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Naomi Klein And Joseph Stiglitz Discuss The Cause And Effect Of The Financial Crisis
Alan Greenspan's economic legacy is slowly but surely deteriorating from that of one created by a "Maestro", to the deranged hungover flashbacks of the most inept monetarst dilettante and plutocrat puppet in the history of fiat capitalism. And with ever increasing honest and truthful observations as those shared by Naomi Klein and Joseph Stiglitz in the 1 hour + program attached, courtesy of Fora TV, only the remnants of the quickly evaporating close circle of Bernanke and Co., will have anything favorable left to say for the man who took the mundane task of building bubbles and converted it into rocket science so complex that only a few people at Goldman Sachs figured out how to benefit from it. We encourage all readers to spend some time watching the program before, just like Barney Frank and other bribed politicans, deciding that changing the status quo vis-a-vis the Fed is a step in the "wrong direction."
10 minute excerpt below:
Watch the full program or select from the following clips. We would like to draw your attention to clips 2, 7, 11 and 13
01. Introduction
02. Flawed Economic Model
03. Economic Power and Ideology
04. Collapse of Trust in Legal System
05. Legal Means of Assistance
06. Effects of Bailout
07. How This Crisis Came About
08. New Unregulated Markets
09. Modern Capitalism Separates Ownership and Control
10. Control
11. Government Controlled by Banking Interest
12. Property Information System
13. Protection of Wealthy and Powerful
14. Documentation of Who Owns What
15. New Orleans Troubles
16. Foreclosures are Economic Katrinas
»
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Great find, this should be required in-class viewing for (at a minimum) every single student in the US from 11th-12th grade up. Not to mention all members of Congress, both chambers, 'Clockwork Orange' therapy-style if necessary (without the aversion therapy elements, of course). Of course, the same could be said about a high proportion of ZH itself. http://cicorp.com/corrections/DidNotWork/AlexLudovico.jpg
Does anyone else remember the incident at the last Superbowl when a brief segment of porn was spliced into the NBC feed to a local cable market? (Hats off to the Tyler responsible for imaginativeness, though it seemed to lack subtlety and purpose) Might a similar technical malfunction not occur with more information-rich content, directed towards an audience segment more targeted than Tucson, AZ cable viewers?
"Alan Greenspan's economic legacy is...the most inept monetarist dilettante and plutocrat puppet in the history of fiat capitalism."
Classic. Amen.
i am still watching the first part of the video
but i can say at this point that de soto is the
sun around which the two other guests revolve....
indeed they look like laverne and shirley compared
to winston churchill.....
de soto's laments about the decline of property
rights is an exceptionally astute observation
but still fails to see its origins in the debasement
of currency which began in 1965 with the
instroduction of copper clad coinage and then
to 1971 when gold was totally repudiated...
thus there is a direct relationship between
the debasement of the currency and the collapse
of property rights and legal brilliance which
built western success....
laverne and shirley are not up to de soto's
intellect....but just now stiglitz is getting
in some good points about a massive transfer
of wealth....yet de soto is still politely
bitch splapping them in an ever so genteel way...
oh wait de soto is picking up on my point about
paper debasement....my god this man is brilliant....
Bingo. de Soto had them both for lunch.
A wonderful example of the difference between conceptual vs. perceptual level thinking.
listening a little bit longer it is evident that the moderator could easily fill in for beavis and butthead - he is a complete 3d rate intellect...he has no business even polishing de soto's shoes....stiglitz is a moron and i'll just leave naomi to flap in the winds...
This is a bunch of crap! A bunch of cry babies.
thanks, a good program, and fora.tv is a great resource .. it has grown from filming all the local talks it is hard to show up for, and now includes so many others given elsewhere .. and features longer treatments of issues than TED and the EG...only problem being a lack of hours for all the good content there (and on ZH too)
Paul vs Greenspan, at the height of the euphoria, February 2000. Listen carefully.
http://www.youtube.com/watch?v=i2AqGQirW1Y
Ron looks and speaks strangely similar to Bush. We got the wrong Republican from Texas just cause Joe cant tell the difference.
Great highlight TD, thank you for it.
You'd 'think' (went wrong already) that Schumpeter woulda seen just a tad more interest in the past year. Apparently only the Mises Institute, every Fed Chairman and Armstrong himself still understand what a cruel joke Keynesianism truly is.
