Democrats & Liberals Archives

LTCM and Frontline's The Warning: Crash and Burn

Imagine a market where you could defraud your investors, and get away with it. Imagine a market the Government couldn’t investigate, that no outsider could peer into. Imagine that the banks would do everything in their power to conceal what was going on from you, yet when the time came, and one company went under, the obligations to and from that one failed company could trigger the failure of the entire system. Of course, you don’t have to imagine this to be true. This is what actually happened, in 2008.

We hear talk of market uncertainties from the Republicans, who talk about how the market might be disrupted by further regulation. Watching Frontline's The Warning, I was intrigued to hear that same talk again, but this time in the mouths of Greenspan, Rubin, and Summers, as they trashed Brooksley Born's attempts at the Commodities Futures Trading Commission to regulate Over-The-Counter (OTC) Derivatives.

Those three succeeded. Hell they even succeeded after the collapse of the Hedge Fund Long-Term Capital Management, which should have been the wake up call.

People want to stubbornly believe in the Free Market, see the failures as anomalies, exceptions to the rules.

What I will suggest here is that dark-market failures like those two are inevitable, given the systems we're talking about. While it's not a good idea to micromanage markets, markets, to function smoothly, to preserve and sustain value and productivity, must have at least a glancing relationship with the facts.

One of the most shocking passages in the documentary is where people recount Alan Greenspan telling Ms. Born that even fraud should not be regulated, that we should simply allow the market to figure it out. While for some this idea might have a particular charm, there's an inherent logical problem with this, and if you know basic market economics, it should be obvious.

The problem with letting the market take care of fraud is that the market relies on good information for nearly everything that makes operations in the market predictable and correctable. Fraud has to be discovered in order to resolve it, and if nothing obligates people to tell folks things about what they're doing, it's not going to get discovered real fast, if at all.

Back in April, I started, but never finished a blog post on what happened in the recent economic downturn with Goldman Sachs.

This hit the news pretty big in April , when the debate on financial reform was starting, the so called "****ty deal beingthe Timberwolf financial instrument that got Goldman Sachs in such hot water with the SEC. When Levin called it "one ****ty deal", he was quoting the Goldman Sachs sales force.

Folks say the market can take care of itself because eventually people refine their knowledge their products, their services and everything so they can do business more efficiently. That's the theory. But as I said in the beginning of my unpublished entry:

The cheapest thing to sell people is an empty promise. It costs you nothing but a little time and a little jaw-jaw to convince people to invest, and then you walk away with the money and then they with nothing.

In a market where fraud is not illegal, where the only consequences are market consequences, what gets refined, made more efficient, are the means and processes of deception.

Folks get better at conning you and other investors, playing high-stakes financial games with cards up their sleeves. The markets on Wall Street became parasitic, operating for their own benefit, rather than the benefit of the customer.

I know that the minute people do their research, they'll find the Democrats deeply dirty in this as the Republicans are. That, I'm afraid, is the cost for me, as a Democrat, in bringing this to you. But really, in my philosophy, what's important here is the question of what the worst kind of uncertainty in this market is. That's not a partisan question. That's a practical one.

As I pointed out, the derivatives meltdown could have very well happened under a Democratic Party President's watch as it actually did under a Republican's. Here, in this entry I will not ask you to favor or disfavor one party or another except to the extent they are willing or unwilling to fix this problem.

The Democrats have done some good in this areas, which I am proud to say. Republicans, though have come back and are saying we need to deregulate or freeze regulation because of all the uncertainty that's causing.

Meanwhile, though, the big financial firms are still running this big, massive, and ultimately dangerous dark market. Democrats have done something to get these activities, these derivatives, out in the open, but if the Republicans get their way, we'd go right back in the dark.

I would state right here that this dark market is more of a danger, more of a source of uncertainty. In fact, it's the source of the uncertainty that plagues our market now. When we talk of toxic assets, we're largely talkind about assets from this market.

If you're wanting to have to take emergency measures for the next few decades, or else watch the economy go down in flames, if you're wanting the banks to be forever tottering on the bring of disaster, go ahead and push the government to allow these transactions to go on in the dark, because that will be the consequence. Sure, we won't disturb the nice neat world of our friends in the financial sector, but they'll keep on doing this, because essentially such markets have long been the market's version of crack or heroin, addictive stimulants and opiates that allow all kinds of economic activity to go on without having to make or do real things- speculation gone wild, uninhibited by more natural flows of supply and demand.

Without these unregulated derivatives, Wall Street would have felt the pain of those bad mortgages years ago, not just recently. They would have been more careful lenders, and more careful customers in the secondary markets. Our banks would be more stable, America financial life more calm. Sure the folks on Wall Street would have a little tic in their eye, as they imagine what they could do if they were allowed to, but we'd sleep easier.

