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Guest Post: President Obama, The View, And The False Notion Of Too Big To Fail
Submitted by James E Miller of the Ludwig von Mises Institute of Canada,
If there is one thing Barack Obama has proven throughout the first term of his presidency besides his expert use of grandiose, simplistic rhetoric, it is his ineptness at understanding economics. Last year, the President hilariously blamed automatic teller machines and kiosks for unemployment. Because politics is defined by reactionary and short term consideration, Obama doesn’t see the additional employment and capital surpluses that result by eliminating labor costs.
Such Luddite-esque thinking often provides all the more justification for government interference in the marketplace to try and equalize outcomes. This view is paired with the perception that rather than society giving legitimacy to the state first, the state and its enforcers are destined to guide society. Under the pretenses of promoting the public good, central planners see failure not as a necessary process of the market but an opportunity to usurp more authority. Ludwig von Mises accurately recognized the inevitable goal of economic regulation decades ago:
Interventionism cannot be considered as an economic system destined to stay. It is a method for the transformation of capitalism into socialism by a series of successive steps.
Nowhere is this more prevalent than in today’s financial sector. The recent $2 billion trading loss by Wall Street giant JP Morgan has given more ammo to the crowd that wishes Washington to have more of a say over the operation of the big banks. Obama, ever the politician, has taken the loss as an opportunity to tout the merits of banking regulation. In an interview on the daytime talk show The View, the popular ladies get his thoughts on Jamie Dimon’s big flub. From McClatchy:
WHOOPI GOLDBERG: So now I’m wondering because I watched this JP Morgan Chase thing just go down. I’m wondering (A) what do you think happened and (B) sir what are you going to do about it because this has to be the last straw.
PRESIDENT BARACK OBAMA: Well look, first of all, JP Morgan is one of the best managed banks there is. Jamie Dimon the head of it is one of the smartest bankers we got and they still lost $2 billion dollars and counting precisely because they were making bets in these derivative markets. We don’t know all the details yet. It’s going to be investigated, but this is why we passed Wall Street reform. The whole point was, even if you’re smart, you can make mistakes and since these banks are insured backed up by taxpayers, we don’t want you taking risks where eventually we might end up having to bail you out again, because we’ve done that, been there, didn’t like it
BARBARA WALTERS: Specifically, though, Mr. President, you have all of these things in place, some working, some not. Are you — is the federal government going to do anything more so that this doesn’t happen?
The very fact that one of the ladies of The View asked Obama “what are you going to do about it” is revealing of the type of mindset they have and their lack of knowledge on all things economical. Like many Hollywood stars that drool over the awesome power of Washington, the ladies of The View made a fortune in entertainment. That is their personalities draw in viewers. Watchers of The View have a myriad of other choices of television shows to watch but, for whatever reason, find that catty chatter of Joy Behar and Whoopi Goldberg appealing. The ladies of The View have success in the market by selling their respective talents. There is no coercion involved. There is no expectation on the part of the American people that the federal government would step in to save the show should it lose ratings and go belly up.
This is how capitalism is supposed to work. Private business prospers by satisfying consumers. Success is never guaranteed therefore the threat of failure is ever present. Shareholders know this. Employees know this. Management knows this. Each takes the risk of dedicating their time and money to the venture in order to garner a return. The danger is that customer preference can change in an instant. What used to be a steady cash flow can dry up almost immediately.
And this happens everyday as businesses go under, shed jobs, and sell off assets in fire sales to the highest bidder. These freed up resources are then used by entrepreneurs looking to thrive in the same market.
In a true free market the idea of a government bailout is counter intuitive. It assumes that companies that go into bankruptcy quite literally disappear. That the newly laid off employees end up begging in the streets never to work again and the previously employed assets rust away into nothingness. But the human condition is one of constant change. There is always demand to be met and wants to be satisfied. Adjustments happen and the market process continues as before. What business failure really entails is that it sends a signal that whatever practices were being engaged in before were not satisfactory to consumers or profitable. It tells the businessman and shareholders in charge to adapt to shifting circumstances or close up shop.
When Goldberg asks “what are you going to do about this,” it’s is clear that the notion of “too big to fail” is still a consideration years after the financial crisis. But there is one reason why large financial institutions such as JP Morgan are still considered TBTF. Rather than a competitive marketplace, Wall Street has suctioned its influential and cash-rich tentacles to Leviathan. It’s no secret there exists a revolving door between the Street and Washington, namely through the regulatory complex. Banking executives get high-level jobs overseeing the banks they used to run, learn the loopholes to bypass whatever arbitrary red tape was constructed to give voters the sense that Uncle Sam is looking out for them, and then cash out by going back to manage another large financial institution. This incestual relationship was cemented almost a century ago with the formation of the Federal Reserve which was a product of scheming bankers such as John Pierpont Morgan to ensure themselves infinite liquidity should they engage in far too risky business. The banks now act as a middleman between the federal government and the printing press. Jamie Dimon even sits on the board of the New York Fed which is supposed to act as the Street’s top regulator.