We all understand Greenspan's culpability in this 'mess' ... we each like to pin the tail on one donkey (dick fuld) and Easy Al is clearly the big burro. That said, bubbles/ crashes etc. are not the product of the Fed, which is only able to slightly exacerbate an already existent trend in play. Trends themselves are brought about by our collective sentiment; which is not only measurable but also predictable.
We say 'enterprise' today but Schumpeter distinctly employed the term "Unternehmergeist" so as to explicitly underscore the "spirit" of enterprise, not simply the function unto itself. In this vein, Zero Hedge deserves much praise for its enterprising spirit; much like the Project for a New American Century ... constructively implode the system from within. Ahhh, doncha just love the smell of creative destruction in the morning?
Naomi, in her typical 'well-said, fact-light, touchy-feely way' nails the analytic issue yet to be discussed by the 'bourgeois intelligentsia' ... "a drift towards authoritarian capitalism" ... at the tail of Chapter 3, from 14:00 - 15:25.
While I think there was very little of this discussion directed to Keynesian theory, if anything the discussion would lean to support it (ie Market Fundamentalism is dead).
Your comment is just your worthless opinion and has nothing to do with the video.
BTW, Tyler, I thought this was a very worthwhile video. Thank you for the link.
As you have stated:
"We all understand Greenspan's culpability in this 'mess' ... we each like to pin the tail on one donkey (dick fuld) and Easy Al is clearly the big burro. That said, bubbles/ crashes etc. are not the product of the Fed, which is only able to slightly exacerbate an already existent trend in play. Trends themselves are brought about by our collective sentiment; which is not only measurable but also predictable."
First of all I am very impressed by your ability to suggest the prediction of economic trends, outside the influence of FED monetary policy and political influence. Please share some of your measurable predictions for the 2010 US economy.
From what I see the FED, through its actions and legislative influence, create the conditions and incentives for economic trends. Furthermore, these FED actions are not under direct control of our collective sentiment. Some would say our representatives are not even under direct control of our collective sentiment.
Take a look at the latest FED balance sheet and tell me that the FED is not directly trying to influence real estate price through purchasing of deleveraging debt MBS.
No my funny friend, the FED is definitely a trend setter here.
Great video. Thanks
De Soto: Made the most sense of property rights as a fundamental starting point.
Naomi: Incoherent. Pretended to be objective while sucker punching with her masked liberal viewpoints.
De Soto is good....his thesis, outlined in his book "The Mystery of Capital" is a good read. As Pedro cites, that's his basis for why Western economies work and others don't ...until the Western economies got hijacked by all the special interests, etc.
"Liberal" --- gimme a break, dood! To an authentic liberal such as myself, I've always thought Ms. Klein to be a rather sedate individual, otherwise she would have included the important factoid (in her "Shock Doctrine" book) that the University of Chicago (proselytizer of every FUD idea around economics -- can you say "Economic Value Added" and "debt should be treated like equity"???) was primarily funded by John D. Rockefeller.
A 20 % increase (granted,less than the increase in the s&p since its lows)in people going after thanxgiving donation
http://www.boston.com/news/local/massachusetts/articles/2009/11/22/famil...
I agree that this is a great video. My only complaint is that it was too short. I could listen to each of the speakers for an hour, by themselves.
The property rights issue really hit home, and made clear why the securitized mortgage industry is completely screwed, when there's no clear title to a loan. And why the Courts have finally stood up and told the Banks that they are out of luck - giving the homeowner free ownership to their house.
That decision makes absolute sense and is huge. Changing the laws to reflect otherwise will destroy one of the core strengths of America. I don't think even Goldman Sachs is big enough to pull it off.
And please don't forget that Supreme Court decision which privatized eminent domain, giving developers the right to bribe pubic (error intended) officials to steal private property.
An excellent point.
Very educational. Thank you!
time123
http://invetrics.com
Hernando de Soto Polar is the fat guy with incipient beard. He makes the best points and is worth watching. Naomi Klein is useless. In clonish feminist fashion she repeatedly use the word power. Is power envy like penis envy?
Stieglitz ain't too bad
You couldn't carry Naomi's tampons.