What the Republicans are suggesting is just setting the stage for the next disaster, just like what Clinton officials and then Bush officials did over the last twenty years set the stage for. Everybody bought into this vision that the system could survive anything, even self-deception on a grand scale. Economies, though, cannot thrive or prosper for too long merely on castles-in-the-air speculation. They must eventually deal with the real world limitations of scarcity and supply and demand. They have to deal with a world where the unexpected, especialy the bad and unexpected can happen.

What the economic libertarians would have us do, as we deal with this economy, is turn a blind eye to a significant, if not overriding part of our economy being susceptible to self-delusion on a massive scale. They would have us keep our hands off of their black box, and simply hope that a market can somehow correct imbalances it doesn't know exists, set prices right when their brokers won't even be straight with them on their product's real value, and prevent economic stampedes when many in that dark market are actually seeking to spook the herds in order to make themselves money. We even have Goldman Sachs using proprietary technology to basically front-run trades electronically.

Or, put another, and I think fundamentally chilling way, they would like us to help them dim the lights on the economy overall, believing that more economic activity would take place in the shadow of our ignorance, not thinking whether more necessarily always means better.

If the recovery ends up slower because we choose to let in the sunshine to disinfect the markets, so be it. At least when we grow, it will not simply be wishful thinking, a figment of our economic imagination. If we are to recover, let's not recover by once again addicting ourselves to secrecy, deception and theft as a way of doing business.

Posted by Stephen Daugherty at August 22, 2010 4:57 PM
Comments
Comment #306706

It’s mostly up to the voters now, since there are no important differences between the IN-PARTY and the OUT-PARTY, whichever each may be.

Not only do neither incumbent Democrats or Republicans have any solutions, but worse.
They are too incompetent, FOR-SALE, and corrupt to ever implement any solutions.
And why should incumbent politicians work on any solutions when they are repeatedly rewarded for failure and corruption?
How much more proof does the majority of voters need?
Are there not enough citizens that are already jobless, bankrupt, homeless, and hungry?
But if it’s not bad enough now, it is not far-fetched at all that it could get worse.
If fact, it most likely will get worse.
But how severe and how long it lasts is mostly up to the majority of voters now, since all major sectors of the society are now too fiscally and morally bankrupt.
It is mostly up to the majority of voters now, since all other levels of government, commerce, institutions, and organizations are too corrupt and colluding to legally plunder the majority of citizens that work, design, create, and produce.

We don’t lack the ability to identify the problems and common-sense solutions.

Unfortunately, the federal government is where common-sense solutions go to die.

And if the majority of voters want to continue the finger-pointing, and fueling and wallowing in the circular partisan warfare, then conditions will continue to deteriorate, and the majority of voters won’t have anyone to truly blame for it, but themselves (though, many will most likely try), for failing to understand that:

  • Short-sighted selfishness = Long-term Pain and Misery
Education is a key portion of the solution.

Yet, sadly, there has been a significant, long-term decline in the quality (while increasing in cost) of U.S. Education:

  • U.S. was 3rd in the 1960s
  • U.S. fell to 5th place in the 1970s
  • U.S. fell to 14th in the 2000s,
  • U.S. fell to 18th or 19th in year 2009; source: en.wikipedia.org/wiki/Education_Index
However, the majority of voters will still receive their education, whether it is sooner than later, or later with many years of more pain and misery.

It’s not really a difficult choice, is it?
What do the majority of voters want:

  • (b) to vote wisely, for the path to real reforms and positive change, sooner than later, to avoid many years of increasing pain and misery?
  • (a) or to vote foolishly, by repeatedly rewarding failure and corruption, for the path to increasing pain and misery for many decades (or longer)?

Thomas Jefferson said that liberty and ignorance cannot coexist:

  • “If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be.” — Thomas Jefferson, 1816.

Sadly, 194 later, too many voters have forgotten that very important fact.

  • Responsibility = Power + Virtue + Education + Transparency + Accountability
  • Corruption, Pain and Misery = Power - Virtue - Education - Transparency - Accountability

At any rate, the majority of voters have the government that they elect, and re-elect, and re-elect, at least, possibly, until repeatedly rewarding failure and these abuses, and repeatedly rewarding FOR-SALE, incompetent, arrogant, and corrupt incumbent politicians in Do-Nothing Congress with 90% re-election rates finally becomes too painful (and finally provides the motivation for seeking Education as to the cause and solution for so much pain and misery).

Posted by: d.a.n at August 23, 2010 10:57 PM
Comment #306709


It is the corporate money. The Democratic Party sold its soul for it. The politicians still claim they are progressive and would prove it if it weren’t for those bad old Republicans, but the proof of their sellout is in their voting records.

Even the environmental groups are selling out, doing commercials praising the good deeds of some of the worst polluters on the planet. Is PBS next?

The money keeps talking, but it is getting harder to walk the BS.

