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Stop Targeting "Greedy Bankers"?
Raghuram
Rajan, professor of finance at the University of Chicago, and former
chief economist at the International Monetary Fund was interviewed on
Yahoo Tech Ticker peddling a message for Washington, Stop
Targeting "Greedy Bankers" and Focus on Growth:
The
euro
fell to an 18-month low Friday amid growing concerns about
Europe's finances. Less than a week after the EU and IMF announced a
whopping $1 trillion bailout package for Europe's so-called PIIGS, a
growing number of high-profile voices, including Paul
Volcker and Jimmy Rogers, are raising doubts about the euro's
future.
A natural question: Is U.S. the next Greece -- as former
guest Peter
Schiff has stated, and economist James
Galbraith has disputed?
"I would say the parallel is more
with the euro area as a whole than with Greece," says our guest Raghuram
Rajan, professor of finance at the University of Chicago, and former
chief economist at the International Monetary Fund.
European
nations, Greece especially, went on a spending binge. "You basically
gave a drunkard a credit card. He went out and spent like mad," Rajan
says.
Some pundits say America is on the same financial
trajectory. "What the U.S. has as the same lines as Greece is this, or
the euro area I should say, is the constant bailing out of anything that
goes wrong," says Rajan, author of a new book, "Fault
Lines: How Hidden Fractures Still Threaten the World Economy."
But
bailouts aren't the answer. Furthermore, "we've used all our bullets.
We don't have any bullets left," Rajan recently told
The New Yorker.
In "Fault Lines", Rajan makes the case that
without a clear growth strategy, America eventually faces tough
decisions -- higher taxes or budget cuts, or a combination of the two as
Spain and Portugal announced this week.
"We are in for tougher
political times," he tells Aaron in the accompanying clip. "And I think
focusing on some of the greedy bankers as the answer to the crisis
takes political heat off the politicians, but is not really the
answer."
Watch the interview below to get Mr.
Rajan's take on how energy policy -- including a carbon tax -- could
help spark America's economic growth.
»
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An open letter to the Financial Crises Inquiry Commission:
Assuming this is truly a for-real commission, and not just another whores-for-hire bunch from the American Enterprise Institute and the Peterson Institute, will you please investigate those who financed and own the following:
InterContinental Exchange (ICE Futures, ICE Clear, etc.)
Markit Group
Climate Exchange, PLC
ELX Futures
DTCC
Thank you, whores-for-hire.....
Once again, yet another phrase is taken completely out of context!!!
What Rajan said, in its entirety, was: "Stop targeting greedy banksters --- and offshore ALL your jobs to India!!
Now....doesn't that make much more sense?
Fascism Folks
the banking system is in effective government control. As my friend Michael Ledeen–an expert on Italian fascism among many other fields–this is “control without ownership,” or fascism, rather than socialism. Governments and banks will wrangle over the spoils. When the banks look fat the government will use them as a political whipping boy or milk them for taxes; when the banks’ holdings of government securities threaten to topple them, as in Europe last week, the governments will pledge a trillion dollars–and borrow it from the banks.
http://blog.atimes.net/?p=1470
wow, control without ownership, very neatly put. Isn't this a bit more than that though? Control by proxy, like the principle of "co-dependency"? You know when the partner of a junky becomes dominated by the junky's behavior? The junkie in this case is the banking/military system? Edward Munch's "damn i got toothache" pic gives me the willies!
Use this one! :)
What kind of sense does this make? The whole fucking planet needs to be reformed. DC, London, China, banks, unions,Middle East and so on. If you lay off the banks, they go back to square one which is excessive money supply creation through credit.
Perpetual growth is inflationary in credit,resource usage and ultimately not sustainable. Inflating money supply just destroys my savings and the "cost" of things in nominal terms goes up.
Except the banks just get to keep more and more of the diluted value of the increase. They don't give a shit anymore because they have been cut loose by Congress and get to make money out of thin air via derivatives,the bond money pump and so on. Their business model has totally changed from reserve banking and lending to casino speculation.