Are you making an implication about Naomi?
that is so clever i almost choked on my ge tomato
Apparently you haven't figured out yet that the name of the game is all about power.
My sympathies. Perhaps you'll get a clue when your new serfdom finally hits you. But I doubt you'll ever realize it.
They managed to fill up an hour with insightful commentary. The South American guy (DeSoto?) has interesting perspectives on property and law. My takeaway: our financial system keeps creating new games which fall apart after everybody gets in - essentially a continuously evolving pyramid/ponzi scam. So, stocks, housing, 401s, derivatives, etc. are all analogous in this sense. The later and greater fool is always left holding the bag.
Logic dictates that one should try to get in early, or completely avoid, the next scam. Are you listening, goldbugs? Or, you carbon credit scammers?
Long time lurker, here.
Thanks for the great site, Tyler, Marla, et al.
Hernando de Soto is spot on, in calling for better property rights infrastructure, and better integration between it and government. But, his appreciation for the quality of our existing physical property recordation/administration system is overstated.
Given the fact that Joe Sixpack is somehow liable for derivatives if they should blow up, there is no valid argument to be made for continuing to allow their transparency.
My view is that consenting adults ought to be able to design contractual relationships to their heart's content. The grand theft occurs when these contractual relationships create liabilities for citizens who were not party to the transaction in the first place. This must end, and I think de Soto is moving in that direction; even if he feels compelled to show appreciation for our paper-based property system.
My view is that the physical property system is f****d too, because it serves the less complicated, but still unfair monetary/banking system and the various brokers. It makes housing too expensive and dampens individual mobility.
quackprogrammer
De Soto's analysis is brilliant (and fleshed out in "The Mystery of Capitalism".) It is a very fresh analysis of our current situation.
De Soto is a real thinker.
His view on the derivatives cluster is brilliant. @39:00 - 41:00
Hernando DeSoto clarifies the fundamental issue we are faced with in the US. Somewhere in "mark to market" we have lost the basis for pricing of assets. This bank "takeover" can be viewed as the elites robbing due to no current knowledge of what assets are worth.
In my opinion one aspect of the rise in gold price is the unspoken, intuitive need for people to "own" something real and priced. Fiat money has lost all meaning as has property value. I agree with DeSoto that there has to been a truthful correlation between Price and the thing priced and this has to be documented in order for our system to have a chance at regeneration.
Otherwise we continue to sink into chaos.
I feel sorry for de Soto, he's actually trying to figure out this mess while the other three keep getting distracted by their contest to see who can insult Republicans/George Bush/Anyone in Finance not named Soros or Buffet the hardest. I'm surprised de Soto put up with it as long as he did, I probably would have unplugged and walked off the stage if I was getting blown off like that.
Forget politics, forget all this high-brow finanicial smoke-and-mirrors, forget all the bloviating you saw on that video. The reason the U.S. economic system is faltering (not failing, not yet anyway) is purely a failure of leadership. Which in a republic (NOT democracy, we don't vote on legislation directly), means it's all OUR fault. We are the ones who elected [fill in the blank], so we are getting exactly what we deserve. Katrina? Don't blame the hurricane, that's just Mother Nature doing her thing. Blame the years, hell, decades of political corruption in Louisiana and New Orleans that effectively crippled their ability to respond to an absolutely predictable natural disaster that hits Florida and the Caribbean literally several times a decade.
In other words, there are penalties for electing completely inept people to high public office. They make bad decisions, they write bad legislation and they appoint even more incompetent people to other high, non-elected positions (Supreme Court and Federal Reserve, I'm looking at you).
Ever wonder why the re-election percentage to the U.S. Congress hovers in the low 90/high 80th percentile? "Because all Congressmen are crooks - except for mine, he (or she) is honest!"
I hate to say it, folks, but we've had it coming for quite a while....
Nice post.
Failure of leadership, decline in public morality and ethical standards, usurious monetary system that inherently fails due to being built upon fraud and lies, corrosion of accounting and transparency that would reveal every dishonesty immediately.
In the end, the public sector conspires with the monetary special interests to fan speculation upon the land and structures of a nation, to disguise fraud, and to raid the public purse.
Proper oversight, prosecutions, lifetime reprimands and a healthily designed financial system would hamper the innate tendency of humans to game all constructs to their own selfish gain.
