Friday, March 5, 2010

Smart People Should Be Able To Find A Better Way of Doing Business

I read Financial Reform Endgame by Paul Krugman the other day. The article appears in the NYT on March 1, 2010. I agree with his comments, and I would like to add my own opinions on this subject.

The men that lead the largest corporations on Wall Street, the bankers, need to realize before it is too late that change and reform are needed. Why should they come to this realization? My answer is simple: before civil behavior breaks down and violence takes over, it is on their heads that the future of Wall Street rests. Politicians will not do what is right without a clear signal from Wall Street's leaders. They need to speak up for what is right, not just for their own self interest, but for the good of the country as well.

The fraud and shell games have to stop, because if they don't, I think violence may raise its ugly head. The leaders of the Banking community can not live on the 30TH floor forever. They have to at some point come down and realize what life is like on the street level. Reform and regulation are necessary, and in the long run will be cheaper for the country. These financial panics and bailouts are not free. They put our economy under unnecessary pressures. Smart people should be able to find a better way of doing business.

Stay tuned.


Butch said...

moneythoughts, I too would like to make a comment by posting a couple of quotable articles. Sorry about the length. The last one mentions Glass-Steagall.

The following is from a newsletter Money and Markets.

"With Ben Bernanke at the helm of the world's most important central bank, a designated inflationist is accountable for the world's most important reserve currency.

Inflationary periods are highly unjust. They undermine the ethics of hard work and thrift. They destroy solidarity, lead to widespread hardship and often to social unrest.

Internal Sponsorship
Debt crisis speeding this way!

The sovereign debt crisis is speeding towards us like a run-away freight train! Massive debt and out-of-control government spending are raising fears of a British debt default! Just recently, the British government shocked the world with the revelation that it suffered an unprecedented gusher of red ink in its January federal budget.

Inflation Is the Result
of Deliberate Policies

Inflationary periods share three major points:

They have taken place under fiat money.

They are caused by huge public deficits, which are largely financed by money creation.

They are manmade, always the result of deliberate political decisions.
So where do we stand now?

Well, the first point above has been fulfilled on a global basis since the end of Bretton Woods. And point two is increasingly becoming the political answer to the burst housing bubble.

On February 12, IMF economists updated their inflation recommendation.
And now the International Monetary Fund (IMF) comes on the scene: In Rethinking Macroeconomic Policy, IMF economists recommend that the world central banks double their official inflation target from 2 percent to 4 percent.

Hence, point number three has arrived.

Plus, we have ...

Ben Bernanke ...
a Dedicated Inflationist

In fact, here's what he had to say during a famous speech on November 21, 2002:

"But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost."

By speaking these characteristic words, the Federal Reserve chairman commended himself for his job as the most important monetary bureaucrat: Promising politicians to always print his way out of any predicament or crisis.

And that's exactly what he has done during the past years. And that's exactly what the IMF is now recommending.

So does this mean inflation is no longer a bad thing? No, definitely not.

Inflationary policies are as bad and devastating as they've always been! But now they seem presentable. The big problem is, neither Bernanke nor the IMF bureaucrats seem to remember how difficult and painful it is to get the inflation genie back into the bottle once it has been let out."

On another note, there was a recent comment in True/Slant on one of Matt Taibi's Goldman Sach's articles that I found interesting. This on mentions how important the Glass-Steagal Act is.

" March 2, 2010 (LPAC)—"Brazil is their weak point," Lyndon LaRouche said today, referring to the Inter-Alpha Group, the Rothschild-run banking syndicate at the core of the British Empire's predatory monetary system. "That's what they're hanging by, and whatever they're hanging by, is what will hang them." As the Euro collapses along with the global systemic economic system we must know that only a global community of sovereign nation-states co-operating in regulation by Glass-Steagal Act standards will hold up because of it's solid foundation in physical economy not bogus monetarism that trades in values arbitrarily assigned by such as Rothchild. "

winslow said...

I don't think the leading bankers will change....they are in control and are winning and will not voluntarily give up their position....after all, isn't this how capitalism works. I've always believed that a capitalist must pounce on someone else. We need another term (by the way...I hate terms) to use when everyone can work together for the common good AND EVERYONE HELPS each other to succeed. We need a new social structure. We've always believed the U.S. was the best. This is no longer evident. Greed has become the American way from the CEO's and politicians down to the crime in the street.