There is a lot of talk about the fact that unemployment in the United States is now above ten percent. Yes, this should be a concern of the Federal Government, but it should also open the Obama administration's eyes to why this is the case. I am sure that every flavor of economist has his or her opinion and solution, so, why not let me add my opinion to the pile?
I start with money, and as I have written several times before, money in the 21st century in the USA is credit. Credit requires confidence. In fact, in answering a comment last week, I said, "confidence is the currency of finance." Without confidence that people are going to be repaid, people will not lend. If you were in a card game like poker, you would not bet your money on a hand if you thought that when you laid your hand down the picture cards that you thought you held were now 2s and 3s. How long would you continue to play under those conditions? The credit rating agencies and system is suspect and because of this, credit is not moving into the hands of borrowers. The credit rating agencies permitted the bubble in the housing market and until the issue of confidence in credit ratings is corrected, the economy will continue to be slow in its recovery.
Talking about poker leads me to my next point, the culture of Wall Street and why "too big to fail" needs to be dealt with effectively. There is a small book I would like to recommend to those readers that would like to get a feel for what the people on Wall Street are like. This book probably did not make Oprah's Book Club, but, nevertheless, I think it is a good book to read. I read Liar's Poker by Michael Lewis in 1989 when the book was first published. For me, the book was shall we say, right on the money. I think the members of the Obama administration need to read this book and then kick Summers and Geithner out of the party. These two guys are part of the problem because they are not able to see that the Wall Street culture of "my balls are bigger than yours" has to end, or at least be regulated.
If anyone is not familiar with the game of liar's poker that is played with dollar bills, you can learn about it on-line at Wikipedia.
The title again of the book about Wall Street and its culture is: Liar's Poker: Rising Through The Wreckage On Wall Street by Michael Lewis, 1989. The book is available in paperback on-line used for a couple of bucks, and it is worth every cent if you are interested in the culture and people that brought us to where we are today in our financial crisis.
Stay tuned.
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2 comments:
Is there no one in Obama's advisory group who knows and understands the things you do?
I am so far under their radar that I would have to look up to see sea level. Besides, there are any number of people in Washington, D.C. that know about the things I write about, and they have better connections than I do. (I have no connections.)
This stuff is not rocket surgery. You and I and lots of people know this. The hard part is the politics and the money behind the Lobbyists.
If I thought I was the only person that knew the answers to our economic problems, I would go the Washington,D.C. and tell a few people in Congress what I thought needed to be done. But, many in Congress know what needs to be done, but they are on the "take". Check out how much money Senator Chuck Schumer get from Wall Street.
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