Showing posts with label Populism. Show all posts
Showing posts with label Populism. Show all posts
Sunday, February 12
Monday, November 21
Image of the Day
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| (click to enlarge) |
In case you missed the video.
More on the story and fallout here.
Educational Site: If you are concerned about political reform, you might be interested in
Sunday, November 6
Wednesday, October 19
Wednesday, October 12
No, No, No: Erin Burnett, the Government Bank Bailouts Were Not 'Profitable'
Oh boy.
On location at Occupy Wall Street, CNN's Erin Burnett is perpetuating the myth that government bailouts for banks were profitable for taxpayers.
Here, here, here and here are my previous posts about why this is not true.
On location at Occupy Wall Street, CNN's Erin Burnett is perpetuating the myth that government bailouts for banks were profitable for taxpayers.
Here, here, here and here are my previous posts about why this is not true.
In short, it's misleading to claim that the bank, or Wall Street, portion of the government bailouts (called TARP) is profitable without referencing the trillions in other bailouts provided by the Fed, the ongoing support for Fannie Mae and Freddie Mac (which could cost taxpayers trillions), and other taxpayer support which directly and indirectly bailed out Wall Street beyond just TARP. The reason is that the recipients of the government bailouts are intricately connected. Wall Street had (still has?) vast real estate holdings, so the support provided to Fannie/Freddie and the Fed's purchase or mortgage backed securities were second and third bailouts, respectively, for Wall Street on top of TARP.
Erin, it is fallacious to promote a myopic view that the government got its money back and then some on the TARP tranche of the government bailouts. You need to also look at where taxpayers have not yet received their money back (Fannie/Freddie) or are still exposed (Fed's nearly $3 trillion balance sheet). To do otherwise is to engage in an incomplete, inaccurate and deceptive accounting of the bailouts.
For those interested in more detail line-by-line accounting of the various government bailouts can be viewed here.
For those interested in more detail line-by-line accounting of the various government bailouts can be viewed here.
Tuesday, September 20
Greek Referendum on Leaving the Euro
Update: a rumor no longer. Latest polling shows 60% of Greeks oppose last week's bailout deal, while 70% want to keep the euro. The vote will supposedly take place sometime early next year. I stand by my earlier prediction that this vote will never take place for the reasons described below. The prospect of a Greek vote on not just the bailout but Eurozone membership, hanging over the financial system like a Sword of Damocles, cannot possibly be tolerated for the next three months.
The latest rumor:
Will Greeks be allowed to vote on whether or not they want to remain in the Eurozone? Extremely unlikely, IMO.
The Eurozone is like the Eagles' Hotel California: countries which have been invited can check in any time they like, but they can never leave. A formal legal process for leaving the Eurozone was intentionally left out of Maastricht.
The situation on the ground in Greece is already incendiary enough as it is. Putting the euro to a Greek vote, while democratic, would trigger far too much chaos. And if the majority voted in favor of leaving the euro and returning to the drachma there would be an immediate, full run on Greek banks (if it hadn't already been completed in anticipation of the voting result).
If Greece decides to leave the Euro, which looks increasingly likely, it won't be done through a popular vote.
Why oh why on Earth is anyone still keeping their euros in a Greek bank? Or to put it another way, why aren't the Greeks behaving more like the Irish?
As pressure from Greece’s foreign creditors and austerity-weary citizens mounts on the government, Prime Minister George Papandreou is considering calling for a referendum on whether Greece should continue to tackle its debt crisis within the eurozone or by exiting the single currency.
According to sources, Papandreou hopes that the outcome of such a vote would constitute a fresh mandate for his Socialist government to continue with an austerity drive backed by Greece’s international lenders -- the European Commission, the European Central Bank and the International Monetary Fund.Here's the source.
A bill submitted in Parliament, paving the way for a referendum to be carried out, is to be discussed in coming days.
