Foreseeable or Not?

I noted in April:

Whenever there is a disaster, those responsible claim it was “unforeseeable” so as to escape blame.

For example:

  • It happened with 9/11

The big boys gamble with our lives and our livelihoods, because they make a killing by taking huge risks and cutting costs. And when things inevitably go South, they aren’t held responsible (other than a slap on the wrist), and may even be bailed out by the government.

But surely the financial crisis was different. After all, Wall Street executives and politicians say that the financial crisis wasn’t foreseeable. And see this.

Actually, it might have been slightly foreseeable for a little while before the financial crisis.

We’ve Known for Thousands of Years

We’ve known for literally thousands of years that debts need to be periodically written down, or the entire economy will collapse. And see this.

We’ve known for 1,900 years that that rampant inequality destroys societies.

We’ve known for thousands of years that debasing currencies leads to economic collapse.

We’ve known for hundreds of years that the failure to punish financial fraud destroys economies.

We’ve known for hundreds of years that monopolies and the political influence which accompanies too much power in too few hands is dangerous for free markets.

We’ve known for hundreds of years that trust is vital for a healthy economy.

We’ve known since the 1930s Great Depression that separating depository banking from speculative investment banking is key to economic stability. See this, this, this and this.

We’ve known since 1988 that quantitative easing doesn’t work to rescue an ailing economy.

We’ve known since 1993 that derivatives such as credit default swaps – if not reined in – could take down the economy. And see this.

We’ve known since 1998 that crony capitalism destroys even the strongest economies, and that economies that are capitalist in name only need major reforms to create accountability and competitive markets.

We’ve known since 2007 or earlier that lax oversight of hedge funds could blow up the economy.

And we knew before the 2008 financial crash and subsequent bailouts that:

  • The easy credit policy of the Fed and other central banks, the failure to regulate the shadow banking system, and “the use of gimmicks and palliatives” by central banks hurt the economy
  • Anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts “will only make things worse”
  • Bailouts of big banks harm the economy
  • The Fed and other central banks were simply transferring risk from private banks to governments, which could lead to a sovereign debt crisis

Given the insane levels of debt, rampant inequality,  currency debasement, failure to punish financial fraud, growth of the too big to fails, repeal of Glass-Steagall, refusal to rein in derivatives, crony capitalism and other shenanigans … the financial crisis was entirely foreseeable.

Category: Bailouts, Really, really bad calls

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.

58 Responses to “The Financial Crisis Was Entirely Foreseeable”

  1. albnyc says:

    And so it goes.

  2. emaij says:

    I know plenty of people who either sold their real estate, or refused to buy real estate, in 2005 and 2006, because they were reading the writing on the wall. These were not people who work on Wall Street. Everyone that looked at the r.e. market in those pre-crisis years and decided to sell or rent, was making a reasonable risk assessment of that market. If you are not a banker, a bank analyst, an economist, or working in finance, deliberately and accurately avoiding a market top is probably as close to calling a banking crisis as you can get.

    As for the others – the bankers, economists, analysts, etc. – many individuals did call it. A rational person would have expected the government to immediately seek those people out to get them into positions to influence legislation and policy. That’s what would have happened in a healthy system. Instead, the people in power declared the crisis to be totally unforeseeable, established The Great False Dichotomy of 2007 (bail out or do nothing), and promptly ignored everyone that had any actual insight into how our financial system functions.

  3. BNels says:

    but this time is different….

  4. Petey Wheatstraw says:

    BR:

    You say, “we’ve known for (X) years . . .”

    “We” is far too broad, and “known” is much too generous.

    From what i’ve sen, most Americans don’t “know” what happened during their own lifetimes.

