The (new) Financial Tsunami thread

[Virgil Showlion]

stonerdr
Message #1005 - 02/10/10 06:40 PM



Editor's Note:
This image contains graphic content that some viewers may find disturbing.

Click to view the image,
or use the buttons above to navigate away.[www.msnbc.msn.com/id/35020563/ns/business-picture_stories/displaymode/1247/?beginSlide=1#] David Granlund / Politicalcartoons.com Thought some of you might find this appropriate.

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great depression1
Message #1006 - 02/10/10 07:14 PM

pRINTS THE CARTOON......takes it to 1st grade sons class for pin the deficit on the bernake game.............

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great depression1
Message #1007 - 02/10/10 07:16 PM

When ben and jill went up on the hill,ben ran the FED.When Ben and jill came down from the hill jill owned the fed.......

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great depression1
Message #1008 - 02/10/10 07:22 PM

FED busted by SECRET SERVICE Hijacking trucks full of green ink!!!!!!

[Virgil Showlion]

BiMetalAUPT
Message #1009 - 02/10/10 10:31 PM

THIS IS ONE REASON OUR BANK HAS BOUGHT 30 Y T-BOND VS LENDING MONEY.. BOTH THE 10 YEAR T-NOT AND 30 YEAR

T-BOND RATES ARE TOO HIGH VS FED FUND RATE...

As before with a 1% over target inflation the fed is targeted with our model for 3% or 1% above the 2% target rate but a good chance for 3.5% as Greenspan will overreach the mark and good one or two steeps too far( as he has done before)... We are keeping to 3% rates as being nutural with the current data.. The 3.5% will rendure a negitive 0.75 % pressure on the economic system( like in 1998)

With a three percent Fed Fund rate then 5% 10 years note will be in a balanced press system..If you add the negitive pressure(-0.75%) of overtighting we could see a flat yield curve of future recession...

TO UP DATE... WITH A 0.13% FEDERAL FUNDS RATE WE COULD SEE A 2.13% 10 YEAR T-NOTE!!AND A 3.13%
30 YEAR T-BOND RATE BY THE END OF THE CYCLE!!
AS POSTED BY ME ON FED-WATCH...3/13/05
Bi Metal Au Pt

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mdiw
Message #1010 - 02/11/10 03:14 AM

Thank you so much for re-pinning this thread Archie. I have read it once, some of it twice but am still trying to digest some of the finer nuances of it all. I plan to get all of it permanently on my hard drive and burn to disk...eventually. I think more info is yet coming and my mind is not nearly so brilliant as some on here. Thank you again.

This one is for you, This one is for me. Or we can switch if I have mis-judged.

Sondra

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shoofli
Message #1011 - 02/11/10 05:02 AM

I have been reading this post from the beginning. O&G will be sorely missed by all as well as Duff. You have my heartfelt thanks for a very valuable education from this thread. I hope you all will come back when cooler heads prevail even if it is only to let us know you are doing well. Happy Birthday O&G. Duff I just bookmarked your site. KLM1

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Old and gray
Message #1012 - 02/11/10 06:13 PM



Duff;

Sent the message off. Respond there when ready.

[Virgil Showlion]

Duffminster
Message #1013 - 02/11/10 06:44 PM

Ok Gray,

Next few days. Wishing a good weekend and though I'm not a woman, none the less, a Happy Valentine's Day.

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Old and gray
Message #1014 - 02/11/10 08:58 PM

Chinese New Year coincides with Valentine's Day this year. Therefore, Happy New Year to all, and a special Happy Valentine's Day to Ask, ComoKate, dj, mdiw, reverendbarb, Saldeck (with her, every day is a Valentine's day!) as well as those travelling incognito through these pages. . my best wishes.

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saldeck
Message #1015 - 02/12/10 12:01 AM



Love in the year of the Golden Tiger.

for you, sir, with my best wishes.

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ASK
Message #1016 - 02/12/10 01:20 PM



O&G,



Thank you, and Happy Valentines Day to you too. [mandarin.about.com/library/audio/newyear/2.mp3] Gong Xi Fa Cái.

[Virgil Showlion]

ComoKate
Message #1017 - 02/12/10 04:18 PM



Thank you O & G-

Also thank you for all of your work here, as well as that of Duff, Neo, Ask and all the rest who take the time to post, educate us, challenge us and just in general, take the time, effort and concern to share their knowledge and thoughts. A Very Happy Valentine's Day & Chinese New Year to all of you

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HappyDaysareHere
Message #1018 - 02/12/10 07:28 PM



Bi Met



Fed purchase of 30 yr bonds have another purpose as I'm certain you know. The Fed buys them to put more currency in circulation, the opposite of selling them and taking money out of circulation. The first tactic promotes inflation, the second attempts disinflation.

Under O&G's influence, I've resumed my education kind of late in life, turning to economics this time around. (I hope I can be half as capable as he was.) Fascinating study, using his writing here as a foundation. I also posted over on Duffminster's thread on Bernanke and the Fed relative to the situation of currency influence on inflation-deflation using an article addressing the current Greek problem.

Whichever Bernanke believes he is treating, the inflation or deflation, the idea that currency manipulation can control monetary policy is something that evolved from Britain's experiences in the nineteenth century. By law, interest rates were set between 4 1/2% and 5 1/2%. So, the only recourse the Bank of England believed they had in correcting the boom-bust cyclical activity was in the amount of currency in circulation. That idea has persisted in economic thought since that time, being enhanced with all kinds of mathematical explanations and justifications to lend it scientific support. It was not cause and effect observation or reasoning that led economics to the supposition that rates and currency controlled the financial well-being of a country back in the nineteenth century, it was the expediency and short-sightedness of the times.

There are other influences, among them simple debasement of currency and taxes, as O&G has mentioned many times here. Then, there are the personal behavior problems of people, such as grubby greed or the crass accumulation of things, toys and wealth at the expense of others. And, with a little thought I believe all of us here can contribute a few more influential practices that are simple and basic which we consider of little effect. But, when a couple of million people indulge themselves and are not constrained, the total effect is beyond what can be tolerated by a system.

I think we've got them all at work today, that's why economists have a difficult time picking out which is the most important. This is a sign of the limitations of human ability to tackle complex problems. Someone attempts to break it down and set up a list of priorities in order to address what we consider the most important, meaning first attention, hoping that in treating that, we might notice improvement. The only reason we have so many contributing factors operating at one time is we underestimated the effect the first little change has on the system. It's allowed to continue, and we test the system with another little "innovation". Since that doesn't break the back either, we go on adding yet another little burden.

Finally, we've piled up so many innovations and excesses that it all adds up to abuse the system can no longer tolerate. That's where we are now.

That's what moved O&G (if I can assume what was underlying in what I consider a monumental work - FOR A MAN IN HIS LATE EIGHTIES, YET!!!) to dismiss five minute explanations or quick summaries that had not a chance to deal with the problems we're carrying as a nation and over-burdening ourselves, and, then, like Typhoid Mary, infecting the rest of the world.

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HappyDaysareHere
Message #1019 - 02/12/10 07:29 PM



You saw this coming years ago and remarked on it. Good! But, others in the industry had access to the same mode of thought and were too busy raking in profits to be bothered to considered restraint or corrections. Probably what you observed had indisputable reason behind it, based on experience. But, translating it to real language is a problem. Tell politicians what you've written and they ask, "How do you translate that into real language?" Then, you back it up with examples and they ask, " How can you judge that it has harmful effect?" So, you fall back on the measurements you've cited, even going as far as to expand on the idea and break down the figures to include what led to formulating the equations, and how they were weighted, and you get the defensive response somebody posted in response to O&G, "Sterile knowledge!" And, that's supposed to dismiss the reasoning. And, we go on groping in the dark.

The conclusion is pretty much in line with what O&G expressed many times. We have to ask ourselves if as a group the nation really wants to confront the issues or repair the problems. Do those in charge of the machinery want to give up the convenient milking machines? Do we, as a nation want to change our outlook and our method of operation? The fact that the great majority of people have trouble understanding the obscure mysteries of the economic system hands the advantage to the people who game the system.

We can vote to break up the conspirators and get their cohorts out of office and cause all kind of turmoil in Washington - and locally as well for that matter - cause the government to fall, but that won't solve the problem. What can cause the turnaround is catastrophe on the national level or on the personal level to the unresponsive crowd in office, public or private, in what is supposed to be our central government and our financial institutions. They're all at sea up there, down there, over there, or wherever they're situated.

I'm not advocating revolution or violence. But, if O&G has reached a time where he needs pause to regroup, in a constructive way, the least we can do is pick up the ball and run with what he's left us. He's put us beyond mid-field in understanding, not backed up against our own goal line. I think the game is still on in this thread. We're without our first stringer in there, but the game is still on.

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ASK
Message #1020 - 02/12/10 07:41 PM

I told you the class hasn't ended.

[Virgil Showlion]

HappyDaysareHere
Message #1021 - 02/12/10 07:49 PM



ASK

It'll end when Washington wakes up to what's good for the people and this nation.

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HappyDaysareHere
Message #1022 - 02/13/10 05:09 PM



Six letters in today's NYTimes are very specific in their protest of bankers' behavior.



[www.nytimes.com/pages/opinion/index.html] www.nytimes.com/pages/opinion/index.html



It might be worth a look solely for the range of thought expressed by folks from a law professor to a fellow from the Center for American Progress, to others not otherwise identified, all opposed to the bakers' operative philosophy.

We'll continue to see more and more protests in a variety of media, from a widening spectrum of citizens and with more and more intensity. Our situation is similar to a lifeboat full of citizens coming to a realization that we face difficulty but none willing to surrender the competitive spirit we've developed to get our share during the past few generations. Some of that competition has become pretty demanding on everyone else, insisting they toe the mark but rejects any suggestion of personally assuming responsibility for our own role. The irony is that although the situation is becoming more desperate and calls for sacrifices from all of us, more people are fighting over who will take the helm and bark out orders the rest should follow. Everybody a captain and nobody to row.

Until we acquire a little more humility and acknowledge that we are, in deed, all in the same boat and only working together will save us, that boat will go nowhere. I don't see any significant unity anywhere on the horizon, either. We're still fighting for a better toehold on our turf, surrendering nothing. Hold onto that and we'll never move out of the doldrums. Do we have to wait until we're plunged into the darkest days, when hope for getting out will be no more than that, a vague hope?

So, programs for improvement are all we can come up with, programs that dictate what everyone else should do. There's no widespread acceptance of any of them, because we know that some gamers out there are waiting for us to give ground to their advantage, a program is no more than a passing gust of air. That's not the atmosphere for improvement.

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saldeck
Message #1023 - 02/15/10 11:35 AM



Really happy days here...or, at least, happy moments...elsewhere, there is a invasion.



Will it protect your thread? Have a nice day, Old and Gray.

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Duffminster
Message #1024 - 02/17/10 05:31 AM

Here is a rare interview with Paul Volker today that if you listen all the way through is befitting of the letter and spirit of this thread. Like O&G, Volker is Old, Gray and deeply experienced, wise and intelligent.

Enjoy,
[www.cnn.com/video/#/video/bestoftv/2010/02/14/gps.volcker.plan.cnn] Interview with Paul Volker on CNN

[Virgil Showlion]

Old and gray
Message #1025 - 02/17/10 04:29 PM



Thank you, Duff. Even being distantly compared to Volcker is equivalent to being placed at the crest of Mt. Olympus. I'm humbled.



But. . . I'm also slightly disappointed in the link provided. We saw Fareed Zakaria talking about Volcker, but no Volcker!? A search through the other clips turned up no Volcker. I read of his interview on the Money Talk venue but could not find the whole of the interview, which you know I'd be interested in reading.



I'm perusing Walter Bagehot again, his Lombard Street, an eminently appropriate book for these times. We believe that what we experience is a first in history, but nothing could be further from the truth. We simply go around in circles. Thus, Bagehot's account of the runs and recessions of the mid-1800's (and earlier) are really a propos to today's situations. A change of a few words here and there to include today's "innovations" and we're looking at the same thing all over again. The shame of the realization that things never change, is that they never change!

We'll be going through this same cycle for all foreseeable time because we're just too arrogant to give ground when we make the same mistakes over and over. We don't want to see the occurrences as the same episode in another setting. It's always "the other guy's" fault so there's nothing we can do to collar the other guy.

All the events that led us to the current crisis, happened before, causes were glossed over before, the needed solutions were not put in place and those who called for the solutions were branded as other worldly thinkers, because it would have called for temporary sacrifice that no one would accept. They'd rather experience the pain of failure and blame it on someone else than experience the ache needed for re-construction to correct the situation once and for all and admit that it was their fault. So, we'll go on experiencing recessions every three to seven years, depression with increasing frequency and intensity until we deplete resources, and it will always be "the other guy's" fault.

Bagehot wrote that bankers were not bankers, they were merchants trying to set up banking to suit their own ends. Well, we said the same thing on this thread: that basically, directors were not prepared for their tasks and the banking professionals were allowed to roam free to practice as they pleased and were never censured when things turned sour. Bagehot simply said you can't change that, because that's the way things are. That was published 1873.

So, what's new?

If I understand correctly Volcker said we're suffering because our leadership is not up to the task of correcting the flaws. Same thing, isn't it? Leadership in Congress is more interested in feathering nests, pal-ing around with rich lobbyists, and setting up prospects for the golden years. Those with a conscience and some vision of accomplishing something worthwhile in their tenure are giving up. Bayh being the latest to drop out of the marathon that has no ending. How obstructionists can view their behavior as serving other than a selfish, personal purpose is beyond my comprehension, even admitting that mean-spiritedness, spite and revenge are innate human characteristics. atavistic and immutable.



But. . . I was disappointed in not finding the words flowing from Volcker's mouth, being rephrased by Zakaria instead. Maybe I'll stumble across them somewhere.

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neohguy
Message #1026 - 02/17/10 05:11 PM

But. . . I was disappointed in not finding the words flowing from Volcker's mouth, being rephrased by Zakaria instead. Maybe I'll stumble across them somewhere.

Transcripts of the interview:



[transcripts.cnn.com/TRANSCRIPTS/1002/14/fzgps.01.html] transcripts.cnn.com/TRANSCRIPTS/1002/14/fzgps.01.html

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Old and gray
Message #1027 - 02/17/10 08:24 PM



It's great to have smart friends.



Thanks, neohguy.

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Duffminster
Message #1028 - 02/18/10 04:36 PM



Sorry for the delay.



Click the video clip in this WEB page of Sinclair's. It has the video interview:



[jsmineset.com/2010/02/16/in-the-news-today-464/] jsmineset.com/2010/02/16/in-the-news-today-464/

[Virgil Showlion]

stonerdr
Message #1029 - 02/19/10 02:41 PM



O&G

Glad to oblige. Copying the entry from "Duffminster, your thoughts. . ." thread.



Why won't they watch what's happening? Why won't they use truthful numbers? Is it the darkness or numbed minds?

The pointless indecision and wandering of our leaders promises a long and cold winter that will last several years longer than anyone wants to admit.

It's not difficult to see the several reasons.

First, they are now releasing numbers they suppressed last year for the sake of mitigating COLA increases, and keep part of their obligations off the books. As though that was the largest part of our problem.

Reason two, Bernanke has persisted with the fairy tale fight to prevent a non-existent deflation from the start. He's still frightened as can be about the specter of the over-indebtedness/deflation combination that Fisher explained is cause for unavoidable and devastating depression.

Third, he (and the Fed) serves the banking industry's call for low interest rates no matter what the consequences. He mentions counter-cyclical strategy but serves pro-cyclical purposes. Not a sign of a positive view.

Fourth, it all adds up to behavior of a Fed board that is frightened to all blazes. They haven't a clue of what to do and are depending solely on fading memories working through the threats and emerging from the other end in unfazed condition. In truth, the threats are magnifying and the only reason there's even a hint of the US improving in the market and general financial condition is in the comparison with the rest of the world.

The euro is under fire with the PIIGS situation worsening, casting distrust that the euro could in any way supplement the fading strength of the dollar, the emerging truth of China's situation, and the further curtailment of international commerce crippled by the banking issues that will not go away.

