01-01-2019, 10:24 PM
(01-01-2019, 01:28 PM)John J. Xenakis Wrote:(01-01-2019, 11:43 AM)pbrower2a Wrote: > Obama did what was practically mandated: he backed the banks. The
> bank runs that caused further erosion of the American economy in
> 1931 and 1932 did not happen. Businesses did not see their
> balances going to zero, and workers did not see their paychecks
> bouncing. The banks that survived the year-and-a-half meltdown
> became profitable again, and business failures became
> scarce.
Lol! The reason that there weren't bank runs had nothing to do with
the sainted Obama (who I doubt has even the vaguest clue about the
underlying macroeconomics - this is a guy who admitted he doesn't
understand his daughter's 8th grade math). The reason that the bank
runs didn't occur is because the central banks in the US, UK, EU,
Japan, China, and elsewhere all flooded the world's banking systems
with "printed money" obtained mainly through quantitative easing.
That strategy is no longer viable, which is why the central banks have
"run out of bullets."
Obama did back the banks in the form of massive corruption -- by
accepting billions of dollars in contributions to his campaigns and to
his cronies' projects in return for not pursuing criminal charges
against the criminals who brought about the financial crisis through
massive fraud, knowingly selling trillions of dollars in fraudulent
sub-prime backed synthetic securities. The sainted Obama was the
biggest beneficiary of this criminal fraud. That would make Obama by
far the most corrupt politician in the country's history. But no one
cares because he's a Democrat, and every crime from corruption to
racism to rape to inciting violence is perfectly acceptable, and even
encouraged, as long as the criminal is a Democrat. That's because
when a Democrat does it, it's GOOD corruption and GOOD racisim and
GOOD rape and GOOD violence. That's the way the world works.
So was the solution setting up a guillotine in front of Congress for dispatching all the crooked figures in banking?
The fraudulent securities were hitting the market while Dubya was President -- almost from the start. Perhaps the solution would have been the break-up of the Big Banks or even their nationalization; of course the first would be disruptive and the second would be socialism.
I think that we can all agree that the situation with real estate and its finance in the Double-Zero decade was a corrupt, and even worse, capital-devouring bubble. Bubbles always go bad; it is always a question of when they will go bad. America would have been better off had Americans invested the capital into plant and equipment in Big Business (which creates well-paying jobs that allow workers to afford better housing) or into small-business formation (but the last few decades have been largely a time of consolidating existing businesses into ever-bigger behemoths.
Bankers were using loans to people who could never pay them off as a back-door means of making money by speculating in real estate. The idea was that some schmuck saved his money for a down-payment on a house that he could never afford, and when he defaulted although prices were rising, the banker foreclosed and got to resell the house for money.
Banking serves the public interest best when it is conservative in lending -- when bankers can say "Hell no!" to highly-leveraged "LSD deals" (as Robert Ringer puts it). When bankers get involved and expect speculative gains instead of normal interest, they facilitate a shyster economy. A good banking system compels people to put up as much collateral as is possible and take the risks of failure as personal ruin. So if you want to operate a business on other people's money, then forget it. Just be an employee who gets low wages and no security.
There was a time when the bankers were the laziest, fullest-witted, least-imaginative executives. They liked wearing nice clothes and never having to break a sweat or get dirty. The old saying about savings-and-loan outfits was "borrow at three, lend at six, and out to the golf course at three", which is not how many other businesses operate.
I could suggest some reforms -- like not giving people full payment of bank balances in the event of a bank failure. 90% perhaps, so that people think twice about putting deposits into a shady institution. (Maybe 2% interest at Safety First Bank is better than 5% at Vegas-style High Roller Bank if one stands to get burned).
We may be headed to another "Bad Bear" -- indeed it may have already started. The policies that led to it have happened with Congressional consent, and for two years we have had a government unified on the idea that there are but two holy entities in America: market share and cash flow. Monopolize and gouge, monopolize and gouge, rinse and repeat. In view of the narcissism and even sociopathy commonplace in Big Business, a 1930s-style depression might be what is necessary to wring out many of the bad habits that our economic system has enshrined as a perverse ideal.
The ideal subject of totalitarian rule is not the convinced Nazi or the dedicated Communist but instead the people for whom the distinction between fact and fiction, true and false, no longer exists -- Hannah Arendt.