Washington should be all over the banks, and we should be all over Washington
Leo, Stick to pensions and Chinese solar panels. Sheesh!
Have you pimped any juice lately? Truly amazing to see the amount of morons trying to keep up here!
The problem that Eurozone and US is facing is unsolvable. The mutual understanding betwen wallstreet and the political complex is to drag it as far out into the future and pass the buck to the next jackass, while hoarding cash and looking after ones self-interest and welfare. Cannot blame them, that's human nature.
I agree that there is a mutual understanding to extend and pretend from the DC/WS partnership, however the answer is solvable just not desirable for the rest of us.
Leo,
These "greedy bankers" are the economic equivilant of war criminals. We need a lot of things, but allowing these bastards to slip from the public consciousness is not one of them. The same goes for their corrupt politcial enablers.
I'd suggest not shifting focus, but expanding focus. Business as usual isn't going to cut it any longer Leo. The US needs to start producing real value, not pixels; production, not FAIL and we are facing a multitude of non-economic limitations in any potential solutions.
I'll stop focusing on the bankers when we 'bury' them.
If you'll include in the category of "bankers" the top managers of Freddie and Fannie during the last decade or so, I might be with you. Add in the greasy, well-greased politicians who enabled them, and continue to enable them, and I'll be up on the barricades with you.
"Bankers" of course is subject to broad definition and I did include "corrupt politcial enablers".
Well, since Freddie and Fannie are extraordinarily interconnected with the survival of Goldman Sachs, JPMorgan Chase and Morgan Stanley, your remarks make a bit of sense, but please let us keep our focus....
if you see this post, by same person, he says good things. He just doesns't understand that unless the structure of banking is broken we won't have the healthy economy. He doesn't make the connection. we talks about bad policy and government inaction, but doesn't understand that has a lot to do with the influence of the financial industry.
http://finance.yahoo.com/tech-ticker/outlook-for-global-economy-is-%22bleak%22-former-imf-chief-economist-says-486167.html?tickers=FXE,TBT,EWZ,GLD,FXI,EUO,EEM
there can be no such thing as "growth" now that the fiat credit ponzi has collapsed.
DEBT IS NOT MONEY.
Financial assets will continue vaporize as incomes continue to fall and the rents can no longer be supported. All that new money will never find its way into circulation - unless they're planning radical tax reductions (not probable). The course has been charted - for 30 years of falling prices, deflation, depression, bankruptcy, lawsuits, congressional hearings, liquidations, etc. etc.
Charles Rangel (like most Dems) voices support of the Fed and says he doesn't want to kill the "Goose that lays the golden eggs." The left has been trained to believe in fiat money and will be slow to acknowledge "game over." Ponzi schemes, perpetual motion machines, antigravity devices, and gold-laying geese don't live long in the real world.
You are very astute for a mad cow. BSE in your case might mean "Brain Super Engaged". I agree entirely with your preposition that DEBT IS NOT MONEY. What befalls all of us is, not to focus on the corrupt, actually and morally bankrupt system, but to focus on a solution. After all focussing on a pile of shit on the sidewalk and saying "that is a pile of shit" will not either remove the pile of shit or stop the person who dumped it, from dumping it again. What we need to do is devise a system that does not have the attributes of the current pile of shit on the sidewalk and instead allows people to conduct business without getting either their bare feet or their snakeskin boots covered in the brown stuff.
This means thinking that a military industrial complex with lip service to democracy is a failed out-dated (ancient Roman) model. It means focussing on the evolution of the species to an earlier and earlier retirement age, recycling human waste (corpses and that pile of shit :) )and stopping the use of carbon emission based vehicles. Doesn't have to happen in a single year. But weaning ourselves off this corruption is stage 1. And no, I don't beieve that democracy is the answer. It too is corrupt by the time it is put into practise.
