I was watching Morning Joe, I know, I know. But it interesting to see the process if you know what I mean. Willy was talking about AIG and "populist anger." Aside from the fact I think using the politicized term populist was unfortunate and purposeful, given the most famous self-declared populist Saul Alinsky, leads us to socialism and to Obama policies, or at least the republican whine about Obama policies. It is just more of their sad demogoggery of the lower economic classes and shows how little they want to examine the process we are going thru and the sins that bought us here. And I might say the real advantage of there being more of us than there is of them. Follow me below the fold for a glimpse of how "populist anger" doesn't get it either.
It is the anger of AVERAGE Americans. The wage slaves are revolting and our masters are reacting. I noticed the Dow slipped a bit today, blaming it on AIG, could be it would have slipped without AIG, people are wising up.
There is an interesting article about how Bernanke believes the to big to fail banks need closer scrutiny. If you think it was about real regulations you would be wrong.
Bernanke, speaking to the Council of Foreign Relations, outlined a four-part strategy that he said could provide better regulation and help to minimize systemic risks.
It included better supervision of financial institutions considered "too big to fail;" improved financial infrastructure to allow more transparency in transactions involving newer financial instruments like credit default swaps; a review of regulations to make sure they don't contribute to stresses on the financial system during economic downturns, like requirements that banks keep more money on hand, rules many have said have led banks to reduce lending, and the creation of an agency whose sole job would be to monitor potential dangers to the entire financial system.
"We must have a strategy that regulates the financial system as a whole, in a holistic way, not just its individual components," Bernanke said. "In particular, strong and effective regulation and supervision of banking institutions, although necessary for reducing systemic risk, are not sufficient by themselves to achieve this aim."
allow more transparency in transactions involving newer financial instruments like credit default swaps CDS are part of what got us trouble and sank AIG.
Credit Default Swaps were invented in 1997 by a team working for JPMorgan Chase. They were designed to shift the risk of default to a third-party, and were therefore less punitive in terms of regulatory capital. Credit Default Swaps became exempt from regulation with the Commodity Futures Modernization Act of 2000, which was also responsible for the Enron loophole. U.S. Sen. Phil Gramm (R-TX) introduced the Act on behalf of financial industry lobbyists. The Modernization Act was rushed through Congress as a companion bill to the omnibus spending bill, the last day before the Christmas holiday. It by-passed the substantive policy committees in both the House and the Senate so that there were neither hearings nor opportunities for recorded committee votes. The omnibus spending bill, which was 11,000 pages long, is the financial plan the government requires for everyday operations. President Clinton signed the bill into Public Law (106-554) on December 21, 2000. Like most financial derivatives, credit default swaps can be used by investors for speculation, hedging and arbitrage.
Bernanke isn't on our side, do you see anything in that process transparency would fix? Its not like all the particpants aren't fully aware of what they are doing. They need to be made illegal. He is "horrified" by the latest outrage from AIG and yet he is fine with pretty much keeping the status quo.
March 9th he said banks wouldn't be nationalized, we will just keep pouring money into them based on the "stress test." In the mean time, the corruption continues, the foreclosures continue and the lending law violations continue unabated. The reasoning is not wiping out the stock holders, it would probably be cheaper in the long run to work something out with the stockholders. If that should happen the banks would come up with another compelling reason not to nationalize, they want our money without interference.
Then on 60 Minutes he said the recession could end this year, no it can't.
Still, Bernanke stressed — as he did to Congress last month — that the prospects for the recession ending this year and a recovery taking root next year hinge on a difficult task: getting banks to lend more freely again and getting the financial markets to work more normally.
More pouring money into the banks, so they start lending money and dodge the bullet of serious regulation, oversight or inquiry. They pay us back and we wait for the next big crash. I have to believe Obama is smarter than buying into this crap. But we have to keep the pressure on him and Congress really fix this mess and not just band aid it for the next guy who thinks he can turn the country around.