Posted by: jlw at August 23, 2010 11:54 PM
Comment #306723

Dan-
First, let me start out by saying that this is your one post for your anti-incumbent solution and argument. It’s first, so everybody’s going to see it. That’s your offering of your first response, your idea of a solution. Beyond that, I will consider it off topic, because I want to discuss financial reform here, not incumbency or anti-incumbency in the abstract.

This is a problem that calls for specific legislation, in my opinion, and a public aware enough of the dangers to register the need for change in this respect. I would suggest you watch the video linked there. It’s very informative. You call for education, I offer some.

The problem here, as I see it, is that Democrats over the years have been intimidated and corrupted into accepting the presence of this dark market. This past year, though, Democrats passed financial reform. While the bill is not perfect, nor is it certain that everybody will enforce it to the best of their abilities, it is the strongest re-regulation of the markets in decades, and I think a much better approach to eliminating uncertainty than what the Republicans offer. The Democrats are not pure on this, and have a legacy going back to the Clinton years on this. However, Democrats in my part are firmly behind changing the rules, and changing the paradigm. The challenge will be getting politicians willing to stand for what the people will stand for, and that’s what many Democrats are hard at work doing.

Republicans, I believe, can do the same, but only if they redefine free markets in terms of free choice of the consumer, the vendor, the manufacturer or other economic agent in the context of binding rules that force full disclosure and good faith honesty in the conduct of business, and the relation of information relevant to the transactions at hand. If the freedom of the free market is simply to cheat others and defraud them, to manipulate markets by stampeding other investors, then that’s not a true free market- it’s a deathtrap for responsible, conscientious investors, the exact kind of investors a market needs for robust, sensible, growth sustaining investment.

jlw-
I get it. Many Democrats would agree. What is your suggestion for what we actually do? While it’s good to get our feelings out on these issues, it’s better to fill the political forums with something else than just complaints about how awful politicians are.

I don’t think there’s been a single period in our history either free from political corruption, or free from corrupt politicians. The question, really, is what we do in response, and in this case, how we apply pressure on these people to make sure we get what we want anyways.

An interesting sideline to this is that many of the strong Derivatives regulations came from Blanche Lincoln, a noted darling of Wall Street. She did this mainly because she was facing a difficult primary battle with the more progressive Bill Halter. I think this backs my theory that even in the face of corruption, politicians will engage their survival instincts, if they are threatened sufficiently with losing their jobs.

It’s not the fastest or most painless process in the world, but putting these people on notice, even primarying them if they fail to properly register the risk, is key and crucial for checking and balancing the special interests in Washington.

The proper response to Greed and Corruption in Washington is not apathy, it’s strategic opposition and pressure from voters. Contributors can hand you money, but people will vote their own way, regardless of how much you get.

Posted by: Stephen Daugherty at August 24, 2010 8:16 AM
Comment #306725
Stephen Daugherty wrote: d.a.n- First, let me start out by saying that this is your one post for your anti-incumbent solution and argument. It’s first, so everybody’s going to see it. That’s your offering of your first response, your idea of a solution. Beyond that, I will consider it off topic, because I want to discuss financial reform here, not incumbency or anti-incumbency in the abstract. This is a problem that calls for specific legislation, in my opinion, and a public aware enough of the dangers to register the need for change in this respect. I would suggest you watch the video linked there. It’s very informative. You call for education, I offer some.
It’s not off topic, because financial reform is not possible until the voters do their job first. Hence, the comment above:
    d.a.n wrote: It’s mostly up to the voters now, since there are no important differences between the IN-PARTY and the OUT-PARTY, whichever each may be.


Contributing Editor-
Look, you’ve been banned two or three times for hijacking discussions and taking it off on this kind of tangent, and for being insulting and deriding to your fellow commenters. I will allow you to be part of the discussion when you stay on topic, and when you stay civil, but everything else will be deleted. This is your last warning.

Posted by: d.a.n at August 24, 2010 9:29 AM
Comment #306729


Dan has the best solution, vote out the incumbents. I would go further and tell progressives and workers to boycott the elections. Now, you may say that the Republicans will get back in control. But of course that isn’t true because the corporations are in control.

What good does it do to discuss the financial situation when one of the chief architects of the financial meltdown is working for Obama? How about we throw open the financial records of Democratic politicians like the Clinton’s, the Dodds, the Franks and even the Obamas to see how much they made from the housing derivatives and the financial meltdown.

Should we discuss how much the hedge funds have contributed to the politicians, $1.9 million to Democrats and $1.2 million to Republicans, over the last year and how they managed to slide in the financial reform bill? Shall we discuss how that legislation is really just a hollow document with most of the regulations to be written at a later date with much help from the financial sectors lawyers? Can you hear those bankers and hedge funders laughing at you, at us.

The people have no choice other than to vote out incumbents and change parties every two years until one or the other party decides that giving it all to the wealthy and allowing them to make the decisions that affect us all while doubling the nations debt every 6 years is not what they were elected to do.

