A Good Start
Last week, the media kept itself busy trumpeting Oprah’s upcoming retirement and Lou Dobbs’s unexpected resignation. Mrs. Palin’s solo comeback tour through the lower 48 had millions glued to their screens. And something extraordinary happened in Washington– though you’d never know it from The News.
In a mighty sucker-punch to the sanctity of the Fed, and to the chagrin of the banking industry, the Democratic party leadership, and of the very Beltway way of doing things, the House Financial Services Committee passed HR 1207; the Ron Paul - Alan Grayson “audit bill,” authorizing the Government Accountability Office to conduct the first real audit of the Federal Reserve in that institution’s seventy-year history.
The MSM has largely ignored the story—and perhaps with good reason. When an improbable coalition of progressives and libertarians, labor leaders and cold-war conservatives, led by a couple of self-admitted wingnuts and egged on by a cadre of moonbat bloggers manages to put aside its partisan bickering and outmaneuver the most powerful institutions on the face of the planet, it does not bode well for Business as Usual in our nation’s capitol. Or, by extension, their finger-puppets in the media.
Here’s what happened:
Back in February of this year, veteran free-marketeer, Ron Paul, R-TX, and wealthy freshman maverick, Alan Grayson, D-FL, introduced a bill that attempted to force some accountability for the roughly $4,000 per American man, woman, and child that the Federal Reserve has seen fit to distribute for us without our consent—and to who-knows-whom—in the wake of last autumn’s financial meltdown. The bill gained immediate bi-partisan support in the House and was, of course, immediately attacked by the Powers that Be as needlessly intrusive, inflationary, and a threat to the independence of the central banking system. “Just another damned excuse for Congressional meddling,” was among the kinder accusations I heard bandied about.
The bill worked its way through committee and finally came up for a vote on Thursday. It was challenged by a last-minute, competing version of the proposal, which was so watered-down it would have essentially gutted the audit by posing a host of restrictions on what could and could not be presented for GAO examination.
This “serious compromise,” as these challenges are known, proposed by FIRE’s own point-man, Mel Watts, D- N.C., was unexpectedly supported by key Democrats like Chairman Barney Franks—who had spent the last year proclaiming his support for an audit. Franks argued that Congressional interference in the workings of the Fed could have an inflationary effect on the economy, and “too much transparency” could compromise national security.
A flurry of eleventh-hour lobbying by “a cross-section of prominent economists,” as they called themselves, (seven out of the eight of whom, as it turned out, had extensive dealings with the Fed, and half of whom are currently serving on the Fed payroll,) was circumvented by some inspired procedural maneuvering on the part of Paul’s supporters. Bolstered by a letter organized by liberal blog, FireDogLake.com, Grayson managed to convince wavering Democrats that their liberal base was behind the bill. Bucking Frank, Democratic support held, and the bill passed in a 43-26 landslide.
Although its ultimate signing into law is uncertain at best, Thursday’s vote is notable on several levels. Most significantly, it serves notice to the Fed, the banking industry, and lawmakers of all persuasions, that when an angry and committed populace rallies behind a just and reasonable cause, no amount of official “entitlement” is going to deter them.
Secondly, it represents a crack in the strict enforcement of party line politics. Although the GOP supported this bill for laughably hypocritical reasons—after all, no one could credibly argue that Paulson/Geithner, Greenspan, Goldman, et al are socialist lackeys—it was the Democratic holdouts and their progressive allies who were responsible for finally passing the bill that Dr. Paul has been proposing in one iteration or another since 1983.
Say what you will about the motley sponsors or their ideological eccentricities, this is our money they’re handing out. This is our legacy they’re suborning to their private ends. These, supposedly, are our representatives, not the paid-for handmaidens of an entrenched corporate oligarchy. And these people stood up for it! No wonder the MSM wants to brush this issue under the carpet in favor of their usual mind-numbing drivel.
That Congress, our institutions, and our futures are owned and directed by a few favored entities may have been acceptable when the economy was booming and the nation was an undisputed powerhouse, but seventy years behind a veil of secrecy has fostered a central banking system that has shown itself to be intrinsically incompetent, if not outright corrupted. And seventy years is long enough.
Yes, there are dangers inherent in a free and open society. Granting Congress—and this would be our Congress, with all its hemi-brained knuckleheads—oversight of an institution as complex and critical to our international functioning as the Fed, is a scary proposition indeed. And giving it a California-style legislative initiative so it can manipulate monetary policy for expedient political ends would be the stuff of nightmares.
Then there is the argument that the Fed (and perhaps the judiciary) are the only independent national institutions America has left. Do we really want them subjected to the political whims of a largely uninformed electorate?
But as we have seen with our military and security apparatus, the costs of non-transparency are just as troubling, and after all, the Paul-Grayson bill simply authorizes an audit of the Federal Reserve—not its abolition. And audits are by definition, an accounting after the fact. So the argument that Congress may use the audit process to unduly influence monetary policy loses some of its steam—on this track at least.
Fraught with unknowns though it may be, allowing an entitled and unregulated shadow agency to continue disbursing trillions of our tax dollars to favored entities is far more disturbing. As Congressman Grayson said in a radio interview with Salon’s Glen Greenwald last April,
“Let’s suppose for the sake of the argument, that Mr. Bernanke decides to give a billion dollars to a fledging institution called the Dick Cheney Savings and Loan, and its only asset was a numbered Swiss bank account. How would we know? How would we know that that happened? The answer is, if you take the Federal Reserve’s view of things, we wouldn’t. And that’s disastrous.”
To the politically idealistic among us, this small mutiny among principled elected officials could herald the rebirth of a true populist democracy in the United States; one in which the partisan dictates of competing ideologies are set aside in the interests of bringing accountability and transparency back into the legislative process. Perhaps this truly representative vote is the beginning of the end for the old boy, business-as-usual power base that has so strangled our market economy and the very governance of our Country. At least it’s a good start.
And that’s a reason to be Thankful.
Travel well. Eat safely!
by ahansen
We can’t handle the truth. Facing reality is un-American, being the socialists we are.
A good one from the recent past:
http://www.theonion.com/content/news/nation_ready_to_be_lied_to_about
“From now on, just tell me the b*llsh*t I want to hear,” Pletcher added. “Tell me my savings are okay, everybody has a job, and we’re No. 1 again. Please, just lie to my face.”
A good, objective writer would not throw in subjective opinions like “Although the GOP supported this bill for laughably hypocritical reasons…” as if they’re fact. I don’t think you need to muddle your writing like that.
Objectivity is not my objective, Michael. Nonetheless, do you truly believe that jumping (en masse,) on the regulation bandwagon after a generation of railing for a “small government” policy does not qualify as hypocritical?
You’re caught up in the Republican, Democrat thing. Remember the entitlement programs and new government agencies that Bush and Company setup. There are only two ways of thinking for most people, liberal and conservative. Both the GOP and Democrats have been pushing liberal agendas for years.
I’ve found the vast majority of people I run into are socially liberal (personal freedom) and fiscally conservative (personal responsibility). It’s only a fringe of the country who want government in control of their life and can honestly say they agree with either of the two parties.
I think you’re close to a breakthrough when you point out how Americans are socially liberally and fiscally conservative.
Maybe people are less tolerant of gov’t control of their PERSONAL lives…and more tolerant of government regulation of institutions that can hurt them with fraudelent lending, toxic food, dangerous products, etc. We like that kind of gov’t meddling. And we now see that huge financial institutions including the Fed have the power to really hurt us. So we need more oversight. It’s just logical.
But conservatives always try to blur the lines and suggest that gov’t “meddling” in anything whatsoever is a slippery slope to “taking yer guns away!” and a Communist takeover of private industry.
I think you’re close to a breakthrough when you point out how Americans are socially liberally and fiscally conservative.
Excellent.
Personally, I don’t care what consenting adult you marry, what drugs you take or what you do with your fetuses - as long as I don’t have to pay for any of it.
My brother/cousin loves sheep back home in Tennessee.
I think you’d find a surprising number of lifelong GOP voters (note: do not confuse them with inside the Beltway GOP incumbents) who are as fed up with the existing system of crony capitalism as any liberal.
Whether they want more regulation is another story. I for one do not. All I want is for failed business models to result in the liquidation of the business, and for the term “bailout” henceforth to appear only in the context of jumping out of airplanes.
Doghouse, if you’re a lifelong GOP voter and the GOP incumbents have been trashing the system for years, the question becomes why you’re still a GOP voter. I gave up on the 2 major parties after GW Bush’s free for all with an all GOP house and Senate.
Good question, Bad Andy. I’ve drawn the collective wrath a time or two by pointing out that people who continue to mindlessly vote for Republicrat Tweedle-Dees and Tweedle-Dums lose the right to complain about the mess these empty-suit politicians have gotten us into over the past three decades. Real change requires a real change in voting habits and willingness to actively support principled political outsiders (and not clueless, counterfeit “mavericks.”)
I turned my back on the GOP when they turned their backs on Main Street USA and the productive classes in this country, and handed the party over to the neo-cons, the military-industrial complex, and Wall Street predators.
I don’t think I said “I am a GOP voter”. For example, the last time I voted for the GOP presidential nominee was 1984.
the last time I voted for the GOP presidential nominee was 1984.
Hey! Me too. Reagan got my vote the day he fired the Air Traffic Controllers.
Nobody ever “loses the right to complain”. That’s the thing, Sammy- you have some sort of twisted logic going on. If I hire an employee and they turn out to do a piss poor job, I fire them. It’s no different with a politician. If they don’t do what they were hired for, then they should face scrutiny from those who placed them in office, and be held accountable.
Fair enough, Grizzly, I’ll concede the point. In a free society we always have the right to complain. But I have right to be irate with the complainers, when they show a foolish consistency at the polls. Next election another Republicrat Hollow Man will beguile them again…and the following election…but yes, they still have the right to complain.
“…the neo-cons, the military-industrial complex, and Wall Street predators.”
Exactly, all the same folks!
Very insightful and well communicated commentary. Bravo.
Your best one yet. Thanks.
I love your posts. They are a shining light in a see of Eddie.
Hey! I represent that remark!
Joking aside, ahansen, your posts are well written, thoughtful and always a pleasure to read. Thank you.
Eddie has a Holy See now?
Bless you my child.
“this small mutiny among principled elected officials could herald the rebirth of a true populist democracy in the United States; one in which the partisan dictates of competing ideologies are set aside in the interests of bringing accountability and transparency back into the legislative process. Perhaps this truly representative vote is the beginning of the end for the old boy, business-as-usual power base that has so strangled our market economy and the very governance of our Country.”
