it is coming to yourtheater without projectors. You are going to live theexperience the Oligarchs brought to the Privatizing Russians. The Oligarchs used the borrowed IMF fundsto loot the country and left them hunger and disease.The bankers will loot the bailouts and then leave uswithout money to pay for Social Security and Medicare.We will privatize many more prisons. We will privatizeit all because the government will not have money.Welcome to your Slumdog Future America. You ignoredthe slums and they are following you!

Pecos BankerFebruary 22nd, 2009 at 7:39 pm

Definition of maverick: John McCain. Hope we hear more from you, Vlad. Great phrase: “the extremes of the ideologically permitted.” Indeed.

GuestFebruary 22nd, 2009 at 7:47 pm

Hope you are correct OR. Jumped out of gold back at $850. Jumped back in at $960, jumped out again at $970. Let’s hope the IMF convinces the PPT to sell gold so I can get back in at $750.

GuestFebruary 22nd, 2009 at 7:53 pm

“Oregon’s beer producers would rise from $2.60 to nearly $50 on a 31-gallon barrel of beer”so big deal, it is only $50 on 31gallon. let just raise the beer tax. pass the cost to who can afford the beer. they are loaded.

GuestFebruary 22nd, 2009 at 7:55 pm

we need to raise tax on the rich and middle-class. they can afford. so we can sponsor list of social programs that need money. we need to fund the unemployeed. we need to fund subprime borrower’s mortgage. it is time to raise tax. YES WE CAN RAISE TAX.

GuestFebruary 22nd, 2009 at 7:59 pm

My Emerson (made in China) 6 month old microwave just broke. Second microwave fatality in two years. Not buying another one. I’m done buying cheap crap that’s designed to fail. DONE!

P&LFebruary 22nd, 2009 at 8:11 pm

“…And there are a lot of new taxes coming. California state legislators want to solve our state’s giant deficit by taxing marijuana. Meanwhile Oregon wants to increase a tax on beer, while New York wants to tax Internet porn. You know what this means? By the end of spring break, this whole thing could be paid for.”Jay Leno

MidasFebruary 22nd, 2009 at 8:31 pm

Unfortunately, Roubini loses a lot of intellectual credibility when he claims that Greenspan [took] “Ayn Rand’s view of the world to an extreme.” It’s almost comical when critics associate the modern Greenspan with Ayn Rand.Ayn Rand opposed the Federal Reserve System and promoted a return to gold-backed dollars. Those ideas sound a bit more “extreme” than anything I’ve heard from Greenspan.If Greenspan truly took Ayn Rand’s view of the world to an extreme, his frequent testimony before the House and Senate would have been filled with pleas to them to abolish his job and the rest of the Federal Reserve System. And, he and Ron Paul would have generated a lot less fireworks.Roubini is usually pretty good with his analysis and predictions. But, he could benefit from some improved ideology.

GuestFebruary 22nd, 2009 at 8:49 pm

time to charge and raise tax in restaurant, fast-food, food market. raise tax on MacDonald, we can tax on their high volume transaction. raise tax on Walmart. Imagine, how much we can milk from these two cows. YES WE CAN RAISE TAX.we can certainly raise tax on gasoline and refinary companies. there is so many tax avenues out there.

GuestFebruary 22nd, 2009 at 9:08 pm

All those terms mean the same thing but they are all being used in a vague sense. Nationalization can mean a lot of things it depends on the details of the particular plan.

Wolf in the WildsFebruary 22nd, 2009 at 9:24 pm

Hey, did the little guy homeowner do his maths? Clearly, given the situation here, HE DIDN’T. That is the whole point. It is like drugs. If I offer you heroin, and said it will make you feel good, would you take it? Easy money has some blame, easy money is like heroin. You have to take it for you to suffer. And that is what these “little guy home owners” did.How about those people who “didn’t take the heroin”? What you are asking of them is to be punished for doing the right thing: buying a house they can afford. Now you want to make the guys who lived within their means pay for those who didn’t.It doesn’t make any sense.

Wolf in the WildsFebruary 22nd, 2009 at 9:27 pm

Yeah, but unachievable. It will jeapodise the whole lending system at least on the senior level. What you would need is to take over bad assets of these banks in exchange for equity. Convert all subordinated debt holders to equity and restart the system.