Shame, humiliation, punishment should attend crimes. Harsh justice, strong regulation, swift enforcement would mitigate the extent of possible damage.
De Soto is a darling of the establishment because he says that poor countries are not so poor, the size of the informal sector is comparable to the formal sector. He doesn't provide any insight on economic development beyond the informal sector.
Follow an asset, like a house, as it evolves from informal asset to securities and it becomes obvious:
Unregistered house -informal asset
Registered house - formal asset
==============================
House financing - Mortgage - financial asset
Mortgage securitization -securities
The mystery of capital is in the second phase, not in the first, as DeSoto claims.
The most interesting economist on property rights and institutions is Douglas North,
http://en.wikipedia.org/wiki/Douglass_North
I don't think it's fair to blame Keynesianism for all of the economic consequences in the U.S. today. There were many prosperous years in the U.S. when a healthy mixed economic framework was is use. Moreover, there is great evidence of a mixed economic system working in many developing nations throughout the past century, prior to the U.S. stepping in and overtaking those governments/economies for its own gain. See Naomi Klein's "Shock Doctrine" for these examples.
I don't think Keynes ever had crony governments as his number one choice for economic policy conduit. Also, from my rudimentary background of his economic theories, did he not always promote free markets but with government influence in the areas that absolutely needed regulation?
The point raised by Klein and Steigler was that unregulated free markets are to blame for the current problems. Milton Freidman and Greenspan, not Keynes.
De Soto was spot on, but he's pretty much getting blown off by the other three. Apparently, they were too busy trying to come up with witty George Bush insults to pay any attention to what he was pointing out. By the way, when a guy like De Soto says he's from 'down South' and you throw in the qualifier "The Third World", you pretty much look and sound like a douchebag. Good job, moderator.
Face it folks, when you elect corrupt incompetents like Barney Frank, Chris Dodd, Ted Stevens or even Randy "Duke" Cunningham to public office, something like this was bound to happen sooner or later. They wrote the laws that enabled this disaster, so the fault is on us, the U.S. public for electing them.
Same applies to Katrina, incidentally. What should have been a manageable natural crisis turned into a full-blown disaster due to the endemic political corruption that has ruined Louisiana and especially New Orleans. When you have awful leadership at the local and state level, Katrina is the end result. I live in the Panhandle of Florida, believe me, hurricanes are only dangerous to the A) truly helpless (ie. children, the elderly, pets, etc...) or B) the truly stupid (ie. most adults living and voting in New Orleans).
As Ed Koch put it when he was voted out as Mayor of NYC and some interviewer asked if he wished he was still in office: "No, the public has chosen and they must be punished"
Interesting discussion, thanks for highlighting.
Desoto has some interesting points on the fundementals, however, I'll go for Naomi's facts, intuitions and global sense of things, any day over a theoretical, academic argument even if it comes from a fresh perspective.
Truth is, little guy gets scewed unless little guys unite and get parasites off them.
Anybody who bogs down that realization of that by the population and thus prevents their consequent mobilization against powered elites with theoretical objections is just another mumbling, baffle-them-with-bs Greenspanist.
Because a bullet-point understanding of the crisis is always more preferable than a fundmental understanding of why it occurs.
Sure then: We'll let Naomi Klein lead the (PTB financed IAW SOP) "socialist revolution" ZZZZZZZZZZZZZZZZZZZ . . .
Hey I have an idea: Maybe TPTB could try a little original thinking for once.
Naomi Klein: Globalist elite media darling groomed to appear "populist" to the plebes. Yawn. Next?
The lightbulb went on for me last year, not because I'm an insider, but because I'm a pattern-seeker.
Ever read Tales of and Economic Hit Man? Imagine it's the late '60's early '70's. What would you do if you were President of the US and/or the head of the CIA (or *cough* both *cough*)and learned your country was next on the IMF hit list? What if you got 30+ years advance notice of the Master Plan - because you're head of the CIA that's why - What would you do?
What if the only tools at your disposal to fight this MASSIVE IMF hit (bigger then the Soviet Union's) were clandestine and mostly illegal? Would you commit the crimes? I know what I'd do if I were already an amoral, high level shadow government operative: I'd play Double Agent and make like I'm on board with the Master Plan. Then I'd launch the biggest, most long-term counter intelligence operation in world history, and hire the best.