If this Frontline episode is the one where Clinton’s boys are up on capital hill cutting the legs out from under regulators then you know how corrupt your party is. You know that the party has been bought and that at least 90% of their reform talk is hollow rhetoric.

There is no better way to show our appreciation for Blanche Lincoln than to vote her out of office. Every politician that has held office during the last 30 years should already have been voted out of office. I get the message is just another incumbency ploy. There is only one way for corruption to get the message and only one day in which to deliver the message, election day.

Posted by: jlw at August 24, 2010 12:21 PM
Comment #306733

jlw-
If you want to square dance with contrarianism, be my guest.

Me? I want facts to guide decisions. I think a vote out the incumbent movement has one critical flaw: it cancels itself out, policy-wise. How do people know what works policy wise for people, and what doesn’t?

Unless people know such a movement exists, and unless it remains un-coopted by one side or another (how likely is that?) Politicians will always have their own narrative.

And that’s if you can make an actual dent.

I say, why the ****ing dancing? Organize on the issues. Get people to show up on the Washington Mall with signs saying Regulate Wall Street, Shine Light on the Dark Markets.

Simple. Unmistakeable. Self-consistent. And you don’t have to convince people it’s the right thing to do. Most think so anyways.

If you want to send a message, write them an e-mail. If you want to toss the bums out, find out who’s a bum and toss them out.

But don’t throw vague, sustained dissatisfaction at me and tell me that’s a solution. Start telling me about proposals you’ve heard about, or linking to some pages or articles about different issues that relate. Quit trying to sell me on political ambivalence.

Posted by: Stephen Daugherty at August 24, 2010 12:50 PM
Comment #306739

It’s funny. If one believes that corporations are in control, why not support a campaign to do away with corporations or say a bill to require that donors to political campaigns be posted in any ad campaign contemporaneously. Oh wait. Obama did promote such a bill. Which party kept it from the floor?

Perhaps we should shorten politician’s terms to a quarter. That way, just like CEO’s we can hold them accountable. Wait, that’s led to short term thinking in many companies leading to maximizing short term gains and eschewing long term goals. Maybe that isn’t the right idea at all.

Maybe if one educates enough people to see past all the BS, long term goals for the American middle class can benefit everyone. Just an idea.

Posted by: gergle at August 24, 2010 2:35 PM
Comment #306767

jlw, Thanks.

jlw wrote: d.a.n has the best solution, vote out the incumbents.
It’s actually VOIDnow.org’s recommendation too.
jlw wrote: Now, you may say that the Republicans will get back in control.
That won’t solve anything, and could make things worse.
jlw wrote: But of course that isn’t true because the corporations are in control.
True, but more accurately, it’s the owners of the corporations, and also the unions, organizations, Political Action Committees, etc., etc., etc., who all use large sums of money to influence and control elections. A whopping 0.3% 83% of all federal campaign donations of $200 or more come from a very tiny 0.3% of the weatlhiest voters of all 200 million eligible voters.
jlw wrote: What good does it do to discuss the financial situation when one of the chief architects of the financial meltdown is working for Obama?
Obama can’t change it. Not any time soon. He could try if he wanted. But the problem is so huge, only the majority of voters may be able to change it.
jlw wrote: How about we throw open the financial records of Democratic politicians like the Clinton’s, the Dodds, the Franks and even the Obamas to see how much they made from the housing derivatives and the financial meltdown.
Yes, that would be interesting, but it won’t happen.
jlw wrote: Should we discuss how much the hedge funds have contributed to the politicians, $1.9 million to Democrats and $1.2 million to Republicans, over the last year and how they managed to slide in the financial reform bill? Shall we discuss how that legislation is really just a hollow document with most of the regulations to be written at a later date with much help from the financial sectors lawyers? Can you hear those bankers and hedge funders laughing at you, at us.
Good point. And it shows how thoroughly saturated the problem is all throughout the fabric of society.
jlw wrote: The people have no choice other than to vote out incumbents and change parties every two years until one or the other party decides that giving it all to the wealthy and allowing them to make the decisions that affect us all while doubling the nations debt every 6 years is not what they were elected to do.
Careful, someone may start deleting your comments too.
jlw wrote: If this Frontline episode is the one where Clinton’s boys are up on capital hill cutting the legs out from under regulators then you know how corrupt your party is. You know that the party has been bought and that at least 90% of their reform talk is hollow rhetoric.
If it wasn’t “hollow rhetoric”, why have things steadily deteriorated for 30+ years?
jlw wrote: There is no better way to show our appreciation for Blanche Lincoln than to vote her out of office. Every politician that has held office during the last 30 years should already have been voted out of office. I get the message is just another incumbency ploy. There is only one way for corruption to get the message and only one day in which to deliver the message, election day.
Thank you. I agree 100% , and hopefully, a growing number of voters agree too.

