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How Crony Capitalism (Or The 'Undiluted Lunacy' Of The Fed) Corrupts The Free Markets

Tyler Durden's picture





 

"This is the final abomination" is how David Stockman begins his epic rant on the Federal Reserve and crony capitalism in this clip. The "undiluted lunacy" of their actions prompted him to address the Fed's decision to "print ourselves to death" by saying "this has gone too far, it's street-fighting time" as he decides, instead of the erudite philosophical view of how capitalism is being destroyed by statist philosophies of one type or another, to launch into a full-strength tirade about The Fed. For starters, "The Fed is being run by the single most-dangerous man ever to hold high office in the history of the United States, "as he opines that Bernanke is more dangerous than Geithner, Greenspan, Summers, Hank Paulson all put together. Must watch...

 

"Bernanke is so bad that we should wish to return to the age of Marriner Eccles in 1935 - a fiscal Keynesian who believed that money-printing would fuel speculation and inflation; if the government were going to rob the people, it should do it the honest way - through taxes"

 

 


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Thu, 09/27/2012 - 22:16 | Link to Comment Cdad
Cdad's picture

Just watched this elsewhere on the web.  For  all ZH fans, watch...and suddenly feel better.  You see, it isn't you...it's the FED that has issues.  No one f*cks with the Stockman!

Thu, 09/27/2012 - 22:19 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Wait....all those libtards won't be able to say "it's Bush's fault" this time around?

Thu, 09/27/2012 - 22:21 | Link to Comment flacon
flacon's picture

I don't like the inclusion of the term "Capitalism" in the title. Is a whore a "crony virgin"?

Thu, 09/27/2012 - 22:56 | Link to Comment Newsboy
Newsboy's picture

Stockman was the smart kid when he worked for Reagan, but now he's a worldy wise MAN.

Fri, 09/28/2012 - 00:47 | Link to Comment otto skorzeny
otto skorzeny's picture

he was in on the beginning of this slow-motion train wreck when all of this big spending got started w/Reagan-and smart enough to jump off quickly

Fri, 09/28/2012 - 03:04 | Link to Comment TwoShortPlanks
TwoShortPlanks's picture

ZH, a covert branch of Mises?

Fri, 09/28/2012 - 03:38 | Link to Comment AldousHuxley
AldousHuxley's picture

corruption will always exist as long as there is money to be made.

It is naive belief of retards that thought otherwise.

 

split up the banks, jail them, tax the shit out of wall st.   any high school grad can do number crunching. bankers only get paid a lot because insane number of hours.

 

 

Fri, 09/28/2012 - 06:16 | Link to Comment Comay Mierda
Comay Mierda's picture

the fact that bankers work crazy hours is super ironic because it exemplifies the inefficencies created in the "crony capitalist" economy by these monster zombie banks.

in a true free market, ppl would work much less and earn much more

but all the ivy league kids who brown nose their way into gubmint sachs or jp morgue and end up working 100+ hours/week to make maybe 60-70k are earning the same hourly wages as your local mcdonalds food prepper.  do  you want fries with that?

sure, the lucky few who suck enough bankster cock to advance up the ladder may end up making 7 figures.  but after uncle sam and bloomberg take their cut, how much is really left?  and average those after tax earnings over total hours worked in the career and its pretty damn pitiful.  and throw in all the soft costs of a broken family life, drug-addicted kids crying how daddy is never around, and poor health 

the cronies are eating themselves alive, and dragging the rest of the productive economy down with them

Fri, 09/28/2012 - 06:59 | Link to Comment markmotive
markmotive's picture

Even the Fed doesn't agree with what the Fed is doing

http://www.planbeconomics.com/2012/09/28/division-at-the-fed-plosser-say...

Such instability from our dear leaders.

Fri, 09/28/2012 - 07:12 | Link to Comment Mareka
Mareka's picture

I don't think anybody at Goldman Sachs is working for $60K -$70K.

A college buddy of mine went to work for an investment bank on Wall St. 25 years ago and started at $100K back then.