I'd hire an inspirational speech-giving actor to play President. I'd put a Randian goldbug anti-statist as head of the NY Fed and let the world think he turned against his ideals. And for the financial shenanigans? I'd hire the best, most powerful bank holding company on the planet. Their mission: Take down the Masters house using the Masters tools. For service to their Nation they would be above the law. They would be made to Win. At any cost.
The new NY Fed chair could use this new-fangled "computer programming" thingy to the Operation's advantage and disrupt the Long Cycle, suppress PM prices, shank the shorts, render leading indicators useless and bifurcate and confuse the markets. Maybe trillions in non-recourse SIVs could stop the Repo Man Phase of the IMF hit in its tracks. Produce the note!
Quantum communications is an even newer tool at their disposal. Think of what faster-than-light communications would do to the ability to manipulate markets.
Mmmmm yeah I'd do all those things, and more. I'd probably call it Operation Screw the Pooch. No wait: I'd probably call it Operation Samson and make it too painful for the IMF to go through with the hit. Take the US down and we take the world down with us.
Goldman doing God's Work? I suppose it depends on which side of the Big Trade you're on, whether you see halos or horns. As for me I'm here for the show. Like I said, I'm a pattern seeker. It appears Goldman's next job is to stuff a herd of camels through the eye of a needle. Let's see how that goes.
(Me: Long PMs - all physical - and short term treasuries since Summer 2007. Tentatively back in large cap equities once I figured out their game was rigged. Can't beat-em, join em, but don't play this market unless you can read their minds. Tarot cards are better diagnostics than technicals and wave theory these days since the timeline has - literally - been broken.)
Did I miss the free market ? What is Stiglitz talking about? the government has intervened over and over again kicking the can down the road.
When Stiglitz is ever talking about that "free market" he's actually referring to the preferential trade agreements with China ("Send us your jobs, your factories, your technology, and we'll continue to buy your junk bonds.").
Which, if both my neurons are still functionally, ain't really a "free market" but a "freak market."
Naomi Klein, I really can't stand her, she derides corporatism and "elites" using government to fleece "the poor" ... yet she fails to CONNECT THE DOTS.
Government allows for the fleecing of the public.
Government bails out banks. Government gives unfair advantages to special interests that distort market behavior.
Yet what does she want?!? More government. WTF
This video is an incredible revelation as to 1) the success of the American system of property rights law, and 2) the dangerous waters in which it now finds itself submerged.
Hernando de Soto is reluctant to use the “electrically charged” phrase “property rights” because it instills different meanings to different people. Instead, he phrases the success of the western economies and forms of government as dependent on what he calls “correctly documented agreements between individuals.”
Enter the Fed, fiat currency and the Rothschild philosophy: “Let me issue and control a nation’s money and I care not who writes the laws.” Mayer Amschel Rothschild, 1790
Fiat is the exact opposite of contract. Contract means that two people have agreed on something that they both know what the value is. In a restaurant you order food at a certain price, roast beef and scalloped potatoes, but if it arrives without the potatoes, you have a valid complaint. You don’t owe $21.95 because the agreement wasn’t honored. But with fiat you are entering an agreement that is judged legal by the U.S. government where the other party has the right to change the value in the agreement.
That, in essence, is the unspoken rule of America’s privately owned Federal Reserve banker system, where after nearly 100 years in operation the “paper is out of control” to such a degree that it has culminated in the destruction of America’s property law system--of capitalism which essentially is a system of information and control. “A true deregulated market looks like the derivatives market,” a gamblers’ market where no one trusts the paper, without clarity, without reality, where the paper no longer reflects a man’s property.
Says Wikipedia, “Hernando de Soto (born 1941) is a Peruvian economist known for his work on the informal economy and on the importance of business and property rights. He is the president of Peru's Institute for Liberty and Democracy (ILD), located in Lima…. Between 1988 and 1995, he and the (ILD) were responsible for some four hundred initiatives, laws, and regulations that changed Peru’s economic system.
“In particular, ILD designed the administrative reform of Peru’s property system which has given titles to more than 1.2 million families and helped some 380,000 firms which previously operated in the black market to enter the formal economy. This latter task was accomplished through the elimination of bureaucratic ‘red-tape’ and restrictive registration, licensing and permit laws that made the opening of new businesses very time-consuming and costly.”