At any rate, the majority of voters have the government that they elect, and re-elect, and re-elect, at least, possibly, until repeatedly rewarding failure, and repeatedly rewarding FOR-SALE, incompetent, arrogant, greedy, and corrupt incumbent politicians in Do-Nothing Congress with 85%-to-90% re-election rates finally becomes too painful.

Posted by: d.a.n at August 24, 2010 9:56 PM
Comment #306769

“Imagine a market where you could defraud your investors, and get away with it. Imagine a market the Government couldn’t investigate, that no outsider could peer into. Imagine that the banks would do everything in their power to conceal what was going on from you, yet when the time came, and one company went under, the obligations to and from that one failed company could trigger the failure of the entire system.”

We don’t have to imagine, we have Social Security, Fannie Mae and Freddy Mac. If a private interprise worked like these three, someone would have gone to prison long ago…

Posted by: Beretta9 at August 24, 2010 10:21 PM
Comment #306783

jlw said: “I would go further and tell progressives and workers to boycott the elections.”

That is anti-thetical to voting out incumbents to achieve better government. They need to vote, and vote out incumbents of both parties in order to force the parties and their candidates to win back those anti-incumbent voters through better governance and some serious political reforms. If they boycott the election, that literally hand the election to the parties without leverage to force them to change the way they govern.

Posted by: David R. Remer at August 25, 2010 3:57 AM
Comment #306785

d.a.n. said:

jlw wrote: Now, you may say that the Republicans will get back in control.

That won’t solve anything, and could make things worse.

Which was entirely my point.

Posted by: gergle at August 25, 2010 5:29 AM
Comment #306788

dan-
You’re simply posting the same things you always post. It’s not that germane to the discussion.

You’re also attacking the messenger. I’m not attacking jlw on personally. I’m saying I don’t think much of his plan. You, on the other hand, are literally calling me names. And saying such gems as “funny how some people don’t practice what they preach.”

You say that, but are unafraid to imply the worst about your debate opponent.

I’m fairly tolerant of discussion growing out naturally towards other issues, but you seem intent on making every issue about incumbency, and I don’t think a look back through your comments will prove that wrong.

I don’t want you practicing this kind of trollery on my column. I don’t want this discussion, where I’m willing to admit to the flaws of my party’s previous policy, and urge people to push a change in such policies, to get drowned out by you posting the same stuff again and again, and berating anybody who wants to discuss the issue itself.

Posted by: Stephen Daugherty at August 25, 2010 8:53 AM
Comment #306796

“Made in America ” —- what’s that ??? You mean “Made in China”

● Free trade destroys the following crucial elements of our economy:
1 Destroys jobs

2 Destroys consumer spending and the Middle Class that our economy is built on.

3 Is destroying America being the #1 manufacterer and economy in the world

● Other effects of Free Trade:

1 Promotes almost literally slave labor in China

2 Is really supporting a communist nation

3 Is giving the Nation of China an increasing dominance in the world

economy while destroying ours.

————————————————————————————————————————


Free trade and our trade deficit (primarily with China) is slowly killing American manufacturing, American jobs, and the overall American economy.

One of the biggest results of “Free” Trade has been the shift of manufacturing and thus jobs to other countries – primarily China. This in turn is massively destroying our middle (working) class and thus decreases consumer spending. Less people working means less people to spend money on durable goods or anything for that matter.

You may as well call Wal-Mart and the other “big box” stores like them ” China –Mart ” considering that so many of the items sold there are made in China.

Other facets of free trade are that by buying Chineese goods we are literally supporting a communist government.

________________________________________________________________________


PEOPLE WAKE UP BEFORE IT’S TOO LATE !!!!!!!!!!


WHAT ARE WE GOING TO WAIT FOR ? —- OUR UN-EMPLOYMENT RATE TO RISE TO 30 % LIKE IT WAS IN THE GREAT DEPRESSION ????????

————————————————————————————————————————

The basic solution to this problem is to put tariffs on Chineese goods.

————————————————————————————————————————

Let’s bring back MADE IN AMERICA !!!!!!!!!!!!!!!!!!!


Posted by: American at August 25, 2010 1:06 PM
Comment #306798

American-
Actually, Unemployment peaked at 24.9%. Make no mistake, that was terrible.

And protectionism? Didn’t help a damn thing. Hurt the economy, in fact.

The better approach is to do research, development, and start manufacturing new kinds of products in this country.

Posted by: Stephen Daugherty at August 25, 2010 1:25 PM
Comment #306811


“If they boycott the election, that literally hand the election to the parties without leverage to force them to change the way they govern”.

As if that isn’t exactly what is happening now. Obama and the Democrats have a majority because slightly more than 25% of the eligible voters elected them.

In this upcoming election, considerably fewer voters will turn out than in 2008.