A business associate told me last month about a friend working for Goldman whose 1st year bonus as a rookie quant was $50K and that after about 4 years as a grunt programmer that year end bonus would be about $250K. 

The bonuses were only so low because GS had given an across the board 40% base pay increase to raise less eyebrowns at bonus time.

These are all dollars extracted from the savers.  Credit the Bernank with the assist.

Fri, 09/28/2012 - 08:49 | Link to Comment LawsofPhysics
LawsofPhysics's picture

My engineers work long long hours on real problems.  Any guess what their pay looks like next to that of a banker.  Go fuck yourself and the banker you rode in on.

Thu, 09/27/2012 - 22:57 | Link to Comment Ckierst1
Ckierst1's picture

I completely agree!  It isn't capitalism, or at least laissez faire capitalism (Are there really other variants that aren't mercantilism?), it's mercantilism.

Fri, 09/28/2012 - 00:29 | Link to Comment Anusocracy
Anusocracy's picture

All of this is just a normal manifestation of government.

Government has always been about a small group of people controlling a large group of people so as to extract wealth.

Time to wake up, little tomato plants.

Thu, 09/27/2012 - 22:57 | Link to Comment Lotus Flower
Lotus Flower's picture

They probably will as long as they're gulping down the CNN kool-aid like it's water, just like "conservtards"/Obama/Fox News.  Everyone's uninformed.  The fact that they are all card carrying members of polarized political parties is just a gauge of their insanity.

Thu, 09/27/2012 - 22:59 | Link to Comment Lotus Flower
Lotus Flower's picture

Maybe disillusionment is a fairer term than insanity.  I'm bullish on insanity, however

Fri, 09/28/2012 - 02:45 | Link to Comment Yen Cross
Yen Cross's picture

dis/illu/sion/ment ?  I before E, except after C?

Thu, 09/27/2012 - 23:48 | Link to Comment ACP
ACP's picture

Seriously? They'll just say he screwed up so bad that they weren't able to fix it.

Don't ever mis-underestimate the power of ignorance, stupidity and last, but not least, free shit.

Fri, 09/28/2012 - 07:33 | Link to Comment new game
new game's picture

Listen at least twice-takes notes, then map out your own personel strategy.

my biggest take-1/2 of all mbs, the biggest part of americans wealth(equity)being purchased by fed.

think about that and what happens when market produces ZERO buyers for that wonderfull worshipped beautifull dream called a home.

connect the dots and you are fucked because if the fed don't take your home the tax man will when you have no income(markets crash).

but, maybe this all won't matter when the majority take control via mayhem-either that or stallen like life for masses...

at this point we have entered the point of no return: masses vs 1 percent; altimate epic struggle of our time and fast ariving.

Thu, 09/27/2012 - 22:18 | Link to Comment Oracle of Kypseli
Oracle of Kypseli's picture

Need more of that to be spread around.

Thu, 09/27/2012 - 22:19 | Link to Comment Ahmeexnal
Ahmeexnal's picture

you read my mind...mmmMMMmmm...peanut butter

Thu, 09/27/2012 - 22:26 | Link to Comment loveyajimbo
loveyajimbo's picture

Make a hell of a President... compared to the choices we have now... a muslim crook socialist marxist and all around lying asshole... and gerald ford reincarnated...

Thu, 09/27/2012 - 22:35 | Link to Comment barroter
barroter's picture

Stockman gets elected...the bankers will want him to do a road tour of Dealy Plaza in a few months.

Fri, 09/28/2012 - 00:32 | Link to Comment urbanelf
urbanelf's picture

Romney is a muslim?!?!?!

Thu, 09/27/2012 - 22:36 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Corporate. Welfare. State. 

Thu, 09/27/2012 - 22:50 | Link to Comment tickhound
tickhound's picture

Sold to the public as... Systemic Risk.  Or, You'd be nothing without me.

