Tuesday, September 22, 2009
Things Seem to be Muddling Through
I'd write about something if there was something to write about. The U.S. seems to be hobbling along as the American people try to survive the economic downturn. Our leaders don't seem to be leading much. Witness the lack of reform in financial regulation, the lack of consensus, and possibly political will, to reform American healthcare. The people sense that something is grossly out of alignment with society, that fairness has been thrown out the window. Meanwhile, the government gives money to corporations and banks, and hopes that it will trickle down to the taxpayer. Tickle-down economics is dead as a practical economic theory, but people still cling to its comforting illusion. It seems that our government has been completely captured by business interests. Both the government and corporations will be looted of their assets. Those in power will reap the rewards, then move on. Jobs will be sent overseas never to return, and the Middle Class will decline as will the nation; unless, the People wake up and cause the government to shake off its parasites. If Australian economist Steve Keen is correct, than U. S. government economic policy is critically flawed. Not that people can't see the obvious, that the Fed is creating a new bubble to offset this last bubble.
I'm not sure why people aren't giving Max Keiser more credit for the Keen interview. Mr. Keiser is a bit over the top and outspoken, but perhaps one has to be that way to get people out of their complacency. Check out www.maxkeiser.com. It's at least entertaining while also being informative. Most mainstream American media isn't really informative any more. It's mostly just entertainment disguised as information.
I'm not sure why people aren't giving Max Keiser more credit for the Keen interview. Mr. Keiser is a bit over the top and outspoken, but perhaps one has to be that way to get people out of their complacency. Check out www.maxkeiser.com. It's at least entertaining while also being informative. Most mainstream American media isn't really informative any more. It's mostly just entertainment disguised as information.
Labels: plodding along
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The bleak view may be correct - although the US economy is no longer as strong an economic leader as it used to be. Policies in China may have an impact on heading off some US economic mistakes - I hope.
Pete,
China is blowing its own financial bubble. Chances are that accounting and mortgage fraud is just as rampant in China. The only difference is that China has a vast amount of personal and national savings. But fraud is theft, the enrichment of a few from the many. The looting must be stopped in both countries or a lot of people will be hurt. Whether Chinese policies work or not will not be known until some future time. We do know that American policies will just result in a worse crash in the future because currently the financial system hasn't been fixed, and the government is giving the people who caused the mess other people's money to get out of the mess. They have nothing to lose if they gamble with taxpayer money, since the government has now essentially guaranteed that any more losses will be covered by the taxpayer. This is extreme moral hazard.
One solution is to make the ratings agencies accountable for their ratings. If they rate securities falsely, they go out of business. (William Black's proposal.) Separating commercial and investment banking again would likewise be a good idea. There are likely other cost effective measures that would force banks and traders to be accountable. The problem with capitalism is that cheats drive competitors to cheat to stay in business. Bad ethics drives good ethics out of the system. This is why control fraud is so subtly nasty. People underestimate the impact fraud has on the system since most people assume that everyone else is trying to earn an honest living.
John
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China is blowing its own financial bubble. Chances are that accounting and mortgage fraud is just as rampant in China. The only difference is that China has a vast amount of personal and national savings. But fraud is theft, the enrichment of a few from the many. The looting must be stopped in both countries or a lot of people will be hurt. Whether Chinese policies work or not will not be known until some future time. We do know that American policies will just result in a worse crash in the future because currently the financial system hasn't been fixed, and the government is giving the people who caused the mess other people's money to get out of the mess. They have nothing to lose if they gamble with taxpayer money, since the government has now essentially guaranteed that any more losses will be covered by the taxpayer. This is extreme moral hazard.
One solution is to make the ratings agencies accountable for their ratings. If they rate securities falsely, they go out of business. (William Black's proposal.) Separating commercial and investment banking again would likewise be a good idea. There are likely other cost effective measures that would force banks and traders to be accountable. The problem with capitalism is that cheats drive competitors to cheat to stay in business. Bad ethics drives good ethics out of the system. This is why control fraud is so subtly nasty. People underestimate the impact fraud has on the system since most people assume that everyone else is trying to earn an honest living.
John
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