Some may argue that things would be a lot different if those disenfranchised voters were to participate, but I don’t think that is true as long as the choices are limited to two, who’s production seems to be limited to a very narrow range of actions that are primarily benefiting the multinational corporations and the wealthy.

If they can manipulate 55% of the eligible voters, they can manipulate 85% of the eligible voters.


Stephen, at least another 25% of the workers had reduced hours or reduced wages during the Great Depression. We have a very similar situation today. It is not as bad as then, yet.

“The better approach is to do research, development, and start manufacturing new kinds of products in America”.

Propaganda put forth by corporations and the Democratic Party. Reminds me of the same BS lies Clinton was spewing when he signed NAFTA. Millions of high tech jobs will replace the jobs lost.

Until the middle class is broken, manufacturers have no incentive to manufacture anything in America that can be manufactured in low wage countries or countries with better educated workers. That is the reality of globalization and neither political party is doing much of anything to alter that reality in any measurable way.

They brag about creating a mandatory health care system that will increase the amount of health care dollars going to profiteers rather than medical treatments.

They brag about financial reform that does virtually nothing to insure that what happened with the housing bubble (89% inflation in housing in less than ten years) won’t happen again with another bubble.

They brag about creating jobs in a market that is bleeding jobs.

And, when they finally get the economy back up and running, virtually all will be forgiven by the voters.

As of now, the American consumers can no longer afford to support our economy and China’s so we are supporting China’s economy at Big Box Mart and third world wage slaves at the higher end retail outlets.

American corporations and consumers have made China’s economy the second largest in the world and now we are financing their large military buildup. I would not doubt that our military industrial complex is aiding the Chinese governments military industrial complex in this effort and making great profits in the process.

Posted by: jlw at August 25, 2010 3:57 PM
Comment #306813

jlw-
Look, I hear many of the same complaints from my side. The difference is, I see them offer some policies to solve the problem, and, under Obama, we see quite a few of those policies actually become reality.

Look at the recent reforms: they put derivatives on an exchange, have them moved through a clearinghouse. These are part of what Brooksley Born suggested in her memor.

Now, I can understand preferring to support stronger reformers in lieu of weaker one, but stubborn supporters of the status quo in lieu of weaker supporters? I just don’t have the same faith that you might have that there will be some kind of rebound, or that we really have time to go back to the folks who were running it before.

In my mind, the way forward is a successive series of improved candidates. Each moves the ball forward politically. If we take your suggestion on this election, what do we get? We get the free market fundamentalists back, and they’ll just try to undo everything. It makes no sense to contribute to the election of folks who make things worse than the other guy.

Meanwhile, what really is the point of making this all about the parties or just elections? That’s inside baseball, greek to most people. They hear about that, and their eyes glaze over. We don’t need to be focusing on such meta BS because most people aren’t saturated enough in the political environment to be thinking about it in such meta terms. Most people are following the results on policy, and it’s policy we ought to be pushing. All this mucking about in meta just ensures that people will be paying attention to the dance of those who are ****ing them over, rather than actually dealing with the political issues that are directly related to that screwing.

When officials get the picture that people will not tolerate that screwing on that issue anymore, when people are marching on the issue, you will see a response. Until that bright line on the policy is made clear, the politicians will think that people are only paying attention to the horse race and everything like that. People pay attention to the trivia because the policy is often a blank, grey wall of mind-numbing information.

What disappoints me here so far is that this discussion seems to be almost completely unrelated to the issue. I’d like to see people posting articles on OTC derivatives, things they’ve found. I shut the door hard on dan for a reason: I wanted the discussion to explore this important topic, rather than become another useless incumbency/anti-incumbency exchange.

You know what my opinion on that it is? It doesn’t ****ing matter as a first-order piece of business. If an incumbent supports reform we need, we should support the incumbent. If the challenger supports stopping the reform dead in his tracks, he’s a dumb choice. Want to send a message? Write an e-mail to your Congresscritter. Everybody’s got an e-mail form of some kind. Want to determine policy? Look at what the candidate does and does not support, and make your decision. A random, meaningless campaign of anti-incumbency is just going to fizzle itself out, because as nerve-racking as waiting for a policy to move its way through Washington is, you will never know for sure if politicians have gotten the message, or if they’re just exploiting short-term dissatisfaction with the other side.

In the meantime, here’s the bloody ****ing stupid message that voters seem to be about to send: Oh, that Obama’s reforms were too much for us, so we’re just going to deadlock the government to put him back in his place.

That, at least, is how Republicans will interpret it. And believe me, they’ll be that much harder to get rid of, after the fact, and they’ll continue to make things worse because they have no bloody perspective on what they’re actually doing.

We should be breaking our habit of letting people like these win elections, rather than hoping that people like these will have a change of heart, somehow. Hell, I think Obama should give the people he’s got in charge a few more months or maybe a year to make progress, and then he’s going to look elsewhere.

But really: will Obama find it easier or tougher to hire more daring choices with fewer Democrats in there? Food for thought.

