Interest rates are at zero and cannot go any lower. The Federal Reserve has stopped buying US Treasuries and is phasing out purchases of mortgage backed securities. Bernanke has essentially announced that he has done his part and will now wait and see what the results are.
The stimulus money has been allocated out, is being spent and now will taper off for the next couple of years. Obama is calling for governmental agencies to cut their budgets 5 percent and is considering using repaid TARP funds to reduce the deficit.
In my opinion, we are setting ourselves up for a Black Swan Event. My reasoning is as follows.
All of the actions taken to date (ZIRP, QE, fiscal) were insufficient to establish sustained economic growth against the ongoing headwinds of credit contraction.
The measures to date will bring on a temporary spurt of economic activity that will disguise the fact that the broad economy has continued to deteriorate. Thus, the downward path will not become apparent to policy makers until after the temporary growth spurt has played out.
By the time the continued downward trend of the economy is confirmed and acted upon it will be "too late". The economy by then will have "committed itself" to a strong secondary recession.
It will be much harder to engage in additional stimulus measures at that time because there will be a greater global loss of confidence in the US economy and in the ability of our policy makers to take the appropriate steps to extract the economy from the decline.
Further, the declining economy means federal deficit projections will be greater than what is projected today even before a new round of stimulus is contemplated. Even QE may be difficult to undertake if the dollar has weakened significantly in the interim.
In other words, we might not have stimulated the economy enough in the first go around to create sustained growth. If so,embarking on a "wait and see" pause, while perhaps a safe bet politically for Bernanke and the Federal Reserve, might be the worst course of action to take for the long term health of the economy.
I believe we saw this scenario play out last year. You recall the $800 stimulus checks in May - July provided additional discretionary income which encouraged consumption & offset higher gas prices during the summer. However, while this economic activity was being generated, beneath the surface so to speak the housing and financial markets were disintegrating.
Today may not be much different. While inventory restocking and temporary housing and auto measures have generated a bit of economic activity, elsewhere the economy continues on a downward trajectory. Housing starts, CRE, mfg, existing & new home sales, layoffs, small business closures, state & local govt budget deficits, bankruptcies, foreclosures, credit contraction etc. are all eating away at the foundations of the economy like termites.
It would be much better to risk inflation that can be mopped up later after economic growth has been sustained. To think we will go "Weimar" with our structural unemployment and surplus capacity seems unrealistic.
Thursday, November 19, 2009
Tuesday, November 17, 2009
What Hit Us?
I am having serious doubts about our style of economy and for that matter our government. It results in extreme concentrations of wealth, income and power that ultimately leads to its own collapse. It happened in 1929 and it is happening today. But this time we will not have a world war to devastate everyone else so our economy can recover on top.
No job growth at all over the last 20 years. Declining real wages. The middle class was living off of credit that now is gone. Our government is broke. Take away all of the props and our baseline economy is probably only 80% of its former self. No one has any money with which to buy anything. I find it quite perverse that the limousine liberal elite class is practicing trickle down economics on a personal level. Maybe employment will perk up in the Hamptons.
Our future does not look bright. The concentrators of wealth now control both political parties. Greed is pervasive. Stimulus dollars are handed out in a crony fashion that would have made the first Mayor Daley proud. Al Gore is on his way to billionaire status because he invests in a company and, eureka, it gets federal grant funding. We throw away our seed corn. We should be using every available resource to become a more productive and competitive economy, but instead we build up deficit-funded government programs and create deficit-funded bureaucratic jobs.
We are on course to becoming a second rate nation. Our educational system is tragic. Our labor force is coddled and unaccustomed to hard work. You cannot find an employ under the age of 30 who is self motivated, capable of independent thought or who would dedicate themselves first to work, second to play. Our financial markets are bona fide zombies who cannot loan and cannot be trusted. Our natural resource base is stifled by pollyannas who think we can advance our economy with a windmill in the backyard and a solar cell on the rooftop. Our business regulatory system is such that it is hopeless to even consider building a new factory without years of environmental studies, community impact statements, litigation threats. Our nation and our economy simply are becoming increasingly corrupt, clogged and dysfunctional.
