Are Financial Adivsers running the US?

[Pythagorean]

Are Financial "Adivsers" running the US?

I recently saw "Inside Job" and realized (or was made to "realize") how the same circle of financial advisers has managed to stay in the white house through several presidencies, left or right.

So while we bicker about left vs. right, it seems that many decisions made by both left and right presidents have this dominant fiscal component to them that tends to favor the financial sector.

For examples, the foreclosure settlement. Is this really something Obama wanted or is he under immense pressure from the financial sector?

Is this a real problem we should be confronting?

 

[phinds]

I recently saw "Inside Job" and realized (or was made to "realize") how the same circle of financial advisers has managed to stay in the white house through several presidencies, left or right.

So while we bicker about left vs. right, it seems that many decisions made by both left and right presidents have this dominant fiscal component to them that tends to favor the financial sector.

For examples, the foreclosure settlement. Is this really something Obama wanted or is he under immense pressure from the financial sector?

Is this a real problem we should be confronting?

It seems so to me. I approved of the bailout of both the financial sector and the auto industry, but I think it is shameful the way Obama let the financial people in his administration keep him for forcing any consequences on the wall st organizations that caused the meltdown in the first place. Personally, I was in favor of a firing squad but I would have settled for some jail terms and big fines.

The "too big to fail" is STILL not in any way addressed, as I understand it, and the whole mess could happen again. Obama has added a massive moral hazzard to the situation by not forcing consequences.

 

[John Creighto]

The government depends on cheap money to finance their budget. Cheap money is inflationary. The financial sector likes cheap money because it allows them to loan more money. It is an “unholy alliance”.

 

[valjok]

> financial advisers has managed to stay in the white house through several presidencies, left or right.

Americans are very funny. Do you call everybody, who is scared of communism "a leftist" or "right-winger"? :rofl:


But you think exactly like a marxist. Do their next step, call your "democracy" a dictatorship of the bourgeoisie

 

[Pythagorean]

I'm not sure I understand your post. Presidents run as republicans or democrats here (even though they are all a little moderate). My point was simply that it doesn't seem to matter which party is in the white house, we still seem to bow to the financial sector.

 

[phinds]

... Do you call everybody, who is scared of communism ...

I don't think Americans think much about communism one way or the other any more. It has been proven to be an utterly bankrupt (both morally and financially) philosophy when actually put into practice, so there's nothing to BE afraid of.

 

[Pythagorean]

Maybe he's referring somehow to the buzz-word "socialist"?

Last time I heard a reference to communism was a vietnam movie.

 

[valjok]

I don't think Americans think much about communism one way or the other any more. It has been proven to be an utterly bankrupt (both morally and financially) philosophy when actually put into practice, so there's nothing to BE afraid of.

If you dislike communism, you are not left. How do you disprove this statement by reproducing the anticommunist propaganda?

As part of off-topic, I must say that though it might be unstable, at least in the popular forms it was practiced, it is bankrupt morally only because you are being distorted by capitalist propaganda since childhood. This propaganda teaches that black is white and white is black.

 

[Pythagorean]

I presume your posts presume too much valjok... Otherwise you are being unclear and misinterpreting language.

 

[phinds]

If you dislike communism, you are not left. How do you disprove this statement by reproducing the anticommunist propaganda?

As part of off-topic, I must say that though it might be unstable, at least in the popular forms it was practiced, it is bankrupt morally only because you are being distorted by capitalist propaganda since childhood. This propaganda teaches that black is white and white is black.

I take it you are a strong believer in communism. Well, good luck with that.

 

[ThomasT]

I recently saw "Inside Job" and realized (or was made to "realize") how the same circle of financial advisers has managed to stay in the white house through several presidencies, left or right.

So while we bicker about left vs. right, it seems that many decisions made by both left and right presidents have this dominant fiscal component to them that tends to favor the financial sector.

Yes, that seems to be the case. "Money, Power, and Wall Street", "Inside the Meltdown", and "The Warning" were interesting also.

For examples, the foreclosure settlement. Is this really something Obama wanted or is he under immense pressure from the financial sector?