From your lips to God’s ears. Excellent commentary.
… the bill passed in a 43-26 landslide.
69 total votes?
That’s a helluva lot of abstentions or absences. Looks like many senators don’t want to be on the record, either way.
House Financial Services Committee.
Yup, corrected myself below …
Ooops, never mind my last comment, it was a House committee vote.
I’ve been reading HBB for about two years now, never posted before. For all of the grave prognostications about the future of the housing market/industry, the simple fact is that you have to live somewhere. We closed on our first house last night. We have a 30 year fixed mortgage at 5.375, and will be saving about 25% in house payments vs. continuing to rent the apartment we are in. Now I will concede that we will likely spend that 25% and then some in annual maintenance etc. But for a roughly equivalent monthly expenditure the modest house that we have purchased in North Charleston is larger (~30%) than the apartment, we don’t have to share any walls (I can’t overstate how much I am looking forward to this), and again the simple fact is that with our new baby we had to move somewhere. We purchased new construction, which they can’t seem to give away right now, and are pretty happy with everything so far. I suppose I should be somewhat cautious with my declaration of contentment lest all the pipes burst and ceiling fall in. Anyhow, the market is certainly down from last year, absolutely down from the previous 5 years, and while it is likely that the market will continue to decline for another year or three, I am optimistic that people have seen the error in putting all of their financial eggs in a single speculative basket and will again look at their houses as places to live instead of their only investment and chance to make it rich. I apologize if this post is a little off-topic I guess I just wanted to say thanks to all the HBBers for helping me to feel a little more educated about all of the nonsense out there and to get the best deal that I could arrange given that I had to make a move. Keep up the good work ahansen, I look forward to following the blog in the future. Oh, and I am all for added transparency to anything that involves my tax dollars. I may not personally have the time to analyze the data that is available but I would gladly contribute to an honest watchdog group that would do so. The major hurdle lies in getting the average american to pay attention to anything other than the price of gasoline, like the information that may be flowing from our newly transparent fed. good luck with that.
I’m with you, man!!
A house is a wonderful thing to own.
I purchase mine (house w/ an ocean view in SoCal) almost 9 years ago.. have a tiny mortgage.. can pay it off if I wish..
I purchased this home, however, as a place to LIVE… with NO INTENTION of flipping it for riches!! That is the difference between people like me & all of the Casey Serin’s out there looking for a quick buck!!
The idea is… don’t rent… buy a place that you plan to OWN FOR YOUR ENTIRE LIFE… you don’t have to live there forever.. but get a good deal on the price… get 15yr loan.. & before you know it… you OWN THE HOUSE FREE & CLEAR!!!
Why is this so hard for anyone to understand nowadays??
You bought at a good time. Anyone who buys a home in your ‘hood right now gets to catch themselves a falling knife.
MDReidy –
How does a baby necessitate a move? Were you guys in a one bdr apt? I hear you about sharing walls; I am top floor only.
North Charleston? With Boeing soon expanding in that area? Ya done good, kid.
ASSUMING you paid no more than $75/sq ft. If you paid over $100/sq ft, then try not to look at your bloody hand.
“North Charleston? With Boeing soon expanding in that area? Ya done good, kid.”
+1 My thoughts exactly.
Because people might want to live some place forever but statistics show they don’t.
I’ve posted this comment before, but I will again as its on point to your post. I purchased my house in Spokane for around $107K in 1988 and paid it off in a little less than 14 years. It is a nice (not pretentious) 3 bed 3 bath in a nice neighborhood. I figure if I had to fire sale it tomorrow, I could probably get around $240,000 net of selling expenses. I once did an ROI calculation on my “investment” using rent as an alternative and 3% of value annual repair and maintence costs, and figured that if I sell it when I plan to in about 5 years, and get something close to the number above in net proceeds of sale, my ROI over the ownership period will be around 6%/year. Not great, but my stock portfolio hasn’t done that well over the same period. I’m a CPA and and and MBA so I think my methodology is pretty sound.
I did not include in my costs of ownership some things like major landscaping projects and some other expenditures I made more for my enjoyment than actual housing costs.
There are some intrinsic values to ownership, for some. For my wife and me and lots of homeowners the home is a hobby, and most of the maintenance tasks are enjoyable persuits, not chores. This is not true for all, and you can pretty well tell who likes working on their house and who doesn’t by how the place looks. The home also provides a great sense of stability, more so since the mortgage has been retired.
But the caveat (and I pass this along to my daughter who is thinks that she needs to buy a Condo at the age of 23), one should never buy a house unless he/she is reasonably certain that they are where they are likely to be for many years, I would set 10 years as a minimum, that their relationship is stable (divorces will kill you financially if you have to dump a house), that you are not buying into even a hint of a bubble, and that you buy a house that you can reasonably expect to build substantial pay-down equity in five to seven years, and completely retire the debt in 15 or less. Also, I think that the 3.5 to 1 income to debt ratio is too high, I would recommend 2 to one or less. Some places, this is not feasable, and those places very few should consider buying.
So, obviously, I don’t think that buying a house is a recipie for disaster, as some on this Blog do. But, given that it is a huge financial and emotional committment, it should be undertaken with great care and deliberation.
Just my two cents worth from hindsight.
There are some intrinsic values to ownership, for some. For my wife and me and lots of homeowners the home is a hobby, and most of the maintenance tasks are enjoyable persuits, not chores. This is not true for all, and you can pretty well tell who likes working on their house and who doesn’t by how the place looks.
I’ll confess to being one of those “home is a hobby” people. And I especially enjoy solving the puzzles that can arise.
Take my new kitchen faucet, for example. It’s a Delta, and it looks very nice. I’ve already taken it apart, and it comes apart quite easily. I like that in a plumbing fixture.
The reason for all this disassembly is to figure out why the dang thing leaks. I think I’ve figured out the answer, and it’s gonna take yet another trip to the plumbing supply house to get some stuff to fully solve the problem.
I spend way more time going back and forth to the hardware store than I do actually working on stuff, and that is annoying. But the alternative would be organization, and that is out of the question.
As an AZ guy, I suppose you don’t get the joys of winterization and de-winterization of stuff. That’s one of those sets of chores that has less intrinsic value to me every year, but, I’ll do the chores to avoid the frozen busted pipes.
Delta is great, I had a problem with a faucet I bought about 4 years ago and couldn’t find the original receipt but they replaced the part with no fuss, for free. Luckily I had saved the Delta brochure which identified the exact model number. Actually, I think I had the receipt,but have you noticed how the ink virtually disappears after several years on those slick paper receipts, so there’s no way you can copy it…..
“Also, I think that the 3.5 to 1 income to debt ratio is too high, I would recommend 2 to one or less.”
My pain threshold is 2.5 x income, and only with a 30%+ down payment.
When you say you are saving 25% in house payments vs. renting, are you factoring in just the mortgage? Or do you also factor in taxes? I don’t care about insurance, but I think mortgage + taxes should be factored in when discussing a house payment.
If I could find a house to buy where PIT (dont’ care about I) save me 25% over renting, I will be first in line believe me. Heck, if I could find PIT to equaly rent, I’d jump in. Not even close around here yet.
CONGRATS, all the best to you and your new little family.
I am a bit jealous BUT I am way to scared to jump and at this rate I may rent for a while yet.
Of course I am living in a State that is set to crash much more yet. I am going to continue to play the waiting game in West Palm Beach
we don’t have to share any walls (I can’t overstate how much I am looking forward to this), and again the simple fact is that with our new baby we had to move somewhere.
Did it ever occur to you to rent a house? We’ve been renting since our kids were very young, will no ill effects whatsoever - quite the contrary. We’ve rented nice houses in good neighborhoods, and my wife could stay home to be an actual mother to them. We never had sleepless nights worrying about oversized mortgage payments or being underwater on a crapbox mass-market houses like so many of our friends and acquaintances. All power to you for buying, but it wouldn’t surprise me to see you kicking yourself when you miss the next big leg down.
Great article ahansen. I’ve been following this bill to see how far it will go.
Glen Greenwald at Salon and Firedoglake are a couple of my favorite reads.
OTOH, “populist” democracies always fall apart, due to the dynamics of mobs, hence the idea of a Republic or representative democracy. The problem is, many of the so-called representatives have become the mob.
They have forgotten that their power derives from the people, which is why, unless they remember it, they will lose power.
I don’t hold out much hope for the US at this moment in time, although the above is a bit of a glimmer. I have often said that one can have a multi-racial society, so long as culture and language is agreed as a unifying force. Multi-culturalism doesn’t work, and various “cultural” groups vying for attention and power, even using violence towards those ends, is the death knell of any nation.
There’s nothing wrong with “populism”, so long as it serves the people, not the mob.
I agree
Palmetto, you subversive. I better hear you chanting the mantra of “diversity is our strength” the next time the thought police patrol in your neighborhood.
The only people who should be allowed to vote are those who pay more into the system in taxes or benefits, i.e. providing real jobs, than they take out in entitlements. On social security or welfare? No vote for you. Sorry AARP, your stranglehold on Congress and generational greed has gone on for far too long. Sorry ACORN, but social parasites no longer get the play the entitlements-for-votes card. Trust me, we’d get a better, more honest class of politicians as a lot of entrenched bums finally got their long-overdue heave-ho from more intelligent and responsible voters.
You want to take votes away from people and run their lives because you’re more responsible and intelligent, eh?
That system of government has been tried before.
Mobocracy has been tried before too. Stupid people are too easily manipulated by the elites. I don’t want to “run their lives.” I just don’t want them voting themselves endless benefits out of the public treasury that I have to pay for. I’ll run my own life and let them run theirs’. But if they do something dumb like buying houses they can’t afford, don’t come boo-hooing to me looking for a bailout.
Very good post ahansen though with your liberal views on healthcare I’m shocked to see that you penned it. The Fed is an unconstitutional abomination. This is step 1 in a long, necessary process of abolishing the Fed.
Just curious, Andy. What do you think should replace the Fed? A central bank of another name and with different responsibilities, oversight mechanism, etc? Gold standard? Something else?
Thanks for asking that question, Polly. That is my main question for anyone (including Dr Ron Paul) who says “End the Fed.” What then?
This principle apparently does not apply at the highest levels of government, but lower level government processes normally involve considering alternatives, including the status quo. If the Fed-based banking system is as terrible as so many say, then where is the list of (clearly) superior systems to replace it? Or would it be better to keep the system we have (including the Fed) in place, but with a better governance system than the current Megabank, Inc cartel based version?
