Just think how bad it would be it they didn't like us so much!
Boy! Aren't we lucky to have such intelligent people running this country? Ever notice the smart ones don't run for office. Just the "Guy Smilies" with room temperature I.Q.s

"... the extensive series of loophole-rich financial "reforms" that the Democrats are currently pushing may ultimately do more harm than good. In fact, some parts of the new reforms border on insanity, threatening to vastly amplify Wall Street's political power by institutionalizing the taxpayer's role as a welfare provider for the financial-services industry. At one point in the debate, Obama's top economic advisers demanded the power to award future bailouts without even going to Congress for approval — and without providing taxpayers a single dime in equity on the deals..."

http://www.rollingstone.com/politics/story/31234647/obamas_big_sellout/print

We're getting royally fucked here.

Good evening, Foiled Goil.

Given my deeply cynical tendencies, I am most decidedly not impressed. Here's why.

From at least 2004 until around the time of the beginning of the noticeable part of the financial crisis last year, the largest monetary aggregate, M3, was spiraling upward at an annual rate that finally reached nearly 20 percent. The Federal Reserve, which has sole responsibility for the money supply, dealt with this by suspending publication of the M3 data.

At the same time this was happening, the monetary aggregate called M1 was barely growing.

Now, M1 is money that includes cash and checking account funds. M3 includes M1, but also includes highly illiquid (that is, not immediately usable) money like massive time deposits, Eurodollars, and the like.

The growth rate of M1 was not sufficient to keep up with the real growth rate of the economy, which meant that a slow, choking throttle was being applied to the economy that uses cash and checking account funds. That's the economy of everyday people and businesses.

The rapid growth rate of M3 was flooding the financial system with a kind of money that the institutions comprising that system could not use directly. So, what does a rational economic agent do when it has an enormous amount of value that it cannot use but little in the way of cash that it actually needs? It will do the same thing any rational person in that position would do: it will pledge the highly illiquid assets against instruments that produce meager amounts of immediate money.

That's what people do when they have huge value tied up in a home but don't have money for their day-to-day expenditures. They'll use their homes as backing for lines of credit and other instruments. If that's not enough, they'll pledge the hard assets on bets that are sure things at first but become less and less so the further out on a limb they go. If you have an investment that will pay off in six months, if you've got lots of wealth but little immediate income, you'll go long against your illiquid assets to buy in on the fast money makers. That's not "human nature": it's rational survival behavior, personal and institutional. (And save me the talk about how "responsible" people don't behave that way. Put just about anyone in the right circumstances, and responsibility goes from fiduciary to personal in no time flat.)

Hence, in the financial industry, we saw credit and other derivatives coming on line as financial intermediaries and other financial institutions utilized vast oceans of M3 money to squeeze out small amounts of liquid cash.

In retrospect, that's extraordinarily risky, of course, but retrospective wisdom is always in unlimited supply, and I dare say that a whole lot of liberal I-told-you-so types did not know beans about what was going on at the time, and they certainly weren't in the mood to knock off their Hey-Hey-Ho-Ho-George-Bush-Must-Go chants long enough to read the articles I was writing and publishing about what was going on and where it was going to lead.

Forward-thinking risk analysis is never particularly easy to come by, and that's why we have a regulator like the Federal Reserve. Whereas no one pays me to write about impending doom, the men and women at the Fed get paid very well at least to try a little bit of objective thinking once in a great while, like when the U.S. financial system is on a run-away freight train to a cliff.

The unfortunate part, though, is that the Fed could do nothing about the soaring M3 without the Chairman of the Board of Governors, Ben Bernanke, going to Congress during the Bush Administration and telling those Representatives and Senators, so many of them full of hubris and bereft of any knowledge of financial systems and economics, that the M3 money supply was spiraling upward out of control and all proportion, and the result was a financial system that was living on borrowed time and madly leveraged non-Tier 1 assets.

Were the Representatives and Senators to have asked how this looming M3 apocalyptic flood was happening, Mr. Bernanke — were he to have the guts, which neither he nor his addled, pathetically partisan predecessor, Alan Greenspan, did — would have explained that it was directly and inescapably the fault of the Congress and the Bush Administration because they were all keeping the U.S. economy going by leveraging off wildly huge trade deficits that were filling the coffers of foreign central banks with American dollars that those foreign central banks were then lending back to the United States government to finance its irresponsibly low taxes and irresponsibly high spending.

And how were those trade deficits so ridiculously high?

Was it greed of corporations moving their operations overseas?

Was it bad, expensive American union labor?

Was it ignorant American consumers who wouldn't just "Buy American"?

— continued below —

— continued from above —

No, unfortunately for the finger-pointers on the Left and the Right, it was considerably simpler: China, India, and several other countries were pegging their currencies at staggeringly low, out-of-line exchange rates against the dollar. (Nobel-winning liberal economist Paul Krugman thinks this is just peachy, which is why Dr. Krugman is on my all-time Lowest-of-the-Low list of liberals, right beside venture capitalist rich boy PowerPointer Al Gore.)