I have read much about China, their culture, values, motivations. My conclusion is that they are going to win. They will be the next superpower. When they decide the time is right, they will revalue their currency, display their true economic might and we will not know what hit us.
The Least They Can Do
The 6 largest (Too Big to Fail) Investment Banks have set aside $114 billion in the first 9 months and are on track to award a total of more than $140 billion this year in employee bonuses.
All of these banks have and are continuing to receive subsidies from the government and the taxpayer. Their actions already have cost the average American dearly. Far worse will be the future costs. Costs that will seep through a variety of channels. Higher bank fees and interest charges, higher income taxes, a devalued dollar, higher food and energy costs and greater inflation.
These circumstances beg the following questions:
How much would banks have set aside for bonuses if they were required to use mark to market accounting rule and as a result revealed their true losses?
In other words, how much of what is going to be paid out in bonuses would have been and should be retained as capital to protect against known – but undisclosed – losses?
Who will be put at risk if there is a double dip recession and any of the TBTF banks needs but is unable to raise additional capital? (rhetorical question)
The TBTF banks need to restrict this year's employee bonuses to stock options not redeemable for 3 or 4 years. The $140 billion in cash saved should be used either to cover undisclosed losses or to expand credit and grow the economy. All of the TBTF banks need to agree (or be required) to use similar stock option approaches to lessen employee defections. They need to do this for the good of the Country and for the goodwill of their industry.
Cash bonuses at this point in the fragile recovery of our economy are not wise. They are too risky for the banks and too risky for the economy. Preserving this capital reduces any future need to raise capital. Capital that would be far more costly if it had to be raised out of necessity at a time of weakness.
Stock options would demonstrate that the bankers are in the game for the long haul along with the rest of us. This would show America that the investment banks are part of the team, that they are working to make the economy stronger, that they are not just the greedy, selfish (fill in the blank'ers) that they have been portrayed as by the media.
Banks should volunteer to do this, but if they cannot, will not or need political cover, then the Federal Treasury should mandate it. If Hank Paulson could force a shotgun wedding between Bank of American and Merrill, surely Tim Geithner can get these banks to agree to similar stock option bonus terms.
Perhaps a better analogy: If Hank Paulson could get these same banks to agree to accept TARP money so as to not single out those in greatest need, then Tim Geithner can get them to agree to the same rules on stock option based bonuses so as not to single out those at greatest risk of future taxpayer bailouts. Geithner can argue that retaining this cash is necessary to accelerate the repayment of TARP funds and reduce the federal deficit and that requiring everyone to take the same approach is necessary for employee stability.
This is the minimum the banks should agree to do given the billions of dollars of taxpayer subsidies they all have received in one form or another. Crap at $140 billion in stock option awards, they can even create a large new market trading in future employee stock option awards. (sarcasm)
All of these banks have and are continuing to receive subsidies from the government and the taxpayer. Their actions already have cost the average American dearly. Far worse will be the future costs. Costs that will seep through a variety of channels. Higher bank fees and interest charges, higher income taxes, a devalued dollar, higher food and energy costs and greater inflation.
These circumstances beg the following questions:
How much would banks have set aside for bonuses if they were required to use mark to market accounting rule and as a result revealed their true losses?
In other words, how much of what is going to be paid out in bonuses would have been and should be retained as capital to protect against known – but undisclosed – losses?
Who will be put at risk if there is a double dip recession and any of the TBTF banks needs but is unable to raise additional capital? (rhetorical question)
The TBTF banks need to restrict this year's employee bonuses to stock options not redeemable for 3 or 4 years. The $140 billion in cash saved should be used either to cover undisclosed losses or to expand credit and grow the economy. All of the TBTF banks need to agree (or be required) to use similar stock option approaches to lessen employee defections. They need to do this for the good of the Country and for the goodwill of their industry.