I advocate open and rational debate on this; otherwise, we are likely to end up in a worse place than we are currently after the dust settles. Perhaps we could start from hearing from the Ron Paul crowd what they consider to be the superior alternatives to the status quo?
Ron Paul always refers to the Constitution for guidance, which is not a bad idea, considering it is the foundation of US federal law. I believe there are references in the Constitution that provide for the alternative to the FED.
Being in the House or Senate wouldn’t be a full time job if folks paid attention to that pesky constitution Palmetto.
Andy, I am of the opinion that before anyone can run for elective office, they must read and study the Constitution and take a test, with not less than a 100% score for a passing grade. If they flunk any point, they have to go back and find out what word or words they misunderstood, clear it up, and then study on from there. It’s a basic policy for the operation of the US and should be adhered to.
I would impose the same requirements on law school students during their first year.
Violation of the Constitution should not be permitted. Charges of treason and the penalties that accrue thereof should be the penalty.
Gee, now that I think of it, perhaps this should apply to all citizens of the US from high school on.
Adhering to the constitution is not popular. Older folks want their social security (and frankly who can blame those who paid in), banks and auto companies want their bailouts, people want their $8K to buy a house and cash for clunkers. Until we do adhere to the constitution we’re bound to be in trouble. Nowhere in the constitution does it grant authority to spend us into the ground.
“Perhaps we could start from hearing from the Ron Paul crowd what they consider to be the superior alternatives to the status quo?”
I’m not part of that crowd (I think?) but would like to weigh in. I see a limited number of options for supplying currency:
1) Let the private sector do it. That would involve multiple currencies as the private sector must be able to compete.
2) Let the government do it. There could be contracting out of some aspects (actual printing, IT) but government would ultimately manage it.
3) Have a quasi private/public entity do it. The Fed is one of these. A new and improved Fed would have new rules, and possibly a fresh new fragrance.
Al you may actually be in the Ron Paul crowd. The government needs to be in control of the money supply, but not the quasi private/public entity that can print money out of thin air. Because you even suggested the idea leads me to believe you might be more Ron Paul leaning than you think.
“Andy, I am of the opinion that before anyone can run for elective office, they must read and study the Constitution and take a test, with not less than a 100% score for a passing grade. If they flunk any point, they have to go back and find out what word or words they misunderstood, clear it up, and then study on from there.”
You do realize that the requirements for being elected to federal offices are set out in the Constitution and do not include any of the requirements you set out, don’t you?
“I am of the opinion”
Read much?
If you intended to say that it is your opinion that the requirements you set out would be your preference (rather than the words you wrote which mean that it is your opinion that the requirements you set out are currently required) then you should change your “must” to a “should”.
Yes, I read all the time. Quite carefully.
“Yes, I read all the time. Quite carefully.”
Oh, I see. Just when making dubious grammar corrections, not when reading American history. BTW, that was almost as tortured as “It depends on what the definition of “is”, is.” (oopsie, I’m just SURE I used those quotation marks incorrectly.)
Did any other posters here really think the scenario I outlined was real? No? I didn’t think so.
Good Lawd a’mighty, I just realized polly thought that I thought the scenario I laid out under the heading of an “opinion” was actually part of the Constitution!!!!
Jeebus. I’ll mind my “musts” and “shoulds” more carefully in the future.
No wonder I was a disaster at the debutante parties up North. I made some terrible faux pas.
People talk about ‘following the constitution’ as if it were so simple. Just like people who say ‘follow the bible.’
Guess what? It’s open to interpretation. In fact, it has to be interpreted. It’s not like every single possible scenario has been explained and solved in the constitution. It sets out guidelines to be followed. That necessitates interpretation, does it not?
I think people think if the constitution were strictly followed, their own political beliefs would finally be instated. The problem is, many with quite different political views feel the same way.
Who’s right? That’s for the courts to decide, I guess.
“What do you think should replace the Fed?”
Let me answer this for you.
*A highly regulated central bank* accountable to it’s depositors.
The disasterous end result of “deregulation”, supply side GOP style of thievery and corporatocracy must end.
Polly,
Suggest you read Ron Paul’s book “End the Fed.” If you really want an eye-opener about how the Fed came into being, read “The Creature from Jekyll Island.” Prepare to be sickened.
http://www.amazon.com/Creature-Jekyll-Island-Federal-Reserve/dp/0912986212
Yeah me too. I’m shocked that someone who supports the gang of thieves (government) in charge of health care can support transparancy of central banking.
You know, guys, that’s not OK. The two views are not necessarily mutually exclusive. In the past, Ron Paul and Dennis Kucinich, for example, have both been able to agree on certain goals, maybe for different reasons, but with an end result that benefits everyone.
I frequently have differing views from others on this board, but when they write something that resonates with me, I like to validate them.
The point here is (and this is why the FED’s gonna go down) it would appear that a majority of the people are united in this goal of reining in an organization that does NOT have the interests of US citzens at heart. This is a good thing.
Palmetto,
I’ve been posting bits and pieces long enough to give you an idea that I’ve been aligned with libertarianism for over three decades. I’m hard core with that.
http://www.theadvocates.org/quizp/index.html
My score on the quiz put the red dot at the top of the diamond, and it’s been that way ever since I started taking that quiz. I cannot help being a sovereign individualist.
I just don’t respect anyone who is inconsistent in the subject of liberty and responsibility.
Is this guy looking for a medal or a chest to pin it on?
signed,
Recovery Libertarian
Recovery >> Recovering
Hey bubble between the ears,
I’ve seen ridicule for 30 years for having a consistent opinion. Your remarks are water over the bridge and only reflect upon your own bankrupt subjectivism.
“Your remarks are water over the bridge and only reflect upon your own bankrupt subjectivism.”
Are you aware that the correct term is “water under the bridge”, and that if his remarks were truly “water under the bridge” then you would have already forgotten about them and not felt a need to respond? For somebody portraying themselves as all-knowing, you certainly do come across as foolish.
Boo hoo, boo boo.
Bile, I think everyone is fully aware of your inconsistencies (read: BS).
Actually Bill has been remarkably consistent. As to consistently what, well, I’m in a good mood today so I won’t elaborate.
Bill believes in individual liberty, responsibility, and accountability. That was the basis of our Republic, at one time. What’s wrong with that?
“What’s wrong with that?”
Unfortunately we’ve moved away from individual liberty, responsibility, and accountability. Those of us who believe in those things are now to be made fun of.
Bill believes in individual liberty, responsibility, and accountability. That was the basis of our Republic, at one time. What’s wrong with that?
That’s all I ask for. Notice the cro magnons excretor, oxide and Boo Boo will not answer your question.
The only one not responding is you Bile.
“…that does NOT have the interests of US citzens at heart.”
I hope this sort of question comes up during the Fed audit:
1) Do you represent the US government, or private banking interests?
2) If you are part of the US government, do you have to follow the same rules other parts of the government follow, or do you get to make up your own rules?
3) If you are not part of the US government, then are you subject to the laws governing other private banks?
Oh, that’s easy:
1. Private banking interests
2. n/a
3. Of course not. What would be the point of that?
I support rational fiscal policies to keep a large and diverse population functioning and out of mischief. That is not an ideology, it is practicality.
Health care payment (and that IS the issue, not health care delivery,) is such an unruly mess, with so many sets of standards for so many subsets of people, so rife with misuse and maladministration, that the only way to get it under control at this point is to nationalize and standardize it– as has been done with Medicare (which ALSO caused a “The Socialists Are Coming, The SOCIALISTS ARE COMING!” brouhaha when it was instituted.)
With so many older workers about to retire (voluntarily or not,) the Ponzi scheme that is Medicare simply must be addressed. Our taxes will necessarily go up, no matter what we do. They will go up less, if we get the middlemen (insurance companies,) out of reimbursement administration. America’s health care system is not “voluntary.” Those who benefit from it without paying for it are freeloaders— and I’m not talking about the poor.
Will Medicare-for-all have to be “rationed?” Of course. Will people be able to get bariatric surgery on the public dime? I doubt it. Will we go back to a public clinic system for basic care and keep private insurance for elective medicine? Yep. Just what constitutes “elective” medicine is where the debate will come in.
I’ve written extensively on this issue before and will likely do so again as the bill makes it way through the legislature. There are very few people in this country who have my qualifications and perspective on the subject, and to reduce that level of complexity to “liberal” or “conservative” point of view belies the seriousness of the issue.
So..then it really is just a plan to fix Medicare. Why don’t they just say so?
There’s something fishy going on. They know Medicare is insolvent, and Congress can’t seem to get themselves to go through with the “fix” to reduce payments to providers. So they promise some kind of gobal pan-generational solution to shovel more money in to..fix Medicare.
It’s some kind of shell game. Help me here, someone.
I posted this two days ago and nobody noticed
it at all….amazing.
Medicare, Medicaid, and soon to be the public option are all entitlement programs and as such must be funded from somewhere (guess where). The government mismanages everything they’ve laid hands on. National Flood Insurance Program, give me a break. Social Security, I feel so secure. Fannie Mae, Freddie Mac, yup loans for everyone with no hassle credit.
We must adapt a strict constitutionalist agenda or we don’t have a chance. Entitlement programs and a central bank run by banker crooks have led us down a path to destruction for the last 80 years. You can’t run a country on borrowed money and you can’t put the government in the charge of everything about someone’s life. Socialism doesn’t work. Read your history books.
Read your history books, captialism hasn’t worked to well either.
Capitalism works until government interferes to help a group of no good scum as opposed to common sense regulation that keeps the playing field level.
That is perhaps the most naive comment I’ve ever seen here.
Capitalism works until government interferes to help a group of no good scum as opposed to common sense regulation that keeps the playing field level.
Exactly. The socialists blame capitalism for the distortions caused by government regulations and taxation, basically blaming capitalism for the failures cause by the socialist side of mixed economics.
Exactly.
Exactly?
But if it were “exactly”, why is your sentence saying something completely different than BA’s great sentence you quoted and then said “exactly”?
It was the lack of common sense regulation that keeps the playing field level. that caused our problems.
Socialists blaming capitalism, although predictable and annoying was not “exactly” the cause of our problems.
“”Will Medicare-for-all have to be “rationed?” Of course.”
I agree.
“Will people be able to get bariatric surgery on the public dime? I doubt it.”
Agree with that too.
