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The Economy Will Not Recover Until the Economic Criminals are Prosecuted, and There Are Real Investigations Into 9/11 and Other Government Failures
Trust in Government is Necessary for a Stable Economy
A 2005 letter in premier scientific journal Nature reviews the research on trust and economics:
Trust ... plays a key role in economic exchange and politics. In the absence of trust among trading partners, market transactions break down.
In the absence of trust in a country's institutions and leaders,
political legitimacy breaks down. Much recent evidence indicates that
trust contributes to economic, political and social success.
Forbes wrote an article in 2006 entitled "The Economics of Trust". The article summarizes the importance of trust in creating a healthy economy:
Imagine
going to the corner store to buy a carton of milk, only to find that
the refrigerator is locked. When you've persuaded the shopkeeper to
retrieve the milk, you then end up arguing over whether you're going to
hand the money over first, or whether he is going to hand over the
milk. Finally you manage to arrange an elaborate simultaneous exchange.
A little taste of life in a world without trust--now imagine trying to
arrange a mortgage.
Being able to trust people might seem like a
pleasant luxury, but economists are starting to believe that it's
rather more important than that. Trust is about more than whether you
can leave your house unlocked; it is responsible for the difference
between the richest countries and the poorest.
"If you take a
broad enough definition of trust, then it would explain basically all
the difference between the per capita income of the United States and
Somalia," ventures Steve Knack, a senior economist at the World Bank
who has been studying the economics of trust for over a decade. That
suggests that trust is worth $12.4 trillion dollars a year to the U.S.,
which, in case you are wondering, is 99.5% of this country's income. ***
Above all, trust enables people to do business with each other. Doing business is what creates wealth. ***
Economists
distinguish between the personal, informal trust that comes from being
friendly with your neighbors and the impersonal, institutionalized
trust that lets you give your credit card number out over the Internet.
Similarly, market psychologists Richard L. Peterson M.D. and Frank Murtha, Ph.D. wrote in October:
Trust is the oil in the engine of capitalism, without it, the engine seizes up.
Confidence is like the gasoline, without it the machine won't move.
Trust
is gone: there is no longer trust between counterparties in the
financial system. Furthermore, confidence is at a low. Investors have
lost their confidence in the ability of shares to provide decent returns
(since they haven't).
Two professors of finance write:
The
drop in trust, we believe, is a major factor behind the deteriorating
economic conditions. To demonstrate its importance, we launched the
Chicago Booth/Kellogg School Financial Trust Index. Our first set of
data—based on interviews conducted at the end of December 2008—shows
that between September and December, 52 percent of Americans lost trust
in the banks. Similarly, 65 percent lost trust in the stock market. A
BBB/Gallup poll that surveyed a similar sample of Americans last April
confirms this dramatic drop. At that time, 42 percent of Americans
trusted financial institutions, versus 34 percent in our survey today,
while 53 percent said they trusted U.S. companies, versus just 12
percent today.
As trust declines, so does Americans’ willingness
to invest their money in the financial system. Our data show that
trust in the stock market affects people’s intention to buy stocks,
even after accounting for expectations of future stock-market
performance. Similarly, a person’s trust in banks predicts the
likelihood that he will make a run on his bank in a moment of crisis:
25 percent of those who don’t trust banks withdrew their deposits and
stored them as cash last fall, compared with only 3 percent of those
who said they still trusted the banks. Thus, trust in financial
institutions is a key factor for the smooth functioning of capital
markets and, by extension, the economy. Changes in trust matter.
They quote a Nobel laureate economist on the subject:
“Virtually
every commercial transaction has within itself an element of trust,”
writes economist Kenneth Arrow, a Nobel laureate. When we deposit money
in a bank, we trust that it’s safe. When a company orders goods, it
trusts its counterpart to deliver them in good faith. Trust facilitates
transactions because it saves the costs of monitoring and screening; it
is an essential lubricant that greases the wheels of the economic
system.