Wolf in the WildsFebruary 22nd, 2009 at 9:27 pm

Yeah, but unachievable. It will jeapodise the whole lending system at least on the senior level. What you would need is to take over bad assets of these banks in exchange for equity. Convert all subordinated debt holders to equity and restart the system.

GuestFebruary 22nd, 2009 at 9:33 pm

And we need to tax taxes. Anyone rich enough to pay taxes, needs to be taxed, on his taxes. WE CAN, YOU KNOW WE CAN. AND WE WILL! WE WILL! THREE CHEERS FOR TAXES. Hip Hip HOORAY! Hip Hip HOORAY! Hip Hip HOORAY!

slf (keep forgetting to sign in)February 22nd, 2009 at 9:43 pm

“Currently we are throwing money at the very people who caused the problem. “Yes, and that should stop. It should never have begun. But let’s be brutally honest here. They’re not the only cause of the problem. There were plenty of others on the opposite end of the deal. Those who were buying the properties, increasing demand, thus fueling the astronomically jacked-up prices. And a lot of them were misrepresenting their income, failing to read & understand the paperwork, and gambling on being able to flip or re-fi. Again, I really want to know where the logic, common sense, and personal responsibility is–that goes for everyone, not just the underwater homeowners.

GuestFebruary 22nd, 2009 at 10:06 pm

I’m afraid that $30,000 figure is erroneous. According to the Bureau of Labor Statistics, total median annual earnings, based on median weekly earnings of full-time wage and salary workers by union affiliation, occupation, and industry for 2008, is as follows:Private Sector… $36,088Public Sector…. $43,784 (Federal = $50,544; State = $42,224; and Local = $42,328)The site also breaks median salaries down further by occupation sectors. Average salary would be a lot higher than median. 2007, the median annual household income rose 1.3% to $50,233.00 according to the Census Bureau. The real median earnings of men who worked full time, year-round climbed between 2006 and 2007, from $43,460 to $45,113. For women, the corresponding increase was from $33,437 to $35,102. In 2006, there were approximately 116,011,000 households in the United States. 1.93% of all households had annual incomes exceeding $250,000.

GuestFebruary 22nd, 2009 at 10:10 pm

Yes, our industries can either come back home, or be subject to tariff so that our industries at home can compete with their low-cost, low-regulated products.

GuestFebruary 22nd, 2009 at 10:15 pm

On to Afghanistan. And Iran… Keep those bombs coming…in Palestine. And don’t forget Russia… Go, Obama! Go!

Wolf in the WildsFebruary 22nd, 2009 at 10:27 pm

Morbid,I think the case of global warming is a case of upside/downside. If we ignore the potential of disaster, we would have catastrophe affection hundreds of millions if not billions of people. If we do not act, and the belief that we do not contribute to global warming is false, the price to be paid will be massive. That is the downside of acting too late. And what is the downside of acting to reduce CO2 emissions? profit and loss. So would you bet the world for a few dollars?

jugglingcdosFebruary 22nd, 2009 at 10:37 pm

i heard peter Schiff is on the team now..nice move by the prof, PS have extreme views which he’s unafraid to talk about whileProf usually stay on the conservative side…if you cant verbally tell it to your comrades, appoint someone to be your spoke person”its in the actions, not words”

GuestFebruary 22nd, 2009 at 10:40 pm one high-level official, “I think the market is missing that the whole intent of this process is to show that the banks have enough capital for even worse outcomes than we currently envision and to show there’s a program in place to give banks access to that capital if they need it.” all practical purposes the financial establishmentis the sovereign. How can the sovereign be stress tested? The sovereign financial oligarchy will haveanything they need plus more! I suspect we are going to be surprised at the events of the next couple of months!The irrational and the absurd will happen!