The Eurozone is like the Eagles' Hotel California: countries which have been invited can check in any time they like, but they can never leave. A formal legal process for leaving the Eurozone was intentionally left out of Maastricht.
The situation on the ground in Greece is already incendiary enough as it is. Putting the euro to a Greek vote, while democratic, would trigger far too much chaos. And if the majority voted in favor of leaving the euro and returning to the drachma there would be an immediate, full run on Greek banks (if it hadn't already been completed in anticipation of the voting result).
If Greece decides to leave the Euro, which looks increasingly likely, it won't be done through a popular vote.
Why oh why on Earth is anyone still keeping their euros in a Greek bank? Or to put it another way, why aren't the Greeks behaving more like the Irish?
Tuesday, August 16
Video: Our Political and Economic Problems Are Fundamentally a Crisis in Virtue
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| Marcus Aurelius |
He's spot on about the point that all the new regulation in the form of Dodd-Frank, Basel III, etc. do zero good without enforcement.
And why aren't both existing and new regulations being enforced? In Dr. Friedman's view, it comes down to a lack of virtue among our current elite.
The good news is that this is not an insolvable problem for two reasons: First, virtue, in my opinion, is unlike height, raw intelligence, or good looks, in the sense that it is not something that one is by-and-large born with. Virtue is both learned and cultivated over time.
But how much attention do we currently place on the development of virtue? The classics in the western world on this topic include the works by Marcus Aurelius, Benjamin Franklin, Adam Smith, Thomas Aquinas, Aristotle, among others. To perhaps unfairly single out two disciplines, what room is made for those works in our current economics and business curriculum? From my personal observations, zip.
The idea of a renaissance education has been steadily pushed aside through the years in favor of the poly-technical practicalness of the 1-minute manager MBA and quant-PhDs. Today's economic and political conundrum is arguably a by-product of this de-prioritization of the study and development of virtue.
The second reason I am optimistic we can solve this problem is that when our leaders first fail society in such an epic fashion, and then next fail a second time by not fixing the root-cause of the problem, then those of us in representative democracies often make change.
Here's to hoping we get the change right this time.
Sunday, May 8
Video: U.S. Government Using Your Tax Dollars to Poison Food
At 1.3 million views and counting, below is the video highlighted in the recent NY Times article on how sugar is toxic.
This is a familiar story for anyone who has read the excellent Omnivore's Dilemma or seen the movie Food, Inc. (both can be found in the 'Good Books and Films' box on the right side of this blog). What may be less familiar is the fact that the U.S. federal government is directly supporting the poisoning of the American public through fructose (corn syrup) subsidies to Iowa farmers.
Please allow me to repeat that: our government is helping to poison us with our own tax money.
While some members of Congress are working to put an end to this deplorable policy, Big Food, the farm lobby and the U.S. Department of Agriculture (USDA) have thus far successfully fought off cuts to corn subsidies.
A perhaps more fundamental way to get a handle on this problem is by replacing the income tax with a consumption tax (which I've written about here).
As an aside, has anyone out there heard Warren Buffet, Coca-Cola's largest investor, address what Dr. Lustig calls the 'Coca-Cola Conspiracy'? It would seem that Warren is turning a blind eye to the fact that he is financing one of the nation's (and now the world's) fastest growing and most serious health epidemics.
This is a familiar story for anyone who has read the excellent Omnivore's Dilemma or seen the movie Food, Inc. (both can be found in the 'Good Books and Films' box on the right side of this blog). What may be less familiar is the fact that the U.S. federal government is directly supporting the poisoning of the American public through fructose (corn syrup) subsidies to Iowa farmers.
Please allow me to repeat that: our government is helping to poison us with our own tax money.
While some members of Congress are working to put an end to this deplorable policy, Big Food, the farm lobby and the U.S. Department of Agriculture (USDA) have thus far successfully fought off cuts to corn subsidies.
A perhaps more fundamental way to get a handle on this problem is by replacing the income tax with a consumption tax (which I've written about here).
