remake/remodel

On April 13, 2010, in Background and Research, by Joe Costello


I tried but I could not find a way
Looking back all I did was look away
Next time is the best time we all know
But if there is no next time where to go?
RM

The first rule of bubbleology is, you don’t know when they will pop, and in fact, they can expand a lot longer than you think. Or as Mr. Keynes said, markets can stay irrational a lot longer than you can stay solvent. The second rule of bubbleology is — bubbles always pop. In the last year, we’ve watched as “man of the year” Mr Bernanke flooded the world with liquidity and it has had an impact, most importantly “inflating” global currency markets, what that means over time, well, we’ll see. Doug Noland is a bubbleologist extraordinaire, he writes at the Asia Times:

The markets’ perception of “too big to fail” has for years been an integral facet of bubble dynamics. And despite all the talk of trying to rid the marketplace of this notion, the markets remain more persuaded than ever: the unfolding global government finance bubble is much too gigantic for policymakers to risk letting it come anywhere close to failing.

So, the real question is how long policymakers can keep things afloat. In the end, that depends on the real economy, and looking at that has become a Rorschach test, unless you’re unemployed, it just looks one way, pretty shitty. It certainly seems deflationary trends are fairly entrenched. The most recent inventory numbers in the US show they remain down a whopping 10% from last year. While the FT reports regulators are telling US banks to hold onto their money “until political and economic uncertainty surrounding the industry dissipates.”

Over in Europe, the roulette wheel turns to see which sovereign debt problem makes it to the front page next —

Portugal, Spain, Italy, the Brits, or back on red with the Greeks once more? Ed Harrison has good piece on the not looking too good European economy. viagra online purchase Can everyone really export and devalue their way out of this mess?

There is one bright spot and that is Asia. And China is moving, but where? The problem with command and control economies is they push on the thing that is working until it doesn’t work anymore, and then there’s great problems. The FT reports the Chinese are indeed exporting and certainly from last year’s cratered numbers things look better, but in the last paragraph the FT notes:

The “new export orders” component of China’s official PMI fell from 53.2 in January to 50.3 in February, while the import component dropped from 53.4 to 49.1. The PMI readings are forward looking and a level above 50 indicates expansion while a level below 50 indicates contraction.

Cross-posted from Archein:  remake/remodel

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Fed Vice Chair resigned yesterday. He was a Greenspan person. Obama gets a pick now. Leading the Fed are Bernanke, an academic economist specializing in the Great Depression, and a community banker and a JP Morgan Chase person. According to NYTimes, it’s likely they will name a woman academic economist to sit beside Bernanke to show that the Fed is not entrenched in the big bank econom. Surprisingly, as the Fed got slack from us and the public for being a feeding trough to the big banks, the Senate is going to give them more power, by housing the CFPA there. Senate, are you listening to anything the public wants?

We don’t think the Fed deserves any new powers unless it is democratized. Now’s probably a good time to sign the petition for no new powers for the fed, if you haven’t already. Any new regulator is simply going to get captured by the financial elite unless we make the regulators transparent, accountable, and operate in the context of public input or rather in democratic ways.

It’s notable that one of handful of Fed governors who has talked about addressing too-big-to-fail, using antitrust law, and breaking up the banks, Daniel Tarullo, is an Obama pick. My pick is Tarullo, just push him up. Doesn’t the guy look nice? Or give me a woman who has talked seriously about addressing the issue and is an expert at monetary policy AND employment.

Baseline Scenario has this to say about hand-picking Fed chiefs:

“Second, why is the Democratic establishment uniting behind Bernanke? Bernanke was a Bush appointee to the board, a chair of the Bush Council of Economic Advisers, and then Bush’s pick to replace Greenspan. He’s a Republican whose main selling point to Obama was that he was already in the job and accepted by “the markets,” and he was the clear choice of Wall Street this winter. Does this mean that Obama is going to appoint three centrists who follow the (recent) central banking orthodoxy of putting inflation control over economic growth, and who oppose tighter regulation of banks? For anyone who thinks that there is such a thing as a coherent Democratic economic policy, that seems like shooting yourself in the foot.