Cash bonuses at this point in the fragile recovery of our economy are not wise. They are too risky for the banks and too risky for the economy. Preserving this capital reduces any future need to raise capital. Capital that would be far more costly if it had to be raised out of necessity at a time of weakness.
Stock options would demonstrate that the bankers are in the game for the long haul along with the rest of us. This would show America that the investment banks are part of the team, that they are working to make the economy stronger, that they are not just the greedy, selfish (fill in the blank'ers) that they have been portrayed as by the media.
Banks should volunteer to do this, but if they cannot, will not or need political cover, then the Federal Treasury should mandate it. If Hank Paulson could force a shotgun wedding between Bank of American and Merrill, surely Tim Geithner can get these banks to agree to similar stock option bonus terms.
Perhaps a better analogy: If Hank Paulson could get these same banks to agree to accept TARP money so as to not single out those in greatest need, then Tim Geithner can get them to agree to the same rules on stock option based bonuses so as not to single out those at greatest risk of future taxpayer bailouts. Geithner can argue that retaining this cash is necessary to accelerate the repayment of TARP funds and reduce the federal deficit and that requiring everyone to take the same approach is necessary for employee stability.
This is the minimum the banks should agree to do given the billions of dollars of taxpayer subsidies they all have received in one form or another. Crap at $140 billion in stock option awards, they can even create a large new market trading in future employee stock option awards. (sarcasm)
Wednesday, November 11, 2009
Lead or Get Out of the Way
Goldman Sachs and the rest of the gang of criminals are not going to know what hit them. Their arrogance, greed, gross manipulation of politicians and government officials is finally reaching critical mass.
It is becoming a "cause celebre" with the Main Street Media. Blankfein's "God's Work" comment is right up there with John Lennon's "The Beatles are more popular than Jesus." remark. It really doesn't matter if it was taken out of context or not. Its arrogance rings too close to the truth. The damage is done.
Outlandish bonuses, unconscionable financial policies and unadulterated arrogance are turning individuals from all walks of life against the investment banking elitism.
Folks who never wanted to know or understand the intricacies of investment banking regulation and the risks of Too Big To Fail banks and hedge funds are beginning to understand how America has been fleeced, who is responsible and why we will risk even worse crashes in the future if something drastic is not done to change the present fraudulent and corrupt system.
A collective realization is developing that nobody is safe as long as the banking system continues to operate in its present form. It is rapidly creeping into the psyches of the ordinary man that something is not right when a bank borrows money for free, charges its customers 30% and our leaders in Washington look the other way. How can they get away with it unless everyone is on the take?
Ordinary folks clearly understand that Goldman Sachs and the other Big Bankers do not help the economy to grow. It doesn't take a genius to understand that one when both bank bonuses and unemployment rates are at all time highs.
While our President and his advisors may not have the courage to go up against the bankers, some of his strongest supporters apparently do. Robert Reich, Arianna Huffington, Maurine Dowd, more everyday are reaching a point of disgust. Perhaps they see the decay within our governmental institutions, the corruption of our officials and the decline in values in our society that banker's greed, money and lobbyists have wrought.
Obama may prove to be too timid to go up against the rich and power folks who hold his purse strings. He may elect to get out of the way and let others lead. Vote "Present". A tragedy because he could have been a contender. He could have been (and still might become) the leader who takes this nation to a higher moral ground. Instead he is proving to be perhaps just another in a long line of Chicago politicians who works the system.
Watch out because the steamroller is gathering momentum. Next you will observe politicians clamoring to get on board, stating that they have supported the break up the big banks all along. They will be calling Geithner up to the Hill and make a public display of castigating him for his obvious failings and lack of courage.
Its going to happen. I can feel the momentum growing.
It is becoming a "cause celebre" with the Main Street Media. Blankfein's "God's Work" comment is right up there with John Lennon's "The Beatles are more popular than Jesus." remark. It really doesn't matter if it was taken out of context or not. Its arrogance rings too close to the truth. The damage is done.