So, central banking world-wide cannot handle the monetary problems, banks are withering away quietly in the corner while they sit on the hoard of idle stimulus money, hoping no one will notice, and any hope of commerce leading us out of the crisis (which the markets are depending on) are crippled and fading by the day.

So, they'll go on studying literature down at the Fed and after three or four dozen economists put their head together, smear math all over the place until they confuse themselves again. They'll then conclude that there's not enough data to draw a conclusion and we'll suffer more down-slide while the board continues to procrastinate. In this way they can avoid taking the path that will lead us to perdition by going down the precise path that leads to perdition, inaction.

Interest rates will stay low, prices will gyrate on the way up, general population will find it increasingly difficult to cope with the inflation, and Bernanke will still lead the board in the futile fight against deflation. When inflation is a raging, out of control inferno, he'll declare the sudden discovery that we're under siege and the board will then issue statements full of clap-trap and all the economists, including Bernanke, can then claim that they were "mistaken" in their assessment of the nation's financial condition, a condition that the smallest practical, mom-and-pop businessman can see from the balance sheets without a minute's study.

Meanwhile, people with experience and a clear view of the way out of our dilemma will be ignored, their proposals will not even be debated and the leaders will swing from one branch of the tree to another to demonstrate their "intelligence" and "dedication" to the nation's welfare, proving how difficult it is to govern. Yes, it is, when you have people afraid of taking action and who choose to posture instead of govern.

Anything new in this? The world has been through it thousands of times, but they disregard history. They're either too busy to sit down and read about it, or sit back and pontificate that, "This time it's different." The innovations and technology may be, but the human behavior is exactly the same.

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Old and gray
Message #1030 - 02/19/10 02:58 PM



Thank you, stonerdr.

Short and swift summary of current situation.

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Old and gray
Message #1031 - 02/19/10 04:44 PM



I believe rstoner's assessment fits here. It serves two purposes.

One may be coincidental (I choose to believe not): he posted this the morning of the 18th, and at the end of business the following day, the Fed raised rates. Good job, srtoner!! But, it's a piddling increase. We need more. We needed at least 1% then and another 1% shortly. Believe me that will release the money the banks are sitting on, waiting for better terms. If capital has to compete with the returns of the gambling world, 0% to .25% will not do the job, nor will raising rates to .75%!

The other pertains to my recent (and still in process) review of Walter Bagehot's "Lombard Street" (published 1873), an analysis of the Bank of England's performance in the first half of the nineteenth century.

Bagehot also has some scathing remarks about the conduct of banking business and the attitude that prevailed which is applicable to today's performance by the Fed. He also expresses an opinion of what is better for the system than "hoarding" reserves. For too long a time, the Fed refused to raise interest rates, a move that helped Sweden climb out of it's banking crisis back in the nineties (see the review of the Lars Jonung paper starting back at message # 181). Bernanke has simply been mimicking the mistakes of Greenspan, who, we must conclude, is Bernanke's mentor. We could also deduce that he and Paulson made mistakes in what they bought from banks, valueless paper, which in essence turned the "good" banks of the Federal Reserve into "bad" banks and led us deeper into the pits of debt which could not be and has not been resolved to date.

Bagehot had this to say about the BOE's situation during England's 1825 panic:

The amount of bad business in commercial countries is an infinitesimally small fraction of the whole business. That in a panic the bank, or banks, holding the ultimate reserve should refuse bad bills or bad securities will not make the panic really worse; the 'unsound' people are a feeble minority, and they are afraid even to look frightened for fear their unsoundness may be detected. The great majority, the majority to be protected, are the 'sound' people, the people who have good security to offer. If it is known that the Bank of England is freely advancing on what in ordinary times is reckoned a good security·on what is then commonly pledged and easily convertible·the alarm of the solvent merchants and bankers will be stayed. But if securities, really good and usually convertible, are refused by the Bank, the alarm will not abate, the other loans made will fail in obtaining their end, and the panic will become worse and worse.

The fact that the Fed will not submit to an audit is suspiciously indicative of the kind of collateral they accepted during the stimulus distribution. What other reasonable conclusion can be made of their sudden growth from what would have been a $200 bn reserve to over a claimed $2 tn?

If the banks had something of value to convey as collateral, why not induce them to convert that on the open market and save themselves without recourse to the Fed's backing? (Fire sale prices are cited as reasoms why banks could not access the open markets, but when bad paper undermines the market, wouldn't it seem reasonable to expect the good paper to be worth that much more? Or, was it that the banks did not want to part with the good paper and only the Fed would take the bad?

Assuming the Fed has taken on "toxic" paper, the question follows: what is the sense or benefit of taking on the toxic paper in order to calm the larger banks and cater to them? How will that expense be recovered to maintain stability in Federal Banks? The purpose of the transaction seemed to have been support for the 'unsound' people Bagehot mentions. . . Of course this was accomplished at the expense of the 'sound' sector. And, if you recall the way the execs paraded through their testimony before Congress at the time, they certainly were "afraid to even look frightened for fear their unsoundness may be detected".

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Old and gray
Message #1032 - 02/19/10 05:26 PM



So what are we looking forward to? More of the same threats that existed months ago, which are now stretching out to years. In the meantime, we look good because everybody is in worse condition. That does not mean things are looking up. Back during Nixon's era, when the inflation march began in earnest, I always felt that a major impetus for the inflationary push was provided by pushers in order to improve their personal positions compared to the pawns. I'd remind everyone that the push lasted for a dozen years before it was tamed. That's the point when banks began casting around for other means of accumulating rewards for mismanagement.

The Fed's slow reaction time is to be expected. It is run by often very competent people in their principal industries who become procrastinators and observers, not doers when they attain a governor's position. The entire operation appears to be run with the board waiting for the Chair to inform them, and the Chair is waiting to see what conclusive developments take place in the commercial environment. Evidence must be overwhelming before the entire mass begins to react, and that is often too late in the game since the movement is well into its maturity.

We're heading toward inflation on the order of 10% a month. It's already reached that over the past four months in some areas if you haven't noticed. Is it my suspicious nature or is it common to show up at a store looking for the sale merchandise that has not yet come in? Shortages, sales to clear the shelves for the newly priced merchandise, or simply boldly remarking the prices seems to be common practice. Those responsible for the prices are not concerned from a personal point of view. As has been suggested by others on the Money Market threads, the movers lay off people, sell fewer products (probably at inflated prices) and fare as well as they had been, or better. Less on the shelves converts more competition among consumers and higher prices. This trend will continue.

What's the role of the Fed here? They are stultifying the growth we need to increase supplies by discouraging banks from lending at low rates with inadequate returns. Returning to Bagehot in 1873:

If we examine the manner in which the Bank of England has fulfilled these duties, we shall find, as we found before, that the true principle has never been grasped; that the policy has been inconsistent; that, though the policy has much improved, there still remain important particulars in which it might be better than it is.

Nothing has changed in the past 140 years. Substitute Fed for the BOE and we have an evaluation in his study that serves today's situation. Unfortunately, we still do not know how to read or how to remember what we've read. Learning is too demanding.

But, there's another point that Bagehot makes (he is a realist!) and that is that people in the leadership are dealing with practical items that need attention and don't have the time to study books or learn theory. Which may mean that even were they to hire informed people, leaders wouldn't have the time to listen to them or evaluate their contribution.

So, the Fed will cater to the smaller percentage of 'bad businesses' and neglect the larger percentage of 'sound' business to our overall detriment.



(BTW, the quotations from Bagehot all come from his Chapter VII, paragraphs 59-61.)

[Virgil Showlion]

BiMetalAUPT
Message #1033 - 02/19/10 11:37 PM

O&G, Going back to what Wm Dudley has said. Today again he is saying Banking systems need capital = better more robust Mt. I hold to the problem with M3 decline as a symptom of the bank capital need.



The Fed's Role in Coping with the Crisis and the Outlook for the United States

The close ties with the mainland means that the broader outlook for the United States is very important for Puerto Rico. The U.S. economy has been through a terrible period, having suffered the worst financial crisis in 70 years. Extensive study of banking crises shows that they tend to be ·protracted affairs· with surprisingly similar, if unpleasant, contours. Downturns average four years, during which the unemployment rate rises an average of 7 percentage points. The peak-to-trough decline in output averages 9 percent.

Those statistics point out the risks that we faced. Well aware of the threat of a second Great Depression, U.S. policymakers took very aggressive actions to support economic growth in 2008 and 2009. The Fed provided liquidity facilities and took many other actions to contain and reduce pressures in financial markets, while the U.S. Treasury supported the banking system and provided cash and incentives to households, businesses, and state and local govering 2009.rnments to support spending du

The Fed's ·lender of last resort· interventions·including facilities such as the Term Securities Lending Facility (TSLF) and the Primary Dealer Credit Facility (PDCF), as well as programs such as reciprocal currency agreements·are examples of the rapid application of central banking tenets to the unique challenges we faced as this crisis evolved. Indeed, in many ways, the crisis has underscored why the Federal Reserve was created almost a century ago: to provide a backstop for a banking system prone to runs and financial panics.

Where it proved necessary and feasible, the Fed also used its emergency lending authority to forestall the disorderly failure of systemically important institutions. These actions truly were extraordinary·well outside the scope of our normal operations·but our judgment was that not taking those actions would have risked a broader collapse of the financial system and a significantly deeper and more protracted recession. Faced with the choice between these otherwise unpalatable actions and a broader systemic collapse, the Fed, with the full support of the Treasury, invoked its emergency lending authority and prevented the collapse of certain institutions previously considered to have been outside the safety net.

Make no mistake: these necessary moves were unprecedented and controversial. The U.S. government's financing of Treasury's actions required federal debt to rise sharply, and stabilizing the financial system temporarily boosted the size of the Fed's balance sheet.

The final numbers aren't in yet, but it now appears that the downturn in real gross domestic product (GDP) in the United States lasted about a year and a half, much shorter than the typical banking crisis downturn. Peak to trough, output fell about 4 percent, less than half the typical decline seen in past financial crises. While there are still some significant downside risks to the economy, in general, the outlook is improving. Of particular note, the capital markets·except for certain securitization markets·are now generally open for business. In addition, the big banks in the United States have been able to raise a large amount of equity capital to put themselves in a stronger position. I believe that Federal Reserve actions over the last year and a half have contributed very substantially to this improvement.

But there still is a lot of work to do. Smaller banks·especially those with large commercial real estate exposures·are under pressure, while households and smaller businesses find that their access to credit is still constrained.

Moreover, regulatory reform is essential to prevent this type of financial crisis going forward. We need to ensure that no financial institution is ·too big to fail.· This means we need Congress to enact a resolution mechan

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Old and gray
Message #1034 - 02/20/10 04:09 AM



Bi Met



I'm very much in agreement with you on the M3. If you might recall, I posted on the Fed Watch site stating my belief that the closest to a reliable M3 tracking available was the unofficial version available through John Williams "shadowstats". I also stated my belief it was important data in getting a grasp on what's going on in banking and circulating debt, which, of course, is an extension of currency. That's how it was designed, and that's why it is suspicious that the Fed abandoned the reporting. Apparently they were aware of things in 2006 when they stopped releasing the data. It must have started on the way down before other data indicated trouble.

I also believe that the regulatory reform is essential. Many of the points in the Dodd bill, which seems destined never to see the light of day again, have merit. It took courage to propose them in view of the unlikelihood of their ever being discussed much less passed. Admittedly, some need work, but better to have the issues out in the open than be totally neglected.

The Fed/Treasury collusion in bailing out the investment banks, AIG, and the brokerages was an end-around play to avoid legal complications in which the Fed was forbidden to accept certain securities and Treasury did not have the authority to extend help in some areas. In those cases, it required the two entities working together to circumvent the laws. (This was mentioned in the tsunami thread in two places; first where the Treasury and the Fed colluded in using funds from the Fed under two different aegises in a way that neither could be accused of inappropriate behavior, and second, when Geithner released the Financial Reform proposals. (by which means Treasury would be charged with overseeing the Financial Holding Companies - the converted brokers/bankers. The Dodd Bill didn't provide for such an arrangement. At best the Treasurer would be seated on the council that passes judgment on certain issues.)

There is no doubt the smaller banks and businesses, along with taxpayers are bearing the brunt of the blow, while those responsible are preening and prancing in glory since taking the entire global community for a joy ride. There is no credit for the smallest entities since the large banks are taking the funds out of circulation, using the "stimulus" to build up their depleted reserves and preparing for the next go round when the smoke clears.

As for the extraordinary measures taken by the Fed in overstepping the bounds of its responsibilities - As Mr. Dudley puts it

. . . but our judgment was that not taking those actions would have risked a broader collapse of the financial system and a significantly deeper and more protracted recession

Doing what they did started the ridiculous Too Big to Fail concept. That's a cross we'll be bearing for eternity! Nothing is being done to solve that riddle. They'll dance around the issue quietly hoping all the time that it will gently fade from memory to allow them to use the ruse again. And that repeat performance is not too far away. We're bouncing but it won't be too far up to the high point and we'll see another collapse before there's any enactment to prevent the next rescue of the TBTF entities.

---

Old and gray
Message #1035 - 02/20/10 04:10 AM



I can't rid myself of the notion that those who drove the companies to the point of failure should be held responsible by the creditors and stockholders. . . ridden out of the business is that's the only recourse. The full responsibility for reconstituting the businesses should have been left to the owners, not foisted on the public. If we participated in the profit-making ventures, then fine, we should shoulder some of the cost. But, in this case a private corporation, managed privately, privately distributed the rewards for the private venture and then go public with a cry for help. That's not listed in my portfolio as a legitimate concern for the taxpayers. Nor do I believe for a minute that we're going to end up any better for having taken the action. It was incomplete, still sits out there waiting to pounce on us again as soon as the sun goes down.

That bit about the "emergency lending authority" is an assumption of quite some magnitude. That's where the conflicts should be questioned and guilty parties brought in to answer for what was done. Is it alright for the Treasury to be the back-up for private industry? I was of the opinion back when Lee Iacocca went to the government for a loan (with all intentions of paying it back!) that the envelope was being pushed. To open the box of taxpayer assets and ask bankers, "How much do you boys want?" Is clearly beyond credulity! I want wrists slapped and somebody standing in the corner until dark to pay for those transgressions with the forceful admonition, "Never again!". . . With laws to back it up!

Comes to mind there was another ex-board member (I believe he was a vice-Chairman, now a faculty member in the Chicago area?) with a comment. He said something to the effect that the Fed committed the number one sin in banking in the rescue process by taking valueless paper in exchange for loans. Nobody does that in the entire global banking community! That is, nobody other than our Fed.

So, there you have one ex-board member in support and one critical of Fed actions. Volcker, in his interview with Fareed Zakaria, refrained from commenting on the basis that an ex-Fed Chief doesn't comment on current Fed activity. So, in all, it's a draw.

However, you and I being free of such constraints can comment all we please. . . to no effect!

---

Veteran_Lender
Message #1036 - 02/20/10 01:26 PM



As dumb as it may sound... start campaigning to lift Financial Moguls into Primary Elected Offices over the next two years. When we have them in Congress and the White House, their actions compromise Lobbying efforts and make them act on behalf of the nation instead of the vocation.

Why won't they watch what's happening? Why won't they use truthful numbers? Is it the darkness or numbed minds?

Hardly. When it all settles, realize that the current power holders are all long-time holders of it. Ergo... they likely would be victimized in any remedy. I don't write Obama everyday telling him to Shutter the Banks because I like writing it... We The People will never see resolution or daylight until either-- the banks cannot continue the game or a major power holder gives up the game. Either way... its a game and we are helpless because they control every aspect of it. In like kind... this is a game of Monopoly where the Banker also has and is the only reader of the Rules.

As Bernanke tightens liquidity, he forces the game to another level. It will detract more cash from consumer credit while government mandates it otherwise. Who is in charge?

We're not far away from knowing.

