New Deal 2.0 Thu 2010-07-22 15:54 EDT

The Summer(s) of Our Discontent

Marshall Auerback

Virtually every profile on Larry Summers tells us that he is one of the most brilliant economists of his generation...Only Robert Rubin and Alan Greenspan played a more important role than Summers in promoting the deregulation and lax oversight that laid the foundations for the current crisis...the latest FT defense reflects Summers's fundamental lack of understanding of modern money. Contrary to his view, the late 90s surpluses was not the reason for that period's prosperity. The surpluses are what ended the prosperity. And until the public understands this, we should expect no fundamental improvement in economic policymaking from the Obama Administration...he violates one of Abba Lerner's key laws of functional finance: a government's spending and borrowing should be conducted ``with an eye only to the results of these actions on the economy, and not to any established traditional doctrine about what is sound and what is unsound.'' In other words, Lerner believed that the very idea of what good fiscal policy means boils down to what results you can get -- not some arbitrary notion of ``fiscal sustainability''...The government budget surplus meant by identity that the private sector was running a deficit. Households and firms were going ever farther into debt, and they were losing their net wealth of government bonds. Growth was a product of a private debt bubble, which in turn fuelled a stock market and real estate bubble, the collapse of which has created the foundations for today's troubles...

0; discontent; new dealing 2; s; summer.

naked capitalism Tue 2010-05-11 09:04 EDT

Richard Smith: Another Nail in the ``Hoocoodanode'' Defense, Circa April 2007

Richard Smith

Here's someone with his head screwed on, back in April 2007, who proves singlehandedly that ``hoocoodanode'' was no defense for failing to anticipate the implosion of the shadow banking system (more on this prescient analyst in due course)...So who is this fellow who got it, back in that mythical time when nobody knew what was going on? According to an email correspondent of mine, he is ``a no-name equity guy'' in London. Actually his name is Henry Maxey, and he is chief investment officer and chief executive elect of Ruffer LLP, a small London fund manager. So there's no chance of making him US Treasury Secretary or head of the NYFRB, I'm afraid...

Circa April 2007; defense; Hoocoodanode; nail; naked capitalism; Richard Smith.

naked capitalism Mon 2009-12-28 17:34 EST

Has Obama been a success despite suspicions of crony capitalism?

Edward Harrison

...There is a rather large body of evidence demonstrating that the Bush and Obama Administrations have favored large banks in an unseemly way. The same is true for the Congress and other big business insiders like Big Pharma, the Defense Industry and Health Insurance companies...we have witnessed an orchestrated campaign by the Bush and Obama Administrations to recapitalize too big to fail institutions by hook or by crook, bypassing Congressional approval if necessary. And when it comes to healthcare, both Congress and the White House have bent over backwards to keep the lobbyists onside. As I see it, our government has favored special interests in the past year of Obama's tenure to our detriment. Personally, I don't buy the line that Obama is a liberal. I consider him more a corporatist (i.e someone who coddles big business). But, from a political perspective, it's not really relevant, is it? What difference does it make whether President Obama is a liberal sellout as Matt Taibbi claims or a pragmatic corporatist, if the outcome for the electorate is largely the same? Forget about intent. Focus on actions.

Crony Capitalism; naked capitalism; Obama; Success; suspicion.

Fri 2009-10-23 08:41 EDT

The US as Failed State

Paul Craig Roberts:

The US has every characteristic of a failed state. The US government's current operating budget is dependent on foreign financing and money creation. Too politically weak to be able to advance its interests through diplomacy, the US relies on terrorism and military aggression. Costs are out of control, and priorities are skewed in the interest of rich organized interest groups at the expense of the vast majority of citizens. For example, war at all cost, which enriches the armaments industry, the officer corps and the financial firms that handle the war's financing, takes precedence over the needs of American citizens. There is no money to provide the uninsured with health care, but Pentagon officials have told the Defense Appropriations Subcommittee in the House that every gallon of gasoline delivered to US troops in Afghanistan costs American taxpayers $400.

failed state.

Tue 2009-09-22 08:18 EDT

Guest post: Regulation in Defense of Capitalism

Rick Bookstaber

Will regulation hobble capitalism? I think the opposite is true. Properly done, government regulation of the financial industry will move the industry closer to the capitalist ideal. By capitalism, I mean where those who take the risks and put up the money get the fruits of their labor. And, importantly, where those who take the risks and put up the money actually do take the risks, bearing the full costs of failure as well as success.

capitalism; defense; Guest Post; Regulators.

