“The biggest obstacle to Volcker’s reform agenda is Summers”

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There is a long article at Bloomberg very much worth reading about Tall Paul: Volcker Gets Less Than He Wants in Curbing Wall Street Excesses.

Consider the following:

“If Volcker is at one end of the spectrum arguing for tougher financial rules, Summers and Geithner are at the other. Summers pushed for deregulation while Treasury secretary under President Bill Clinton, advocating the repeal of the Glass- Steagall Act, which had separated investment and commercial banking for more than 60 years. Geithner was president of the Federal Reserve Bank of New York during a period when banks ratcheted up their leverage.

Both men are proteges of Robert Rubin, a former Clinton Treasury secretary who served on Citigroup Inc.’s board from 1999 until this year and has been criticized for allowing the bank to pile up $544 billion of derivatives and securities before it became the recipient of more government assistance than any other bank. Rubin declined to comment.”

When it comes to regulatory reform, the Geithner Summers pairing are the phlegmatic duo.

And, they epitomize why Team Obama’s economic legacy will likely amount to very little in terms of lasting change or significant legislation.

O may aspire to FDR’s greatness and legacy, but it is wildly obvious that when it comes to either economics or financial regulations, O is no FDR.

What is it that Volcker wants?

-Impose capital requirements on trading parties, people familiar with his thinking say.

-Make bigger banks smaller

-Reduce the role of an overstretched Fed

-Force Derivatives to be traded on exchanges

-Transparent investor prices of Derivatives;

-More-aggressive capital reserve requirement

-Bigger role for exchanges.

Of course, major Wall Street banks, (such as JPM and Goldman Sachs) ALREADY sent a letter to the New York Fed supporting less supervised clearinghouse.

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Previously:
Obama Reform Plan Fails to Fix Whats Broken (June 18th, 2009)

http://www.ritholtz.com/blog/2009/06/obama-reform-plan-fails-to-fix-whats-broken/

Obama to Dramatically Reshape FOMC (June 23rd, 2009)

http://www.ritholtz.com/blog/2009/06/obama-dramatically-reshape-fomc/

Source:
Volcker Gets Less Than He Wants in Curbing Wall Street Excesses
Yalman Onaran
Bloomberg, June 25 2009

http://www.bloomberg.com/apps/news?pid=20601109&sid=atBbIcvSgrFs#

Category: Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

92 Responses to “Volcker: We Need Radical Regulatory Reforms”

  1. franklin411 says:

    Barry,
    Obama is certainly not FDR. Because FDR died 64 years ago. There will never be another FDR.

    Obama cannot and should not enact another series of New Deal financial reforms either. Because the Great Depression began 80 years ago and more or less ended 70 years ago, depending on how you define it. There will never be another Great Depression.

    Circumstances now are nothing like the circumstances then, because every historical moment is unique. You forget that by the time FDR took power, the Depression had been underway for more than 3 years. You forget that by the time FDR took power, the banking system had completely collapsed (this time, it was just threatening to collapse). You forget that FDR took power with a much more unified Democratic Party in Congress, and with a Republican opposition that included *MANY* liberal Republicans such as George W. Norris (who campaigned for FDR) and William E. Borah. You forget that by the time FDR took power, there had been numerous Congressional investigations about what had transpired. You forget that in many cases, FDR merely enacted proposals that had been batted about for decades by American liberals, such as securities regulation.

  2. franklin411 says:

    PS–You also forget that in March 1933, the relatively conservative and highly respected newspaper columnist Walter Lippmann called for FDR to be given temporary dictatorial power to address the crisis. There was even a proposal for FDR to be given the power to force the Democratic and Republican members of Congress to vote as a bloc–IE, the Senate Majority Leader and the Minority Leader would simply order their Senators to vote along the party line.

    Imagine that happening today!

  3. Greg0658 says:

    I looked into Baracks eyes(soul) and didn’t see a global WallStreeter type*
    … hunches are not always what they are cracked up to be
    thats why I like the line in the JC Creed “government should be of laws – rather than of men”

    * (unlike Clinton I)

  4. Pat G. says:

    Tough love. A regular practice of a generation from yesteryear. Subsequent generations have become known for self-centeredness, instant gratification and skirting rules/regulations when they didn’t fit their cause. With the likes of Summers and Geithner whispering in O’s ear, Volcker doesn’t have a chance with influencing policy reform. Nice try Tall Paul but you are viewed as a dinosaur and so are your ideas and ideals. They don’t fit the generations which have succeeded you and who have lost their moral compass.

  5. call me ahab says:

    “You forget that FDR took power with a much more unified Democratic Party in Congress”

    so how does that have anything to do with the selection of Geithner and advisors such as Summers watering down proposed regulation at the behest of the banks?-

    with a 100% majority /w zero opposition- how would that have changed what Geithner and Summers have done?-

    answer- it wouldn’t- only a complete fool would think– that- if only Obama had full control of the legislature- everything would be perfect- -

    keep wearing the kneepads franklin

  6. constantnormal says:

    This fits in perfectly with Matt Taibbi’s excellent Goldman Sachs piece in Rolling Stone. Volcker is just window dressing, a figurehead brought in to capture some fiscal conservative appeal for a while, then discarded when his figurehead status is no longer useful. Summers and Geithner are the ruling figures in this administration, at least so far as economic and finance go, and Obama is knowingly giving them full rein, in his role as the Chicago pol in residence at the White House.