And therein lies the root cause of Wall Street’s dicey business model. In a recent New York Times editorial, economist and big government worshipper Paul Krugman uses the JP Morgan trading loss to emphasize the necessity of banking regulation. He writes:
Just to be clear, businessmen are human — although the lords of finance have a tendency to forget that — and they make money-losing mistakes all the time. That in itself is no reason for the government to get involved. But banks are special, because the risks they take are borne, in large part, by taxpayers and the economy as a whole.
And after being asked what he would “do” in regards to JP Morgan’s $2 billion loss on The View, Obama responded:
“This is the best, or one of the best-managed banks. You could have a bank that isn’t as strong, isn’t as profitable making those same bets and we might have had to step in. That’s exactly why Wall Street reform’s so important.”
Does it ever cross the President’s mind that perhaps the big banks take risks precisely because he stands ready to throw Joe Taxpayer’s hard earned money at their mistakes? Right on national television, Obama affirmed what every Wall Street banker has been conditioned to; that should things get too hairy and big losses are imminent, a government bailout awaits. This was the real purpose behind the Federal Reserve’s role as “lender of last resort.” It took away the prudence necessary with the prospect of failure and transferred the losses into the form of devalued currency that all dollar holders must inevitably suffer from. The end result was industry cartelization as existing banks are now protected from competition by smaller, more flexible ones.
The same goes with the Federal Deposit Insurance Corporation that puts taxpayers on the hook for $250,000 of demand deposits for each depositor in thousands of banking institutions. With some TARP funds still outstanding and dubious accounting on part of the U.S. Treasury showing a profit for taxpayers, there is hardly a question if Washington will come to the rescue should another financial crisis wreck the balance sheets of supposed “too big to fail” banks.
As Fox Business Network Senior Correspondent Charles Gasparino points out,
But if JPMorgan’s loss had been truly life-threatening, no one in Washington would’ve let it fall into bankruptcy.
Dimon has stated publicly he’s against “too big to fail.” If JP fell apart, he says, the government should just put it out of business. Problem is, the ripple effects in the global markets would be huge — not to mention JPMorgan’s $1 trillion-plus in federally insured (that is, taxpayer-insured) customer deposits.
Just as “common ownership” incentivizes maximum use with minimum upkeep, government guarantees against failure throw the practice of risk management right out the window. Why hold back on the excesses of high-risk trading when you are protected from insolvency?
From the 2008 financial crisis to Bernie Madoff, federal regulators have consistency proven too incompetent or too in-the-pocket to actually catch big disasters before they happen. Their interests, like all government employees, are politically based. State bureaucracies seek more funding no matter performance because their success is impossible to determine without having to account for profit. There is never an objective way to determine if the public sector uses its resources effectively.
The news of JP Morgan’s loss has reignited the discussion over whether the financial sector is regulated enough. The answer is that regulation and the moral hazard-ridden business environment it produces is the sole reason why a bank’s loss is a hot topic of discussion to begin with. Without the Fed, the FDIC, and the government’s nasty history of bailing out its top campaign contributors, JP Morgan would be just another bank beholden to market forces. Instead it, along with most of Wall Street, has become, to use former Kansas City Fed President Thomas Hoenig’s label, a virtual “public utility.”
Take away the implied safety net and “too big to fail” disappears. It’s as simple that.
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First gay President.
a couple of those guys in the 1800s look like they must have liked some dick
Unfortunately for the American Manly image, it's fairly certain that Geroge W was gay or at least swung both ways.
And mr. LH, you forgot Gannon? And Boystown?
In fact, that is common for many higher degree mason-types.
Do look at all the rainbow imagery in famous Washington Paintings.... always on a Rainbow.
And then there are those tights.. ;-)
ori
/time-faster-now
Thomas Jefferson "obsessively decorated and chose furniture for Monticello... he never remarried after his wife died at age 39... he loved Paris... he seems to have dyed his hair... he had a lisp... and he loved birdwatching."
:-)
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Washington Was a Homosexual? And there we have it...some love letters have been uncovered by historians in Paris that are the correspondance between George Washington and his lover, Guy Raffleur III, an eccentric in Southern France. The Leuvre's Office of Antiquated Items (L'Office du Materiales Antique) is currently holding the letters until further study can be done, but early findings are proving the letters to not only be completely genuine, but shocking in nature.