[Virgil Showlion]

Old and gray
Message #1037 - 02/20/10 03:11 PM



There's an additional, pertinent quote from Bagehot that should be included here to demonstrate how timeless good advice is, despite the modern "thinking out of the box" tendencies.

The business of banking ought to be simple; if it is hard it is wrong. The only securities which a banker, using money that he may be asked at short notice to repay, ought to touch, are those which are easily saleable and easily intelligible.

(The italics are Bagehot's.)

Now tell me that good sense has changed in 140 years! The absurd sense that current banking uses is novel, and to my way of thinking, not banking sense! I certainly do side with the Fed ex-vice Chairman who cites the Fed practice of accepting valueless paper as collateral which agrees totally with the Bagehot quote. In more than one way, the Fed under Bernanke with the unauthorized and totally inappropriate blessing of Paulson, has exercised poor judgment. It may or may not be considered poor banking judgment, but there's little question that it is poor business judgment. It goes back to Adam Smith's distrust of people who manage businesses who are not principal owners of the enterprise. Poor judgment is often a direct result of not having "skin in the game" (according to today's' jargon). Ownership of shares of stock conveyed by way of compensation is not ownership in any real sense. Easy come, easy go is a truer evaluation of the executives' concern for that stock. If the speculation goes sour, since we had nothing to begin with, nothing is lost.

This is even more prominently evident in the case of the Fed where no one profits from the action of the reserve system. No "skin in the game" no loss should the wrong choice be made. In England's case, should management under a governorship distinguish itself, a medal, a title are gained and recognition for a job well done is conferred. In the US, foul up the system and you can command large speaking fees on the dinner circuit, write your memoirs and pontificate on how you did the right thing but everyone else "misunderstood and abused the system" and then enjoy elevation beyond any title. . . near deification.

---

Duffminster
Message #1038 - 02/23/10 07:00 PM



O&G, common sense has not changed in 140 years. Unfortunately, the nature of unchecked greed hasn't either. Read this article (which I will post seperately) and you will see a microcosm of the situation here at home (which is far more opaque in some regards at least).



[www.gata.org/node/8359] "London firm was created to route cash" - Goldman, Greece and Derivatives



Submitted by cpowell on Mon, 2010-02-22 19:23. Section: [www.gata.org/taxonomy/term/2] Daily Dispatches

By Carrick Mollenkamp
The Wall Street Journal
Monday, February 22, 2010

[online.wsj.com/article/SB1000142405274870379150457507990390397198...] online.wsj.com/article/SB1000142405274870375>

Behind Titlos and the notes sale are Goldman and the National Bank of Greece, a 169-year-old institution whose operations span Eastern Europe into Turkey, Serbia, and Romania. The bank isn't the country's central bank, though the government owns a 12% stake through its pension system.

Goldman, the National Bank of Greece, and the Greek government have long had close ties. Last week Greece named Petros Christodoulou, who worked at both Goldman and the National Bank of Greece, as the government's new debt chief.

Titlos's origin dates to 2001 and a complex transaction that at its crux called for Goldman to loan Greece E2.4 billion. The structure permitted Greece to lower the debt it had.

Over the next decade, the structure would prove to be malleable -- and legal. In total, from 1998 to 2000, Goldman structured 12 currency-swap agreements with Greece, leading up to the 2001 transaction.

Greece's finance minister last week said the original transaction met with the legal standards of the European Union's statistics watchdog. Moody's Ratings Service rated the 2009 deal.

"This was a unique deal," says Christoforos Sardelis, the head of Greece's debt-management agency from 1999 to 2004. "It was made public, and there was no violation of any rules."

To hedge its credit risk, Goldman carried out a transaction with a small Dublin firm. The investment bank also agreed to a new deal with Greece that was structured as a way to hedge interest-rate risk. That deal compensated Goldman for losses it was experiencing from the currency swap, according to a person familiar with the transaction.

Goldman then exited from the interest-rate-swap deal in 2005 when the National Bank of Greece replaced Goldman as Greece's trading partner, according to people familiar with that transaction.

In late 2008, with the financial crisis peaking

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flow5
Message #1039 - 02/24/10 03:46 AM



Perverse and staggering. No one will stand up to these flim flam robbers.

---

dr puma
Message #1040 - 02/24/10 04:36 AM

There is no regulation if regulations can constantly be re-regulated at will. Then it all becomes a true sham no matter how many fig leafs they use. In short, it really is all about The Money and nothing else seems to matter to these national and international financial bozos. And the term Money always just means Their Money and to get more of it, always. So long as they retain the power to decide how the ever-changing games will be played, then no one else has a chance but they manage to suck them in anyway. Quite the marvel. They are not just criminals (if only there were laws applying, but they appear to control those as well); they are crime geniuses. Sometimes I think the whole world just looks like one big Chicago. In 1837 Chicago was born in crime and it has never changed. I suspect the same can be said of the whole world. Let's face it, the average and even way above average investors are up against literally centuries of experience and are constantly out-gunned. Some manage to make their millions anyway, but the vast majority never will. I guess you could say the rules don't allow for that and it is Their Rules I might add. It's like living in two different worlds at the same. A few do it well, most do not.

[Virgil Showlion]

Old and gray
Message #1041 - 02/24/10 02:43 PM



The situation has become so pervasively destructive and morally distasteful that it has reinforced the claim that derivatives should no longer exist. The definition of derivatives has been a major part of this extended thread as was intended and indicated in the title when Duffminster collected a few odd messages and consolidated them under one banner back in March, 2009.

The complex, entangled nature of the beasts, a situation deliberately fabricated to conceal the damage their originators knew full well was unavoidable, has been spread out over the previous 1000+ messages as the complexity and reach was explored. And, as we see from the unfolding of the Goldman/Greece scandal, the history is far from complete. In message #214, it was pointed out that banks benefitted three ways from issuing derivatives (that was exclusive of the exorbitant compensation they granted themselves for the contamination): as a hedge, brokering the insects, and gambling that someone else would lose the bet and the banks would rake in the profits. Well, the Goldman/Greece game is evidence there is another deceptive use come to light: concealing debt by moving it off the balance sheet. It should be no surprise since that is precisely what the banks did and are still doing by moving them into memoranda, off balance sheets. Greece went to the financial experts with a problem and the experts responded with a short, "Sure! Let us show you how we do it." And, since a renowned firm like Goldman said they did it, Greece surmised it was legal and totally acceptable.

Just with the little reprise stated here in a few paragraphs demonstrates how derivatives have fouled, ,and will continue to foul the system with their many-faceted fraudulent nature and sweetheart laws which render them uncontainable. . . And, the two proposed bills, from Barney Frank and Chris Dodd have two opposing ways of treating them. . . Neither approach handles them. There's no all-encompassing neutralization, no clearing them off the market or controlling the market once and for all, no constraining their issue, and no correcting the diluting influence they have on currency. The proposed regulation introduces more complexity which will simply unsettle life for the regulators while banks find other means of circumventing the regulations. They will still be out there, are still something to be reckoned with, and still as deadly as ever.

Because of their nature, they defy concise definition, and resist comprehensible explanation in a few paragraphs. The New york Times tried to define them in an article of ten paragraphs back in October, 2009, which is still available on their site. It may have been that article that moved a poster to write here that they read the NYTimes description and still didn't understand how derivatives worked. . . or, I assumed, how they also contaminated currency or caused the global financial system to suffer near-paralysis. That's not a simple subject. Even with a complete definition the reader is required to bring along some understanding and a great deal of imagination to fill in the blank spots of the description. That is one of the reasons why the proposed regulations will be hard pressed to stem the flood of those contaminating papers. Can we expect regulators to plow into the blizzard and make sense of if, when the very process has been aimed at opacity for the sake of concealment? We're all aware of the fact that the legislation proposes that "standardized" contracts be handled through clearinghouses. And, then non-standardized contracts will be traded on a self-regulating open market. . . To what advantage? How will that explain massive contracts of several hundred pages? Why anyone would want to jeopardize their solvency for the sake of a gamble of such enormous proportions these transactions represent is beyond reasonable explanation.

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Old and gray
Message #1042 - 02/24/10 02:44 PM



The Times article tries to tie the derivatives in to futures, mentioning specifically the 19th century corn futures. Well, they still have futures in most commodities, many of them in agriculture, so we can conclude that since that limited comprehension is tied to derivatives that would justify including them in the markets supervised by the Commodities Trading and Futures Commission. But, then, how do corn futures tie-in with the Goldman/Greece scandal? A dummy corporation, a dummy instrument that provides a convenient, deceptive chute to move debt off-balance sheets? That's neither commodities, trading, nor futures! So, the definition the Times provides serves no end in such a case. A better source would be criminal statutes that describe not only the crime of fraud but the punishment waiting for those engaged in the practice.

After this is posted, I'll trace back, verify and supply the link to the Times article. But, be warned, it presents the criminal situation in white tie and tails, trying to bring respectability to the scam. That simply means it boosts the price and is more dangerous to the system.

These, and other, still to be uncovered questions will persist as long as the painful arrangements exist. Those devices have got to disappear!

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Old and gray
Message #1043 - 02/24/10 02:47 PM



This is the link to the NYTimes article mentioned. Along with it are listed more than a dozen articles published over a period of time, dealing with cause, effect, outlook, regulation, etc. for those willing to go further into the subject.



[topics.nytimes.com/top/reference/timestopics/subjects/d/derivatives/index.html] topics.nytimes.com/top/reference/timestopics/subjects/d/derivatives/index.html

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rocking-v
Message #1044 - 02/24/10 06:44 PM



An interesting one for you to chew on:

Love this string...you guys did good...beeb posting articles and working on twitter to explain and bemoan derivatives and the destruction of the Gass-Staegull Act and Basil ll...which sigh is on the page also

[projectworldawareness.com/2010/02/7747/] Essent…you figure it out..loll



Greece, Greece, and more Greece·



[projectworldawareness.com/2010/02/frontline-the-warning-sneak-peek-1-pbs/] FRONTLINE | “The Warning”: Sneak Peek 1 | PBS



[projectworldawareness.com/2010/02/gerald-celente-the-global-financial-system-is-collapsing-get-ready-for-war/] Gerald Celente: The Global Financial System Is Collapsing: Get R



[projectworldawareness.com/2010/02/how-does-goldman-sachs-make-its-profits-part-1/] How Does Goldman Sachs Make Its Profits? (Part 1)…



[projectworldawareness.com/2010/02/the-dollar-was-a-delusion-we-had-in-common/] the dollar was a delusion we had in common…



[projectworldawareness.com/2010/02/central-banking-doesnt-work-just-ask-the-fed/] Central Banking Doesn’t Work – Just Ask the Fed!



[projectworldawareness.com/2010/02/the-long-demise-of-glass-steagull-must-readjude/] The Long Demise of Glass-Steagull..must read!~jude



Nothing new here...just a recap...loll



~jude

[Virgil Showlion]

Old and gray
Message #1045 - 02/25/10 04:18 PM



rocking-v is a blogger drawing attention to his (Pardon me. . . her) site. What caught my attention there was a link which eventually led to Ellen Brown's website (she's the author of "Web of Debt", an intriguing title.).

Previously, mention of her book was posted here (message #341) by the roundabout route of noting a critique of her book by someone caught up with concern as we are. . . and, apparently, as is Jude, alias rocking-v. Back in May, 2009, I'd intended to search out the book with the hope that fresh thinking could be found, so her site lifted hopes again. . briefly.

A title to one of her articles, "Solution to the Credit Crisis" raised hope for half a page, until I discovered one proposed solution, roughly condensed, is based on establishing public banks, state and Federal. The country tried that and in banking history the first thought will always be the struggle between Andrew Jackson and the Second Bank of the United States.

Ms. Brown's proposal is to have banks established by the Federal and State governments so that they might issue credit to lift themselves out of the debt trap entangling them. She points out that political candidates in several states are championing the idea. Replace the Fed with a true National Bank and we'll do away with the private consortium which owns and controls the Fed. And, while we're at it, states could handle their debt crises by retaining the right to issue credit to pay off their creditors. She cites no less an authority than Joseph Stiglitz who suggested, in March, 2009, that we could have

"used the $700 billion to create a new financial institution, allowed to lever 10 to 1. . . and would have generated $7 trillion of new lending capacity".

That would have saved us from all the strain and stress on the Fed, the banks and the taxpayers. Fine and good for the bookkeeping, but in effect, we would only be transferring the debt from one venue to another, very much the same as listing Social Security obligations off-balance sheet and saying that our debt is not as great as we are led to believe. A state or national bank would be owned by the taxpayers and the burden of the new leveraging would still be borne by taxpayers and when the bank runs short (as it surely will in due time) the taxpayers would then have to make up the shortage through taxation in a more direct channel. Additionally, this time, we'll be obligated toward not only the new National Bank, but the state banks as well. I prefer the Volcker Rule, fail and you fail with no additional burden on the taxpayer or US Treasury. Euthanasia uber alles!

The concept of state banks or the Third National Bank of the US falls a little short of a fair study of the Second Bank of the US. When Jackson finally prevailed and shut down the Second Bank by refusing to renew the expiring charter, all chaos broke loose, as was mentioned previously when states began printing their own money and a random mess resulted in interstate transactions. Issuing credit, as we've discussed here too often, has exactly the same effect as issuing currency, with all the benefits of the accompanying inflation, runs on banks, and the general money plague dumped on consumers. How many different currencies will we carry in our pocket and who will honor which?

So, that suddenly, I don't feel anxious to place faith in Ms. Brown's ideas for solving our problems. But, her evaluation of the crisis may yet yield some benefit. Another pair of eyes while searching in the dark is never a disadvantage. But, we can do without reproducing the chaos of 51 different credit (or currency) creators (the states plus a new national bank), or 51 different ways to distribute our debt load. It just won't lighten by that means.

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neohguy
Message #1046 - 02/27/10 10:16 PM



[www.business-standard.com/india/news/satyajit-das-paul-volcker%5Cs-trojan-horse/386855/] www.business-standard.com/india/news/satyajit-das-paul-volcker%5Cs-trojan-horse/386855/ Satyajit Das: Paul Volcker's Trojan HorseControlling proprietary trading may be a Trojan horse for redefining the banking reform agenda

....

The Volcker Rule does not also cover other arguably more significant risks · such as credit risk of loss on loans or liquidity risks · which have been a major problem in the current crisis.

The narrative misses the point that controlling proprietary trading may be a ·Trojan Horse· for subtly redefining the existing banking reform agenda.

A key agenda item is the reduction in the role of financial services in the broader economy. The US financial services industry·s share of total corporate profits increased to around 40 per cent in 2007 from 10 per cent in the early 1980s. Similarly, the value of the US financial services industry increased to 23 per cent of the total stock market value in 2007 from 6 per cent in the early 1980s.

Interestingly, banks suggest that trading profits are low (less than 10 per cent). This relies on the same semantic games defining ·proprietary trading·. If trading earnings are so insignificant, then why are banks resisting the proposal?

Volcker has been openly sceptical about the contribution of financial innovation to economic activity. The proposal marks a notable reversal in the emphasis on trading in financial instruments to facilitate capital formation and lower costs of capital. It also marks a shift away from market and trading-oriented economic solutions.

....

Finance always should be a handmaiden to the broader economy, not the entire economy itself. It should facilitate capital formation and risk management. Finance cannot replace (the) real industry, nor is speculation a substitute for (a) sound industry. As John Maynard Keynes warned: ·Speculators may do no harm as the bubble on a steady stream of enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill done.·

James Baker once stated: ·Never let the other fellow set the agenda.· Whatever the merits of the narrow Volcker Rule, the former Fed chairman is taking advantage of the crisis to cunningly reshape the financial reform agenda.

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Veteran_Lender
Message #1047 - 02/28/10 12:05 AM



I believe I said a while ago... it's paper. When, in the end, one group has it all it becomes useless paper. An economy needs currency. Just because we call it a dollar doesn't mean we only recognize the dollar as sole currency. In a few weeks it will be warmer and money cannot suppress nature. People won't be running out to buy buy buy... they'll be fortifying and preparing for the worst since there seems to be nothing stopping it from coming. Notably, the key legislative moves have been clear while the focus has been on healthcare. The most plausible reason would be that "cold war" transitioned to "derivative based demolition derby" where the fake movement of paper takes precedent over common living.