Thu, 09/27/2012 - 22:47 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

John Dean- "There is a cancer on the Dollar, and it is growing"

Thu, 09/27/2012 - 22:55 | Link to Comment Dr. Engali
Dr. Engali's picture

That was a good speech. I think what Stockman misses though is the fact this is all part of the plan. The Bernank is doing his job, and that job is to blow up the system so the NWO can be ushered in. If people don't know by now that the Bernank is purposefully trying to blow up the dollar and take action to protect themselves, then they deserve what's coming.

Fri, 09/28/2012 - 01:08 | Link to Comment pherron2
pherron2's picture

I pretty sure he said almost exactly that, in a recent interviw with Lauren Lister on Capital Account.

Fri, 09/28/2012 - 05:23 | Link to Comment Dr. Engali
Dr. Engali's picture

I kind of suspected he knows that, he's a smart guy, but he isn't willing to go that far for risk of losing credibility.

Fri, 09/28/2012 - 09:12 | Link to Comment NewWorldOrange
NewWorldOrange's picture

Yep. Which implies that he realizes (correctly) that he can say all that he did say without losing credibility since it's rapidly becoming pretty apparent to most everyone.

Even the people that I know who are most invested in the system and who for years have steadfastly denied my stated concerns about what's coming are beginning to say "I think you were right all along."

 

Thu, 09/27/2012 - 22:53 | Link to Comment proLiberty
proLiberty's picture

It should be clear that the Federal Reserve Corporation is run for the benefit of its shareholders, the member financial institutions who get to vote their shares in proportion to their capital and surplus.   Bernanke takes care of his shareholders consistent with keeping Congress and the Executive branch happy because they could, and do, easily pass laws to change the rules of the game.  

Thu, 09/27/2012 - 23:02 | Link to Comment Radical Marijuana
Radical Marijuana's picture

While the first part of your comment is correct, the second is naive. How are any politicians supposed to survive the established systems of bribery, intimidation, and assassination, in order to actually have enough of a political career to vote for anything against the interests of the banksters?

The last President to do so was Andrew Jackson, who ONLY was able to because he miraculously survived the assassination attempts of the banksters.

It is way, way too late for anything else but the continuing runaway madness of the system to destroy itself FIRST, before any other solutions become practically possible ... IF THEN ...

Thu, 09/27/2012 - 23:31 | Link to Comment lasvegaspersona
lasvegaspersona's picture

RM

I believe your last statement is the closest to the truth. All the players are behaving rationally if the belief is that we are just in a down cycle. Since we are not and are in fact in the death throes of a fiat currency they are in fact just sppeding the ulimate end along a lot faster.

I am hopeful that what comes after will be better. I hope that the folks will see how the problem developed and not take too long to embrace a better system.

Fri, 09/28/2012 - 21:35 | Link to Comment Imminent Crucible
Imminent Crucible's picture

"political career"......There's the problem, right there in two words that should NEVER go together.

One term. One term ONLY. Then get your sad ass back to doing something ETHICAL and PRODUCTIVE.

Thu, 09/27/2012 - 22:58 | Link to Comment holdbuysell
holdbuysell's picture

"Heading toward a Constitutional crisis" - Stockman in video

"Heading toward a crisis" - There, fixed by US's finest 535. /sarc

 

 

Thu, 09/27/2012 - 23:02 | Link to Comment km4
km4's picture

How are the people in American going to be sold on capitalism when the system is rigged

Yup

Thu, 09/27/2012 - 23:23 | Link to Comment barroter
barroter's picture

True.  I hear from the average Joe out there that has a few assets and he's NOT sending them to Wall St or any financial manager to tweak with. After seeing Madoff, Enron and all the BS that goes on, he's not going to trust it at all.   His assets are just sitting.  As for inflation, I hear this. "If I don't need it, I don't buy it."  Or, "If I need it, I make it last." 

