financial collapse

Triumph of the Money Party!!! Warren's role downgraded, reports to Geithner

Michael Collins

The White House snatched back one of the few bones it's thrown to the people outraged at the looting of the United States Treasury by failed financial concerns - the big banks and Wall Street. The promised appointment Elizabeth Warren as head of the new agency to protect consumers from the financial services industry has been seriously downgraded. Instead of running the Consumer Finance Protection Agency, Warren's role has been diminished to that of special assistant to the president and adviser to Treasury Secretary Tim Geithner.

"President Obama, sidestepping a possibly heated confirmation battle, will appoint Harvard law professor Elizabeth Warren as a special advisor to the Treasury Department to launch the government's powerful new Consumer Financial Protection Bureau, according to two Democratic officials familiar with the decision." LA Times, Sept 15

An interim appointment would have given the no-nonsense Warren the full authority to structure consumer bureau in the interests of the people. A special adviser role is defined in a New York Times article as follows:

"Ms. Warren will be named an assistant to the president, a designation that is held by senior White House staff members, including Rahm Emanuel, the chief of staff.

"She will also be a special adviser to the Treasury secretary, Timothy F. Geithner, and report jointly to both men." September 15

The title of the Times article says it all: Warren to Unofficially Lead Consumer Agency.

Of course, President Obama could have set it up for Warren to officially lead the agency through an interim appointment. Warren's outstanding efforts and her extraordinary record of being right on the issues are more than enough justification for that.

Goldman Sachs Vice-Chair: Tolerate the Inequality

Hat tip to Firedoglake, for picking this up from MSNBC and The London Guardian:

In remarks that will fuel the row around excessive pay, Lord Griffiths, vice-chairman of Goldman Sachs International and a former adviser to Margaret Thatcher, said banks should not be ashamed of rewarding their staff.

Speaking to an audience at St Paul's Cathedral in London about morality in the marketplace last night, Griffiths said the British public should "tolerate the inequality as a way to achieve greater prosperity for all"

The State of California Issues IOU's in Place of $s: State Budget Crisis

 



 hat tip  Federal Reserve Bank of San Francisco


For the first time since the Great Depression (with a brief exception in 1992)  California, state finance officials will begin issuing IOUs today to meet its $24-billion budget shortfall.These will go to local governments, vendors, taxpayers and college students receiving state financial aid. State workers will face more unpaid leave days and Counties that administer social services also would not get paid, nor would taxpayers who are still expecting refunds.


Were California an independent nation it's economy would rank in the top ten globally and now it is bankrupt, and it is not the only US state economy in deep trouble. It's economy accounts for 12 percent of US domestic product and has the largest retail consumption in the country.


Columbia Journalism Review Assesses Failure of Business Press to Warn of Crises

Hat tip to lambert on correntewire for providing the link to the latest cover story in the Columbia Journalism Review, Power Problem: The business press did everything but take on the institutions that brought down the financial system, by Dean Starkman.

Starkman and a team of researchers set out to examine how well the nation’s business press did in providing warning of the coming financial crises in the past decade. They selected a list of the nine business-news outlets they considered the most important (Wall St. Journal, New York Times, Washington Post, Los Angeles Times, Financial Times, Bloomberg, Forbes, Fortune, and BusinessWeek) and the financial institutions with leading roles in the collapse (Wall Street: AIG, Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, Morgan Stanley. Lenders: Ameriquest, Citigroup, Countrywide, Fannie Mae, Freddie Mac, IndyMac, New Century, Washington Mutual).

"The financial system is playing us for chumps" Bill Moyers is told

First posted Sat, 02/14/2009 - 23:31, not to be overlooked - standingup

“The financial system is playing us for chumps”

That’s what Simon Johnson, former chief economist at the International Monetary Fund, told Bill Moyers on the Bill Moyers Journal that just last night.

And the interview became even scarier. What Johnson and Moyers made clear, without saying it in so many words, is that American democracy is on the line.

Not Chile. Not Argentina. Not Bolivia or anywhere else. America.

What is at stake is the continued existence of the United States as a democratic republic.

If I were President . . . [Ending Wall Street's rule]

The past week, since the news that Merrill Lynch had hurried to pay out billions of dollars in bonuses before the end of the year, provoked a torrent of tirades and rage against Wall Street. Now, progressives are debating each other over the value and efficacy of President Obama’s attempts to attract Republican support for the stimulus program. Many defenders of President Obama demand to know what he might do differently.

Well, here’s my suggestion, in the form of a speech the President can give explaining measures I have concluded are essential to solving the financial and banking crises. Here is what I would do to root out and destroy the root cause of our troubles.

Political Power of Just 6 Banks is the Problem

Last week ago, Institutional Risk Analytics interviewed Josh Rosner of Graham Fisher & Co and David Kotok of Cumberland Advisors, and the discussion is one of the most direct and revealing of the true political nature of the financial collapse I have yet seen.