2centsFebruary 22nd, 2009 at 10:59 pm

I think that the ‘nationalization’ should take a multi-part form of a spinoff/divestiture and a merger. The bad assets would be spun off to the current creditors and all current stakeholders (i.e. the get 100% of whatever). The assets deemed to be salvageable get backed up with whatever gov’t capital infusion is required. Those same stakeholders get their commensurate proportion based on the current value of those assets as compared to the total put in by the gov’t.This has obviously been clouded by the fact that the gov’t has already contributed a sizeable chunk to many of these entities already, but I’m sure a reasonable compromise can be worked out on those previously received funds. The gov’t looks to re-privatize as soon as practicable with the notion that capital + x% per annum (time while in gov’t hands) needs to be returned to the gov’t.This gives the current stakeholders everything that they signed up for plus a little extra goose by partnering with the gov’t. The taxpayer provides stability funds via the gov’t and guarantees a minimum return to the taxpayer should the institution be reprivatized.Yes, that’s a bit of hand waving, but I think it forms a basis from which everyone can maximize their situation without bailing one side out at the other (taxpayer’s) ultimate expense. More important, I think it is a plan that the public would buy into and it leaves very little ground for the current stakeholders to complain ‘rationally’ against!There would very little repricing going on (just the viable stuff that took a haircut). All the new capital would be chasing solid investments while the crap pile get to live on in ignominy. Let the pile smolder while the real world move on down the road.What do you think?

The AlarmistFebruary 23rd, 2009 at 2:54 am

You obvkously didn’t get the gist of last week’s speech, which basically told a whole class of Americans that they have a right to own their homes regardless of whether or not they actually pay the debt they took on to acquire them … Sauce for the gander is sauce for the goose, so you should stop paying anything on your mortgage.

The AlarmistFebruary 23rd, 2009 at 2:58 am

Did you ever notice that Monopoly doesn’t get interesting until you step outside the rules of the game and start wheeling and dealing. Yes, indeed, this has become a giant Monopoly game.

The AlarmistFebruary 23rd, 2009 at 3:19 am

Let’s face it … As the old, first Star Trek movie had it, we are but “Carbon Infestations” on old Mother Gaia, a condition that must be ended as soon as possible.Mr. O, please launch the nukes now and put us out of Mother Gaia’s misery.

The AlarmistFebruary 23rd, 2009 at 3:49 am

Let’s try to reframe this in proper perspective …We are in the midst of a war between debtors and creditors. Opportunistic politicians have thus far spun this down to a fight between the “deserving poor” and the “undeserving rich.” What is lost in the middle is that the “undeserving rich “are the ones who have been paying most of the taxes that will support the “deserving poor” in this epic struggle.At some point Atlas will shrug and walk away from carrying the world on his shoulders. For some unknown period of time the rest of the world will pile into US Treasuries in a misguided flight-to-safety, but even they will awake to smell the coffee as the debt grows larger and interest payments, let alone principle, can be serviced by the output of the “deserving poor.”The “deserving poor” will have won that battle, but will have lost the war, and yes, the dark ages will descend as the external creditors (China et al) physically descend on the US to claim the assets that are backing their now worthless debt securities.

AnonymousFebruary 23rd, 2009 at 4:27 am


GuestFebruary 23rd, 2009 at 5:57 am

Anonymous on 2009-02-23 04:27:50is John Ryskamp ? Would love to hear JRs thoughts from time to time.He has the know-how (just wish he is less disparaging of NR)

GuestFebruary 23rd, 2009 at 6:17 am

we also need to devalue dollar to make more expensive to offshore jobs to China and India. we also need to raise tariff tax to fairly level the playing field. raise gasoline tax to discourage gasoline consumption and raise tax credit to ethanol to boost home grown ethanol consumption and job creation.

GuestFebruary 23rd, 2009 at 6:25 am

can we have tax on saving and checking deposit/withdraw like 0.25% per transaction? or ATM tax? parking tax? what else can we tax? Lets find the way to tax more while we have DEMOCRATS CONTROLLED CONGRESS.

blindbatFebruary 23rd, 2009 at 6:53 am

pjb,interesting site, need time to check it . t.s. / florida. i currently have a very great friend with als9 yrs. , a star of the als community for still being alive, who recentlymoved to florida from upstate new york. he could not function in the cold.he absolutely loves it.? get around, no shivers.i myself swore, when i was younger, never to set foot in that particularstate. that may change?geriatric and terminal care, i have had some exposure, not myselfmind you. we know. when the morpine starts, they are checking you out.