Thu, 09/27/2012 - 23:08 | Link to Comment km4
km4's picture

it took Fed 93 yrs to accumulate a balance sheet of $900B mostly gov securities. In 7 weeks of sheer panic Benanke doubled this and then in first 13 week after Lehman event it went to $2.5B. There is some madmen in charge of the printing press

 

At end of 2014 it is projected to be $4.5 trillion

Thu, 09/27/2012 - 23:13 | Link to Comment km4
km4's picture

> it's leading to a Contitutional crisis. We have an unelected dozen people ruining this economy and creating crony capitalist windfalls

Thu, 09/27/2012 - 23:16 | Link to Comment lasvegaspersona
lasvegaspersona's picture

I am surprised that Stockman seems surprised.

Thu, 09/27/2012 - 23:44 | Link to Comment Radical Marijuana
Radical Marijuana's picture

One metaphor for the American economy is that it is like a family that has become the victim of a home invasion. A gang of criminals have moved into the home, and set up shop, telling the members of the family what to do ... The members of the American family have adapted to that, bit by bit ... However, the end game of the criminals is not to ever leave, and allow the family to return to normal.

While I agreed with what this video said, it was still grossly optimistic! What the criminals who have taken control of America are planning is world war, and martial law. In my analogy to a home invasion, the criminals that are controlling the family finances are not planning to one day leave peacefully. They are planning to systematically murder the members of that family first.

The American family has gradually adapted and accommodated itself to doing what the international banksters have been telling them to do, for almost a Century ... and things have been getting worse at an exponential rate. However, we have not seen anything yet! This is not going to end nicely!  This is going to end worse than anyone is able to imagine.

Thu, 09/27/2012 - 23:48 | Link to Comment bshirley1968
bshirley1968's picture

Great speech.  Great points.  Now who is going to do something about it?  We can all see the problem.  We can all see who is at the wheel driving us off the edge of the cliff.  Who can do something about it?

We need solutions not another depiction of the problem.

Fri, 09/28/2012 - 00:41 | Link to Comment Anusocracy
Anusocracy's picture

You would have to rewire the brains of 300+ million Americans.

Ain't gonna happen.

Fri, 09/28/2012 - 07:48 | Link to Comment new game
new game's picture

plan accordingly...mucho destruction>been living on barrowed time wayyyyy to long.

reversion to average for last 10000 years(since the epic struggles of gathers vs nomads ie fertle cressant)). darwin will cull the masses...

Fri, 09/28/2012 - 09:07 | Link to Comment crusty curmudgeon
crusty curmudgeon's picture

"We need solutions not another depiction of the problem."

Education is the key to solving our problems.  Your statement is like saying, "We need more food...not all these damn seeds."

Most people (who don't read ZH) think the Fed is doing all it can to help the economy.  Until that changes, there will be no solutions.

Spread the word...one mind at a time.  That's the solution and that's what this video is helping to do. 

There are plenty of other sources to provide solutions for those who already understand the problems.

Fri, 09/28/2012 - 09:44 | Link to Comment My Days Are Get...
My Days Are Getting Fewer's picture

Agreed - a great speech, which sums up the situation in an easy-to-understand manner.

I do not think that there is any lunacy to the Fed’s methods and actions.  Bernanke panicked.  He must have seen something - like a meltdown of the derivatives markets.  The solutions are obvious: cut the military budget by 50%; mark all assets to market and reorganize the big banks in Federal receivership; restore the rule of law (the Corzine exception confirmed that a “made man” is above the law) - I could go on.  All of that will never happen.  Upon reflection, my plans for the worst are inadequate.

Fri, 09/28/2012 - 01:22 | Link to Comment Son of Loki
Son of Loki's picture

I am actually seeing a glimpse of the 'free market' at work. Houses in the area are not selling until they drop below $55 psf. One fairly nice house sat on the market for 180 days before someone finally bought for $42 psf.

 

What's a house worth? What a willing buyer and seller pay/sell for (without Fed VooDoo).

Fri, 09/28/2012 - 02:26 | Link to Comment Monk
Monk's picture

Actually, it wasn't Keynesianism that caused the current crisis but free market capitalism, from which the economic elite engaged in unregulated financial speculation, forcing governments that work for them to bail them out. The middle class played along with easy credit and tax cuts, using their houses to buy even more consumer goods, and even to engage in the same speculation for easy profits.

