Charlie Rose

Raghuveer  11/08/2008 09:38 AM Report

Paul Volcker too big to fail!

I think Reagan made a mistake by letting Volcker leave or maybe Clinton should have hired him back. I think the key difference between Volcker and Greenspan is Volcker's ability to do the right thing even if it means short-term trouble, Greenspan just pushed cheap money that resulted in two successive bubbles.

Solar John  10/30/2008 03:52 PM Report

Wow! Did everyone miss the part about needing more electrical and civil engineers? Engineers put a man on the moon, gave us the Large Hadron Collider and the industrial revolution. The financial elite do nothing productive and rather earn a living from the manipulation of money. The financial elite gave us the current economic crisis. Way to go boys!

John

B.M."Bud" Campbell, P.E.  10/24/2008 06:01 PM Report

Now I understand why my Mother questioned my career choice upon seeing that I was the only white, english speaking Civil Engineering graduate from a prominent Southern California University in 1985. And, she wanted me to go into business?

Party On! Go Civil Engineering!

sock puppet  10/14/2008 02:26 PM Report

Nothing can be taken at face value nowadays. In Kevin Phillips, "Bad Money" he talks of a Fed PPT (plunge protection team). So once-again laissez faire self correcting marketeers corrupt their own choir. Big swings in the market may be us buying stocks as unwitting taxpayers, seeding the market to induce a trend (or to prevent a plunge). More opaque transparency, or transparent opacity?

TABS  10/14/2008 05:36 AM Report

Comment by TABS on Friday, Oct 10 at 03:06 PM

For some people the integrity of their words is more important than political or even financial gain. For at the end of the day what does it gain a man to inherit the world only to lose his soul. ..................................................................................................... ........................................................

When your words have integrity, people will trust what one has to say. What the world has come to is a lack of trust or confidence in the system. It largely has been run by people who lack integrity and are self serving whether they are political or financial. That has served as the "smart guy" "conventional wisdom" for decades now. They are now reaping the whirlwind for their "wisdom" Unfortunately it is taking everybody right down with them.

Daniel  10/12/2008 04:20 PM Report

Sir, this is the second time you have posted this exact comment. Please stop the bigotry. no one here agrees with you.

ive reported you again

Lance Dugger  10/12/2008 11:44 AM Report

All of this hair pulling and tooth gnashing isn't going to make one whit of difference. The one thing that we, the vast ignorant masses , could have easily done to prevent this catastrophe was to have elected either Al Gore or John Kerry President instead of George Bush. I shouldn't have included myself in that category because I never voted for the man. Those of you who did, and somehow no one now wants the credit, need to ,as Phil Graham puts it, stop whining. Let this be a lesson to those of you now still contemplating voting for McCain/Palin. Berating you ignorant sheep still thinking about putting the McCain/Palin dynamic duo into office are beyond logic and reality. Let's see if troopergate brings any of you true believers to your senses. If you've deluded yourselves this long, probably not. I watch the campaign now mainly to see what new idiotic charge McCain and the Republican party manufacture, and what S.N.L. does with the new material. Thank God for the comedians. How long do you think it will take for McCain/Palin to try crying in public as a tactic, it worked for Hilary. Maybe if they're successful disenfranchising all the electorate, save themselves, they might win. Its worth a try I say.

Frank Cisco  10/12/2008 05:33 AM Report

Nothing really was said here.

FDR calmed the mighty storm with a speech and then walked on water.

Shame on you Mr. Volcker for mixing FDR legend with your financial evaluation.

Bottom line is the country suffered terribly during the great depression.

Is that your bottom line analysis for us at this time? (YES)

Why no mention of financial policy that penalized small savers for 20 years!

The message - people at the bottom get ready to suffer and pay the price for the people

at the top who are getting a bail-out with your money.

If we had a great leader to trust and give us an FDR chat that would help us swallow the bitter medicine better!

Paul & Charlie get you heads out of urban legends ...