I have a slight problem in that I think the fat bastards like Rajan have never done a days work in their lives, not solved a single problem. To me they don't qualify as intellectuals or have any capital that is worth more thananother pile of shit. My problem is, although I have solved a few real problems in my time...I am getting old and putting on a little weight, heh.
Leo, interesting links - what is your view on the opinions expressed by Mr. Rajan i.e. carbon tax
I agree with those who argue that it's time to revisit the dreaded carbon tax and that the carbon tax is preferable to VAT hike. But taxes will not suffice. We need to rethink our whole economy and how we approach work. So much time wasted on trivial issues and not on sustaining long-term growth through good jobs that pay well above minimum wage.
how about we just. stop. the. fucking. spending. Got it?
it makes me laugh because we won't have growth unless we target the greedy bankers. the IMF in general represents the interests of the corrupted system of western anglo saxon capitialism. add the fact that he comes from the deluded chicago and that says it all.
"
The fact is, during the 40 years before 2008 when Greenspan had his epiphany, real economic growth in the United States slowed to a crawl, a fact not reflected in the soaring stock market. Part of the slowdown owed to what some economists are calling “the financialization” of the American economy. Just a couple of figures illustrate what was happening. Until 1950, manufactures constituted about 30 percent of GDP, while finance produced about 10 percent. By the 1980s, those figures were reversed, with financial activities amounting to three times the value of manufactures. During the last quarter of the 20th century more than half of all new investment went into financial deals – mergers and acquisitions and the like — compared to less than 10 percent around mid-century. That included the invention all kinds of complex holding companies and reshuffling of corporate entities within and outside of the master companies. By the ‘90s, 44 percent of all corporate profits came from these deals and dealings within the financial sector compared with only 10 percent from manufacturing.
Please understand that by financial profits, we are not referring to profits from underwriting production and consumer services. Rather, overwhelmingly those profits came from engineering corporate reorganizations, and by trading paper – that is, an increasingly obscure and complicated variety of “financial instruments,” sometimes referred to generally as “derivatives“ (including arcane devices like “credit-default swaps”). Many if not most of the new gimmicks were plainly designed (in Joseph Stiglitz’s words) for “circumventing regulations, accounting standards and taxation.”
In fact, during many of those 40 years after 1970 that so pleased the Great Greenspan, unemployment rates rose to record post-Second World War heights. For those who managed to hold onto or win new jobs, median family income barely rose at all in that 40 year period – although family income for those in the top two percent of families rose spectacularly. Moreover, what modest rises families in the middle ranges of income did enjoy owed to the dramatic increase in two-earners in each family. In other words, earnings per worker in the great majority of American families dropped precipitously during those 40 years. (Do the arithmetic.).
Excellent summary, exactly right.
There isn't enough work in the world for the people to do that pays well, is valued. Most service workers are interchangeable at the drop of a time card.
The Fee-driven professions like Law, Dentistry and Accounting are arbitrarily set, but I defy anyone to tell us why a Lawyer is getting 5% of an estate for filing a few papers on time. Or an accounting firm partner taking $600.00 an hour for the services he/she renders. That smacks of price-fixing and is completely unrelated to the value of services rendered. At least an ambulance chasing lawyer doesn't get paid unless he wins or gets a settlement.
But it remains that there are gargantuan amounts of work to be done on our faulty and failed infrastructure, alternate energy sources and massive improvements in technology. Why there is so little being done is a mystery that cannot be fathomed but to say that a group of very powerful people are standing in the way of making these job-creating changes, purposely foiling the growth of new and well-paid jobs, and careers in those fields. Tens of millions of these opportunities can be financed by printing more money for them instead of giving it to Lord Blankfein and other failures who simply use it to enrich their personal lives.
Either there is a behind the curtain program being structured right now to do exactly that, build new emplolyment opportunities that will absorb workers coming onstream, organically or thru immigration, OR the greatest opportunity for our country is intentionally being sabotaged by insiders who will not benefit from the change.
This may be the biggest crime ever perpetrated on the American people.
Greedy? Greed is not a criminal, immoral, unethical human trait. It is a perfectly natural one. We're all a little greedy, so what?