Outlandish bonuses, unconscionable financial policies and unadulterated arrogance are turning individuals from all walks of life against the investment banking elitism.
Folks who never wanted to know or understand the intricacies of investment banking regulation and the risks of Too Big To Fail banks and hedge funds are beginning to understand how America has been fleeced, who is responsible and why we will risk even worse crashes in the future if something drastic is not done to change the present fraudulent and corrupt system.
A collective realization is developing that nobody is safe as long as the banking system continues to operate in its present form. It is rapidly creeping into the psyches of the ordinary man that something is not right when a bank borrows money for free, charges its customers 30% and our leaders in Washington look the other way. How can they get away with it unless everyone is on the take?
Ordinary folks clearly understand that Goldman Sachs and the other Big Bankers do not help the economy to grow. It doesn't take a genius to understand that one when both bank bonuses and unemployment rates are at all time highs.
While our President and his advisors may not have the courage to go up against the bankers, some of his strongest supporters apparently do. Robert Reich, Arianna Huffington, Maurine Dowd, more everyday are reaching a point of disgust. Perhaps they see the decay within our governmental institutions, the corruption of our officials and the decline in values in our society that banker's greed, money and lobbyists have wrought.
Obama may prove to be too timid to go up against the rich and power folks who hold his purse strings. He may elect to get out of the way and let others lead. Vote "Present". A tragedy because he could have been a contender. He could have been (and still might become) the leader who takes this nation to a higher moral ground. Instead he is proving to be perhaps just another in a long line of Chicago politicians who works the system.
Watch out because the steamroller is gathering momentum. Next you will observe politicians clamoring to get on board, stating that they have supported the break up the big banks all along. They will be calling Geithner up to the Hill and make a public display of castigating him for his obvious failings and lack of courage.
Its going to happen. I can feel the momentum growing.
Tuesday, November 10, 2009
Stockholm Syndrome
The following position by Geithner is an example of “Stockholm Syndrome”. Who do you suppose per chance has been presenting these arguments to him?
“Treasury Secretary Timothy Geithner has been adamant that creating a standing fund would enhance moral hazard and be viewed by the financial industry as an insurance fund that would insulate it from risky bets.”
To the contrary, a standing fund would provide funding that would allow the government to shut down a bad bank and shift its assets and liabilities to another entity, just as the FDIC does today. A banker who knows the government has the ability to take away their job will be more cautious than a banker who knows that his firm is TBTF.
Geithner could draw this same conclusion, but it would not be in his best long-term interests or future career prospects to oppose the investment banking community. Therefore whether consciously or unconsciously he will follow, he perceives that he must follow, their script.
It is simply not possible for people with conflicts of interest (such as a future lucrative employment opportunity) to effectively regulate an industry.
You know that it must be in the back of Geithner’s mind that he will land a nice job at a prominent financial institution so long as he does not anger them while in public service.
You also know that Summers remembers that $5 million part-time hedge fund gig that he got just before moving to Washington and he must think that future opportunities are certainly in store.
Wall Street bankers are masters at instilling their brand of callous greed in others.
I doubt many of us in Geithner’s position would have the courage to risk everything in order to do what is absolutely right. His attempt to find a way to please the industry while appeasing the public is pretty much human nature given the circumstances he is placed in.
There are very few Sheila Bairs in this world who will stand up for what is right as opposed to looking out first for their personal prospects.
“Treasury Secretary Timothy Geithner has been adamant that creating a standing fund would enhance moral hazard and be viewed by the financial industry as an insurance fund that would insulate it from risky bets.”
To the contrary, a standing fund would provide funding that would allow the government to shut down a bad bank and shift its assets and liabilities to another entity, just as the FDIC does today. A banker who knows the government has the ability to take away their job will be more cautious than a banker who knows that his firm is TBTF.