'we are not all sheep'

Jason Romero  10/12/2008 12:58 AM Report

isn't this the same mofo who suspended gold convertibility...wake up AMERICA...the federal reserve is unconstitutional!!! DO YOU OWN RESEARCH!!! RON PAUL for PRESIDENT!!! :)

sock puppet  10/11/2008 09:33 PM Report

Plagiarized from the Warren Buffett discussion. Totally agree. Credit Default Swaps are speculative derivatives that should not be bankrolled, rewarded by taxpayers if can be avoided. _______________________________ Comment by Robert C on Saturday, Oct 11 at 07:57 PM ________ WARREN BUFFET has called the $55 Trillion in outstanding credit default swaps (CDS) “financial weapons of mass destruction.” These agreements among banks and companies were intended to shield them from the risks created by mortgage-backed securities, corporate bond defaults and other financial disasters. The CDS instruments with Lehman Bros. as a counterparty became virtually worthless when Lehman filed bankruptcy. Same issue came up in the AIG nationalization. This threw the world banks into a lockdown where no bank would trust anyone to repay money loaned. They are waiting to see which of their other counterparties (banks, brokers, companies or insurers) defaults or files bankruptcy. HERE’S THE CORRECT WAY TO HANDLE CDS SYSTEMIC RISK, from a former bankruptcy attorney as well as former General Counsel to a Mortgage-Backed Securities Issuer: Markets will not resume rational behavior until the nuclear threat of credit default swaps has been rendered harmless. There are $55 Trillion of these private, non-regulated insurance agreements outstanding involving every major money center bank, investment house and major insurer worldwide. There are two ways to take away counterparty risk. One is to guaranty their performance. The other is to render them unenforceable or of only limited enforceability. Systemic confidence in world banks is so low that a government guaranty of counterparty obligations is totally worthless. Once everything has been guaranteed, nothing is guaranteed. As a matter of public policy, the risk of enforcement of credit default swaps would be much more destructive to world economies than would be the risk of their unenforcement. These instruments were an unregulated, and unsanctioned, form of insurance. These instruments must be taken out of the equation in order to return the world banking system to the status quo ante. The G7 meeting should result in a unified announcement that none of the currently outstanding credit default swaps will be enforceable in any of the G7 nations’ courts for at least five years as a matter of public policy. A G20 announcement could follow. A Derivatives Court of Claims could then be set up at the Hague to review such instruments, submitted by the parties and counterparties. The Court of Claims could then act as a Court in equity to determine the putative obligations and cross-obligations of the parties, with a decision as to what percentage of the obligations should be enforceable, if any. This would be, in effect, a bankruptcy court for an entire shadow insurance system, if you please. Remove the CDS Sword of Damocles by declaration of unenforceability. Then, banks could begin lending to one another again without worthless guarantees from each other or from governments who are already on the hook for systemic risk.

Jerry Kemp, Founder  10/11/2008 08:21 PM Report

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bill  10/11/2008 03:38 AM Report

His comments about FDR were silly, ah that's real leadership if it hadn't been for FDR America won't have had a Great Depression, everywhere in the world it was a Depression but because of FDR and his policies in America he made it the Great Depression, WW2 was the real reason that America over came not because of FDR's New Deal. Electing Obama now with his policies is going to turn this recession into a deep painful recession if not something worse, so be fore warned.

tom  10/11/2008 02:37 AM Report

All this had been enacted under Clinton, to leveraging Fannie and Freddie to the tone of over a trillion dollar in 1998, to Glass Seagull 1999, to suing banks in 1994 and 1995 to lower their standards for mortgages and taking away a banks ability to say no on the bases of credit history and income ( Obama at his firm in the 90's sued banks to lower their standards sighting it a human right that inner city's had a chance to get a mortgage and that credit history should not be a factor, joke) and once the dot.com bubble hit which also grew under Clinton and over a 2 trillion dollars was lost in equity easy money moved to housing and commodities but if democrats had allowed Bush's administration in 2001 or again in 2003 and again in 2004 and again 2006 to regulate Frannie and Freddie who now have over 5 trillion dollars of mortgages banks won't have been so invested in the sub-prime because there wouldn't have been no Freddie and Frannie so quick to buy them or securitize them , so I would really appreciate some honesty from people and not put this crap on Presidents Bush's doorstep, he just had the misfortune to be President after Clinton who ignored every danger in the 90's from Bin Laden and Islamic terror growing around the world in Africa to the Middle East to Asia, to the Dot.Com and stock market bust the started in 1998 and ending late 2000, to ignoring Aids in Africa throughout the 90's so by the time 2000 hit it was a epidemic killing millions a year, this decade America has just been putting one fire after another that all had their seeds from the 90's.