Finally, and I know I’m in the minority here, why are we trying to increase the power of the Fed chair — especially a Fed chair from the opposite party? Leaving aside policy questions, I think the deification of the Fed chair in the past two decades has been a decidedly bad thing. The sensitivity of the markets to one man’s pronouncements (and, just imagine, his health) is a bad thing; the fact that an unelected person is widely considered the second-most powerful person in the country is a bad thing; and if our economic fate actually depends on one person’s wisdom, that’s also a bad thing. The point of a committee is to have differing views, arguments, and a vote — not to have a bunch of suck-ups and yes men. If we put some real progressives on the board, then that’s what you would have — diversity of opinion and meaningful votes. (Including Bernanke, three of the four current members are Bush appointees, including a former investment banker and a former chair of the ABA.)

I know people will say I don’t understand, and if we had debate on the board the markets would be spooked. I think that effectively amounts to saying that dictatorship is good for the markets, so we should have a dictator.”

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Pushing on a String

On February 19, 2010, in Background and Research, by Joe Costello

Pushing on a String

Marriner Eccles is a figure too little known to American history. He was a banker in Utah, who became Fed Chief under Roosevelt. In Feb of 1933, Mr. Eccles gave what might be one of the greatest Senate testimonies in history. The no prescription viagra sale St. Louis Fed has it here, and it is essential reading. Eccles, before Roosevelt was even sworn-in lays out the intellectual, economic, and pragmatic rational for much of what would become the New Deal. No Keynes or economic priesthood, just a Mormon banker with some years of banking experience–the radical pragmatism that has always been this republic at its best. Again, I couldn’t more highly recommend reading Eccles testimony.

What little that is remembered about Eccles is his remark of a few years later. In an entrenched deflationary environment, monetary policies eventually become useless, simply flooding more money into the system is the equivalent of “pushing on a sting”. The question is if our present Depressionary historian/Fed Chief has ever read anything about his predecessor, or if in his monetary indoctrination, Mr. Bernanke was taught to disregard Mr. Eccles.

Today the FT reports:

The prices of US goods and services, excluding food and fuel, fell last month for the first time since 1982, as aggressive measures to stimulate economic growth failed to inflate the cost of living.

A year ago, someone said to me, “Well, everything Bernanke is doing is inflationary, right?” I replied, “Well,

that’s certainly what Mr. Bernanke hopes.” I think we’ve learned a lot about hope over the last year.

So, as Cato the Elder took to ending every speech “Carthago delenda est,” Jefferson ended his letters, “Divide the counties into wards,” we need say, “Debt needs to be written down.”

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A quiet ceremony for Bernanke

On February 4, 2010, in Background and Research, by Tiffiniy Cheng

Bernanke was sworn in for another 4 year-term. In contrast to his swearing-in ceremony 4 years ago, this one was quiet and more “humble”.

This video commemorates Bernanke’s swearing-in under Bush. Obama’s Bernanke is the same Bush Bernanke; same game plan, same priorities, same feeding trough. This is a well-done and surprisingly fact-based video.

NYTimes has a great piece on the real issue with regulation and the Federal Reserve. It’s not really about who is the regulator. It’s about what a harmonized oversight architecture looks like that is actually set up to maximize the safety and soundness for the whole economy, which includes the general public. We haven’t seen a really serious regulatory reform plan yet. A smart economist and Fed governor is featured in the article saying,

“Policy makers, in my view, should be more focused on what constitutes effective prudential supervision, rather than be diverted to the less consequential discussion as to who should perform it,” Mr. Warsh told the New York Association for Business Economics.

Mr. Warsh said the idea of “resolution authority” — which would empower a regulator to step in and dismantle a failing financial institution before it jeopardized the economy — “is unlikely, in the near term, to drive the market discipline required to avoid the recurrence of financial crises.”

Mr. Warsh called for more accurate and timely information to be provided to shareholders, creditors and regulators; more robust competition in the financial services industry, which he described as “ripe for a healthy dose of creative destruction”; and stronger capital and liquidity requirements, along with better corporate governance and risk management.

“We need a new financial architecture, one in which improved regulation and supervision play an important but co-extensive role with greater market discipline,” he said.

What’s odd to me about the article is Bernanke’s admission that the Federal Reserve need be more democratic (my words), or rather more transparent and accountable, yet pushback on an audit of their goings-ons.