An excerpt reads:
From the depths of my heart, dearest friend; I live not for the setting sun, nor for the trickling water that abades my restlessness in the evenings. But for you I loathe the distance that divides us, that conquers our souls as though they were threshed wheat on a blustery plain; or a locked chest with naught but the treasures of islands lost. Dearest Guy, I wish for the day that we can retire in bliss in the hills of great lands and clutch each other as thieves clutch their gold. We will be Kings of the Universe and the creators of love. <<<<<<<<<<<<<<<<<<<<<<< ori
I don't know if he fukked beautifully but if its he that wrote it, he writes beautifully. Magnificent prose from a man with a hard-on he cannot have consoled.
Poetry is for the beasts of love caught in the iron fist of events. Who gives a rat's ass if he was homosexual; I guess the US nation gets a jolt up their nether regions at thus being jilted in their intimate moral convictions by a father figure who created their nation. Between Jefferson who loved to screw his slave girl and GW who dreamt of screwing his french lover, its the same human passion and its a wonderful passage of poetry as witnessed by this love letter.
I have no interest in buggery but I have no axe to grind.
If George Washington was gay, how come he's not on a $3 bill?... & furthermore, wasn't Washington famous for saying:
"I cannot tell a lie" (I don't remember "I was addicted to dick" attached to that)
~~~
http://www.youtube.com/watch?v=876pmxUFYmY
maybe nobody asked him on that issue; there was no "coming out" in those days.
i write stuff like that all the time. what's the problem?
Buchanan.
Best comment of the thread so far today.
"First gay President."
It's FAB-U-LOUS with a two finger snap.
http://www.youtube.com/watch?v=ILQMwcKXP7M&feature=related
When I was young the word gay used to mean "happy".
Using the proper words to describe reality is no longer acceptable. Too many people need to rely upon euphemisms and substitutions because they wish to avoid the harsh truth. That's why 'gay' was substituted for 'homosexual'. Likewise, one rarely hears "he died"; now it's simply "he passed". It once was said as "he passed on", but apparently the new formulation is gentler. "He passed" can mean anything; I hear it a lot while watching car races.
The devaluation of words - 'marriage' is the latest attempt - is every bit as pernicious as the devaluation of fiat. It's hard to have a conversation when participants have different understandings of words. It took me years to be able to easily understand my Chinese wife because of similar issues, but at least her misuse of words was not intentional (as far as I know :D) while the current redefinitions are quite intentional.
At least lesbians still call themselves lesbians.
They are the CIA's kids.
Mr L H
Stupid homophobic remark and digression
Fag
When Fannie was nationalized, the USA was changed forever. Moral hazard? POOF. Gone.
Nothing but a Clown Show now.
I got out of Freddie Mac trade less than 90 minutes before it happened by sheer dumb luck - sell order took all day to fill. When it was announced it was like I dodged a bullet.
Moral hazard? Oh please: the clowns running things now are the same ones back in the 60s who went around saying "you can't legislate morality."
Obumbles and Baba WaWa, you couldn't make this shit up.
We really are in Bizzaro World..........
yeah, I wonder who the fuck is running the country, oh, that's right, the Bernark!
Nah, it's the nitwits that lead the nitwits..like Whoppi Goldberg and WaWa...they inspire the nitwits to not think past what they hear on tv as correct thinking.
Reverse that, and the Obamas and Bernankes go away.
Now you know why we have all those governmental czars. Curiously, these czars all seem to be communists, whereas the last real one was murders BY communists.
Propaganda.
-Edward Bernays
The author writes three MISLEADING and FALSE assertions that reveal a common bias that plagues our society.
Their interests, like all government employees, are politically based. State bureaucracies seek more funding no matter performance because their success is impossible to determine without having to account for profit. There is never an objective way to determine if the public sector uses its resources effectively.
1) EVERYONE’s interests are arguably “politically” based. The “political” interests at the top are unfortunately often geared to the narrow interests of their cronies and sponsors. Most all of the lower ranks of government employees are focused on performing the tasks assigned, whether collecting garbage or typing court records.
2) Actually, it is the opposite of what the author contends. Profit-seeking accounts for most bureaucratic expansion. Bureaucracies typically request more funding because politicians and top bureaucrats are lobbied by corporations pursuing more profits. The Pentagon is a prime example of that.
3) “Success” can definitely be determined apart from “profit”. There are objective ways to determine if public resources are being used effectively. Apparently the author has never heard of cost modeling and goal setting.
Whoopi Goldberg on Zero Hedge. That's like Jim Cramer on the cover of "Integrity Magazine"
+10 ROFLMAO
all i can see are whoopiee's tennis shoes.
Those were her POTUS meet and greet Nike's no doubt.
Goldberg has said on many, many occasions that she does not (and will not) shave her legs. For whatever reason that just makes my skin crawl.