I was reviewing a sequence of billing statements last week on a credit tied to a derivative. For the past year the statements have grown increasingly complex and fully inaccurate. Even the bank couldn't figure out the true rate nor the accurate balance. The "complex financial component" was poorly disclosed and without any demonstration of performance. It literally is eating the entire payment, so... a loan that should be around 4% is more like 18% when you account for the derivative component.

---

Old and gray
Message #1048 - 02/28/10 08:13 AM

I'm not sure just how Das saw the Trojan Horse in there. . . But, as for the other contention

The Volcker Rule does not also cover other arguably more significant risks · such as credit risk of loss on loans or liquidity risks · which have been a major problem in the current crisis.

I believe the intent of the Volcker Rule is to re-direct the attention of the schoolboys staring out the classroom windows at the pretty girls, getting them to concentrate on the business at hand. . . the class work they should be attending to. Take away the distraction of the fast buck, gambling with the depositors' and taxpayers' money and they should turn their attention back to sound banking. That is provided they are capable of doing so.

Sound banking, of course, does not include the innovations Volcker disdains, nor, I'm sure, does it include not paying attention to risk of any nature be it liquidity, market, capital, reserve or loans. Volcker's too thorough a banker to overlook something as basic as that. (I wish I could say the same about the CEOs who led us into this mess.) Also, I believe him to be straightforward in his extreme professionalism. I don't believe I've ever heard or read anything he's issued that was ambiguous in any sense. One thing he seems to avoid is the double speak we get from people like Greenspan and Bernanke, trying to appear informed while they prove themselves near-illiterate, relying on mystic language.

The fact that

Volcker has been openly sceptical about the contribution of financial innovation to economic activity.

will not find any objection from this corner as you gentlemen are well aware. I don't have a word count on this thread, but I will testify to a great number of keystrokes that went into it's composition. And from the day Duff posted the title until today, those "innovations" were one of the thorns stuck in my foot.

I think Das, for all his cleverness and intelligence, may be running out of issues to write about and is guilty of reaching in this instance. I also believe he has taken the Volcker Rule too far astray from its intent. Volcker saw no fault with banks providing the services they do for customers; services which include handling transactions in bonds, stocks and looking after accounts other than loans and deposits. What he did state as a conflict of interest was banks engaging in the same business in competition with their clients, or issuing the "innovations" in a manner in which they are working counter to their clients' interests.

Das's article is dangerously close to claiming that Volcker would shut down all bank operations beyond taking in deposits. I don't believe anyone else has interpreted it as such to this point. But, now that Das has suggested it, anyone looking for a talking point in opposition to Volcker's Rule will certainly make use of the idea.

Without knowing the particulars of V_L's "sequence of billing statements of credit tied to a derivative" I can understand the struggle to make sense out of them. When the derivative contract requires up to a half ream of paper to state the conditions, that's considerably more than casual reading. Quite honestly unless they were involved in writing the contract, I don't believe the pros can give a precise explanation of any thing touched by a derivative. That's the built in risk of all business risks.

[Virgil Showlion]

Old and gray
Message #1049 - 02/28/10 08:15 AM

Additionally, that understated rate for that and similar loans is eating away at all the assets we own individually. As it comes out of the shadows and those dallying with the unknown traps begin to understand more thoroughly the nature and effect derivatives have on the industry and financial tools. . . including currency. . . we're due for another round of devaluation that may shock folks. I used Merrill Lynch's .22 on the dollar as the only recognized price for derivatives back a ways. That would price all derivatives globally at $150 trillion dollars, should that value hold up. Who has the currency or assets to support that load? Reduce it to 10% of the $.22 and it's still a staggering figure of $15 trillion! (Do you think the Repubs are aware of this and in anticipation of the tinkling crash on its way they continue to protest about expenditures?)

This is a credit figure that has to be satisfied somehow. Any suggestions? I know the American consumer will be paying, and still waiting for the taxpayers is a great leap in tax bills from every corner of every level of government.

I took advantage of V_L's economic barometer down the paper aisle recently. Those products that sold for $13 a few months ago are now priced closer to $18! $17 and change. That's about the 32% inflationary increase I noted a while back in food and the 30-35% devaluation of real estate in the neighborhood. All that credit is floating around and working on aggregate currency. When banks issue another loan not backed up by reserves or deposits, that's more currency created and released in circulation. The effect of loans issued a few years ago is now beginning to show up. It's become a more prickly issue by the Fed's manipulations tending to the banks tin cups and ignoring the greater dangers from doing so. The inflation will become a desperate issue in short order and we'll be back in the late seventies and early eighties fighting inflation that will not respond to controls. It's about 18 months beyond control now.

Oh, yes! . . . a house in the neighborhood that was foreclosed by the bank about a year ago finally came on the market. . . at a giveaway price. . 41% of what it sold for three years ago! (Less than equivalent houses were selling for thirty years ago!) That's not a devaluation of 32%; that's 59%! It's known in the industry that the bank does have a problem and is attempting to unload other properties at similar discount prices. The astounding thing is that to the neighborhood's knowledge, nobody has even looked at the house!

V_L's forecast may be a little behind the times. People are not now running out to buy, buy, buy. . . Even at giveaway prices. And spring is not yet here.

---

Veteran_Lender
Message #1050 - 02/28/10 12:28 PM



What the billing statement reveals O&G... is that a formally sufficient Interest-Only payment without a rate change no longer covers that cost due to fees and charges associated with a backroom obligation that is a derivative in deficit mode. The bank is incurring huge charges leveraged against the poor client and passing them through even though the means to pay them never existed. Thus in a judge's chambers, the lender is more sufficient than the lawyers in plotting future course. IMHO, it makes sense that some banks have been bolstering stock values in preparation for huge losses they cannot redistribute elsewhere. A reminder that a judge isn't paid by bank-anything, it comes from tax revenues. Without folks in homes, businesses and complexes, all public Officials will be leaning toward community salvation. Likely, local decisions will begin trumping Federal ones out of sheer necessity.



Talking about Buy Buy Buy... I read about auctions in the Bread Basket states where old farm tools fetched obscene prices. Old tools that work were going for far more than brand new junk. That's the "buying" I'm referring to.



A reminder that fighting inflation through self-sufficiency also attacks the financial terrorism issue. If you're able to do without [something imported] it trickles up to impact overall costs. Again, you'd be amazed at the prospects of counter-cyclical thinking on what supplies will be valuable during the transition from importation to indigenous sufficiency.

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Old and gray
Message #1051 - 02/28/10 08:26 PM



That "backroom obligation" will continue as the economy wobbles drunkenly through the net few generations while economists hide behind the code language in a blatant refusal to deal with realities, preferring to side with financiers as usual. We'll get smooth talk about "quantitative easing" instead of bailouts, "illiquidity" instead of insolvency, and "stress" instead of bankruptcy. In the meantime the demand of the deficit created by "innovations" that never had a chance of succeeding and never was formulated to succeed in anything but draining the circulating currency for personal enrichment will carry the big hole of debt which banks hope to cover with the credit that continues to foul the system and promise an inflation that looms uncontrollable and incapacitating for the next several generations.

In the meantime, we'll get evasive language from the "experts" who understand nothing and operate off a platform of denial to protect their personal "wealth" built on nothing substantial. It's like the song, "Everything I built was on weak and shifting sands." But, their fuzzy math is dedicated to embellishing the sands with a solidity that is absolutely hopeless.

There was an economist who spoke and wrote plainly (and whose passion was a joy to experience one on one). Murray Rothbard. He wrote a short essay (on a beat up old typewriter that had more sense built into it than all the computers in operation today) published in 1963, entitled Economic Depressions: Their Cause and Cure.

A measure of the man can be found in the opening of the article, the first four paragraphs are a stand alone gem.

We live in a world of euphemism. Undertakers have become ·morticians,· press agents are now ·public relations counsellors· and janitors have all been transformed into ·superintendents.· In every walk of life, plain facts have been wrapped in cloudy camouflage.

No less has this been true of economics. In the old days, we used to suffer nearly periodic economic crises, the sudden onset of which was called a ·panic,· and the lingering trough period after the panic was called · depression.·

The most famous depression in modern times, of course, was the one that began in a typical financial panic in 1929 and lasted until the advent of World War II. After the disaster of 1929, economists and politicians resolved that this must never happen again. The easiest way of succeeding at this resolve was, simply to define ·depressions· out of existence. From that point on, America was to suffer no further depressions. For when the next sharp depression came along, in 1937·38, the economists simply refused to use the dread name, and came up with a new, much softer-sounding word: · recession.· From that point on, we have been through quite a few recessions, but not a single depression.

But pretty soon the word · recession· also became too harsh for the delicate sensibilities of the American public. It now seems that we had our last recession in 1957·58. For since then, we have only had ·downturns,· or, even better, ·slowdowns,· or ·sidewise movements.· So be of good cheer; from now on, depressions and even recessions have been outlawed by the semantic fiat of economists; from now on, the worst that can possibly happen to us are ·slowdowns.· Such are the wonders of the ·New Economics.·

Volcker is of that class of straight-talking, no-nonsense realist. Today's bankers and economists have much to learn. We prefer to have "quantitative easing" instead of bailouts; and "illiquidity" instead of insolvency; and "credit crises" instead of bankruptcies. Bank mismanagement is a matter of "market forces" and instead of depending on taxpayer doles, we look for "market corrections". Sorry, none of it abates my anger or disappointment with the ineptitude.

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Old and gray
Message #1052 - 02/28/10 08:31 PM



So, when you mention the back office manipulation to compensate for the big hole they've dug for banking and finance which in the face of our present leadership in government, banking, finance and the scholars who should be holding the light in the dark tunnel to show the way, it now appears to be irresolvable until the inevitable default. It's unpredictable how long that will take but adding that 150 trillion dollar obligation (at 22%) attributable to the derivative debacle, or a $15 trillion dollar obligation at even 10% of that to the debt we're piling up with two or three distant raging wars and a selfish insistence that by some miracle this can be absorbed without raising taxes beyond endurance is, if not the most, one of the most ludicrous positions in the history of government.

As you suggest between the lines, banks cannot help but try to recoup some of that deficit, and it's a hopeless fantasy to suppose that interest rates can be held low and the money will appear out of nowhere. So, they do what they can, charging the customer and trying to conceal it from them at the same time. You know, I know, and a hoard of others know it won't work.

Economists who should be able to help get the message across with a few notable exceptions are living behind all kinds of shields. Rothbard noticed this back in 1963, when that essay was published in this way:

Beneath their diagrams, mathematics, and inchoate jargon, the attitude of Keynesians toward booms and bust is simplicity, even naivete, itself.

And, the thoroughly discredited Keynes is being cited more and more as having answers which are never stated because to do so would open him to ridicule at best and complete dismissal as drivel at worst. So, we go along as you point out, with

. . . formally sufficient Interest-Only payment without a rate change [which] no longer covers that cost due to fees and charges associated with a backroom obligation that is a derivative in deficit mode. The bank is incurring huge charges leveraged against the poor client and passing them through even though the means to pay them never existed.

(I apologize for taking the liberty of a slight addition to your text for the sake of clarifying my point.)



How do you provide for that lack of somewhere between $15 and $150 trillion dollars? What's the likelihood of its being resolved without default? Who's dealing with that problem now?

I do know this, for a small instance. An elderly gentleman with not too much resource discussed just one phase of his financial problems. His supplemental health insurance premium rose; his prescription insurance premium rose; he renewed three prescriptions which last year he received with no co-pay. This year, one is no longer covered by the insurance; another requires a 50% co pay (which did not exist last year; and the third required more than 50% co pay. In the meantime, interest on his recently renewed CDs now is reduced to less than half of what it was last year; and he's told there is no inflation, prices rise, and he get no consideration for Social Security.

He tells me, he's been a life-long Republican (admits to occasionally crossing over if the other candidate looked promising), but will never vote Republican again in his life.

And, he finished his story by saying how foolish and helpless he feels at this, the end of his life. He discussed an option that popped into his mind on occasion. . . life is no longer worth living when you realize how little you mean to your society.

It doesn't make me feel any better. Apparently, it means nothing to the politicians in Washington or the bankers and brokers on Wall Street.

Should their policies be supported? And, to whom can we appeal for an alternate policy?

[Virgil Showlion]

Duffminster
Message #1053 - 03/01/10 06:04 PM

As you suggest between the lines, banks cannot help but try to recoup some of that deficit, and it's a hopeless fantasy to suppose that interest rates can be held low and the money will appear out of nowhere.

What throws me off a bit is how come Japan seems to be able to have a debt to GDP which is more than double that of the US, engage in constant Quanitative Easing, and yet still seem to be in a flat to deflationary environment.

That is the argument Bernanke is likey to use as to why the USA needs even more QE than Japan and applied more agressively now because even with all the QE and debt Japan has they still face deflation.

I personally argue that the USA is different because much our debt is finananced externally, unlike Japan. Also, the US $ is for the moment the global reserve currency of choice. Also, the US has no appreciable foreign currency and the only small reserve we have is the hard cash of Gold in Fort Knox, and there are many, especially GATA, who believe that gold has already been swapped and leased forward in large part.

I would love to hear your thoughts on why the US can not successfully follow the Japanese model and how, if at all, the difference of our intial conditions and boundry values makes the outcomes of to the borrow and QE to infinity different for Japan than the US.

Duffminster

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reverendbarb
Message #1054 - 03/01/10 07:48 PM



Hi Everyone - I'm baaaaaack!! I was unemployed throughout Feb, but have now been hired back by the same company to do a new job. I even moved back to the very same cubby! I see I have a LOT of reading to catch up on in this thread.



O&G - Please don't leave us, if at all possible. We NEED you. We learn so much from you - and what you contribute on this board is GREATLY appreciated by me and many, many others. AND I'm still ready to go on that cruise with you!!

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Old and gray
Message #1055 - 03/02/10 05:48 PM



Duff

To use the vernacular. . . It's a cultural thing!

Similar (not Identical) tactics in different countries may work on occasion. But from first crack of the starting pistol, people of all nationalities begin to innovate on the cure that worked in one country, and too soon it's no longer the program or policy that solved the issue.

Starting at post # 181, the paper by Lars Jonung detailing the Swedish crisis back in the nineties was discussed. The country worked together in solving their problem. EVERYBODY! . . . and I mean the entire country (!), citizens, politicians, bureaucrats, investors, theorists, practical people. . . the entire country! went to work with the same idea in mind. They woke up, looked at reality, and devoted themselves to solving the issues facing the banks. People swallowed hard, saw their plight, said, "Alright, I'll give up my end for the good of the country," and they pulled out in three years. . about 1 1/2 years ahead of the normal schedule. Heads rolled, pride took a fall, but in the end they came out of it stronger, and in my personal opinion, nobler than they were going in.

Very simple question: Can you picture that kind of unity at work in the ego-centric oriented US? Where we can't even call on religion to band us together to help other citizens in trouble, financially or health wise? Where our first thoughts are, save my company, save my bank roll, save my status. . . save me!

We hardly have the culture that allows us to drive a mile down the road without facing egos insisting their rights of way are of prime importance.

How, then, do you get a nation of "individualists" to bond together to repair and/or prevent recurrence of something like our crisis which was a result of feeding the frenzy of ego-centricity?

Would Japan's solution (which has not yet proved to be a solution for the simple reason that they approached the problem as they imagined the US would, from the regulation point of view) work here? Do we have anything like the homogeneity of the Japanese people? Not on our best days. Not for more than a blink of an eye. As soon as we realize we·re working in unison, the foot smashes down on the brakes with the thought, that guy will never get my help!

