“This site is dedicated to preying on peoples vanity, ignorance, or loneliness, gaining their trust and betraying them without remorse.”

Monday, September 12, 2011

We don’t live in an economy based on morals and fairness.


The correct moral hazard is to punish the banks who lent imprudently by making them eat their own losses.
____________________________


Sept. 12, 2011, 12:00 a.m. EDT

Massive default is best way to fix the economy

Commentary: Clearing away the debt is the only way forward


By Brett Arends, MarketWatch


NEW YORK (MarketWatch) — You want to fix this economic crisis? You want to put people back to work? You want to light a fire under the economy?

There’s a way to do it. Fast. And relatively simple.

But you’re not going to like it. You’re not going to like it at all.

Default. A national Chapter 11 bankruptcy.

The fastest way to fix this mess is to see tens of millions of homeowners default on their mortgages and other debts, and millions more file for bankruptcy.

I told you that you wouldn’t like it.

I don’t like it much either. It sticks in the craw that people got to borrow all that money and won’t have to pay it back.

But you know what? The time to stop that was five or 10 years ago, when the money was being lent.

It’s gone.

And mass Chapter 11 is, by far, the least obnoxious solution to our problems.

That’s because the real cause of our economic slump isn’t too much government or too little government. It isn’t red tape, high taxes, low taxes, the growing divide between the rich and the poor, too much government debt, too little government debt, corporations, poor people, “greed,” “socialism,” China, Greece, or the legalization of gay marriage. It isn’t, in short, any of the things all the various nitwits say it is.

It’s the debt, stupid.

We’re hocked up to the eyeballs, and then some. We’re at the bottom of a lake of debt, lashed to an anchor. American households today owe $13.3 trillion. That has quadrupled in a generation. It has doubled just in the last 11 years. We owe more than any other nation, ever. And for all the yakking about how people are “repairing their balance sheets,” they’re not. From the peak, four years ago, they’ve cut their debts by a grand total of 4%.

And a lot of that was in write-offs.

More than a quarter of American mortgages are underwater. Many are deeply underwater. In states like Nevada and Florida the figures are astronomical.

The key thing to understand is that most of that money has gone to what a fund manager friend of mine calls “money heaven.” Most of these debts will never, ever be repaid in real money. Not gonna happen.

Think how corporations handle this kind of situation.

It happens all the time. Banks and bondholders find they have lent, say, $1 billion to a company whose assets and earning capacity will only repay, say, $300 million. What happens? Does the company soldier on with $1 billion in debt it can never repay? Do the stockholders send back their dividend checks? Do they sell their homes to pay off the bonds?

Not a chance. The company goes through Chapter 11. The creditors ‘fess up to their blunder, they face up to their losses, and they fix it. They write down the loans and take the equity instead. The balance sheet is cleaned up, and the company starts again.

Why not homeowners?

Most of the objections to this idea are well-meant, but misinformed.

A fund manager I asked raised the issue of “moral hazard.” Why should anyone pay their mortgage if some people were getting a pass, he asked?


The answer: For the same reason GE and Verizon kept paying the coupon on their bonds while Lehman Brothers defaulted. You want to keep your credit standing. And you want to keep your equity.

If a company defaults, the stockholders get wiped out. If a homeowner defaults, the bank takes the home. I like keeping my home, as well as my savings, and my credit rating. Most people are the same.

Some will say the financial impact would be terrible. But the banks would just be facing up to reality. And a lot of these mortgages are already trading at distressed levels.

Some will say, “why should people get away with borrowing imprudently?” The response: Why should the banks get away with lending imprudently?

There’s no point telling people not to borrow money. They always will. I have yet to see a Wall Street executive turn down free money. I have yet to see a company in an IPO say, “Don’t give us so much money!” People like money. They will take as much as they are offered.

In a free economy, the people who are supposed to ration the loans are the lenders. Banks are supposed to lend carefully and responsibly. What else are they paid for? Accepting deposits? You could hire people on minimum wage to do that.

Some will say, “it’s immoral” for borrowers to default. Alas, most of these people are being inconsistent. They are usually the first ones to defend a company when it closes down a factory and ships the jobs to China, or pays the CEO $50 million for doing a bad job, on the grounds that “this ain’t morality, pal, this is business!”

But when Main Street wants to do the same thing, they start screaming “Morality! Morality!”

We don’t live in an economy based on morals and fairness.

T Mobile doesn’t charge me what’s “fair” each month. They charge me what’s on the contract. Your employer doesn’t pay you more if you need more. He pays you your economic value. Did Dick Grasso give back his bonus? Bob Nardelli? Dick Fuld? We operate in an economy based very firmly on contracts, and nothing else. Companies, and the wealthy, live by the letter of the law.

American mortgage contracts allow for default. Half of the states in this country are “non-recourse,” which broadly speaking means you can send in the keys and walk away from a bad loan. The other half are sort of “semi-recourse.” The bank can come after you for any shortfall, but only in a limited way. Broadly speaking they can’t touch retirement accounts and basic assets. You can typically keep your car, personal effects, often things like life insurance.

Most of the people who are deeply underwater don’t have that much anyway.

And the banks knew this. When they were lending $500,000 to a bus driver with $1,000 in his checking account, they knew that their loan was only guaranteed by the value of the home.

If they didn’t know it, they should have. Their incompetence is not our problem.

It’s tempting to say, “if someone borrows money, they should repay it.” Generally speaking, I agree. I pay all my debts. But while that makes sense when applied to any individual, it doesn’t work so well when it’s applied to everyone.

We have tens of millions who cannot repay their debts. But they are all trying to. That sucks huge amounts of money out of the economy. And that means these people cannot function properly as consumers or workers. That’s the reason people aren’t coming into your restaurant. It’s the reason people aren’t taking your yoga class. It’s the reason they haven’t hired you to redo the kitchen.

And so tens or hundreds of millions of perfectly responsible business owners and employees are also suffering from this slump. That’s the reason we have a shortage of demand. That’s the reason no one is hiring.

Even worse: People who are underwater on their mortgage, but who do not want to default, cannot move to where the jobs are either. They are stuck with their home.

You want to break this logjam? Try Chapter 11 for the nation. Massive defaults. Clear the decks, clean the books.