“At the Federal Reserve and other agencies, the crisis revealed weaknesses and gaps in the regulation and supervision of financial institutions and financial markets,” Mr. Bernanke said. The Fed, he said, was revamping how it conducts oversight and collaborating with Congress and financial authorities in other countries to reform banking regulations.

However, Mr. Bernanke also defended the Fed’s autonomy, at a time when some critics in Congress have called for auditing its monetary policy.

“Institutional independence brings with it fundamental obligations of transparency, responsiveness and accountability,” Mr. Bernanke said, adding: “It is essential that the public have the information it needs to understand and be assured of the integrity of all our operations, including all aspects of our balance sheet and our financial controls.”

Earlier on Wednesday, Kevin M. Warsh, another Fed governor, suggested in a speech in Manhattan that the regulatory debate in Congress was not addressing the right questions.

“Policy makers, in my view, should be more focused on what constitutes effective prudential supervision, rather than be diverted to the less consequential discussion as to who should perform it,” Mr. Warsh told the New York Association for Business Economics.

The debate over banks and banking came front and center this week. In his toughest language yet, President Barack Obama vowed to veto financial reform legislation that is not tough enough on Wall Street. “The lobbyists are already trying to kill it,” Obama told Congress in his State of the Union address. “Well, we cannot let them win this fight. And if the bill that ends up on my desk does not meet the test of real reform, I will send it back.”

The President’s rhetoric offers an important measure of progress. Now we can be assured that the political elite are paying attention to the poll numbers showing an unprecedented anger at the big banks and the Wall Street bailouts. Democrats are starting to figure out if they don’t take up this populist message and run with it in November, the Republicans will.

But the rest of the President’s speech and the other dramatic developments in the banking world this week indicate that Democratic actions are falling far short of their rhetoric, a pattern that voters are sure to notice.

First, the speech. Many had anticipated a big announcement on jobs. With jobless rates in the double digits and a projected 5-10 year haul to get employment back to normal levels, workers were hoping for something big and bold. Instead, Obama proposed $30 billion in TARP funds to get credit flowing to small businesses. $30 billion to put 16 million Americans back to work? $30 billion when the Wall Street bonus pool for a few thousand bankers was $140 billion this month? Democrats will live to regret this missed opportunity.

Also on Wednesday, U.S. Treasury Secretary Tim Geithner was called on the carpet once again by irate members of the House for his mishandling of the AIG bailout. To their credit, several Democrats asked the toughest questions. But Geithner bobbed and weaved and no knock-out punches were landed. This is a problem for the Democrats. The whole incident paints an ugly picture of the federal response to the financial meltdown, best described by Representative Edolphus Towns (D-NY): “The taxpayers were propping up the hollow shell of AIG by stuffing it with money and the rest of Wall Street came by and looted the corpse.”

On Thursday, Federal Reserve Chairman Ben Bernanke was reconfirmed by the Senate for another four year term. His nomination had been in trouble and a record number of senators voted no, but Obama stood by his man and pushed him through. The problem with Bernanke is best summarized by economist Simon Johnson: “Bernanke is an airline pilot who pulled off a miraculous landing, but didn’t do his preflight checks and doesn’t show any sign of being more careful in the future – thank him if you want, but why would you fly with him again (or the airline that keeps him on)?” While Bernanke may have saved Wall Street, he has shown little interest in using his power as Fed Chairman to aggressively aid Main Street. He is not the man for the job in these tough economic times and that will soon be apparent to the detriment of the Democrats who secured his confirmation.

Ultimately, however, the most important developments of the week were played out behind closed doors in the Senate. Senate Banking Chairman, Chris Dodd, made the decision some time ago to try to devise a bipartisan financial reform package. His package of reforms was then handed over to four bipartisan working groups. With thousands of bank lobbyists swarming the hill, it is no surprise that these groups are busily making the Dodd bill worse.

The derivatives language is being weakened and bankruptcy is emerging as the preferred method of unwinding financial institutions, which could leave taxpayers to foot the bill for this expensive procedure. To truly end the “too big to fail” problem and crack down on the reckless behavior of the biggest banks, we need strong, specific preventative measures such as leverage limits, capital and margin requirements, limits on counterparty exposures, a ban on proprietary trading and limits on bank size through a low cap on total liabilities. Even Obama’s signature reform, an independent consumer agency is in danger of being whittled down to a corner desk in a failed federal agency.

