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Date Posted: 11:46:55 10/11/11 Tue
Author: JMcEnaney
Author Host/IP: 68.195.253.213
Subject: Re: Something I wrote about 3 years ago....
In reply to: Mark Shapiro 's message, "Something I wrote about 3 years ago...." on 21:04:07 10/07/11 Fri

Mark:
How’s it going? Hope all is well.

I would not cite Paul Krugman in any effort to support any case I was trying to make. Despite his awards, the guy was a chief advisor to Enron and he recently advocated the “broken window” theory of economics in commenting about the earthquake / tsunami disaster in Japan claiming the rebuilding there will be expansionary. Huh? Krugman hasn’t been right about anything.

I have no time for many of the platforms voiced by some of the Occupiers but I do believe they and we have a legitimate beef about the rules being rigged in favor of those who make fortunes producing nothing but fees. Today’s financial titans are not the industrial giants of yore who built factories that employed people who made things that improved our lives and whose CEO’s were not making obscene multiples over the workers. No. Our current class of plutocrats make (not earn) billions on paper shuffles and all they do with their gains is buy another home somewhere in the world. They’re not reinvesting in productive job-producing assets, such as companies, plants and machinery.

But having said that though, I agree with Bill and think the Occupiers are demonstrating in the wrong venue. They should be clogging the streets and parks of Washington, DC where the system that abets the accumulation of such valueless wealth and passes the additional costs of the underlying transactions to the citizens resides. For example, I’d like to see reduced volatility in commodity prices, oil in particular, by limiting trading to hedgers (those who either directly produce or consume the physical product) and ousting the speculators. Put the speculators on the sidelines, watch the price of oil drop and the cost of living go down. The Commodity Futures and Exchange Commission tried to clean up the NYMEX oil trading pits years ago but when the regulators realized how complex the markets had become and how little they knew about them, they let the traders write the rules and passed the end product off as “reform”. (For an interesting book on that subject, read “The Asylum: The Renegades Who Hijacked the World’s Oil Market” by Leah McGrath, a highly regarded business writer).

Same with the too-big-to-fail bank bailout and TARP programs. It wasn’t that long before the most recent financial crisis that Barney Frank opposed a measure introducing more oversight to Fannie Mae and Freddie Mac and in the process said “I think it is clear that Fannie Mae and Freddie Mac are sufficiently secure so they are in no great danger... I don't think we face a crisis; I don't think that we have an impending disaster. ...Fannie Mae and Freddie Mac do very good work, and they are not endangering the fiscal health of this country.” Hmmm. And said-same Mr. Frank went on to co-author, along with another innumerate member of Congress, the most sweeping financial reform bill of modern time. And we’re all OK with that? And to demonstrate his indefatigability, he now advocates lowering lending standards for condominium purchasers.

The US had responded to past banking crises with infusions of Fed credit to ensure liquidity which was historically enough to weather the storms. This time though we taxpayers were forced to underwrite and pay for the failed corrupt business decisions which were often made at the urging of corrupt politicians. Our government, those geniuses in Washington that know what’s best for us, took the process off-line, completely contravening bankruptcy law (both with the banks and the automobile industry) and handed us the bill.

So why should I be pissed off at the fat cats on Wall Street? They are merely the beneficiaries of Washington’s largesse. If I wanted welfare reform, I wouldn’t protest in poor neighborhoods. I’m for tossing all the bums out of office, from Obama on down. They’ve become a ruling class who have no idea who is paying their bills or picking up the tab for all their mismanagement. Begin with term limits. Reform Washington and you reform Wall Street.

In the meantime, if you played along and packed on debt you can’t handle, it’s not the banks fault. Do what we should have allowed failing industry to do: restructure, pay up, or declare bankruptcy. The taxpayers are not here to underwrite bad policy or worse decisions.

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