Woopie Goldberg is a woman? (read with a Danny DeVit voice as in the Lorax)
Goldberg likes to use the term "dog mess". That's because she looks in the mirror daily and sees it.
Walters should have retired in....oh.....1981.
Joy Behar has as much knowledge of economics as the cat that hangs out out back of my office. Actually, the cat is smarter.
It's truly frightening that women consider these women intelligent - but they do.
Virtually every liberal media outlet is trying to cover this but they have no clue what they are talking about. Some try to bring an "expert" in however the host often is just as lost as the listeners. I thought the 99% wanted the banks to lose money, now we need to do whatever we can to stop it? We are still bailing out the banks Mr. Obama, remember the robosigning settlement you rubber stamped? Why are you not talking about BoA putting risky funds into the FDIC backed arm of the bank. Why is John Corzine not in Jail. Hopefully this will be a can of worms that the Obama ReElect MSM will ultimately open and it will backfire, bad. Fuck who am I kidding.
All I can see is the blonde on the right.
+1 for recognition of class
And that's all you can safely see without gagging.
These banks will be public utilities once people and sovereigns stop saving their excess production in dollars.
Look at the banks in Jamaica. They work fine for daily and short term transactions. They are a utility without any regulation. Nobody saves their excess in Jamaican dollars because nobody is stupid enough to. Eventually nobody will be stupid enough to hold their savings in US dollars either.
And when nobody is stupid enough to hold their money in dollars at these banks, the only job the bank will have to do is facilitate transactions.
http://freegoldobserver.blogspot.ca/2011/09/is-euro-system-next-monetary...
Puppetry... Of course Opuppet is going to say this."WE" all know who is pulling the strings. Fascism has arrived to America. Honestly, I don't really give one rat's ass what Whoppie Goldberg has to say anyway, nothing more then a couple blubbering lips...
Has anyone found her eyebrows yet? This is the same woman who famously asked if she had to worry about being a slave again.
Can someone tell her she never was a slave?
Instead of cussing the TBTB's once again. Let's cut to the chase, shall we?
There is an easy solution to the TBTF / government symbiotic relationship based on the government backstop through FDIC. Coincidentally, it would give members of Congress something to do in the limited time they will be "working" this summer.
Any of the TBTF/TBTB banks that received Federal assistance in the period of 2008 - today would have their FDIC coverage removed effectice September 1, 2012. Any money in any account in any of those banks would no longer qualify for compensation of the account holder by the FDIC. Period.
Anyone wanting their money to be FDIC insured would have to move it into a bank that still qualififed (i.e. has never been bailed out by the government).
Think about this one for a second. It doesn't stand a chance in hell of passing in that time frame but it does put a wedge issue from the Main Street level into the DC mix.
It would cause a CRAPTON of money to move from the TBTL down to smaller banks without access to the Fed discount window & prop trading desks who would do something old fashioned like ... loan it to small businesses.
Would "We Can't Wait" Obambi want to explain why this is NOT something which could be done by FDIC regulation? (He'd have to move his money out of JPM or leave it there as a sign of his faith in the bank.)
Who in the House of Representatives would want to go home to campaign on "We must forever stand by the TBTF/TBTB!" ???? (Are Democrats going to use that campaign slogan? Republicans?)
Which senator up of re-election or which senator wannabe is going to be willing to have their feet held to the fire rather than denounce the TBTB? (No, we can't literally hold their feet to fire ... dammit!)
Just a bit of public heresy courtesy of ...
barliman
The solution is simple and eloquent ......... break 'em up into a dozen pieces and then let them sink or swim. Suddenly you get 60+ new, large banks with 60+ new CEO's. AT&T was broken up and so was Standard Oil and others. It's time for a cap on bank size. Once they get to a certain size they have to divide. Like a sort of financial mitosis.
The solution is simple and eloquent ......... break 'em up into a dozen pieces and then let them sink or swim.
________________________________________
But arent people allowed to get as rich as possible?
Not through lying and fraud.
But arent people allowed to get as rich as possible?
Only if they are also allowed to fail and the state will not allow it. Why would they kill something they created?
Your government created too big to failYes, the simple solution, remove all federal backstops and guarantees, banks sink or swim on their own like any other business.
Depositors then have to choose wisely which bank to do business with, just like they have to choose wisely on any other kind of business.
Where I am there's a good size bank that never got into subprime,never needed a bailout, and never took one. So yes, further down in the system there are some banks run properly.
Go back to a gold-redeemable currency and all this TBTF bailout with printed money crap would stop.
Depositors then have to choose wisely which bank to do business with, just like they have to choose wisely on any other kind of business.
______________________________________________
Of course they have to.
Amazing how US citizens are able to cling to pure fantasy when they are surrounded by a contradictory reality.