The President understands that the Wall Street bailout was “about as popular as a root canal.” But if Democrats continue to peddle this type of rhetoric while neglecting meaningful reform as they have done this week, the Republicans will run away with the anti-bailout message and with the election in November.

Crossposted from http://www.banksterusa.org/

Bernanke, Most Voted Against Ever, Wins

On January 29, 2010, in Current Leadership, by Tiffiniy Cheng

We started our campaign against the Bernanke confirmation with no real support. In the end, and thanks to Bernie Sanders and most of all, to all of you, he was confirmed with the MOST VOTES AGAINST A FED CHAIRMAN EVER. He needed 50 votes to pass reconfirmation, he got 70 and 30 people voted no. We had over 3,700 signatures.

This is the roll call: 28 Republicans, 11 Democrats, and 1 Independent voted against Bernanke. What’s up with the Democrats — what are they trying to do? They’re helping to put more holes into a sinking ship.

Do you think our ANWF members would appreciate a message about this? Would like to know your thoughts.

Simon Johnson nails the problem:

Some on Wall Street, of course, would disagree – arguing that the financial sector growth he fostered is not completely illusory, that we have indeed reached a new economic paradigm due to the Greenspan tonic of deregulation, neglect, and refusal to enforce the law. Prove the ill-effects, they cry.

What part of 8 million net jobs lost since December 2007 do you still not understand?

Reappointing Ben Bernanke solves none of our problems. In fact, given his stated intensions, a Bernanke reappointment implies larger bailouts in the future – thus compromising our budget further with contingent liabilities, i.e., huge payments that we’ll have to make next time there is a crisis. What kind of fiscal responsibility strategy is this?

Rather than messing about with a meaningless (or damaging) freeze for part of discretionary spending, the White House should fix the financial system that – with too big to fail at its heart – has directly resulted in doubling our net government debt to GDP ratio from 40 percent (a moderate level) towards 80 percent (a high level) in a desperate attempt to ward off a Second Great Depression.

If you think we can sort out finance with Ben Bernanke at the helm, it was sensible to reappoint him. But when the time comes for members of the Senate themselves to be held accountable, do not be surprised if people point out that pushing Bernanke through – come what may – was the beginning of the end for any serious attempt at reform.

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Harkin says let’s stop being held hostage by Wall St. Another vote against Bernanke:

“How long will our economic policy be held hostage to Wall Street who threaten us that there’ll be total collapse if we don’t do everything they want? Wall Street wants Bernanke,” Harkin added. “They’re sending all these signals there’ll be this total collapse if he’s not approved. You know, I’m tired of being held hostage by Wall Street.”

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Time is Running Out for Big Ben

On January 26, 2010, in The Public, by Mary Bottari

Opposition has been mounting to the reconfirmation of Ben Bernanke as Federal Reserve Chairman. In recent days, Senators Barbara Boxer (D-CA) and Russ Feingold (D-WI) and John McCain (R-AZ) announced that they would vote no. If Bernanke does not get a vote this week, before the formal end of his first term, it would send shock waves through Wall Street.Although he was named Time’s “Man of the Year” due to his handling of the financial criisis, Boxer and Feingold reprise a bit of forgotten history. “Dr. Bernanke played a lead role in crafting the Bush administration’s economic policies, which led to the current economic crisis. Our next Federal Reserve chairman must represent a clean break from the failed policies of the past,” said Boxer.

“Under the watch of Ben Bernanke, the Federal Reserve permitted grossly irresponsible financial activities that led to the worst financial crisis since the Great Depression. Under Chairman Bernanke’s watch predatory mortgage lending flourished, and ‘too big to fail’ financial giants were permitted to engage in activities that put our nation’s economy at risk. And as it responds to the crisis it helped to usher in, the Federal Reserve under Chairman Bernanke’s leadership continues to resist appropriate efforts to review that response, how taxpayers’ money was being used, and whether it acted appropriately,” said Feingold in a statement.