GuestFebruary 23rd, 2009 at 7:38 am

“What is lost in the middle is that the “undeserving rich “are the ones who have been paying most of the taxes that will support the “deserving poor” in this epic struggle.”Correction: it is the “deserving poor” who’s hard work and labor actually supports the “undeserving rich”. The “undeserving rich” are in fact “rich” on the back of the “deserving poor’s” sacrifices.The “rich” are blind to this of course and say “I own therefore I am”

GuestFebruary 23rd, 2009 at 7:40 am

“The “deserving poor” will have won that battle, but will have lost the war, and yes, the dark ages will descend as the external creditors (China et al) physically descend on the US to claim the assets that are backing their now worthless debt securities.”Not if we do the right thing and return to the “deserving poor” what is rightfully theirs!

GuestFebruary 23rd, 2009 at 7:53 am

Well it is very relevant because the whole Laissez Fare, unfettered capitalistic, big business, shrink the government approach is the Republican’s main agenda which they successfully propagandized and put into public policy. One could say it was that mind set or belief system that left us extremely vulnerable to this disaster.

MorbidFebruary 23rd, 2009 at 8:06 am

Brother’s Keeper?A,I too, have been trying to get my head around this very issue. Normally in a bankruptcy such things, like derivatives, would be the loser. I guess they don’t want to let the derivatives lose – otherwise it all comes unraveled world wide – creating like this a “disaster” or mega tsunami.

HubbsFebruary 23rd, 2009 at 8:12 am

Govt needs to take over banks to provide cover for their real level of insolvency, I.e take over the banks before they collapse and the real depths of insolvency are made public.Like giving an order for nitroglycerine to be administered to a patient with a heart attack to give the impression he is still alive, instead of calling up the coroner’s office to do a post mortem.

FEDupFebruary 23rd, 2009 at 8:30 am

The worlds’s financial system is on the brink of collapse and our leaders Know only one thing: don’t tell the public the full and honest truth because they don’t deserve it and can’t handle it! We must serious question why throughout history do the wrong people continually rise to power?

GuestFebruary 23rd, 2009 at 8:43 am

check out CR’s latest

economicminorFebruary 23rd, 2009 at 8:59 am

When TPTB finally are forced by circumstances in taking over the banks, which they don’t want to do for many reasons, the biggest being the recognition of all those swimming naked, the world as we know it will change dramatically. TPTB are going to do everything possible in covering up and patching up and obfuscating right up to the day that circumstances force the issue. This won’t be all the banks, just the biggest ones that have so much power in Washington. The loss of power and loss of faith and possible other repercussions will be a devastating blow to the US image and power around the world. It will be an admission of the corruption gone wild in our country and no one really knows what the long term consequences are going to be.

see.clayFebruary 23rd, 2009 at 8:59 am

they raised my interest rate 10% from 5.99 to 15.99, 3 months after raising my limit by $8k. I have an 800 fico score, never been unemployed, never made a late payment and have about $80k in credit cards available in my pocket, with only the citi card carrying the balance. Freaking amazing how these ghouls operate. My new mission is exactly what you stated, pay it off and stick with my local credit union. I am done with credit cards for anything other than emergencies!

GuestFebruary 23rd, 2009 at 9:11 am

In an all out effort to save the banks they’re going to break the consumer even more, that will sure drive growth!

GuestFebruary 23rd, 2009 at 9:21 am

What is rightfully theirs? I look at poor countries and see the people eating grass cutting down the last remaining trees to build a fire but I never see them planting anything. They do approach the cameras and say where is the aid we were promised. Take all the poor and put them in one place and make sure they are well supplied, would they have starved themselves to death or cannibalized one another. I do not think so, however the poor are always singled out as dimwits who are unable to feed or cloth themselves as if they were born to be poor, and what classifies them as poor. I have known many lazy people who won’t do the basics to take care of themselves or try in any way to change their situation and their children grow up to be the same toothless wonders unable to do anything. I am sorry to say but there are many poor people who given the chance to alter their situation would choose to remain poor not by desire but by their unwillingness to take advantage of opportunities granted to them. Most children who grew up during the depression went on to prosper and create wealth for themselves and their families, those who did not prosper from that group are considered poor?, was it the responsibility for those who made it to also provide for them. Many who are poor made decisions which made them poor and do not want to work for any reason that’s just a fact.