Not too distant from my community, there's a very religious woman who thought she could do good for the under-privileged, the homeless, the destitute. She started up a camp or home to house and feed them. It was located away from any large center so it's not an intrusion on anyone else. Her life has turned into a living hell. Everybody seems to come down on her with all kinds of reasons why she shouldn't have such an operation. Completely overlooked is the fact that she does it only to help people. Apparently the majority of our society believes people should not be helped.

This attitude is not new. I said elsewhere that our economy is often regarded as Ricardian (David Ricardo, 1772-1823). In discussing wages, Ricardo had this to say of the Poor Laws, enacted a couple of hundred years ago to help the disadvantaged in Britain. He first summarized his "laws by which wages are regulated, and by which the happiness of far the greatest part of every community is governed" in this way: "wages should be left to the fair and free competition of the market, and should never be controlled by the interference of the legislature." The Poor Law was "a pernicious tendency".

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Old and gray
Message #1056 - 03/02/10 06:05 PM

In a nut shell, Ricardo criticized,

The clear and direct tendency of the poor laws, is in direct opposition to these obvious principles: it is not, as the legislature benevolently intended, to amend the condition of the poor, but to deteriorate the condition of both poor and rich; instead of making the poor rich, they are calculated to make the rich poor; and whilst the present laws are in force, it is quite in the natural order of things that the fund for the maintenance of the poor should progressively increase, till it has absorbed all the net revenue of the country, or at least so much of it as the state shall leave to us, after satisfying its own never failing demands for the public expenditure.

Chapter 5, paragraph 35, ·Principles of Political Economy and Taxation·

I think you might say that this epitomizes the prevailing domestic credo of "What's mine is mine and what's yours is mine, too."

So, you see how deleterious and destructive it is to help the unfortunate among us, unless they're bankers. This is the "pernicious tendency", and it's just one of the reasons we have an economic system more in line with Ricardian theory than with the Swedish Knut Wicksell (1851-1926), who was more "socialist" in his outlook, whose Lectures on Political Economy was not published until 1934 when we were mired in the depression. "Socialist" thinking was more fashionable during those trying times. It was acceptable to help the family next door struggling to survive.

But, it's basically culture (along with more than a modicum of bull-headedness) that would prevent us from using someone else's programs to solve our problems.

A Japanese Economist, Kazuo Ueda, Professor at the University of Tokyo, (traditionally the Japanese put the family name first so he should properly be addressed as Ueda Kazuo, but we straighten out their culture by westernizing their names), presented a paper at the Boston Fed Reserve Bank's 54th Economic Conference last October, describing the Japanese regulatory system and the changes affected to deal with the economic and financial problems that plagued them.

The Japanese public was also " 'fiercely' against 'assisting financial institutions" (as is some of our own) according to Dr Ueda. Until finally it became apparent the weaknesses and failures were greater than originally believed. Then people rallied behind the programs. Ben Bernanke must have studied the Japanese path because he's taking us there with some modifications that create a future considerably more trying than the Japanese will face. That's quite menacing in view of the fact that although there is some slight improvement, Japan is not yet out of the woods.

Japan's debt to GDP ratio is not comforting to anyone, hence the fluctuations in their currency. There is not yet assurance that their problems which were based on stock market and real estate bubbles, as was ours, are stabilizing with long term assurances. Regulation was handled by the Bank of Japan (BOJ) and the Ministry of Finance (MOF). In addition there were a few other temporary and now some more or less permanent agencies entrusted with regulation and oversight. The BOJ is the lender of last resort, but the scope of the BOJ coverage and assistance traditionally reached much further than our Fed at the start of this crisis. The BOJ included among their charges and therefore eligible to receive loans and other assistance and services the "nonbank financial institutions" such as securities companies, money market dealers and securities finance companies. They all have accounts with the BOJ, much as our banks alone had accounts with the Fed. However, I do believe that Bernanke read about their approach and thought he could adapt it to fit our situation. So, from the start their system differed, dictated no doubt by culture.

[Virgil Showlion]

Old and gray
Message #1057 - 03/02/10 06:07 PM

The extent of the losses sustained during their crisis was not of the magnitude the US is still sustaining and has not been entirely resolved. Using a dollar to yen ration of about 1 to a 100, one can quickly understand the relatively smaller problem (in numbers only!) of banks bad loan losses of 110 tn yen, of which the government absorbed about 10% and left the remainder for the banks to deal with. They have the equivalent of our FDIC in their DIC of Japan. And of course there was a bail out. . pardon me, "quantitative easing" to the tune of about 11% contribution from the government. In addition, like the Fed, the government purchased assets from the banks; about another 10 tn yen. So, added to the 10% the government absorbed originally, they have supported banks to the tune of about 30% of their total loss.

If our Fed is following the same path, we're not likely to hear a figure indicating the extent of our own losses. Using that, we could calculate how much our problem is going to cost us overall. Quick calculation, at this time, I consider about $12 tn to be the median expected cost to our government, that is, we taxpayers, to straighten this mess out, and the projection from the budget point of view is payments will continue through this coming decade. That will put us on about the same schedule of rescue as the Japanese are experiencing. So, the bankers, brokers and stock markets are rejoicing. Another ten · twelve years and we·ll be able to resume normal living. The unemployed will be back to work. . at reduced wages of course, we·ll still be tapped with debt beyond capability to cover, and we·ll be fighting for credibility in the global community, but then, if their culture can·t accept our outlook, it·s their loss.

Japan's problems started early nineties and they consider themselves to have turned it around somewhere around 2005, about twelve to fourteen

years start to a moderately resolved situation. By no means are they as stable as they were twenty or thirty years ago, though with the remarkable resource of their people, they are now, and will continue to be of substantial influence and importance to the world economy. This is remarkable from the viewpoint of what we are attempting with less determination and with less cooperation from the different sectors, public and private.

I'd characterize our policy as waiting for the wind to change direction and blow our troubles away.



Note: the above was posted in response to reverendbarb's request.



Congratulations on your good turn of fortune, reverendbarb.



Long posts cause my fingertips to hurt from the typing. And, unfortunately, I never learned how to be abruptly succinct. My family spoiled me by always encouraging me to speak my piece. Can't break the habit. So, my fingers suffer.

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Old and gray
Message #1058 - 03/02/10 06:30 PM



Duff,

The above is about the start of it. Were I to continue the path would follow the same general direction, namely, how do the Japanese differ in their regard for their citizens, in their response to citizen reaction, and in support of their citizens needs. It's not the same as ours. In Japan, when things tighten up, everybody tightens up. In the US, people like the bankers and politicians say, "Yes, Good idea. Why don't you people tighten up so we can get out of this quandry."

We've already been told that we should all save more to build capital, and that we should go out and spend more to bolster the economy. You'll have to explain that to my feeble, old mind, which sees that as an irresolvable conundrum.

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reverendbarb
Message #1059 - 03/02/10 07:51 PM

We've already been told that we should all save more to build capital, and that we should go out and spend more to bolster the economy. You'll have to explain that to my feeble, old mind, which sees that as an irresolvable conundrum.

I'm glad it isn't just MY old, feeble mind which has trouble figuring out that conumdrum!!

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Veteran_Lender
Message #1060 - 03/02/10 11:51 PM

Add this to that conundrum... [articles.moneycentral.msn.com/Investing/MutualFunds/why-you-mustnt-give-up-on-stocks.aspx] Don't give up on stocks... an article pleading why- after losing your shirts to nefarious Wall Streeters with super-computers- you should pony up what's left and hope for the best. Not. Those with anything left should be "positioning" for good strategic real estate buys and becoming venture capital for the businesses we'll need to create to offset the crumbling hulls of those turned platform and/or have cooked the books to ashes. On a daily basis we all read--- NO PROGRESS and that is due mainly to the presence of a funded not functional stock market. Greener pastures lie entirely off from Wall Street.

[Virgil Showlion]

Old and gray
Message #1061 - 03/03/10 01:30 AM



V_L

You know as well as anyone and better than most that there can be no progress because of the cost of debt.

People are of the mindset that a debt is incurred once, the problem is solved and we return to normal, forgetting completely about the lingering cost-burden of the payback.

Takes us back to Duff's question of how Japan has such a larger debt burden in proportion to their GDP than does the US. It's because they are so much further down the road than we are. In time, when we begin to see how much compound interest is accumulating and feel the surge of inflationary forces on interest rates, and try to cope with the debt waiting for us during the next 8 or 10 years, we'll see how expensive it is. Instead of 12% of GDP, we'll be looking at heavy debt a good deal more than 50% of GDP, trying to pay that off with cheaper money but finding that it grows faster than we can pay no matter how much tax rates are boosted. Higher taxes are unavoidable, and we all understand that the friendliest voices with enough surplus cash to grease the palms of the campaigning politicians will carry the lightest burden.

Those who have hopes that Wall Street will prepare them for their tax obligations will find how much of a sting disappointment carries.

They'll disbelieve the realities, go on playing with stocks and crow about their gains. But, no matter how much they gain, they'll never get into the bracket that wins favor with the tax collector. If you're out of the top three or five percent, you don't stand a chance of avoiding the hammer. In that group, they don't pay, they collect. That should be clear enough by now even if memory extends back no more than three or four years.

Those with a dictionary should look up the words "oligopoly", "oligarchy". General opinion is that these are descriptive of privileged people, aristocracy. That's the current connotation. I grew up in times when the words had other meanings. The Greek root of the word, ironically, is oligo- which means more succinctly "ruin". Quite fitting.

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Veteran_Lender
Message #1062 - 03/03/10 12:36 PM

The Greek root of the word, ironically, is oligo- which means more succinctly "ruin". Quite fitting.

The key is understanding what- gets ruined. Very recently, children stopped being taught how to score well on tests and back to actually learning things (how novel). I was fascinated by my child's recounting of the years leading to World War I. While the parallels are indeed sobering, subtle changes occur which give us a ray or two of sunshine. The era force-shut the power of farm over industry, family monarchy over forms of people or person government, fear of to applied use of technology and innovation. It should occur to us all that such large-scale shift requires pain but recognizing a) that we are in a shift not a vortex of doom, and b) that each shift appears to have a target or flavor. In this case, it is finance and all that financiers have welded to an order and control. The clock ticks on the rich while the poor endure more (of the same). I'm in agreement about the over-control factor but differ on what the actual prize is.

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decoy409
Message #1063 - 03/03/10 05:15 PM

Social engineering (political science) [en.wikipedia.org/wiki/Social_engineering_(political_science] en.wikipedia.org/wiki/Social_engineering_(political_science)

O&G , this certainly seems like the old college try as in 'Piecemetal Approach'. Used throughout countries over time to shape and mold the individual citizen.

Building empty towns and cities such as China has to show a strength of GDP growth is just crazy as it has resulted in nothing more than loss of money. However on the other hand gives the illusion of growth.

When the storm subsides, we may still be operating on the flawed assumptions, the imperfect mechanism or the incompetent institution, still filled with all the weaknesses or faults that caused the last crisis.

The storm is not going to subside as there is no truth to the matters that present us. Without honesty and transparency the Sham WoW will continue.

When you study the piecemetal approach a favorite is planting seed of destruction. As they grow so do the problems,they intertwine and suffocate any chance of a true recovery (depending who you are and what you call recovery). Examples of these seeds you do not have to look far for,why the removal of Glass Stiegel and Basil 1 and 2 are excellent examples as well as Free Trade. such things have done no more than cripple a already delicate structure wobbling. It was known far in advance by removal (or appling of these things mentioned as examples) of what would become. Some good experts seen what would happen and did warn everyone but they were called out and then ridiculed and poked on television and other news sources. They were discredited for there view which hence was a TRUE REALITY.

When you battle the cockroaches do you allow some to get away? Not if you can help it. So without honesty and transparency nothing changes except for what those seeds wreck havoc on next or 'the piecemetal approach'.

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Old and gray
Message #1064 - 03/03/10 07:01 PM



V_L

. . . we are in a shift not a vortex of doom, and b) that each shift appears to have a target or flavor. In this case, it is finance and all that financiers have welded to an order and control.

Shift is a kind characterization.

One of the oldest tenets of economic studies is that any capital venture will eventually strangle itself. (That's my characterization.) Market forces, formed by tastes (i.e., fashion) or suddenly restricted supply which, out of necessity, will divert accustomed or habitual demand, or simply rise in costs by either inflation or wage demands of another sort all exert their force on profits. The older the industry, the more likely it's strangling itself. One of my favorite lines in my consulting capacity was that everything has a life cycle, what are you doing to prepare for the death of your current product or activity? It's true, it's life is limited if the venture is not flexible and ready for change. Sometimes that life is brief, sometimes extended.

The same goes for invested capital. When those forces I listed above come into play and returns diminish, capital finds itself less attracted to the venture. Every time a new force exposes itself, the capitalist has to invest more. Believe it when I say that there comes a time that investing additional capital reduces the profit in any operation unless the entire operation, management to labor, is flexible enough to alter its operational mode or its product (which is not as easy as it might sound). I had a crazy chart depicting this that I'd draw for a struggling client and more than once the eyes would open wide and the response was, "Yeah! Yeah, that's it! That's what's happening to my investment! Where is it going?"

It was in the books, but they weren't looking for reduction in profit when prices were rising, everything seemed to be humming along, ratios all seemed to be in line and the future secured. But, with a little of the right kind of probing in the books, it could be demonstrated clearly that additional investment would actually yield less profit. The older the company, the more set it is on a product line,the more visible the trend.

This is what has been happening to the US for the last 40 or 45 years. The sequence has caused capital to abandon one area after another, operating on that ever slimmer profit margin as it has been, and moving off in search of something with a higher yield. We've now moved away from production to service our needs. We all know the consequences of that - dependence on foreign suppliers who are now enriching themselves at our expense which is funded not by our wealth, but by our debt.

Each generation believes they've discovered another means of generating profit. We gravitated toward the money businesses - that very fascinating triumvirate of FIRE - Finance, Insurance and Real Estate. All well and good except that one of the three legs failed and our stool won't support us anymore. In the interim, in the process of turning our investment interests from production to strictly financial manipulation we've lost sense of what is responsible for creating wealth and what is a scam. We've rid ourselves of the restricting rules and the conscience that calls for the use of common sense and a resulting, reasonable profit margin.

If we become dependent on other countries for the necessities we no longer provide for ourselves, the worst policy is to give up all interest in producing anything, which we've done when we turned to the intellectual financial game in the world's money pit. That, too, is subject to the slow, inexorable, and ultimate reduction of profit, until capital has no where else to go. Where? Back to production industry? We've forgotten how to do that profitably, or we no longer understand the nature of that game. Couldn't run a plant if our life depended on it - and, it does. We are at the mercy of our suppliers and they have no intention of being kind to us, since they, too, are subject to the same slow squeeze that did us in.

[Virgil Showlion]

Old and gray
Message #1065 - 03/03/10 07:03 PM



When finance, or, more exactly, exchanging debt, becomes 40% of GDP, and debt applied as a solution continues on the path to overwhelming us, the writing is on the wall, the ceiling, in the sky, and should be in the minds of our economists night and day. Unfortunately, it's so with too few of them. 60% would be too few. . and I don't believe that anywhere near 60% of them are concerned. . not in the USA! We should ask ourselves why any of the others would allow the destruction to take place without a shout or admonition.

Bearing in mind that the finance industry operates facing the same fate of diminishing returns we've mentioned above, what do we have for a substitute for that capital except to leave the country in search of more promising ventures. And, it doesn't take an IQ of 170 to recognize the destitution that would leave for those left behind. . . our children and their offspring among them.

The employment of capital in a beneficial manner is a difficult undertaking. Families with money start educating their children from the earliest of ages about the value, uses, and benefits of capital and the dangers of the lure of money. These are and always will be two separate issues. At the rate they are pursuing the accumulation and subsequent squandering, today's people have no understanding of or interest in capital. That's why I've been saying along the way that the US is no longer a nation of capitalists; that the speculators have been busy diverting capital and that why we have no options left, nothing to invest, nothing in which to invest. We simply play with money in the big money game. Our taxes are not geared toward serving the purpose of capital, but to serve the moneyed players. Our economy has abandoned everything but the money games. . . and, that, too, will soon expire.