Posted by: Stephen Daugherty at August 25, 2010 5:11 PM
Comment #306857

All this discussion about anti-incumbency, deficits, SS, Medicare, etc. ignores the elephant in the room: a dysfunctional economy. An economy that has become alarmingly dependent upon middle class debt expansion supported by bubble asset growth and has exported its manufacturing and production base to China and other third world countries. The widening trade deficit, increasing wealth disparity and chronic jobless growth over the past decade should have sounded alarm bells.

As jiw has repeatedly pointed out, neither party appears prepared to seriously address the structural weaknesses in our economy. Whether they have been captured by corporate interests or are simply in denial may be debatable. However, it seems to me that unless the economic engine of the US is repaired, there can be no solutions to private and public sector unsustainable debt levels.

Posted by: Rich at August 26, 2010 9:29 AM
Comment #306861

Dan-
Your first post, which contains nearly all of the points you repeat in your subsequent post exists, and is part of the discussion. I lament that, to a certain extent, because people started discussing BS partisan politics, which I did not intend to be the focus of our discussion, rather than discussing practical policy and its implementation.

Perhaps in the future, I should just remove your posts in the expectation that you will not allow yourself to be moderated for either your unwillingness to stay on topic or your unwillingness to be civil. I am not going to allow you the privilege of hijacking every thread you feel like taking over.

If you are thinking of just trying to post and repost things, understand this: however long it takes you to write this, it takes no more than a minute or two for me to locate the administrative page, find your comment, and move it out of the published list of comments. It’s not that much more than clicking one checkbox and pressing one button.

If I were actually going through the effort to respond to you, as I once did, you might be able to make me have a bad day. As it is, I can take your posts, non-compliant with Watchblog’s policies, and remove them immediately.

You are evidently a tireless researcher and a well-informed person. You could doubtlessly discuss the topic itself and offer or bring other articles to the page. But if all you’re going to do is essentially use this as a bulletin board for your same old generic boilerplate agenda item, I’m not going to tolerate that any longer. On my posts, at least, I’m going to do my job as Contributing Editor, and moderate the comments. I will let people have their say, but not the whole page.

This is the last I’m going to say on this topic. In fact, if I have to explain this in another future column, I’m simply going to link to this commment, and that’s all the explanation you’re going to get.

If you want to be a constructive part of this conversation, you’re welcome to post. If you want to abuse this forum, I will put spam comments where spam comments go on this site.

Posted by: Stephen Daugherty at August 26, 2010 11:57 AM
Comment #306876

Rich-
That’s pretty much correct, fiscally speaking. Governments are not economic engines unto themselves, they depend upon economies for their fiscal strength. Given an equal amount of spending, A government that taxes too much strangles its economy and not enough devalues and debases its currency through debt.

The use of OTC Derivatives was critical in what you could call the monstrous reveal of our economic weakness. They allowed companies that extended credit to extend that credit to those who would never pay back, yet still make a profit by essentially selling off that debt as a security and pocketing the money.

This worked as long as people were certain that those derived securities had a defineable value.

Unfortunately, the opacity of the Dark OTC Derivative Market has made it difficult to impossible to establish value on the assets in question. That uncertainty is toxic to the bank’s ability to sort out the bad from the good assets, thus making those assets toxic.

I bring up the differences in the parties to ask a critical question: should we only have one alternative here? Should not both parties be competing to solve this problem, rather than having one that is making admittedly mediocre, often compromised efforts to put forward a solution?

I think the critical thing is that people on all sides not come into this issue with a naive understanding of what’s going on, of what the conceptual problems here are. If you’re like Greenspan and his acolytes here, and you think even fraud should be off limits to government regulation, you’re never going to favor reform.

But I think both Democrats and Republicans, once they become familiar enough with the subject, can be brought to understand this subject.

Most importantly, I think good reform will not come through until people are not only angry, but know to be angry, know that the situation as it is, is intolerable to all but the lucky few who run the market.

Posted by: Stephen Daugherty at August 26, 2010 4:05 PM
Comment #306893

Stephen,

“But I think both Democrats and Republicans, once they become familiar enough with the subject, can be brought to understand this subject.”

Ignorance of the fiscal and economic problems facing this nation are the achilles heel of effective reform. Everbody, at least, had an opinion on the health care reform proposals. Despite the almost catastrophic collapse of the financial system, nobody seemed to even know what the financial reform bills contained let alone have an opinion. Conservatives were vaguely against it. Liberals were vaguely for it. Reflexive reactions only.


Posted by: Rich at August 26, 2010 7:26 PM
Comment #307273
Contributing Editor- [CENSORSHIP MANAGER] Look, you’ve been banned two or three times for hijacking discussions and taking it off on this kind of tangent, and for being insulting and deriding to your fellow commenters. I will allow you to be part of the discussion when you stay on topic, and when you stay civil, but everything else will be deleted. This is your last warning.
Stephen Daugherty, Thank you for deleting my comments.