As an aside, has anyone out there heard Warren Buffet, Coca-Cola's largest investor, address what Dr. Lustig calls the 'Coca-Cola Conspiracy'? It would seem that Warren is turning a blind eye to the fact that he is financing one of the nation's (and now the world's) fastest growing and most serious health epidemics.
Sunday, February 27
University of Revolution
Good read on the Serbian-based organization CANVAS, which provided some inspiration for the April 6 Egypt revolutionaries, here.
Friday, February 11
Friday, December 3
Maverick Fed Governor Hoenig: Too 'Bigger' to Fail Alive and Growing
The maverick of the Federal Reserve, Governor Thomas Hoenig, states the following in his NY Times op-ed:
At risk of causing my high school grammar teacher to roll in her grave, I've started calling what Hoenig describes above as 'Too Bigger to Fail'. The below chart helps illustrate the 'Too Bigger to Fail' concept.
The grey circles represent banks which failed and then were merged with the 'bigger fish' in the banking pond. By eating smaller fish the big fish grows, and that's precisely what's happend at the world's already Too Big to Fail megabanks (hence the new name Too 'Bigger' to Fail).
Regulators — not just in the U.S. but across the globe — activated their Too 'Bigger' to Fail strategy with the hope that the crisis would be solved by spreading toxic assets across a larger, and in theory healthier set of balance sheets. The same toxic assets still exist, but it was hoped that the bigger banks could better cope with the toxic asset losses.
Too 'Bigger' to Fail has one further element: megabanks would have time to lick their wounds and heal by a) generating increased profits due to fewer competitors (the small fish that were eaten), and b) through bank profit and banker bonus friendly programs like unlimited zero interest central bank lending to mega banks and QE2.
Ultimately, any hope for a solution to the Too 'Bigger' to Fail problem depends on whether sufficient political will and leadership can be mustered. Can it?
Small is Beautiful
The U.S. based megabanks -- Chase, Citibank, Bank of America, Wells Fargo, Goldman Sachs, and Morgan Stanley -- will not voluntarily shrink themselves out of a sense of patriotic duty. Hopefully this week's news of the Fed's foreign bank lending of perhaps as much as $1 trillion at nearly 0% interest rates to banks like UBS (Switzerland), Deutsche Bank (Germany), Barclays (U.K.) and BNP Paribas (France) puts to rest any lingering doubt of whether the megabanking establishment is loyal to any one nation's flag.
Turning to our current political leadership, unfortunately Inside Job Director Charles Ferguson may be right in his assessment that the Obama administration is unwilling to step up to the plate and drive the necessary stake through the heart of Too Big to Fail once and for all.
If our politicians can't fix the problem, what hope remains? Thankfully an arguably even more effective solution to Too Bigger to Fail exists completely outside of the Washington D.C. political black hole.
Lost Customers: The Only Language Megabanks Understand
Most of us are bank customers, which makes putting an end to Too 'Bigger' to Fail quite simple: all we have to do is take our banking business somewhere else.
For those customers at one of the above Too 'Bigger' to Fail banks, move your account to a smaller bank. Also never use an ATM at a Too 'Bigger' to Fail bank. Plenty of smaller banks now offer free ATM fee reimbursement, so this won't saddle you with extra fees. While moving your account will require a little extra work it's a relatively simple process. If enough of us pull together and do this it will go a long way towards solving the problem.
And for anyone who works at one of the aforementioned megabanks and has read this far, you can perhaps make one of the biggest contribution of all by seeking out another employer, or career. I did.
Democratic capitalism has many shortcomings. But one of the beautiful things about the marketplace in this particular instance is that it can successfully achieve what D.C. can't and Wall Street won't — cutting the Too 'Bigger' to Fail banks down to an appropriate size.
Disclosure: No positions; I bank primarily with the recently divested from BofA (NYSE: BAC) and IPO'd First Republic Bank (NYSE: FRC) and USAA Savings Bank (private).