It's a huge lobby, and Obama did fill key positions with people whose past positions/behaviors suggest that they're aligned with the financial sector ... maybe to a fault ... when he could have filled those positions with people who were known to be in favor of reform and regulation and increasing transparency and diminishing the financial sector's percentage of the economy.

Is this a real problem we should be confronting?

It seems to me to be a problem. How would you suggest dealing with it? Apparently Obama isn't part of the solution, and it seems clear to me that Romney's aligned with the financial sector.

 

[Pythagorean]

Obama did fill key positions with people whose past positions/behaviors suggest that they're aligned with the financial sector ... maybe to a fault ... when he could have filled those positions with people who were known to be in favor of reform and regulation and increasing transparency and diminishing the financial sector's percentage of the economy.

But why do presidents continue to do this? It appears to me that it doesn't matter who the president is; like once they sit in the seat, they realize the financial sector's hand was waiting to grab them by the balls.

Or maybe financial sector was there in the beginning, ensuring presidency to all who would play well?

Isn't it worth trying to analyze motive when we see a trend like this?

 

[ThomasT]

But why do presidents continue to do this? It appears to me that it doesn't matter who the president is; like once they sit in the seat, they realize the financial sector's hand was waiting to grab them by the balls.

You should probably phrase this a bit differently to avoid an infraction. Just a suggestion. But, yeah, your statement has a certain "ring" of truth to it ... to my ear.

Or maybe financial sector was there in the beginning, ensuring presidency to all who would play well?

Maybe. Either way it seems pretty clear that the financial sector is exerting a lot of influence on legislative actions and administrative policies.

Isn't it worth trying to analyze motive when we see a trend like this?

The motive is money, imho. The underlying cause is that people are greedy ... at least sometimes. That's just my opinion of course.

I don't think there's much need to analyze. What can the average American do about it? Not much, imho.

The good news is that things seem pretty OK across the board for the vast majority of Americans. So, I'm just enjoying the ride for as long as it lasts. It is possible that things in the US can get a lot worse ... for most Americans -- and, imo, if people keep voting for major party candidates, then that's almost assured. But then, what's the alternative? As I mentioned, I believe that we're all somewhat greedy at least sometimes, and sometimes motivated by money to the exclusion of arguably 'higher' goals.

EDIT: Things like calling and writing elected officials to support actions which minimize the probability that financial players might really mess things up again do help, I think.

 

[edward]

Here is a link to Money Power & Wall Street all four hours of it. It can be viewed one segement at a time.

http://www.pbs.org/wgbh/pages/frontline/money-power-wall-street/

I had no idea that the FED loaned money to foreign banks?? It makes it sound like the financial sector running the show isn't just made up of American interests.

 

[edward]

The good news is that things seem pretty OK across the board for the vast majority of Americans. So, I'm just enjoying the ride for as long as it lasts. It is possible that things in the US can get a lot worse ... for most Americans -- and, imo, if people keep voting for major party candidates, then that's almost assured. But then, what's the alternative? As I mentioned, I believe that we're all somewhat greedy at least sometimes, and sometimes motivated by money to the exclusion of arguably 'higher' goals.

The news is only good for the bankers who caused the crisis as they are now back to doing business as usual.

Anyone who bought a home after about 2002 , depending on location, is now underwater. And that includes people who didn't buy more house than they could afford.

 

[phoenix:\\]

ThomasT, don't get banned again! Lol

But when did you figure this all out? This is no new fact. When the government turns to businesses for help, or when your presidential candidates are backed by businesses, and senators are align with businesses, you'll see your country being run by big business. This is nothing new, it is apart of this capitalist society.

 

[valjok]

The news is only good for the bankers who caused the crisis as they are now back to doing business as usual.

Anyone who bought a home after about 2002 , depending on location, is now underwater. And that includes people who didn't buy more house than they could afford.

Not only bankers. Private housing is incredibly expensive infrastructure compared to compact cities of tall buildings, with no place for private cars. But, you need a planned economy to build the economy and eco-cities. Capital cannot benefit from it. Do not blame everything on bankers. Private housing feeds builders, automobile and oil industry. Blame your dreams and capitalist society. It cannot live without cricises. What is more dangerous is that in the race for profits, people devastate the nature.