The IRA Analyst Mon 2009-09-21 17:23 EDT

Exposure at Default: As Banks Shrink, So Does the Economy

...before Treasury Secretary Tim Geithner and the other G-20 finance ministers set about to raise capital levels, they need to understand that the earnings of the banking industry are going to be impaired for years as the cost of resolving failed banks is repaid. Restoring solvency is the first issue for many banks, then we can talk about increased capital and restrictions on risk taking equally. And as the banking industry shrinks defensively in order to conserve capital and fund liabilities impaired by realized losses, the credit available to the US economy also shrinks. You can't have economic growth without credit growth...Bottom line is that deflation is still the chief threat to the US economy, driven by a relentless contraction in bank and nonbank credit. Until we see a restoration of the market for nonbank finance and a sustained turn in the EAD of the large bank peer group, which accounts for almost 70% of the entire US industry balance sheet, we do not believe that any economic recovery will be meaningful in terms of jobs or asset prices.

Banks Shrink; default; economy; exposure; IRA Analyst.

Rick Bookstaber Sun 2009-09-20 14:30 EDT

Regulation in Defense of Capitalism

Rick Bookstaber

Will regulation hobble capitalism? I think the opposite is true. Properly done -- and I think most of the financial regulation that is envisioned fits into this camp -- government regulation of the financial industry will move the industry closer to the capitalist ideal. By capitalism, I mean where those who take the risks and put up the money get the fruits of their labor. And, importantly, where those who take the risks and put up the money actually do take the risks, bearing the full costs of failure as well as success.

capitalism; defense; Regulators; Rick Bookstaber.

Taibblog Sun 2009-09-20 09:51 EDT

Will Obama listen to ex-Fed chief Paul Volcker's warnings?

Matt Taibbi

So former Fed chief Paul Volcker yesterday was spouting off about how nuts it is that certain ``too big to fail'' commercial banks that receive mountains of public money are allowed to run around acting like high-risk hedge funds...This would be meaningful if the Economic Recovery Board that Volcker runs for Obama were actually a chief policymaking center for the president. But the reality is that the Volcker group is a kind of show-pony the Obama administration kept on as a way to give consolation jobs to the more progressive economic advisers who led them through the campaign season, people like University of Chicago professor Austan Goolsbee...Obama did a bit of a bait-and-switch, hiring progressives to run his campaign and jettisoning them once he got into office. I hear about this phenomenon from different corners of the policymaking universe, from health care to defense and intelligence spending. But my sense is that the switch was most violent in the realm of economic policy...

ex-Fed chief Paul Volcker's warnings; Obama listen; Taibblog.

Jesse's Café Américain Sun 2009-09-13 10:32 EDT

Barrick Capitulates

Jesse

Barrick and their partner J.P. Morgan were the target of lawsuits by the gold bulls, most notably Blanchard and Company, for price manipulation through the use of their forward sales in their hedge book. Barrick's original defense was reported to be that they were acting in conjunction with J. P. Morgan and the central banks to cap the price of gold, and were therefore immune from prosecution since the central banks are immune from prosecution. Gold market manipulations.

Barrick Capitulates; Jesse's Café Américain.

Mon 2009-01-19 00:00 EST

Jesse's Café Américain: In Defense of Economics

Jesse's Café Américain: In Defense of Economics; ``How can a society which defines its first principle, the ultimate good, as greed be anything but what it is? Cruel, self-absorbed, shallow, unjust, delusional and imbalanced.''

defense; economic; Jesse's Café Américain.

Thu 2008-06-05 00:00 EDT

naked capitalism: Dirty Tricks at Lehman? (And a Defense of Shorts)

defense; dirty-tricks; Lehman; naked capitalism; short.

Thu 2008-03-27 00:00 EDT

naked capitalism: Robert Shiller Makes Bogus Defense of Financial Innovation

financial innovation; naked capitalism; Robert Shiller Makes Bogus Defense.

Wed 2006-10-04 00:00 EDT

Rolling Stone :

Your Tax Dollars at Work, by Matt Taibbi (defense appropriations)

Rolling Stone.