Danny  10/11/2008 01:37 AM Report

Let the morons that over leveraged themselves FAIL! Why should we save these people that debted themselves 30-1. We will bottom faster and start over. Hey Uncle Sam... Step off! This is making me sick. Volcker sounds silly! He thinks he is so smart. Can we use common sense please.

Flooding the market with cash will lead to massive worldwide inflation.

It's a mess they are making worse. Just look at the market after Paulson's bright idea... Bust

Bill Parks  10/10/2008 10:02 PM Report

When nations use privately owned central banking systems; when the bulk of the money supply is created as debt; when that debt must be repaid with interest; when no one creates the interest; when the interest must be paid from the money supply, leaving too little money to repay the debt; when new loans must be originated to make up the money shortage, giving the system the illusion of stability; when bankers create a growing pyramid of debt resulting in and unsustainable economy; when the system reaches it mathematical limits where the requirements for interest payments equal or exceeds the capacity for new borrowing; when the only variables that bankers have to manipulate and control the money supply are interest rates and credit – the system crashes.

Dan Wilson  10/10/2008 06:05 PM Report

The assertion that we'd somehow be in better shape at this point had Gore or Kerry been elected is profoundly stupid. The plain fact is we'd be addressing this same crisis had Bush never been born.

sock puppet  10/10/2008 05:45 PM Report

TABS - Now I'm bettin there's a thought unique amongst financial industry wise-guys. But their influence is formidable (just ask them). They've hedged their loss with Soul Default Swaps (SDS) with Beelzebub, but at extremely high premiums. But not a problem for these guys. However, St.Peter is holding Puts on them, despite the bevy of K-street lawyers lobbying their case.

TABS  10/10/2008 03:06 PM Report

For some people the integrity of their words is more important than political or even financial gain. For at the end of the day what does it gain a man to inherit the world only to lose his soul.

rich dimmock  10/10/2008 01:31 PM Report

miffed about the voelker segment.

charlie constantly interrupting(more so this time).

i wrote the producers of the show about having

viewers submit more specific econ questions for voelker. instead we got a rambling meandering interview which was of little real value to the viewer.

lately the show is becoming a collection or gathering of intimate friends sitting around in a pseudo-bistro shooting the breeze. like a bistro the conversation is of little interest to other diners. which one is supposed to be

dorthy parker?

Marilyn  10/10/2008 01:17 PM Report

crash course in economics aside, very interesting report available at http://gcr.weforum.org/gcr/

World Economic Forum 2009-2009, though obviously done pre-wtf, this offers report card on all countries in wide breadth of categories. Now, back to breathing......

sock puppet  10/10/2008 11:21 AM Report

Volcker has reduced himself to just-another-wise-guy status, a la Messrs Paulson, Prince, Rubin, Dimon et al. All to clever by half. Half hell - by fractions. They'll all gladly exploit human frailty for their own excesses. Human frailty in this case is the powerlessness to change the extortion associated with the bailout. Credit Default Swaps (CDS), the most egregious part, as they are pure speculative derivatives designed to hedge the already flagrant gambling on Collateralized Debt Obligations (packaged subprime mtgs). Taxpayers shouldn't be forced to bankroll such high-rolling gambling. Let them fail. It will take years to work all this out anyway. Time enough to build new and hopefully institutions with integrity (this time).

______ Marilyn, loved your analogy of the drought at the watering hole in the desert. Predator and prey forced to converge. I would like to at least get a different set of predators.

Stephen B. Wise  10/10/2008 10:17 AM Report

We are witnessing the "twilight of illusion."

Someone should tell Paul Volker. In his book, The Great Crash of 1929, John Kenneth Galbraith notes that on September 11, 1929, in keeping with a regular practice, The Wall Street Journal printed its thought for the day. It was from Mark Twain. "Don't part with your illusions; when they are gone you may still exist, but you have ceased to live."

Marilyn  10/10/2008 10:15 AM Report

and when earth is a lifeless rock, if there be a beauty to recall of humankind, it would have to be the ideals and toil of peasants who though trampled upon by so many, still strived to live by honorable means, and held fast to their ideals through all time. Linus, you break my heart and inspire it. If only.......but these times are like the drought at the watering hole in the desert. Predator and prey forced to converge.

Willis C. McAllister  10/10/2008 09:29 AM Report

How did we get here? Are we (Accountants), to blame, again?

Re: Derivatives, FASB # 133, SAS No. 92, SOX Provisions, etc.