    Case in point: A few years back, just after the Iraq war began, I attended lunch with a client and a few of his coworkers. I arrived on time, and was met by the first attendee from the client’s group — a fellow in his mid 40’s at that time. As we waited for the other attendees to arrive we discussed the war. I pointed out that there was a chance that we would be sent packing after causing much damage to that country and our reputation — for all intents and purposes losing the war, as we had in Viet Nam. Shockingly, the fellow got very perturbed and stated that we had won the Viet Nam war, and that I didn’t know what I was talking about. When others arrived and set him straight, he was dumbfounded.

    Nowadays, most people don’t understand squat about how we got where we are, economically — much less the structure and mechanics of the banking/monetary/financial systems or the history of western civilization and the lessons we might learn from it.

    Our national IQ must be among the lowest in the world.

  5. BusSchDean says:

    We have also known for thousands of years: 1) private and/or political power can be used to marshall and focus resources to advance or ruin societies, 2) in real time the collective wisdom cannot always tell if the outcome will be advance or ruin — you can fool all of the people some of the time, 3) that leadership isn’t always “good” leadership (see Kellerman, 2004) even when it is perceived at the time to be effective leadership, 4) that too often power has a corrupting influence on leaders, and 5) that transparency rarely happens unless forced.

  6. TigerHawk says:

    We have also known since roughly the eighteenth century that no politician or regulator, whether republican, monarchical, or oligarchical, will take the steps necessary to stop a bull market before it stops itself. It has never happened, and it never will. This is not corruption, it is self-preservation.

  7. Bill Wilson says:

    Powerful people can shape the narrative. Before the crisis hit, people like Ben Bernanke, Hank Paulson, and Barney Frank told us that there was no crisis. Once it hit, they told us that we needed to do exactly as they said or the world would end. They couldn’t tell how the world would end, that would scare us. Why did we listen to people who were so wrong in the first place?

    The greatest achievement of the supporters of TARP was labeling any alternative as “nationalization.” They might as well have called it the “communist gestapo takeover of our economy.” There was also the unfortunate label, “Swedish model.” Was it possible to say that without chuckling.

    Even with the best PR campaign, I don’t think we would have chosen a Swedish style takeover, or any style of resolution authority that would written debt down. In the fall of 2008, we just weren’t ready to face the fact that it wasn’t going to be 2007 again, not for a long time.

  8. Greg0658 says:

    I’d rather live in a world that would blame lazy Labor for a mess rather than cut corner Capitalism
    .. but thats me* / most here believe > “free market capitalism is the best path to prosperity”
    .. & new toys (services) only a starving inventor/manufacturer could imagine

    * I give in – get to the list there – fix it .. hell I could be wrong on how to get to utopianism for the next 1000 years

  9. streeteye says:

    Who predicted the crisis?

    Paul Volcker, Warren Buffett, Nouriel Roubini, Raghuram Rajan, John Paulson, Bill Ackman, Mike Burry, Steve Eisman, Mark Faber, Jim Chanos, Peter Schiff, Nassim Taleb, Robert Shiller, Steve Roach, am sure I forgot more than a few widely-publicized cases.

    Knowledge is overrated. People can know they have all sorts of dysfunction and fail to do a thing about it. Admitting you have a problem is step 1 of 12.

  10. BusSchDean says:

    streeteye: agree but we do need step 1 and we cannot even seem to get there.

  11. theexpertisin says:

    streeteye:

    x2

    Perhaps our species has a genetic flaw……

  12. Petey Wheatstraw says:

    streeteye:

    OTOH, Who failed to predict* the crisis?

    Politicians, Bankers, RRE/CRE developers, serial flippers, corporate wage arbiters (either offshoring jobs or undermining US labor laws by hiring undocumented workers) . . .

    . . . pretty much anyone who profited from maintaining/advancing the scam.

    * this is not to say they didn’t know it was coming — only that they had a vested interest in not publicly acknowledging it, giving warning, or modifying their behavior to avert it.

  13. wj says:

    Great Post, Barry!

    “And we knew before the 2008 financial crash and subsequent bailouts that:

    Anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts “will only make things worse”
    Bailouts of big banks harm the economy.
    The Fed and other central banks were simply transferring risk from private banks to governments, which could lead to a sovereign debt crisis.”