What are the alternatives?

Government cutbacks, higher taxes, and a balanced budget? In a normal economy, fine. But in this situation, when the private sector is also slashing its spending, that could lead to absolute catastrophe. That’s what happened in the Great Depression. And our debt levels are worse than in the Great Depression.

Government borrowing? That’s the Keynesian solution. “The consumer can no longer borrow like a crazy person,” says the Keynesian, “so Uncle Sam has to do so instead.” It’s just transferring private madness to public madness.

Inflation? That’s probably the least bad alternative. But it’s just default by another name. And instead of taking money from the imprudent banks that caused the problem, it robs grandma’s savings.

Twice before, advanced economies have gone through what we are going through now — namely a massive hangover after a massive debt binge.

The first was the U.S. in the 1930s, the second was Japan in the 1990s.

The U.S. didn’t get out of it until the 1940s unleashed inflation and reduced the debt’s value in real terms.

Japan still hasn’t gotten out of it. They have deflation, while government debt has skyrocketed.

The correct moral hazard is to punish the banks who lent imprudently by making them eat their own losses.

I told you that you wouldn’t like it. I don’t either. But the alternatives are worse.

Brett Arends is a senior columnist for MarketWatch and a personal-finance columnist for the Wall Street Journal.

126 comments:

  1. No, no and thrice no. The domestic retail and corporate banker takes low risks, and calculates them carefully.

    What we are looking at here are two different problems that have given banks a bad name:-

    - a massive move into mortgage lending that could not be backed by negative US savings and led to horrendous liquidity issues when money market funds swirling around between countries dried up. It was apparent more than 25 years ago that banks did not have the matching long term savings for 20,25 and 30 year mortgage commitments and quotas for branches were introduced.

    - a confusion between the esoteric global activities of Wall Street banks which can be higher risk and have also been associated with packaging and selling crap on behalf of third parties.

    People who had no demonstrable banking skills ended up running domestic banks like corporate wheeler-dealers - every canon of good management went out of the window. A return to sound management principles and the separation of very different businesses is what is required here.

    ReplyDelete
  2. Doctor Housing Bubble has been comparing events with Japan's two lost decades for years.

    We continue to repeat every mistake the Japanese made and act like we can have a different result.

    Ain't gonna happen.

    GM and Chrysler should have gone through normal bankruptcies.

    Instead, the bondholders and taxpayers were looted to pay off the unions.

    TARP was to deal with troubled assets, then came Stimulus, QE1 and QE2, but lo and behold, banks are still holding and hiding billions in assets, that if marked to market would bury them.

    All because of repeatedly kicking the can down the road JUST LIKE JAPAN, instead of letting the markets clear themselves in a normal (but wrenching) fashion.

    Bank of America still has more bad mortgages than they have reserves, despite Ben and Timmy's magic circus.

    Likewise the rest of the TBTF's.

    (I do recall years ago Deuce arguing for action to forestall mass bankruptcies by homeowners... :-)
    We live, we pay, and we learn.

    Not so our betters, the DC Elites.

    ReplyDelete
  3. Ric Rescorla's wife is on the phone with Bennett!

    ReplyDelete
  4. Once, as he prepared his men for an enemy assault, one of them remembered asking him,
    "What if they break through?"

    Calmly, he replied,
    "If they break through and overrun us, put grenades around your hole.
    Lay them on the parapet and get your head below ground. Lie on your back in the hole. Spray bullets into their faces. If we do our job, they won't get that far."

    ReplyDelete
  5. Thirty-seven years later, Rick Rescorla, by now an American citizen, had earned a law degree in Oklahoma, and was serving as Vice President for Corporate Security for Morgan Stanley Dean Witter, whose corporate offices were in the south tower of the World Trade Center.

    When the first plane hit the north tower on September 11, official voices came over the loudspeaker system in the south tower telling people to stay put - don't leave the building - the area is secure, blah, blah, blah.

    Rick Rescorla was on the phone at the time to his best friend. "You watching TV?" he asked. "The dumb sons of bitches told me not to evacuate," he said as he watched the news. "They said it's just Building One. I told them I'm getting my people the [expletive] out of here."

    And so he did, and miraculously - on a day when miracles were few - he directed the evacuation to safety of 2700 of Morgan Stanley's employees. Only six of the company's employees perished. Rick Rescorla was one of them.

    ReplyDelete
  6. No businessman including , and especially bankers should get bonuses, unless they risk their own capital. This is real capitalism. The rest is organised fraud and embezzlement of shareholder's money.

    ReplyDelete
  7. Debtor in Possession for the Banks

    Due to the escalating financial crisis in both Europe and the US a strategy considered but not enacted at the start of the banking meltdown in 2008, is now being put into place. Rather than a TARP like bail out, the US government will provide a structured Debtor in Possession (DIP) financing process to wind down insolvent money center commercial and investment banking institutions. This is a huge change in how this burgeoning crisis will be dealt with.

    It has been determined by policy makers that the monetary approach used in 2008-mid 2011 failed from a reflation perspective. Asset prices for key categories including housing and the equity markets as well as growing unemployment and Gross Domestic Product (GDP) growth have all turned negative. The political will for a second styled bail out also is no longer in the Congress.

    The focus now is to provide, to the degree that it can, an orderly winding down of financial institutions including supporting the interbank repo (repurchase) markets that provide liquidity to the overall financial system. But the actual bailing out of the money center banks by allowing them to offload their nonperforming debt, aka mortgages in effective default, will not occur.

    This is the single best decision having been made since the crisis started in 2008 because it will get to the fundamental issues facing the economy in the US and worldwide.

    ReplyDelete
  8. The sooner we see Corporate and Banking Bosses put in handcuffs and marched through the trading floor to their trial the better.
    There was unquestionable fraud on a massive scale that led to the last banking crisis - Not least those at the credit agencies who colluded in the "AAA rated" scam.

    This is where the RISK needs to be addressed - with criminal prosecution and the return of fiduciary responsibility to corporate and banking leviathans.
    The possibility of a " mediocre" bonus is not a deterrent - 8 years imprisonment for reckless endangerment of the economy and pension funds of millions of hard working men and women would "encourager les autres".