 

[ThomasT]

ThomasT, don't get banned again! Lol

Right ... well, I don't think I've insulted any countries or ethnic groups since my return. It's tough being a gnarly curmudgeon.

But when did you figure this all out? This is no new fact. When the government turns to businesses for help, or when your presidential candidates are backed by businesses, and senators are align with businesses, you'll see your country being run by big business. This is nothing new, it is a part of this capitalist society.

I think that's pretty much what I said. However, I don't think that questionable business and financial practices are necessarily inevitable. That is, the mass voting public can have a more direct influence than just casting votes once in a while, imo. But it requires actually contacting elected officials via phone, email, letter, or in person to let them know how you want them to vote on various issues. Politicians do like the perks and money that lobbying groups offer, but they also want to get reelected. Maybe I'm just being naive.

 

[ThomasT]

The news is only good for the bankers who caused the crisis as they are now back to doing business as usual.

Yes, it's been inordinately good for some (most?) financial institutions. But it's also been good, or OK anyway, for many businesses and a significant proportion of the populace not involved in finance.

Eg., my situation, and the situations of most of my friends hasn't been significantly adversely affected by the financial crisis. And none of us are rich. The rate of inflation hasn't unduly increased as far as I can tell, and the vast majority of Americans are employed.

The unemployment rate seems to be generally declining.

Anyone who bought a home after about 2002 , depending on location, is now underwater. And that includes people who didn't buy more house than they could afford.

I'm guessing that home prices will recover (not back to what they were during the bubble maybe, but enough so that tens of millions of homeowners aren't under water) ... in the foreseeable future (that is, within my lifetime ... I'm 65).

But of course, if nothing is done to prevent or at least minimize questionable practices by financial institutions, then the probability of another serious economic crisis within my lifetime remains uncomfortably high, imo.

And I think that this is something that individual Americans can influence.

 

[russ_watters]

Yes, it's been inordinately good for some (most?) financial institutions. But it's also been good, or OK anyway, for many businesses and a significant proportion of the populace not involved in finance.

Eg., my situation, and the situations of most of my friends hasn't been significantly adversely affected by the financial crisis. And none of us are rich.

Yes, for the vast majority of the population, the real impact of the financial crisis has been minimal. The people most hurt are the ones who became unemployed (and their families), who probably amount to something like 10% of the population.

I was hurt slightly by working a few percent fewer hours than "normal" for me in 2008 and by a temporary freeze on raises and benefits at work. But this was mostly offset by tax cuts and a reduction in interest rates - for my mortgage and for the car I'm about to buy. All in all, it is tough for me to characterize a reduction in gains as a loss.

 

[gravenewworld]

Without a doubt banks are running the country.

The financial blogs and insiders are all a buzz with what was a whistle blower letter to the CFTC by a supposed JP Morgan employee:

http://articles.businessinsider.com/2012-03-16/wall_street/31199386_1_jpmorgan-chase-open-letter-mf-global http://ftalphaville.ft.com/blog/2012/03/16/926591/gartman-ponders-the-1st-whistleblower-of-many/

Now maybe that letter is fake, but it is interesting to see that JP Morgan just lost $2billion through bets on more shenanigans.
Upon retiring, even CFTC judge Painter gave insight into how the entire system is riggged through his whistle blowing:

http://articles.latimes.com/2010/oct/26/business/la-fi-hiltzik-20101026

Even when his word comes wrapped up like a bombshell.

Painter, 83, detonated that bombshell recently in the course of announcing his retirement as an administrative law judge for the Commodity Futures Trading Commission, effective in January. In a public notice, he accused his lone colleague on the CFTC bench, Bruce Levine, of having made a vow nearly 20 years ago never to rule in a complainant's — that is, an investor's — favor.
...

When I reached Painter again last week, he didn't seemed to have changed much. "It's gone to hell," he said, referring to the standing of the investor at the CFTC. "But it's always been that way, hasn't it? We're not prosecuting the bad guys." For the record: He sounded perfectly lucid.