    Isn’t this what they are doing in Europe?

  14. VennData says:

    Wrong! For centuries Barney Frank has promulgated rules and regulations that stop the galant, church-going, alabaster-white pillars of their local communities from operating their God/Constitutionally-given private property in whatever – and whoever – manner they so-responsibly see fit … and Clinton – both of them – and oh… I can’t even say his Marxist, food-stamp-licking, stock-market-destroying, globally-despised (unless you’re a Kenyan-Palastinian, Muslim, Occupying 666er) …Obama.

  15. Raleighwood says:

    Our national IQ must be among the lowest in the world.

    I would say that our ability to think critically is the lowest in the world. IMO it was deliberately taken away by the various educationally inclined tax-exempt foundations created by the oligarchs of years past to get people to willing be slaves, wage and debt slaves that can be dismissed when no longer needed.

    The Prussian school of education creates fabulous order-taking robots that do as their told – and think what their told to think.

    http://www.youtube.com/watch?v=8ogCc8ObiwQ&feature=related

  16. dead hobo says:

    Goddammit – all we need to do is pass a law that prevents this sort of outrageous behavior, and then make sure the police enforce it, and all this nonsense will go away. I don’t understand why someone doesn’t do this!

  17. Petey Wheatstraw says:

    dh:

    We are not, currently, a country based on the Rule of Law.

  18. crankitto11 says:

    Barry: concerning the foreseeability of 9/11, I was aware of Richard Clarke’s detailed briefing to President Bush in the summer of 2001, and the arrest of Zacharias Whatshisname in August, 2001, but the depth and amount of warnings chronicled in your link simply floored me. The only thing more amazing than this colossal failure by the Bush Adminstration to halt the attacks was its successful campaign to hide its incompetence behind anti-terrorist hysteria. Given this, and the Iraq War Scam (America’s Most Expensive, Most Unnecessary War), the question isn’t whether the Bush Administration was criminally negligent– it is simply whether it was criminal, period.

  19. Greg0658 says:

    imo WTC7 was a big filing cabinet (see your WTC phone book circa 2000)

  20. Bill Wilson says:

    “We’ve known for hundreds of years that monopolies and the political influence which accompanies too much power in too few hands is dangerous for free markets.”

    I think that’s the most important point on that list, and it’s Obama’s greatest failing. Even if you think the TARP was necessary. How can you not be in favor of downsizing TBTF banks in the future? If you believe that TBTF is good, then you don’t believe in conservative ideas like free market capitalism, and you don’t believe in liberal ideas like economic justice either. You believe in cronyism.

  21. PrahaPartizan says:

    crankitto, I pray every day that Dick Cheney never dies, despite his poor heart, so that he will be able to enjoy the trial he deserves at The Hague. Given enough time, he will be there. I wish him a long life, so that justice can be served. Bush just might make it without any prayers.

  22. Raleighwood says:

    It is the mark of an educated mind to be able to entertain a thought without accepting it.

    Aristotle

    It’s a shame that the media gives us so little to ponder ..

    http://worldmeets.us/images/US.Media.compromised.text_pic.jpg

    http://fabiusmaximus.files.wordpress.com/2011/12/20111204-think-sheep.jpg

    Amazing: 2 planes = 3 buildings

    http://www.youtube.com/watch?v=hZEvA8BCoBw

  23. alnval says:

    “Given the insane levels of debt, rampant inequality, currency debasement, failure to punish financial fraud, growth of the too big to fails, repeal of Glass-Steagall, refusal to rein in derivatives, crony capitalism and other shenanigans … the financial crisis was entirely foreseeable.”

    Looks to me like chapter headings in a new book with the last phrase as the title. When can I pre-order at Amazon?