By framing it as "greedy banker" Rajan completely and consciously attempts to negate the global destruction these men have caused and continue to do.
What geithner,orszag,bernanke,summers,paulson,greenspan,rubin, friedman,fuld,frank,thain,dodd,mozillo,o'neal,gensler, cassano, blankfein, shapiro,yellin,fink,kashkari,madoff,cohn,dudley, dugan, lippman and many others have done is commit acts so blatantly fraudulent crimes against humanity not proven, and a globally disastrous tsunami and an abuse of their fiduciary power, a financial blight, simply because they have the power to do it.
So shove it up your ass, Rajan.
Amazing how many of you are so full of venom that you don't bother listening to what the man is actually saying. Where is future growth going to come from? We need an industrial revolution to foster growth in clean energy, and other areas of the economy which need investment.
"We need an industrial revolution to foster growth in clean energy, and other areas of the economy which need investment."
With the governement consuming all resources, punishing the innovative to reward the slothful and dependent, not much R&D is going on, and even less will go on with the raft of taxes and regulatory hinderments being added. Add that to the monster overhang of entitlement programs that exist thanks to previous vote buying compaigns, and you've got trickles, literally trickles available for R&D. BTW, as to clean energy, we already have the cleanest energy we've ever had. Ever cooked on a wood stove indoors? Bonjour cancer causing soot. Remember leaded fuel? Remember smog" Remember Dickensian chimney sweeps? How about horse manure as a transportation byproduct?
Hey, not true! I listened to every word, read the links, looked up the dust-jacket blurb from his book on Amazon, then responded to his contention in two sentences:
Where is it, exactly, that we have industrial undercapacity in the first place?
Does he honestly think a tax incentivizing replacement of higher EROEI energy sources with lower ones is the answer?
Industrial revolution? Pipe dreams - we have been lied to about energy as well as our education system - expecting high standards of living because we're 'Merica! We're up for a major correction in our standard of living - and that's if the ship stays above water! A lot of people are not going to take it very well when they realize there is no magic trick to make hunger go away.
This is sad. And it makes me very angry to see fellow citizens led on:
http://www.youtube.com/watch?v=19v5Kjmc8FI
http://www.youtube.com/watch?v=P36x8rTb3jI
There is NOTHING, not even Chinese solars, that will prevent this descent into impoverishment - this is the price we pay for never wanting to ask questions that only have hard answers. So we will all pay the price while those that propose actual solutions are ridiculed and marginalized by Ivy League, IMF types.
Well fucking duh! It takes a degree from U of C to figure that out? We've been listening to these childish metaphors from banker apologists for a while now. And we don't appreciate condescending views from parasites anymore.
Bankers should be giddy that the only real "targeting" going on, at present, is via the media and some populist politicians. Wait until they start seeing little red dots flashing across their foreheads.
At least he admitted they were greedy.
This Economist is an Idiot.
If this is the Professor, imagine what the students will become.
How can you grow if there is no investment future in this country, all good brains are concentrated in financial industry, producing , manufacturing is long gone to overseas.
New generations only think how they can become rich, their education level is way behind many developed or developing nations.
When Chinese workers making 50 cents/hr and they are happy, our American workers are unhappy when they barely make 7 dollars/hr for the same job.
The World will we see a severe depression, gold will be the only asset backed by all new currencies and the depression will not end until a labor balance is reached all around the world for the same job.
Do you seriously believe this statement ? In a communist country every one is happy or that is what we are led to believe.
Obviously this professor knows about as much about science as Paris Hilton and about as much about economics as Al Gore, or he wouldn't be talking about investing public money in negative return projects.
Growth is such a healthy sounding word until it's used to describe a cancer. I am getting a real hate-on for the language used to describe these economic issues. Growth, contagion, recovery, bailout, liquidity, etc.. It all deflects the mind away from the truth of the matter. Expanding the debt supply for instance doesn't sound nearly as wholesome and it puts the blame precisely on those who control it.