Saving the financial system without a national industrial policy is worse than useless

Sorry, President Obama, there simply is no time for a honeymoon. As you said in your Inaugural Address yesterday, "The ways we use energy strengthen our adversaries and threaten our planet." Unfortunately, it seems that this idea has not yet filtered into your administration’s thinking and planning regarding what to do about the financial collapse.

Why So Little Self-Recrimination Among Economists?

Promoted. -- GH

Yves Smith at Naked Capitalism picked up an excellent article by former economics columnist Jeff Madrick, who attended the just-concluded annual conference of the American Economics Association, How the Entire Economics Profession Failed. Madrick writes:

At the annual meeting of American Economists, most everyone refused to admit their failures to prepare or warn about the second worst crisis of the century.

I could find no shame in the halls of the San Francisco Hilton, the location at the annual meeting of American economists that just finished. Mainstream economists from major universities dominate the meetings, and some of them are the anointed cream of the crop, including former Clinton, Bush and even Reagan advisers.

There was no session on the schedule about how the vast majority of economists should deal with their failure to anticipate or even seriously warn about the possibility that the second worst economic crisis of the last hundred years was imminent.

“No one questioned their contribution to the current frightening state of affairs, no one humbled by events.”

I heard no calls to reform educational curricula because of a crisis so threatening and surprising that it undermines, at least if the academicians were honest, the key assumptions of the economic theory currently being taught.

There were no sessions about why the profession was not up in arms about the deregulation of so sensitive a sector as finance. They are quick to oppose anything that undermines free trade, by contrast, and have had substantial influence doing just that.

Yves Smith adds some excellent commentary in her piece, Why So Little Self-Recrimination Among Economists?, inclduing an insightful quote from Thomas Palley, in April 2008:

Stumbling Toward Stimulus: Are Entitlements in Danger?

Originally published 2009-01-08 14:14:40 -1000 - promoted by Roxy

In contrast to the mainstream media, there were many warnings in the progressive blogosphere over the past two years about the dangers of economic imbalances – most particularly the gap in incomes resulting from the 28-year old war Ronald Reagan initiated on the working and middle classes  – leading to a financial crisis. There is one primary and very important reason for this blindness of the mainstream media and prescience of the progressive blogosphere – the mainstream media is infested with the reigning economic paradigm of monetarism and financial economics which places emphasis on financial and monetary capital, while the progressive blogosphere throbs with populist economics focused on how well the least in society are uplifted and supported - the hoary old idea of developing human capital.

Thom Hartmann Points to Alexander Hamilton as the Solution

This past Friday night, Dec 12, 2008, Air America radio host and progressive author Thom Hartmann appeared on Countdown, hosted by David Shuster, to discuss the rescue of the U.S. auto industry. Hartmann eloquently defended American workers from the numerous anti-labor themes being spun by Republican and wrong-wing think tanks. But the most important thing Hartmann did was point Barack Obama and the American people back to the too-long forgotten roots of the U.S. economy and financial system, Alexander Hamilton.

The crucial test - who Obama picks for Treasury Secretary

Who Obama picks as a Treasury Secretary is going to tell us just about all we need to know about how far Obama is willing to break with the unfortunately named “neo-liberal” economic policies of free markets and free trade that have dominated U.S. economic policy since Ronald Reagan – including even under Bill Clinton. Through most of today, there was a diary on the recommended list on DailyKos, Summers' call for poisoning Developing World?, on the news today that Summers was at the top of Obama’s list for filling the cabinet post of Secretary of the Treasury. The resulting Dailykos thread quickly turned into a discussion of who might be an acceptable Treasury Secretary. Unfortunately, scanning that thread, it appears to me not many people understand that this is the most important fight Obama can undertake right now.

What Might Real Financial Reform Look Like?

promoted by roxy - originally posted 2008-10-18 04:20:34 -1000

In What Might Real Financial Reform Look Like?, The Agonist editor and former Morgan Stanley banker Sean-Paul Kelley has outlined ten critical financial reforms that, amazingly, neither Obama nor McCain -- nor anyone in the mainstream media for that matter -- are even discussing.

The Fundamentally Political Nature of the Present Financial Crisis: The Constitutional Moment Arrives

In an extraordinarily important article today The Constitutional Moment Arrives, Stirling Newberry observes that

The key question is this: the American tax payers just bought the banking system. We are going to pay, with interest, upwards of three trillion dollars for it. A relative bargain actually. The question is what we are going to do with it now that we own it.

Let Wall Street Burn

At the cost of your future, the U.S. financial system is being saved. For a half century, the United States has been unable to find a hundred billion or so a year to fund general healthcare, but now that financial powerhouses like Bear Stearns, Freddie Mac, Fannie Mae, and AIG are crumbling, the U.S. Treasury can magically procure trillions of dollars in promises without so much as a nit of resistance in either chamber of the U.S. Congress.