“Will we go back to a public clinic system for basic care and keep private insurance for elective medicine? Yep.”
And I agree with that.
The problem is that none of the public advocates of federalized health care is saying what you’re saying.
What we are being told by President Obama is that we can (a) cover 30-40 million more people with (b) no increase in cost and (c) no one who currently has commercial insurance or Medicare will see any diminution of the care they receive.
If all these things are true, we also need to to revise our elementary school math texts as it appears that the commutative property of addition has been repealed.
If your position is that we need to fake out the American public in order to get this bill passed, and impose the service cutbacks once it’s solidly entrenched, then please make that clear.
Um, Doghouse?
I’m saying it….
I disagree the the issue is payment and not delivery. Its by and large the OVER-Delivery that results in the excessive cost. The enactment of Medicare in 1964 (yeah its only been around 45 years) was by and large responsible for creating “Big Medicine”; corporate hospital conglomerates, corporate doctor groups and mega Pharma companies. Once created, Big Medicine had to have an ever increasing base of users to fully utilize all of the services, bed-space, equipment and chemicals that are continually being developed or expanded. What could be more ready made for the exploitation of that than a governmental program that promises all services to everyone forever at no cost? Vola- Medicare, Medicaid, and Tri-Care. The result is a vast over utilization of medical services, which is particularly acute among the elderly and the terminally ill. Private insurance is somewhat culpable as well, but at least corporations have some profit motive to attempt to manage the expenditures made by their employees and to manage plan design to minimize over-utilization. Government programs have no such motives. That’s why the public employee’s health benefits are typically far superior to those in the private sector.
Will there be rationing? Absolutely! Should there be ratoning? Absolutely! As a society, we cannot continue to provide every medical procedure, to everyone for everything, forever. The problem is you cannot trust Big Medicine, which includes most physicians, to be the rationing agent. Big Medicine is highly incented to do “things”. In medicine, things = money. Therefore, at some point, the entity paying the bills, the taxpayer and its serrogate the government, will have to step in an develop comprehensive guidelines as to what services will be available to whom, and at what stage of life. To the extent that a procedure is denied, the patient and his family will have to make the decision as to whether to spend down personal resources or accept the inevitable. This is somewhat like the costs of Long Term Care now. In order to qualify for Medicaid, the patient must spend down most of his personal resources first. Nothing wrong with that.
I’m getting close to Medicare age and have written a very stongly worded non-intervention living will and more importantly have instructed my family as to what my wishes are. However, so long as Big Medicine can make money doing “things” to me, they will pressure my family and me to try that one last “thing”. The only way to prevent that is to make sure that “things” are not paid for. Once the economic incentive is gone, the excess utilization stops.
We’re all going to die someday.
Spokane,
I AM retired and on Medicare plus a fairly
inexpensive supplemental that covers all my needs. I am in total agreement with your
comments above and have already done
similar things to protect my family. My father,
who died decades ago, spent the last 9 months of his life totally paralyzed due to
Parkinson’s and had specifically stated previously that he didn’t want life support, yet due to his failure to do this in writing,
my two darling SOB sisters over ruled me
so they didn’t have to make the hard decision.
I make the decision, no one else.
There are so many reasons why the medical care system is
all mess up ,including your valid points Spokanerman .
The point is we can no longer afford to have a Medical Care system that is in part based on simply the creation of a
industry . If I wanted to create jobs ,I wouldn’t do it by giving
pills with side affect while I didn’t tackle lifestyle reasons for ill health . Insurance Companies having monopolies in which they can raise costs and cancel people who actually need health care is not my idea of how to run a health care system either .
Have you ever noticed how crazy trends come on slowly at first and if they meet the we can get away with this test ,it just gets more absurd ?
“Let’s suppose for the sake of the argument, that Mr. Bernanke decides to give a billion dollars to a fledging institution called the Dick Cheney Savings and Loan, and its only asset was a numbered Swiss bank account. How would we know?”
Counter argument. Based on what Congress tends to do, giving it more leverage over the Fed makes a billion dollar loan to the Dick Cheney Savings and Loan, Nancy Pelosi Savings and Loan, etc. more likely.
Agencies directly controlled by Congress allowed the banksters to get away with far more, although the Fed also allowed them to get away with too much.
It all comes back to the bailout in late 2008. Many people who want to audit the Fed also believe the financial system should have been allowed to collapse, wiping out the value of paper assets and undoing the increasingly and unsustainably unequal distribution of wealth that has built up over the decades at horrific cost.
One could argue, long term, that was best, or short term, it would have been disastrous. One could argue that a growing share of Americans have little left to lose — no savings, no pension or prospect of getting one, no Social Security or Medicare in the future, falling wages, etc. But that is the argument.
“One could argue that a growing share of Americans have little left to lose — no savings, no pension or prospect of getting one, no Social Security or Medicare in the future, falling wages, etc.”
I see Share the Wealth programs extending into the indefinite future.
Hey, what I’m suggesting it that they had an “eliminate the wealth” option and didn’t take it, and now everyone is kvetching.
I would have been like a neutron bomb — real assets (buildings, machines, human capital, intellectual rights, land and minerals) would have remained standing, but paper claims on them would have been vaporized. There would have been extensive short run collateral damage to income and employment, but the distrubution of income would have been more equal going forward. This, essentially, is what happened in the Great Depression.
Perhaps the Democratic “progressives,” if they understood this, would have been in favor. I wouldn’t put it past Ron Paul either. I’m not sure about the rest.
“…Perhaps the Democratic “progressives,” if they understood this, would have been in favor….”
It is my understanding that progressives *were* in favor of letting the markets settle themselves, then proceeding out of the rubble into something more equitable. There is an odd morphing of progressive/libertarianism going on these days, and I think it will become more pronounced as the election season comes around.
Remember, it was mainstream politicos who voted to bail out favored institutions. The whole point of my post was that progressives DID band together with conservatives on this issue. As did 15 Dems—in defiance of party dictates.
For those who have saved a modest amount, bucking the cultural Tsunami, hitting the national (or global) reset would be painful. For one thing, I’ve been saving for the kid’s college since they were born, and now college is a year and three away.
On the other hand, there is something satisfying about the idea. And I’m afraid that after enriching the rich once again, we might end up right back were we were sometime in the next two years.
My inner Austrian economist is cheering! I think my donations to “Campaign for Liberty” is paying off.
Score against the dimwits I’ve seen here ridiculing Ron Paul!
Score against the dimwits I’ve seen here ridiculing Ron Paul!
What about the dimwits who think Ron Paul is the Second Coming?
Oh but I worship the one true Messiah, Barack Obama. Don’t get me wrong!
Now I’m laughing.
Can someone explain to me why so many people here say “both parties are the same” and “all politicians are the same” — yet Mr. Paul, who works within The System, right down to his major-label affiliation and national aspirations on behalf of one well-established political juggernaut … is somehow different?
‘major-label affiliation’
When I first met RP in the mid-90’s, we sat down for breakfast and I immediately asked him to not run as a Republican (again). His answer, in short, was that he couldn’t have any effect unless he could get elected and this was the only way to make that happen. (It was still a long shot). I agreed to volunteer and after a long battle he won. History will have to decide if he was right.
“…yet Mr. Paul, who works within The System, right down to his major-label affiliation and national aspirations on behalf of one well-established political juggernaut … is somehow different?”
Maybe the freaky one-eyed fish is more comforting than all the freaky three-eyed fish in the river? At least he’s swimming against the current.
His answer, in short, was that he couldn’t have any effect unless he could get elected and this was the only way to make that happen.
That has a certain logic to it, but at the same time, those who claim the “all politicians are the same” must reconcile Mr. Paul’s willingness to join forces with politicians-as-usual and work within a system they claim is corrupt to the core.
For the record, I don’t think Mr. Paul is a bad politician or has bad ideas. But the same people who make jokes ad nauseum about other Messiahs are curiously willing to put Mr. Paul on his own ivory pedestal.
those who claim the “all politicians are the same” must reconcile Mr. Paul’s willingness to join forces with politicians-as-usual and work within a system they claim is corrupt to the core.
Brilliantly made point ET. And let’s hear some responses from those who flaunt their political purity for never lowering themselves to vote for a mortal and yet put Ron Paul on a pedestal as the answer to all our problems. Isn’t he, by their own definition, part of the problem? Or is it not so black and white after all?
Neither of these extremist groups are right. Let’s have a rational discussion about what would be an improvement on the status quo. We can be grateful to Ron Paul for pushing forward an important issue few others were willing to touch, without getting carried away in religious debate.
We can be grateful to Ron Paul for pushing forward an important issue few others were willing to touch, without getting carried away in religious debate.
True enough.
But let’s also note he had a co-sponsor from across the aisle, as well as considerable bi-partisan support (regardless of label).
One man alone can’t get anything done within our system.
“One man alone can’t get anything done within our system.”
Yes, agreed (Geithner doctrine notwithstanding).
We’re getting to the point here.
Both ideological persuasions are guilty of hero worship but face it…. these guys R.Paul and Grayson are tools; rather a mechanism to take down the power structures called the banking cartel. They are a means to an end, nothing more. Everyone wants a gladiator…. a champion and herein lies the pitfall with these two, in particular R. Paul. I want them to suceed in smashing the banking cartel to smithereens…. I couldn’t care less about their flag waving as a means to rally votes and neither should anyone else.
Amen, Prof.
“And audits are by definition, an accounting after the fact. So the argument that Congress may use the audit process to unduly influence monetary policy loses some of its steam—on this track at least.”
That’s the thing that gets me about the argument of this bill. It’s only allows an AUDIT of the past… it doesn’t allow Congress to VOTE on monetary policy!!
WHO, IN THEIR RIGHT MIND… COULD EVER BE **AGAINST** AUDITING FOR ACCOUNTABILITY… FOR ANY INSTITUTION???
It just shows you… how corrupt…. our elected officials are!!! They are so deep in the pockets of the banking powers that be!!!
Ron Paul/Alan Greyson… for President/Vice-President!!!!
‘ANY INSTITUTION’
I’ve mentioned here that the Girl scouts undoubtedly have audits. If we can expect a look-see into all those cookie sales, why not one of the billionaires that control the money supply?
Here’s something to think about; as a former accountant, I’d bet my favorite calculator that the Fed IS audited regularly. Any organization with an accounting system has to be. So all that really needs to be done is for those audits to be made public.