The use of "credit" and "loan" for "debt" is pretty hilarious.
Why is a "credit card" not called a "debt card"? Why is an auto loan not called an "auto debt"? It's because it's aimed at consumers, so it's better to use words that deflect from what it really is - getting into debt to banks to finance consumption.
On the other hand, when the government borrows money at very low rates to inject into the economy, it's called "government debt", as if that is a bad thing. Or if the government injects money into the economy without getting into debt to banks, it's called "printing money", as if that will led to the economy collapsing tomorrow.
False dichotomy. I believe he incorrectly diagnoses and attempts to treat a secular demographic shift as a temporary liquidity and confidence issue.
Where does Ranjan suggest we grow? Show me an industry, anywhere, not fraught with overcapacity.
Energy... what utter bullshit. On a strict energy-return basis, oil-to-natural gas is around 6:1. Exogenous factors exempted, oil should be in the 20s. A country with a rational energy policy would transition, intermediate-term, to NG, then to nuclear, with its 9:1 EROEI.
He is correct in so far as this is a crisis of the political-economy, not solely Wall Street.
This guy's message is "stop targeting greedy bankers...but remember to raise taxes and cut social security to pay for their usury".
Riiiight....what a shill.
Was this one of those Punjabis who threw acid into his wife's face? Sure sounds like it.....
+1
Cut social [everything].
Absolutely. That part of the public sector debt always gets left out. It is the 800lb gorilla in the room noone wants to admit into their conscience, despite its clear intention to kill us all. It's also the underlying Ponzi, bigger than all the rest combined.
Stop Targeting Greedy Bankers. Start Enforcing Laws.
"Growth" in newspeak signifies credit expansion.
Who but the greedy bankstas could deliver "growth"?
I agree with him! Stop focussing on the banksters and focus on the enabler and that is the Fed and especially its Chief.
Focus on him as he is the main cause for the rooten system that exists now .. which is bailout anything that goes wrong especially if it is your bankster friend.
This guy should be treated as America's Enemy No: 1 with his poclicies of TBTF and bailout spread for his bankster friends and his inability to see oncoming train wrecks!!
Could we say-- as far as the world is concerned he is the economic equivalent of Hitler!!
The Fed is simply the public face of the bankster cartel, dood!
You require a bit more learning in the realms of global finance and economics, guy.....
I agree with him! Stop focussing on the banksters and focus on the enabler and that is the Fed and especially its Chief.
Focus on him as he is the main cause for the rooten system that exists now .. which is bailout anything that goes wrong especially if it is your bankster friend.
This guy should be treated as America's Enemy No: 1 with his poclicies of TBTF and bailout spread for his bankster friends and his inability to see oncoming train wrecks!!
Could we say-- as far as the world is concerned he is the economic equivalent of Hitler!!
I agree with him! Stop focussing on the banksters and focus on the enabler and that is the Fed and especially its Chief.
Focus on him as he is the main cause for the rooten system that exists now .. which is bailout anything that goes wrong especially if it is your bankster friend.
This guy should be treated as America's Enemy No: 1 with his poclicies of TBTF and bailout spread for his bankster friends and his inability to see oncoming train wrecks!!
Could we say-- as far as the world is concerned he is the economic equivalent of Hitler!!
Makes me laugh.
Bankers are just one part of the picture.
Some parts of the world willingfully have participated in the scheme, because they got nice stuff through it and felt they wouldnt have to cope with unpleasant consequences as they would be limited to places far from their own.
Bankers, politicians did not force the US people to grab land from the Indians. Settlers didnt have a gun on their head to be forced into that decision.
All the signs of a sterile population....
no what growth are they talking about??? A generation bought up in a culture of servitude...they cannot get away from their banker overlords.
This guy is so sold out
LOL
Leo, seriously? Focus on growth? CAN I PLEASE GET ANOTHER FUCKING HELOC THEN!
And I don't even own a house. NINJA BABY! N.I.N.J.A.!