AnAnonymous said:
Amazing how this is exactly what you are doing, with your US citizenism this, and your Easter Island that. Nothing more than denial and self-offuscation.
Made me laugh.
But hey, you're here to entertain.
Ananonymous is a troll. Lately it looks like zerohedge has been extra extra targeted.
If there is no federal backstop and interest rates are near zero, why would anyone keep their money in a bank at all? What's the advantage? The convenience of a checking account?
Seriously. Without FDIC insurance there is not a single soul in the country who would put their money in a bank. Not a single one.
One step at a time, friend
Saying, "... remove all federal backstops and guarantees, banks sink or swim on their own like any other business."
And they can dismiss it out of hand as an attempt to destroy the banking industry. Just as everyone hates all lawyers except for their lawyer, eyveryone may hate all bankers except for their banker.
But the TBTF / TBTB ? I think most everyone has had enough of their nonsense.
barliman
This is interesting;;
http://www.afn.org/~govern/mcfadden_speech_1932.html
and;
http://home.hiwaay.net/~becraft/mcfadden.html
Appears that reps have stood up in the past.
Also see (gives legal concepts);
http://avalon.law.yale.edu/18th_century/bank-tj.asp
they have even shut them down after they were established.
http://avalon.law.yale.edu/19th_century/ajveto01.asp
Standing by the too big to fail is not a choice, it is a necessity.
A necessity that was earned and imposed through competition process.
AnAnonymous said:
I'm sorry, my fellow citizen, but you are mistaken. Standing by the too big to fail is a denial of reality, an ostrich head in the sand, a can kicking.
It's actually a privilege that was purchased through easy money and bribery process.
Except for those two points, you are correct.
Call me skeptical, but this two billion dollar loss seems to come at am awful convienient time for Obummer. Cripes , what is 2 billion to the morgue anyway? Like loose change? But it sure sounds good to the pleebs.
Well, now I know what Barbara and Whoopi think...
...30 minutes that their viewers will never get back
Somehow Obomba just belongs on the The View. Perhaps Obamney can get a spot at the Show on a regular basis after the fictional election.
The President on "The View"; surreal buffoonery.
Nearly four years of vacations, speeches, and acting like a celebrity instead of a President.
Not that electing someone other than Ron Paul will make a difference; it is sad to see the Office turn into a TMZ short.
The U.S.A. crossed the Rubicon several decades ago and it is really too late for any kind of meaningful change without violent collapse and rebuilding - or simply the end.
Sure: sound money, no TBTF, rule of law, property rights, non-parasitic government and industry; I don't see politics bringing us back to those principles, anyone else?
No
Sad :(
Definitely not. Flush and start over.
The U.S.A. crossed the Rubicon several decades ago and it is really too late for any kind of meaningful change without violent collapse and rebuilding - or simply the end.
Sure: sound money, no TBTF, rule of law, property rights, non-parasitic government and industry; I don't see politics bringing us back to those principles, anyone else?
_________________________________________________
Quite to bring back principles that never were.
The US of A crossed that rubicon a bit more than two centuries ago.
Same recipes as the beginning. Different ingredients.
But hey, when one expected the ingredients to be always the same and to find oneself tossed into the cooking marmit, one has to tell the story of the fabled past, that things were different in the past.
Property rights is something hard to believe when one descend from continents robbers.
Well said AnAn.
I always wonder about that. These pillagers talking about property "rights" and squealing when someone tries to take their anyways non-allodial property away from them.
EMINENT DOMAN.... ftw...
;-)
ori
ORI said:
There is no doubt that when he is being serious, he makes some valid and interesting points. My biggest contention with him is that he refuses to recognize that not all Americans "descend from continents robbers".
Point well taken. Lack of allodial title is equivalent to lack of property rights. It makes everyone a renter.
:-) I think he's dropped Citizenism for good. which is great, because he does make excellent points.
And this Allodial Title thing. It's a shoe-in. Or is that Shoo-in? It's well known. It's all over. It's in the laws.
Why is even a question?
What Government wants, government can TAKE. And pay you what THEY think your land is worth.
It is a renter's world and the Vatican is the Land Lord.
Standing in for the real Lord or Lords, of course. Vicarious Filii Dei.
Property "rights"... and who is taking them away fast, faster fastest? The left.
How Ironic Eh 4th?
ori
I think he's dropped Citizenism for good. which is great, because he does make excellent points.
____________________________________________
It is not possible to drop 'Americanism' when one speaks of the US of A. The US of A has known nothing else but 'Americanism'
My comment never alluded to something else. The US of A, under US citizenism guidance, crossed that rubicon since its inception.
You can think Americas, the geographical location, without US citizenism as there were people living there before the start of the US.