It simply proves a valuable point.

There were many things in my posts related to financial and government reforms, and solutions (one of the subjects of your article), but perhaps not the reforms you want to hear?

The point that I and several people were trying to make is the use of vast amounts of money to influence elections.
So, I’ll repeat it here:

of all federal campaign donations of $200 or more. Therefore, 99.7% of the 200 million eligible voters are vastly out-spent by a tiny fraction of the wealthiest voters who abuse vast wealth to control and influence government.
The fact is, government is FOR-SALE, and when the consequences of that fact become too painful, then there may possibly be real financial reforms, and other reforms too.

Stephen Daugherty wrote: jlw- If you want to square dance with contrarianism, be my guest.
Is that being civil to other commenters?

Again, funny how some people don’t practice what they preach, eh?

Stephen Daugherty wrote: I say, why the ****ing dancing? Organize on the issues. Get people to show up on the Washington Mall with signs saying Regulate Wall Street, Shine Light on the Dark Markets.
That’s Congress’ job. But they aren’t doing it. So why repeatedly reward them with re-election?
Stephen Daugherty wrote: If you want to toss the bums out, find out who’s a bum and toss them out.
It’s most likely most (if not all) of them.

After all, who can name 10, 20, 50, 100, or even 268 (half of 535) in Congress that aren’t FOR-SALE, incompetent, and/or corrupt?

Stephen Daugherty wrote: But don’t throw vague, sustained dissatisfaction at me and tell me that’s a solution.
Heil !
Stephen Daugherty wrote: Start telling me about proposals you’ve heard about, or linking to some pages or articles about different issues that relate. Quit trying to sell me on political ambivalence.
Many have been. Perhaps it’s simply not what some people want to hear?

So, now you threaten to delete more comments?

Go ahead, because in doing so, it simply proves the truth.

Stephen Daugherty wrote: d.a.n- You’re simply posting the same things you always post. It’s not that germane to the discussion.
Nonsense. Money in politics, campaign finance reform, and the influence of money in elections is very “germane”.

And how is the constant fueling and wallowing in the blind, circular partisan warfare and endlessing bashing the OTHER party, better?

Stephen Daugherty wrote: You’re also attacking the messenger.
False.
Stephen Daugherty wrote: I’m not attacking jlw on personally.
Is this the level of civility you speak of?
Stephen Daugherty wrote: jlw- If you want to square dance with contrarianism, be my guest.
Is that being civil to jlw and other commenters?

And is this what you consider civil?
What some people fail to recognize is that what bothers them most is merely “quotes” of their very own comments, which are most revealing.

Stephen Daugherty wrote: You, on the other hand, are literally calling me names.
False again.

Please show us exactly where I called you a name.
And who is now “off topic”?

Stephen Daugherty wrote: And saying such gems as “funny how some people don’t practice what they preach.”
So what?

How is that name calling?
Is that all the evidence?
Is that it?
The big question is, is it true?

Stephen Daugherty wrote: You say that, but are unafraid to imply the worst about your debate opponent.
False.

What some people fail to realize is that what upsets them most is(a) the truth, and (b)what their very own numerous “quoted” comments reveal.
So, calling other people names is not necessary.
Only a fool can make a fool of themself.
If people are offended by their own comments, then perhaps they should more carefully consider their own comments more before they submit them for debate?

Stephen Daugherty wrote: I’m fairly tolerant of discussion growing out naturally towards other issues, … .
Really?

How is that when comments about campaign finance reform and the corrupting influence of huge amounts of money in politics were deleted?

Stephen Daugherty wrote: I’m fairly tolerant of discussion growing out naturally towards other issues, but you seem intent on making every issue about incumbency, and I don’t think a look back through your comments will prove that wrong.
And even if that were true (which it isn’t), how is that worse than the constant fueling and wallowing in the blind, circular partisan warfare and endlessing bashing the OTHER party?
Stephen Daugherty wrote: I don’t want you practicing this kind of trollery on my column. I don’t want this discussion, where I’m willing to admit to the flaws of my party’s previous policy, and urge people to push a change in such policies, to get drowned out by you posting the same stuff again and again, and berating anybody who wants to discuss the issue itself.
Perhaps the problem is that some people simply don’t want to hear about how huge amounts of money in elections and government are corrupting it, despite the supposed interest in financial reforms.

How about CAMPAIGN FINANCE REFORM ?

At any rate, the majority of voters have the government that they elect, and re-elect, and re-elect, at least, possibly, until repeatedly rewarding failure, and repeatedly rewarding FOR-SALE, incompetent, arrogant, greedy, and corrupt incumbent politicians in Do-Nothing Congress with 85%-to-90% re-election rates finally becomes too painful.

Posted by: d.a.n at August 30, 2010 7:55 PM
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