With that gone, the players will be off to other venues with their money, and, if they're able, corrupt other countries, other sectors. In which case, a withered US will not be able to support the value of its currency. Like a third world country, we'll be back to square one, nearly reduced to tilling soil to begin rebuilding a capital base. After all, nearly all of what was once 40% of our capital will have moved elsewhere for the easier pickins'. . . China, maybe?

I didn't vote for oligopoly. . . in the truer, less flattering sense.

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Old and gray
Message #1066 - 03/03/10 07:08 PM



BTW, V_L, it's the most gratifying experience for a parent to see their children learn and grow. Each little bit becomes an unforgettable part of you. That's the only worthwhile thing in the long run.

Good for you that you've chosen a place where they can learn.

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schrizo
Message #1067 - 03/04/10 12:51 AM



I have been reading the posts above and must ask/ isn't this the inevitable costs for lifting all boats?? If we have some responsibility for bringing the poorer countries into a situation where their people can live better it seems to me that production would have to shift from here to there. We are basically living better on the backs of the poor. Of course we lose our well paying blue collar jobs but we can afford to buy more of the things we want.

I am not sure this could play out any other way. We are evolving and so is our venture capital.

I enjoy reading your post O&G and would ask you to envision an outcome in which this all works out for the best. As a person (like myself) approaches the last 8 years of my working life what would you do with any existing capital at this point?? There are annuities that guarantee 7% return minimum with unlimited upside for about 2% costs. So for as negative as this future seems, we (I) must make choices to ensure self reliance. I don't think that means stuffing a shoe box with devalued dollars in an inflationary environment. Thanks for your great input.

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Old and gray
Message #1068 - 03/04/10 06:01 AM



Schrizo



I'm not a financial advisor, having failed miserably at being specific on more than one occasion when someone drew me out. It works with family, but I hesitate in other circumstances. I talk generalities nowadays. I recall having heard John Kenneth Galbraith saying something like, "Stock Market? Don't ask me about the stock market! I've given up trying to make sense out of that. . . long ago." If someone of his stature takes that attitude, who am I to disregard the significance?




It's difficult to throw out suggestions. Eight years until retirement leaves not much time to prepare. I'd say generally, if what you've been doing has yielded positive results, keep at it. You're not a newcomer with only eight years to retirement, so you must have learned something that nudges you once in a while. Instinct is not to be taken lightly, there's invaluable experience alongside it.

But, not knowing more of personalities, family situations, income, what sum is available for investment, whether you're considering one time investment or on a continuing basis, etc., etc., there's little chance for intelligent recommendations. There's an article about Warren Buffet on the home page of msn.com at this time.

Buffett's tips for new investors

The world's most famous investor lays out his basic principles in this year's annual letter to Berkshire Hathaway shareholders.

The article is courtesy of the WSJ. Among his queries are, "What's your tolerance for risk?" It's a basic list of things to consider for initiates mostly. But, they hold true for experienced people as well. Sometimes we tend to overlook the obvious basics. You might get some ideas from the article.




I will comment on annuities in a very general way: I personally do not like them, therefore, I wouldn't recommend them. There's too much commission for the sales person in addition to management fees. Through the years, a few contacts of mine were near violent in discussing personal experiences over the long term. I was bothered enough to move back a step of tw

[Virgil Showlion]

Old and gray
Message #1069 - 03/04/10 06:04 AM



I was bothered enough to move back a step of two lest I got caught up in the mini-cyclone!

Before accepting the 7% as gospel, I'd suggest you make detailed inquiry about when that 7% applies, what's deducted from it and what happens after those first few years pass. Also, when do you have access to your money.



As for your first two paragraphs dealing with developing countries and international trade: I believe I'm probably pushing the limits of what is appropriate to Market Talk now. Management has been gracious enough to allow it, I don't want to suffer banishment or relegation to some hinterland where only my echo answers.

I believe the subject matter to this point, banks, available funds, the stability, liquidity, risk (or their opposites) in the current economic environment are directly relevant to market performance. The entire scene is so unsettled that no one can really choose an investment with confidence. I don't see it doing anything other than bouncing around for a few years yet. Others posting have the same outlook. That's easily deducted from reading through the variety of threads posted here.

When it comes to international trade, the development of 2nd and 3rd world countries. . . ?? I'm not so confident it belongs here. Not that I'm without ideas or experience in that area. Due to circumstances of early development, I acquired a reputation that followed me throughout my career, starting while I was still in grammar school, if that's believable. It hasn't left me since. For a while it was the focal point of my studies, here and abroad.

I'd love to discuss it and still do so with close friends and associates when prompted, but, it wouldn't be appropriate here.

I'll just say that as far as your first two paragraphs went, they are well thought out and sound.



I'll have to stop here before enthusiasm prompts me to violate my resolve.



Good to hear from you again, schrizo.

---

dr puma
Message #1070 - 03/04/10 07:03 AM

There are alternatives. I just read about a dentist who got sick of it all and quit. His aim was to drop out of the social and financial morass as much as possible, while enjoying life in a better way. He ended up on the lower Mississippi river where he enjoys rowing a wooden boat and basically lives on it. Needless to say, the practically daily boat rowing keeps him rather fit. Apparently the boat provides both shelter and transportation and food is findable, shall we say? Perhaps he likes to eat fish a lot? The narrative didn't speak of it. If one is going to drop out of the rat race, it does help to have a plan. Just like certain of the homeless, some are better at it than others. No doubt, many former home-owners are learning to sharpen their homeless skills right now. Some prefer to be called urban campers, which has a nice ring to it. There are also those who opt for voluntary poverty and they may be smarter than we think. For those who have been living in various of these alternative lifestyles, the current Depression probably doesn't mean very much to them. It means they have a lot in common with the very wealthy that way.

---

flying higher...............
Message #1071 - 03/04/10 07:30 PM



Attorney General Eric Holder was just on Fox News saying the following:



"The pendulum is starting to swing, America run by Progressives, it's about to happen and we're going to be looking for people who share our values". So basically, we are being warned and not a lot of people get what he's saying. Every American will begin to lose more and more of their rights. We as Americans have been played like suckers by the Progressives. They will slowly nudge us into their ways. There is NO regulation as Obama promised but he did say that this administration would be transparent, and yes they have been because people are to starting to see right through them!



Who in their right mind would let this happen to our Constitution? Who is in charge of protecting our Constitution and what are the Ramifications if they don't?

---

schrizo
Message #1072 - 03/04/10 08:24 PM



Well O&G I am not sure how discussing the shifting labor load to Korea or Vietnam is not an appropriate subject for this message board. If it is ok to discuss the impact of rising oil prices why not the impact of shifting labor forces??

No matter, there are many of us approaching retirement and you sharing your views should not influence what an individual does. I, for one, am looking for someone with an idea for what 20 years down the road will look like.. There may be many ideas and sharing them would allow for a person to either build on them, reject them or accept them as plausible.

The writer ahead of me is speaking about progressives and how bad it is they are in power. I don't really understand the jest of it.

Dr. Puma gave a detailed alternative to my current path. Though that is not for me, I can see how that might appeal to another.

Anyway I will continue to read this thread as it seems void of the nonsense crammed into so many of these threads. Please share the good news as well as the bad. Some of us have to live in this world and make the most of it.

[Virgil Showlion]

flying higher...............
Message #1073 - 03/04/10 10:20 PM

The writer ahead of me is speaking about progressives and how bad it is they are in power. I don't really understand the jest of it.

THE PROGRESSIVE MOVEMENT

The Progressive Movement began late in the 19th Century. Its Central Tenets are Statism, Income Redistribution, Unionism, Government Management of the Economy, womb to tomb provision for its citizens, and a Libertine Social Policy. To accomplish these aims, The Progressive Movement believes in State/Government Ownership of Businesses·instead of Entrepreneurial Free Enterprise; Central Planning by the Government of the supply of goods and services, including fixing prices of wages, and of goods and services·instead of Free Market Capitalism; That all Citizens should have equal wealth except for the Elite Rulers; And that Sovereignty does not belong to Individual Citizens·but that the People only exist for the benefit of the National State.



Various large parts of this Ideology are identical to Socialism and Fascism, including the ideas that the use of courts, bureaucracies·even the police and military·should be used to accomplish goals that would never be approved by a Democracy or a Republic (such as The United States of America under its current Constitution).

COMMUNITY ORGANIZING

A more recent champion of The Progressive Movement is Saul Alinsky. Alinsky is the father of the [hubpages.com/hub/Mortgage-Crisis-caused-Worldwide-Financial-Meltdown] modern community organizing movement, of which ACORN is a prominent example. One of his key philosophies is for a community organization to claim non-partisanship, in order to receive grants from the government (of monies confiscated from taxpayers) that are illegal to be given to a partisan group.



This is obviously a sham, since none of their stated goals could be remotely described as Conservative, and their members vote for Democrats in elections virtually 100%. In effect, they use the wages of Conservatives to fight against them and everything they believe in.

Taking a new step is what people fear most. Any revolutionary change must be preceded by a passive, affirmative, non-challenging attitude toward change among the mass of our people. They must feel so frustrated, so defeated, so lost, so futureless in the prevailing system that they are willing to let go of the past and change the future." And finally this, "Our rebels have contemptuously rejected the values and the way of life of the middle class."

---

sangria
Message #1074 - 03/05/10 12:51 AM



You know, that's been creeping me out for a while, "Don't give up on the stock market." There seems to be a daily plethora of boo yah articles on the MSN pages about how to invest. They seem to indicate that you are not using the right criteria to select your securities and that they have a better one. But, I have not seen one sentence mirroring Cramer once yelling "Sell everything." You would think at least one article would advocate staying out of the market. The MSN pages are very pro stock market, so I assume the powers behind them still have a lot of garbage left in their portfolios that they would love to unload on some damn fool.

---

schrizo
Message #1075 - 03/05/10 02:35 AM



MSN is just playing the percentages. There stats are for over a 100 years of stock investing. I don't see anything deceptive in that. They cherry pick the stats but they don't lie. Also, after reading Jubak or Fleckenstein they stress caution with stocks. But I must agree there is a lot of cheerleading going on. They always drag out Buffet when times get sketchy.

When Fleckenstein starts to freak out I begin to worry. As long as he is on the fence I smell no rats.

I see no good in spreading fear but it should always be buyer beware.

---

schrizo
Message #1076 - 03/05/10 02:40 AM

Thanks for the info on the progressives. It would seem to me that if you oppose the philosophy you would let nature take its course as in survival of the fittest. I am not sure I want to live in that jungle with all the guns on the streets. Government does not have to be all bad.

[Virgil Showlion]

rocking-v
Message #1077 - 03/05/10 04:24 PM



rocking-v is a she...that being said I get no $$$ for my site but it contains an incredible amount of information...I read everything I can put my hands on in order to try and take it to the masses...I have been doing this for over a year now...MANY more people than the ones on this string need to understand what is going on...never dismiss a source of info...especially when it's been collected from all over the world...It's great to educate a few but if the sheeple don't wake up and smell the coffee soon...their will be dire consequences...a paticular period of time to watch is Greece's deadline...watch the markets...They are being highly manipulated again...was a mod here for 6 yrs or so on these boards for 8 yrs...



~jude

---

rocking-v
Message #1078 - 03/05/10 04:35 PM



About Geithner who has some explaining to do...By [www.americanthinker.com/david_yerushalmi/] David Yerushalmi

Specifically, the deal Geithner put together in September 2008 was for the NY FED to pour up to $85 billion of debt funding into AIG to solve its liquidity crisis as the Credit Default Swap counterparties, the banks which had insured themselves against the [www.wikinvest.com/concept/Subprime_lending] sub-prime mortgagemeltdown, demanded payments under their AIG insurance policies. AIG ended up drawing down $60 billion almost overnight.


But Geithner was not content with a straight debt deal where AIG promised to pay back principal and interest and handed over almost all of its assets as collateral. Geithner wanted real ownership and control (77.9%, to be exact) of AIG·s equity and the voting rights to go along with that.


The problem Geithner knew he had to confront, however, was that the FED was not authorized to take ownership in AIG or any other financial institution. The law authorized the FED only to loan money and take collateral. While the FED might end up with ownership after a default and foreclosure on the collateral, the Federal Reserve Act does not authorize the NY Fed to structure the debt deal with an equity piece. The Criminal Artifice


So what did Geithner do? He took equity, but he used a fictitious ·Trust· to accomplish that which he could not do legally. The AIG Credit Facility Trust has three so-called independent, non-governmental trustees owning the 77.9% of the legal interests of AIG, and the Trust agreement assigns the U.S. Treasury the beneficial interests in the 77.9%. The highly-touted ·independence· of the trustees is quite obviously critical to save the Trust from the claim that it is merely a ruse for FED ownership and control.


But there is only one problem with this Trust structure: It is invalid and illegal for two important reasons, not the least of which is that its independence is nonexistent.


Specifically, the Trust Agreement includes a hardly-noticed section 1.03, which gives the FED absolute authority over the Trust·s existence and its terms, effectively granting the FED control over the actions of the trustees. By any legal definition, this is not a valid independent trust. This means, at the very least, that the FED is the real owner of the legal interests in 77.9% of AIG·s equity, and this is, as Geithner himself testified before the Senate Banking Committee in April 2008, not legal.


But the Trust·s infirmities do not stop at its lack of independence. The Trust Agreement also assigns the beneficial interests to the U.S. Treasury as the Trust·s beneficiary. This assignment is patently invalid because a trust beneficiary must be a person or entity that can own title to things in its own name. But the U.S. Treasury is · by statute, by case law, and by actual fact · nothing more than a bank account or depository for things owned by the U.S. government. And a bank account cannot own anything.

---

Old and gray
Message #1079 - 03/05/10 04:36 PM



Well, something enticed a learned woman to return. Welcome.

(I returned to the former post and made a correction. Sorry! Too presumptuous of me, based on self-centered orientation.)

---

cyborg1939
Message #1080 - 03/06/10 10:18 PM



Re: " tax revisions"



Question: How can it be that Warren Buffett claims he pays a lower tax percentages than the secretary in his office? HOW DO THE SMART ONES---AND THE RICH ONES---arrange this?



Thank for for edification on this....I am sure it interests many many US citizens.



Cyborg.

[Virgil Showlion]

HappyDaysareHere
Message #1081 - 03/07/10 03:40 AM

Buffet and those with the ability to pay, get the good lawyers, those who know how to add and - more importantly, - subtract! We, on the other hand, (if we could afford it) get lawyers who fill out tax returns so that when the column should total 1.00, somehow 7.481 shows up and we get the penalty. Plus, teams are put to work to research for those all important loopholes ahead of time, arrangements are made, and, when tax time rolls around, their ducks are already in place. We play catch up.

---

frank the impaler
Message #1082 - 03/12/10 03:18 AM

Schrizo-there are annuities that will pay you 10% for ten years guaranteed to double your money...or to pay you that 10% for ten years with a lower M/E than 2%...my 2 cents

---

schrizo
Message #1083 - 03/12/10 11:32 AM

I just signed up for a 7% guarantee yesterday. Wished I'd heard from you earlier. Thanks.

---

Old and gray
Message #1084 - 03/12/10 03:10 PM



schrizo



In response to your message # 1067 and the implied question of consequences of international trade with emerging countries:



Short term there's a market advantage to the more advanced countries through importation of cheaper goods. Long term job loss due to production cuts in that particular field are felt and there is an "leakage" of capital from two aspects.



First, when a segment of the population is out of work or reduced to a lower level of income (which is the usual case) over protracted periods, earnings and eventually savings is effected and opportunity for growing new capital is gone. This also creates diminution of the standard of living in the importing country and increase in the standards of the exporting country.



Second, When investors hear of the opportunities in a growing or emerging market they leave the older markets, which means they take their capital out and look for the more favorable volatility of new growth. (Better opportunity to increase your net worth faster.)