Geithner could draw this same conclusion, but it would not be in his best long-term interests or future career prospects to oppose the investment banking community. Therefore whether consciously or unconsciously he will follow, he perceives that he must follow, their script.
It is simply not possible for people with conflicts of interest (such as a future lucrative employment opportunity) to effectively regulate an industry.
You know that it must be in the back of Geithner’s mind that he will land a nice job at a prominent financial institution so long as he does not anger them while in public service.
You also know that Summers remembers that $5 million part-time hedge fund gig that he got just before moving to Washington and he must think that future opportunities are certainly in store.
Wall Street bankers are masters at instilling their brand of callous greed in others.
I doubt many of us in Geithner’s position would have the courage to risk everything in order to do what is absolutely right. His attempt to find a way to please the industry while appeasing the public is pretty much human nature given the circumstances he is placed in.
There are very few Sheila Bairs in this world who will stand up for what is right as opposed to looking out first for their personal prospects.
Thursday, November 5, 2009
Into The Abyss
Third quarter productivity rose 9.5%. Were that to continue for an entire year it would mean that the nation's businesses could produce the same amount of good and services with 10% fewer workers. Normally this is a very good development. However it is also signaling a protected period of very high and painful unemployment. Maybe as much as 15% by this time next year?
This is very possible. It is also why we conservatives need to tread lightly with the fiscal responsibility rhetoric. Our nation is facing its second Great Depression. It is undergoing a massive adjustment process. We cannot - in this moment of crisis - just let free market forces prevail. To do so will destroy some very important parts of our economic machinery and will ruin the lives of many people who have been playing by the rules.
Instead, please think about how we can stimulate our economy and create jobs in the right way. Tax incentives for capital investment. Domestic energy development. Insist on a level playing field for global trade. Smart investments in public infrastructure to eliminate bottlenecks to commerce.
There will be a time for fiscal discipline. It will be once our economy is on a self-sustaining path and is again growing. Then we will need to cut spending, raise taxes and live within our means. But first let us make certain we have stopped falling into the abyss.
This is very possible. It is also why we conservatives need to tread lightly with the fiscal responsibility rhetoric. Our nation is facing its second Great Depression. It is undergoing a massive adjustment process. We cannot - in this moment of crisis - just let free market forces prevail. To do so will destroy some very important parts of our economic machinery and will ruin the lives of many people who have been playing by the rules.
Instead, please think about how we can stimulate our economy and create jobs in the right way. Tax incentives for capital investment. Domestic energy development. Insist on a level playing field for global trade. Smart investments in public infrastructure to eliminate bottlenecks to commerce.
There will be a time for fiscal discipline. It will be once our economy is on a self-sustaining path and is again growing. Then we will need to cut spending, raise taxes and live within our means. But first let us make certain we have stopped falling into the abyss.
No, This Is Not Envy!
Goldman Sachs and the Investment Banking Community will make record amounts of money this year. Prior to 2008, I would have agreed with the synopsis - it is all about envy.
Heck everyone's boat was rising and Goldman Sachs simply was the brightest of the bunch. The concentration of wealth and incomes was somewhat concerning but when I looked around, it seemed like my neighbors were all doing OK, everyone had a job, lots of disposable income, so I guessed the Ruebens, Greenspans et al knew what they were doing and if the meritorious prospered, so be it.
Fast forward to what we know now. That entire era was a facade. The jobs, the new homes, the disposable income were all the result of excessively risky and irresponsible financial engineering. Much of it undoubtedly developed and or promoted by those smart guys - Goldman Sachs. My neighbors were living on credit being given away by a financial system run a muck.
What have we learned? The infiltration of government, greasing the skids with hundreds of millions in campaign contributions and sprinkling in a few really really nice low rate mortgages to high placed officials allowed GS and the rest and the gang to essentially engage in unlimited risk taking as capital requirements were for all intents and purposes removed.