There is an old saying: lend a business $1,000 and you own it; lend it $1 million and it owns you. This latest crisis confirms that the economic influence of the largest financial institutions is so great that their chief executives cannot manage them, nor can their regulators provide adequate oversight.
Last summer, Congress passed a law to reform our financial system. It offers the promise that in the future there will be no taxpayer-financed bailouts of investors or creditors. However, after this round of bailouts, the five largest financial institutions are 20 percent larger than they were before the crisis. They control $8.6 trillion in financial assets — the equivalent of nearly 60 percent of gross domestic product. Like it or not, these firms remain too big to fail.Too 'Bigger' to Fail
At risk of causing my high school grammar teacher to roll in her grave, I've started calling what Hoenig describes above as 'Too Bigger to Fail'. The below chart helps illustrate the 'Too Bigger to Fail' concept.
The grey circles represent banks which failed and then were merged with the 'bigger fish' in the banking pond. By eating smaller fish the big fish grows, and that's precisely what's happend at the world's already Too Big to Fail megabanks (hence the new name Too 'Bigger' to Fail).
Regulators — not just in the U.S. but across the globe — activated their Too 'Bigger' to Fail strategy with the hope that the crisis would be solved by spreading toxic assets across a larger, and in theory healthier set of balance sheets. The same toxic assets still exist, but it was hoped that the bigger banks could better cope with the toxic asset losses.
Too 'Bigger' to Fail has one further element: megabanks would have time to lick their wounds and heal by a) generating increased profits due to fewer competitors (the small fish that were eaten), and b) through bank profit and banker bonus friendly programs like unlimited zero interest central bank lending to mega banks and QE2.
Ultimately, any hope for a solution to the Too 'Bigger' to Fail problem depends on whether sufficient political will and leadership can be mustered. Can it?
Small is Beautiful
The U.S. based megabanks -- Chase, Citibank, Bank of America, Wells Fargo, Goldman Sachs, and Morgan Stanley -- will not voluntarily shrink themselves out of a sense of patriotic duty. Hopefully this week's news of the Fed's foreign bank lending of perhaps as much as $1 trillion at nearly 0% interest rates to banks like UBS (Switzerland), Deutsche Bank (Germany), Barclays (U.K.) and BNP Paribas (France) puts to rest any lingering doubt of whether the megabanking establishment is loyal to any one nation's flag.
Turning to our current political leadership, unfortunately Inside Job Director Charles Ferguson may be right in his assessment that the Obama administration is unwilling to step up to the plate and drive the necessary stake through the heart of Too Big to Fail once and for all.
If our politicians can't fix the problem, what hope remains? Thankfully an arguably even more effective solution to Too Bigger to Fail exists completely outside of the Washington D.C. political black hole.
Lost Customers: The Only Language Megabanks Understand
Most of us are bank customers, which makes putting an end to Too 'Bigger' to Fail quite simple: all we have to do is take our banking business somewhere else.
For those customers at one of the above Too 'Bigger' to Fail banks, move your account to a smaller bank. Also never use an ATM at a Too 'Bigger' to Fail bank. Plenty of smaller banks now offer free ATM fee reimbursement, so this won't saddle you with extra fees. While moving your account will require a little extra work it's a relatively simple process. If enough of us pull together and do this it will go a long way towards solving the problem.
And for anyone who works at one of the aforementioned megabanks and has read this far, you can perhaps make one of the biggest contribution of all by seeking out another employer, or career. I did.
Democratic capitalism has many shortcomings. But one of the beautiful things about the marketplace in this particular instance is that it can successfully achieve what D.C. can't and Wall Street won't — cutting the Too 'Bigger' to Fail banks down to an appropriate size.
Disclosure: No positions; I bank primarily with the recently divested from BofA (NYSE: BAC) and IPO'd First Republic Bank (NYSE: FRC) and USAA Savings Bank (private).
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