Perhaps the worst insult you can hurl at a politician these days is to give him the middle name of "Hoover".
Such as George Hoover Bush and Barack Hoover Obama. 80 years later Herbert Hoover is still the standard for the "do-nothing" president in the face of economic collapse.
Like most easy comparisons, these examples lack details. That's because the names are there for the purpose of accusation, rather than enlightenment.
However, if you dig down into the individual economic policies of Hoover, Bush, and Obama, the story gets much more interesting.
As Mark Twain once said, "History doesn't repeat itself, but it does rhyme." I'm not going to try and find direct connections in this essay, just broad picture comparisons. If the reader confuses the two, then that will only mean I was justified in writing this.
Yet another month, yet another report on how our money was used to bail out foreign banks, while we go without retirement and jobs.
The Congressional Oversight Committee has released a new report, The Global Context and International Effects of the TARP.
Guess what?
It appears likely that America‟s financial rescue had a much greater impact internationally than other nations‟ programs had on the United States.
Gets better. Of course the U.S. didn't bother to ask other nations to help...
if the U.S. government had gathered more information about which countries‟ institutions would most benefit from some of its actions, it might have been able to ask those countries to share the pain of rescue. For example, banks in France and Germany were among the greatest beneficiaries of AIG‟s rescue, yet the U.S. government bore the entire $70 billion risk of the AIG capital injection program. The U.S. share of this single rescue exceeded the size of France‟s entire $35 billion capital injection program and was nearly half the size of Germany‟s $133 billion program.
And even better. Of course to this day the U.S. Treasury isn't collecting data on our taxpayer dollars flowing overseas.
Treasury gathered very little data on how TARP funds flowed overseas.
By Numerian
The Federal Reserve, in announcing the results of this week's meeting of the Open Market Committee, surprised the market by revealing it will begin purchasing US Treasury notes and bonds with the principal income it receives from its vast holdings of Fannie Mae and Freddie Mac mortgage securities. This practice - wherein the Fed buys up US government securities and injects cash into the public market as payment for these securities - is a form of monetizing the debt.
The last time the Fed did this on a big scale was back in the 1960s when it attempted to mop up the excess Treasury securities that were flooding the market as a result of Lyndon Johnson's efforts to finance the Vietnam War. That Fed program was viewed at the time as a failure, since the cash the Fed put back into the economy in exchange for the securities was a big reason - perhaps the major reason - why price inflation accelerated from the late 1960s until a decade later, when Paul Volcker managed to squelch inflation once and for all with forbiddingly high interest rates.
On The Economic Populist you might have noticed the right column. We try to list other sites and blogs who have exceptional insight and writing on what is happening in the U.S. economy.
Sometimes though, one cannot say it better but miss those who did.
In a memo sent to the FCIC -- a government panel charged with investigating the roots of the financial crisis -- Wall Street's most profitable bank revealed that its derivatives operations generated $11.3-$15.9 billion of its $45.17 billion net revenue in 2009. This amounts to 25-35 percent of the bank's revenue.
We seldom hear pertinent, nor factual news, anymore, but when we do the stories are fed to us as discrete events, having no connection or bearing with one another.
Throughout this post I intend to fill in the back story and elaborate the connections between these various news bytes.
Sometimes the information provided may appear circumstantial, but courtroom convictions occur on such evidence, and when there is an overwhelming amount of circumstantial evidence, the conclusion becomes glaringly obvious.
Matt Taibbi has written an autopsy report on the lack of real financial reform and how it happened. In Wall Street's Big Win, Taibbi first sums up what happened in the last decade:
The huge profits that Wall Street earned in the past decade were driven in large part by a single, far-reaching scheme, one in which bankers, home lenders and other players exploited loopholes in the system to magically transform subprime home borrowers into AAA investments, sell them off to unsuspecting pension funds and foreign trade unions and other suckers, then multiply their score by leveraging their phony-baloney deals over and over. It was pure financial alchemy – turning manure into gold, then spinning it Rumpelstiltskin-style into vast profits using complex, mostly unregulated new instruments that almost no one outside of a few experts in the field really understood. With the government borrowing mountains of Chinese and Saudi cash to fight two crazy wars, and the domestic manufacturing base mostly vanished overseas, this massive fraud for all intents and purposes was the American economy in the 2000s; we were a nation subsisting on an elaborate check-bouncing scheme.
Many of us contend the dot con bust, 9/11 fueled, offshore outsourcing 2001 recession never really recovered. It was masked by the glorified ponzi scheme described above.
On The Economic Populist you might have noticed the right column. We try to list other sites and blogs who have exceptional insight and writing on what is happening in the U.S. economy.
Sometimes though, one cannot say it better but miss those who did.
The problem was not the investment Cortney's family made in her education. The problem is our dangerously low level of job creation.
What happened to the jobs Cortney was counting on?
Investment creates jobs. GE invests billions in China. Microsoft invests billions in India. Boeing invests billions in Russia. General Motors builds more cars in China than in America. We are making millions of new jobs -- just not in America.
It is no surprise that our economy is hollowing out. Look at the huge global oversupply of cheap labor, combined with mobility of capital, rapid transfer of technology out of the country, and trade policies that encourage investment offshore.
They suggest: Rather than reducing hours of work, why not have Washington offer to buy gold at $5000 an ounce:
A coordinated global currency devaluation. The Fed, for example, tenders for private gold holdings at $5000/oz and maintains that bid/offer. As the Fed purchases gold, the gold flows to the asset side of its balance sheet. The Fed funds these gold purchases with newly-digitized money, which flows to banks in the form of net new deposits. This would be a discrete monetary inflation event (devaluation) and a simultaneous deleveraging.
Once the Fed acquires enough gold from the markets, a gold price peg for the US dollar is established. Would this be a gold standard? Yes, if that nominal exchange value is maintained in the open market by the Fed. No, if the Fed decides to periodically adjust that $5000/oz. level following the original exchange. (In fact, tinkering with the official gold price would be a pure example of a monetary agent conducting monetary policy.)
It's Friday Night! Party Time! Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!
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