  24. rd says:

    But we have economists and economic theories that now explain all of these movements of wealth with great precision, similar to modern day physics describing the movements of our solar system. This means that what was once risky and the domain of know-nothing leaders, is now easily explained and modeled so that mistakes will not happen.

    Bernanke, Geithner, and others tell us this so it must be so.

  25. dougc says:

    But do we see that the accumulated debt problem can only be solved by either writing down debt or by hyperinflation?
    I read an editorial in todays NYT that claims the soverign crisis in Europe was caused by the refusal of the ECB to buy sufficent Euro area bonds to lower interest rates to where they in Setember and if they did it now the debt problem would rapidly evaporate. This is almost as ridiculous as the poll on Yahoo claiming that Madonna was the 5th sexiest woman in history , she was too skanky for Dennis Rodman.
    The solution of too much debt and leverage is not more debt and leverage. Geithner wanted the Europeans to bundle 200 Billion Euro of Greek bonds and use them to borrow 2 trillion from the ECB. This is the type of thinking that is working on our debt problems.
    There will be 4 new voting members on the Fed in January, they are all doves and don’t be surprised if inflation is ignored and QE 3 ,4 ,5 etc are the result.

  26. Singmaster says:

    So, what happens next?

  27. SOP says:

    Raleighwood,

    It is sad that you have to preface your remark with that quote from Aristotle.

  28. louis says:

    The insane deregulation of financial markets were a pretty good indicator of what was to come.

    Deregulation of the derivatives market, Greenspan’s ARM message to consumers, LTCM Bailout, etc.

    ” American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage.” Ding Ding Ding, Intruder alert!

    “To spot a bubble in advance requires a judgement that hundreds of thousands of informed investors have it all wrong.” Greenspan.

  29. A says:

    We’ve also known for thousands of years, that history teaches us nothing.
    (at least, most of us)

  30. Lookout Ranch says:

    Can you imagine a politician standing up and say, “We have to put a stop to all of this phony prosperity, half of these people employed by the building boom shouldn’t be.”

    Yeah, like that’s ever going to happen.

  31. James Cameron says:

    Who predicted the crisis?

    Paul Volcker, Warren Buffett, Nouriel Roubini, Raghuram Rajan, John Paulson, Bill Ackman, Mike Burry, Steve Eisman, Mark Faber, Jim Chanos, Peter Schiff, Nassim Taleb, Robert Shiller, Steve Roach, am sure I forgot more than a few widely-publicized cases.

    Indeed, by now it is certainly well known by anyone who has followed these issues that there were a number of people who tried to bring attention to the impending crisis. At the time, they were either ignored or ridiculed, much to the detriment of all of us. Anyone who claims at this late date that the crisis was unpredictable is either an imbecile or self-serving liar. God knows, there are still plenty of the last group. As far as I’m concerned a big swath of our political and financial industry leadership should be serving time for the damage done to this country. Instead, we get limp excusing making even now regarding how hard it is to prosecute these cases or how the problem was unforeseeable.

    Bumps on a log.

  32. jonhendry says:

    Where Washington comes, the 9/11 Troofers follow.

    Please take your conspiracy theories elsewhere.

  33. Through the Looking Glass says:

    Remind me why it is that they socialized the debt and privatized the profits?
    What if it had been done the other way?

    What if they had just given all those $trillions to the people?
    Folks would pay their mortgages hence that problem solved.
    Folks would buy new cars hence GM wouldn’t need your kids lunch money.
    Folks would buy things hence the economy wouldn’t suffer.

    Whats so bad about socializing profits over socializing pain?
    Answer: The megalomaniacs would not have it all,,,and that would be bad for them.
    Bastille Day is a shout away.

  34. wally says:

    To the above list we might add that we have known since at least the time of the Egyptian dynasties that there will be good years and lean years and that a good government acts in a counter-cyclical manner, saving up in the good years and dispensing in the lean years.

  35. bergsten says:

    And, sadly, we also don’t seem to “know” that whatever has happened before is inevitably going to happen again.

