My Conversation with Paul Volcker, Former Fed Chairman

News Update, 11-26-08:

Paul Volcker, Obama's Economic Advisory Chair

The Federal Reserve has taken extraordinary emergency measures in response to the current financial turmoil. Tonight, I spoke with Paul Volcker, former Fed chairman and one of the most respected figures on the economy, in an exclusive interview. Here is what he had to say about the collapse of Bear Stearns and the role the central bank has played.

Comments

[themodernleader]

Notapathetic. You receive my accolades. If we were suddenly to awaken and unite, we could still wrest ourselves from impending doom. But only our powerless middle Americans grasp the enormity of the issues. And nobody gives a hoot for their opinions, only their demigogicly sought vote. A Republic controled by concentrated power and wealth is an organization careening out of control.

[dadw5boys]

Charlie, you will enjoy this cartoon about the bailout.

http://news.yahoo.com/comics/uclickcomics/20080317/cx_jd_uc/jd20080317

[SCG]

By the way, Volcker has endorsed Obama a number of weeks ago.

[DSun]

This is what happens when one doesn't have firm core principle. Bernacke mustn't be a true free marketer , but another one of those so claimed conservatives who act like free loader.

[themodernleader]

Ex-Fed Chairman Paul Volckerer has read the mission statement and laws establishing the Federal Reserve. He is right in acccusing the Fed of over stepping its authority of attempting to bail out Investment bankers of their dangerously leveraged positions. The Bernacke Fed will not reveal the target of the 30 billion that was thrown down the rat hole of Bear Stearns. But Mr. Volcker surmised it was highly leveraged derivatives (which I have predicted also). JPM is holding the big bulk of these derivatives. They may be the next speculator to cry for governmental largess. Then down the road others will cry out for help. Finally, there will be such a revulsion of public opinion as our dollar crashes and our basic necessities inflate out of reach of many Americans, That the Fed will be forced to cease and desist, Then the entire ponzi scheme will collapse.
But the damage will have been done. The only accomplishment in saving Bear Stearns was a temporary rise in the Market so the insiders could sell out and maybe buy some time before financial collapse.
The damage to our economy and human suffering will be incalculable. Saving the pyramid schemers and risking the value of our currency is what the Fed was willing and illegally took upon itself to do. There is nothing to say or do except hang one's head in grief and shame for the future of our country and ourselves.

[joebhed]

Thanks for the clear notion of how the FED went beyond the spirit and letter of its responsibilities with the people's money. And for the need to look "Beyond the FED".
I was shocked to hear Volker's call for direct government action in any move like that of the Bernanke FED payoff.
He also noted that traditional federal financing agencies are in no position to provide anything like the money power required for providing financial backing to the unregulated banks in this country.
He clearly said that the FED should not be bailing out other private bankers, especially if they are unregulated.
It is always a little chuckle when the analysts explain to people that there are these incredibly complex financial arrangements in place that nobody can really explain right now. More important than understanding what they are and who has them, all we need to know is that, because of the "entanglements" of all the large institutions, NONE OF THEM CAN BE ALLOWED FAIL.
WOW! This is some really complicated, unregulated STUFF going on out there!
Please consider, again.
Charlie asked: "Then what government agency, what options do we have?"
Here Volker demurred to a point of we need SOMEthing.
The Sovereign United States National Bank.
Under the direction of the Joint Congressional Committee on Currency and Monetary Policy.
Under the direction of the people of the United States.
Repealing the FRA, and resorting to more Constituti­onally-bas­ed money system in the United States of America.
We need to get beyond the call for regulation of the investment banks.
They would rather go away than be beholden to the people of the country acting through their government.
Especially when the truth comes out about all those incredibly complicated inter-relationships these guys created to conceal their facade.
Only the Congress shall have the power to create money and to regulate its value in commerce.
Let's get on with it.

[Notapathetic]

I am not an economics expert but I do have an opinion about our current situation, and what I think will occur as a result.

The investment banks, chartered banks, credit unions, direct mortgage lenders, credit card companies, student loan specialists, and even small time operators who placed private loans for construction projects, and, of course, the local, state and federal governments, are in the financial soup so far over their heads that the United States as we knew it is over. It is just a matter of time before we recognize that the jig is up.

When I was a kid, in the forties, the U.S. was the biggest producer of goods in the entire world. Now we are a weak producer and a gigantic borrower. From the youngster who runs up credit card debt to the suburbanite who has been borrowing against the increase in his home value, to the big players who have played Cosmic Criminal with sleight-of-hand ponzi schemes, to insane politicians who have no concept of basic economic laws, we have spiraled from a nation of greatness down into a nation of flim-flam artists. It is now time to face the music.

I believe the U.S. is going to crash like an airliner, very soon. Greece, Rome, Egypt....a­ll of them thought it would never end but it did end, as it always does.

The upside is that when we come out of shock we will be able to re-make the country, and I believe it will look very much like a large Canada. We will NOT have our greedy hands in every other country's business. We will NOT have a nation based on weaponry and violence. We will learn what it means to live peacefully, tending to our own business. We will have to make things ourselves, and sell them to our neighbors who also make products and sell them to us.

We still have wonderful, intelligent people. The core agreement on the necessity for personal freedom will still guide us. We have more than ample natural resources. We have a perfect geographical location.

When the 757 crashes into the ground it will rid us of the crazy, belligerent, greedy sickos who have led us into this mess.....a­nd then we can rebuild.