hoover

The Seduction of America

I agree. I also believe the monopoly problem goes deeper than just the banking industry. Free markets and relatively fair markets require rules of the game to be established and enforced. If you establish real competition in a capitalst game with free and fair markets, smart regulation instead of corrupt lobbyist induced regulation, and constant monitoring to stop monopolistic practices (both old methods and new high tech methods), I believe most economic problems would eventually disappear. Just an opinion.

On Apr 19 10:15 AM derryl wrote:

> John,
> Great article. A few weeks ago a former chief economist of the IMF
> published an article warning of the excessive influence of bankers/Wall
> St on US government policy. His conclusion was that these extremely
> rich people were manipulating the political system to get even richer,
> at the expense of the interests of the nation as a whole.
>
> I see a couple of comments claiming you are guilty of envy of 'successful'
> people. If some group (bankers) enjoys such power that they can hijack
> government policy to enrich themselves without producing anything
> of value for the economy, it is not 'envy' to denounce this. If socialists
> hijack the US agenda and implement fiscally unaffordable universal
> health care, would you be guilty of 'envy' for denouncing these unearned
> benefits which some are given at the expense of others?
>
> In 1848 Karl Marx noted that 'capitalism tends inevitably toward
> monopoly'. In the tradition of Adam Smith I think what we want is
> not 'capitalism' per se but free enterprise. Enterprise cannot be
> free and competitive in a monopoly environment If some relatively
> small group gains control of the monetary apparatus and concentrates
> economic power in a few hands, this is not free enterprise but oligarchy
> and tyranny.
>
> Since the beginning the Founding Fathers have warned against this
> development, against the 'European banking powers' (Benjamin Franklin's
> term) who seek to control the issue of nations' money and thereby
> own and control the nation. A democratic republic has the right and
> duty to limit the concentration of the nation's wealth in too few
> hands, because overconcentration chokes out real economic development
> and a free market distribution of incomes.
>
> Mammon, the god of capital, is not the god of free enterprise. We
> do not need to honor this false god by surrendering our economy to
> the clutches of Money.

Unintended Consequences of Four Government Policies

I disagree that enormous salaries must be paid to attract so-called superb talent for top executives. I would suggest its a bogus economic theory floated in the media and in academic circles by the very wealthy. Why do I think this? First, gross failure and incompetence have been obviously displayed by the overpaid heads of the biggest banks and auto companies. Obviously they are not paid for performance. Also, in the bowels of most big corporations (which I served for 33 years) there are talented people that perform most of the corporation's "thinking and managing" work. The range of pay in this large group of middle people (managers, engineers, supervisors, legal staff, buyers, department heads, project chiefs, sales managers, and many others) range from maybe $60,000 to say $300,000 or so at many corporations. If you look at manufacturing labor (another essential component) it may range from $25,000 to $50,000 or so. So, why do you have to pay $20 or $40 million (basically a lottery winner) for REAL talent for a hotshot CEO? The Chinese get talented very successful big biz CEO's for $100,000. Common sense tells me that CEO's are worth only a fraction of what they make and they should be fired regularly for incompetence like evryone else.

BofA Following Citigroup to $5 or Lower

Yes, $2 trillion or more is needed to stabilize the financial system. But, of course it takes LESS than $2 trillion to buy up all of the troubled mortgages and other loans. And that tells you that maybe the mortgage mess is only the excuse, and not the biggest problem. Where has the money gone? They aren't saying. Another reason to believe the mortgage mess is not the real problem. There is a lot of investment money on the sidelines just waiting jump into the market and buy bank stocks and other worthless stocks. They want to get in at the bottom before the next big boom. Good luck!

On Jan 15 11:39 AM Ishortyou wrote:

> the financial system needs at least 2 trillion dollar capital injection
> to stabilize at the least.

Will 2009 Bring Ring Three of the Financial Circus?

Excellent article. The overall debt problem (businesses, people and government) spending years and years of earnings, wages, and tax collections ahead of time, finally reached a point where it can't be sustained. Now add in EXPECTATIONS by the same people of major stock and housing capital gains for years into the future, plus casino gambling on the whole leveraged mess by banks and the worlds rich, and you have a real problem. The government's answer -- increase the debt. I wish Obama well -- he is smart and has selected supposedly some of the best talented people to work on this disaster. But, the best captain and crew in the world could not have saved the Titanic AFTER it hit the iceberg.

10 Stupid Moves That Created This Mess

I would only comment that the low-income social justice loans were only a small part of the CATALIST causing the problem. The major problem was (and is) the financial industry built on a house of borrowed, ridiculously leveraged, cards. Basically, it was the grossly irresponsible bankers, insurers, and their enablers in government that took far too much risk. But those that believe in totally unregulated markets, like to blame it all on their favorite red herring -- low income people.

On Jan 01 09:15 AM CautiousInvestor wrote:

> What about the congress, HUD and the GSE's. In pursuit of social
> justice and eager to put more low-income and minority families into
> their own homes, HUD required that two government-chartered mortgage
> finance firms purchase far more "affordable" loans made to these
> borrowers. There were also accounting scandals within the GSE's and
> shortly before they broke the Office of Federal Housing Enterprise
> Oversight (OFHEO)--the agency that regulates the GSEs--had pronounced
> Freddie's internal controls "accurate and reliable."