The world is suffering from the worst downturn since the Great Depression. The crisis has left tens of millions unemployed in the U.S., Europe, and elsewhere. The huge baby boomer generation in the United States, now on the edge of retirement, has seen much of its wealth destroyed with the collapse of the housing bubble.
It would be difficult to imagine a worse economic disaster. Prior periods of bad performance, like the inflation ridden seventies, look like mild flurries compared to the blizzard of bad economic news in which we are now enmeshed.
None of this is new. People don't need economists to tell them that times are bad. However, what the public may not recognize is that the same people who caused this disaster are still calling the shots. Specifically, there has been little change in personnel and no acknowledgment of error at the central banks whose incompetence was responsible for the crisis.
Remarkably, this crew of incompetents is still claiming papal infallibility, warning governments and the general public that bad things will happen if they are subjected to more oversight. Instead, the central bankers and their accomplices at the IMF are dictating policies to democratically elected governments. Their agenda seems to be the same everywhere, cut back retirement benefits, reduce public support for health care, weaken unions and make ordinary workers take pay cuts.
Given how much they have messed up, it is amazing that these central bankers have the gall to even show their face in public. They are lucky that they still have jobs -- and very good paying ones at that. (Many of the boys and girls at the IMF can retire with six figure pensions at the age of 50.) Ordinary workers, like teachers, autoworkers, or custodians, would be fired in a second if they performed as badly as the world's central bankers.
What was going through their heads when they saw house prices in the United States, the UK, Spain and elsewhere spiral upward with no basis in any of the fundamentals of the housing market? How did they think this bubble would end; did they think that trillions of dollars of housing bubble wealth could just disappear without any impact on the economy. Or, did they think the bubble would never end and that house prices would just continue to go skyward forever?
How about the central bankers who allowed the euro to be imposed on a mix of economies with very little in common and no controlling governmental organization? Did they think that wages and prices would follow the same pattern in Greece and Germany? If not, what adjustment mechanism did they envision once these widely different economies were tied to together in a single currency?
Yes, many of the central bankers are now saying that they knew the euro was a bad idea back when it was established. Some of them even muttered quietly to this effect. But the central bankers and the IMF in 1998 were not making the same bold pronouncements and issuing the same directives to elected governments about structuring the euro zone that they are now doing in telling them to dismantle their welfare states. In other words, these central bankers failed disastrously -- why do they still have jobs and why on earth is anyone listening to them?
At the top of the list of villains in this story is the IMF. Its ineptitude managed to reverse the fundamental flows of capital in the world economy. In normal times capital is supposed to flow from wealthy countries with large amounts of capital, like the United States and the European countries, to the developing countries who need capital to fuel their development. Due to the failure of the IMF to establish a workable system of international finance, the flows went in the opposite direction in a huge way. The world's poor were sending their capital to the United States because the IMF gave them little choice.
It is important to be clear about the responsibility of the central bankers and the IMF for this totally preventable disaster. The first reason is accountability, something that is very important to economists who believe in economics. Economic theory teaches us that if workers are not held accountable for poor work, then they have no incentive to do their jobs well. If the central banker and IMF crew can mess up disastrously and continue to draw their paychecks as though everything is fine, what is their incentive to do better next time?
The other reason why it is important to recognize the responsibility of the central bankers and the IMF for this disaster is so that we don't continue to take advice from people who apparently don't have a clue. Before anyone listens to Ben Bernanke, European Central Bank President Jean-Claude Trichet, or IMF Managing Director Dominique Strauss-Kahn, they should first be forced to tell us when they stopped being wrong about the economy. We cannot afford to let these subprime central bankers control economic policy any longer.
Robert Creamer: On Jobs and Teacher Bills, Some Democrats Ignore Economics and Politics 101
The GOP has done a good job promoting the "deficits are out of control" narrative. But Dems should realize that failure to pass measures that create jobs poses a much graver political danger to members -- and economic danger to the country.
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THEY. The BAD PEOPLE, the nefarious individuals- is where you make your mistake. Corruption is a built in by-product of Wall street. Whoever the BAD PEOPLE are, and please, go ahead, release your frustration; name names !- the addiction to money has its consequences! Any one in charge would behave precisely the way they do as they are conditioned through their schools of eager competition and slapped on the back by their backstabbing good old boy friends. Democracy shall be spoken of but n'er applied, x'cept to give preeminance to this pestulance at the top- they who elected themselves to be in charge of the life flow of the planet. Go ahead sir, continue to toss the blame around while I sit here so very patient and eager to watch it all at last flush itself down the drainpipe of pre-civilis. Upon the oil wars and food riots must you still be blaming THOSE PEOPLE ??? Or will you finally copt to what is plainly evident, the outdated and immoral money system itself, my good sir!