    If you step back and clear your head of all the fine speechifying, and instead look at his actions, the mirage clears and you see a talented Chicago politician, dancing with the money and influence, without a shred of a goal of his own. This explains the lack of any sort of credible national health care, the wanton destruction of the economy by the banksters (with tacit approval from the White House), the continuation of the mortgage mess with no substantive programs being presented to alter its course, the complete avoidance of any acknowledgment of the serious problems with Social Security or Medicare.

    It’s why Obama DESERVES the middle initial of W. He is the instantiation of the third term of George W Bush, with the exception being that quite possibly Dubya was cluelessly manipulated by those around him, while Obama is acquiescing to the influence of money with full knowledge and awareness.

    Those who voted for Obama (as did I), expecting change, have been fooled. The only change has been for the worse.

  7. DeDude says:

    Unless Obama gets more interested in the economy and begin to demand getting the full spectrum of advice that his team can deliver, the best hope for some meaningful and effective reform will be in the congress. Geithner and Summers are a couple of arrogant idiots who refuse to have their opinions revised by facts from the observable world. At this point in time you have to be willfully blind to not understand what went wrong, and how to prevent it from ever happening again. I guess the lure of those fat paying jobs after you are done being a governmenter (provided you have been a good boy) are just to much

  8. franklin411 says:

    @Ahab
    You forget the example of Raymond Moley:

    http://en.wikipedia.org/wiki/Raymond_Moley

    FDR deliberately picked advisers with varying points of view. He let them duke out their varying policy prescriptions and then he would make his decision.

    And only a fool would ignore the political realties of a 40/40/20 Senate.

  9. [...] Yalman Onaran has a long look at the role Paul Volcker is playing in the Obama Administration (via Ritholtz). It’s apparently bigger than it was a few months ago: After the inauguration and Geithner’s [...]

  10. CNBC Sucks says:

    “O may aspire to FDR’s greatness and legacy, but it is wildly obvious that when it comes to either economics or financial regulations, O is no FDR.”

    Ritholtz, you really are getting crankier by the day! Cranky cranky! I TOTALLY agree with you that Olamo has been the best Republican President we have had since Reagan, but please…a smidgen more faith. Maybe, Olamo will figure things out, smell the coffee, and throw Geithner and Summers directly under the Presidential limousine, and bring in Volcker and some proper liberals (I am not talking about Krugman) to run things. It’s early yet.

    Unlike MEH and others, I don’t believe in The Obama Deception (though nevertheless prefer the full-length HQ version over Hoffer’s piecemeal, low-res crap), but I do happily concede that Olamo was wet behind those big ears in the way he has let Geithner and Summers run things.

    Olamo needs to RAISE taxes on the rich, LOWER his spending ambitions significantly, ELIMINATE as many subsidies as possible, CANCEL any more bailouts for Wall Street, get the states to LOWER their spending, REGULATE and ENFORCE more vigorously, and FIGURE OUT the right trade policy that will bring jobs back to America. His first goal should be to make balanced budget and trade somewhat remotely realistic, as opposed to the punchline for the history of the world. It might happen. It MUST happen.

    In the meantime, Ritholtz, why don’t you chillax and, in the meantime, just enjoy Don Luskin looking like death warmed over?

  11. call me ahab says:

    what happens when Obama fails franklin- are you with him thick or thin- regardless of outcome- regardless of policy-

    constantly defending w/ no credible critique of his administration-

    that’s why no-one buys what you say- because you are not believable- you have one song and one dance-

    if Obama sent troops into any country for any reason- you would be on board- if Obama demanded restrictions on free speech- you would be on board- if Obama wanted expansion of the Patriot Act- you would be on board – if Obama wanted to round up dissenters- you would be on board- because-

    in your mind Obama can do no wrong and you will always find a way for what he does to make sense- and if he was holding up four fingers and demanding you see five- you franklin would see five

  12. willid3 says:

    cnbc, unless we get jobs created your whats to keep your prescription from creating the greatest depression ever? there is no demand from consumers, and they aren’t coming back for a least a year if not longer (i think longer. only because the have learned the same lessons that was taught in the great depression. don’t buy much. don’t trust banks. don’t trust wall street).
    and given thats 70+% of the economy (about 9.8 trillion of a 14 trillion economy) , if they were to cut back from previous levels, to only contribute on 7 trillion (it would still end up being 70+% of the US economy. what you thought business would actually contribute much???)

  13. Super-Anon says:

    O may aspire to FDR’s greatness and legacy, but it is wildly obvious that when it comes to either economics or financial regulations, O is no FDR.

    FDR inherited a very different situation: He came in after the Great Contraction and mass bankruptcies had been removing the excesses from the economy for 4 years. He inherited a minimalistic government less than half the relative size of the current one and without the massive structural problems that is causing ours to hemorrhage money.