Under normal circumstances, Painter's view might be taken to heart by the bureaucratic establishment in Washington. It was regulatory agencies' failures to look out for consumers that helped win enactment of a new consumer protection agency this year. Furthermore, the CFTC has long had the character of a place where regulations go to die — although, to be fair, that's not entirely the fault of its commissioners.

In 1998, during the Clinton administration, then-CFTC Chairwoman Brooksley Born urged Congress to place over-the-counter derivatives, then a $100-trillion business, under the agency's control. She was rudely slapped down by her fellow financial regulators, who said things were fine. That was before derivatives helped bring down Enron Corp. in 2001 and the world financial system in 2008.

One of Born's predecessors as CFTC chair was Wendy Gramm, wife of former Sen. Phil Gramm (R-Texas), who pushed through key financial deregulatory legislation while he was senator.

After leaving the CFTC, Wendy Gramm joined the Enron board. She was still there when the company went under. The CFTC chair to whom Judge Levine supposedly made his pledge, according to Painter, was Wendy Gramm. (I couldn't reach her or Levine for their comments on Painter's remarks.)

http://articles.marketwatch.com/2012-05-11/commentary/31655422_1_markets-wall-street-financial-crisis

 

[Office_Shredder]

I don't see how you draw a link between an accusation that JP morgan is manipulating markets and making money hand over fist with JP morgan blundering billions through incompetence

 

[chiro]

When you've got an abundance of cheap credit that should not be cheap, then you are bound to get problems. When you combine cheap credit with an encouragement to speculation, then it's even worse.

I watched an interview with Charlie Munger and I agreed with his stance that in a good economic climate, one should be looking to invest in things that are good in terms of long-term results, and for things that actually benefit society whether they be business ventures, infrastructure projects and so on.

The only reason though that I don't agree with this 'at this moment' is because the integrity of the system is broken. When you have a situation where people even think or hesitate for a moment to think that there is 'confidence issues' with a currency or some kind of capital, then you know this is a huge problem.

When you have a structurally sound system, then there is no need for people to hoard gold and silver, but unfortunately we don't it this way. If you think I'm way off or kidding, then why don't you look at the ratings for specific kinds of debt just to get a sanity check.

I have heard some people support buying gold and silver and others saying that is crazy, but the gold bugs have the right idea when there is a lack of trust in monetary policy. We don't necessarily need gold, but when you let human beings in charge of things (especially things that affect everyone), then the 'hundred year floods' as they call it in finance wipe everyone out and I can't blame some people for being 'cautious'.

I would rather, like Charlie Munger, have an environment where investors can look at investing in businesses and other projects rather than having to worry about gold and the soundness of the underlying system, but this means having either a management that has the utmost integrity, social responsibility, and loyalty to the public at large or to implement a system that is the most weatherproof to corruption, fraud, and misdemeanor of any kind.

Unfortunately I don't have faith in the human race having someone with the former attribute and one reason to back this up is to look at history in terms of the fiat systems and the following chaos that ensued when people got too greedy.

Charlie Munger also made mention of dealing with short-term traders with liquidity and I think that this is an absolutely fantastic idea IMO.

 

[alt]

Once folk come to terms with the fact that the world always has, is, and always will, be ruled by plutos (plutocracy) no matter it's guise, they are generally better off.

 

[mheslep]

Once folk come to terms with the fact that the world always has, is, and always will, be ruled by plutos (plutocracy) no matter it's guise, they are generally better off.

Always has? Nonsense.

 

[mheslep]

the vast majority of Americans are employed.

The unemployment rate seems to be generally declining.

The US job situation bottomed out in Jan 2010, but unfortunately it has stayed oin the bottom since then.

Employment to population ratio
http://data.bls.gov/generated_files/graphics/latest_numbers_LNS12300000_2002_2012_all_period_M04_data.gif

http://data.bls.gov/timeseries/LNS12300000

58% of those over age 16 are employed, but that is not so vast a figure.

 

[ThomasT]

Once folk come to terms with the fact that the world always has, is, and always will, be ruled by plutos (plutocracy) no matter it's guise, they are generally better off.

