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!
Tonight's video is a lecture by Economist and Law Professor William K. Black, an expert on the 1980's S&L crisis. He minces no words, as one can see by the lecture title, on the current financial crisis.
"We must break the Money Trust or the Money Trust will break us."
- Louis D. Brandeis, 1913
When the economy appeared to be melting down last September, Wall Street bank representatives began showing up in Congress like mobsters walking into a mom-and-pop business looking for protection money.
"Nice economy ya got here.(crash!) It would be a shame if something were to happen to it."
Mobsters and Robber Barons have a lot in common.
Neither has any respect for the law or morals, only for power. Neither can ever be satisfied with any amount of wealth. They will always need to steal more and more and more until they've completely bankrupted their victims.
We are now at the mercy of modern Robber Barons, and if history is any judge, it is either them or us.
If we remove political considerations, such as how we can get to a certain solution in the face of powerful corporate interests, what would be the best solution to healthcare? First, a few baseline assumptions:
We want to have everyone covered.
We want to maximize health.
We want to minimize costs.
We want the cost burden to be progressive (i.e. rich people pay more.).
Let's look at a hypothetical proposal from economist Brad DeLong, the Australian system, our VA system here in the US, and some thoughts of my own.
We've noted many times on The Economic Populist how the continual focus of the United States citizenry as simply a bunch of consumers is just plain wrong. We hear cries 70% of the economy is based on consumerism, how this creates demand and so on....
But here's the real situation. The consumer is plain tapped out.
Naked Capitalism through Guest Posts by Leo Kolivakis, publisher of Pension Pulse, has done an excellent job of chronicling the problems with pension funds. I certainly encourage people to read his posts.
The headline is from a Bloomberg "exclusive" story. This is the lead in paragraph:
U.S. pension funds contributed to the record $1.2 trillion that private-equity firms raised this decade. Three of the biggest investors, state pensions in California, Oregon and Washington, plunked down at least $53.8 billion. So far, they only have dwindling paper profits and a lot less cash to show the millions of policemen, teachers and other civil servants in their retirement plans.
If we leave aside the war-impacted years of 1942 to 1946, the largest annual deficit the United States has incurred since 1920 was 6 percent of gross domestic product. This fiscal year, though, the deficit will rise to about 13 percent of G.D.P., more than twice the non-wartime record. In dollars, that equates to a staggering $1.8 trillion. Fiscally, we are in uncharted territory.
Disclaimer: Not certain this is appropriate to EP. This is in the way of an introduction to some aspects of modeling and might be a bit arcane. It was inspired by a comment by RebelCapitalist and deals with econometric modeling. Enjoy.
Let's say we're interested in estimating the likelihood of some event x happening. x might be a loan default, upcoming regulations, getting hit by lightning, whatever. If we happen to know something about x, we can assign some probability P(x), play the numbers, and improve our chances of a good outcome. That's a big "if", and unless P = 1 we can still lose; still, that's the best we can do.
When Colonial Bank failed on Friday, the 77th bank to fail this year, very few people noted that it was the largest bank failure of 2009. Even fewer people noted that the cost of cleaning it up required more capital resources than the FDIC had.
The total losses of Friday's five bank failures, according to the FDIC, would be $3.67 Billion. The problem is that the FDIC had less than $650 million in its Deposit Insurance Fund at the time.
"Put the jam on the bottom shelf so the little man can reach it," Sen. Ralph Yarborough used to say in the 1950s and 60s, when Texas still elected populist democrats to the Senate.
Well, it's time for Obama and the Congress to put some jam, in the form of stimulus and jobs (like a new WPA) in the reach of the little people, because if they aren't careful, the little people are about to get dragged back over the precipice into a chasm of wage deflation.
Has housing hit a bottom? Fox News declared that the bottom is in, as had many other talking heads.
In fact, the reality of the situation is a "good news, bad news" scenario.
(Bloomberg) -- The wave of “option” adjustable-rate mortgages recasting to higher payments, projected by some economists to represent a looming source of foreclosures that will hurt housing markets over the next few years, will be smaller than “feared” because many borrowers will default before their bills change, Barclays Capital analysts said.
So you see, the coming tsunami of foreclosures will be much small than expected because people are going to go broke beforehand. That's the good news.
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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