And a distinguished international group of
economists (Giancarlo Corsetti, Michael P. Devereux, Luigi Guiso, John
Hassler, Gilles Saint-Paul, Hans-Werner Sinn, Jan-Egbert Sturm and
Xavier Vives) have written a brief essay arguing:
Public distrust of bankers and financial markets has risen dramatically with the financial crisis. This column argues that this loss
of trust in the financial system played a critical role in the
collapse of economic activity that followed. To undo the damage,
financial regulation needs to focus on restoring that trust.
They note:
Trust
is crucial in many transactions and certainly in those involving
financial exchanges. The massive drop in trust associated with this
crisis will therefore have important implications for the future of
financial markets. Data show that in the late 1970s, the percentage of
people who reported having full trust in banks, brokers, mutual funds or
the stock market was around 40%; it had sunk to around 30% just before
the crisis hit, and collapsed to barely 5% afterwards. It is now even
lower than the trust people have in other people (randomly selected of
course).
Time Magazine notes:
Traditionally, gold has been a store of value when citizens do not trust their government politically or economically.
In other words, the government's political actions affect investments, such as gold, and thus the broader economy.
Trust Is At An All-Time Low
Unfortunately, the public's trust in government as a whole (and see this and this), the justice system, bankers, and the corporate media are at all-time lows.
Why?
Partly because the government has been repeatedly caught lying.
The
government repeatedly said about the subprime crisis, banking crisis,
debt crisis, mortgage crisis, and other economic crises:
- "It's contained"
- "We've got it under control"
and
- "We're going to fix it".
It wasn't, and they didn't ... and so people have lost trust in the government.
But it's not just the economy. The government also got caught making false claims that:
- Iraq had weapons of mass destruction, had a hand in 9/11 (and see this) and carried out the the anthrax attacks
- 9/11 wasn't foreseeable
- That the government doesn't spy on Americans (it did even before 9/11), Americans don't torture, etc.
But
there's another important reason for Americans' lack of trust in our
government and our economy: the failure to prosecute the criminals.
Prosecuting the Criminals and Launching REAL Investigations Is Necessary to Restore Trust
One of the leading business schools in America - the Wharton School of Business - has written an essay
on the psychological causes and solutions to the economic crisis.
Wharton points out that restoring trust is the key to recovery, and that
trust cannot be restored until wrongdoers are held accountable:
According to David M. Sachs, a training and supervision analyst at the Psychoanalytic Center of Philadelphia, the
crisis today is not one of confidence, but one of trust. "Abusive
financial practices were unchecked by personal moral controls that
prohibit individual criminal behavior, as in the case of [Bernard]
Madoff, and by complex financial manipulations, as in the case of AIG."
The public, expecting to be protected from such abuse, has suffered a
trauma of loss similar to that after 9/11.
"Normal expectations of what is safe and dependable were abruptly
shattered," Sachs noted. "As is typical of post-traumatic states,
planning for the future could not be based on old assumptions about
what is safe and what is dangerous. A radical reversal of how to be
gratified occurred."
People
now feel more gratified saving money than spending it, Sachs suggested.
They have trouble trusting promises from the government because they
feel the government has let them down.
He framed his argument
with a fictional patient named Betty Q. Public, a librarian with two
teenage children and a husband, John, who had recently lost his job.
"She felt betrayed because she and her husband had invested
conservatively and were double-crossed by dishonest, greedy businessmen,
and now she distrusted the government that had failed to protect them
from corporate dishonesty. Not only that, but she had little trust in
things turning around soon enough to enable her and her husband to
accomplish their previous goals.
"By no means a sophisticated
economist, she knew ... that some people had become fantastically
wealthy by misusing other people's money -- hers included," Sachs said."In short, John and Betty had done everything right and were being
punished, while the dishonest people were going unpunished."
Helping
an individual recover from a traumatic experience provides a useful
analogy for understanding how to help the economy recover from its own
traumatic experience, Sachs pointed out. The public will need to "hold the perpetrators of the economic disaster responsible and take what actions they can to prevent them from harming the economy again." In addition, the public will have to see proof that government and business leaders can behave responsibly before they will trust them again, he argued.
Note that Sachs urges "hold[ing] the perpetrators of the economic disaster responsible." In other words, just "looking forward" and promising to do things differently isn't enough.
Many high-level economists agree.
Economists such as William Black and James Galbraith have repeatedly said that we cannot solve the economic crisis unless we throw the criminals who committed fraud in jail.