    ReplyDelete
  9. 'DIP' Loans Are Scarce, Complicating Bankruptcies

    Oct 17, 2008 – Credit has gotten so tight that firms contemplating bankruptcy protection can't find the cash that is needed to get through the process.

    Debtor-in-possession, or DIP, financing is essential for the lawyers, layoffs and other restructuring necessary for a company's rebirth. Exit financing is used when a company "exits" reorganization. Banks have been eager to take part in this market because the loans are the first to be paid back and command high interest rates.

    Without the lending lines, companies that would normally survive bankruptcy will have to quickly sell assets. Potential buyers may not be able to borrow either, meaning companies could be forced to liquidate immediately instead of working out their problems. That could cost tens of thousands of jobs across the economy.

    ReplyDelete
  10. “[B]arack Obama is no Harry Truman,” Krauthammer said. It’s not that complicated. Obama is over his head. He is a great orator. He came out of nowhere. He dazzled America. He [has] never run anything. He never actually enacted anything even in the legislature. He hadn’t run a state. He hadn’t run a city. He hadn’t run a business. He is running the biggest enterprise in the world and he has not succeeded. And that is why all of these independents, all of those who believed in a soaring rhetoric, including probably a couple who swooned in the aisles as he spoke in 2008, are now waking up and realizing he is a mortal who is in over his head.”

    ReplyDelete
  11. I've never bought that he's a great orator.

    Merely felt embarassment as adults swooned over sophomoric blather.

    With low grade delivery tricks, ALWAYS to include reverb.

    He's soo heavy.

    ReplyDelete
  12. .

    Most here can agree with the sentiments expressed by Brett Arends in his article. Most, if not all, have been offered up here numerous times before, separately if not in summary.

    The problem is that they are simplistic in assuming that they would ever be implemented. The bulk of the article ignores Arends most important observation, "We don’t live in an economy based on morals and fairness.”

    Our economic system is currently a zero-sum game, with designated winners and losers. Unfortunately, most of us do not belong to the former category.

    Take an example.

    Arends suggests we need all mortgagees who are seriously underwater to turn in their keys and walk away from loans. However, despite the fact that this would not happen anyway, if it did, the results would not be as predicted by Arends.

    Currently, Fannie and Freddie hold half the mortgages in the country. They are issuing 90% of the new mortgages right now. It is actually to their benefit to have mortgages go to foreclosure since any losses they incur will be backstopped by the government (taxpayers). It merely helps them clear up their balance sheet by removing toxic assets before the government eventually spins them off.

    There are rules that protect the big boys. Where there are not, they will be written.

    .

    ReplyDelete
  13. Going against the grain here I think we do have an economy based on morals and fairness.

    I have seen banks come and go.

    I have seen the rise and fall of billionares.

    I have seen the Hunt Brothers in Bankruptcy Court

    I have seen the rise and fall and rise of Ford and GM.

    I've seen it all.

    Keep your own nose to your own grindstone.

    risky

    ReplyDelete
  14. In his argument there are thre parties, the borrower the lender and an unrelated party to the transaction, savers.

    Why should savers be the party that provides the means to undo the damage by the other two? Why not remove FDIC insurance from the banks with the largest problems?

    ReplyDelete
  15. Let them fail if they cant get the capital and spread their assets over regional banks where the houses are located. The local banks could administer the loans, modify the loans or liquidate the asset.

    ReplyDelete
  16. I haven't been able to find that DIP News anywhere else.

    Hope my source isn't bogus.

    ReplyDelete
  17. The United Nations says at least 2600 people have been killed in Syria during the anti-government uprising that has swept the country since mid-March.

    The Israeli have claimed, since at least 2008, that the UN does not truthfully report civilian death toll numbers, in the Middle East.
    That they are unreliable, especially as a source of data sets concerning the ways and means of the deaths, in these civil conflicts.

    ReplyDelete
  18. As to the economy, take the Treasury out of the debt markets.

    Leave the Federal Reserve to manage the country's banks, but not the financing of the Federal debt.

    We should reject the Progressive economic prescription to 19th Century's challenges that has come to control DC, in the 21st Century.

    Mint the coin to pay the interest on the debts incurred by past administrations.

    End the Federal borrowing, now.

    ReplyDelete
  19. As boob reports from Idaho, there is massive deflation in housing and construction industries.

    Exemplifying the hundreds of thousands unemployed across the continents.

    With the credit markets drying up, for corporations and individuals only the Federals can provide liquidity to the economy.

    Not by borrowing more and redistribution, but by the Constitutional means given to Congress.
    Their primary Constitutional assignment.

    Minting coin.

    ReplyDelete
  20. The Federal Reserve System is the cause of the problem, not the solution.

    ReplyDelete
  21. .

    Would vending machines have to be modified to accomodate those trillion dollar coins?

    .

    ReplyDelete
  22. Eventually, Q.

    But not in our lifetimes.

    ReplyDelete
  23. We're going to see the destruction of the Dollar.

    Then a new currency will be introduced.
    A North American currency.

    It was central to US/Mexico negotiations, 'tween GW Bush and V Fox.

    May take a few more cycles, but the light is in the tunnel.

    ReplyDelete
  24. If moral fairness were part of the DC mix, well, the Treasury Secretary would never have been the tax cheat, Tim Geithner.

    ReplyDelete
  25. Liquidity isn't the issue. It's the velocity of that money through the economy. Benny and the Inkjets printed a shitload of liquidity, and right now it's sitting in banks earning 1.85%.

    "Get the hell out of my way." -- John Galt

    ReplyDelete
  26. ... Bob Graham, the Florida senator who co-chaired the joint inquiry, told the authors that the investigation found evidence "that the Saudis were facilitating, assisting, some of the hijackers. And my suspicion is that they were providing some assistance to most if not all of the hijackers. ... It's my opinion that 9/11 could not have occurred but for the existence of an infrastructure of support within the United States. By 'the Saudis, I mean the Saudi government and individual Saudis who are for some purposes dependent on the government -- which includes all of the elite in the country."

    ReplyDelete
  27. Money in the bank, Ms T, is not liquidity.

    Liquidity = velocity.

    Liquidity, by its very nature, means flow. Increasing liquidity means increasing the flow.