Of course, to be realistic, we can expect nothing of significance to change. Those who run the show will continue to do so to their own advantage. Money and wealth will continue to buy Power. But some day the inevitable break will happen, like unplugging an ocean of oil at the bottom of the Gulf of Mexico, and the world as we know it will disappear.
http://www.baitandswitchtv.com/comedy2.html
Yea, the biggest ponzi scheme ever invented (NYSE) is "too big to fail". The hedge fund manager who made $4 Billion last year ($2 million an hour for a 40 hour week) certainly is too big to fail. At least in his own eyes.
This statement itself could not be more true! However, those people work for the Government, not the banks!
As for owning the Government do not forget the Unions, who seem to have a better link to Government than the Banks!
The book Ubiquity by Mark Buchanan discusses this issue, and forest fire prevention is one of many cases he uses to illustrate it. By preventing and quickly putting out all local forest fires, the timber load builds up and forests run together until a massive fire wipes out a region. Controlled burns (or induced avalanches in the case of mountain snow packs), are the most effective management technique for reducing the rate of uncontrollable global conflagrations. We haven’t considered controlled burns in economics, because we want to avoid pain. Our public policy is naively to prevent or postpone as many economic failures as possible…with the consequence that the very acts which cause postponement (low interest rates, massive loans) enable stresses to build up which eventually bring down the entire economic system.
Beating up central bankers for doing what they are appointed to do, postpone economic hardships, is silly. The error is ours because we believe we can construct an unfailing economic system; a fundamental impossibility; which is why the first law of evolution is to “embrace uncertainty.”
Jackson had it right when he dashed the first iteration of a US Central Bank. Congress/American citizens should control the money supply in this country, as decreed by the Constitution.
I seriously doubt, having read Ben Bernanke's "Essays on the Great Depression", that he ever took such a simplistic view of its cause. I suspect you may be quoting something out of context. I do think that he is over-reacting to the lessons learned from the Great Depression and leaving interest rates far too low for far too long.
Our military destroyed wealth in Iraq.
Wall Street stole wealth in the bubble and the collapse that followed.
I don't understand why progressives complain about the "bad corporations", when those that are bad are only enabled by central banks. Paper money is not wealth, but actually credit on the backs of the people, as that money is not backed by anything but the potential of the people to create wealth and thus taxes, either directly or indirectly through inflation, will take from the people the fruit of their labors. This is what happens when you want government to be in control solving the problems of the world, it gets made big enough to oppress the people, rather than merely enacting a legal system and protecting the people through a police or military force.
The world's central banksters are aware of our own increasing awareness of them and their misdeeds. KEEP UP THE PRESSURE.
When this bubble finally bursts for real, we must be certain the blame is laid where it belongs: on the notion that a global economy made up of billions of souls can be managed by a few people on a committee. The viability of that idea died with the Soviet Union, yet we continue to want to believe it here in the West. It's a myth, as childish and stupid as Santa Claus.
When people work, they are paid in dollars. Money is a concept invented by man. It allows people to translate various things and services into a common denominator, the dollar. The value of anything is based upon the assent of others. The system works very well. Charles, a man in his 20's, can say, "we agree that my work equals $50,000.00, but I need only $25,000 right now. Thus, I will give Joe Corp. $10,000, who will use my money to make more money and when I am 65, Joe Corp. will start paying back the money I gave him when I was 25, 35, 45, etc." Joe Corp. agrees.
Thus, the concept of money along with the concept of a pension allows a Charles to preserve his wealth over decades. For several generations, Joe Corp. had to follow rules (regulations imposed by the government) to make certain that the value of Charles' money did not decrease. We have to remember that the money Charles gave to Joe Corp is Charles' wealth. He worked hard for that money and he could have spent it as soon as he got it and have bought something physical. His decision to trust this massive conceptual system of money did not mean that his "abstract concept of $10,000" was any less wealth than if he had bought a car.
see below
The matter is worse when there is systematic fraud of millions of Charleses. In the abstract system we have, Joe Corp. was supposed to loan Charles' money to Ted, Bill, Mary and Sally who would use that money to build factories, provide services, make inventions. Ted, Bill, Mary and Sally never received Charles' money because Joe Corp. used Charles' money to buy worthless bundled mortgages. Thus, the entire society was deprived of the benefit of Charles' money.
Thus, wealth can be destroyed by bombs, but it can also be destroyed in other ways.
It's getting rich without having to do anything to deserve it that attracts greedy people.
More relevant today than when it actually happened - in fact the same criminal practices and fraudulent accounting and market manipulation never has never ended -
"What was going through their heads when they saw house prices in the United States, the UK, Spain and elsewhere spiral upward with no basis in any of the fundamentals of the housing market? How did they think this bubble would end; did they think that trillions of dollars of housing bubble wealth could just disappear without any impact on the economy. Or, did they think the bubble would never end and that house prices would just continue to go skyward forever?"
The same above (quoted statement) could have easily been applied to Enron and their energy scams with minor substitutions. Bubble = Ponzi - Housing = energy - Spain = California