This becomes obvious when the executive class gradually shows less interest in production and more to keep their resources active and productive. They turn more toward investment and finance. We've seen it over the long haul (I have: over eight, closing in on the completion of nine, decades). There's no guarantee that had the nation tended to the factories and stores, they would have avoided boom/bust cycles, but the advantage of investing in your own activities has more control, stability and promise to it than the uncertainty of political unrest or new commercial development (this includes physical plant, regulatory systems and moral outlook) in an emerging country.

Few of the results implied are a matter of short term reality. You mention oil markets. It took the mid-East 50 years to come around to confiscating and nationalizing the oil fields developed by foreign capital. That was quite a blow to the investors. It could be justified on the basis that during the fifty years, their investment was recouped several times over, but, it was gone. Also, there is the dependency issue. We grew dependent on cheap oil. Cheap imported oil was a powerful argument that we needn't devote ourselves to developing technology in the event resources were spent or cut off for some unanticipated political reason.

Reversals do not all need fifty years to actualize. The more volatile the area politically, the less future in the safety of the investment. Also, the sooner the emerging country realizes that they are allowing profits to escape and that those profits represent capital for additional growth, the sooner they'll discover some means of preventing the leak. I don't know current laws regarding foreign ventures taking their profit out of the UK, but not too many years ago, there were restrictions. UK realized that their currency and capital were being drained so they erected barriers. Any sovereignty can do the same. Safety of investments in foreign lands are more dependent on the confidence and competence of that nation's leadership than in the stability of the corporation or venture in which investors choose to participate. If they feel confident they can control the foreigners, (sometimes sharing in the proceeds does that for a while) a nation will allow the incursion with a warm welcome. It is a gamble.

But, what are the consequences of long term dependence on other countries when the lure of cheap imports is too great to resist? Eventually, the emerging country begins to accumulate capital and the richer, older nation's capital is correspondingly depleted. That means that there is, if not a role reversal, a lower standard of living for the older and a better standard of living for the emerging country.

It's that, and you then have the Chairman of the Fed blaming emerging countries savings habits for the destructive financial peccadilloes of the bankers and financiers that throw our nation and the world into panic.



This is the end of treating International trade from this end.

[Virgil Showlion]

schrizo
Message #1085 - 03/12/10 09:10 PM



Thank you O&G for a very logical explanation of the shifting of wealth. Then I am wondering about the argument that we cannot isolate ourselves from the rest of the world's trading partners. Do we become selective with whom we trade??

I heard a fellow speaking on Bloomberg radio this week about our equities markets and the future. He says corporations cannot become more productive and they cannot layoff more workers anymore than they have and continue to increase profits. And as long as 20 million people are without work they cannot increase sales. So, he says the next thing that will be done to increase profits will be to reduce wages. And with reduced wages the value of housing will continue to decline until there is a balance between what a worker gets paid and what they can afford for housing. It was rather sobering and at the same time good to hear some logic about the eventual balance between getting people back to work, getting housing moving and what it will take to keep profits up in industry thereby keeping the equities markets alive and sane.

Anyway, my father is 91 and still sharp and he is finding it difficult to find good conversation with his peers now. It is good to see another with such good writing skills continuing to search for truth and justice. Thanks.

---

schrizo
Message #1086 - 03/12/10 11:06 PM



Frank the I. Please give me the name of the investment firm that offers 10%. I would at least like to let my counselor know that there is something better than he has. The one thing I like about this investment is that it locks in the best quarter of the year for its guarantee. Where I am at now it locks in whatever the market is at on the anniversary day of the contract. I am sure you know all about this but it is new to me. Thanks for your input.

---

Old and gray
Message #1087 - 03/13/10 01:22 AM

. . . corporations cannot become more productive and they cannot layoff more workers anymore than they have and continue to increase profits.

That's a very old argument. David Ricardo (mentioned before) spent a lot of time writing about the relationship between landlords, tenant farmers and labor. He aligned them with Rent, Profits, and Wages, respectively and then proceeded to introduce other things, like taxes and market conditions that change the picture. When additional expense was added into the growing complexity of his portrayal of the workplace, (making no distinction between manufacture and farming) he concluded that the group hit most severely were the middle-men, those living off the profit of a venture. And, the severest of all losses occurred when market conditions were such that labor had to have an increase in wages in order to survive. Taxes, if they were equitable, hit everyone equally. Church tithes, which were common in his days, hit the middle-man, or farmer, hard, too; but most of Ricardo's pages devoted to the issue of who hit the profit-takers the hardest were directed toward laborers, not as part of a conspiracy, but as a natural course of events.

In today's crisis the multiple between top echelon and workers' compensation is unconscionable to the point where executives are bleeding corporations dry. This is not Ricardo's natural course of events! When I was in the workforce as a wage earner, for two employers, I made more than the presidents took home on a weekly basis. Neither time was I an officer of the company. Could you imagine that today? That's how times have changed. Today, the profit margin after those executive treasury raids, leaves less percentagewise for stockholders or the workers. . . since 1929. So, along comes someone broadcasting that corporations cannot increase profits. Sure, they can! But, they don't want to take the necessary steps. It would be less in their pockets.

During my life time I saw gratitude in owner-entrepreneurs, (and humility in some) not all of them, but a significant number. I'd guess your father did, too. In order to live in the splendor you see in nearly every neighborhood today, your family had to be moneyed! Now, one man operations call for five bedroom houses, several cars in the garage and designer clothes. Yes, some have worked hard to provide for themselves. But, as our money is cheapened and corporate executives concentrate on finance rather than production, somebody is losing sight of the donuts and chasing after the holes! And, that's what results. . . an empty nothing! For which they reward themselves beyond reason for the corrupted goals they set for themselves. Always at someone else's expense.

The burden is coming down on those below the top level aristocrats (by self-proclamation). It's a systematic default! Two ways to go about this: either just cut wages (which may bring on riots and strikes - the thirties all over again), or inflate the money. In the latter case you'll only get whatever percentage of value from the buck the leaders decide on. They're in process of doing just that. Of course, they'll explain away the situation by saying that first, there's nothing they can do about inflation, that's the "government's" responsibility and the government will say it's "market forces", and so on in the never-ending circle; and secondly, they'll say they can't afford to raise wages beyond current levels because "the market is stagnant". . too many people laid off unable to buy anything. So, workers suffer wages that buy some fraction of what they did previously, managers get their raises and profits soar again. Nothing new in that process, it's been going on since before I was here. I've seen it, so has your Dad, many times over.

---

Old and gray
Message #1088 - 03/13/10 01:28 AM



A poster asked for some good news for a change. Was that you? Of course, we all like to hear good news. But, what we should be busy doing is making our own good news in our own private lives. No matter what the system. . booms and busts have always been with us and always will be. It's more a result of our "herd" instincts, or "mob" psychology. In commerce we all do the same thing. We see the same opportunities and when they appear, it's like passengers on a boat: the attraction is on one side so they all rush over for an advantage and the boat capsizes. That, obviously, is the bust. The boom restarts when we right the ship, climb back aboard, dry out and resume our journey. I don't believe it will ever be any different, even though next time it might not be a mermaid we rush to see, maybe a sea monster, or, just a lump floating in the ocean. It doesn't matter.

They mention five major "panics" since 1929, but I counted many more than that during my working career. There were different reasons for the panic: in addition to the obvious wars, changing the money standard, oil, and then the series of bank frauds from about 1980 on; unmentioned are the insurance problems, real estate surges and deflations we've gone through in between; the market deflations, the inflationary monetary defaults we've suffered through; the shifting of capital investments that have caused periodic unemployment disruptions and shortages of necessities and price rises. The list goes on. What else can you do if you're raising a family but work through it and ignore it? Another periodic thorn in the side. . . another of the "thousand slings and arrows". . Sooner than you think, we'll pull out of it, make the adjustments needed, and go on.

I always encouraged my children to ignore bad times, because the next cycle will be better. Lose a job, there's another one waiting for you with more recognition, more compensation or better partners. Make an unwanted change? Things must be better where you're going. It must have worked. They suffered through the difficult times along with others and still march along.

When does it get better? Can it ever? It's been going on forever. It repeats itself. But, that doesn't mean you can't find enough to enjoy while you're here. Find the right people, cultivate the interests, and don't get down on yourself too much. They call that "making the best of" . . . whatever.

Someday, someway, we might get lucky and learn something.

[Virgil Showlion]

schrizo
Message #1089 - 03/13/10 02:20 AM



Yes it was me that asked for some good news and you have given it. Of course, I have suffered with low wages for a lifetime so these days are no worse. I think I just want to have some hope to pass on to those behind me as they gripe about having to support my old age.

The answer to how a corporation can increase profits should have be obvious to me but it escaped me until you mentioned the uneven compensation between labor and management. If management were to give then maybe labor could sustain and profits will still survive. I never really considered the possibility that profits might come from management taking less.

Nice review of history. Sounds like we are in the water now as the boat has tipped over. Boom and bust.

---

frank the impaler
Message #1090 - 03/14/10 02:17 AM

Schrizo-Nationwide Life Ins...it's the only annuity company I use...very good ratings...low costs....high quality and reputation...and you can pick the allocations from the choice's they offer or your guy can plug in his own...or use a third party...with the guarantee!

---

schrizo
Message #1091 - 03/14/10 04:08 PM

Thanks Frank. I appreciate your input.

---

neohguy
Message #1092 - 03/16/10 12:10 PM



Old and gray talked about this type of mind set earlier in this thread:

[www.huffingtonpost.com/2010/03/14/michael-lewis-wall-street_n_498690.html] www.huffingtonpost.com/2010/03/14/michael-lewis-wall-street_n_498690.html [www.huffingtonpost.com/2010/03/14/michael-lewis-wall-street_n_498690.html] Michael Lewis: Wall Street Collapse A Story Of 'Mass Delusion' (VIDEO)

It may be tempting to think Wall Street is full of criminals who got off easy during the financial crisis.

But bestselling author Michael Lewis cautions against such an easy conclusion.

"I think the story is much more interesting than that," he said during an interview on CBS's 60 Minutes. "I think it's a story of mass delusion."

The former bond trader is releasing a book this week called The Big Short: Inside the Doomsday Machine. According to CBS, the result of his 18-month investigation attempts to explain, "how some of Wall Street's finest minds managed to destroy $1.75 trillion of wealth in the subprime mortgage markets."

Lewis told the network, "The incentives for people on Wall Street got so screwed up, that the people who worked there became blinded to their own long term interests. And because the short term interests were so overpowering. And so they behaved in ways that were antithetical to their own long term interests."

[Virgil Showlion]

Kim Andrew Lincoln
Message #1093 - 03/16/10 12:57 PM



Money was only ever intended to serve as a medium of exchange and store of future value. It is because the money changers have perverted the purpose and intent for which money was originaly created that we have all these problems today. Money is now mostly credited as debt. This is a perversion of money as money itself is not meant to make money via the charging of interest.



Therefore there can be no workable (meaning sustainable) economy where money is credited as debt.



With the implosion of our financial systems the West is now beginning to understand the implications of this. Abraham Lincoln clearly understood it, which of course, is why the illuminati banksters (NWO) had him killed.

---

Kim Andrew Lincoln
Message #1094 - 03/16/10 01:18 PM



The origins of the 'illuminati' go back to the wars in heaven described in 'Revelations in the bible' when Lucifer and his followers no longer wished to serve Gods co-creators (Humankind) because Lucifer thought that God was wrong to give man free will. Lucifer thought that man should not be allowed to learn from his mistakes and that God should control what man was allowed to do. So Lucifer went against God's will and was thrown out of heaven by Archangel Michael. He came to Earth with one third of the angels from heaven where they decided to try and prove God wrong by destroying God's children i.e. us.



Perverting the money system was chief among their list of 'to do's' in his plan to wreak havoc on Earth. Satan, incidentally, was one of Lucifers lieutenants.

---

Driftr
Message #1095 - 03/16/10 01:27 PM

"The incentives for people on Wall Street got so screwed up, that the people who worked there became blinded to their own long term interests. And because the short term interests were so overpowering. And so they behaved in ways that were antithetical to their own long term interests."

Yeah. I heard this guy talking about his book on NPR yesterday while driving home. While I agree that learning a lesson from this and preventing it from happening again is more important than locking up a few people, I don't understand why he seems to think it is an either/or question. Can't we reinstate Glass-Steagal AND investigate/lock up the bad guys?

---

schrizo
Message #1096 - 03/16/10 03:43 PM

He seemed to be confused with his message. His autism plays into some of his thinking I am sure. He made excuses for the regulators and yet found it easy to discover the weakness in the mortgage bundles himself. It was a very confused interview in my opinion. Hardly useful and very soft on white collar crime.

[Virgil Showlion]

Silver Onyx
Message #1097 - 03/16/10 05:53 PM



Between this(NPR) piece & the 60 minute segment Sun. evening, I thought there would be more public outrage. I am thinking that this whole financial calamity is too confusing for the average individual to digest..

..I too agree that Glass-Steagal re-instatement and jail time is warranted.

---

Old and gray
Message #1098 - 03/16/10 06:13 PM

At the Huffington site Neohguy linked, an article by Simon Johnson on Senator Kaufman of Delaware, who levels the claim of "fraud and potential criminal conduct at the heart of the financial crisis" is available.

That's to be found here

[www.huffingtonpost.com/simon-johnson/senator-kaufman-fraud-sti_b_500146.html] www.huffingtonpost.com/simon-johnson/senator-kaufman-fraud-sti_b_500146.html

---

Silver Onyx
Message #1099 - 03/16/10 06:58 PM



Thanks for the link Old and gray! So glad you're back with us, as I have learned so much from you. You definitely posses the wisdom & knowledge, and you are a fantastic educator!

..I have been an avid reader/lurker for years here at MT.

---

neohguy
Message #1100 - 03/16/10 07:59 PM



Thanks Old and gray (post 1098). The article says that Senator Kaufman is a on the Judiciary committee.

Who is Senator Kaufman and what power does he have in this situation? He is not a member of the Senate Banking Committee -- and if you think this is a regulatory issue, that reduces the weight of his voice.

But he is a member of the [judiciary.senate.gov/about/members.cfm] Senate Judiciary Committee and we are discussing here potential crimes --

The link to his speech is well worth reading:(he ends it with)

[kaufman.senate.gov/press/floor_statements/statement/?id=de804dbb-6dc3-4537-8c5d-81496714ed73] kaufman.senate.gov/press/floor_statements/statement/?id=de804dbb-6dc3-4537-8c5d-81496714ed73

Conclusion

Mr. President, last week·s revelations about Lehman Brothers reinforce what I·ve been saying for some time. The folly of radical deregulation has given us financial institutions that are too big to fail, too big to manage, and too big to regulate. If we have any hope of returning the rule of law to Wall Street, we need regulatory reform that addresses this central reality.

As I said more than a year ago: "At the end of the day, this is a test of whether we have one justice system in this country or two. If we don·t treat a Wall Street firm that defrauded investors of millions of dollars the same way we treat someone who stole 500 dollars from a cash register, then how can we expect our citizens to have faith in the rule of law? For our economy to work for all Americans, investors must have confidence in the honest and open functioning of our financial markets. Our markets can only flourish when Americans again trust that they are fair, transparent, and accountable to the laws."

The American people deserve no less.

[Virgil Showlion]

Duffminster
Message #1101 - 03/16/10 08:16 PM

In the spirit of this thread and for anyone new to this thread I urge this review of the events surrounding Brooksley Born, former head of the CTFC and her epic battle with the "zero regulation" school of thought, exemplified by Greenspan, Rubin, Summers, Bernanke, Geithner and Paulson among others who to this day continue to heavily influence US policy. The Dodd bill is largely smoke and mirrors designed to soothe political fires without truly addressing the major existing derivatives positions and problems and which is full of exemptions for the biggest trouble makers. The video is highly informative in my opinion:

[www.pbs.org/wgbh/pages/frontline/warning/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid] The Warning:
[www.pbs.org/wgbh/pages/frontline/warning/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid] www.pbs.org/wgbh/pages/frontline/warning/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid

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Old and gray
Message #1102 - 03/17/10 03:56 AM



Duffminster started a thread on Brooksley Born at the start of 2009 or end of 2008, the title began, "The Woman Greenspan, Rubin & Summer. . ." Haven't been able to track it down. Searched the Market Talk Index without success. Might find it if I knew how the search tools worked here.