    Taking away the banks "safe haven" in Treasuries would move US forward, economically.

    ReplyDelete
  28. the investigation found evidence "that the Saudis were facilitating, assisting, some of the hijackers.

    The Federals, not faithful to the truth, at all.

    ReplyDelete
  29. Either the Russians do not believe the UN, either, or the 2600 or so dead folks ...

    ... have no impact upon the national interests of Russia, which cares little about morals and fairness.

    ReplyDelete
  30. While the AP reports:



    Russia, which said a UN resolution on Syria must not contain sanctions.

    ReplyDelete
  31. .

    CAPITAL GAINS TAXES

    Advocates for a low capital gains rate say it spurs more investment in the U.S. economy, benefiting all Americans. But some tax experts say the evidence for that theory is murky at best. What is clear is that the capital gains tax rate disproportionately benefits the ultra-wealthy.

    Most Americans depend on wages and salaries for their income, which is subject to a graduated tax so the big earners pay higher percentages. The capital gains tax turns that idea on its head, capping the rate at 15 percent for long-term investments. As a result, anyone making more than $34,500 a year in wages and salary is taxed at a higher rate than a billionaire is taxed on untold millions in capital gains...




    Some well off farmers often argue for the elimination of capital gains taxes.

    Selfish? We report. You decide.

    .

    ReplyDelete
  32. Our NATO ally moving forward, to further cement and extend our position in Egypt.

    TURKEY'S Prime Minister was due to arrive in Cairo overnight amid speculation that he will attempt to stoke anti-Israeli sentiment following last week's assault on the Israeli embassy in the Egyptian capital.

    Recep Tayyip Erdogan, who is embroiled in a separate diplomatic war with Israel over its refusal to apologise for killing Turks on a Gaza-bound ship 15 months ago, is seeking to strengthen Turkey's alliance with Egypt to cement and extend its influence in the region.


    Read more: http://www.smh.com.au/world/turkey-stirs-pot-with-cairo-talks-20110912-1k5wu.html#ixzz1Xkhm5lpF


    It's great to have proxies.

    ReplyDelete
  33. .

    While it’s true that many middle-class Americans own stocks or bonds, they tend to stash them in tax-sheltered retirement accounts, where the capital gains rate does not apply. By contrast, the richest Americans reap huge benefits. Over the past 20 years, more than 80 percent of the capital gains income realized in the United States has gone to 5 percent of the people; about half of all the capital gains have gone to the wealthiest 0.1 percent.

    “The way you get rich in this world is not by working hard,” said Marty Sullivan, an economist and a contributing editor to Tax Analysts. “It’s by owning large amounts of assets and having those things appreciate in value.”

    Republicans have led the way in pressing for low capital gains tax rates, but they have been able to rely on a significant bloc of Democratic allies to prevent an increase and to protect the preferential treatment of money earned through investments over money earned through labor...



    Wall Street and their minions at CNBC and in OZ, argue that most Americans own stocks. They ignore the fact that most of them own the stock in 401k's and don't really worry about capital gains taxes.

    Paying Your Fair Share.

    .

    ReplyDelete
  34. To further exemplify the lack of change, in Egypt ...


    ''The government is using the attacks on the Israeli embassy on Friday night to justify its use of repressive measures,'' said Amer al Wakil, a leader of the Egyptian Revolutionary Alliance, one of the political coalitions that emerged from the popular movement that led to the ouster of long-time Egyptian president Hosni Mubarak.


    Rock Steady!

    ReplyDelete
  35. It was not deemed in the national interest of the United States to pursue the real sponsors of the border raid of 11SEP01.

    Rather, those in the know had the US invade Iraq, instead.

    Not wanting to admit we'd been done by our allies in Saudi Arabia and Pakistan, the Federals channeled the public anger to a false flag.

    Numquam fidelis

    ReplyDelete
  36. It's a better than even money bet that amongst the "Ultras" that made up the crowd that breached the security wall at the Israeli Embassy, that there were more off duty soldiers than there were members of Muslim Brotherhood.

    That some believe that the Muslim Brotherhood is omnipotent, in the "new" Egypt, merely exemplifies their ignorance's and fear.

    ReplyDelete
  37. Here in sheitback Iddeeeehooo the lumbderjacks are few and far between these days but the wolf hunt is afoot the grain bins are bulging with dark red winter and rentals is great cause we suck off students, and they are coming out of the woodwork, and the housing market is still good.

    Who except a rat's shit would wanna live in Phoenix, anyway?

    risky

    ReplyDelete
  38. I see our rathooo rodent has it all figured out again this good morning, from the meat markets to the banks to the feds to our foreign policies to triple tapping and selling off the natinal forests to deep deep dark underground work to minting trillion dollar coins.

    What a dumb shit.

    risky alibi

    ReplyDelete
  39. This comment has been removed by the author.

    ReplyDelete
  40. All those Federal education subsidies are putting money in boobie's pocket.

    Little wonder he so strongly supports the status que of Federal Socialism.

    People live in Phoenix for the mellow winters and because of the lack of discrimination, based upon race, creed or national origin, here in AZ.

    We live the American Dream, in Arizona, except when the Federals allow for law breaking, at a fast and furious pace, in the name of enforcement.

    Numquam Fi

    ReplyDelete
  41. Let's get this straight and have it out.....MINTING TRILLION DOLLAR PLATINUM COINS....is an idea ONLY
    the Quirkster OR the boobster or them 2 tagether could have come up with, over lunch at the One World Cafe near Friendship Square.

    risky

    ReplyDelete
  42. Not at all, boobie.

    Legislation has already passed Congress and has been signed into Law by the President, that authorizes the minting of these platinum coins.

    It is well beyond the "idea" stage.
    It is an option that is "shovel ready" for implementation.

    While boob continues his family tradition, of suckling on the Federal financial teat.

    ReplyDelete
  43. over lunch at the One World Cafe near Friendship Square.

    And neither of us has ever been there...


    risky

    ReplyDelete
  44. While boob continues his family tradition, of suckling on the Federal financial teat.