That is why US citizenism is a better word than 'americanism' that could include anything that happened in the Americas.
There is no doubt that when he is being serious, he makes some valid and interesting points. My biggest contention with him is that he refuses to recognize that not all Americans "descend from continents robbers".
_______________________________________________
US citizenism is a serious thing. Only US citizens want to claim that 'Americanism' is fantasy and does not exist.
Others know that it is the dominant set of beliefs that has been governing the world for decades by now and which led to the current state of affairs on the global scale.
US citizenism includes stuff like undivided nation.
Whether or not you descend directly from continent robbers does not matter with this 'american' concept of undivided nation as you are part of the undivided nation for the glory (and much reluctantly) for the unglory
This said, it is also well known that US citizens of A have a indian ancestor, to naturalize them to the continent.
Chuck Norris type.
Get back to your FoxConn shift chinese citizenism.
Asked during the same show how close he expected the result of November's presidential election to be, Mr Obama said: "When your name is Barack Obama, it's always tight".
After a host noted that his full name was "Barack Hussein Obama," he repeated this twice, stressing the middle name that has led conspiracy theorists to claim erroneously that he is secretly Muslim.
Voting that or Romney. Democracy is dead.
He really said that to a group of ladies?
Sounds more like he was promoting a racial sexual stereotype.
The author was just one step away from connecting the dots. The TBTF take the free money they get from the corrupt system described and recycle some back into the political system to buy our representation out from under us, ensuring that their private-when-profitable, public-when-not status is maintained perpetually.
It's no accident that Obama so casually takes bailouts for granted - he's paid to do just that, as is everyone around him, friend and alleged foe.
Except Ron Paul of course.
TBTF = another name for Monopoly?
http://avalon.law.yale.edu/18th_century/bank-tj.asp
OK, maybe the author went into a coma in the 1920's. I don't know but I'll give that person the benefit of the doubt because otherwise going on about free market this and capitalism that after the experience of the great depression is rather infantile.
That sand castle was washed away with yesterday's high tide so don't tell me how you're going to build a sand castle that will withstand the test of time today.
Capitalism as described in the article collapsed. Done. Finis. It's over. Get over it.
Reading Austrians always give the feeling these guys have jumped chronology, forgetting established knowledge to avoid facing the shallowness of their thesis.
A business thrives by satisfying its consumers. So far, so good. But one has to remember that consumers are various in their expectations on the business and that ultimately, business owners are consumers of their own business and they have the final cut on it.
Generally, business owners'expectations are very different from the other consumers'.
A bank owner might expect from his (own) business consumption power, social recognition etc... while for some others, the service is cash deposit.
It is funny because well, it happens every day, when the owners consumption expectations collide with the other consumers' expectations. The business might be profitable, customers of products happy, workers motivated, but if the owner does not satisfy his own consumption properly, the business is over. It is sold, closed etc...
There is always tension between the various consumers. Banks are not different. And bankers have to express their consumption expectations. And this is what they do. And this is how the expectations are.
The consumer is king. And the owner is a consumer of his own business. And certain Kings are more kingly than some other kings.
Again with that too big to fail, a product of government.
Too big to fail is not a product of government. It is a product of competition. And when a competitor reaches too big to fail, this status has to be acknowledged by the surrounding, including the government.
Too big to fail is a natural product of competition. It happens anytime density of competition falls.
Take a football league: the two top clubs are close from each other. If one is dismissed, the other can fill immediately the gap.
But between the top two and the third club, there is a large gap. Dismissing the two top clubs will leave a gap that neither the third or the following can fill anytime soon.
Too big to fail. What is provided by the top twos can not be provided by the others so the top twos are going to be propped up anytime they meet annoyance.
No government. Only competition. The one remedy is to maintain a high density of competition, meaning that competitors are rather even or equal among themselves.
And bingo, as US citizens favour inequality, this can not happen.
Why bemoan too big to fail? The government has nothing to do with that.
The view?
Geez whats next Dancing With The Starts.......
Perhaps we should vote for a buffon who just doesn't show his face.
As a former bank regulator, we used to claim to go in after the battle and bayonette the wounded. I always thought that pretty well described our activities.
The Pax Americana construct is NOT interested in market forces that dilute the power construct. The construct is the collective history of the Oligarchy elites that made America what it is. "We the people" being the sham tinsel curtain behind which this construct now dominates the world. Markets are fine for non strategic issues which don't hurt the power construct; not for those issues which are lifelines to the survival of the elite system that actually runs government. As the modern, industrial, post-Marxist construct basically uses technology as the arrow of civilization, the elites change depending of who comes out top through the technology pipeline. But you ALL have to be on the same page and feed the system. That is a basic requirement of the US power construct like all those before; whether you be Rockafella, Pierpoint Morgan, Henry Ford, IBM, Bill Gates, Steve Jobs or Mark Zuckerberg. You are part of the system and its artorial and nerve systems are clear as daylight :
1° THE military component of BIG stick.