    It’s very dangerous to assume Obama has the same options as FDR when he’s facing a structurally very different sort of economy.

    Logic would suggest that a relatively small efficient and unencumbered government can be expanded to use debt and spending effectively to aid the economy, but that expanding the debt and spending of a corpulent, sodden, money incinerating government would merely make things worse.

    To put it another way:

    For structural and circumstantial reasons the modern liberals may have been right in the mid 1930s where they are entirely wrong today.

  14. franklin411 says:

    @willid3
    You’ve put your finger exactly on the problem the anti-Obama forces have. They love to throw bricks at his proposals to grow the economy by investing in education, science, and infrastructure. They love to decry the fact that 70% of our economy is consumption. Yet…they offer no solutions to changing that.

    Even if CNBC got everything he proposed in that list, what’s to assure us that we won’t end up with nothing more than a smaller economy as addicted to consumption as our current economy is? There’s an intellectual leap that these critics make where we’re supposed to believe that by shrinking our economy so it’s a smaller version of what we currently have, it will become sustainable.

    Poppycock. We need to change our economy, not shrink it. Downsizing from an SUV with no engine to a VW with no engine isn’t going to change the fact that there’s no engine!

  15. The Curmudgeon says:

    The rejection of Paul Volcker’s wisdom is of a piece with the idea of American exceptionalism. Americans think history does not apply to them, and each succeeding generation thinks that it should not be burdened by the wisdom of its elders. It worked for a while, as the empire expanded.

    But we have now reached a point where we’ve got more behind us than ahead. This generation will likely be the first to witness the wholesale unveiling of American weaknesses–economically, politically and militarily–such that they will be the first in many to realize that history actually does apply to Americans, and might even provide lessons from which to learn.

  16. Ned Bushong says:

    Volker will never get his way. We no longer live in his world, the Conservative world. Today, most people are liberal and live off the government. Government will create the dollars to support the votes. At least, until they can’t.

    BTW, has anyone been paying any attention to the rumor of a “Bank Holiday”?

  17. Super-Anon says:

    Maybe, Olamo will figure things out, smell the coffee, and throw Geithner and Summers directly under the Presidential limousine, and bring in Volcker and some proper liberals (I am not talking about Krugman) to run things. It’s early yet.

    Why not just some people with common sense who’ve read some history books (that don’t start with the assumption that recorded history began with the FDR presidency).

    The simple fact is that some “conservative” ideas have a lot of historical and empirical merit, notably tenets of fiscal conservatism regarding deficits and monetary policy.

    It’s worth noting that modern conservatives have been very fiscally and economically liberal while primarily justifying their conservatism by being socially conservative.

    Maybe part of the problem is that “conservatives” have abandoned “good” conservative ideas and focused more on the “bad” ones for political reasons.

  18. call me ahab says:

    ned-

    saw that rumor @ Jesse’s Cafe Americain- something to do with US emabassies abroad being advised to get out of the US $ and invest in local currencies with the suspicion being that there is going to be a bank holiday of long duration

  19. Super-Anon says:

    Volker will never get his way. We no longer live in his world, the Conservative world.

    That’s the irony I think – Volker is really a conservative figure in a legitimate and defensible way in precisely the way that people like Reagan and Nixon weren’t.

    Even towards the end Carter started supporting a more historically justifiable “conservative” view point and got his ass handed to him by a guy who people hold up as a conservative paragon simply because he was good at promoting himself as such and didn’t like porn.

  20. dead hobo says:

    BR noted:

    And, they epitomize why Team Obama’s economic legacy will likely amount to very little in terms of lasting change or significant legislation.

    reply:
    ————
    Au Contrair Mon Frere. The downward spiral and fraud practiced and perfected during the GWB Presidency will be institutionalized and glorified by Obama and his crew. We’re on the precipice of a new era in finance. Crooks and idiots running everything, while being supported and glorified by the US Government. This is all new. While war is the ultimate and foreseeable outcome, the intermediate stage is just going to be Alice In Wonderland.

  21. willid3 says:

    ahab, i wonder if they think the banksters are so bad off they will have to shut then entire banking system down to fix it? just like they did in the GD? if so, then the attempt so engineer a semi-soft landing has failed.
    and that will mean every one will have an unplanned (probably unpaid too) holiday. take the banksters out, no business happens

  22. call me ahab says:

    ned-

    but maybe another reason-

    the question I have I guess- what would be the reason for US embassies to go local currency- a big devaluation on the horizon? China to float theur currency? default on debt? inablity to secure USD?

  23. dead hobo says:

    Incidentally, with regards to future inevitable wars:

    These will be inspired by finance crooks who just want something the other side can provide and it’s easier to get if Uncle Stupid raises arms to get it for them. Plus, a good war might provide jobs at the moment. This will help sell it. Not to mention the inherent profitability of war in general.

  24. willid3 says:

    DH, thats nothing new, they have been doing for centuries now. almost all wars have been about resources (even if they get sold as some thing else!)

  25. call me ahab says:

    willid-

    but if it is a bank holiday- why get out of USD for the embassies? why not stock up on USD?? how long could it last- it couldn’t be months obviously- so again why get out of USD? a devaluation I could understand however- then you would want to be in another currency.