Why the fuss? Why doesn’t the Fed just toss the paperwork to congress? I suspect they know that when the public finds out what they do, the SWHTF. After all, how will Joe and Jane 6pack feel about getting up and going to work, day after day, for this “money” these guys make out of thin air and then charge everybody interest on it?
‘…this “money” these guys make out of thin air and then charge everybody interest on it?’
Well, technically, the Megabank, Inc members who get interest free loans don’t get charged interest on it. Only Joe and Jane 6pack pay interest to fund the spread between Megabank, Inc’s zero percent interest loans from the Fed and whatever the so-called ‘market rate’ happens to be that the 6pack family gets to pay.
You don’t really need to audit the Fed to figure this out, do you?
I think that’s what Ben was getting at. For my benefit, the audit would expose the the details of the various cash for crap loan/swap facilities.
I suspect they know that when the public finds out what they do, the SWHTF
Hey, you can cuss on here if you want. I know the guy that runs the place.
“the Fed IS audited regularly. Any organization with an accounting system has to be. So all that really needs to be done is for those audits to be made public.”
What good is an AUDIT…. if NOBODY gets to READ IT????
If everything is secret….. how do we know what the hell is going on?
We can use this syllogism: As goes the Federal Reserve System so go the big banks. As go the big banks, so goes Wall Street.
Wall Street is hostile to any suggestion that the U. S. government has any legitimate authority to audit its creation: the Federal Reserve System. The government’s authority must be limited to enforcing the barrier to entry in banking. Anything beyond this is conceptually and operationally illegitimate. This is the party line of the Wall Street establishment. It has been since before the creation of the FED in 1913. The Federal Reserve was the joint product of a mutually beneficial alliance between the Morgan bank and the largest Rockefeller bank. The story of this alliance is here
The Federal Reserve System has been described as the Temple. That is because, ever since 1914, it has been sacrosanct: above politics and above the law. It has also been the inner sanctum. No unauthorized person is allowed to open its door.
Congressman Ron Paul dared to introduce a bill, H.R. 1207, that would require an audit of the FED by a government agency. The House of Representatives agrees with him. He got over 300 co-signers of the bill. Barney Frank at first tried to bottle it up in committee. Then he tried to substitute a watered-down version. The committee voted for Paul’s version last week. This was a palace revolt against Frank. This does not happen often in any committee.
Excerpt: From Gary North
“The committee voted for Paul’s version last week. This was a palace revolt against Frank. This does not happen often in any committee.”
Isn’t it amazing how the MSM pretty much ignored this story, preferring instead to get all bug-eyed about the Rogue dressed in Red.
Another example how little the MSM cares about this matter. They don’t see it important, I guess. Rather chase after soap opera type news.
We can use this syllogism:
Syllogism.
Now I miss Oly. She would have loved that.
Yeah, where is Oly anyway? I miss her story-posts. And her clever turns of the phrase.
“Syllogism.
Now I miss Oly. She would have loved that”
The HBB wild child has to be out there somewhere.
She’s most likely lurking, drooling and just dying to fire up her keyboard and the board with flowers, clams and weird wit.
But, then again, perhaps the warden at Walla Walla Prison has finally remembered to lock his office and Olygal can’t get back on line.
ha ha ha Olygal !
Hugs
It would be glorious to see the Federal Reserve shattered and broken. They have been robbing the American people via inflation and intentional Bubble Brewing since they were created in the dead of night under a cloak of shadows back before the Roaring Twenties (which lead to the Great Depression…)
I doubt anything will happen long run, at least not until the American people wake up in anger and demand accountability from the crooks who have run this nation into the ground. And that will only happen once Americans stop worshipping crooks in a vain dream to “becomem rich/powerful/famous like them.”
1913 Fed created
1914-1918 America in WWI
1920-1929 Roaring Twenties
1930-1939 Great Depression
1940-1945 America in WWII
Was the above sequence of events historically coincidental, or is there a thread of causality running through them? It seems in retrospect like the entire period from 1913 through 1945 was one of great financial and political instability in the US. I will be interested to learn more about the Fed’s role in the entire episode.
Here’s another timeline
2000 BC God created man
1999 BC - present: man in chaos
Seriously though, there were bubbles, financial upheaval and wars before the Fed.
Modern finance (with or without the Fed) has given leaders a greater ability to wage war on one another. - credit Niall Ferguson, still reading his Ascent of Money
Our system is built on the assumption that banks are supreme. The Fed is there for the pleasure of the banks.
Why do we not protect and grow our non-financial industrial sectors with the same rigor?
Oh dear god, Ron Paul actually has power now? This country gets more and more insane every day.
Ron Paul! Ron Paul! Ron Paul!
Ehhdee, keesa me goo’night. (Topo Gigio)
‘This country gets more and more insane every day.’
It’s pretty interesting how anyone who questions the Fed is still viciously attacked. Nothing new of course. Anyone who was paying attention in the 70’s and 80’s will remember that even mentioning the Fed too often was forbidden. Similarly, when I slipped in my business college classes and admitted that I owned some gold, the professors went nuts. We really have come a long way; buying/selling gold is no longer a fringe activity. Criticizing the Fed can be done openly. What’s wrong with that?
Anyone who dares to criticize or even question the Fed is a kook. Just ask Eddie.
“It’s pretty interesting how anyone who questions the Fed is still viciously attacked. Nothing new of course. Anyone who was paying attention in the 70’s and 80’s will remember that even mentioning the Fed too often was forbidden.”
The Federal Reserve represents the highest stage of organized crime in the United States.
When people talk about “The Powers That Be”, they need to remember that the so-called “Federal Reserve” is not a branch of the Federal government, it is a private international banking cartel. As such, its owners don’t run for public office. They INFLUENCE and BANKROLL those who run for office as well as those already in office. Their agenda and policies are multi-generational, global, and generally secret. That is who the “Powers That Be” really are.
Think about this, HBB’ers: If a private banking cartel -The Fed- already exercises the power to control the money supply and economy of this country, why should it be concerned about the will or welfare of the people? Why wouldn’t it rely on graft, corruption, and subterfuge to perpetuate and enrich itself at all costs?
Many thanks, ahansen and Ben, for this public discussion. The country needs a lot more of it.
‘They INFLUENCE and BANKROLL those who run for office as well as those already in office. Their agenda and policies are multi-generational, global, and generally secret.’
I will remain skeptical about such harsh charges against the Fed until the results of the audit are made public. But I do hope the auditors investigate outlandish claims such as those you make, in order to either corroborate or refute them.
I will reserve judgment…
Thank you, Bear.
…even mentioning the Fed too often was forbidden.
First rule of the Fed… Don’t talk about the Fed.
It’s more like: the greatest trick the devil ever pulled was convincing the world he didn’t exist.
The mystique surrounding the Fed’s operation reminds me of the fictitious religion of Bokonon, where all residents of San Lorenzo caught practicing it were bound by law to die of impalement on the hook. Nonetheless, Bokonon had many faithful adherents.
Come to think of it, the Fed is just as accomplished in foma as were the Bokononists.
busy, busy, busy
Po-tee-weet?
“Criticizing the Fed can be done openly. What’s wrong with that?”
Aladinsane, Neil and Olygal ?
Ben, people mysteriously disappear around here. “THEY” know your name and where you live.
Ben…Ben…Ben !?!
Ben, people mysteriously disappear around here. “THEY” know your name and where you live.
Well, Paladin seems to have escaped, so I don’t suppose there’s much to worry about there.
“…Ron Paul actually has power now? ”
No, not really. But after 25 years of proposing the same bill, he finally figured out the art of reasoned compromise. There is a difference between intent and effect.
He said on CNBC yesterday morning he’d vote against this (his own) bill, however, as it is included in a bunch of other regulation he doesn’t agree with.
He said he won’t vote for his own bill because like everything in Washington, it gets loaded down with crap.
“after 25 years of proposing the same bill, he finally figured out the art of reasoned compromise”
You forgot timing. Timing is everything.
OK, at risk of showing my age, I have to recall the very first time I heard a congressman talk about this. I was about 18 and a political junkie. I loved CSPAN and especially the special orders (after house business), where house reps could talk about anything, usually late at night. One night Henry Gonzales, a Dem from San Antonio, called for a Fed audit and made pretty much the same points we hear today. Now, I would never have heard this on the main networks, and this was before cable busted up the network news powerhouses.
Gonzales was an ornery dude who wasn’t afraid to speak his mind. Over the years he would bring this up, but at that time the Fed was so above it all that they didn’t even release their FOMC actions for months! So, yeah, now over 20 years later, we’ve made some progress and I hope we can continue.
If you’re a fan of Henry Gonzales, you’ll love the book that was recently written by one of his aides, Robert Auerbach. He’s a University of Texas prof and the book is called Deception and Abuse at the Fed. Read it — it makes a very convincing case for auditing the Fed.
You’ll also enjoy the stories about Rep. Gonzales.
Interesting post ahansen, as always, thank you.
Since the Federal Reserve is chartered by Congress, I have to agree that the ability to audit is a no brainer. The possible consequences are staggering.
“Oh dear god, Ron Paul actually has power now? This country gets more and more insane every day.” Eddie
Ok then Eddie, you send us a postcard from
your new “sane” country.
Yer pretty regular with complaints, so let’s see some action behind the big mouth!
AQIUS! Bro’, good to see ya! Many happy returns of the season to you and yours!
and many good things yer way also, palmy, you ‘ol “he-coon”.
(in memory of Walkin’ Lawtin)
I suggested in today’s Bits Bucket that Eddie should start his own blog, but I like the suggestion that he should start his own country (or perhaps his own planet) even better.
Well it’s the usual thinking.
Option 1:
Remove all regulation via lobbying.
Make their Pile by basic cheating.
Hide Pile in a Swiss Bank Account.
Leave country under the guise of “Going Galt,” taking Pile along.
Put all the regulations back so nobody else can make a Pile.
Move to beach in banana republic and live off Pile.
Option 2:
Remove all regulation via lobbying.
Make their Pile by basic cheating.
Hide the Pile in Cayman Islands.
Make sure regulations stay removed (via lobby/elections) so they can keep their Pile.
Live off Pile in US, write blogs lording it over those who didn’t cheat.
You all need to spend more time thinking and less time foaming at the mouth. I can’t believe you didn’t pick up on Eddie’s sarcasm.
Eddie, the stiletto (sp?) approach didn’t work. Next time use the 2×4.
What do personal attacks and political invective have to do with sarcasm?
Oxide, did this comment of yours land in the wrong place?