McCain told Face the Nation that Bernanke “was in charge when we hit the iceberg” of the recession, thus his confirmation to a second term should be weighed carefully. “I think that he should be held accountable.”

These Senators joined a bipartisan group of their colleagues who placed a “hold” on Bernanke’s reconfirmation in the Senate. The group includes Senators Bernie Sanders (I-VT.), Jim Bunning (R-KY), Jim DeMint (R-SC) and David Vitter (R-LA.). A vote cannot take place until these holds are lifted.  According to the Wall Street Journal, 17 Senators are voting no. Forty-one are needed to block a vote in the Senate.

Many Senators are back in their districts this month getting an earful on the state of the economy from their constituents. Others are paying close attention to last week’s  crushing victory by Republican Scott Brown in the Democratic stronghold of Massachusetts. As we reported, Brown rode a populist wave of anger against the bank bailout and the state of the economy to seize a U.S. Senate seat long held by Democrats.

But some in the Senate greeted the rising tide of citizen discontent with disdain. Senator Judd Gregg (R-NH) told CNBC: “There’s a lot of populism going on in this country right now, and I’m tired of it.”

Although originally appointed by Bush, Bernanke was nominated to a second four-year term by President Obama in August. His first term ends on January 31st. Although Obama has been talking tough with Wall Street lately, he appears to be standing by Wall Street’s man. White House adviser David Axelrod said Sunday on CNN that Obama remains “confident” that Bernanke will be confirmed.

Axelrod should know better. Obama cannot talk tough on Wall Street one day and change his tune the next. Let others make the case for failed Bush policies and left-over Bush appointees.

There is still time for the Obama team to change course and embrace a new direction in its Fed policy. Call your Senators now and tell them its time for Ben to go or contact them at A New Way Forward. The clock is ticking.

Cross-posted from PRWatch.org

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This article is written by our guest blogger and ANWF member, Robert Roth

The Three Stooges – Moe, Larry and Curly Joe – gave a comic definition to the term “stooge.”  But one of the dictionary definitions of “stooge” is “one who plays a subordinate or compliant role to a principal” – “principal” meaning one who calls the shots.  “Puppet” is said to mean the same thing.  The dictionary I’m looking at even gives, to illustrate the definition of “stooging,” “congressmen who stooge for the oil and mineral interests.”  So how apt is the use of the term for Ben, Larry and Curly Tim – Federal Reserve Chair Ben Bernanke, Larry Summers, director of the National Economic Council, the White House office that coördinates economic policy in the Obama Administration, and Treasury Secretary Tim Geithner?

In a general way, all three are stooges for Wall Street, in that their reaction to the near-collapse of the financial system that nearly brought us a Second Great Depression – and still could, in my view – has been to try to revive the institutions and practices that gave rise to the problem in the first place.  In short, they have been representing financial interests, rather than Main Street.  More specifically, Ben Bernanke supported and now continues the low-interest policies that helped inflate the Bubble Economy, enabled widespread fraud by failing to exercise the Fed’s regulatory powers while the Bubble was inflating, and has arranged trillions in backing for the credit markets, making more billions for Wall Street at the expense of the rest of us.  And it seems entirely fair to give Larry Summers, as the chief advisor to the White House on economic policy, an ample helping of blame for Obama’s failure to fight for a more substantial jobs program.  And there is evidence Tim Geithner arranged for a secret bailout of AIG when he was chairman of the New York Fed.  Others have made the case in more detail – see, for example, Chris Hedges, “Wall Street Will Be Back For More” and the other sources cited below – but I think it’s clear the terms are apt, and a useful way to draw attention to the need for President Obama not only to do an about-face on the subject of financial regulatory reform, but to clean the White House of the influence of those who have until now served as stooges for Wall Street while occupying positions of public authority and trust.  And a good start would be firing Ben, Larry and Curly Tim.

Perhaps in desperation after the Democrats’ loss in Massachusetts, President Obama has finally come out swinging at Wall Street.  Previous “reform” efforts were a smokescreen, but there is potential for real change in the latest proposals.  Those should be evaluated against our own program for fundamental restructuring of the financial system and the economy, and as their impact is complex and they will surely change, I don’t propose to evaluate them fully here.  Suffice it to say that in adopting the proposals of former Fed Chief Paul Volcker, Obama may have taken a page directly out of the playbook outlined by Simon Johnson a few days previous.  But as the dust flies and may not settle for some time, there are some things we can and should do to impact the situation.  This article outlines some of those first steps and provides a toolkit of information resources for following the action.