That thread was active back when the "Treasury Real Yields . .", the germ of this thread, either just started up or was yet to begin.



Viewed the entire video. Deja vu! We need more replays of the process that led us to the brink of disaster.

And, we've already thoroughly agreed with Ms. Born that, given the fact that Congress is liable to do absolutely nothing to bring OTC derivatives under regulation, the future of the US economic system will be based on an ever-increasing amplitude of failures, one after the other until total destruction of the financial system results. (That's mentioned back there several times, too.) All for the sake of gratifying the gaming instincts of the "big boys" in banks and brokerages. Our politicians must believe the gaming is worth the sacrifice.

If someone is interested to see the short, one paragraph of the Gramm-Leach-Bliley Act, from Sec. 206C which allowed derivatives to be, as was noted, "invisible", turn to message # 840 of this thread. That section deals with the first Dodd Proposal, Nov. 2009 which went nowhere after our extensive review.

Ms. Born is mentioned briefly in #130 and again in #359.

This thread agrees that Greenspan's assumptions which formed the basis of the major part of his career, by his own admission, "a mistake", is justifiably ridiculed throughout the thread. . . and, on appropriate occasion, the value of the public service of Rubin and Summers are questioned.

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ASK
Message #1104 - 03/17/10 01:47 PM

moneycentral.msn.com/community/message/thread.asp?threadid=904016&post=904016&boardname=Hide&header=SearchOnly&footer=Show&linktarget=_parent&pagestyle=money1&boardsparam=Page%3d1&board=PoliticsandtheMarket​​s

Old & Gray this is a link to the thread you are looking for.

The Woman Greenspan, Rubin & Summers Silenced - over The Root of the Financial Crisis, OTC Derivatives - The same team is Back on the Court

[Virgil Showlion]

Old and gray
Message #1105 - 03/18/10 08:11 PM



A little correction. . .

Provisionally, I'm retracting that remark about the OTC derivatives above (message #1102). . .

given the fact that Congress is liable to do absolutely nothing to bring OTC derivatives under regulation,

. . . on the grounds that the latest Dodd proposal spends 227 pages in Title VII to "Improvements to Regulation of Over-The-Counter Derivatives Markets and another 42 on "Payment, Clearing, and Settlement Supervision" which is in my review process. I'll hold up on further comments until it's been allotted more study time. There is some promise of improvement in what I've glance through to this point. Matter of fact, I like the ring of this proposal (March, 2010) a great deal more than the last (November, 2009).



It now has 11 titles, losing one along the way but gained about 300 pages. Insofar as they've not proposed a mass new agencies and administrations, it should blend in better with existing government structure.

The first thing that impressed one on reading the last proposal, was the cost of adding all those new groups. For instance where the proposal had been to have a complete new agency fully staffed to keep tabs on systemic developments and stability, the proposal now stands at a council. Board personnel very much the same, but working as a council rather than a large new structure.

For resolution of failing banks and brokerages beyond the capabilities of the FDIC, an "Orderly Liquidation Authority Panel" is suggested. The panel will oversee the resolution of entities no longer considered viable pretty much along the lines of bankruptcy, perhaps with a little lighter hand. That remains to be seen

The repeal of GLBA sections 206B and 206C, the short paragraphs that made derivatives invisible so they could foul up our currency values (and which were referred to in message #1102 above), is still being proposed.

What appears to be a qui pro quo, in exchange for allowing the consideration of a few more restrictive rules and regulations (not to be confused with capitulation), banks probably demanded less competition in the domestic deposit and loan markets (trying to keep competitive rates down). In a very abrupt paragraph, thrifts are facing the possibility they will no longer be chartered. Summarily, they'll be converted to banks. Existing branches will continue, but since the parent company is labeled a bank, the question of what happens to deposits as far as interest rates, etc. remains. It is not directly addressed in TITLE III, Subtitle D.

The Bureau of Consumer Financial Protection may have some power in this respect should another proposal survive. They'll have supervision of non-depository covered persons, very large banks, savings associations, and credit unions. Inasmuch as it is specifically called out (Sec. 1025 and 1026), it would seem to indicate that thrifts and credit unions could continue to exist. . . But, no new thrifts could be chartered. There are still stipulated restrictions on the bureau's authorities which need study.



Looking at the list of titles in the table of contents, it's easy to conclude that this time around, the Senate Banking Committee will be concentrating more on the regulations and less on the structure of the regulators. That's encouraging, since that most of us are principally concerned with corrections rather than a growing government. Yet to be investigated: what kind of transitions and assumption of power is written into the fine print. Surprises spring suddenly from under the cover of 1332 pages.



For comparisons sake below is the new Table of Contents which can be compared with that listed in and around messages #710 and 711. The difference is notable with very little study.

More will follow.

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Old and gray
Message #1106 - 03/18/10 08:13 PM



TITLE I - FINANCIAL STABILITY

Subtitle A - Financial Stability Oversight Council

Subtitle B - Office of Financial Research

Subtitle C - Additional Board of Governors Authority for Certain Nonbank Financial Companies and Bank Holding Companies



TITLE II - ORDERLY LIQUIDATION AUTHORITY



TITLE III - TRANSFER OF POWERS TO THE COMPTROLLER OF THE CURRENCY, THE CORPORATION, AND THE BOARD OF GOVERNORS

Subtitle A - Transfer of Powers and Duties

Subtitle B - Transitional Provisions

Subtitle C - Federal Deposit Insurance Corporation



TITLE IV - REGULATION OF ADVISERS TO HEDGE FUNDS AND OTHERS



TITLE V - INSURANCE

Subtitle A - Office of National Insurance

Subtitle B - State-Based Insurance Reform

PART I - Nonadmitted Insurance

PART II - Reinsurance

PART III - Rule of Construction



TITLE VI - IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS ASSOCIATION HOLDING COMPANIES AND DEPOSITORY INSTITUTIONS



TITLE VII - IMPROVEMENTS TO REGULATION OF OVER-THE-COUNTER DERIVATIVES MARKETS

Subtitle A - Regulation of Swap Markets

Subtitle B - Regulation of Security-Based Swap Markets

Subtitle C - Other Provisions



TITLE VII - PAYMENT, CLEARING AND SETTLEMENT SUPERVISION.



TITLE IX - INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF SECURITIES

Subtitle A - Increasing Investor Protection

Subtitle B - Increasing Regulatory Enforcement and Remedies

Subtitle C - Improvements to the Regulation of Credit Rating Agencies

Subtitle D - Improvements to the asset-Backed securitization process

Subtitle E - Accountability and Executive Compensation

Subtitle F - Improvements to the Management of the Securities and Exchange Commission

Subtitle G - Strengthening Corporate Governance

Subtitle H - Municipal Securities

Subtitle I - Public Company Accounting Oversight Board, Portfolio Managing and Other Matters

Subtitle J - Self-Funding of the Securities and Exchange Commission



TITLE X - BUREAU OF CONSUMER FINANCIAL PROTECTION

Subtitle A - Bureau of Consumer Financial Protection

Subtitle B - General Powers of the Bureau

Subtitle C - Specific Bureau Activities

Subtitle D - Preservation of State Law

Subtitle E - Enforcement Powers

Subtitle F - Transfer of Functions and Personnel: Transitional Provisions

Subtitle G - Regulatory Improvements

Subtitle H - Conforming Amendments



TITLE XI - FEDERAL RESERVE SYSTEM PROVISIONS

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Duffminster
Message #1107 - 03/18/10 08:51 PM

Hello O&G,

I also amended the first post in this document to link to the PBS video on Brooksley Born as a recommend starting point for new readers to this thread. It really does a good job of introducing those not familiar with the topic of OTC derivatives to historical context that led us to where we now stand. It should be required viewing for High School and College students and certainly anyone who spends the day listening to financial/economic blather from many mainstream resources which steadily and studiously ignore the systemic issues underlying Wall Street and its long and deep tentacles through K street and into Congress and the White House.

Thanks for digging up the original link on Brooksley Bork ASK.

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Old and gray
Message #1108 - 03/18/10 11:59 PM

All my life I wondered how that worked. It took until I was nudging ninety to discover the meaning of - -

"ASK, and ye shall receive."

Thank you, humbly, dear woman.

[Virgil Showlion]

ASK
Message #1110 - 03/19/10 08:23 PM



Dear O&G,



They (MSN) have deleted all of Duff's posts and banned him from MSN. The mods are looking into it and say it may have been a mistake. Some mistake, this thread is ruined. I regret that I never finished copying it. I only have the first 300 posts. You are welcome for the link, but now it is a link to nowhere. It is a shame that all that work is gone.

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InNeedofTrust
Message #1111 - 03/19/10 08:34 PM

Found Duff's Blog. He left an article in regard to being banned without warning and having years of posted deleted. Its a little tricky. Once you get to the blog at [www.duffminster/SilverandGold] www.duffminster/SilverandGold You can reach him by clicking on the title of the Blog Post and then you register, get your password, login and then leave a comment on the post. I left a comment a little while ago but haven't heard back yet.

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stonerdr
Message #1112 - 03/19/10 09:28 PM



ASK



Decoy posted elsewhere that O&G mentioned this could happen.

The guts ripped out! Kind of hard to take, I'd think. I've been reading this stuff over and over and it makes more sense to me, the more I read it. How could anyone object?



O&G, I have a an idea of how you might feel. Not 100%, but an idea. (Do you suppose he's able to post? Anyone have an idea?) We may never have another impartial bit of information regarding what's taking place in Washington again! Anyone think of that?



O&G, if you're out there, send a word or two. Just a hello, if you can.



To the rest of you: with this done, I believe the thread is finished. Without that beginning, it's hard to pick up the intent as it progresses. I never saw the devastation of Germany or Japan after the war except in film. But, it must have been something like this thread. And, I don't offer that with humor. I'd better shut up or I'll be tossed off the site.



But. . . I've been downloading the text all along. Must be a way to distribute it on the net. I could set up shop. I have no idea if there would be expense involved or what. But I could look into it. It's an awful lot of pages! Maybe an editing job could cut something down? ? ? Is that even possible? I'd be interested more in what O&G had to said primarily . . not to slight anyone, but he was the main attraction.

If this is what Duffminster suspects, just cold censorship, we're all in for it and I believe this thread will disappear some afternoon. . or overnight. Duffminster would have nothing to gain by telling anything but the truth. We have to believe what he's reported.

So, now, those of us left behind will be scattered to the four winds and whoever is pressuring Microsoft, might be able to sleep better. . if there is anyone else.



A lot of work and recorded thought . . on an exceptional level!! . . disappeared willy-nilly, it's like a book-burning. Fahrenheit 451!

But, then, as someone once commented here or on one of these threads, it's microsoft's turf and they're entitled to do with it as they please, no matter how it reflects on them.

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ComoKate
Message #1113 - 03/19/10 09:46 PM

I believe Neohguy has a family member that saved this thread; hopefully so. If we can find someone with it, we could repost it here, and elsewhere, as we cannot let truth be suppressed !

[Virgil Showlion]

Old and gray
Message #1114 - 03/19/10 09:51 PM



I'm here, reading the threads. I'll come back when Duff does. . . And, when the text is restored.

Right now, I have to think a bit. This calls for a rest.

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ASK
Message #1115 - 03/19/10 10:02 PM











Posts start again on page 117.

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Note: Thread port omits messages #1116-#1397. These threads were a deleted partial restore of Duffminster's posts pursuant to "Duffgate", or comments related thereto.

- Virgil Syonid (12/22/10)

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[Virgil Showlion]

Ž
Message #1398 - 03/21/10 01:55 PM

The times they are a changin'

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Sunfolks1990
Message #1399 - 03/21/10 04:48 PM



Grandad says he has a "glitch" in both his PC and Laptop and cannot access any MSMoney threads! He gets to the Market Talk Index, but cannot enter to view the threads. After all he's been allowed to post here, he doesn't believe Microsoft could possibly be behind that.



However, I have the files handy and will begin posting soon. I'm flying north this afternoon (classes tomorrow!) and will begin posting at the first break in my schedule.

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ASK
Message #1400 - 03/21/10 04:51 PM



Sunfolks,



You are a wonderful person. The apple doesn't fall far from the tree.

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reverendbarb
Message #1401 - 03/22/10 02:39 PM

Sunfolks - I agree - you're a wonderful grandson and a great guy!! But have grandad try again - supposedly the "problem" has been fixed for the folks who were "banned" from posting recently.

[Virgil Showlion]

Duffminster
Message #1402 - 03/22/10 07:54 PM

Now, I have another issue of what feels like "censorship". I'm not being allowed to create a stand alone thread that provides my feelings and response to this issue as the first message of the post.

Given what I've been put through, does that make any sense to anyone? Or does it just seem to be adding insult to injury. Here is what I want to post and have open for Debate. I did post such a thread but Archie said he wanted to keep everything under this thread and stopped any commentary to follow. Now that I'm not banned from posting, why can we have a thread that starts from where I am able to have a voice in a subject on which I was the object of censure? It appears like further censure if you ask me.

Subject: Duffminster Comments on the Deletion of 7000 Posts on MSN Money Boards

"First of all Thanks to everyone who supported me and who continues to be in protest of the deletion of all of my writings and posts. That effort, those posts, that work, those resources, are now gone and according to the moderators they can never be recovered from what I am reading.

I'd like to preface this by saying that all of the moderators who spoken on this issue have thus far been fair and I believe doing the best they can to get to the bottom of it, even if (as I believe), they are ignorant of the actual cause and and the actual restorative capabilities of the message board system of the MSN environment. As I understand it, the MSN moderators are almost entirely composed of volunteers and are not paid employees of MSN. I would like to know more about this from either existing or previous moderators on these forums. Let's not get distracted from the main point:

Let me just say something very clearly.

The data can be restored. For all sorts of legal compliance reasons, MSN has to keep a record of all transactions and content. I am awaiting an official accounting of what happened and I would like an official statement that the records can not be restored from an official of MSN employee who is authorized to accurately make that statement on behalf of MSN. Yes, an actual explanation seems in order but given what appears to be the low priority that this issue being given and the fact it took 24 hours to even enable to post again, I would expect a relatively non-comittal flippant response. After all, in a business of hundreds of billions of dollars, how important are the words of one person who seems to disagree with the Mainstream on almost everything actually be. Dismissive, close mouth and condescending are probably better suited to the situation in their minds than honesty, humility and the willingness to go the extra mile to put things right, which are the only appropriate response from the old world value of service, integrity and honesty from which my cloth has been cut.

That being said, and despite any technical claims, this looks like and feels like book burngings to me and more so because it is my books that have been burned. Let us not go gently into the goodnight of censorship.

From now on, I will not post here until I post on my blog and back my blog posts up on multiple other systems. Yes, that will slow me down, which is a success for those trying to halt the flow of alternative ideas from my mind. May I suggest you do the same if you value the content of your own commentary and opinion content.

One thing this whole incident demonstrates to me is that the new corporate culture treats the idea of "customer service" or the individual human being and their thoughts and feelings with a paradigm of irrelevancy."

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cedaredge
Message #1403 - 03/22/10 08:06 PM

Duffy!!!!!!!!!!!!!!!!!!!!!! You old SOB!!!!
Your banning over the weekend had everybody in a tizzy over at the P&M board!!!
I started a thread over there and believe me, everybody there wants to hear at least a word from you!!
Look for the thread I started and post something!!!!!

Reading your message of #1402..............I completely agree! Unfortunately the so called "rules" will not allow you to post a link from the P&M boards to here and visa versa.

But at least let them know over at your "other hang out" that you are well and breathing!!!!!!!!!!!!!!

Your buddy, Cedar

......................................................HOT DAMN!!!!! DUFFY IS BACK!!!!!!!!!!!!!!!!!!!!

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cedaredge
Message #1404 - 03/22/10 08:14 PM

P.S.

GLAD TO SEE YOU TOO OLD & GREY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!