I think that this is essentially correct. Landowners, business owners, money changers, the wealthy in general, always have been and are always going to be able to exert an inordinate influence on government officials, imho.

I have no idea to what extent this might be true. But, wrt some extent, it certainly makes sense, and, from our common experience regarding the felony indictments of hundreds (thousands?) of government officials in the US, and situations in certain other countries ... we know that government officials have been bought, coerced, extorted, pressured, etc. Thus, a reasonable assumption is that any of them can be bought, coerced, extorted, pressured, etc.

Thus, no elected official should be trusted. This is, imo, the basis of the US separation of powers. But if all the governmental powers are corruptible (corrupted?), then who you going to call?

OK, I don't think it's that bad ... yet. I think that there are, still, lots of people in governmental hierarchies who aren't corrupted. In fact, wrt events in other countries, this seems certain. Wrt Mexico, for example, the good people pretty much get killed. But, wrt the US, it's much more complicated. More buffers. Lots of buffers. But the influence seems to be there, nonetheless.

I'm disappointed in Obama because he seems to me to have succumbed to the pressure of the financial sector.

Is the financial sector running the US? Imho, no. Is it exerting an undue influence on governmental policies and legislation, to the detriment of the country? Imho, yes.

 

[chiro]

I think that this is essentially correct. Landowners, business owners, money changers, the wealthy in general, always have been and are always going to be able to exert an inordinate influence on government officials, imho.

I have no idea to what extent this might be true. But, wrt some extent, it certainly makes sense, and, from our common experience regarding the felony indictments of hundreds (thousands?) of government officials in the US, and situations in certain other countries ... we know that government officials have been bought, coerced, extorted, pressured, etc. Thus, a reasonable assumption is that any of them can be bought, coerced, extorted, pressured, etc.

Thus, no elected official should be trusted. This is, imo, the basis of the US separation of powers. But if all the governmental powers are corruptible (corrupted?), then who you going to call?

OK, I don't think it's that bad ... yet. I think that there are, still, lots of people in governmental hierarchies who aren't corrupted. In fact, wrt events in other countries, this seems certain. Wrt Mexico, for example, the good people pretty much get killed. But, wrt the US, it's much more complicated. More buffers. Lots of buffers. But the influence seems to be there, nonetheless.

I'm disappointed in Obama because he seems to me to have succumbed to the pressure of the financial sector.

Is the financial sector running the US? Imho, no. Is it exerting an undue influence on governmental policies and legislation, to the detriment of the country? Imho, yes.

One thing I have noticed is that many people complain about the state of things, but very very few want to actually do something about it.

Doing something about the situation means taking responsibility, and when you are dealing with things that affect more and more people, the the responsibility jacks up quite a bit.

People should be setting an example and thinking about what they do. If they want to step up to the plate and they think they can do a better job, then step up to the plate.

We both individually and collectively define the rules and I would bet that most people would rather convince themselves that everything will be 'ok' if that means convincing yourself that someone else who you don't know, who you can't read will do a job. In some ways it's like giving a random stranger on the street $1000 dollars and telling them to wait there for five minutes: you might be lucky to get a few people that will wait, but I wouldn't hold my breath for the majority.

Personally I'm not dissappointed with anyone politician, banker, or tycoon of any kind: I'm dissappointed in us collectively as a species.

When people take responsibility, it means that they are putting themselves out there and on the line for everyone to see, disect, and absolutely rip apart. But this is the cost of growth and in this modern age, we end up discouraging this and it is destroying us from ever reaching our potential as a species.

Instead of kids having to struggle and do 'real' learning, we tell kids how to get the right answer all the time: this means when they get into the real hard world, they snap like a twig and can't handle 'the real world'.

Instead of people taking responsibility for their own misfortunes, we encourage people to sue the other party to make a quick buck 'just because they deserve it'.

We encourage people to buy stuff they don't need and can't afford and they convince themselves that 'it'll be ok! I deserve it! If I can do it, then I should do it! My friends are doing it! It makes me feel like a real human being!'

