University of Newcastle economist Bill Mitchell ("Professor of Economics" in a University system where Professor means something far more than just "university teacher") addresses the disconnect between Ben Bernanke's economic universe and the real world in The Great Moderation myth. This is one of his (typically) long blog posts with the (normal) very high signal to noise ratio combined with (typical) substantial amount of detailed economic discussion which may be off-putting to those with poor tolerance for economic discussion.
However, in his post, he has two diagrams which perfectly capture an important element of the disconnect between Bernanke's world and the real world.
So, two diagrams and a handful of paragraphs on why Bernie Sanders is quite right: we need somebody different from Bernanke as Fed Chairman.
source of image is the linked to piece by Bernie Sanders in the Guardian's Comment is Free
The only thing Alan Grayson should Apologize for ...
was not having the Fed's Price List
for their services!
(imo)
Perhaps Grayson can be excused, since "The Fed" does favors for its clients, far from the scrutiny of prying eyes ... giving away Billions to their good ole Buddies, both Foreign and Domestic, without so much as a Receipt or and IOU exchanging hands ...
It's easy to see how this shady activity just might get "mis-construed":
Alan Grayson: Which Foreigners got the Fed's 500 Billion?
I wrote a lengthy diary on dailykos.com November 13, 2007 with this title. It's based on Milton Friedman's belief that Keynesian economics is a mongrel. Friedmanites wanted no part of "mongrel Keynesian compromise"; "an ugly hodgepodge of capitalism" where crazy ideas like state ownership of essential services were working quite well for most, but not making the rich into the super-rich. It was annoying. But mostly it was unclean and impure. It was messy; not neat and tidy. For a great many people order is what they prefer. But when taken to a neurotic, even psychotic extreme, we get Utopians and purists who lack either the capacity or the will to get into other's shoes. These are people who will not compromise in what I call their science of selfishness.
Hereis a section of that diary that talks about South Africa. Last year I thought there might be a connection. http://www.dailykos.com/story/...
Was there a further coup when the Congress took over in January, 2007? Did they cut a backroom deal like the Congress did in Bolivia in 1985? OR South Africa offers another possibility. Were our Congress critters,in the euphoria of victory, concentrating so hard on gaining and distributing power that they missed the big picture? Did they not get that they were being hoodwinked by first class snake oil salesmen?
OK, now, Wash-Mooooo has been taken to the slaughterhouse and the choicest cuts bought by JP Morgan Chase (full disclosure: I bank at Chase).
Didn't anyone know that this was going on? Well, of course people did. For example, back in May of this year, William C. Dudley, an Executive VP at the New York Federal Reserve Bank said:
So what has been driving the recent widening in term funding spreads? In my view, the rise in funding pressures is mainly the consequence of increased balance sheet pressure on banks.
And, obviously, "balance sheet pressure" is a nice way of saying trending toward a risk of insolvency.
Of course, the Fed has been acting for a year now like we are facing a liquidity crisis, when we are actually facing a solvency crisis ... but if you carefully read an analysis by a fairly senior person in the Federal Reserve System, its all there. What's up?
(more interesting thoughts on the economy, Part II... - promoted by poligirl)
Robert Scheer calls it what it is "Financial Facism".
http://www.thenation.com/doc/2... In an article for The Nation, columnist Robert Scheer calls the "bail out" is akin to what Mussolini did in Italy. Mussolini called the merger of corporations and government, fascism.
Sen. Jim Bunning, R-Ky., condemned Paulson's proposal as an effort to "take Wall Street's pain and spread it to the taxpayers." He added, "It's financial socialism and it's un-American."
He's wrong on that last point, for what is proposed is not the nationalization of private corporations but rather a corporate takeover of government. The marriage of highly concentrated corporate power with an authoritarian state that services the politico-economic elite at the expense of the people is more accurately referred to as "financial fascism." After all, even Hitler never nationalized the Mercedes-Benz company but rather entered into a very profitable partnership with the current car company's corporate ancestor, which made out quite well until Hitler's bubble burst.
Smell a rat if Congress approves the Paulson plan without severely curtailing CEO pay and putting a freeze on the mortgage foreclosures that are threatening to destroy the homes of millions of Americans.
(some interesting thoughts on the economy, Part I... - promoted by poligirl)
Dean Baker writes on TPMcafe.com http://tpmcafe.talkingpointsme... that the basic element in this crisis is "trust". These guys knew that this was a bubble. They knew that what they were doing was a huge Ponzi scheme. Alan Greenspan was being knighted by the Queen of England back when the non fundamentalist economists like Dean Baker were warning of the coming debacle. So now mistake after mistake later, none of these people in charge or the ones making millions off this meltdown should be listened to, let alone given money to spread around.
Unless the conditions are written in stone, for example specific rules that limit executive compensation using the same type of language that CEOs use when they sign contracts with their companies, there is no reason for the public to believe that they will get a fair deal in this bailout. The public should also demand that some genuine outsiders, representatives of labor, consumer groups and other non-Wall Street segments of society, have a direct oversight role in this deal.
Instead of seeing Obama surrounded by bankers like ex Fed chairman Paul Volker and ex Goldman Sachs now Citigroup former Secretary of the Treasury Robert Rubin last Friday, I wish Barack Obama had been huddled with Leo Gerard of the Steelworkers, James Hoffa of the teamsters, Naomi Klein author of "The Shock Doctrine, Naomi Wolfe, "The End of America" , Nomi Prins, "Other People's Money" and Glenn Greenwald of Salon.com.
This morning, Treasury Secretary Henry Paulson formally announced his grand scheme to use America's economic mess to consolidate power in the hands of the few, the economic pillagers at the Federal Reserve.
Under the guise of "increasing" regulation, Paulson's scheme seeks to abolish the last vestiges of New Deal oversight on the U.S. economy and complete the deregulation of Wall Street. Paulson proposes nothing less than economic shock therapy to the U.S. financial sector. As The Guardian notes in its coverage of Paulson: "Big banks saw little to fear in the blueprint."
The Bush administration will propose on Monday that Congress give the Federal Reserve broad authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system.
The proposal is part of a sweeping blueprint to overhaul the country's hodge-podge of regulatory agencies, which many specialists say failed to recognize rampant excesses in mortgage lending until after they triggered what is now the worst financial calamity in decades.
I think this is precisely what Naomi Klein warned about in her book, The Shock Doctrine. I suspect the Bush administration is going to try to use the shock of the collapsing economy to quickly deregulate the entire economy to make it easier to loot.
University of Newcastle economist Bill Mitchell ("Professor of Economics" in a University system where Professor means something far more than just "university teacher") addresses the disconnect between Ben Bernanke's economic universe and the real world in 
OK, now, Wash-Mooooo has been taken to the slaughterhouse and the choicest cuts bought by JP Morgan Chase (full disclosure: I bank at Chase).