It was an oblique reference to those who have their money and think they got it through “hard work” and therefore they deserve it, and the people who don’t have money obviously didn’t work hard enough, and so therefore they deserve to die in the street. Of course that “hard work” usually translates to “luck” or “picking the right college major by chance” or, most frequently, “having a rich daddy get you into a school with good connections.”
Lol oxide.
Anyway ,who said that the Fed audit would be made public ,
The thing that crosses my mind is that Greenspan openly admitted that he made a mistake . The problem with a Fed Chairman making a mistake is that it could cost the Country …the Country .If the check and balance on any system isn’t
strong enough to take away the possible fact that one self-interested group or one nut cake or incompetent human being
could have that much power to actually create a meltdown ,than
the check and balance isn’t strong enough .
I have not been that impressed with the last 2 Treasury Sec. and the last 2 Fed Chairmans . Just watching Paulson and BB lie to the Public leading up to the bail-outs was painful . Watching
Greenspan admit that he didn’t see the risks in the sub-prime markets etc,is enough to make you know that the Fed and Treasury Job mistakes can actually sink a Country as much or more than a Military mistake .
The fact that BB was a student of the Great Depression in my view would disqualify him from being a good Fed Chairman . You need to have a person that is able to see all the current facts and see how they are unlike the Great Depression . For one thing ,during the Great Depression we didn’t have FDIC Insurance and Investment Houses weren’t rescued by Government and for most part they came up with rescue money themselves . Solving the job loss problem as well as the deflationary problem became the foremost problem during the Great Depression .
Also , what good is a audit of the Feds after the fact?
“If the checks and balances on any system aren’t strong enough to take away the possible fact that one self-interested group or one nut cake or incompetent human being could have that much power to actually create a meltdown, than the check and balance isn’t strong enough.”
You have singled out the reason I find current proposals to concentrate far more power in the Fed’s hands extremely frightening. The founding fathers had a great idea when they built checks and balances into the Constitution. Let’s not throw away the best ideas behind the American system in favor of appeasing those who savor unchecked power.
The problem with a Fed Chairman making a mistake is that it could cost the Country …the Country
True HW,
That’s also why I think the Chairman of the Fed should have term limits. 8 year max. 18 years was too long for one man’s “mistakes”.
Test
This is my favorite of your posts to date Alena! Very nice.
Here is a MSM article which points to the need for rational debate on what has become of the US banking system over the past century, and how it should evolve to improve the well being of all US citizens, not just those who make their living on Wall Street.
Many recent articles characterize the political pressure for a Fed audit as a populist revolt run amok. The motives of those wanting an audit are ascribed to a lunatic fringe which has somehow taken hold of the American populace in the wake of the 2008 financial meltdown.
Nothing could be farther from the truth, so far as I can tell. We just want a banking system which does not institutionally enable Wall Street to systematically steal from Main Street. Is that really too much to ask?
Nov 25, 2009
Page 1 of 2
Bernanke’s neck on the line
By Julian Delasantellis
“Julian Delasantellis is a management consultant, private investor and educator in international business in the US state of Washington. He can be reached at juliandelasantellis@yahoo.com.”
Proposed question for the Congressional Fed auditors to ask:
Which of Julian and others currently penning MSM articles to pillory anyone in favor of the Fed audit are, in fact, paid Fed or Megabank, Inc consultants?
“Perhaps this truly representative vote is the beginning of the end for the old boy, business-as-usual power base that has so strangled our market economy and the very governance of our Country. At least it’s a good start.
And that’s a reason to be Thankful.”
I’m thankful for people like Alena, whose guiding principles will help carry our country forward out of our current malaise. Let me know when you run for high office, and we will send our campaign contributions your way.
‘Frank argued that Congressional interference in the workings of the Fed could have an inflationary effect on the economy, and “too much transparency” could compromise national security.’
It sounds like the Fed is setting up a blame game for the inflation they will inevitably create over the next decade: ‘The Congressional audit caused inflation to happen.’
On the other hand, Congress may be setting up to have the Fed monetize the debt, for better and worse. Isn’t that what both parties would want, based on what they have done not said?
I just had a thought.
The distribution of wealth has become unequal because the executives who sit on each other’s boards voted to print stock (options) and award it to each other.
So, an audited Fed, depending on who controlled Congress, could print money and distribute it. The effect is the same, watering down existing wealth, but the beneficiaries might be different.
Is that what the unaudited Fed is doing?
A good post all in all. The biggest threat to our country is the corrupt politicians, Democrat or Republican, and I’m afraid that it’s hard to find one these days who isn’t. Campaign finance reform is desperately needed.
We’ve had several doses of “campaign finance reform” during the last three decades, during which the lifetime incumbents have if anything gotten even more entrenched.
No such “reform” will work which does not address the resources available to incumbents but not to challengers. It’s as if there were to be a 15 round bout between Mike Tyson and Pee Wee Herman and the rules were to be “reformed” by saying, “Mike, you can’t bite Pee Wee’s ear and Pee Wee, you can’t bite Mike’s ear either”.
And if we can ever pass campaign legislation over the objections of the incumbents, we oughta go all the way and put in term limits.
* The Nation
* Economics
* Economic Policy
Dismantling the Temple
By William Greider
This article appeared in the August 3, 2009 edition of The Nation.
July 15, 2009
…
The Fed was designed as a unique hybrid in which government would share its powers with the private banking industry. Bankers collaborate closely on Fed policy. Banks are the “shareholders” who ostensibly own the twelve regional Federal Reserve banks. Bankers sit on the boards of directors, proposing interest-rate changes for Fed governors in Washington to decide. Bankers also have a special advisory council that meets privately with governors to critique monetary policy and management of the economy. Sometimes, the Fed pretends to be a private organization. Other times, it admits to being part of the government.
The antiquated quality of this institution is reflected in the map of the Fed’s twelve regional banks. Five of them are located in the Midwest (better known today as the industrial Rust Belt). Missouri has two Federal Reserve banks (St. Louis and Kansas City), while the entire West Coast has only one (located in San Francisco, not Los Angeles or Seattle). Virginia has one; Florida does not. Among its functions, the Federal Reserve directly regulates the largest banks, but it also looks out for their well-being–providing regular liquidity loans for those caught short and bailing out endangered banks it deems “too big to fail.” Critics look askance at these peculiar arrangements and see “conspiracy.” But it’s not really secret. This duck was created by an act of Congress. The Fed’s favoritism toward bankers is embedded in its DNA.
This awkward reality explains the dilemma facing the Fed. It cannot stand too much visibility, nor can it easily explain or justify its peculiar status. The Federal Reserve is the black hole of our democracy–the crucial contradiction that keeps the people and their representatives from having any voice in these most important public policies. That’s why the central bankers have always operated in secrecy, avoiding public controversy and inevitable accusations of special deal-making. The current crisis has blown the central bank’s cover. Many in Congress are alarmed, demanding greater transparency. More than 250 House members are seeking an independent audit of Fed accounts. House Speaker Nancy Pelosi observed that the Fed seems to be poaching on Congressional functions–handing out public money without the bother of public decision-making.
“Many of us were…if not surprised, taken aback, when the Fed had $80 billion to invest in AIG just out of the blue,” Pelosi said. “All of a sudden, we wake up one morning and AIG was receiving $80 billion from the Fed. So of course we’re saying, Where is this money coming from? ‘Oh, we have it. And not only that, we have more.’” So who needs Congress? Pelosi sounded guileless, but she knows very well where the Fed gets its money. She was slyly tweaking the central bankers on their vulnerability.
Fed chair Ben Bernanke responded with the usual aloofness. An audit, he insisted, would amount to “a takeover of monetary policy by the Congress.” He did not appear to recognize how arrogant that sounded. Congress created the Fed, but it must not look too deeply into the Fed’s private business. The mystique intimidates many politicians. The Fed’s power depends crucially upon the people not knowing exactly what it does.
Basically, what the central bank is trying to do with its aggressive distribution of trillions is avoid repeating the great mistake the Fed made after the 1929 stock market crash. The central bankers responded hesitantly then and allowed the money supply to collapse, which led to the ultimate catastrophe of full-blown monetary deflation and created the Great Depression. Bernanke has not yet won this struggle against falling prices and production–deflationary symptoms remain visible around the world–but he has not lost either. He might get more public sympathy if Fed officials explained this dilemma in plain English. Instead, they are shielding people from understanding the full dimensions of our predicament.
President Obama inadvertently made the political problem worse for the Fed in June, when he proposed to make the central bank the supercop to guard against “systemic risk” and decide the terms for regulating the largest commercial banks and some heavyweight industrial corporations engaged in finance. The House Financial Services Committee intends to draft the legislation quickly, but many members want to learn more first. Obama’s proposal gives the central bank even greater power, including broad power to pick winners and losers in the private economy and behind closed doors. Yet Obama did not propose any changes in the Fed’s privileged status. Instead, he asked Fed governors to consider the matter. But perhaps it is the Federal Reserve that needs to be reformed.
…
‘Fed chair Ben Bernanke responded with the usual aloofness. An audit, he insisted, would amount to “a takeover of monetary policy by the Congress.” He did not appear to recognize how arrogant that sounded. Congress created the Fed, but it must not look too deeply into the Fed’s private business. The mystique intimidates many politicians. The Fed’s power depends crucially upon the people not knowing exactly what it does.‘
That intimidation factor due to opacity is a key reason that Congress should conduct an audit. They should start by asking the Fed for a list of all possible questions which would potentially compromise the independence of monetary policy, in order to preemptively avoid the appearance that the Congress was trying to undermine the Fed’s monetary policy independence.
Of course, one could argue about whether wealth redistribution schemes and summary decisions about whom to bail out and whom to throw under the bus fall under monetary policy moniker. I would argue they do not.
‘Fed chair Ben Bernanke responded with the usual aloofness. An audit, he insisted, would amount to “a takeover of monetary policy by the Congress.”
And whose hands is monetary policy in now? Goldman Sachs is the answer that comes to mind. Raise your hand if you think THEY are acting in the national interest. Given Fed secrecy and resistance to Ron Paul’s audit, it looks to me like they’ve got a lot to hide.
The Fed Chairman went beyond the usual role it serves and they included Insurance Companies and Investment Houses and unregulated entities in at first Discount Window loans and than actual bail outs . I would not of been as pissed off had Ben Bernanke
just limited the bail outs to the regulated banks . As I see it BB and
Hank Paulson went way beyond what you would consider bail outs or discount loans that could be justified to bail out to entities that should not of been bailed out and in large part it was a Obstruction of Justice and a abuse of authority .