This game of HOT POTATO (Derivatives), didn’t start 16 months ago, it started more than (13) thirteen years ago! That’s right (13) thirteen years ago! And it’s not something entirely different! CBS, failed to connect the dots (they normally give ref. to previous reports on the same topic), to their previous20/20 video report, aired in the year 1995! Although CBS sounded the alarm way ahead of Warren Buffett (approx. 8 years - see below). We (the public), were told that SOX, (and a string of other prior and subsequent government regulations), would prevent this kind of fraud from happening. Did the Lawyers (some are Lawyers too!), tell the Accountants and Auditors what GAAP is, like they did at Enron, WorldCom and others? (BTW: The Lawyers made money in the subsequent court proceedings). I thought the Big CPA firms (along with the FASB, AICPA, etc.), were the gate keepers, with the State licensed responsibility of protecting the public investor (inter alia)! Basic bookkeeping states that it’s an Asset, a Liability, Equity, Revenue or an Expense. Derivatives can be part of all of these account classification groups, at the same time! – and off balance sheet, to boot! PROPER ACCOUNTING AND REPORTING IS THE BACKBONE OF BUSINESS ORGANIZATIONS. The Federal courts are going to be busy for a long time with the Plaintiffs and the Defendants, in this game of HOT POTATO (Derivatives). The legal fees are going to make many Law firms very, very rich! Destruction (e.g. WWII, natural disasters, man made disasters, etc.), is often followed by a money making activity called Construction. LAW 101?

Derivatives (CBS aired this story on July 23, 1995).

July 23, 1995: CBS (Steve Kroft), investigates what stock derivatives are and the dangers they pose to investors. http://www.cbsnews.com/video/watch/?id=4501762n

Wall Street's Shadow Market (CBS aired this story on October 5, 2008).

CBS (Steve Kroft), looks at some of the arcane Wall Street financial instruments that have magnified the economic crisis. And as CBS (correspondent Steve Kroft), reports, it's far from being over. “It started out 16 months ago as a mortgage crisis, and then slowly evolved into a credit crisis. Now it's something entirely different and much more serious”

http://www.cbsnews.com/stories/2008/10/05/60minutes/main4502454.shtml

Further: CBS (Kroft) asked Partnoy, “…what role the credit default swaps (a.k.a. derivatives!), play in this financial disaster… ”, Frank Partnoy tells Kroft, "They were the centerpiece, really. That's why the banks lost all the money…”.

THEY WANT YOU TO BELIEVE THAT IT’S ROCKET SCIENCE (e.g. PhD’s, Mathematicians, etc.), BUT IT’S NOT.

http://www.cartoonstock.com/directory/m/mathmaticians.asp

Re: The BBC - Five years ago, billionaire investor Warren Buffett called them (i.e. derivatives), a "time bomb" and "financial weapons of mass destruction" and directed the insurance arm of his Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research, Stock Buzz) to exit the business. http://news.bbc.co.uk/2/hi/business/2817995.stm

CONCLUSION: The chopping up and re-packaging of these mortgages has been going on for (13) thirteen years, and called derivatives. The related ownership paper work, for these properties has increased, but the physical goods have decreased, in some cases to nothing (e.g. various properties destroyed by natural disasters in Louisiana, Mississippi, Florida, California, etc.) Muddy vacant lots! Demolished crack/drug houses in the mid-west too… that were never taken off the books, just chopped up, re-packaged and re-sold over many years. With the actual physical product(s) never being reconciled to it’s related “packing slip(s)/bill of lading(s)/title(s)”, during its many subsequent sales.

A Story of greed on both sides: DURING THE 1970’s, AT THE FAR END OF A PARKING IN NEW YORK CITY, LEROY AND HIS BUDDY ARE SELLING BRAND NEW $500 COLOR TV SETS, IN THE BOX! NEVER BEEN OPEN! FOR $50 DOLLARS! “…GET’EM NOW! BEFORE THE COPS COME! ...” - Many paid LEROY the $50, and then they put the heavy TV labeled box in the back seat of their car(s) and drove away quickly. Once at home, they opened the box, only to find some very large, dirty ROCKS! … So has China?, Germany?, Japan? opened their boxes? … Also Re: The McKesson & Robbins Salad Oil swindle.

http://www.aicpa.org/pubs/jofa/oct2000/WELLS.HTM

I hope this insight is useful in your analysis.