With regards to finance, I don't think people realize that people are in different societies where people can earn their own money! Not only that, they can spend it on what they want! Some people don't realize what a luxury this is in comparison to what it used to be like! Hell the aristocracies of the past didn't even let the peasants read or write! Only royalty knew reading, writing, and arithmetic!

In the past, the peasants couldn't do this! You don't have this in purely communistic or socialist paradises!

But look what is happening: instead of being responsible with the money, people are wasting it and being completely irresponsible and look what happens!

But all of these things don't get me mad: what gets me mad is that everyone looks for a scapegoat, and the scapegoat is us both individually and collectively and no-one wants to hear this.

People want to fix up things? Send a message. People can get out of debt and encourage others to do so: this sets a precedent. People want to encourage businesses to do certain things, then let them know when you decide to purchase something.

Don't like what the big corporations are doing with how they effect the economy and jobs? Stop buying their stuff. Don't like the public school system? Teach your own kids and take responsibility for their learning.

It's hard to do these things because the first thing you have to do is acknowledge your own responsibility which means admitting something that opens you up to all kinds of criticism of any kind which you will have to look at objectively and respond to, and for this reason I understand why many people don't want to do it.

This experiment has to shown what happens when you give people luxuries and privileges that they don't take seriously and where they don't think about the consequences of their actions, and it's probably the best thing to see, just like it would be great for a drug addict to hit the absolute rock-bottom before they decided to get off the drugs and genuinely go clean.

 

[ThomasT]

Personally I'm not dissappointed with anyone politician, banker, or tycoon of any kind: I'm dissappointed in us collectively as a species.

I'm still in the process of reading and considering your rather long post. Anyway, I think you sort of hit the nail on the head with the quoted statement. The problem isn't bankers, or speculators, or politicians, or whatever. The problem is me. The problem is ... us.

Nevertheless, we can still reasonably expect that potentially harmful practices by the financial industry be legislated against. That is structured out, ie., prohibited by law and woefully punished.

Is this likely to happen? Imho, not as long as predominantly major party candidates are in office. Which, effectively, means that, wrt reasonable expectation, it will never happen.

So, bottom line imho, the financial sector is exerting an inordinately negative influence on the American economy, and there's nothing that anybody can or will do about it (because the people that can do something about it are benefitting enormously from the status quo). Just my opinion.

 

[chiro]

I'm still in the process of reading and considering your rather long post. Anyway, I think you sort of hit the nail on the head with the quoted statement. The problem isn't bankers, or speculators, or politicians, or whatever. The problem is me. The problem is ... us.

Nevertheless, we can still reasonably expect that potentially harmful practices by the financial industry be legislated against. That is structured out, ie., prohibited by law and woefully punished.

Is this likely to happen? Imho, not as long as predominantly major party candidates are in office. Which, effectively, means that, wrt reasonable expectation, it will never happen.

So, bottom line imho, the financial sector is exerting an inordinately negative influence on the American economy, and there's nothing that anybody can or will do about it (because the people that can do something about it are benefitting enormously from the status quo). Just my opinion.

I do support regulation and the idea of it especially in industries that have a huge interdependency with how society functions and the biggest one of these is the financial system and any kind of area that deals with allocating resources and to provide any form of medium of exchange that streamlines this process.

However even with this said, it is important for us individually and collectively to set the precedent for our social order that we wish to have, and unfortunately the people that have been given the privilege of money and debt and have abused it dramatically.

Social collapse and deterioration ends up doing very very few people good and this includes a lot of business interests and wealthy people as well.

It is a lot better for society to function in an organized fashion where things work together in a harmonius way rather than for things to go hell. When things to go hell, then they really go hell and given how we 'depend' on many things working together in some kind of harmonius way whether its for our food to be shipped to the supermarket, or whether it is for our internet connection to work in a complex telecommunications network, the idea doesn't change.

The biggest thing IMO that people can do to the financial companies is to send a message with your wallet: if you don't like how the big banks do business then don't do business with them. Take your money out. If you are a merchant banker, find someone else to handle your transactions and accounts. If you are just a normal saver, then do the same. Go to your local credit union and encourage a move away from the oligopoly that we have.