Says de Soto, the Western system is by far the most successful I have seen, and I travel the world, and I read the world. “You’ve got a GDP per capita at least six or eight times further ahead than where we are."
Property rights, says de Soto, is not how property is distributed but how it is documented, in such a way that the owner has the information of his ownership. The real economy is made out of the paper that reflects those things, a record as to who owns the house, with maps, et cetera…
The friendly discussion brought out how America’s contract society enabled citizens to make agreements of ownership that ensured the prosperity of their future. In other parts of the world, where citizens did not have agreements to own the land on which their homes were established, when a disaster such as the S.E. Asia tsunami referred to wiped away their all their lodgings on the beach, for example, it wiped away all they had and their futures.
On the other hand, in America when say a Katrina swept away many houses, even if the government did not replace those houses, the people who owned them still held ownership to the land; those water soaked records, that information, were frozen, dried out, and remained recorded as their right to their property. Such underlying information is the essence of the property rights system.
Unfortunately, America’s financial crisis has uncovered fiat’s dangerous assault on property rights. How can Americans pursue an investment where the value is to be determined by the financial central bankers on the other side of the curtain? Purchase equities at an established price; the value changes later with government intervention and manipulation. Buy property and face a market with the Fed’s thumb on the scale. Save money for your retirement in treasuries or savings accounts and never know whether the moths of Bernanke’s policies will come and chew it all away…
Abolish the Fed.
Humor at the expense of politicians is amusing, and often deserved. Gratuitous political cheap shots when it’s all one-sided is not. Or are they suggesting Obama, Pelosi and Reed are doing a good job?
In what universe are derivatives traded in a remotely free market? Klein and Stiglitz are well-spoken and they are extremely good at describing the situation as it stands these days but unfortunately this amounts to little more than stating the obvious.
Klein excells at pointing out the collusion between government and the banking system but what I don't understand is how she plans to use the political system to fix itself seeing as the imbalances she criticizes are endemic to all kinds of political power.
De Soto is the only one in this video talking anything that slightly resembles sense.
+1
Totally right. De Soto was speaking about fundamentals.
Kein and Stiglitz were rattling off talking points to get applause.
Both implicate the government in massive corruption yet both believe what we need is MORE GOVERNMENT!?!?
I guess if they ran the government we could simply "trust" them to do the "right" thing.
Thanks for the post. Stiglitz is one of the few economists I admire and respect.
Wow! Putting uber socialist N Klein in the title and implying there is a rational discussion is just more tweaking of my nose than I can take TD.
Stigliz says banks should not be allowed to gamble on assets (bet $1 trillion on Bear Sterns' fall). Hence more government regulation is needed. That assumes the government is liable for private banks' decisions.
Gambling is not the problem for private entities. The problem is the government should not use taxpayers' money to bailout those gamblers. The government should not bailout AIG and Goldman Sacks' bets insured by AIG.
The current American system works in such a way that when a bubble is blowing, the government stands aside letting banks reap all profits and hands-off viewpoints dominate, when it bursts the government steps in to bailout banks and hands-on viewpoints dominate. Both Stigliz's hands-on approach and Greenspan's hands-off approach serve the same purpose: to redistribute wealth from Main Street to Wall Street, they just enter at different points in the bubble cycle.
De Soto is right. It's not about left or right. It's about trust in the system. The West succeeded because of the trust in financial paper including currency to represent true and constant value. And that trust is seriously eroded by policies from both left and right.
"Welcome to the new world order
Families sleepin' in their cars in the southwest
No home no job no peace no rest" -- Springsteen "Ghost of Tom Joad"
RATM does it best
http://www.youtube.com/watch?v=pIEHCSHa98k
Stigliz says banks should not be allowed to gamble on assets (bet $1 trillion on Bear Sterns' fall). Hence more government regulation is needed. That assumes the government is liable for private banks' decisions.
Gambling is not the problem for private entities. The problem is the government should not use taxpayers' money to bailout those gamblers. The government should not bailout AIG and Goldman Sacks' bets insured by AIG.
The current American system works in such a way that when a bubble is blowing, the government stands aside letting banks reap all profits and hands-off viewpoints dominate, when it bursts the government steps in to bailout banks and hands-on viewpoints dominate. Both Stigliz's hands-on approach and Greenspan's hands-off approach serve the same purpose: to redistribute wealth from Main Street to Wall Street, they just enter at different points in the bubble cycle.