  26. call me ahab says:

    dh-

    last I checked we’re at war- but aside from that- who are we going to fight?- a billion Chinese?

  27. CNBC Sucks says:

    Franklin, did I say anything about cutting back on education, science, and infrastructure? If anything, Obama’s greatest failure so far six months into his Administration besides his Wall Street largesse is his WOEFUL lack of infrastructure spending. Research how Obama’s own progressive supporters feel about THAT.

    We can probably eliminate a lot of government spending just canceling any new bailouts for Wall Street. I don’t know the figures, but you can imagine how bloated the Treasury’s payroll is getting just administering all that crap. Same thing with defense spending. I think it is enough we can blow up the world 15 times over, we don’t need to do it 50 times over. There IS plenty of government spending to cut back on that have nothing to do with education, science, and infrastructure.

    As for the states, they need to cut back to spending levels commensurate with their tax revenues. I am all for a steeply progressive tax regime at the federal level, but we cannot have a double whammy to taxpayers between the federal and state levels. Spending and taxation between those two levels need to be harmonized. Clearly, I am a Federalist.

  28. willid3 says:

    ahab, it might be months. but that would be much worse than any thing we have ever done.
    not sure why they would want out for a devaluation. most foreign currencies are in much worse shape by far in every way imaginable. it might be harder to get $, but thats a stretch for an embassy

  29. dead hobo says:

    BTW, what I am describing is maybe 8 years out if things go fast and 12 to 16 maximum. All we need is more financial deterioration which is certain unless Uncle Stupid grows a backbone with Wall Street and gets an unexpected case of smarts and integrity. Unlikely. Condition 2 is a Republican majority. Likely if they get their act together and nothing changes much.

  30. dead hobo says:

    call me ahab Says:
    June 25th, 2009 at 5:16 pm

    dh-

    last I checked we’re at war- but aside from that- who are we going to fight?- a billion Chinese?

    reply:
    ————
    Not likely, It will be whoever had the most to offer with the lightest apparent cost. Such as Iraq looked in 2003.

  31. CNBC Sucks says:

    If we fought the Chinese, would the Chinese lend us the money to wage the war against them? We have been building aircraft carriers to defend ourselves from the Chinese using bonds we sell to the Chinese.

    Such is the ludicrousness of the situation.

  32. call me ahab says:

    CNBC sucks-

    my humble opinion is that in the next naval war- aircraft carriers will be laid to waste by subs with accurate missle delivery systems that can be shot from quite a distance away-

    I think we put entirely too much emphasis into them- could definitely be our Achille’s heel- but they sure look cool-

    what i would like to see is a return to battles like in the movie Braveheart- couldn’t relax behind a console and shoot missles in those days- took actual nerve- and you really had to believe in what you were fighting for

  33. CNBC Sucks says:

    LOL, ahab, yes. The enemy doesn’t even need subs when the Russians have focused their whole naval technology doctrine to countering our multi-billion-dollar supercarriers with multi-million-dollar anti-ship missiles like the Sunburn and Yakhont, which they then proceeded to sell to everyone else.

    In other words, the world is a lot more complicated and competitive than most Americans realize and coming to grips with how America can find a sustainable economic, political, and social role in the “new” world will be by far the greatest challenge for Obama.

  34. call me ahab says:

    Way OT-

    for all you Michael Jackson fans out there- appears he died of a heart attack

  35. harold hecuba says:

    here’s my scenario (volker is out of the picture and will not be a factor as he is thought to be too old and quite frankly can barely hear) roubini has been quiet and not critical of the obongle administration as of late therefore my opinon he is vying for a postion. bwernanke will simply call it quits as he has had enough of this pathetic fraud and nonsesne. SUMMERS the ultimate scum is salivating in the backround and will be appointed not by Obongle (who has no say in anything) but by the banking fraudsters who tell him what to do. remember geitner and roubini worked together in the 90′s. this should solidify the looting of AMERICA. as the former clinton administration of complete misfits are now in place. the only one missing is rubin but he will have a major say in anything that goes on. this man was looked upon in the clinton administration as being godlike and doing no wrong. the pieces are now in place for serfdom among the american people as these people grab ultimate power. GOD HELP US ALL the collapse is in place.

  36. Thor says:

    Ahab – yeah, sad. You should see the helicopters over UCLA, looks like a bunch of flies

  37. call me ahab says:

    CNBC sucks-

    the problem with this country is we are fat, stupid and lazy- and I don’t see a fix for that- and-

    all these lame policy prescriptions as put out by franklin- such as investment in education- is waste of time and is such a tired beat up slogan- I feel like punching somebody in the face everytime I hear it. It means absolutely nothing and is akin to saying that you wish no child went to bed hungry- well no shit- who’s going to argue with that-

    the question we have to ask ourselves is -why is education important- what is trying to be acheived- are we trying to develop critical questioning minds that challenge our current ways of thinking and doing things or do we want a passive, docile workforce that has been brainwashed into what they should believe-

    I think the biggest problem with this country right now- is we don’t know what we are all about- who we are- unless our national identity is that of a insatiable consumer- buying and eating and eating and buying- has to be a bigger purpose than that I would think-

    like when Bush told everyone to go shopping not too long after 9/11- made me feel proud

  38. Thor says:

    Ahab – slight correction – GW told us to go shopping AND go on vacation ;-)

  39. jc says:

    It’s funny hearing “liberal” and “conservative” coming from so many different angles. Nixon was the conservative who instituted wage & price freezes – hardly free market or conservative – and Carter ended them and paid the price politically.