People may not have the power to issue currency, or the power to enact new legislation, but at the moment they have something even more powerful and that is money. People vote with their money everyday, and for businesses, this is the bottom line. If you send a message that they can't ignore they will have to respond in some way, whether it's a nice PR statement, or whether its through some actual change.

If you want to stop speculators, then do what you can in your life first to discourage speculation. Get yourself out of debt and set a precedent that debt should not be easy to get like a two dollar hooker is. If society sets a high enough precedent and saves a lot, then interest rates will rise and the effect will be what is expected.

If you want to stop the oligpolistic markets and economies, then diversify where you spend your money or find products that you support and buy those. Support competition through your money. There are anti-trust laws and good regulations for a reason, but it doesn't hurt to send a message yourself as well.

 

[ThomasT]

The biggest thing IMO that people can do to the financial companies is to send a message with your wallet: if you don't like how the big banks do business then don't do business with them. Take your money out. If you are a merchant banker, find someone else to handle your transactions and accounts. If you are just a normal saver, then do the same. Go to your local credit union and encourage a move away from the oligopoly that we have.

People may not have the power to issue currency, or the power to enact new legislation, but at the moment they have something even more powerful and that is money. People vote with their money everyday, and for businesses, this is the bottom line. If you send a message that they can't ignore they will have to respond in some way, whether it's a nice PR statement, or whether its through some actual change.

If you want to stop speculators, then do what you can in your life first to discourage speculation. Get yourself out of debt and set a precedent that debt should not be easy to get like a two dollar hooker is. If society sets a high enough precedent and saves a lot, then interest rates will rise and the effect will be what is expected.

If you want to stop the oligpolistic markets and economies, then diversify where you spend your money or find products that you support and buy those. Support competition through your money. There are anti-trust laws and good regulations for a reason, but it doesn't hurt to send a message yourself as well.

I think your points/directives make sense. Maybe easier said than done wrt some situations.

But here's part of the problem, imho. Maybe THE problem wrt collective stimulation of improvement. We have it really good here in the US. So good, I'm supposing, that there's little motivation on the part of the average person to do the sort of stuff that, collectively, would make a positive difference.

The only thing, wrt the financial sector, that I wonder and sometimes worry about is whether or not it's practices, left unmonitored and unregulated, could actually precipitate the economic downfall of the US. I really have no idea. At first glance, the total economy seems too big. But then, the percentage of the economy that is the financial sector seems to be inordinately high, and growing.

 

[chiro]

I think your points/directives make sense. Maybe easier said than done wrt some situations.

But here's part of the problem, imho. Maybe THE problem wrt collective stimulation of improvement. We have it really good here in the US. So good, I'm supposing, that there's little motivation on the part of the average person to do the sort of stuff that, collectively, would make a positive difference.

The only thing, wrt the financial sector, that I wonder and sometimes worry about is whether or not it's practices, left unmonitored and unregulated, could actually precipitate the economic downfall of the US. I really have no idea. At first glance, the total economy seems too big. But then, the percentage of the economy that is the financial sector seems to be inordinately high, and growing.

I would characterize our situation in Australia to be like what your situation in US was a bit before the housing boom.

Our major export of ours is the mineral industry which includes various kinds of mining for a wide range of minerals including uranium, copper and so on.

Some people think that we will be 'riding the wave' forever and I see a link between the thinking of 'we will ride the wave forever' in terms of high living standards, easy credit and so on with respect to our 'riding the mineral wave' statement. Also we have absolutely ridiculous house prices here and the economist Steve Keen is predicted a big housing bubble right here and I wouldn't be shocked in the slightest for this happening.

The thing though, and this is my point, is that things always revert back to the middle: the correction mechanism comes in one way or another. Having huge deficits and fiscal irresponsibility within a country is one thing, but it's a completely different thing when you have trade between different countries.

When other countries stop doing trade with you, that's nearly as bad as dropping bombs on you. If (I'm thinking more along the lines of when though) countries stop lending money and demand that trade only take place using something that is considered valuable, then it ultimately means that the US has to end up producing something the other side considers valuable.