De Soto is right. It's not about left or right. It's about trust in the system. The West succeeded because of the trust in financial paper including currency to represent true and constant value. And that trust is seriously eroded by policies from both left and right.
Banks provide a public utility, dispensing credit into an economy. Since this is rather a straightforward business proposition, government should assume this function.
Trading and speculating as investment banks used to do (and GS still does) should be prohibited. Strict underwriting standards should reduce risk, while timely and effective regulation would curb abuse. Leverage would be strictly limited to be within historically "safe" standards and exceedingly strict accounting standards would prohibit off-balance sheet or "innovative" end-runs.
Money would be issued by the GOVERNMENT and not LENT into existence for the benefit of private individuals. The mandate of low unemployment and price stability would be maintained by strict attention to regulating money supply only to match the underlying goods and services and increase in same.
Malefactors and professional misconduct which caused injury to the system would result in the suspension or dismissal for life of perpetrators. Civil and criminal actions when warranted would be expeditiously prosecuted.
Financial crimes of scale would be added to the list of high crimes and misdemeanors to be viewed as treasonous fraud.
Property rights and rule of law should be held inviolate.
Usury or the charging of interest in excess of the natural rate of growth would be occasionally wrung from the system by default, bankruptcy, or economic downturn. Innovative political and fiscal means to avoid that would constitute financial treason.
Balance budgets would be black letter law and mandate that 2-4% surpluses be maintained always in excess of expenditure. Provision for spending this rainy-day fund would be under the harshest of economic climates i.e. depression.
Always we hear the frightening reports of what's wrong and the wail of what should we do. In this post, you have identified what we should do, and in the most complete and fair manner I have yet to witness.
J.R.
Wow, I appreciate the site enormously but that was a remarkably un-rewarding experience.
Naomi Klein imparts so little knowledge of even recent political - economic history and yet is seen as some kind of superstar ... I loved the part where she talks about how she's been looking into the laws behind financial de-regulation. Just getting around to that now are you Naomi? Let us know how that goes, meanwhile we're replacing you with someone who's been paying attention. I can't believe anyone gives her a second thought. (My pet theory is, despite her maverick rep, she's popular because she doesn't really challenge liberal shiboleths... or force anyone to do any real thinking.)
Replace Klein with any number of people:
Bill Black
http://www.pbs.org/moyers/journal/04032009/watch.html
Michael Hudson
http://michael-hudson.com/
Simon Johnston
http://www.pbs.org/moyers/journal/02132009/profile.html
And you would have had a better, more insightful, more informed discussion.
Stiglitz seemed kind of uninspired and De Sota's points seemed laughably unequal to the task of explaining why we went "off the rails" so badly. Errrr... we wouldn't have a crisis if actors could have seen what their positions were... (worth, I assume.) Well, yeah, but then it's hard to have a bubble then isn't it? Isn't that kind of the point of a bubble: uncertain values create opportunities... for fraud, among other things? And this is different from some golden age of capitalism how?
Many of you are enamoured by Hernando De Soto...To the point of outright trashing Stiglitz & Klein.
In this video, Joseph Stiglitz addresses De Soto's arguments.
http://www.youtube.com/watch?v=qE0mQb2Bnlk
Excerpt: "The property rights solution doesn't work. It has some effects...but not the ones De Soto talked about."
So Stiglitz understands the arguments.
But he was kind enough NOT TO destroy De Soto in such a public forum.
My previous post wasn't going through, so I signed up for an account here.
WOW! Some of you guys are pretty hot for Hernando De Soto...
You're throwing hissy fits about Stiglitz & Klein ignoring him?
Along with generally trashing the sweet & smart Naomi Klein, you're actually suggesting that Joseph Stiglitz doesn't understand his "brilliant" arguments?
In this video, Joseph Stiglitz addresses De Soto's arguments.
http://www.youtube.com/watch?v=qE0mQb2Bnlk
Excerpt: "The property rights solution doesn't work. It has some effects...but not the ones De Soto talked about."
The point is kiddies, Stiglitz understands the arguments.
But he was kind enough NOT TO destroy De Soto in such a public forum.