    Recently we’ve lumped republicans and conservatives together and dems and libs in another pile but life ain’t that simple!

    Thus far the O’B economic agenda has been a disgusting continuation of TeamBush. There’s a lot of criticism of O’B's deficit – but it follows a stream of 8 record TeamBush deficits which occurred without a depression. Tiny Tim is Paulson light and Gentle Ben has guaranteed himself a place in the history books – possibly ahead of Greensputum

  40. jc says:

    Darrell Issa being attacked by Becky Quick and her posse for badmouthing Gentle Ben, actually Issa (as a Congressman) just wants access to records and testimony under oath – not such a radical thing. But Quick comes at him like she wants his his office or is suffering some hormonal imbalance. Issa a consev Repub is mostly critical of TeamBush and Gentle Ben – and that has Becky mad as a wet hornet.

    http://www.cnbc.com/id/15840232?video=1163624749&play=1?__source=CNBC|newsnow|vid1|2009|

  41. The Curmudgeon says:

    “I think the biggest problem with this country right now- is we don’t know what we are all about- who we are- unless our national identity is that of a insatiable consumer- buying and eating and eating and buying- has to be a bigger purpose than that I would think-”

    Maybe that’s just it…there is no purpose to the United States anymore if insatiable consumerism fails. That the purpose for the US has devolved into being a place where anyone can come, not to be free (whatever the hell that means), but to be fat, lazy and stupid.

    The US has never really been a nation-state, even if it’s earliest founders were mostly of English/Scots/Irish descent. Given it’s polyglot population (even the polyglot ancestry of its president) it couldn’t be, like the European states that emerged in the 16th and 17th centuries, a loose collection of closely-related tribes, that had as at least part of their motivation for existence the continued propagation of the tribes.

    Personally, I think the idea has run its course. The idea of the US as the Puritans shining city on the hill devolved, or perhaps was always premised, on rapacious empire building. Growth has been our God for some time now. No growth and we are separated from our god, which in Judeo-Christianity, defines hell.

    As DH observes, war is the ultimate outcome. But when it comes, it won’t be a minor skirmish on the frontiers of the empire, as represented by the conflicts in Iraq and Afghanistan. It will be a major conflagration, which we will lose, and thereby shrink the empire to its original borders (the lower 48 maybe, or maybe just the Eastern seaboard), much as Great Britain did after WWII. From there, it will be, like GB is on now, a long, slow slide into oblivion.

    Happy thoughts, eh?

  42. Wes Schott says:

    jc@6:48 and 6:55 –

    all of this shit is so bi-polar

    comon everybuddies, everything is not black and white, for us or against us

    it may well be easier to think in these terms, but not more realistic

  43. Wes Schott says:

    curmudgeon@7:02-

    god that is a hard handle to spell

    GB -> US -> China?

    of course, we thought it would be Japan back in the 80′s based on industrial might/efficiency

  44. Stillaway says:

    ahab-
    “like when Bush told everyone to go shopping not too long after 9/11- made me feel proud”

    Embarrassed me also. W said many stupid things, but that had to be #1 on the list. Anymore we are not citizens to be addressed, but as you pointed out, merely consumers, “buying and eating and eating and buying”.

  45. deanscamaro says:

    Why is it so often forgotten:
    The Golden Rule: those with the gold, rule.

    The financial institutions will not let anything they don’t want, be implemented; even if Volcker shouts it from the rooftops. They have/will, in the future, control our elected and sleazy office holders. Money rules and any Obama protests will fall under the wheels of needed progress that is being/will be proposed, as it is run over a cliff to a quick death.

  46. Thor says:

    Wes – I’m with you, on both your posts. Curmudgeon – who will we go to war with? How could they possibly beat us? No one is even close to being able to militarily challenge us. China? I think China is going to have a hard time keeping itself together over the next 30 years, let alone manage growth large enough to build a military anywhere near our size. Even if someone did manage to eventually build a military large enough to challenge us, how could the supply their army across both the Pacific AND Atlantic oceans? Or are you looking far into the future? Beyond say 50 years . . ?

  47. The Curmudgeon says:

    @WS…just abbreviate TC…

    It could be GB>US>China. I don’t know, though. The Chinese, outside of Asia, have never been much interested historically in empire building. There was a time (about 400 years ago and before) when the Chinese thought Peking was the center of the universe, and its emperor was a demi-god ruling it. Given that all of its neighbors, Korea, Japan, Vietnam, Thailand, etc., kowtowed to the Chinese emperor, for them, they were correct.