First, Obama should conduct a clean sweep, and divest his administration of those who produced the near collapse of the financial system and the economy and have thus far been working to preserve the pre-crisis status quo.  That means dumping the Three Stooges who laid so much of the groundwork for the recent near collapse of the economy and have worked ever since to preserve in its current form the financial system that caused it:  Amid the talk of possibly replacing Bernanke at the Fed, Summers’ name has been floated as an alternative.  That would be a change we could believe in – from the frying pan to the fire, or vice versa, take your pick.  Instead, progressive forces should mobilize behind figures like FDIC Chair Sheila Bair or economists like Joseph Steiglitz or James K. Galbraith.  And the few Senators who have thus far announced opposition to Bernanke’s reappointment – Oregon’s Jeff Merkley, Wisconsin’s Russ Feingold, and California’s Barbara Boxer – should hear from us in support, and the rest should hear from us in protest until they change their tune.

Second, something constructive should come out of the hearings of the Financial Crisis Inquiry Commission.  Thus far, we’ve seen softball questions lobbed at the giants of the finance industry on heavily reported Day One, while the media all but ignored the second day, at which Sheila Bair and Illinois Attorney General Lisa Madigan, among others, systematically described the ways in which the Fed helped enable the rampant fraud that led to the crisis and proposed serious steps to avoid a repetition.

Third, we should understand generally Wall Street’s program at this point – so we can oppose it – and devise and promote specific steps toward genuine and effective reform.  Ms. Bair’s testimony before the Commission is a wonderful resource for this purpose, and in reviewing it, we should also recognize that the People have a genuine champion in Sheila Bair.  Ms. Bair deserves our thanks, praise and support for taking on the – literally – Old Boys network who have empowered Wall Street’s fraud machine and are working to preserve it.

I published last May a comprehensive assessment of the financial and economic crisis, and a set of proposals for restructuring the economy.  Nothing in my assessment has changed, and I suggest it to your attention as a starting point if you want one.  Fast-forwarding to the present, possibly the best short resource I’m aware of on the background to the current situation and how it is evolving is Michael Hudson’s “The Revelations of Sheila Bair: Wall Street’s Power Grab (CounterPunch, January 19, 2010).

There are some straightforward proposals, already on our table if not Wall Street’s, that we should keep sight of and continue to mobilize behind.  Wall Street’s program provides a sort of mirror image of what they are and ought to be.  First, the Old Boys want to be allowed to continue to gamble with other people’s money and the financial system as a whole, and they want the financial sector to stay as it is even though it is already too big a part of the overall economy and is full of institutions whose practices continue to pose systemic risk.  Second, they want the proposed new Consumer Financial Protection Agency to be dumped.  Third, they want to avoid any structural reforms like reenactment of Glass-Steagall.  And of course, they want their own Three Stooges – Ben, Larry and Curly Tim – to remain in charge at the Fed, the Treasury, and the White House.  So if they lost Bernanke at the Fed, for example, they’d want to replace him with Larry Summers.  Flip those coins and we have the beginnings of our own program.

First, the big banks should be broken up.  Too big to fail means too big to be allowed to exist.  However, the financial system has evolved so that there are now institutions other than banks whose failure can pose systemic threats.  That’s one reason Obama’s proposals are more complex than the old Glass-Steagall firewall between commercial and investment banking.  There should be limits on the size of financial institutions.  But just as importantly, any institution engaged in financial activity should be required to hold sufficient reserves to cover its deposits if it takes them, and its bets if it makes them.  Simon Johnson recommends tripling capital requirements so banks hold at least 20-25 percent of their assets in core capital.  Peter Boone and Simon Johnson, “A bank levy will not stop the doomsday cycle,” Financial Times, January 19, 2010.  If implemented, such a requirement would make it more expensive for financial entities to expand beyond their usefulness or to pose systemic risk by making bets they couldn’t cover.  Of course, such a rule would have to be vigorously enforced, and that would require a regulator with integrity as well as authority.