  36. BusSchDean says:

    A: — Actually history teaches us many things; we just refuse to learn.

  37. Defining Quality says:

    We all choose what we want to believe! I choose to believe my observed reality. Our collective current observed reality continues to prove history does provide evidence to support the fact that not only was our Current Financial Crisis Forseeable, but it was also intended and engineered to harm the common citizen. All out class warfare of the rich, by the rich, for the rich – our current observed truth and collectve reality.

  38. Futuredome says:

    “There will be 4 new voting members on the Fed in January, they are all doves and don’t be surprised if inflation is ignored and QE 3 ,4 ,5 etc are the result.”

    Nope, your not getting it. QE is dead as a “number”. As they say, it will be to lift NGDP above debt servicing or not at all.

  39. Futuredome says:

    “I think that’s the most important point on that list, and it’s Obama’s greatest failing. Even if you think the TARP was necessary. How can you not be in favor of downsizing TBTF banks in the future? If you believe that TBTF is good, then you don’t believe in conservative ideas like free market capitalism, and you don’t believe in liberal ideas like economic justice either. You believe in cronyism”

    Wrong on all accounts. All capitalism is crony. If you are “Lazzie faire” you believe TBTF is no problem and that the “crash” is no big deal and necessary. That brings in Ron Paul(and his handler Lew Rockwell at the Mises Institute). That is what he “believes”. But that is also good fodder for the Republican party who’s REAL goal is to remove the full employment clause from the Federal Reserves charter(which was used to suck the skepticle Bryan onboard). Once that is done, the Fed would just then be used to bail out banks and then force austerity. I am amazed people can’t get this. Ron Paul is nothing more than fodder to make the Paul Ryan’s and John Kacish’s of the world look reasonable by writing and saying things that don’t add up economically(and lying about past monetary systems to boot). Heck, Rockwell tries to spin reactionary stuff into market liberalism, which is a paradox itself. He needs to leave that to the leftists.

  40. victor says:

    BR: This piece is very well written, it covers the subject thoroughly. I forwarded it to my kids (grown up techies) and friends here and abroad. I do remember though many pundits downplaying the likelihood of the sub-prime mortgage morass plus the derivative gathering clouds doing any harm: Greenspan for example. Our ex VP (Dick C) quipped on national TV: “Nobody saw it coming” and later Greenspan testified that he had been taken by surprise? To wit: Nassim Taleb’s writings about the improbable Black Swans and his ideas for creating “Black Swan Robust” systems with the caveat that financial systems are particularly fragile should figure prominently if and when “we” ever get serious about putting in place controls to avoid future shocks.

  41. howardoark says:

    Yes, lets ignore the constitution and 500 years of common law and forgive debts to stave off an ugly decade or two of slow or nil growth. The trouble with large scale debt forgiveness is that someone (e.g., politicians) has to pick winners and losers. Sure, lets write all existing mortgages down to zero – winner: idiot who leveraged his house in Buffalo into 12 (now seriously underwater) condos in Tampa; loser: widow in Buffalo whose only retirement asset is $250,000 in First Federal of Buffalo CDs. Or, since we’ve suspended the constitution and are just taking people’s property for the public benefit, we could just nationalize all pensions, 401(k)s, 403(b)s IRAs, social security future payments et cetera into a federal program that would pay everyone in America over 65 a pension (I’m thinking $12k/yr to start) – winners: every governmental agency and corporation without a fully-funded pension; loser: cop who worked 30 years (now 52) and spiked his pension with 1000 hours of overtime his last year in. I particularly like that one as the losers are mostly old people and the winners are mostly children. Or we could just put a one-time only 20% tax on all real property – winner: people seriously underwater on their mortgages who would get money back; losers: mostly people over 50 who’ve managed to accumulate a nest egg.