    :):):)

    If you only knew ratass

    Doctors
    Lawyers--who built the law school
    Nurses
    Teachers
    Farmers
    Secretaries -- my mom

    all sucking off the federal teats

    :):):):)

    You have never told us, rathole, just what it is YOU do?

    Other than work for some quasi/military bunch hired by Unca Sam.

    What do you actually do, thugo, that gives you the time to spout off all day long, 365 days of the year?

    risky

    ReplyDelete
  45. "I like keeping my home, as well as my savings,"


    Fucking moron who wrote the article doesn't seem to realize that if the banks took the hit like he proposes HIS SAVINGS would be gone as well.

    ReplyDelete
  46. This comment has been removed by the author.

    ReplyDelete
  47. On a more ideological bent, explain to us, boobie, why the Congress should pay interest to the Federal Reserve, for money that the Federal Reserve has created through debt instruments, rather than manage the mint, itself?

    When it is the Congress, not the Federal Reserve, that is mandated with managing the money supply?

    The Federal Reserve has done a poor job on its twin mandates of employment and fiscal stability.

    Though growth, of the US economy over the past 100 years, has been exceptional.

    We need to readdress the issue of the National Bank and how powerful an influence we should allow it to be.

    The power and influence, even the existence of, a National Bank was the major political issue of the first hundred years of US politics.
    As a political issue it is coming back to the fore.

    ReplyDelete
  48. ahshit i ferget ta mention the constuction and developments we done here created whole new neighbor hoods we done, nice uns two

    risky

    ReplyDelete
  49. I want to know, what do you actually DO, rathole?

    risky

    ReplyDelete
  50. I, like Teddy Roosevelt, have done many things, boobie.

    Built homes and developed small housing projects.

    Sold real estate on commission.

    Been a publisher of books, magazines and newspapers.

    Developed websites for sale.
    Developed websites on a fee basis.

    Sold a lot of little businesses, over the years.

    Now I ride horses on the National Forest, thankful that the people of New York and Pennsylvania are as ignorant as they are, to be subsidizing my pleasures.

    Something that is in my best interest, but not the best thing for the national interests.

    ReplyDelete
  51. The fucking federal reserve nor the fucking congress has not a goddamned thing to do with any of it, you rely on your self and your family.

    The congress nor the federal reserve had nothing to do with what we did here.

    Ever.

    And I hope never do.

    risky

    ReplyDelete
  52. Thanks, rat, you have done well.

    risky

    (and keep riding in those national forests)

    ReplyDelete
  53. Did event production and promotion for a while, that was both fun and nerve racking.

    Being dependent upon the gate, makes each event a bet on one's ability to "read" the market.

    Much more time intense than I thought it would be. That business devolved into using City subsidies from the "Bed and Board" taxes, so I moved on, from that.

    The Barrett Jackson Sale, in Scottsdale takes place on the old polo field. It looks alot more like a car lot, than a polo field, now.

    That facility is Federal Land, the BLM, managed by the City of Scottsdale through private contractors, as is the Tournament Players Club, where the PGA has its annual Phoenix event.

    ReplyDelete
  54. The Federal Reserve manages the banks and the money supply, boobie.

    It has everything to do with it.

    The Federal Reserve is a consortium of PRIVATE banks. They are looking out for their interests, not the national interest.
    Except where those two intersect, by both happenstance and design.

    Only the Chairman is appointed by the President and the books cannot be audited by the government.

    It is at the core of the liquidity crisis.

    ReplyDelete
  55. Yes, rattie, but

    THERE WAS NO FEDERAL RESERVES WHEN CLAUS STARTED AND THE CONGRESS WAS SO FAR AWAY YOU'D NEVER HEAR OF IT

    I hope to outlast both the Federal Reserve and Congress, fuck them both.

    risky

    ReplyDelete
  56. We mint the coin, to pay the interest on the Federal debt.

    $1.3 trillion.

    This puts the Federal budget in balance, revenues to operational expenditures.

    Fund infrastructure projects with bonds set up on Deuce's model. Where revenues produced by the project pay those specific notes.

    Back the development of cellulosic ethanol with loan guarantees and tariffs.

    ReplyDelete
  57. Global GDP is almost $60 trillion USD.

    The US has the Reserve Currency, of the whirled.

    By increasing the money supply by under 2%, we'd be providing global stimulus, while not stoking the inflation, with such a small increase.

    Fear of inflation, and the inability to find safe haven in Treasuries would move the Chinese to invest or spend some of their foreign reserves.

    Adding to liquidity in the global marketplace.

    ReplyDelete
  58. Domestic banks would lose their Federal "Safe Haven" in Treasury bonds and would have to loan to John Q Public or his companies, instead of the Federals.

    Or purchase the infrastructure bonds.

    ReplyDelete
  59. Alberta is now producing two million barrels per day but expects that number will grow to four to five million within a decade.

    O Canada!

    Meanwhile Obama pursues a "green job" pipe dream.

    ReplyDelete
  60. The Rat wrote:

    "The Federal Reserve is a consortium of PRIVATE banks. They are looking out for their interests, not the national interest"

    And by what reasoning do you think that the Congress critters would operate the bank in the national interest as opposed to the way they do everything else - they operate, naturally, in their short term political interest. Hardly a way to create sane monetary policy.

    ReplyDelete
  61. Stimulus is a program to get Obama re-elected.

    There already is too much debt and insufficient time to invest in capital goods that would have a positive impact on growth and incomes in anything like the short term. It's called a recession. We are in a recession.

    The debt mountain cannot just continue to grow without serious consequences for living standards.We have been here before. In the thirties the US developed a more comprehensive system of welfare. Massive capital investment was ordered - the building of the Hoover Dam, the Empire State Building and a number of others, paid for by deficit financing. But by 1936 with little reduction in unemployment and a doubling of the national debt, Roosevelt was forced to bring in big spending cuts.

    ReplyDelete
  62. Though it is way out of my interest spectrum, I don't feel I'm really against the Federal Reserve.

    It is some kind of brake on things, isn't it?

    But then I'm a minor league when it comes to this stuff.

    risky

    ReplyDelete
  63. I certainly would reject the Saint Claus lifestyle, as an option for the 300+ million residents of the United States.

    He choose to live in poverty and deprivation, as a sign of piety, while his family prospered on the historical land holdings received as an inheritance.