2° The Energy component of Big Oil.
3° THe financial component of USD hegemony; linked with 2° in petrodollar duopole of Saudi-US monopoly, since 1971.
4° The post industrial frontier of RISK/Internet asset economy; the current new frontier.
But this whole mosaic has now gone fragile as the "virtual" money economy dominates the real one; in the name of which the .1% Oligarchs have outsourced their labour component of world industry/service economy to Chindia. On the basis of international labour arbitrage which they control.
All these vital nerve lines are now dependent on the money line to stay healthy; and it can't. If the financial power house blows up it corrupts the rest. We are there.
Changing Rome from a Casino/Coliseum "panem-circenses" economy is no easy deal. Its always the human mind set that corrupts and is difficult to resuscitate as the elites prefer spilling other people's blood than seeing their own money/power/blood stream go dry.
That is History. And it will repeat even if it stutters and plays out differently in detail, the power structure always crumbles and is replaced by a new one with different value systems.
A good example of a power construct going decadent is Frederick II of Sicily. He created the first written constitution of the medieval world. It was absolutist; all powers to king. He insisted that markets be open except in three vital sectors : Food, Iron ore ( weapons), silk (symbol of regal power) where government monoplies ruled. The rest was open to the feudal order to compete for. Sicily was the richest kingdom of its day and had surplus budgets as it fed the Italian peninsula. But he lost as the Papal power construct along with burgeoning French power took away his kingdom in civil war.
He was ahead of his times as the western world regressed until the Renaissance occurred. All power systems use the market mechanism as a MEANS, not as an end in itself. That is the true lesson of history. Power constructs protect themselves. USA is no different to any other system, inspite of its revolutionary beginnings.
Today the US system has attained maturity, the US dream has morphed as did the Roman dream after the Rubicon. It is ripe for the long slide back wards, unless it reforms pronto from within. As it no longer feeds the progressive loop of human needs in the coming age. The issue of free markets is secondary. The Issue of Political Power constructs is primary.
But the ONe cannot live without the Other; that also is a vital thread in history.
Like Whoa...
Take a breath and a break, maybe listen here:
http://www.youtube.com/watch?v=etVNNMpckcE&feature=related
Come back later to conclude and see how many junks you got.
Eh, perhaps not Frederick II. The USA could have less choices, maybe the Medicis with socialized healthcare, or Plymouth Rock with nukes.
Also doubt that Freedom and Democracy have been exhausted just yet; any open and direct authoritarianism certainly has a bad record all around.
NPR must be turning to the right, because yesterday morning they were talking about how TBTF is really Too Big To Manage. They didn't have much to say on new regulations. In fact, they didn't mention Glass-Steagall once. Imagine that!
Too Big For Capitalism
As entrepreneurs innovate, they reap economic rewards. Production then expands and new forms of economic organization emerge, such as the modern firm, which grows to capture economic opportunities. As the size of the firm increases, so too does its bureaucracy. The functions of ownership and control gradually separate. Eventually, the owners find that their connection to, and knowledge of, the economic process has been severed. They lose the ability to see the necessity of social institutions, such as private ownership and voluntary contract - institutions without which there would be no economic progress. Isolated from economic reality, their sympathy for the capitalist system begins to wane, and, with it, the social support for the institutions that form the foundation of capitalism. These render the capitalist system open to attack from hostile parties.
- Joseph Schumpeter
The big banks need some creative destruction. It seems to me, there was a time that when banks got too big and made bad decisions, they divested assets. These assets were bought by the smaller banks, and newer, emerging firms. But I guess we need stability, right?
"Stability" is the last resort of a scoundrel.
I'm not sure, but I think the president has had more appearances on The View than he has had press conferences. Is that good?
A. Governments should not be too big to fail either. If they fail, the people should have a mechanism to sweep them aside and form a new government. Unfortunately in this day and age, the government views itself as the important entity and the people secondary. It defends and codifies its incompetence and corruption.
B. Regulation can easily be replaced by "personal responsibility" and common law. When a banker or any one screws up and causes harm to someone else then they are personally liable for that harm... regardless of their intent. No corporate veils or shields.
Obama = complete flaming homo-not that there's anything wrong with that.
edit: doh Mr Lennon Hendrix with the first comment already said what I was thinking.
President O: 'Man of the People' or Marxist bankers puppet?
next up...
Mitt Romney: 'Man of the People' or Fascist bankers puppet?
That's democracy at its best folks ...or there's another way to vote:
Stop Paying Your Taxes ...don't feed the suckers
Sickening!