  42. mathman says:

    To second Petey’s statement:

    http://susiemadrak.com/?p=30216
    It was Obama who asked for Citizen Imprisonment Law
    “PETITION: http://wh.gov/D0B We have only a few days to speak up before the President signs NDAA 1031, permitting citizen imprisonment without evidence or trial. The bill passed by Congress absolutely DOES NOT exempt citizens. Section 1031 reads, “A covered person under this section” includes “any person who has committed a belligerent act”.

    - Confusingly, Obama previously threatened a veto for 1032, but NOT 1031. 1032 is UNRELATED to imprisoning citizens without a trial. He has never suggested using a veto to stop Section 1031 citizen imprisonment. In fact, it was requested by the Obama administration. Watch the video for proof.

    - The Feinstein Amendment 1031(e) is dangerously misleading. Don’t be fooled: In the text of 1031(e), “Nothing in this section shall be construed…”, the only word that matters is “construed” because the Supreme Court are the only ones with the power to construe the law. The Feinstein Amendment 1031(e) permits citizens to be imprisoned without evidence or a trial forever, if the Supreme Court does not EXPLICITLY repeal 1031.”

    In case you don’t “get it” – all the crazy stuff Alex Jones on Infowars has been screaming is NOW HAPPENING: militarization of police departments, FEMA detention camps, mass movements of troops around our country, martial law, etc . This isn’t fiction people. We’re about to become a completely different country than that in which you grew up. Not “maybe”, “might” or “could” happen – it’s here.

  43. Greg0658 says:

    mathman & howardoark bloggers .. to combine your ideas > it’s just gotta be to teach for year 2051 ie: 2 generations from now .. the cost of learning in realtime

    who are the wolves who are the sheep and who are the ants looking up from the green green grass of home

    on that Ron Paul – last night during the debate – what struck me is his tBP concept of freedom and liberty from crony capitalism and crony socialism .. I need to grab that segment – it made me think … that I’m as big a impossible dreamer as him

    Robert Goulet the Impossible Dream 10th Anniversary Tribute to 9/11
    http://www.youtube.com/watch?v=eP5ASsi-5aM
    (I approve this version of video overlays |-;)

  44. Greg0658 says:

    howardoark I totally get where your coming from .. played by the rules .. shape of an L on my forehead …/
    on the other hand .. I can’t/don’t want to live in a busted up community .. IT TAKES a community in the modern world .. it really really does .. so why I still believe in anti-capitalism (at least as we know it) …. whatever

  45. AtlasRocked says:

    You forgot to include that Keynesian Stimulus, via Democrat-style overspending of Republican-style under-taxing, has never created enough future tax revenue increases to pay back the debt created. It is a 100% failing economic fix that is of the most damaging kind, because it creates an early sense of economic improvement that indicates it is “working”, when in fact it is just another form of borrowing. A form of borrowing that has, in practice, never paid back the debt created.

    ~~~

    BR: According to our Randian friend, Keynesian Stimulus — around for 7 decades — caused the Financial crisis in 2007-09.

    This is my problem with every ideologue: Their bias prevents them from seeing ANYTHING objectively. You need to go reread: The Crisis Was Caused by [Insert Pet Peeve Here]

  46. [...] also really hate to just wholesale copy and paste another blog–in this case Washington Blog at The Big Picture–but some times you just have to  let the voice of the source speak for itself and hope it [...]

  47. AtlasRocked says:

    Barry, I’ve been consistently saying the Keynesian spending, in the form of Democrat style over-spending or Republican style under-taxing both fail to pay back deficits. Your accusation is pathetic, and paint you as more of an idealogue, about Keynesian deficits, than I.

    ~~~

    BR: What is the relevance of that off topic rant? Why on a post titled “The Financial Crisis Was Entirely Foreseeable” do you feel compelled to offer up a diatribe on Keynesianism?

  48. Greg0658 says:

    fyi .. this afternoon “Conspiracy Theory with Jesse Ventura > Louisiana Oil Spill” via TruTv on Comcast ch61*
    its behind a paywall unless you have a link via various paid subscriptions
    http://www.trutv.com/trutv2go/index.html#!/62601/811051
    .. it was a rather interesting story .. its total truethyness ? and reasoning behind this that this … and that ?