Nobel prize winning economist George Akerlof has demonstrated
that failure to punish white collar criminals - and instead bailing
them out- creates incentives for more economic crimes and further
destruction of the economy in the future. See this, this and this.
Nobel prize winning economists Joseph Stiglitz and George Akerlof agree.
Indeed, polls show that:
- Most Americans believe that the Iraq war was a mistake. At least half of all Americans wanted Congress to impeach President Bush if he lied about the Iraq war
- Hundreds of millions of Americans think that there was a cover up about 9/11, and want a thorough investigation
- Americans want those who committed financial fraud to be prosecuted
Remember, distrust in the political actions
of those in Washington D.C. undermines the economy. Therefore, the
economy will not recover until the economic criminals are prosecuted,
and there are real investigations into 9/11 (even the 9/11 Commissioners
themselves think there should be more investigation: see this and this), the Iraq war, torture, spying on Americans and other government failures.
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We'd first have to acknowledge we are living in a kelptocracy
We'd first have to acknowledge we are living in a kelptocracy
I'd much rather be ruled by kelp than by criminals!
Precisely! So never going to happen till the people revolt.
Investigate 9/11 for government complicity???? If the Dims thought there was anything to 9/11 being an "inside job", they would have been all over it after they took over Congress in 2006. GW's tin-foil hat, political clap-trap is really getting boring. Obviously, this guy is a card-carrying member of the loony left. He has destroyed his credibility with me. Some people have a lot of time on their hands they can't figure out how to use constructively.
LOL The dems would have investigated 911 if there was anything to it? That's a good one! LOL
http://www.youtube.com/watch?v=qvwbZr81sKM
http://www.youtube.com/watch?v=rGCnpsZ9YcI
You misread George's thoughts about 9-11. He said only that it was "foreseeable." This is established fact--FBI knowledge received from investigators in the Philippines, "increased chatter" all over the place suggesting an "imminent, large scale attack," bin Laden declaring war on national television, Bush's briefing the day before the attack, etc.
That's not the same as saying it was an "inside job."
While the issues of 9-11 and what followed--the Iraq war based on fraud, etc--are certainly relevant to George's thesis on trust, it is clear that the very use of "9-11" stimulates a rush of pure hysteria that makes any kind of genuinely rational consideration realistically impossible to expect.
Interestingly enough, this is characteristic of clinical PTSD.
Much as it shouldn't be that way, it is. Hence, I'd have to agree with Banzai's thought about excluding 9-11 from the equation and just focusing on the bankster Super-Criminals . One thing at a time. Start with the "easy" stuff.
The worst part is how he forces you to read and comment. Must be another "clap-trap" mind trick. Making peak oil, criminal wars, financial and political corruption one party issues loses a lot more "credibility"
I totally agree. There is a big huge difference between R and D. The D's care about you. Only idiots think different. Additionally, anyone who thinks that building 7 didn't commit suicide by spontaneously turning into dust because it was sad about the death of her older brothers is a kook. George Washington, you're nuts!
http://www.youtube.com/watch?v=uPoQc5r32wI
So true, the government wants you to trust them rather than trust what you see with your own eyes.
Geraldo Rivera on 9/11.
http://www.youtube.com/watch?v=T_gE4wZEh0g
From the comments:
howitzer24 1 hour ago@avzett You're telling me you didn't mock it at one time in the past 9 years? I went? from mocking to believer over several years. That's natural.
Regarding the foreseeability of 9/11, I guarantee you someone saw it coming. There was a tremendous amount of put buying occurring the two weeks prior. I am talking 750 October puts for 60 cents each for Dupont, a very steady name....And there were many more situations like this that I saw and posted on AOL's chat room about....No one paid attention to my observations....I myself bought 20 puts on Alcoa figuring somebody knew something and I was going to jump on board. I made $10,000 with those few contracts.
They did not just forsee it happening - the BBC filmed the building still standing and told the whole world that the building had collapsed. Talking about premonition :)
http://www.youtube.com/watch?v=6mxFRigYD3s
Conversations like that happen everyday you tool with regards to stocks. 750 puts is nothing. Show me someone buying 100,000 puts of American or United and then it starts to stink.