Ricardo C. Amaral  10/10/2008 07:59 AM Report

Since most of you probably are not going to take the time to read all the information that I posted about the derivatives market from the 1990s to the current crisis I am going to post on this forum just the following: Stock Market Crash in 2007 or 2009

http://www.elitetrader.com/vb/showthread.php?s=&threadid=106795&perpage=6&pagenumber=8

________________________________________________________________________

I searched on the web and I found an article published by The New York Times describing the problems that derivatives were already causing to various corporations at that time. And around 1992 the notional or face value of the US derivatives market was estimated to be just $ 24 trillion dollars - contrast that with - the total "notional," or face value, of derivatives held by U.S. banks in September 2008 is $180 trillion, and it's three times that much globally.

For many years now I have been writing on my articles that what is going to trigger the First Great Depression of the New Millennium would be the meltdown in the derivatives market. The derivatives Chernobyl would be at the core of the collapse of the global financial system.

We got a taste of the nasty surprises that derivatives losses can cause to the financial statements of all kinds of corporations, and these losses can be very large and catch people by surprise since they are balance sheet items.

________________________________________________________________________

With the events that have been occurring in the global financial markets in the last 10 months and the massive amount of large corporations and banks that had meltdowns – that means that the entire financial system is littered with massive derivatives losses that is going to surprise people over and over again and will put a lot of people out of business creating a chain reaction – as Warren Buffett predicted derivatives are instruments of mass destruction and right now we have the hydrogen- bomb type of derivatives going off all over the place.

Just wait to see how fast these Ebola virus derivatives are infecting the entire global financial system and the damage that they are inflicting all over the place.

Forget these G 7 meeting of finance ministers or some other type of damage control that they are trying to organize to contain this massive epidemic – Basically it is too late since there are too many people inflicted with the disease and time has run out long ago.

All you can do at this time is hope that you will be one of the survivors of this catastrophic event that is underway.

________________________________________________________________________

.

Ricardo C. Amaral  10/10/2008 07:43 AM Report

I posted some information on the Elite Trader Economics Forum regarding the conversation between Charlie Rose and Paul Volcker as follows:

October 10, 2008 - SouthAmerica: Last night Charlie Rose interviewed on his show the one of the most outstanding economists that we have in the United States. I respect his opinions, and I think he is the only “Legend” that they had at the Federal Reserve. His name is Paul Volcker.

Mr. Volcker was a guest at the Charlie Rose Show in an attempt to calm the markets. And he said that we should not end up in a Great Depression.

________________________________________________________________________

He had to say that, but I am sure that he understands that a total collapse of the entire global financial system is a possibility at this time; a complete global financial meltdown, a real financial Chernobyl.

For some reason the world of derivatives made an impression on me in the early 1990’s at the time when if I remember correctly massive derivatives losses were the cause that forced 2 major banks into forced mergers to avoid going out of business – the banks were Bankers Trust, and Manufacturers Hanover Trust Company (the bank that people referred to as “Manny Hanny”).

It is a long posting you can read the entire piece at: Stock Market Crash in 2007 or 2009

http://www.elitetrader.com/vb/showthread.php?s=&threadid=106795&perpage=6&pagenumber=8

By the way, my screen name on that forum is SouthAmerica.

_

_______________________________________________________________________

Regarding the second guest he had last night Mr. Dominic Strauss-Kahn the General Manager of The International Monetary Fund (IMF) all I can say is that the countries of South America hate the IMF and they hate all their policies and their suggestions about anything.

________________________________________________________________________

.

linus  10/10/2008 03:08 AM Report

sock puppet

Thanks, your well informed posts on hedge funds etc. are edifying to say the least. I agree that this goes much deeper than the elitists would like to admit. The neoconservative corpo-government has promoted this whole money scene from the day that Duhbya was installed in the White House. His "Ownership Society" and the promotion of Fanny Mae and Freddie Mac were just part of it. He even promoted the cutting of more timber to build the houses with by his program called the Healthy forests Iniative...):

Anyway, I wish them all the best if they hit bottom. They'll be better off getting a little exercise and drinking well water. Bu$h will probably escape to Paraguay where he owns property, but he should be careful. I hear the natives there have laptops and dart guns...G:

An early Republican viewpoint:

The prudent, penniless beginner in the world, labors for wages awhile, saves a surplus with which to buy tools or land for himself, then labors on his own account another while, and at length hires another new beginner to help him. This is the just and generous and prosperous system, which opens the way to all, gives hope to all, and consequent energy and progress, and improvement of condition to all. No men living are more worthy to be trusted than those who toil up from poverty--none less inclined to take or touch aught which they have not honestly earned. Let them beware of surrendering a political power which they already possess, and which, if surrendered, will surely be used to close the door of advancement against such as they, and to fix new disabilities and burdens upon them, till all of liberty shall be lost."