 

Fri, 09/28/2012 - 03:20 | Link to Comment AnAnonymous
AnAnonymous's picture

What caused the current crisis is 'americanism'.

Keynesians are 'americans'. Free marketers are 'americans'.

Useless to waste time on some sub sets when the mattering set is the global set.

Fri, 09/28/2012 - 03:28 | Link to Comment akak
akak's picture

What caused the current Chinese fecal crisis is 'AnAnonymousitizenism'.

Roadside crappers are 'AnAnonymousitizens'. Free sphincterists are 'AnAnonymousitizens'.

Useless to waste time on some sub sets when the mattering set is the public pooping set.

Fri, 09/28/2012 - 03:53 | Link to Comment prains
prains's picture

AnAnnointedAnus

 

you rubbee the same spotee to hardee, try and mix in a few mexican and danish rants as well, go multicultural, as it appears you favor the ass licking chinks waaaaaaaay too much.

really they are a foul species and you should know this.

Fri, 09/28/2012 - 04:08 | Link to Comment akak
akak's picture

When one has the pedal to the metal in the magical lightning-powered time-traveling flying rickshaw of Benjamin Franklin inventionism of American US Citizenism fabled past, one cannot stop beating the drum of anti-American bigotry for even one moment!

All those algebraic coconuts are not going to online troll themselves, so ....

Fri, 09/28/2012 - 04:18 | Link to Comment prains
prains's picture

AnAnalogousAnus

 

GOOGECTOMY cheep for yu

Fri, 09/28/2012 - 09:22 | Link to Comment marathonman
marathonman's picture

Uhhh Monk, if there was free market capitalism, AIG, GM, GE, Goldman Sachs, BoA, and a whole host of other parasites would be gone.  Or at least their stock would be worthless.  If other firms had been allowed to fail along the way, think LTCM, those SOB's probably wouldn't have been that far out on the risk curve.  The Central Bank is Keynesianism because it removes the perception of risk.

Fri, 09/28/2012 - 02:43 | Link to Comment Offthebeach
Offthebeach's picture

If it wasn't for free markets, communism/Mao/Cuba/Detroit/Public Schools/communes/etc ........would work.

Fri, 09/28/2012 - 03:19 | Link to Comment AnAnonymous
AnAnonymous's picture

In 'americanism', communauty spirit (communaulism) is an important tenet.

What 'americans' call crony capitalism is just the manifestion of communauty spirit as practiced by 'americans' but this time, when they do not belong to the 'american' communauty.

Bernanke is driven by 'americanism' and shows communauty spirit as demanded by 'americanism'.

Once again, as told many times, for 'americans', it is all situational.

You're part of the communauty: this manifestion is communauty spirit.
You're not part of the communauty: this same manifestation is crony capitalism.

Same old, same old, with 'americans'. A well known world with few to no surprises.

Fri, 09/28/2012 - 03:25 | Link to Comment akak
akak's picture

Tell me, AnusAnnoyingMouse, if a "cosmonaut" travels into the cosmos, then where does a "communaut" venture?

(Perhaps to the Mobius-strip realm of insanitation and hyprocritizenism in which you dwell?)

Fri, 09/28/2012 - 03:49 | Link to Comment prains
prains's picture

communauts venture to the land of tight panted communards, stylish and very eighties

Fri, 09/28/2012 - 05:18 | Link to Comment Yen Cross
Yen Cross's picture

 Quit fucking with the squirrels. Mess with some one your own size! You sylable/yzing " monstrostity". You ar asking a question with one answer! " Note the missing [e}? We can play these games all day!

Fri, 09/28/2012 - 03:41 | Link to Comment Pandorable
Pandorable's picture

Too bad Stockman didn't include a solution in his tirade.

Unless there is a plan to accompany this awareness, we all might as well be screaming at a tsunami just before it yanks us under.

