Economics Round-Up, or: Why We are All Screwed

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Erik Kain

Erik writes about video games at Forbes and politics at Mother Jones. He's the contributor of The League though he hasn't written much here lately. He can be found occasionally composing 140 character cultural analysis on Twitter.

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15 Responses

  1. Avatar mw
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    says:

    Agreed that the “solution” has all the earmarks of deliberate obfuscation, and further agree that the notion that it is all so complicated we must trust that only an elite few sophisticated intellects are capable of grappling with the problem is fraught with danger.

    Here is one way to simplify things – One man’s opinion of a virtuous hierarchy of commercial enterprise – from best to worst – offered by a libertarian leaning independent:

    1) Free market enterprise – private capital fully accepts the risk and potential reward, government investigates and prosecutes criminal fraudulent activity (i.e. selling the Brooklyn Bridge or Credit Default Swaps without financial wherewithal to honor guarantees).
    2) Regulated enterprise – Same as above, but government represents and attempts to manage private risk through enforcement of preemptive regulation.
    3) Government enterprise – Government sets goals, government funds mechanism to achieve them, government is held accountable through elected representatives.
    4) Unenforced regulated enterprise Government represents that it is regulating risk and fraud, but in fact does not through failure to fund enforcement or incompetence in enforcement agency or both (i.e. Bush Administration SEC)
    5) Public Private “Partnerships” – Public assumes most risk, private enterprise gets most of the reward (i.e. Fannie Mae, Freddy Mac, this proposed abomination). these entities are always pregnant with possibilities for corruption wth lobbyist funneling private gains back into public pockets via contributions and bribes (i.e. – Chris Dodd, Barney Frank, etc. ) Corporate Statism at its worst.

    Note that Big Government Republicans as well as Big Government Democrats tend to promote Public Private Partnerships as a preferred vehicle to addressing any issue, when in point of fact it is the worst of all possible worlds, with the least accountability, the least transparency and the most susceptible to corruption.Report

  2. Avatar mjB
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    says:

    hyperinflation on Weimar scales is on the way thanks to Helicopter Ben!

    http://tinyurl.com/clck4y

    mBReport

  3. Avatar Dave
    Ignored
    says:

    E.D.,

    This is more a study of the capital markets and finance than it is of economics IMO.

    http://www.crisisofcredit.com/

    To me, the causes aren’t that difficult to explain although the solutions present huge problems. I may have posted this in the past so I apologize if I repeated myself.Report

  4. Avatar jfxgillis
    Ignored
    says:

    E.D.:

    Can you do me a favor and promote this?

    Money quote:

    The hearing ended with Kanjorski threatening to pass legislation to force Herz to loosen standards. In fact, the pressure was so intense that the FASB. The pressure was so intense that the FASB announced the new rule after only a week. The Chairman of the full committee, Barney Frank, seems to have accepted it as a foregone conclusion. This is absolutely unacceptable. Democrats pressing for this, like Paul Kanjorski and Gary Ackerman, need to stop. Go-along Democrats like Senator Christopher Dodd and Barney Frank need to stop going along. As a Democrat myself, I can complain about the Republicans all I want but the fact remains, the Democrats hold power and it is only because of pressure from Democrats that this loosening is being rushed to implementation. At the end of the day, loosening mark-to-market will only allow the fraud that is the current financial system to be perpetrated, er, I mean, perpetuated.

    More:

    Correctly Political Action Alert: Can We Stop The Deepening Fraud of “Unobservable Inputs”?!?Report

  5. Avatar Bob
    Ignored
    says:

    I’m going to vote with E.D. on this. The whole economic situation is beyond understanding or any rational explanation. If it were easily understood, as Dave asserts, why has so much time been spent on trying to explain the mess? Liberals attack “free markets” as running amok. Libertarians and conservatives lovingly defend “free markets” or call for some imagined laissez faire economic condition. Too much regulation, not enough? Repeal of Glass-Steagall a big problem, not a problem. Rating agencies did their job, fell-down on the job. FED to blame, SEC to blame. Adjustable Rate Mortgages, interest only payments, overbuilding of commercial and residential property, speculation, inflow of foreign money, greed or business as usual… the list of problems and their interaction is almost endless.

    Megan McArdel has an interesting post, “Hindsight regulation,” 9/16/08. She writes, “I hope that this will result in deep changes to our regulatory system, starting with unifying the diverse bank regulatory body, and giving them a stronger mandate to watch systemic risk like a hawk. I hope the GSEs will be broken up, stripped of their government guarantee, and regulated like other companies that do the same thing. I hope the central bank will pay more attention to inflation, and less to unemployment.” Well that sounds reasonable to me (except that “unemployment” thing.) I recommend the entire post, it is long and asks probing questions. Maybe E.D. can link it if he feels it is pertinent.

    Yes, we are all screwed, we may not know how, why, who but we sure feel it.Report

  6. Avatar jfxgillis
    Ignored
    says:

    Bob:

    Of course we know who, how and why. It’s not even a close call. Large-cap natyional and global private financial institutions destroyed the system with their greed, fraud and thievery. McArdle knows that, too, or she wouldn’t call for a new regulatory regime, although she seems to self-deludedly be unable to admit it.

    If the GSEs really were the problem, disbanding them would solve it. But she knows they aren’t, so she spews the capitalist-pig talking point about it, yet STILL calls for a new regulatory regime.Report

  7. Avatar Bob
    Ignored
    says:

    jfxgillis: that who how why was mostly rhetorical, I’m kinda dogmatic on occasion so I toned it down, way down, for that comment. I’m with you, class warfare is what this country needs. The McArdle thing caused me quite a start. But honest to God, those are her words. Somehow she blundered into truth telling, mark it on your calender.Report

  8. Avatar jfxgillis
    Ignored
    says:

    Bob:

    Somehow she blundered into truth telling, mark it on your calender.

    Our little girl is growing up.

    :^{)>Report

  9. Avatar Bob
    Ignored
    says:

    jfxgillis: I’m very proud of her.Report

  10. Avatar Bob
    Ignored
    says:

    jfxgillis: Yes, I’m so very proud of her.Report

  11. Avatar E.D. Kain
    Ignored
    says:

    Great comments, and thanks for all the links etc. Jack, of course. Give me a while….

    Bob, let me go check out McArdle’s piece…

    Dave, damn it you’re our resident financial expert! Time to finish up one of those many drafts perfection be damned! 😉Report

  12. Avatar jfxgillis
    Ignored
    says:

    E.D.:

    Thank you!

    But …

    Time to finish up one of those many drafts perfection be damned!

    … I don’t even know Dave, but lay off the poor guy! I suffer from the same condition myself.

    :^{)>Report

  13. Avatar E.D. Kain
    Ignored
    says:

    Ah, Dave knows I’m only messing with him. It’s just that here at the League he’s basically the economics guru so…you know, the times and all…it’s a good time to blog about economics and finance.Report

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