I guess it starts to stink . . .
"Sources tell CBS News that the afternoon before the attack, alarm bells were sounding over unusual trading in the U.S. stock options market.
An extraordinary number of trades were betting that American Airlines stock price would fall.
The trades are called "puts" and they involved at least 450,000 shares of American. But what raised the red flag is more than 80 percent of the orders were "puts", far outnumbering "call" options, those betting the stock would rise.
Sources say they have never seen that kind of imbalance before, reports CBS News Correspondent Sharyl Attkisson. Normally the numbers are fairly even."
http://www.cbsnews.com/stories/2001/09/19/eveningnews/main311834.shtml
Yes, and I believe those trades were traced to Middle Eastern accounts, not accounts in Texas.
Exactly...
really? I never found anything about where those puts were linked to. can you please link your back-up information?
Sure, I'll try to find it.
GW, to reset the markets, I would settle for simply prosecuting and incarcerating the perpetrators of the financial meltdown, before going down the 9/11 maze.
The extent of the fraud committed is simply breath taking.
And while I agree that there are a multitude of questions out there that are unanswered, mixing them together with the meltdown is exactly what they want us to do.
In this instance I'm afraid I have to go with GW, Buckeroo!
True, the extent of the fraud is breathtaking. A truly deep investigation into 9/11 will eventually establish connections between embezzled gov't funds, the sudden and dramatic growth in hedge funds in 2002, and the meltdown.
This is simply a classic replay, albeit on a larger context and venue, of the securitization/Prohibition/stock pools of the Great Depression (something too few people either remember or understand).
For the first time since the Pecora Commission, that Financial Crisis Inquiry Commission is actually the real deal -- evidently Angelides and Born are out to destroy the evil doers.
The point is whether anything will be done when they deliver the goods? They have enough stuff now to send members of the former Bush administration, members of the present Obama administration, and plenty of banksters to jail.
Let us never forget that in the aftermath of the S&L meltdown, back in the '80s, at least 1,000 (one thousand) banksters went to jail.
Completely agree with WB7.
What does 9/11 have to do with the financial meltdown? Some very well organized and well funded terrorists attacked iconic American buildings, killing thousands in the process. End of story.
It makes no sense to me why investigating 9/11 is "necessary for economic recovery". WTF? And it doesn't help to make ridiculous comments like "hundreds of millions of Americans think that there was a cover up about 9/11, and want a thorough investigation". There are only 300M or so Americans and I'm sure most don't give a rat's ass about anything.
-100 for most inane, moronic comment of the week.
It would be nice to move past 9/11, we have other more pressing problems, please live in the present. I think the time and effort would be more constructively spent revisting the Katrina response failure than 9/11 and ultimately help more Americans. For those who would like to revisit 9/11, why stop there? Why not revisit the moon landings (oh, sorry, you already are), the bay of pigs, the cuban missle crisis, the Kennedy assassination (I truly believe he was killed because he tried to usurp the power of the Fed but I'm not going to waste my life trying to preach that to other people), for God's sake let's revisit Pearl Harbour while we're at it, something there doesn't add up.......................
Hello, anybody home? Another 911, or worse, could happen at any time. It's the same gang of elites and their ilk that also engineered Pearl Harbor and the JFK assassination and now with the economic situation deteriorating thay may try to bring about another gamechanger-unless the people stop them!
mrgen,
Katrina?,
Where's the cover up there, or an issue?.
The state of Louisiana was was to blame, not the Feds(and that takes a lot for me to say).
But when the truth is there for ALL to see, and Bush, FEMA, etc, get roasted,for lack of response, I call BS.
Mayor Nagin,and the Governor, were both called by Bush FIVE days before landfall, and he pleaded with them to get their folks OUT.
What did they do, nothing.The picture of a 100+ school sized buses sitting in 6' of water, that could have been used for evac,and were not is criminal,did these two leaders get nailed?.
Hell no.
The Gv't did, most folks do not realize it is up to the states to make ready, evac,lay in supplies,and provide the early relief, and warnings, and action.
