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Larry Summers: The Future of Global Finance

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Soylent Avatar
Soylent
Posted: 04.03.10, 05:07 AM
This crisis, much like the 1930's, was a government failure. It was created by not only allowing, but aiding and abetting fraud. Instead of going after these criminals like in the S&L crisis they changed the law to legalize fraudulent accounting; mark-to-market accounting rules were replaced with mark-to-myth. The major banks are still insolvent, all they've done over the last two years is dig themselves into a deeper hole; they are not too big to fail, they're too big to bail out without destroying the United states government. Blaming fraud on greed is like blaiming airplane crashes on gravity. When the government is not involved greed is naturally balanced by fear of loss. Regulations must always come in pairs; if you're going to remove fear of loss you must also remove greed. E.g. without federal deposit insurance the depositors care about the safety of the bank they are saving in; they don't simply go where the highest interest rate is. If the bank starts making investments that its depositors think are risky they will withdraw their savings and in a worst case scenario there might even be a run forcing the institution to close if insolvent(fractional reserve banks are _not_ inherently insolvent like some claim, because _properly_ made loans can always be sold into the market to recoup enough money to pay back all depositors). If you have something like the FDIC you MUST have the rest of the Glass-Steagal act; if the government removes the market mechanism for regulating greed it must regulate the greed itself. Without the government a financial instution contemplating engaging in fraud would would face the specter of the free market way of dealing with fraud; having the responsible employees recieve a pitch-fork up their arse by an angry mob. The government steps in and says it will deal with fraud on behalf of the populace because mobs are messy and too indescriminate. So far so good; but if the government were ever to allow fraud to go unpunished the situation is now much worse because there is nothing keeping the fraud from growing well past the point where it would have been stopped with pitch forks and torches absent government intervention. I remind you that the FBI said in 2004 that there was an epidemic of mortgage fraud that would become the next S&L crisis if not curtailed; then they proceeded to do exactly nothing about it. The US economy is now in a situation similar to severe radiation poisoning. There have been a few cases where people have recieved 10-50 Sieverts of radiation, e.g. criticality accidents among bomb designers; what happens is that you kill all the rapidly dividing cells, the intestinal wall and the bone marrow in particular. The initial sickness is followed by a period of apparent recovery lasting days before entering the terminal phase during which no amount of blood transfusions or bone marrow transplants can save their life. All the temporary stimulus will not help the US economy; it will only temporarily prop up the malinvestments that need to fail. The US economy is a walking ghost, it is not possible to avoid a very severe depression, it is only possible to make it worse(compare the depression of 1920-22 vs. the great depression).
hatch38 Avatar
hatch38
Posted: 01.17.10, 06:03 AM
Good lord! What a bunch of goobeldy goop. The US Dollar is doomed. Please continue to make preparations for collapse. I honestly believe he doesn’t have a clue regarding the governments own information. Please read the first two facts of the US Census press release, did he miss that? http://www.census.gov/Press-Release/...ns/006105.html The 78 million aging and retiring baby boomers are the economy!
scott711 Avatar
scott711
Posted: 01.03.10, 11:40 AM
Larry Summers, One of the masters of creating bubbles within our economy. They have been using our tax dollars to put billions into the market thus driving up again the market so that these cartels (fed bankers) can continue to pay each other obscene amounts of money. If Obama does not start listing to other economist on how to build our economy his presidency will become scene as a miserable failure. We have to stop saving millionaires and start saving the middle class. After all we are the ones who make this country run.
Antiks Avatar
Antiks
Posted: 12.04.09, 05:54 AM
More Chicago school idiots running the circus. When will this nightmare end?
PwlM Avatar
PwlM
Posted: 10.03.09, 04:07 AM
Summers is a swine. He was instrumental in creating this mess in the first place under Clinton. Now "Summers ex machina" will save the day. Give me a F-ing brake...
phiscal Avatar
phiscal
Posted: 10.02.09, 03:43 PM
Summers is delivering a pretty conventional message. For possessing such a lively mind, he seems restrained in what he can say by his office. The financial reform he's selling strikes me as a bit timid, or perhaps he just did not want to get into specifics. To Big To Fail needs to be addressed more completely...find a way to pull the taxpayers rug out from under the industry. We should be dropping FDIC insurance, too. A consumer finance regulator makes some small sense. It'd better to require plain language contracts, then free the schools to teach better math. The stupidity wasn't all at the lender's level. As a mainstream economist, he has a healthy appreciation for what finance has brought us - efficient allocations of capital and higher standards of living. He and Obama likely won't go too far wrong. But, given his job, he cannot yet talk about the elephant in the room - the vastly underfunded retirement of the baby boomers. While we can probably dig out from a speculative crash, it seems highly likely to me that broke boomers will crush US living standards over the next generation.
triforcelink Avatar
triforcelink
Posted: 10.02.09, 02:28 PM
im using firefox for vista and it works fine
Murtaza Avatar
Murtaza
Posted: 10.02.09, 11:49 AM
The videos don't play at all using IE 8 and Adobe Flash 9 or 10! bbethany7, what OS/brower are u using to play this video?
bbethany7 Avatar
bbethany7
Posted: 10.02.09, 04:33 AM
Summers, a convenient tool of The Fed, i.e., a consortium of private bankers who have been swindling the American tax payer since 1913, and part of the close-knit cabal directing Obama's economic policies, can't be believed. Obama is being held hostage by these smart thugs, and we'll pay for it until, if ever, he wakes up.
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