Abraham Lincoln

sock puppet  10/10/2008 02:26 AM Report

From Bloomberg 11/7/07:

__________

Credit-default swaps tied to Citigroup more than tripled in the past three weeks, indicating the risk of default is rising. Citigroup this week said losses from the assets may reach $11 billion, and analysts said writedowns may increase. Contracts on Morgan Stanley, Wachovia and Merrill Lynch & Co. are at or near six-year highs on concern that their losses will grow.

sock puppet  10/10/2008 02:20 AM Report

Linus - nice post. Some good honest work - maybe sans computers? - might go a long way in restoring some good wholesome values. Reduce the too powerful hegemony of the financial wise-guy merchants of debt that have plundered the US, the world. I hope they can take it with them from their Bahamas retirement (or wherever?) when they meet their maker. Probably take their lobbyists with them to broker a deal with St. Peter, or is it Archangel Gabrielle?

sock puppet  10/10/2008 01:52 AM Report

From Contrarian Profits 10/10/08: 8 Reasons the Bailout Will Fail ______________

The idea, from a theoretical standpoint, isn’t stupid. It is, however, impossible to implement to any degree that will result in its intended effect. ___________________________

Here’s why: _________________________

There are more than $1 trillion worth of subprime collateralized mortgage-backed securities out there - and that’s just one type of problematic derivative security. The bottom line: $700 billion isn’t enough. Period. ____________

The purchase plan is not limited to just residential mortgage-backed securities. Surprise! What else will Treasury buy?

Who’s going to fight off the lobbying groups out to influence the managers that the Treasury Department hires to direct money to their masters? Did we mention that $700 billion wasn’t enough? _____________

The government plan is even more under-funded than people realize, for it doesn’t authorize the full $700 billion: Indeed, it starts with only $350 billion, leaving an even greater shortfall. Did we mention that $700 billion wasn’t enough? ______________

Treasury is going to hire banking-industry managers to manage the process. Those managers are going to serve themselves - just as they served themselves to get us into the crisis.

There is no defined mechanism to determine what price the Treasury Department will pay for what it buys. For argument’s sake, even if Treasury were to only buy the problem securities its leadership speaks of in public - residential mortgage-backed securities - there are problems if it prices them too low: If that happens, some holders won’t sell them, taking the chance that if they hold them long enough they will be worth more than Treasury is willing to pay. How will those financial institutions regain liquidity if they won’t sell the securities needed to make this happen? __________________

Since Treasury can’t buy all the problem securities, if it prices what it’s going to buy too low, all remaining holders will have to mark down their holdings and take more write-downs and losses. How will that create confidence and facilitate “liquidity”?

However, if the Treasury Department prices the securities too high, several problems quickly emerge: Hedge funds will rush to sell their current holdings, and may very well speculate by buying up more securities to sell them at a higher price (profit) to Treasury, meaning that the Treasury Department plan won’t necessarily be helping banks directly. What’s more, if those securities are priced too high, and the market for them continues to fall, taxpayers will eat the losses - a reality that likely will lead to an end to further program funding.

linus  10/10/2008 01:16 AM Report

I don't know a lot about the stock market,and speak from the viewpoint of a retired small business owner. I quit my regular job for health reasons, and went into the second hand and then antique business, which is maybe one of the last vestiges of free enterprise.

What I heard in these discussions by members of the global elite was about solving problems from the top down, and in my opinion there are many problems down here on the bottom. The grass roots aren't doing so well these days, what with all of the chemical farming going on and no one hoeing their weeds because they seen an ad on TV & believe that Roundup is God's gift to the suburban lawn.

This once great country was built on the concept of free enterprise and anyone could jump in without having to worry about restrictions and rules from every branch of government that quickly stifle any attempts to build something like, say, a more effecient automobile. In the 1910's & 20's there were at least two hundred makes of automobiles and trucks, many of them from small companies: they ran on gas, electricity, kerosene,or steam. If you owned a small farm you could buy a truck to haul your produce to market, of which there were many, or your grain to the family that owned an elevator. It was free enterprise and at that time was built from the bottom up.