If this happens and you guys don't produce anything that is valuable, then you're screwed. If you can produce everything you need in-house then OK that's great! But the reason I'm skeptical is because you don't do that: in fact not many people do that at all which is a good thing IMO.

When you need something from somewhere else and you can't pay for it in the currency 'they' expect, then it means nothing short of social breakdown in the end. In collapsing environments, things that 'really are valuable' become valuable like food, water, any kind of energy, medical supplies and so on, and money becomes worth the paper it is printed on (or even less).

The person that is out of debt and has a roof over their head, no matter how small is going to be in a far far better position than the person who has a mortgage they will struggle to pay off (or never pay off) for a few reasons:

The first one is that people in debt owe something: a bank could confiscate their house amongst other things as they have an obligation to meet the needs of the contract they entered into.

The second one though is more subtle: the person who saves has a different mindset to the person who needs to borrow. The person who saves has discipline, has better planning for the future, knows how to sacrifice, and thus will be in a lot better position when the proverbial hits the fan.

Also the saver will be able to take their wealth and convert it to something valuable when they need to, even if they lose some of the purchasing power. A person in debt is in a far more precarious situation.

So even if one person decides to get out of debt and the rest don't, that one person will be in a way better situation to deal with chaos than the people who just think la-la-land is never going to end.

People will see this: they will see themselves going down the toilet with debt and they will look to other examples where they have decided not to go this route, and the people that do this will be a tangible example and not some theoretical one which makes the change for those who need it a lot easier since they can 'taste' and 'touch' the results for themselves.

Also your last paragraph is something that people should be very concerned about.

Finance for all purposes should be a very boring business. Finance (I'm not talking about insurance, this is different) is concerned about managing resources and allocating to themselves the risk of allocating those resources in the way that the debt may not be paid and that they will lose not only the potential returns, but the initial investment itself.

The risk is two-way and it should be two-way: if the bank is stupid enough to defy basic credit-analysis and throw too much money at something that fails, then they should lose. This whole idea is why any kind of bank or investor should look for investments that work out usually transfers to having ones that produce what other people need.

The idea of trying to manage all the risks financially through ridiculous forms of insurance (gambling is better) and ruthless speculation does not fit into this normal functioning of finance which is to allocate resources and share the risk between the debtor and creditor. I'm not talking about the management of say an airline company getting oil options or a farmer getting futures for the delivery price of their goods but instead of the situations where people are trying to completely eliminate the risk as well as to use insurance for completely un-necessary speculation.

Specifically the speculation I am referring to can be seen in a way that corresponds with liquidity. Long-term investments do not require the kind of liquidity that speculation, especially short-term speculation requires.

Speculation is of course inherent to the risk involved in allocating resources and having both obligations met for debtor and creditor, this I do not doubt.

The problem is when you allow credit to get out too easily, and when you allow this in combination with speculation that is not properly balanced (higher risk in finance usually equates to a much higher interest rate traditionally), and when you have a liquidity situation where it's easy to 'buy and sell' almost instantaneously, then you combine all these elements together and you get absolute chaos.

If people want to speculate, then OK, but speculation needs to come at a price and that traditionally is done with interest rates, which is a good idea. However the other thing has to do with liquidity because speculators absolutely love lax or 'great' liquidity because they can make a transaction any-time they want like it was just normal cash. This breeds the situation we have and are seeing right now.

There's probably going to be a lot of financial types complaining about the liquidity issue and they might even say if I would live in a world where transactions didn't go through instantaneously on things like groceries, fuel, and how I would live in that kind of situation.

My response to them is that I already have the wealth and there is no form of speculation involved if the money is rightfully so in my bank account and because of this it does not apply.

 

[Artus]

Bailouts were a very bad decision. Citizens should not have paid for other's financial mistakes. Europe and USA got into crisis after a big credit expansion, and, when thing went bad, they took an even worst decision: to save the banks and corporation in trouble. But the biggest problem is, people like Krugman, Bernanke and other government advisors are developing strategies without succes, but even with them, things are going to be better because this crisis is a cycle.

Economy is going to get better and people are going to enjoy another Economic increase. But that's just a signal of the beginning of another cycle, and that'a when these regions must break that cycle by changing economic policies.