    But China’s population is not growing, except it has a vast excess of unattached males coming of age because of its one-child policy, which could make the incentive for military adventurism somewhat stronger than otherwise. But the Chinese are very family-oriented still, and they might not support seeing their only heir die in battle on foreign soil.

    The real population growth is coming from Arabia. Perhaps the war that ends our pretensions of power comes from there, too.

  48. The Curmudgeon says:

    Thor,

    My time horizon is fuzzy. It is a really Big Picture view. Who could defeat us? No one right now, but we are a technological tiger. Whoever does roll back the empire won’t do it w/ technological superiority, but in the old-fashioned way, like Ahab alluded to, with people willing to die for a cause that is more important to them than eating twinkies and watching Oprah.

  49. call me ahab says:

    stillaway-

    glad to see you are back at the keyboard- and I agree- that shopping line by Bush was cringe worthy

    curmudgeon Says-

    “It will be a major conflagration, which we will lose, and thereby shrink the empire to its original borders (the lower 48 maybe, or maybe just the Eastern seaboard)”

    Alaska and Hawaii- goners if it gets ugly- that the country could break up into separate entities- certainly-

    as an example-the eastern portion of Canada said they would likely want to become part of the USA if Quebec seceded- so-

    no country or country’s borders are set in stone- they are in flux- and borders change- and countries come and go

    thor-

    dude- there is no way on this planet that I would want to be in a conflict with China- if they attack us- well- then we fight- but outside of that- forget it- my guess- if there are serious doubts about our ability to win- the nukes would come out

  50. Wes Schott says:

    remotely controlled drones

    knocking out comms satellites

    general info systems terrorism

  51. Thor says:

    Curmudgeon – good point. I’m not saying it’ll never happen, we certainly can’t be on top forever. Just not sure where a challenge would come from. The middle east is a mess, I’d be more inclined to think they’d blow eachother up before they came challenging us.

    Keep in mind though – attitudes can change very very quickly in a nations history. Can you imagine either the Japanese or the German people of today being great warriors? Sixty years ago they were some of the most feared people on the planet I think it’s possible, given the right social and economic circumstances, for a people to go from passive, lazy, slobs, to a nation of soldiers. Yes, I know that’s a stretch for us, but it could happen.

    Anyone read “The Next 100 Years” by George Friedman? Good book

  52. Wes Schott says:

    Thor -

    is that the stratfor guy?

    if so, he is a good strategic thinker

    more than one outcome possible

  53. Pat G. says:

    @Thor

    How could they possibly beat us? I think that we all agree that our foreign policies/police actions over the last 60 years have pissed off a lot of other countries. What if the North Koreans, Chinese, Russians, Iranians and the rest of the Islamic terrorists around the world decided to join forces against us. Could we win a war against a coordinated attack like that? Uh…no.

  54. wunsacon says:

    Ahab,

    >> answer- it wouldn’t- only a complete fool would think– that- if only Obama had full control of the legislature- everything would be perfect- -

    That’s not what Franklin said. Your characterization is unfair.

    >> keep wearing the kneepads franklin

    Was that necessary? C’mon… No need to be so personal about it. Right? (Yes? No?)

    I personally believe the “Overton window” has not yet shifted over to the Left enough for Obama to do *that* much. You cannot tell me that the political will in 2009 for *real* change is the same as it was in 1933 after 3+ years of Depression (with a capital “D”). That’s what Franklin said. So, I guess I’m one of your “complete fools”… ?? I think not. (But, I could be wrong…)

  55. Wes Schott says:

    Pat G -

    ur right we’ve pissed them off, no doubt

    never mind the latin american countries/peoples….but they are more laid back

    it think it will be a cyber war

  56. willid3 says:

    well considering how little that bunch like each other, its doubtful they would even be able to coordinate them selves long enough to do so
    what will likely kill the empire is what has killed others.
    lack of water

    been new studies of late that what killed almost all of the empires has been droughts

  57. willid3 says:

    ot…has any body noticed that all of the German car companies except VW and maybe BMW are in big trouble? Porshe needs help with big bucks. Mercedes needs help, needs big bucks. probably won’t be long till BMW needs help also.

  58. Thor says:

    Wes – yes, that’s the guy, I highly recommend the book.

    Pat G – Gee, I don’t know, if the Soviets, and the Eastern Europeans, and the Chinese all joined forces . . oh wait, they did, it was called the Cold War. And what do you mean “A coordinated attack?” On our soil? with the threat of massive nuclear retaliation? Can you conceive of a scenario when we would NOT use the nuclear option against a country threatening to invade the US? I can’t.

  59. The Curmudgeon says:

    “no country or country’s borders are set in stone- they are in flux- and borders change- and countries come and go”

    And this, from St. Augustine:

    “All wicked people, just like good people, desire to live without fear. The difference is that good, in desiring this, turn their love away from things that cannot be possessed without the fear of losing them. The wicked, on the other hand, try to get rid of anything that prevents them from enjoying such things securely. Thus they lead a wicked and criminal life, which would better be called death.”

    You’re on to something, Ahab.

