Avery Goodman

The Truth About Unemployment Numbers

Mark,

If Fox Business News is covering news in the honest forthright fashion that is going out of style, that is good news.

ABG
On Jun 22 08:33 AM Mark Lieberman twitter/foxeconomics wrote:

> You should be following emlployment / unemployment reports on Fox
> Business Network. We regularly not the widening gap between those
> collecting benefits (including extended benefits) and those reported
> as unemployed by BLS. That gap is now over 5 million.
> The other concern is the impact on businesses who contribute to unemployment
> insurance funds. Those contributions are based on experience factors
> (the number of former employees collecting benfits) and could mean
> employers will be making higher contributions long after a labor
> recovery -- on a greater number of employees.

Break Up the Big Banks

Clearly, you did not read this article, as I do not support Henry Paulson's policies.

I would have allowed banks to fail, put them into receivership, removed managements entirely (without severance pay or golden parachutes), sold them off piece by piece to more responsible people, and held my breath as I printed as limited an amount of money that was needed to pay off depositors (if necessary) and/or transfer deposits to a new institution. I certainly would not have supplied government subsidized funding, in the form of FDIC guarantees for bank bonds, to back up high risk investment banking activity.

My policies would have put the nation into severe recession. However, we will now enter a much more severe depression (inflationary depression), over a far longer period of time, because of Paulson/Bernanke policies. I fear that the coming problems may put the very existence of the United States of America at risk.

The amount of money that will now be printed will be many times greater than it would have been had insolvent banks been liquidated. The U.S. government is now forced to print money based upon the gross values of leveraged bets, rather than close to the monetary base by replacing deposits.

It is now impossible to liquidate insolvent banks. The U.S. government has erroneously made legally binding investments that will bankrupt us if we liquidate the banks, at this point. These investments ARE NOT limited to, or mostly, in the form of TARP allocations. The situation is far worse than it would have been if correct measures had been taken from the beginning.

We must make sure that this cannot happen again. That is why systemically important banks must be broken up into more manageable sized units that pose little risk to the nation and the world.


On May 21 06:50 PM another pissed off banker wrote:

From another pissed off banker,
If I didn't know better I'd think you were related to Paulson. You
iddiots wanted us to take money to buy failing institutions with
certain requirements placed by you on the front end only to start
changing the terms after we accepted it.

Break Up the Big Banks

The problem is that government, and its taxpayers, are being forced to step in and bail out these banks. That being so, it follows that government also has the right to initiate a "preemptive strike" to prevent being forced to bail them out.

While it would be better if no one ever got bailouts, I think that, politically, voices that oppose bailing out irresponsible large institutions will always be squelched, as they have been over the last year.

Accordingly, there is no choice but to approach this problem from an anti-trust viewpoint, and break up any bank that poses a systemic risk, before the risk manifests itself.

Break Up the Big Banks

Oligopolies do not fail even though they may suck the life blood out of the society in which they reside. They prevent free markets from existing, and, hence, the "free market" cannot eliminate them. Look at any banana republic and you will see oligopolic conditions that have been in place for hundreds of years. The oligarchs, in those countries are still in control, and the countries, themselves, are basket case economies because of that. The USA will join them if we do not correct this situation very soon.

With respect to the "banking" industry, I am not referring to the type of community bank that makes loans and accepts deposits in their local community, nor to the branches of big banks that may do the same thing. Although it would be better for people to follow the Home Depot management's example, and become self-funding, such banks are the salt of the earth, and critical for the communities they are in.

When we break up big banks, the first thing we will do is free those divisions from liability to the irresponsible risk-taking of the other, more malevolent, parts of the bank. You are absolutely correct that some banks are still profitable. Perhaps, I did not make it clear, but I am discussing breaking up banks which pose a "systemic risk", not community banks, and not banks that simply operate on a national basis.

The banks, or parts of banks, that you are referring to do not pose a systemic risk. The "bad boys" I speak about are the ones who habitually work closely together and with the Federal Reserve, and engaged in securitization, payments to ratings services to give AAA ratings to toxic waste debt instruments, and the ones who continue to engage in what most prudent people would see as reckless high risk derivatives sales and guarantees. These big banks pose a risk to the entire system, and that is why many people felt it was necessary to bail them out, although some disagree about that necessity.

Anti-trust action is a traditional, well worn, and effective means of dealing with this problem. We need active enforcement and, perhaps, Congressional reinforcement of those laws to help them work.

Thank you for your comments.


On May 21 10:35 AM greedcanbgood wrote:

Your first premise here is that the banking industry is controlled
by a handful of banks and by extension competition is limited. I
challenge you to demonstrate where this is the case. Go to nearly
any town in the US and right by your BofA, Wells, Citi, Chage, USB
(pick your big bank here) is a small community bank who offers products/services and rates that are at least as competitive. Most of them are making money and doing well. Where’s the “oligarchic consortium”?