They, especially the Chinese, were bleeding us dry, wiping out tens of millions of American jobs and hundreds of billions of dollars of our industrial base, all while lending us back the money they were getting from us because they were selling their products at artificially low prices that made the Blue Light Special at K-Mart pale by comparison.

And hence, the U.S. government (along with the private sector) lived beyond its means, M3 spiraled, M1 was being crushed by the Fed in a stupid attempt to counter-balance the spiral of the larger monetary aggregate, and the financial system was swelling like a balloon with illiquid money that it used as the backing for derivative swaps off which its member institutions could make what seemed like a fast buck until the leverage became so great that even a small pull on the fulcrum (as happened on about September 15, 2008 ) sent the whole teeter-totter into a great big flop off that meager fulcrum of trust in the system.

Mr. Obama and his Democratic allies spend like there's no tomorrow while they talk about reforming the tax system but do nothing whatsoever that would come even close to closing our federal budget deficits, and they rely for an economic recovery on unemployment staying high so worker productivity will go up to pull us into a growth phase just like Keynesians for the past seven decades have been doing.

Financial reform does not impress me.

When the government (at all levels) stops spying on its citizens like every one of us is a criminal waiting to be caught, when the Obama Administration starts prosecuting Bush Administration officials from the top down, and when the members of Congress start educating themselves about economics and finance and stop drooling to every pathetic interest from AIPAC to the healthcare industry to the banks to the military and its failed commanders like Petraeus and McChrystal, then I'll be on board the reform efforts.

In other words, I shall remain now and permanently a cynic who knows what he's talking about.

The Dark Wraith has spoken.

And if any of you in the reading audience plowed through the entirety of that two-part lecture above, let me know so I can tell you that I am mildly impressed.

If you read it and understood it, I am more than mildly impressed.

If you read it, understood it, and disagree with me, I'll eat your ass off.

The Dark Wraith has been on a diet for two weeks and is, therefore, quite hungry tonight.

DW,
While I read and understood (for the most part) your maniacal ravings these last years, I had hope (there's that word again) that the new administration would , if not get us out of this mess, but at least make an effort. November 6th 2008, that thought was crushed from my mind. Further questionable appointments brought more and more disrespect. Still, I imagined it a better country without the likes of a McCain/Palin Administration. What we got, however is something that even Bush/Cheney must stand in awe of. (Phuk the preposition!)

We put new people in office to correct the corruption. Foolish us! The new people have a lower threshold of morals than the previous charlatan bastards. They sold us for pieces of silver.
These are the same people who think a fractional militant group wearing rags and living in desolate places represents a more ominous threat to the United States than the fools in New York and Washington.
Some may wonder who the real terrorists are; I give you the Congress of the United States and the Stupidification of America.

"The Age of the Eagle is at an end; the Age of the Dragon Begins." - a good friend I met in Chicago in 1968 who is no longer with us. He was only off by a few years.

The sovereign protects his predecessor and prosecutes his wars.

Reform takes the road of compromise with those corrupted by destructive irresponsibilty legislated from those corrupted by power.

What was once our privacy by natural law is now for review without probable cause by authoritarians and for commerce at profit by merchants of information.

And we settle for bread crust when we are told that our meal has been negotiated away on our behalf.

Empire renewed by fresh blood is still Empire. Its reach is far, its consequences near.

The sun may well set on Empire, but that comes long after we have seen the darkness.

DW - I at least read both parts of your lecture, can't attest to fully comprehending it in YHO but at least feel as if I followed it. Do know about the no longer reported M3 spiral (in part, thanx to you) but am unsure about what Mr. Obama's folks have been spending - for that I look here,
Treasury Direct.gov
All I know is when GW took office the total US national debt was $5.7T & change, leaving office it was $10.6T meaning Mr. G 'fiscal conservative' W. Bush doubled the damned thing. Today we're at $12T but we're facing 1932 again so I do not know what to think & I am a Keynesian, much rather spend the $$$ on infrastructure than on wars or worse, multimillionaire bailouts or related 'tax cuts' ...
Know you're not a Krugman fan but this one he nailed today -

Krugman

Likewise, saw another article that intrigued me (though I do not know how to respond but definitely feel the inertia)

Are Americans A Broken People

Any chance of getting a comment preview option here? & standard hyperlinks?

Darms,

Look just below the "Add Comment" button for Allowed BBCode

hot link:

Good morning, darms.

I shan't comment on anything Krugman pumps out, even if he is accurate in an assessment, because he will make his points from the tainted position of the sources of the money in which he wallows.

A statement is virtuous not merely by its message but as well by the reason for having made it. Quite frequently, I hear words from modern Christians, Muslims, Jews, Hindus, and others of faith with which I am in wholehearted agreement, yet I must make those same assertions without reference to the people who say the same things with hate, pride, greed, or envy motivating their versions.

To paraphrase a line from the movie 300, I wish Dr. Krugman a long life.

The longer a person lives, the better his chance of seeing with clarity the ill he has wrought through the haze of self-satisfying good he imagines he has done.

We should all live long lives, of course.