Fri, 09/28/2012 - 10:02 | Link to Comment Everybodys All ...
Everybodys All American's picture

First of all QE is intended to bailout bank's balance sheets. The solution is for banks to go through bankruptcy.

The solution the Fed is offering is for all of us to go through bankruptcy.

Fri, 09/28/2012 - 05:23 | Link to Comment Yen Cross
Yen Cross's picture

AKAK , do know the sun is really the moon at night?  what is the difference between "waxing & waning"?

  If a plane takes off from point"A" at 1000 mph, how long would it take to circumvent the Earth?

  Exclude altitude and trajectory.

Fri, 09/28/2012 - 06:25 | Link to Comment Chain Gun Smoke
Chain Gun Smoke's picture

His book doesn't come out for 6 months...   :(

Fri, 09/28/2012 - 07:31 | Link to Comment orangegeek
orangegeek's picture

With yesterday's move combined, the latest move down looks more corrective than impulsive.

http://bullandbearmash.com/chart/standard-poors-500-daily-september-26-2...

The gongshow continues - more market gain.   Let's see what earnings season brings us.  Is that a flushing sound I hear?

Fri, 09/28/2012 - 07:57 | Link to Comment Quinvarius
Quinvarius's picture

Does anyone actually think letting the entire banking system fail was an option when the banking system has access to a printing press?  They aren't even half way done printing yet.  Not even close.  If you keep thinking they are doing this to help the economy, you will always get it wrong.  They print to stay solvent first.  Then the printing becomes the only way to stay profitable.  So they later print out of greed.  QE4 is going to make you really upset.  Then when they finally try to get ahead of the insolvency and completely bailout the system, you will totally blow your stack. 

Fri, 09/28/2012 - 09:58 | Link to Comment Everybodys All ...
Everybodys All American's picture

I've already been blowing my stack. People that know me think I'm nuts, but I'll be prepared.

Fri, 09/28/2012 - 09:14 | Link to Comment Anasteus
Anasteus's picture

A heartening speech. In fact, any such truth revelation pronounced by significant persons on public forums makes me feel optimistic. The same is valid for the Spanish Manifesto published during the last protest in Madrid explicitly exposing the core of the problems. It's necessary to reveal facts and spread testimonies about the psychopatic and criminal nature of state cronyism whenever possible. We can sure be expecting some threats and accompanying ritual dances but the final countdown has already started.

Fri, 09/28/2012 - 09:31 | Link to Comment Vince Clortho
Vince Clortho's picture

In most of its aspects Capitalism has big advantages over other economic systems.

Ironically, one of the central problems of capitalism is there are no safeguards to stop the system from devolving into the abomination we have today.

It offers a free path for the most unprincipaled, cut throat scum to advance to the apex of the pyramid.

Fri, 09/28/2012 - 09:32 | Link to Comment Grand Supercycle
Grand Supercycle's picture

IMPENDING SELL OFF.
Longs please be careful.

Due to recent central bank intervention and short covering spikes, these daily charts are extremely overextended and significant correction expected very soon:

SPX, DOW, NASDAQ, NZDUSD, GBPUSD, AUDUSD, COPPER, CRUDE, GOLD, SILVER. [USD strength will return]

http://www.zerohedge.com/news/2012-12-24/market-analysis

http://trader618.com

Fri, 09/28/2012 - 11:00 | Link to Comment Anasteus
Anasteus's picture

Hmm, 'http://www.zerohedge.com/news/2012-12-24/market-analysis', that's fairly possible. 12/24 2012 is the third day after the doomsday announced by all the trumpets in the Mayan calendar.

Fri, 09/28/2012 - 13:33 | Link to Comment dragoneyes74
dragoneyes74's picture

David Stockholm has it right. 

Fri, 09/28/2012 - 14:41 | Link to Comment Whiner
Whiner's picture

"Doomsday Machine"! Yes, Im am afraid that's what we have here, Mr.President a Doomsday Machine gap! We cannot let the ECU out print us. New speed presses to The Fed now! Buy them on the USSA credit card!

Do NOT follow this link or you will be banned from the site!