Taking public money and using it to pay off the fact that Insurance Companies didn’t have the funds to back Casino bets
that Goldman would of been burned on and exposed over is not my idea of the way public funds should of been used .Besides ,the Feds could of directly provided funds to keep the credits markets going and make requirements because they were the direct funder had the real purpose been to keep the credit markets from jamming up .
When these entities crashed and burned ,the Government could of provided possible funds in a contractive way ,rather than Goldman and AIG flaunting their bonus payouts . The bail outs kept evil entities going and they kept exposure of just how
unregulated these entities are and just how much they were leveraged Casino houses . These entities are still operational
without reform coming about yet .
Did anybody get a little pissed in how these culprits were given billions of dollars with no requirements put on them on how
they had to spend the money ?
It’s a pity and it’s a shame that the bribed Politicians didn’t take
the course of busting the culprits to the crash and instead spend
billions trying to keep them going so they could live another day to fleece Main Street without reform .
So,I’m sure the Public would be shocked and dismayed if they ever found out where this money went .In fact it is surprising that when the meltdown first started that the immediate respond wasn’t a clean house reaction and a big time investigation rather than less transparency . If anybody thinks that those bogus Senate hearings in which they ask the culprits
to come in and make their PR statements is a investigation ,than you don’t know what a investigation is .
“As I see it BB and Hank Paulson went way beyond what you would consider bail outs or discount loans that could be justified to bail out to entities that should not of been bailed out and in large part it was a Obstruction of Justice and a abuse of authority.”
That does not seem monetary policy related. Are questions about who got bailed and why fair game for the Congressional audit?
Ahansen!
Nicely done.
Letters to the Editor »
Fight out-of-control Federal Reserve
By Letters to the Editor/Gloucester County …
November 13, 2009, 3:00AM
To the Editor:
It’s time for us to fight back against the out-of-control Federal Reserve Board and the Wall Street plundering of our tax dollars.
The threat is hard to see. Our constitutional principles and freedoms are being assaulted at every turn: more bailouts, trillion-dollar stimulus plans, huge new debt for our children, just printing money to cover our failed policies that President Barack Obama is going to keep going — if someone doesn’t put a stop to this madness. Trillions of dollars are being stolen from the taxpayers.
We are seeing the worst plundering of our country’s wealth in the history of our civilization, led by the Fed. Just think about the outrageous amount of dollars committed to the bailouts in recent months. The expenditures total more than the entire Iraq war, more than the 1980s savings and loan bailout, and more than the Korean War. When it is going to end?
It’s time for the taxpayers to put a stop to the out-of-control Federal Reserve. So, start writing to your congressmen and senators, and ask them to pass H.R. 1207 and S. 604, which would limit the Fed’s powers and add transparency to its actions.
Do you know the Federal Reserve is shrouded in secrecy? They told Congress “no way” when they asked to account for $2 billion in taxpayer-backed losses. They have mismanaged economic crises and are slowly destroying the middle class, as fuel, food, medical and education costs are going up. Everyone who doesn’t work for the government is forced to make do with less, as the value of their money slowly decreases.
When people see that their money isn’t worth the paper it’s printed on, no one will accept it — unless we end this madness in Washington, D.C.
The two bills I mentioned above are vital to exposing the dollar manipulators at the Federal Reserve. The establishment and power brokers are telling us they are working hard to fix our economy. Whom do they think they are kidding?
…
* OPINION
* NOVEMBER 19, 2009, 9:58 A.M. ET
Americans Deserve a Transparent Fed
Trillion-dollar interventions in the economy merit scrutiny by taxpayers and their representatives.
By RON PAUL AND JIM DEMINT
For nearly a century the Federal Reserve has operated in the shadows, away from the prying eyes of Congress, journalists and the American people. Created in 1913, the Fed was given enormous responsibility to protect the value of our currency. Yet in the last 96 years the U.S. dollar has lost more than 95% of its purchasing power. The Fed’s unprecedented actions over the past year in attempting to stabilize the financial system have now forced it into the spotlight, and caused millions of people around the country to question the opacity of the Fed’s financial transactions.
While the Fed is more transparent now than it was 20 or 30 years ago, there is still a long way to go. If the Fed were fully transparent, organizations such as Bloomberg and Fox News wouldn’t have to sue its board of governors to receive materials that should be available through Freedom of Information Act requests. These include information on which banks and companies received loans and for what amounts after the 2008 financial meltdown.
One puzzling assertion made by the Fed and its supporters is that the Federal Reserve has some sort of independence from the government and independence in undertaking monetary policy. Nothing could be further from the truth. The Federal Reserve is a government-created banking monopoly, and its top decision makers are appointed by the president and confirmed by the Senate. If they do not perform satisfactorily in the eyes of politicians, they will not be renominated.
…
Ah, ahanson. You’ve redeemed yourself for your Obama vote by highlighting Rep. Ron Paul’s single-minded determination in leading the movement to audit the Fed. Although I object to your characterization of Ron Paul’s ardent supporters as “moonbats.” I prefer “enlightened independent thinkers.”
Even the most zombified Republicrat voters are starting to get a dim sense, amidst the throbbing of their lobotomy scars, that something is seriously amiss and our DNC/GOP Captains Not Courageous are steering the ship of state straight into the rocks. If this is what Ron Paul could accomplish with the active support of a tiny fraction of the population, and with all the hostility and manipulative powers of the political, financial, and media elites arrayed against him, imagine what he could do if a few hundred thousand more Americans started acting like citizens of the republic and rallied behind him. He’ll probably never be President, but he is a beacon of principle, reason, and hope among the bought-and-paid-for Republicrat political apparatchiks who have sold their souls and our country to the corporate cartels and financial oligarchs.
“So the argument that Congress may use the audit process to unduly influence monetary policy loses some of its steam—on this track at least.”
I believe the point is that unless monetary policy decisions are somehow left off the audit table, the temptation for Congress to engage in Monday morning quarterbacking of any Fed decision it did not approve would be quite extreme.
That’s my question: say congress had had the ability to audit the Fed during the housing bubble- what would they have done differently? And would it have been better? They were as caught up in bubble-think as anyone. (Not that I’m against auditing the Fed.)
White banker speak with forked tongue.
The Financial Times
From World 9:23pm
Fed sees risks in low rates policy
By Sarah O’Connor in Washington
Published: November 24 2009 21:23 | Last updated: November 24 2009 21:23
Federal Reserve officials have expressed concerns that near-zero interest rates could fuel “excessive risk-taking in financial markets” but believe the possibility of such an outcome is “relatively low,” minutes from its November meeting show.
Both China and Germany warned this month that the weak dollar and the Fed’s policy to keep US interest rates “exceptionally low” for an “extended period” could be laying the groundwork for a new speculative bubble.
The central bank’s Federal Open Market Committee already had discussed this risk, according to the minutes released on Tuesday. In their meeting on November 3-4, the officials “noted the possibility that some negative side-effects might result from the maintenance of very low short-term interest rates for an extended period”.
The minutes said: “While members currently saw the likelihood of such effects as relatively low, they would remain alert to these risks.”
…
The Financial Times
Fear pushes US rates into negative
By Michael Mackenzie in New York
Published: November 24 2009 19:19 | Last updated: November 24 2009 19:19
Negative interest rates are back. Yields on short-term US government debt have fallen into negative territory as banks and investors park their cash in havens before the end of the year.
Strong demand for US Treasury bills, US government debt with durations of one year or less, suggests that dislocation and fear still pervades the financial system as institutions and investors show they are willing to forgo interest income completely or even take a small loss to own securities considered safe.
…
The problem these guys fervently avoid discussing is that since Henry Paulson clearly demonstrated to the world last fall that the Fed and Treasury are good for their previously implicit guarantee of too-big-to-fail financial entities, these firms will be forever enabled to pay a reduced cost of capital relative to their too-small-to-bail competitors.
Assuming the Sherman Antitrust Act cannot be used to break up the too-big-to-fail firms into smaller sized firms that do not put the global financial system (and American taxpayers) at risk, then I suggest a simplified, conservative approach to charging these firms for the cost of their free bailout insurance: Estimate the too-big-to-fail risk premium using the difference between capital costs for too-small-to-bail firms less that for too-big-to-fail firms. If the too-big-to-fail firms were charged this difference in the form of a Pigouvian tax to cover the external cost their expected future bailout costs impose on taxpayers, this would appear to neutralize their unfair advantage in the capital markets. The tax could be used to set up an explicit too-big-to-fail bailout insurance program to be privately operated by the Wall Street banks, with explicit federal legal protection of Main Street taxpayers against future TARPs.
I also am interested to hear the argument about what exempts Megabank, Inc from the Sherman Antitrust Act?
* The Wall Street Journal
* NOVEMBER 19, 2009, 4:45 P.M. ET
Fed’s Fisher: Too-Big-To-Fail Problem Must Be Addressed
By Michael S. Derby
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–The government should stop short of breaking up Wall Street’s biggest banks, but it may need to strip them of some of their riskier operations, Federal Reserve Bank of Dallas President Richard Fisher said Thursday.
The official was tackling the issue of what authorities should do to reduce the threat of the so-called too-big-to-fail financial institutions, which Fisher and many others consider a huge problem.
Fisher, who was speaking in Washington at an event held by the Cato Institute, said the financial crisis of the last two years can in large part be attributed to these massive financial institutions and the bad bets they made on housing prices. The one-sided nature of their bets and the large size of the firms forced the government to save these firms, fearing their failure would destroy the financial system.
The central banker also believes the too-big-to-fail issue must be addressed in order to allow the Fed’s traditional way of managing the economy to function properly. The troubles suffered by these firms “reduced the effectiveness of monetary policy’s transmission mechanisms,” Fisher said, adding “obstructions in the monetary policy channels worsened a recession that has proven to be longer and, by many measures, more painful than any post-World War II slump.”
“The sooner we are able to return to traditional policy making the better,” Fisher said. “I do not believe we can do so without treating the basic pathology of too big to fail.”
The policy maker said there are two main schools of thought when it comes dealing with the threat of the too-big-to-fail financial firms. Some would tighten regulations and require higher capital levels for these firms, while others would take the more drastic action of taking overly large firms and breaking them up into more manageable chunks.
Fisher proposed a different path. Authorities should develop “the least disruptive way to have (the firms) divest those parts of the ‘franchise,’ such as proprietary trading, that place the deposit and lending function at risk and otherwise present conflicts of interest.”