    Lands which stayed in his family, after his death.

    We'd have to deed my riding area along the Verde River to private interests, can't be having that now, can we.

    ;-)

    ReplyDelete
  64. It is their Constitutional mandate, anon.

    They are answerable to the public.

    The Federal Reserve System is not answerable to the people or the government, by design.

    It is time to redesign the Federal Reserve, to return the Congress to the Constitutionally mandated responsibilities it has avoided for 100 years.

    Replace them if they fail, as that is the Constitutionally designed check and balance you are searching for.

    ReplyDelete
  65. Then, as tax revenues increase, with the expanding economy, dedicate a large portion of those increases to interest payments, rather than the continued creation of new coinage.

    That would be the check on to much expansion of the money supply.

    In ten years, the Federal notes would be paid off, the Federal budget, in balance.

    If that was what the electorate wanted.

    ReplyDelete
  66. .

    It is their Constitutional mandate, anon.

    They are answerable to the public...



    Replace them if they fail, as that is the Constitutionally designed check and balance you are searching for.




    :)

    :)

    :)



    .

    ReplyDelete
  67. He choose to live in poverty and deprivation, as a sign of piety, while his family prospered on the historical land holdings received as an inheritance.

    Ah shit, how can you talk to an idiot like this.

    He left home, with some other guys, ages about 16, to escape poverty, in Sweden, and the old rules of primogeniture.

    He came through Ellis and worked his ass in Illinois, then came out here. Worked his ass all his life, two wives, and eight kids, finally made it more or less big on hay after World War One, and Washington Water Power stock (the micro soft of them days) then he bought the big house in town for sixty five hundred and in the middle of World War Two, he died.

    When he voted he always voted Republican cause he asked a favor of the commissioners of the day who were Republicans, about a road or something, they said, we will do it Claus if you come in and register as a Republican.

    So, not giving a big fuck about politics at all, he did just that, and got his road.

    And voted Republican till he died

    :):)

    true story of olden days

    risky

    ReplyDelete
  68. Are you serious? Do you think the government will fix this? Think again:

    In November 1929, a month after the stock market crash, unemployment was 5 percent. It hit 9 percent in December but then began a generally downward trend, subsiding to 6.3 percent in June 1930.

    That was when the Smoot-Hawley tariffs were passed, against the advice of economists. Five months after the tariffs were passed, the unemployment rate hit double digits for the first time in the 1930s. This was more than a year after the stock market crash. Moreover, the unemployment rate rose to even higher levels under both Presidents Hoover and Roosevelt, both of whom intervened in the economy on an unprecedented scale.

    For nearly three consecutive years, beginning in February 1932, unemployment never fell below 20 percent for any month before January 1935, when it fell to 19.3 percent.

    Sure the government will fix it!!!!!

    ReplyDelete
  69. Rat, the FED prints money now, or the print money under the 'constitutional mandate' you speak of the result is the same - they print money. What is different in you scheme of things for the printing of the money that will increase its velocity? In other words, how would this FED of yours get money into the economy that is different then how they are currently injecting it?

    ReplyDelete
  70. It is time to redesign the Federal Reserve, to return the Congress to the Constitutionally mandated responsibilities it has avoided for 100 years.

    C O N G R E S S M A N D A T E D
    R E S P O N S I B I L I T Y

    : (

    ReplyDelete
  71. Back when America was still worth a shit and the average man could still get ahead.

    risky

    ReplyDelete
  72. I want a Trillion Dollar Platinum Coin myself!

    whinnywhinnywhinnynickernickernicker

    risky alibi

    ReplyDelete
  73. still trying to get head on this board are ya boobie? Melody is NOT interested!

    ReplyDelete
  74. No, anon, the Fed prints the money, and the government borrows it.

    That is what QE1 & 2 were about.
    The Federal Reserve buying the debt.
    So the people can pay the Federal Reserve for what is rightfully the people's.

    Why should the government pay interest on the money it mints?

    ReplyDelete
  75. Yeah, boobie, back in the Federal Land Grant days, right?

    ReplyDelete
  76. I am sure she is not.

    But thank you for following so closely the ins and outs of my emotional life!

    Which I'd forgotten about, myself.

    She is a nice person.

    And the Lord God has taken my heaviness away.


    risky

    ReplyDelete
  77. This comment has been removed by the author.

    ReplyDelete
  78. good point about paying the interest and not getting seignourage I might add but the idea of having the Central Bank at 'arms length' from the politicians is to have long term Monetary policy guide the bank as opposed to politicians looking to get re-elected - that is a real problem having short term interested politicians with their hands on the printing press so maybe a more politically oriented appointment procedure coupled with audit rights might be a better solution (i.e. Bank of Canada).

    ReplyDelete
  79. Taking the Treasury out of the debt market is key to reviving the economy and public confidence in the economy.

    anon tells US that we cannot afford to borrow our way out of the "mountain of debt".

    The Constitution allows for a way we can climb that mountain, without resorting to debt.

    Stimulus without debt, while forcing the funds that were going to be parked in Treasuries into the commercial market, instead. More stimulus.

    ReplyDelete
  80. desert rat said...

    Yeah, boobie, back in the Federal Land Grant days, right?

    Mon Sep 12, 03:10:00 PM EDT


    Poor poor rat.

    It was back in the days when land here was dirt cheap and was sometimes traded around a poker table, and gramps never did that, only worked his ass off.

    They would in those days, before our more modern summerfallow, work one farm, then go to the next the next year.

    Land was cheap, and the work really really hard, with horses.

    YOU DON'T KNOW SHIT, RATHOLE

    risky

    ReplyDelete
  81. He dug the cellar out from under his big house with a shovel. And cut the apple orchard south of town down with an axe, and farmed it.

    risky

    ReplyDelete
  82. If one looks at the results of the "Long Term" management that has been provided, by the Federal Reserve, the results are, at best, mixed.

    We would not eliminate the Federal Reserve System, just limit it.

    ReplyDelete
  83. Gambling with those Federal Land Grants, aye.

    ReplyDelete
  84. You see shithole, that is exactly what he didn't do.

    risky

    ReplyDelete
  85. And why, o dear asshole, I ask again, why o why are you still squatting in occupied Phoenix??