The BIG FED BS taking over the disaster areas,doing all the supplies, and work, and being blamed is BS, this is a relatively NEW phenom.
The Police Chief, along with the city leaders and governor, all broke laws, and are the direct cause of the Katrina debacle.
You sir, are a moron. Katrina was 100% the cause of the feds for failing to take care of the dikes. Full stop. The Army Corps of Engineers for years advised that the levees would not withstand a force 3 hurricane. It was the breach of the levees that caused the destruction, not the hurricane itself. That was a man made disaster that only a conservative dick wad would blame on the people. Fuck you.
Sorry don't mean to burst your bubble but in discussions prior to Katrina when local, state and federal governments got together to plan how to respond to an event almost identical to Katrina, the PAM study, the federal government repeatedly took tasks upon itself. It then failed to execute those tasks. Some of those tasks were major. This is not to get anyone in the local and state governments off the hook but it is absurd to imagine that the Federals didn't have a big hand in this. Try not to argue with me about this since I lived this experience in ways you cannot imagine.
In just one small example of the stupidity of the Federal Government. They sealed off the entire disaster area and didn't allow folks like me to go into the city to help.
I wasn't apportioning blame to any levels of gov't for Katrina, mainly trying to contrast revisiting that tragedy with 9/11 in terms of relative usefulness for the American people.
I'm wondering how much control any person or organization has in the world today. Is this planned? Or did this just spin out of control a long time ago and keep perpetuating itself?
There is a group of elites who want to dominate the world and they have a plan that is now having complications. Unfortunately, they always use war as an option because they usually come out even stronger in the aftermath although it does have its risks.
WB7
..."mixing them together with the meltdown is exactly what they want us to do. "
Agreed. There is so much going on that there is a loss of focus. I believe this is intentional. Story after story unfolding before folks that have the attention span of a kumquat.
It is not just loss of focus, it is emotional content. The minute you say "9/11" or "9/11 Conspiracy" you have an immediate brawl. It is like yelling fire in a movie theater.
On the other hand, if one concludes that the whole mess is inseparable, then the only thing to do is hit the streets.
But that is not going to happen either. At least not at this stage.
I think I'll take sentence number two. I am not sure how to separate these issues. Maybe it's my criminal mindset. I think it's necessary for us to realize exactly what we're dealing with here. If we realize it will go to such extravagant steps kill us, lie to us, and create false enemies to get material advantage, it may help us to understand and prepare for its increasing economic attack?
Sad but true, Banzai.
Did you notice the news this week about the FBI report on US Gov't involvement with Ex-Nazis. There was a time when this kind of information would have been considered absolute lunacy.
?
WASHINGTON -- A secret history of the U.S. government's Nazi-hunting operation concludes that American intelligence officials created a "safe haven" in the United States for Nazis and their collaborators after World War II, and it details decades of clashes, often hidden, with other nations over war criminals in the U.S. and abroad.
The 600-page report, which the Justice Department has tried to keep secret for four years, provides new evidence about more than two dozen of the most notorious Nazi cases of the last three decades.
Read more: http://www.post-gazette.com/pg/10318/1103228-84.stm#ixzz15HKqjwym
The US wouldn't have much of a space program if it wasn't for Nazi scientists who came here in Operation Paperclip.
I understand the Soviets did the same. I don't think that's the issue here though.
Breathtaking. Whaddya know, I'm still able to register surprise.
Makes me wonder what FBI Director Robert "Honey Pie" Mueller is up to now.
And wish that I had image-posting priviledges at ZH so that I could insert a picture of the cocksucker every time I use his name--the guy is so far off the grid, so completely MIA that (unlike Eric Place Holder) nobody even has a mental image of him. That just ain't right.
What does it tell us about law enforcement?
(And, Banzai, can you help me out with a photo here? Somebody? Anybody?)
+100 for the elegant description of our non entity attorney general.
Naaah, Bobby Mueller isn't off the grid and he gets the job done, like when he was first appointed to the Dept. of Justice by V.P George H.W. Bush, to be chief of the criminal justice division and interfere and stop the investigation of BCCI connections to the highest levels of the US government.
Bobby can always be depended upon, if your name is Bush, Cheney, Rumsfeld or Goldman Sachs.