I'm not saying that its as simple as all this, but do think that this must be considered, and who knows, if this downhill slide continues with no brakes, we may be doing just that...G:

Gertrude Stein  10/10/2008 01:15 AM Report

Volcker's and Rose's comments concerning FDR were ill-informed to the point of being embarrassing. FDR's policies prolonged the Depression to the tune of seven-plus years! In fact, had it not been for World War II, the U.S. likely would have continued to suffer severe economic difficulties well into the 1940s. Rose's suggestion that as a result of a particular fireside chat "we came back stronger than ever" is demonstrably idiotic. As for FDR's vaunted "leadership," it should be noted that he was in the early days of his first term and the subject of adoration by an exceedingly accommodating press corps. I'd love to see how he'd deal with the fourth estate jackals that presidents today routinely have to contend with. Really, I don't know what's worse: suffering through a Rose telecast featuring an entire panel of stridently anti-Bush partisans -- a frequent programming strategy -- or seeing him fail so miserably in recounting recent history.

sock puppet  10/10/2008 01:07 AM Report

Volcker pissed me off and I can't let go. He's a fraternity member whispering the password of 'pass-it-on-to-the-unwashed' - namely us. He condoned repeal of Glass-Steagall on basis of technology? BS! Citigroup was instrumental in that.

____

Obama is diminished by his association with Robert Rubin (ex Citigroup CEO) et al financial wise-guys that doubtless prostitute him with campaign contributions. Consequently the bailout under Obama will continue to be corrupted under his Secretary of the Treasury, whoever he/she is. (God forbid it being Rubin.) Whatever the ultimate real cost of the bailout government incompetence and mainly CORRUPTION will double it. If $0.7 trillion is accurate inflation, incompetence and corruption will AT LEAST double it to $1.4 trillion. Inflation could make this exponentially into the stratosphere as our currency is debased from bailout abuses.

sock puppet  10/10/2008 12:34 AM Report

Volcker lost all credibility with me suggesting that Credit Default Swaps be a part of the bailout (if I understood him). The shear size of the CDSs is too large at $200,000 per head (maybe $400,000 / worker). The financial wise-guy 'merchants of debt' should be saddled with all losses resulting from their speculation with these CDSs. The taxpayer should have no responsibility re this kind of crap shoot. AIG should be left to collapse and all of the attendant affected wise-guys. Even if it takes years to work out. Which may happen anyway - even with an attempted bailout. Potempkin village indeed.

RE Mant  10/10/2008 12:23 AM Report

It is always nice to see Paul Volcker. Call me naive, but I think what we will have to do, and probably the only thing we will have to do, is to create a globally-coordinated program to buy all of the securities involved in order to rewrite the mortgages on a workable basis. As Volcker says, it will be a formidable challenge, but we have the ppl and the tools to do it. Doing that should render the swap question nugatory. I do not think just buying the instruments in order to resell them is either desirable or workable. I also disagree with the idea that these successive bail-outs are benign. Each one imho leads to a bigger bubble the next time. I also don't like the movement I see in all of this towards an insurance society, both in the bail-outs and in the mkts themselves. Market traders contend that extra-mkt devices such as short-selling, swaps of various sorts, make the basic mkt more fluid by spreading risk in the same manner as insurance, but like insurance, they remove individual investors from risk, and even the necessary judgment of credit and value worthiness, and thus are a moral hazard as much as insurance cos whose inflationary effect is seen in health care and auto repair cost escalation. The programs of social-democratic govts, those relying on corporate provision of services, or of political machines, such as those of a Daley, Prendergast or Tweed, while useful as a means to distributive justice are open to manipulation and corruption. This kind of govt is not far removed from feudalism, but without the sense of community or noblesse oblige. Tocqueville saw the seeds and wrote scathingly about it. Indeed the tension between equality and liberty pervades Democracy in America. Far better to have a national budget leaving implementation to competition as a means to social justice, than to be patronized in this way. Ideally mkt processes alone would suffice, working through the concept of amour-propre (i.e., self-love rightly understood, analogous to the Stoic sympathy found in Locke, Pope and the Scots including Adam Smith), but to work they need at this juncture govt help to protect ppl from bullying, and monetary corruption, which is little developed even in 1st world countries, and it won't do for libertarians to ignore that fact, which would be no better than Social Darwinism. The argument so often heard from them that ppl should be left free to do as they please as long as they don't interfere with the same right of others has been around a long time. It was made by Jeffersonian theoretician St. George Tucker in his edition of Blackstone. But it does not make sense unless ppl are very remote from each other or think exactly alike already. No modern society or economy could reasonably operate on that basis, and it excludes the idea of education that is the basis of amour-propre. Indeed in ppl like Berlin and Hayek the bias against "freedom to" is clear. I don't suppose our honored guest would disagree. Since it was brought up, the Depression was really lifted only by WWII, because: 1. the war forced a reduction in consumption and an increase in saving; 2. it built factories and created a lot of jobs; 3. those jobs improved skill levels and work ethic; 4. there was an over-all increase in virtue and community spirit (criticized afterwards by William H. Whyte, but whose loss has since been bemoaned by Robert Putnam); 5. the GI Bill paid for a lot of education; 6. we were left with a very strong currency after the war; 7. the onset of the Cold War encouraged us to subsidize our trading partners in Europe and the Far East, including our former enemies, unlike the 20's and 8. Eisenhower modernized schools and infrastructure to address the manpower and logistics problems found during the war.