  60. call me ahab says:

    wunsacon-

    dude- I have no problems with arguments pro or con about any subject- but please read my 2nd post to franklin-

    he is a partisan of he nth degree- and- there is nothing Obama could do to shake his devotion-

    thus- the knee pad reference (but I meant it in a nice way)

    and I will stick by my observation- that even if congress was 100% all the same party as Obama- only a complete fool would think that then things would all be good-

    because- franklin has referenced that same argument before in previous posts- saying- that- Obama wouldn’t have chosen the same policy prescriptions if he had a pliable legislature-

    and that to me is the last thing anyone should want

  61. Thor says:

    Wes – I think it’ll be cyber too – and space based – shooting satellites down. I definitely think there will be large global wars in the future, I just think they’ll be fought in an entirely different way. Bringing down the electrical grid of a continent, disrupting the free flow of money through networks. That sort of thing

  62. Pat G. says:

    @ willid3

    First of all these are either communist countries or dictatorships so they have a common political thread. Second of all the Chinese, Russians and Iranians are all doing business together so they have common economical interests. Lastly but more importantly for several reasons; none of them like us. They simply tolerate us. Attacking us would give them a common purpose/goal.

  63. km4 says:

    constantnormal at 4:23 pm nails it !

    The US financial ponzi scheme is a racket…..Obama and his Wall St bought and paid for economic team have put all their chips on the Banking Oligarchs. It is conducted for the benefit of the very few at the expense of the very many ( the American taxpayers). Obama’s objective with his Wall St bought and paid for economic team is to pump up great chunks of the Big Shitpile that’s essentially worthless unless the peak real estate values of the bubble can be miraculously restored.

    Obamanomics is where
    1) The government champions funds
    2) Funds champion corporations
    3) Corporations champion markets and industries
    4) The people ( American taxpayers ) get the tab

  64. The Curmudgeon says:

    Pat G. Says:

    June 25th, 2009 at 7:57 pm
    @ willid3

    First of all these are either communist countries or dictatorships so they have a common political thread. Second of all the Chinese, Russians and Iranians are all doing business together so they have common economical interests. Lastly but more importantly for several reasons; none of them like us. They simply tolerate us. Attacking us would give them a common purpose/goal.

    >and I can assure you, they are smelling blood in the water about now<

  65. Stillaway says:

    I see the next war taking place in Pakistan, if and when the Taliban take control. Their access to nukes would demand immediate response, probably both from the US and India.

    Another probability would be the little nut with the big hair in North Korea deciding to invade South Korea.

    As long as their are politicians and dictators there will be wars.

  66. Thor says:

    PatG – what you fail to mention, most especially with Russia, is their massive demographic issues. Russia’s population is among the fastest shrinking population on the planet.

    No one “tolerates” us, we’re big, we carry a very large stick, and we’re most definitely not afraid to use it. I don’t particularly agree with that policy, but we have certainly proved to the world that when we really feel we need to, we’ll invade a country. The end result of that invasion doesn’t even have to be to win the war, but just destabilize the region.

  67. The Curmudgeon says:

    As long as their are politicians and dictators there will be wars.

    and we’ve (the US) got politicians galore.

  68. Pat G. says:

    @Thor

    Well sure it’ll be cyber..to start with. It’s already happening. The goal will be to disable communication satellites and nuclear missile launch capabilites. Once that has happened, we’ll be pretty toothless and a sitting duck.

  69. call me ahab says:

    curmudgeon-

    thanks for the Augustine quote- excellent reference- we should all take it to heart- as I tell my kids-

    at the end of your life- you don’t remember the silly stuff you had to own- you remember the things you did and the people you knew

  70. willid3 says:

    pat,tc i think they tolerate each other more than like each other. as they see each other as much as a threat as we are to them. they do business with each other because its easier to do that than do with others. but of the bunch, China is much more interested in calm as any thing else will cause them trouble at home. and iran maybe more malleable after their current problems. russia has really long term viability problems if we and europe get off oil and gas.
    if some one takes over Pakistan that will be very problematic for every one. nukes going off in Saudia Arabia and Iran will be the first hint that the end of oil will go out with a bang.

    failing that it will the lack of water. which is a major problem here

  71. The Curmudgeon says:

    call me ahab Says:

    @June 25th, 2009 at 8:07 pm

    …and an arbitrary line drawn on a map is hardly an eternal thing. It should never define a man, if we are worth more than the moment.

    Cheers.

  72. Pat G. says:

    @Thor

    “No one “tolerates” us, we’re big, we carry a very large stick, and we’re most definitely not afraid to use it. I don’t particularly agree with that policy, but we have certainly proved to the world that when we really feel we need to, we’ll invade a country. The end result of that invasion doesn’t even have to be to win the war, but just destabilize the region.”

    You see Thor your perception shared by many others, defines the problem. We have become the bully. The best way to beat a bully is by ganging up on him. I am curious, why would we want to destabilize a region?

  73. The Curmudgeon says:

    @willid3…

    I like the Pakistan angle. They are just a razor’s edge from anarchy, and their neighbor, Afghanistan, is the graveyard of empires.

