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View Diary: Alan Grayson Rips the 'Liar' Alan Greenspan a New One (233 comments)

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  •  Obama, typically, does not speak up until (1+ / 0-)
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    No one gets out alive

    he is sure what he wants to say.  The American people need to get a lot more informed about the financial sector before reforms are undertaken.

    In a sense, I agree with Greenspan because the way economic analysis is set up there is no provision for the middlemen.  The whole thing is constructed in a bi-polar model--producers and consumers, buyers and sellers, credit and debit.  The guys in the middle are nowhere in evidence in the accounting.  They were left out.  The invisible hand is invisible because nobody was looking at it.

    Who are the middlemen?  Well, in addition to bankers, brokers, salesmen, insurers, factors, jobbers and their public counterparts, the regulators, there are also auditors, accountants, managers, etc.

    Perhaps the reason they were assigned no formal role in the economy was because it was assumed that they served to keep everyone honest, to fill the gap between experience and expectation.  Nobody anticipated that the fixation on profit would render the impartial partial.  And, more important, nobody anticipated that money would be transformed into the primary lever for exercising control over the economy--that money, instead of doing double duty as lubricant AND measuring stick, would be elevated to the role of ruler.

    That the latter wasn't going to work as expected started to become apparent towards the end of the '90s, when jiggling the cost of money proved inadequate to slowing the economy or speeding it up.  The apparent became obvious when lowering the cost of money to zero did not spur the economy either--something that is less likely to have escaped notice had it not been for the housing bubble and the military adventures masking what was really going on.  (How many bulldozers and loaders, for example, did the National Guard take to and leave in Iraq so they had to be replaced when the troops came home?  Equipment that was worn out in the service of the Army and Air Force, but not purchased by them is not counted as part of the defense budget.  States and local communities are faced with paying to have them replaced and coping with the work that had to be delayed).

    Monetizing the equity people had in their homes has been going on since the early '90s.  I can recall Greenspan explaining that the equity needed to be liberated as a justification for removing or reducing the capital gains tax on the sale of homes.

    The economists were obviously on a tear to get every last little transaction denominated in dollars so their models could be made more accurate.  In other words, people were to be persuaded to use money, not because that would facilitate their trade and exchange, but because the universal use of currency would make it easier for the money men to keep track.  In other words, the medium became the message.  And then it became meaningless and the economy seemed out of control.  So, the banksters took it upon themselves to put on the brakes by systematically taking money out of the system and secreting it in speculative arrangements with each other--a sort of mutual self-abuse.  And then, like an engine deprived of oil, the gears ground to a halt.

    The bailout poured more lubricant in.  But, it seems the banksters secreted that, as well.  Then, when they discovered they were expected to open their books (records) to inspection, they suddenly coughed the money up.
    The money hasn't been getting to Main Street for quite a while.  When speculators are into consolidation, and restructuring and re-alignment, there's not a lot of real enterprise going on.  Much less re-investment in industry and commerce.  We have been using up capital assets for decades and not replacing what naturally wears out.  The economy fell into the hands of middlemen who have no idea how to make or create anything.

    The only good thing is that the money itself is worthless.  Value is defined by the good faith and credit of the American people and to validate that all we have to do is put the crooks out of business.

    by hannah on Thu Apr 08, 2010 at 11:11:47 AM PDT

    [ Parent ]

    •  I have to disagree with you hannah... (8+ / 0-)

      because once again, let us go back to the OCC law of 1863 that protected Americans for over 140 years.  This law was overturned by the Bush Administration on purpose, and the OCC stepped in, and would not allow States to use their own power and legislation against their local and national banks:

      "Predatory lending was widely understood to present a looming national crisis. This threat was so clear that as New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government...Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

      Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

      In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks."

      To pretend, that this move on Bush's part, was not only outrageous, but that Greenspan and Bernanke were not privy or did not support these kinds of predatory practices is not being honest.  The OCC was absolutely part of the problem, and many government 'regulators' received huge bonuses for their part in pushing the sub-prime markets, specifically 'for the benefit of Wall Street and the Banks.'  And Greenspan and Bernanke, knew all about these efforts, and once again, ignored what was really going on in predatory lending, and in addition, were repeatedly warned.

      ...oh, not to worry, I'm wearing a Flame Retardant Valentino Orange Moo Moo whenever I visit DailyKos.

      by Badabing on Thu Apr 08, 2010 at 11:53:50 AM PDT

      [ Parent ]

      •  Point well taken. Perhaps I should (1+ / 0-)
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        amend my argument by suggesting that the unrealistic economic model is intentional--not just a consequence of a basic desire to exercise control (THE unique characteristic of economic "science" whose models aim to shape behavior, rather than illustrate reality), but a conscious effort to utilize how people sustain themselves as a tool for political power.  
        I've only recently come to understand the meaning of "political economy."  So, managing trade and exchange to coerce compliance with the dictates of leaders/rulers is a new thought for me.  I've recognized it as a consequence, but not a motivator.  If deprivation isn't just a source of sadistic satisfaction, but a conscious application of torture that aims to subjugate, then the offense is even worse.  A regimen of deprivation is worse than sadistic--sort of like the "experimentation" of the Nazi doctors.

        Deprivation in the pursuit of power.  Power, to be felt, has to hurt.  Inflicting hurt to experience potency is like rape or the intentional failure to incorporate safety measures at the Massey mines.  It's the difference between a rapist who can't control his instincts and a serial rapist who's out to instill fear in women.

        We know that the culture of fear was purposely created as a mechanism of social control and the instrument of that fear (some foreign group) was faked.  What you're suggesting is that the American people were intentionally put in fear of their ability to survive to render them more compliant.  The wrecked economy wasn't an accident, incident to the quest for power, a consequence of inattention, but rather the objective.  
        Why would they do that?  Failure is the key to longevity in power.

        They wrecked the economy to stay in power?  

        That's a thought that's going to take a while to digest.

        by hannah on Fri Apr 09, 2010 at 12:27:32 AM PDT

        [ Parent ]

    •  Obama typically does not speak (2+ / 0-)
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      hannah, Badabing

      "The American people need to get a lot more informed about the financial sector before reforms are undertaken." There is total truth in that statement!!! But the prospects of the American Public taking on that challenge are not promising! And if that is missing, "they" - fill in any "they" you want - will continue doing what "they" want which will have no bearing on the public welfare!

      I'm not prepared to fault Obama on this. The American public which is willing to let "them" (read: "experts") do what they think is right with no basis in fact and no proof of the correctness of their actions - we, the people, have to step up, become knowledgeable and SPEAK OUT!!!!

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