Another key proposal is creation of a Consumer Financial Protection Agency.  On the need for it, see “Elizabeth Warren: Pass A Consumer Protection Agency Or Forget Regulatory Reform,” and Michael Hudson’s article including his report of Sheila Bair’s testimony.  In the meantime, Connecticut Senator Chris Dodd, who has floated the idea of dumping such an entity or burying it in another agency in order to obtain, excuse the expression, bipartisan support, should hear from his constituents by all available means.

And the financial sector itself should be reduced in size to the point where it can serve the needs of the economy without putting it at risk.  As Ms. Bair pointed out, “our financial sector has grown disproportionately in relation to the rest of our economy,” from “less than 15 percent of total US corporate profits in the 1950s and 1960s…to 25 percent in the 199s and 34 percent in the most recent decade through 2008.”  While financial services are “essential to our modern economy, the excesses of the last decade” represent “a costly diversion of resources from other sectors of the economy.”  In other words, what is spent on financial services is not available for investment in plant, equipment, research and development, training, or the production of goods, services and jobs outside the financial sector.

As the battles that have now been joined proceed, I’d suggest, among many excellent resources, those listed below, and the ongoing commentary of Simon Johnson, Michael Hudson, Mike Whitney (often posted on the website of CounterPunch, and others whose work appears here and on the home page of Progressive Democrats of America).

Robert Roth is a retired public interest lawyer who prosecuted marketplace fraud for the Attorneys General of New York and Oregon.

Other valuable reads from Robert:

Dan Geldon, http://baselinescenario.com/2010/01/20/how-supposed-free-market-theorists-destroyed-free-market-theory/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+BaselineScenario+%28The+Baseline+Scenario%29″>“How Supposed Free-Market Theorists Destroyed Free-Market Theory”

Robert Roth, “Fixing the Economy: For Starters, Fed Chief Ben Bernanke Should Not Be Re-Appointed”

The new sport: Bernanke Vote Tally

On January 25, 2010, in Current Leadership, by Tiffiniy Cheng

We started with one senator holding, now there are 17. Wall Street Journal is doing a vote tally on Fed Chief Bernanke’s reconfirmation to a second term. They’re doing this because more and more senators are putting a hold on his confirmation, see here. We helped to make this happen with our petition for “No Bernanke in My Name!”

This is certainly the beginning of much needed reforms and changes to the Fed. Whether or not they exist as an entity doesn’t matter to me in particular, but more that we have a system that keeps the banks from growing so big they have so much power. See here at A New Way Forward, we think about process more than particular programs or institutions — what kinds of processes or reforms can transform the amount of power any individual can have, especially when they have none or very little?

I, thus care deeply about corporate domination and collusion with the federal government. The Fed seems to be the worst of that now.

If you think that we need a democratization of our central bank, rather than allowing it to remain as the feeding trough that it is, please sign the petition that has helped to start the restructuring. We think that the Fed needs to be democratically elected, without bankers leading the helm, and have transparency and accountability to the public good, jobs, and our savings. So, sign the petition to start democratizing the Fed and stop the confirmation of bankster chief #2, Ben Bernanke –No Bernanke in My Name.”

Want one reason why he shouldn’t be confirmed? The central bank of all places, and the Fed chief of all people should know that his fixes continue to starve the real economy and aren’t helping to fix them either. “Credit card delinquencies at big banks masked by paynent holidays & other modifications” as reported in “Large-Cap Banks: Dec. Trust Data: Losses Headed Up?” (unavailable without subscription).

Simon Johnson points out the disservice taxpayer-paid Bernanke has done to the American people, “As Fed Chairman, Bernanke allowed Goldman Sachs and Morgan Stanley to become financial holding companies during the financial crisis in October 2008 [which qualified them for massive taxpayer bailouts], and then to continue to engage in massive amounts of proprietary trading, just as they had done previously.”

Lastly, I have been noticing Andrew Jackson’s work when he was president — he stood with the people on economic matters. And that is inspiring because he was able to work with the people and make huge changes to the system. And Simon pointed out that, “FDR’s favorite president was Andrew Jackson.  The White House might like to read up on why – Jackson confronted, ran against, and ultimately defeated, the specter of concentrated financial power.  President Obama needs to do the same.”

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