He added the regulatory structure should be changed to prevent financial firms from again attaining a status where their failure could threaten the stability of the financial system as a whole. Part of that would include an explicit rollback of the government safety net, to ensure that those engaging in risky behavior do not do so believing the government will save them in a time of trouble.
…
Is it completely obvious by now that Wall Street’s adventurous foray into mortgage lending was an utter and abysmal failure, or is there still ongoing debate on this question?
Megabank, Inc should stick to business it knows well, like making loans to homebuilders, commercial real estate developers or automotive manufacturers.
PB….I think they want to avoid bringing back Glass-Stegall or anything that reeks of limiting the casino games that Wall Street and
the Banks can play ,especially the leverage games . They already tried the insurance game for backing risk ,and guess what the Insurance Company couldn’t pay off (think AIG)
In the 30’s they already figured out what caused the crash and they created reform and new regulation laws accordingly .To think that they think the answer is to created a regulatory agency that would
oversee if Wall Street or a Bank is stepping over the line is just
absurd . You have to have laws in which you go to jail if you violate them and you have to put these entities back in the box they belong
in iby defining what games they can play and what games they can’t play ,and certainly you have to limit leverage .
Everything they do and say is to prevent the outright closing of the Casino that created this mess and opening up a new Casino with a new set of rules .The first rule should be that a investment house should not be allowed to be a lender also and a lender should have limitations on what investments it can partake in .
By the way ,I got a weird letter today . The Bank of America was offering me health insurance . I didn’t know that a bank was all of a sudden in the Health Care business . When did this start ? Did anyone else get the letter ?
When an improbable coalition of progressives and libertarians, labor leaders and cold-war conservatives, led by a couple of self-admitted wingnuts and egged on by a cadre of moonbat bloggers manages to put aside its partisan bickering and outmaneuver the most powerful institutions on the face of the planet, it does not bode well for Business as Usual in our nation’s capitol. Or, by extension, their finger-puppets in the media.
This an example of why there is still hope for our country.
Great post ahansen.
I am thankful that the owners/rental agency reduced our rent $170.
Aimed for -300 and settled for not moving/packing with a garage/w/door to hide some storage/bike.
Happy Thanksgiving to everyone. Stpn take care- prayers always w/you regardless of diff of opinions! And thankful for PB, Ben-of course, SFBgal, oly, Ahansen, losty, muggy, nycdj, lavid, hwy, et,edge, bilcarol,bila, ate, slim,Polly, gosh so many to mention. Missing some for sure, and many who haven’t posted in some time.
Take care and thank you for your company and smarts.
Here is an oldie but goodie.
The authors were so spectacularly wrong. Do they still show their faces in public?
Federal Reserve Bank of New York
Staff Reports
Assessing High House Prices: Bubbles,
Fundamentals, and Misperceptions
Charles Himmelberg
Christopher Mayer
Todd Sinai
Staff Report no. 218
September 2005
This paper presents preliminary findings and is being distributed to economists and other interested readers solely to stimulate discussion and elicit comments.
The views expressed in the paper are those of the authors and are not necessarily reflective of views at the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.
Assessing High House Prices: Bubbles, Fundamentals, and Misperceptions
Charles Himmelberg, Christopher Mayer, and Todd Sinai
Federal Reserve Bank of New York Staff Reports, no. 218
September 2005
JEL classification: R21, R31, G10
Abstract
We construct measures of the annual cost of single-family housing for 46 metropolitan areas in the United States over the last 25 years and compare them with local rents and incomes as a way of judging the level of housing prices. Conventional metrics like the growth rate
of house prices, the price-to-rent ratio, and the price-to-income ratio can be misleading because they fail to account both for the time series pattern of real long-term interest rates and predictable differences in the long-run growth rates of house prices across local markets. These factors are especially important in recent years because house prices are
theoretically more sensitive to interest rates when rates are already low, and more sensitive still in those cities where the long-run rate of house price growth is high. During the 1980s, our measures show that houses looked most overvalued in many of the same cities that subsequently experienced the largest house price declines. We find that from the trough of 1995 to 2004, the cost of owning rose somewhat relative to the cost of renting, but not, in most cities, to levels that made houses look overvalued.
Key words: housing prices, housing rents, user costs, fundamentals, bubbles
Perhaps this paper helps explain why their boss (Tim Geithner) got stucco?
Thanks, Allena! Nice writimificating.
I’m here in Coral Springs Florida and have been looking to buy a house for about 1 month. I am struck by the really limited amount of inventory. Out of 10 houses 6 are short sales, 2 are foreclosures and 2 are normal. The amount of inventory is really low even compared with the pre-bubble years. But I’m torn, in my price range the houses are in really poor shape, with several needing new roofs, or the kitchens are falling apart with 1990 appliances etc. The prices are going up because the banks are holding on to the inventory. A bank owned property might sit while the bank sits on 30-80 offers. They are just waiting for the highest price, and by dribbling the inventory out, they are artificially keeping the prices up. There have been a large number of foreclosures here in Broward county, but we’re not seeing the inventory.
I’ve been wanting to buy a house since 2003. I’m curious about what you folks think. I’ve heard about the shadow inventory, but what do you think is going to happen next year. Of course the only realtor I’ve talked to expects prices to go up next year.
Wait until the Congress audits the Fed. Perhaps it will come to light that the withholding of inventory is coming down from the top, and that it is illegal (i.e., anti-consumer cartel price fixing).
The Broward market is much the same as the Palm Beach market. Inventory appears low because homes are in foreclosure and not yet on the market. Eventually these homes will have to hit the market. Factor in the fact that they’ve been fleecing first time homebuyers with free funny money and you have a disaster waiting to happen.
I made the mistake of taking a great deal in December of 2006. That great deal has turned into a miserable failure. Even if we’ve found a bottom, and I doubt it highly, prices won’t skyrocket as they did during the bubble.
I think your assertion that inventory is low in FL is false. Either your relying solely on marketed garbage like realtorDotcom or youre not putting any effort into researching REO data. I found over 75 REO’s in Coral Springs in the time it took me to write this.
“I think your assertion that inventory is low in FL is false. ”
Not false. I am seeing this all over Pinellas, too. That’s why I said last week there must be mass collusion. Homes *that I know* have been foreclosed are just sitting there, with nobody doing anything, no sign, no activity, no nuttin’.
exeter
I’ve been working with a realtor, and I did specify about my price range. Inventory is low. Very low.
This is all fine and dandy, so long as Main Street doesn’t have to pay bonuses for Megabank, Inc cartel member executives who p!ssed hundreds of billions of dollars into the sea. People who should be in jail are instead allowed to keep feeding at the bonus trough on the public dime. Wall Street talking heads can bloviate until they turn blue, but until the cess pool which Wall Street has become is cleaned out, there will be no recovery of trust in the American banking system. Giving the Fed greater powers with no strings attached is more likely to lead to an attempt to sweep the mess back under the rug than to clean it up.
* The Wall Street Journal
* OPINION
* NOVEMBER 24, 2009, 9:36 P.M. ET
Finding the Right Fix for ‘Too Big to Fail’
Despite its fumbles, the Federal Reserve is crucial to a better regulatory regime.
By MORTIMER ZUCKERMAN
In the grip of our Great Recession, with more job losses to come, we have yet to fix the broken financial system that is an underlying cause of this whole mess. The long history of financial panics wrecking American lives had led to what we thought was a tight regulatory system. But the system did not keep pace with fast-moving changes in the financial industry.
… it must be remembered that the size of many of our financial institutions, despite its role in bringing on the crisis, has also greatly benefited the U.S. economy. Size, for example, enables our big financial firms to compete against others in Europe and Asia.
The too-big-to-fail institutions operate around the world, participating with similarly large financial partners to execute diverse and large transactions. They offer a full range of products and services, from loan underwriting and risk management to local lines of credit, providing financing to states and municipalities as well as firms of all sizes.
Should we fragment and constrain the system and cap the size of banks, it would undoubtedly limit the competitive level of service, breadth of products, and speed of execution. Clients could turn to foreign banks that don’t face the same restrictions. Ill-judged reform could undermine one of the most important ingredients of American global power: our financial know-how, intellectual firepower, and size.
…
Dodd seems to be searching for a suitable systemically risky replacement to his lost GSE cookie jar. I am guessing a key purpose of the new systemic risk rules will be to fertilize new money trees that could fund future Congressional campaign contributions, now that the GSEs seem questionable as a future source of campaign finance.
Bailout Nation
Sen. Christopher Dodd’s bill on financial regulation crystallizes the government’s ability to lend to private enterprises using central bank resources.
By JOSEPH R. MASON
Governments are always tempted to use their central banks and treasuries as their own personal money pots. Since the creation of the first central banks in Western Europe in the seventeenth century, governments have succumbed to the temptation to borrow from the monetary authority to fund government-sponsored enterprises, private enterprises, and sometimes even the treasury. The temptation continues because, who better to fund expansion off-budget than the creator of money, itself?
It is interesting to illustrate how our current Congress is succumbing to this classic temptation. For instance, three parts of Sen. Christopher Dodd’s recent draft bill on financial regulation interact to crystallize the ability to lend to private enterprise using central bank resources at government’s whim: a much broader definition of “systemic risk”; removing the barriers between receivership and conservatorship; and more broadly available funding for bailouts.
…
This is the insanity of the Fed Audit proposal .What do you think of
Politicians that handed Trillions to Hank Paulson’ and Fed Chairman without
requirements ,and now they have to go through all this to get a audit of what they authorized to begin with .
This is what I don’t get . Why isn’t more being said about the very fact that
the bribed Politicians were incompetent in handing over Blank Check money to the Treasury Sec/Fed Chairman based on some BS about a
Good Bank/Bad Bank principal and Paulson claiming he wants a Big Gun, than claiming he needed to save the financial systems ,without proof
of such a claim .
If you watched all the Senate hearings at the time ,you would say that all the Politicians that voted for the Bill at the time were either bribed or incompetent . Paulson didn’t make his case and if anything the Senate should of demanded that they give temporary loans while a investigation could be made of the claims of Paulson and Fed Chairman . It was clear what they were going to do by the actions that lead to the request for
Tarp .
So,my point is that if you have to get a Bill to correct the fact that
you gave Trillions of Dollars to self-interested parties ,and the money ended up in questionable hands ,than what does that say about the
Politicians that handed over the doe to begin with .
Probably that, like most of the rest of us in times of national crisis, they were clueless and scared and too lazy to do the research.