FEDupFebruary 23rd, 2009 at 9:34 am

thankyou for the post; since our leaders believe in “conceal the truth at all costs”, what specific signs will there be that these changes have occurred?

GuestFebruary 23rd, 2009 at 9:47 am

In India where they have a class system the wealthy would tell themselves the poor are poor because of bad karma because they did some evil deed in the past and now they are poor but it’s their own fault. This is justification or a primitive way to live with themselves when they have plenty to eat and others around are hungry. Just simply blame the poor for being poor and ignore the fact that they are your brothers and ultimately you are connected to them. It’s called living on an island in your own head: or denial!

GuestFebruary 23rd, 2009 at 9:47 am

So we have the poor by choice, we have the poor by misfortune. So we have the deserving poor, and the undeserving poor. Or you could say the lazy and the unfortunate. How do we make the right call? If there was ever a chance for the poor to get out of their situation it was in the past 10 years with easy credit and liar loans, they had the same chance to obtain loans and prosper if they worked the system as many did.

GuestFebruary 23rd, 2009 at 9:54 am

I think it sounds great. BUT, as someone said above, “The sovereign financial oligarchy will have anything they need plus more!” because they are “sovereign” and Barney Frank and C. Dodd are their paid water boys. The rest are the likes of Pelosi and Reid, Schumer and Specter. The taxpayer has no representation in this game. He’s the patsy, the “payer.” Where does he go for an appeal?But in a decent world, your plan makes moral and financial sense.

HilarioFebruary 23rd, 2009 at 9:56 am

Could we get one thing straight? It was not the Swedes who nationalised their banks in the 1990s, although one state owned bank was involved and other banks were helped by the state. It was the Norwegians, where the government swooped without notice, took over the two largest commercial banks, wrote down the share capital to zero, refinanced them and later re-privatized them. This, surely, is the model for banks such as Citi and BofA?

GuestFebruary 23rd, 2009 at 9:56 am

It’s about not wanting to lose power the central banks would all collapse which who knows what would happen to currency values etc. I think it really comes down to control and power it would unleash chaos in terms of private ownership in general. I think it’s all going to come down like no one can believe.

GuestFebruary 23rd, 2009 at 9:58 am

They are two arms of the same being. Just because each arm does something different, doesn’t mean that they’re not both operating under a similar agenda.

GuestFebruary 23rd, 2009 at 10:05 am

I personally know some people who by choice are poor, True Example, I know a man who seemed to struggle thru his early 20’s never seaming to catch a break, so I had some connections with a company who paid $50,000.00 a year for general labor in a union. I was able to get him hired but six months later he had quit this job, I asked him why he quit his job and his answer was he had rather work for himself as a part time roofer so he could hunt and fish and basically do nothing as he had in the past. He is lazy and because of his choices he is classified as poor if determined by his income. I also worked with another man who worked 3 days a week and was always on the verge of being fired, I asked him why he only worked 3 days a week, his reply –I cannot make it on 2 days a week, that’s the honest truth. Poor is loosely defined by income and that does not start to define who is poor by choice and or by misfortune. So I do not always fall apart when someone says but look at all those undeserving trampled on poor people. It’s not that simple to determine who is truly poor.

GuestFebruary 23rd, 2009 at 10:14 am

Here’s an excerpt from Ron Paul’s foreward to Thomas Woods’ new book, “ Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse,” a New York Times bestseller as of March 1.“These fixes are based on the false belief that the free-market economy has failed. But it is not the market that has failed. It is intervention into the market that has failed. The Federal Reserve and its manipulation of money and interest rates have failed. None of this can be blamed on the free market, but that isn’t stopping newspaper columnists from doing so anyway.“Keynesian so-called economists, led by Paul Krugman, are vainly reaching into their usual bag of tricks to try to solve the problems of intervention with more intervention, and nothing is working. But they are persistent. They’ll keep scrounging around in that bag all throughout the Obama administration. The slump will continue, since none of these tricks has the slightest thing to do with the underlying problems in the economy. All we’ll have to show for them is an empty Keynesian bag and lot more unpayable debt.“Meanwhile, who’s being ignored during this crisis? The free-market economists of the Austrian School of economic thought, the very people who predicted not only the Great Depression, but also the calamity we’re dealing with today. The good news is that Austrian School economists are gaining more acceptance every day, and have a greater chance of influencing our future than they’ve had for a long time. I’m told that Google searches for “Austrian economics” are off the charts…“Our years of living beyond our means, buying everything on credit and on money printed out of thin air, are over. Sure, our government will carry on with its nonsensical policy of curing indebtedness with more indebtedness, inflation with more inflation, but the game is up. It’s not going to work… [T]he sooner we understand what has happened, assess our economic situation honestly, and rebuild our economy on a sound foundation, the sooner our fortunes will be restored.”.