Today when I look around, my neighbors aren't doing so well anymore. In fact many are slowing dying in financial terms. Living off of what they thought they had saved for retirement. Property theft is up. Local parks are being shut down. And we all have this foreboding that times will only get worse when the 401Ks are drawn down completely and there are no more family members to turn to.
The weaknesses in our economic system are now being exposed and stripped bare. The high incomes at Goldman Sachs and the IB community were not because of some great improvement in the efficiency and effectiveness of capital allocation. rather it was a reckless, wanton act of greed and gambling style operations that destroyed the livelihoods of tens of millions of formerly middle class individuals.
This is so totally different than a Sergey Brin or a Steven Jobs who in the course of amassing enormous sums of personal wealth have also provided permanent wealth and economic gains to society at large. We now understand that the Goldman Sachs simply takes and destroys. They do not add value, they destroy value. They do not make the world a better place in the "invisible hand" free market style. No, their invisible hands are basically the high powered lobbyists who are groping any and everyone with power and influence in Washington D.C. They in essence are stealing the middle class poor in order to enrich.
So, at least in my case, the "envy" is now anger. But more importantly it is a sincere concern, hopefully without sounding too melodramatic, for the very existence of our free market economy, for our values as a society and for our way of life.
I hope I am wrong, but I see that wealth and income has become so concentrated that the rest of society may not have the financial where with all to keep the economy self sustaining at any level near to where it was before. I see a political system that has been so corrupted by greed and self interests that it is no longer capable of governing for the public good. I see a society that is becoming obsessed with "gaming the system" rather than with the rule of law or acting with any semblance of integrity.
I see Goldman Sachs as both the symbolic and in many ways the actual source of the corruption and degradation of our economy, ethics, values, institutions and quality of life.
So my admiration is now anger. My respect has turned into disdain. I can only hope that my change in attitude is shared by enough other people so that real changes will be made to preserve our economy and society before it has been completely ruined. I do not think we have very much time.
Heck everyone's boat was rising and Goldman Sachs simply was the brightest of the bunch. The concentration of wealth and incomes was somewhat concerning but when I looked around, it seemed like my neighbors were all doing OK, everyone had a job, lots of disposable income, so I guessed the Ruebens, Greenspans et al knew what they were doing and if the meritorious prospered, so be it.
Fast forward to what we know now. That entire era was a facade. The jobs, the new homes, the disposable income were all the result of excessively risky and irresponsible financial engineering. Much of it undoubtedly developed and or promoted by those smart guys - Goldman Sachs. My neighbors were living on credit being given away by a financial system run a muck.
What have we learned? The infiltration of government, greasing the skids with hundreds of millions in campaign contributions and sprinkling in a few really really nice low rate mortgages to high placed officials allowed GS and the rest and the gang to essentially engage in unlimited risk taking as capital requirements were for all intents and purposes removed.
Today when I look around, my neighbors aren't doing so well anymore. In fact many are slowing dying in financial terms. Living off of what they thought they had saved for retirement. Property theft is up. Local parks are being shut down. And we all have this foreboding that times will only get worse when the 401Ks are drawn down completely and there are no more family members to turn to.
The weaknesses in our economic system are now being exposed and stripped bare. The high incomes at Goldman Sachs and the IB community were not because of some great improvement in the efficiency and effectiveness of capital allocation. rather it was a reckless, wanton act of greed and gambling style operations that destroyed the livelihoods of tens of millions of formerly middle class individuals.
This is so totally different than a Sergey Brin or a Steven Jobs who in the course of amassing enormous sums of personal wealth have also provided permanent wealth and economic gains to society at large. We now understand that the Goldman Sachs simply takes and destroys. They do not add value, they destroy value. They do not make the world a better place in the "invisible hand" free market style. No, their invisible hands are basically the high powered lobbyists who are groping any and everyone with power and influence in Washington D.C. They in essence are stealing the middle class poor in order to enrich.
So, at least in my case, the "envy" is now anger. But more importantly it is a sincere concern, hopefully without sounding too melodramatic, for the very existence of our free market economy, for our values as a society and for our way of life.