Obama says: "Jamie Dimon is one of the smartest bankers we got"
Yes, he's also one of your largest campaign contributors you A-hole.
Too big to fail meets too stupid to live...
I agree that 99% of Regulators are probably incapable of finding a problem before it occurs. Even if one did stumble on to one, it would probably be covered up due to political pressure. Same thing with regulations. Generates a lot of paperwork, but the Big Boyz will almost always be nimble enough to to get around it. The smarter thing to do is not to regulate overly risky activity but prohibit it outright. But that probably won't happen.
But, at the end of the day, this pile on is mostly about gaining political points and power. The fact that the Government is incompetent to wield that power is lost on the vast majority of people, but especially the audience of "The View".
I always get to the bottom of the page and forget what i was going to say. GREAT THREAD! Having said that "President Obama has a million dollars in a Chase Manhattan checking account" according to CNN yesterday. Who the hell has a million dollars in their checking account? And at JP Morgan Chase no less? So much for "i'm all for the Occupy Movement" thing...
.... Because politics is defined by reactionary and short term consideration, Obama doesn’t see the additional employment and capital surpluses that result by eliminating labor costs. ....
It seems to me that the main beef that Austrian Enonomists have here is that Obama is stealing all the credit for running wages down to one bowl of rice per day - with free maggots for protein!
Obama absolutely understands "economics", as being The Science and Art of distilling all value produced by society to the top 0.001, who supported his election for him to do exactly that job - which Bush prepared but could not pull off in the end!
Obama undertands Power too, anyone, anywhere may be killed, kidnapped, tortured, locked away forever, disappeared, at the whim of the President.
The problem is that no-one seems to be willing to understand Obama, see the monster behind the smooth veneer.
Just how do we know Obama does NOT, know/ see the additional employment and capital surpluses that result by eliminating labor costs. ....???
"The View" is the epitome of everything that is wrong with the USA.
Funny irony here:
A) The ladies asked, "What are you going to do about it?" Which is hilarious, because he is paid (99% of pols are) very BIG money to specifically NOT do anything about it. Back to this, later.
B) Obama has assets in JPM. I think he knows, maybe not as much as us, but knows enough that if there were TRUE, HARDENED FINANCIAL REFORM....that JPM, Goldman, and BAC would all have to be nationalized as the transparency would reveal the fraud that is their balance sheets, which would result in their banks crashing....along with every single dollar of Obama's assets.
C) The ladies asked, "What are you going to do about it?" How faux-liberal!
What's funny about the right wing's assertion on liberalism is that they just assume liberalism=want things done for them. It's not, at least in what the true sense of the left wing of what it USED to be.
Liberals lost their nuts when Clinton took office, just because he hit the dot.com lottery and they believe his neo-liberal policies were the way to run governance.......when in fact, it was really acclerating a decline of American Society that started when Nixon took office. Both Neo-Cons and Neo-Lib want consolidation; they are paid hansomely to push this.
Remember JFK's quote: "Ask not what your country can do for you; ask what can you do for your country."
This really in the end, aligns both the liberal and libertarian thought that when push comes to shove, it's really "us" as a collective citizenry, that needs to change shit. We've asked the political class to change things for 35 years, with hilariously failed results. Obama ain't gonna do it for you; he's proven that. I lived for 4+ years under Romney; he ain't gonna do shit either.
I mean, the opponent puppet of this puppet president is SO ethically conflicted, that when a candidate literally hands you an EXPLOSIVE FOOTBALL like this, in defending JPMorgan......and you can't even capitalize on this layup of a talking point? Could you imagine if Obama said this during an actual competitive primary? He'd get skewered for it!
What we need is more Sam Adams, who held a sharp tongue to the Red Coat Tories in Colonial America, when it came to issues like reliance on debt, taxes, and the police state. People like James Carville aren't liberals because they feel its the right ideology; they do it becuase it fucking pays well.
Instead of looking for the 100th Monkey, we all need to become the 100th Monkey, to root out the evils of society, and fix this shit.
And when the people realize this, as an actual collective, and start REAL, CONCRETE ACTION? That's when SHTF, IMO....because then, a real threat to corporate (and monetary) monopoly, finally begins.
Real liberals, IMO, don't agree with government officials like Obama who cover their friends' ass through reassurances in the media, and talking points.
They do what the true base of the ideology compels them to do:
Challenge Authority.
the more i think back to the advice by the russians heading into the collapse it makes sense.
heading into a collapse all the 'leaders' just pretend, lie, self deceive, or see only what they want to see with all the yes men around them.
for the average person, the only advice is to IGNORE the media and the government and just try and focus on survival. the governing structure is a huge distraction and the dirty business of figuring out how to maintain ones ability to feed oneself and ones family is a challenge requiring constant focus.