    * – well .. on my broadband computer based feed (maybe Watson senced I was navigate’g for a landing & comply)

  49. AtlasRocked says:

    BR said: What is the relevance of that off topic rant?

    BR – The list above is a list of things we knew caused the economic crisis Borrowing $15 trillion of 30 years is clearly a problem, bro. You may not fear this much debt, and our fiscal system – which you believe is based on much bad fiscal policy – may not yet believe this is debt to be feared, but many citizens do fear it. A fear drives an economy. Fear is a real issue in an economy. It is a contributor to the last round of GIGANTIC stimulus that failed to produce growth. The biggest Keynesian kick ever, and it failed to bring employment back up at all – it has mostly driven people out of the workforce. And – why not follow your first accusation: I’m an idealogue. You are supporting a 100% failed idea: easy money for government. You consistently cite easy money as a problem everywhere, except when the gov’t has access to easy debt creation. Who is the idealogue here?

    ~~~

    BR: To the man whose only tool is a hammer, everything soon looks like a nail.

    Let it go . . .

  50. AtlasRocked says:

    More supporting data: Barry, Every wealthy liberal I know is hiding their money and fearing the government tax reaper coming down the road to pay for the mountain of debt. They’ve put a decent portion of their money in gold, physical gold, conservative investments, and are planning to move out of the country as the debt gets so bad they have to stop borrowing and balance the budget. They believe that will be an ugly scene.

    Get your arms around that cockamamie idea: Rich liberals I know personally are still supporting deficit spending, but making moves with their money to be much more conservative in their investments, hoarding cash in safety deposit boxes, and buying property in safe haven countries they can move their families to when the crisis goes to the next level.

  51. AtlasRocked says:

    http://www.ft.com/intl/cms/s/0/4e0a21fc-2261-11e1-acdc-00144feabdc0.html#axzz1gKBKCB6O

    OECD warns on global funding struggle

    Hans Blommestein, head of public debt management at the OECD, said: “[On occasion], market events seem to reflect situations whereby animal spirits dominate market dynamics, thereby pushing up sovereign borrowing rates with serious consequences for the sustainability of sovereign debt.”

  52. AtlasRocked says:

    BR wrote: What is the relevance of that off topic rant? Why on a post titled “The Financial Crisis Was Entirely Foreseeable” do you feel compelled to offer up a diatribe on Keynesianism?

    If we weren’t in debt already for $15 trillion, the Obama stimulus package would likely have recovered the economy. It would not have paid back debt created, like all Keynesian deficits before this have failed to do, but it is likely it would have been much more effective.

    Instead, the wealthy are hoarding cash and gold, putting off investments that would be making the private market recovery, instead of trailing weakly. I know 2 wealthy liberals. These cockamamie guys are saying debt is not bad, while they buy gold, physical gold, buy overseas property in “safe haven” countries, and go conservative on their investments. Actions speak louder than words, don’t they? The US debt is scaring the crap out of them, but they don’t want to admit Keynesian deficit spending, federal money printing or the liberal programs’ suck on the economy is killing us.

    You recite easy money is so damaging elsewhere in the private economy Barry, but then when the federal gov’t has access to easy money, you go mute. Only idealogues would bring that up, you say.

  53. AtlasRocked says:

    @BR – And to a liberal program advocate that religiously believes liberal policy can never fail, keep avoiding looking at the data on Keynesian payback, and how it is used for finance the failed ideas you support.

    If debt is not an issue, why are the Europeans attacking it, bro? Back when Euro-style health care was so vogue to advocate, you were all over it. Now that Europe is caving in under debt, you refuse to talk about their main concern: Debt accumulation.