GuestFebruary 23rd, 2009 at 10:19 am

And what was the outcome? Who took the hit for the debt? Did the refinancing cost the taxpayers anything after all was said and done?

PeteCAFebruary 23rd, 2009 at 10:24 am

So, at this auspicious time in the history of the United States, we have reached the point where everyone knows our banking system is insolvent.Last week we crossed a number of important SELL indicators, or indicators that confirmed a long-term bear market (e.g. Dow Theory). As a result, even diehard investors are yanking their money at this stage. That explains the market movement this morning.The point is … the Treasury, Fed and Congress have been fighting tooth and nail to STOP the system from ever reaching this point. The whole mad panic by the Treasury – when they sold the TARP to Congress – was to avoid the critical situation that we are now in. Whoops, did I say TARP? Does anyone even remember TARP any more? Since that time we’ve moved through more bailout plans, and a $1 trillion spending package from Pres Obama. But nothing can stop the slide downwards.Wich of course – it shouldn’t. Home prices in the USA have to get back to an equilibrium level where people can actually AFFORD them. Not afford them as in … Oh sure you can take out a 50-year mortgage. Afford them as in … yes a young married couple can buy a new home, with the expectation of reasonable payments, BASED ON the lower wages that we Americans will all be earning in the future.Nobody can stop this slide down to a new home price equilibrium. Just like nobody can stop the fact that our living standard is reducing, or the incomes paid to Americans (measured in inflation-adjusted dollars) are declining. It has been pointless to fight this process, but unfortunately our whole system of leadership is living in denial.Expect more strong reassurance – and more scream of agony – from Washington DC. But very little of this stimulus money is being spent on a well-thought plan that takes into account where America WILL be in the world in the next 10 years.PeteCA

economicminorFebruary 23rd, 2009 at 10:56 am

The changes?For one the Oligarchy of the four big banks will be broken and their empires dismantled. This will leave the fed with some real issues as how to facilitate bond sales and money laundering. Other issues will emerge having to do with huge wastes of dollars to support something that was not supportable. This could shake the entire foundations of our political and financial system.Another is the bodies laying naked in the tide pools which will probably include AIG, MBIA, Moody’s, et. al. and large insurance companies who were providing annuity guaranteed incomes to many of the elite. Much of the wealth that is talked about being on the side lines will be known to have been false wealth based upon false asset values and preferred stocks and other securities that were really toxic waste.Most likely some of the biggest pension funds will be found to be technically insolvent leaving the government the ugly task of taking them over at a huge cost to the taxpayers.At some point, all these huge costs will no longer be able to be financed with out interest rates going up or the dollar crashing.The US is in a deep hole and there is little left besides hope and prayers and obfuscation IMHO. All this talk of supporting mortgages to keep the price of housing up so that it doesn’t destroy neighborhoods is bubble head talk. The real underlying worth of something is in the free auction price and that depends not only on want but also on ability to purchase.The US spent the last decade destroying our ability to purchase by shipping our manufacturing off to foreign countries so that the CEO’s and the controlling interests could make larger and larger profits. Very little of those profits benefited the US as a whole so we were offered the opportunity to become really poor or trade paper for a living. Many of us chose trading papers but few took their profits and invested because investing was not as profitable as speculating on inflationary trends.Borrowing to speculate and borrowing to live (trading paper) became a way of life. Until we just plain ran out of buyers. Then on the margin, people unable to gain from the ever rising prices, they started losing it. Unable to make the payments the speculative cycle ended.But now we are left with little real income and huge debts with EVERYBODY dependent upon someone else making their payment.What you are witnessing is the collapse of nationalized pyramid ponzi finance. The financial part of our economy grew to ? more than 20% of the economy but that is a misnomer as it caused rapid growth in both residential and commercial construction and forward sales on autos, dishwashers, ranges, granite counter tops, boats, quads, and so much that is mostly on credit….The biggest banks did this with the help of the FED and Congress and they are now failing because it was a broken stupid business plan from the beginning. There is no way they can survive this. Their business plan is built on ever growing debt and speculation. That is over! They are responsible for and carrying so much what is now garbage and they don’t want any one to know so it is buried deep in hidden off balance sheet accounts but their entire structure is based upon the payments which aren’t coming in.They are history and they just don’t want to admit it. Unfortunately for the rest of us, they are taking down our lifestyles and security with them. If there ever was an enemy among us, they have been the big banks who got totally out of control. By the time this is over, they will have caused so much more damage to America than any terrorist could have ever done.