  74. Thor says:

    Pat G – Again, can’t see how this could logically happen. We control the worlds oceans. If you added up the navies of every country on the planet, the result would still be half the size of ours. Does Russia even have any working aircraft carriers left? I know China has one bought from Russia that they’re trying to reverse engineer. Never mind trying to invade a country that is separated from your shore by thousands of miles of ocean, itself with coasts on both sides of the continent, each thousands of miles long. Then try to imagine a supply line for this army that stretches to the other side of the globe. Then imagine invading a country where pretty much every Tom Dick and Harry has a gun . . . .

  75. Stillaway says:

    Don’t forget the non-military option: Infiltrate an army of Wall Street banksters into the the target’s economy.

  76. Pat G. says:

    @Thor

    And how many combined nukes do they have? How many points of attack? How many combined troops to invade? Billions? And I guess those rifles, pistols and shotguns would stand up to assault weapons and all those trained combat forces. It would be like revisiting Custer’s last stand. We’d inflict alot of damage no doubt but in the end, this country would perish.

  77. willid3 says:

    pat g…they still have to get here. thats some thing only Russia might could do. you have to do that with ships. but their navy has been strangled for money for so long it probably hasn’t the capability to do so .and you don’t launch invasions t with subs. and we still have an air force (and navy) that can defend us far enough out to preclude an invasion. and most of these countries don’t have militaries that are able to put force that far away. and only China has a population of a billion, but its there entire population. not the size of the military. while i suppose if they got lucky, we might perish but none of them would know it, they would all be glowing the dark if they were even in one piece to do even that.
    because they are dictatorships they can only keep their people inline with the military. send that off and who will keep their people from revolting?

  78. km4 says:

    Bank managers should expect a comprehensive suite of services from their supplier ( the Fed ) to facilitate their lubrication management.

  79. Bruce in Tn says:

    http://finance.yahoo.com/news/Eurozone-industrial-orders-apf-260931449.html?x=0&amp;.v=1

    BRUSSELS (AP) — New orders for manufacturers in the 16 nations that use the euro fell 35.5 percent in April from a year earlier, the EU statistical agency Eurostat said Thursday — the sharpest drop so far this year.

    Worst hit were orders for tools, parts and components sold on to other manufacturers, down nearly 40 percent. Orders for cars and home appliances fell by more than a quarter.

    Orders in Germany, the European Union’s largest economy fell 39.5 percent

    Eurostat said euro-zone orders slipped 1 percent from March. Orders across the entire 27-nation EU in April fell 35 percent from the same month last year and 0.5 percent compared to March.

    …I mentioned this when I got up this morning but that was days ago…The Japanese news is about as bad. ORDERS, Franklin, are a leading indicator.

    My bet is we reach 11% U3…

  80. km4 says:

    @Bruce in Tn Says:
    My bet is we reach 11% U3… which means U6 ( the REAL unemployment metric ) at about 20%

  81. cvienne says:

    I think in the end we will have less to fear from a foreign military invasion than we will have to fear an internal civilian rebellion…

    Despite our technology & weapons, the larger threat to America is the division amongst it’s own citizens…

    Blacks, whites, hispanics, asians, liberals, conservatives, gays, straights…

    People in this country trust their neighbor no more than they trust anyone else…

  82. cvienne says:

    @Bruce

    and remember the STRESS TEST worst case I think was 10.3

  83. call me ahab says:

    curmudgeon-

    great line- I looked at a map the other day of N America- topographical- and I turned it sideways and upside down- just checking it out- and I just loved it that there were no lines saying this was that-

    freedom dude

  84. willid3 says:

    can any body explain how u3 is as low as it with almost a 20 million short fall in jobs?

  85. Thor says:

    Bruce – do you think U3 is going to stop at 11? Or are is that your prediction for 2009? I’d agree for a 2009 target, no so much for 2010 and beyond.

  86. Thor says:

    Cvienne – I agree with you on our main problem being internal divisions. That could possibly change though. Don’t forget that our population today looks much like it did in the 1920′s with regard to foreign born residents. In fact, in 1920 the proportion of foreign born, to native US population was higher than it is now. Sure, today I would be considered white, but back at the turn of the century when my Italian ancestors came, Italians and other southern Europeans were definitely not considered white or “true” Americans. Same could be said for the Germans, I’m sure many of you living in the upper midwest know the history of the Germans in your area – third and fourth generation German Americans were still speaking German up through the early 1900′s. The Depression slammed the door shut on open immigration into this country up until the 1960′s. That gave the nation more than 30 years to assimilate the newcomers.

    I often wonder if the same thing will happen now, the mood in the country now certainly seems to suggest that we’re overdue for another rest, and if the economy stays in the dumps for as long as most of us think it will, that’s going to cut the massive Mexican migration into this country right off at the knees. It used to be said that we needed these low paying unskilled workers to do jobs that Americans would no longer do – you can bet that if it comes down to having to pick fruit and take out trash in an office building in order to feed your family, Americans will jump right back into those jobs out of sheer necessity. It’s a stretch, I know, but stranger things have happened in our history.

  87. call me ahab says:

    thor-

    good points

  88. David Merkel says:

    Obama = Bush-plus

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