    Should not thee begone back to thy native Italy??

    Out of common human decency, and a concern for the rights of those you have disposed?

    risky

    ReplyDelete
  86. Flee thee, flee thee, back to Genoa, or whatever Italian shitpot thou came from.

    And take your godawful shitfull attitude aback with you.

    I'll pay the plane ticket.

    riskly

    ReplyDelete
  87. Like I said, boobie, I've never been to Italy, so to return there, impossible.

    Gambling with their welfare receipts, that is exactly what you described.

    Black, Brown or Swede some of those welfare folk gamble with their "easy money".

    Historical fact, just as you described it.

    As for living in Arizona, you've had have your answer.

    Want a further dissertation, call your Jewish lawyer, he can tell you of the benefits of living in an area that is relatively free of discrimination based upon race, creed or national origin.

    ReplyDelete
  88. Or write Mrs Palin, she can tell you of the wonders that are available to those that reside in Arizona.

    ReplyDelete
  89. Gambling with their welfare receipts, that is exactly what you described.

    Black, Brown or Swede some of those welfare folk gamble with their "easy money".



    :):):):):):)

    You sad, sad, shameless son bitch, you are absolutely a laugh a minute.

    Shameless, sad, shamrockless.

    risky

    ReplyDelete
  90. In "occupied" Arizona, as you have described Iddeehoooo and parts of 'palestine'.

    You are an intellectual nitwit, shitting in your own boots all the time.

    risky

    ReplyDelete
  91. I got me an idee, now fixee, may have come from my friend Quirkster though, through the noogie sphere, stead of Platinum why not Pewter???

    risky

    ReplyDelete
  92. Stocks Claw Back

    Stocks erased a steep loss late in the day amid a report that China may come to the aid of the euro zone.

    ReplyDelete
  93. Minting of Trillion Dollar Pewter Coins Buoys Market...

    Some Fear A 'Flight To Safety'....

    r

    ReplyDelete
  94. In an answer that many in the auditorium cheered, Ahmadinejad claimed Bollinger showed no "respect" and called his remarks an "insult to information and the knowledge of the audience here."

    ...

    The Iranian leader also denied that he wants nuclear weapons.

    "Let me tell a joke here," he said. "The politicians who are after atomic bombs - politically, they are retarded."

    ReplyDelete
  95. In summary, the police arrested Patrick Lawrence, 22 year old white male, in a pumpkin patch 11:38 p.m. on Friday night.

    On Monday, at the courthouse, Lawrence was charged with lewd and lascivious behaviour, public indecency, and public intoxication.

    The suspect explained that as he was passing a pumpkin patch on his way home from a drinking session when he decided to stop...

    "You know how a pumpkin is soft and squishy inside, and there was no one
    around for miles or at least I thought there wasn't anyone around" He stated in an interview.

    Lawrence went on to say that he pulled over to the side of the road, picked out a pumpkin that he felt was appropriate to his purpose; cut a hole in it, and proceeded to satisfy his alleged need. 'Guess I was really into it, you know?' he commented with evident embarrassment

    In the process of doing the deed, Lawrence failed to notice an approaching police car and was unaware of his audience until Officer Brenda Taylor approached him.

    It was an unusual situation, that's for sure,' said Officer Taylor. 'I walked up to Lawrence and he's just banging away at this pumpkin.'

    Officer Taylor went on to describe what happened when she approached Lawrence ..

    I said, Excuse me sir, but do you realize that you're having sex with a pumpkin?

    He froze and was clearly very surprised that I was there, and then he looked me straight in the face and said... A pumpkin? Shit ..... is it midnight already?

    ReplyDelete
  96. A Russian and an Irish wrestler were set to square off for the Olympic gold medal. Before the final match, the Irish wrestler's trainer came to him and said 'Now, don't forget all the research we've done on this Russian. He's never lost a match because of this 'pretzel' hold he has. Whatever you do, do not let him get you in that hold! If he does, you're finished.'
    The Irishman nodded in acknowledgment.

    As the match started, the Irishman and the Russian circled each other several times, looking for an opening. All of a sudden, the Russian lunged forward, grabbing the Irishman and wrapping him up in the dreaded pretzel hold. A sigh of disappointment arose from the crowd and the trainer buried his face in his hands, for he knew all was lost.. He couldn't watch the inevitable happen.

    Suddenly, there was a Long, High Pitched Scream, then a cheer from the crowd and the trainer raised his eyes just in time to watch the Russian go flying up in the air. His back hit the mat with a thud and the Irishman collapsed on top of him, making the pin and winning the match.

    The trainer was astounded. When he finally got his wrestler alone, he asked 'How did you ever get out of that hold? No one has ever done it before!'
    The wrestler answered 'Well, I was ready to give up when he got me in that hold but at the last moment, I opened my eyes and saw this pair of testicles right in front of my face. I had nothing to lose so with my last ounce of strength, I stretched out my neck and bit those babies just as hard as I could.'
    The trainer exclaimed 'That's what finished him off?'
    'Not really. You'd be amazed how strong you get when you bite your own nuts.

    ReplyDelete
  97. I'm sorry folks, I just can't seem to pull that Trillion Dollar Coin idea out my ass.

    That may just be the funniest thing I've ever heard.

    Well, hell, might as well go all out and mint them out of aluminum foil, as anything else.

    But.....would the casinos in Vegas take them?????



    risky minter

    ReplyDelete
  98. On Mandela's claim that Cuba is a good advert for democracy:

    "Well Mr Mandela why don't you go and ask one of the 12 year old Cuban prostitutes

    which way her parents voted?"


    - Jeremy Clarkson

    ReplyDelete
  99. rat, ya thank the ol' golden nugget in downtown vegas would take them trillioncoins???

    risky minter

    ReplyDelete
  100. What would prevent...oh...say..The Quirkster perchance..... from minting up a few of them TrillionCoins??

    risky minter

    ReplyDelete
  101. What would prevent the Camaroonians from minting up a few TrillionDollarPythonCoins?

    risky minter

    ReplyDelete
  102. * Is Rick ready?: Texas Gov. Rick Perry cleared the twin hurdles of credibility and seriousness during last week’s California debate — but not by all that much. His answers on climate change and, especially, Social Security were meandering and insufficient — keeping both issues alive for his opponents.