GuestFebruary 23rd, 2009 at 11:03 am

As the Sovereign Society said in mid-decade, this is a 372-trillion dollar derivatives time bomb that would “vaporize” wealth. The bomb has exploded and the fall out is extreme, and as John Pugsley predicted in 2006, it is “the final unraveling of the U.S. economy…” Said Pugsley, “nearly one third of these derivatives are concentrated in the hands of just 3 banks: JP Morgan Chase, Citigroup and Bank of America — those 3 accounting in 2006 for a “mind-bending $372 trillion of the global derivatives market.”It is hard to salvage anything from a bomb explosion.Pugsley pointed out then that this “Phantom Economy” was “20 times the size of the U.S. economy” from which a small group of private investors had already “reaped gains of up to 1,794% and 797% by cashing in on these little-known investment techniques.He further noted in 2006: “Derivatives have been at the core of almost every major economic disaster since 1987. They were responsible for Black Monday. They were behind the Asian crisis, the LTCM hedge fund disaster, the fall of Barings Bank, the bankruptcy of Orange County, and the collapse of Enron and Argentina…“And they’ll soon be responsible for what could turn out to be the greatest economic disaster yet. For the popularity of these notorious financial instruments has erupted at an alarming rate. Their explosive growth has given birth to an underground economy—so powerful and so complex—that no one really understands it. Not Buffet—not even Greenspan or Bernanke. Yet one thing is clear to all: This “Phantom Economy’ carries threats that have the power to blow up the U.S. financial system.”And “blow up” it did

MorbidFebruary 23rd, 2009 at 12:31 pm

The Loophole that Became a Wormhole…G,Thanks – this really nails it. We are so screwed, unless there is a world wide jubilee.

these (derivative)obligations are not like other obligations. They occupy a series of loopholes that make them unusually dangerous. Perhaps the greatest loophole of all came in the 2005 amendments to the Bankruptcy Code. Although designed ostensibly to “get tough” on profligate debtors, those amendments also made certain that CDS holders would get special treatment in bankruptcy…

GuestFebruary 23rd, 2009 at 1:14 pm

Hmm…Lyndon LaRouche, eh? PeterJB apparently you don’t know LaRouche’s history, i.e. that he’s a neo-Nazi and raving anti-Semite.Just thought you might like to know.

JaboFebruary 27th, 2009 at 7:57 am

The cynicism and corruption of the USA with its mega ponzi global fraud and as the world’s biggest dope consumer, asking now daddy government, the cash rich countries i.e. Japan lended 100,000 million USD to the IMF, without mentioning the global tax of segnieurage, for help is endless and out of all proportions; you better believe it! Where are the market fundamentalists? Certainly not in jail, sailing and golfing at pebble beach with the world’s and taxpayers money…

Chase KrackerJune 10th, 2011 at 8:22 pm

This weblog appears to recieve a good ammount of visitors. How do you advertise it? It gives a nice individual spin on things. I guess having something authentic or substantial to say is the most important thing.

split training routineJune 13th, 2011 at 7:45 am

What i do not realize is actually how you’re not actually much more well-liked than you may be right now. You are so intelligent. You realize thus significantly relating to this subject, made me personally consider it from a lot of varied angles. Its like women and men aren’t fascinated unless it’s one thing to accomplish with Lady gaga! Your own stuffs nice. Always maintain it up!