Michael Couch  10/09/2008 11:40 PM Report

Real Economics, as opposed to what goes on in the fantasy we live in; recognizes that real wealth is only created by labor. Even gold is only valuable because it takes so much labor to find it.

The problem with our economy is that people with power have been trying to deceive the world into believing that value comes from somewhere else. This false economy is created to keep the masses enslaved by creating the illusion of scarcity and lack.

The Federal Reserve (Private Bank) controls the people by controlling the economy through limiting the amount of paper money available to facilitate commerce transactions, especially the ones that don't put all the profits back into their own pockets.

To build a real economy, it would be necessary to strip the Federal Reserve Private Bank of its power to print money and loan it to the Government, restoring this power to print money to the Government ALONE.

Each years budget should be printed and spent by the Government as God intended. The LABOR of the people as they earn the money from the Government projects is what will create a stable prosperous economy and by funding all the great projects we need remove the lack and scarcity imposed by the Super Bankers of the New World Order. That is what a real economy would be.

Josh Eliopoulos  10/09/2008 09:25 PM Report

This "credit crisis" could have been a blip on the radar screen of US markets had their been timely government intervention in the banking system. As a mere broker, I saw the train going off the tracks back in the fall of 2005. The banking industry was getting drunk on the volume of mortgages it could buy and resell; Mortgage Backed Securities that were as difficult to value as a bag of sand in the Sahara. Because the housing market is the backbone of our economic viability, there should have been staunch oversight and pragmatic policy in the mortgage industry. FNM and Freddie, as corporations with government charter, should never have been allowed to buy such risky mortgages as were under-written by the primary market players. I am disgusted at the whole mess. It could have been avoided!

sock puppet  10/09/2008 06:07 PM Report

Betting the AIG bailouts are already addressing their CDS (Credit Default Swaps).

____

If so this is unconscionable. Gambling with these purely speculative derivatives should not be rewarded - with our money.

sock puppet  10/09/2008 05:52 PM Report

Weds. econs passed so Thurs. turn. The elephant in the room is Credit Default Swaps (CDS).

____ From Business Week and the AP 10/08/08 10:48 ET: "The roughly $60 trillion market for credit default swaps lacks transparency, is unregulated and creates an environment for market manipulation, Securities and Exchange Commission Chairman Christopher Cox said. The market's size exceeds the gross domestic product of every country in the world combined, he noted."

____ With a 6 billion world population that's $10,000 per head. And $200,000 per capita US

____ Are CDSs a part of the BAILOUT? If not do many more financial institutions belly up - as they deserve - or do they get coddled like AIG et al?

____ If CDSs are included then we're finished. That will debauch and debase our currency to wallpaper. They couldn't print it fast enough. All western currencies might collapse in tandem (dollar, pound, euro) while eastern's (China, Russia? oil producers et al) would appreciate. We have some Pyrrhic choices to make (as in damned if we do and damned if we don't).

____ My choice: no CDS bailout and let the financial institutions that indulged collapse (as they may anyway a la Lehman, Bear-Stearns) and as they should. Then inject preferred stock into banks that request assistance - and ONLY if they request. In the interim think gold. Again, I hope CDSs will be a (major?) part of the conversation. But I'm not holding my breath.