    ...

    * Romney as attack dog: Romney has emerged as a winner in each of the first three Republican debate thanks to his steady performance and message discipline. He rarely takes his focus off of President Obama and the economy and even more rarely responds to attacks from his Republican rivals.

    ...

    * Now or never for Bachmann: In last week’s debate, Bachmann was absolutely invisible. And polling continues to show her support badly eroding from its heights earlier this summer.

    ReplyDelete
  103. One trillion dollars, could buy a lot of bling.
    One trillion dollars, could buy most anything.
    One trillion dollars, buying bullets, Buying guns.
    One trillion dollars, in the hands of killers, thugs.

    (Woah)x3
    Fuck the world, a lot of people gotta die tonight. . .
    (Woah)x3
    Fuck the world! kill them all!

    One trillion dollars, in Africa, Iraq.
    One trillion dollars, and it's never coming back.
    One trillion dollars, could buy some bad ass drugs.
    One trillion dollars, makes me wanna kill myself!

    (Woah)x3
    Fuck the world, a lot of people gotta die tonight. . .
    (Woah)x3
    Fuck the world! (YEAH, YEAH) kill them all!

    Until the sun burns from the sky.
    Until the sun burns so bright,
    This world is no more!
    The sun burns from the sky,
    And all the people are just dust on the ground. . .

    One trillion dollars, could buy a heart! a soul!
    One trillion dollars, buying nations, all the world.
    One trillion dollars, could make the fat lady sing.
    One trillion dollars, what a bullshit useless thing!

    (Woah)x3
    Fuck the world, a lot of people gotta die tonight. . .
    (Woah)x3
    Fuck the world, a lot of people gotta die tonight!
    (Woah)x3

    Shit loads of money spent,
    Will show us wrongs from right.
    Fuck the world, kill them all. . .


    risky minter

    ReplyDelete
  104. And it is so so true a TrillionCoin could buy a lot of bling.

    risky minter



    rat, really, you absolute dumb ass

    ReplyDelete
  105. Because, boobie, they do not control the reserve currency, of the whirled. The US does.

    None of those you mentioned control 25% of global GDP. The US does.

    The GOP dominated Congress has already pass the legislation, boobie.

    Obama has signed it.

    He just has to break with the bankers and order it done.

    Doubtful he will, though.
    He's a lot like you in that regard.

    Unimaginative and gutless, to boot.

    Prisoners of the status que, both.

    ReplyDelete
  106. Here boobie, you can read the law

    It’s right here in 31 USC § 5112 “Denominations, specifications, and design of coins.” It’s super-prescriptive about all kinds of things until you get to section (k):

    (k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.


    That you have total ignorance of which you speak, typical.

    ReplyDelete
  107. Read up on reality of the law, boobie.

    ReplyDelete
  108. Let's go for a fling
    He said to his lady lovely thing
    I'll take you from your big city lights
    And show you country nights
    That outshine your city's darkness
    There will be no blings
    No falsifying of things
    But just maybe a blanket
    And the whisper of the pines
    And the stars
    And things

    minter

    ReplyDelete
  109. Don't bother me now, rathole, the pewter is molten.

    Leave me alone.

    risky minter

    ReplyDelete
  110. Quirkster, you got them Greyhound Bus tickets to Vegas yet?

    I'll meet you in Boise.

    bling

    ReplyDelete
  111. Follow the money.

    Some Turkish and Israeli analysts say that Turkey's motive is not to seek a showdown with Israel over Gaza, but to build up a naval presence between Cyprus and Israel to create a sense of menace and scare investors away from the gas fields there.

    Turkey has been chafing at Cypriot-Israeli energy deals, and the tensions with Israel could enable Ankara to send a message without making explicit threats.

    ReplyDelete
  112. Romney praised the Texas governor for his record of job creation in the Lone Star State, saying "Oh sure," when invited by moderator Wolf Blitzer to do so. However, he noted that his rival benefited from several advantages such as a Republican Supreme Court, a Republican legislature and oil and gas interests.

    "I think Governor Perry would agree with me that if you're dealt four aces, it doesn't necessarily make you a great poker player," he quipped.

    "Mitt, I was gonna say, you were doing pretty good until you started talking poker," Perry shot back.

    ReplyDelete
  113. Italy borrowed from Amex at 10% to pay their Visa, then borrowed from Visa at 15% to pay Amex. When it’s time for Italy to pay Visa again, Amex will be charging 20%, and when it’s time to pay Amex again, Visa will be charging 25%. And why will that happen? Because Visa and Amex have figured out that’s exactly what Italy is doing.

    ReplyDelete
  114. Q, bring your works of Husseral and the Catholic Encyclopedia, I got the works of Martin Luther, and Big Sam's Ways To Win In Vegas.

    If I'm not in the waiting room, check the crapper at 11 bm tomorrow night.

    bling

    ReplyDelete
  115. I got the works of Martin Luther

    I'm sure that will endear you to Allen and WiO. You know, On the Jews and their Lies which reads a little like Mein Kampf.

    ReplyDelete
  116. Luther was a swine Miss T.

    And yet, he adopted children.

    Things is complex.

    And you know I have never ever said anything other, than that Luther had many many faults, of which I think I know them all.

    He was ok when he was young, but Jesus, when he got old.

    Did he have some moral responsibility for the holocaust centuries later?

    Yes

    bob

    ReplyDelete
  117. But don't get me wrong.

    I do not wish to be 'endeared' of Allen.

    Allen is a shit, and needs help.

    WiO is an upstanding guy.

    bob

    ReplyDelete
  118. Asked who in the GOP field would be most likely to "get the economy moving," 35 percent favored Perry, while 26 percent favored Romney.

    The poll also underscored the plunge in support for Minnesota Rep. Michele Bachmann. Among a field that also included the name of former Alaska Gov. Sarah Palin, Bachmann won the support of just four percent of registered Republicans, down from 10 percent last month and 12 percent in July.

    The poll put Palin in third place, with 15 percent, and Texas Rep. Ron Paul in fourth with 12 percent.

    ReplyDelete