    Huh? You still need more data to be convinced? Oh no – debt is not a problem is it?
    “Under the deal announced in Brussels Friday, all 17 countries that use the euro agreed to allow a central European authority to oversee their future budgets and impose tighter controls on spending. They also agreed to automatic penalties if countries spend too much.” http://finance.yahoo.com/news/us-stocks-fall-euro-crisis-144053018.html

    Debt is not a problem? Yet it is the central theme of a European agreement? Stop denying BR. You’re a data-driven guy, right? Why are you parroting American liberal policy advocates?

    Also do you realize this European idea a federalist idea, similar to our Constitution? Read on….

    This is exactly what conservatives and constructionists have been pushing for years: Pushing benefits controls back to the state levels. Each European nation has it’s own benevolence programs – state level benevolence, right? Each European nation is in huge fiscal debt per capita, most of them far worse than the US. So the Union will impose by decree to control each nation’s deficits. This is analogous to what the Constitution demands: The Constitution states that it forbids federal benevolence, and forbids state money printing. States must have balanced budgets, states are left the power to enact benevolence law.

    So, now the European using is stating they will adopt a federalist concept. A Tea Party idea.

  54. Petey Wheatstraw says:

    AtlasRocked:

    Initially (when you began commenting here), you seem to want to blame the (D) party for all of the evils that led us to where we are, currently. When confronted with facts that don’t match your narrative, you fall back on blaming the (R) party for SOME of the problems, but your token blame seems to minimize their contribution. For example, you say:

    “I’ve been consistently saying the Keynesian spending, in the form of Democrat style over-spending or Republican style under-taxing both fail to pay back deficits”

    First off, you have not been saying that consistently. Secondly, your comment blatantly and dishonestly excuses the Republican contributions to overspending, when the only true difference is not the amount of overspending, but who, exactly, benefits from (D) or (R) largesse. (keeping in mind that deficits are taxes, deferred).

    In my view, the difference between the two camps is what they want to do with the “wealth.” The (R) camp seems to want to distribute it to their friends (even though they have to borrow it from their ideological enemies to do so), while the (D)s want to use taxation (a necessity for any government/society), to distribute the wealth more evenly.

    If you look back at the 20th century, it is not by chance or coincidence that the high points in our society are directly attributable to the creation of the middle class by redistribution of wealth from the greedy to the needy.

    In short, your comments would be much more valuable if you would stop trying to place blame where it isn’t deserved (there’s plenty wrong with both political parties without having to resort to bending your arguments — or stopping at the threshold which, if crossed, would disprove your own point — to fit your world view).

    BTW: Your handle is ridiculous, in that “Atlas” was all about greed, not wealth, or wealth creation. Wealth can be a good or bad thing, depending on what one does with it. Greed, OTOH, is bad. The two are not synonymous. Your celebration of greed is repugnant and childish.

  55. AtlasRocked says:

    Not going to play the game, wheatstraw. I won’t take sides, I just print these two dominating facts: Deficit spending from both parties fails. Period. And the Republican party has voted OVERWHELMINGLY to force balanced budgets on both parties twice (1995, 2011), while the democrats have voted OVERWHELMINGLY to NOT force a balanced budget for both parties twice. Actions speak louder than words. Own the problem, bro, stop making excuses for either party’s deficit spending, and stop making excuses for the democrat’s OVERWHELMING, documented opposition to balanced spending with revenue.

    It’s just a nickname, Wheatstraw. Focus on ideas, not labels, ok?

    If debt is not a problem, if it’s a contrivance of the American conservatives, why are the Europeans focused on it right now?

  56. bal says:

    Barry,
    Don’t forget the big one: Hurricane Katrina. Who coulda known?

  57. Greg0658 says:

    my post Dec11th@10:29am I referenced Ron Paul in the debate .. his clips have been uploaded (not by me):
    see 5m44s & 10m12s for the “freedom and liberty from crony capitalism and crony socialism”
    http://www.youtube.com/watch?v=-3QJL6IiNYo
    (he resonated applause multiple times)