I hope I am wrong, but I see that wealth and income has become so concentrated that the rest of society may not have the financial where with all to keep the economy self sustaining at any level near to where it was before. I see a political system that has been so corrupted by greed and self interests that it is no longer capable of governing for the public good. I see a society that is becoming obsessed with "gaming the system" rather than with the rule of law or acting with any semblance of integrity.
I see Goldman Sachs as both the symbolic and in many ways the actual source of the corruption and degradation of our economy, ethics, values, institutions and quality of life.
So my admiration is now anger. My respect has turned into disdain. I can only hope that my change in attitude is shared by enough other people so that real changes will be made to preserve our economy and society before it has been completely ruined. I do not think we have very much time.
Tuesday, November 3, 2009
Fear & Consequences
We are governed by self-serving individuals who do not see any negative recourse .
If one’s mission is to get re-elected, then one will accept campaign contributions and in return lean towards favorable legislation.
If one expects to land a high paying job in the banking sector after “paying your dues” in public service, then one will tend to be more receptive to banking industry concerns when drafting regulations.
Humans have a strong ability to rationalize in order to justify their actions. Thus these individuals truly do not think that their actions are wrong.
There is always some degree of rationale that can be made for any position on legislation and regulations. Government leaders will simply most often side with the rational that serves the bank’s and thus their own best interests. The banksters are clever enough to understand how the human psyche works and how to play it to achieve their objectives.
We will not get good governance until these circumstances are changed or until fear of consequences over takes self-serving interests.
How can circumstances change? Real campaign reform. Ban governmental employees from accepting positions in private sector firms that they governed over.
How can fear of consequences change behavior? Threaten to vote out all incumbents. Vote for candidates who pledge that they will fire corrupt and self-serving government officials. Let your representative in Congress understand how strongly you feel about this.
During the campaign Obama acted like a statesman. In office though, every indication is that he shares these same self-interest obsessions which may be one reason why the young have become less enthused with him. We really need a leader today who will take the nation’s interests to heart first. I hope Obama will come around, but I do not expect it.
It might be that the government-banking co-dependency is much like an individual who suffers from an addiction. That individual has to hit rock bottom in his life before he is willing to change his behavior. In the present instance, it is likely that our economy will have to hit rock bottom before we are willing to demand the changes in Washington and the banking sector that are needed. If so, it will not be pretty.
If one’s mission is to get re-elected, then one will accept campaign contributions and in return lean towards favorable legislation.
If one expects to land a high paying job in the banking sector after “paying your dues” in public service, then one will tend to be more receptive to banking industry concerns when drafting regulations.
Humans have a strong ability to rationalize in order to justify their actions. Thus these individuals truly do not think that their actions are wrong.
There is always some degree of rationale that can be made for any position on legislation and regulations. Government leaders will simply most often side with the rational that serves the bank’s and thus their own best interests. The banksters are clever enough to understand how the human psyche works and how to play it to achieve their objectives.
We will not get good governance until these circumstances are changed or until fear of consequences over takes self-serving interests.
How can circumstances change? Real campaign reform. Ban governmental employees from accepting positions in private sector firms that they governed over.
How can fear of consequences change behavior? Threaten to vote out all incumbents. Vote for candidates who pledge that they will fire corrupt and self-serving government officials. Let your representative in Congress understand how strongly you feel about this.
During the campaign Obama acted like a statesman. In office though, every indication is that he shares these same self-interest obsessions which may be one reason why the young have become less enthused with him. We really need a leader today who will take the nation’s interests to heart first. I hope Obama will come around, but I do not expect it.
It might be that the government-banking co-dependency is much like an individual who suffers from an addiction. That individual has to hit rock bottom in his life before he is willing to change his behavior. In the present instance, it is likely that our economy will have to hit rock bottom before we are willing to demand the changes in Washington and the banking sector that are needed. If so, it will not be pretty.
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