Crisis may be worse than Depression, Volcker says

[FieldsBlank]

There seems to be no let up in the scary news
How bad is this gonna get?

I don't want to become a doomer, but this crisis seems to get uglier every day

----------------------------------------


NEW YORK, Feb 20 (Reuters) - The global economy may be deteriorating even faster than it did during the Great Depression, Paul Volcker, a top adviser to President Barack Obama, said on Friday.

Volcker noted that industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world," Volcker told a luncheon of economists and investors at Columbia University.

Given the extent of the damage, financial regulations must be improved and enhanced to prevent future debacles, although policy-makers must be cautious not disrupt things further while the turmoil is ongoing.

Volcker, a former chairman of the Federal Reserve famed for breaking the back of inflation in the early 1980s, mocked the argument that "financial innovation," a code word for risky securities, brought any great benefits to society. For most people, he said, the advent of the ATM machine was more crucial than any asset-backed bond.

"There is little correlation between sophistication of a banking system and productivity growth," he said.

He stressed the importance of preventing financial institutions large enough to pose a threat to the entire system from engaging in risky behavior such as running hedge funds or trading for its own accounts.

The current crisis had its beginning in global imbalances like a lack of savings in the United States, but policy-makers around the world were too reticent to take action until it was too late, Volcker said.

Now that the crisis had erupted, it was important to take decisive actions, including a more effective regulatory structure and some movement toward uniform accounting systems, Volcker said.

He said all financial institutions that are deemed too large to fail should be subject to increased scrutiny, echoing the findings of the Group of 30, a panel of policy-makers and influential economists, which he leads.

http://www.reuters.com/article/bondsNews/idUSN2029103720090220

[sandnsea]

1. Soros compares it to demise of Soviet Union

Says we aren't near the bottom yet.

http://www.reuters.com/article/bondsNews/idUSN2027820120090221

[depakid]

2. Gee Paul- things are computerized and interwtined these days

whereas the computer wasn't even a glimmer in Alan Turing's mind at the beginning of the depression.

Hardly surprising then that things unravel a bit faster....

[MADem]

3. The unemployment rate has to more than double, more than triple in some regions.

Most people alive today weren't alive during those times, and didn't listen to gramps and granny when they told 'em how it was.

You got used to having a lot of people in the house, if you had a house and a couple of steady incomes coming in.

We may go back to regional economies as a consequence for a time. Less product whizzing around the globe. Fewer fresh fruits on the table in January. More consumption of goods that were grown closer to home.

[Double T]

4. Citigroup and Bank of America can't be dismantled fast enough IMO.

These two criminal corrupt financial institutions represent EVERYTHING that is wrong with America. Banking institutions should be limited in size and heavily regulated with meticulous oversight. There is no longer any doubt that we are going into a severe depression and there is little or nothing that can be done to stop it. If America continues with missteps we will no longer be a super power of any kind.

[CoffeeCat]

16. Do you lump Wells Fargo in with these other banks?

Wells is part of the bailout group.

I always assumed this bank was well capitalized, and frankly, responsible. In my area,
the housing bust wasn't so bad, and many attribute that to how responsible and conservative
Wells was with their loans. They did some subprime, but it wasn't rampant.

I'm wondering why in the hell Wells is in this bailout group. It sounds like Paulson
forced Wells to take the bailout funds.

I really think this is an interesting slice of the bailout--very curious.

I'm just trying to understand all of this, and I don't quite understand why Paulson
grouped Wells, a seemingly healthy bank--into the BofA crowd.

It smells of forced wrangling, in my opinion. The government decided what banks
it wanted to eventually nationalize, and it forced all to play along. Is that
even possible?

Something seems really rotten in Denmark...but maybe I'm missing something.

[Jeep789]

28. Wells was forced to take the bailout money due to their Wachovia

takeover, as I understand it. Wells is still doing fine.

[The Brethren]

35. I support strict regulations

of banks along with "meticulous oversight"....and w/o the oversight the regs. are useless. As a general rule, I don't support putting regulations on the free enterprise, and if banks ran as they should, they should be a business onto themselves that follow even basic rules of capitalism -- such as manage your capital wisely or fail.

I would also be the first to say what they do with their profits is their business -- literally. However, because certain banks, namely the top guns, have been using corrupt and blatant unethical business practices, such in cases where they are tripling mortgage rates for certain home owners who have gotten behind, free enterprise or not, regulations and scrutiny are needed. And if they expect government bailouts, then they need to agree to strict regulations because they're business management issues have the nation's problem.




Know what you're paying for. The Stimulus Plan ("American Recovery and Reinvestment Act of 2009"): Orig. House version -- http://appropriations.house.gov/pdf/RecoveryBill01-15-09.pdf , House spreadsheet -- http://spreadsheets.google.com/ccc?key=pV-c6t5fOVmNorqMpHvnCMw ; Senate version -- http://appropriations.senate.gov/News/2009_02_02_The_American_Recovery_and_Reinvestment_Act_of_2009.pdf ; and Senate compromise -- http://www.govtrack.us/congress/billtext.xpd?bill=h111-1 , Text and $$$ details of Senate compromise -- http://appropriations.senate.gov/News/2009_02_08_UPDATED_Appropriations_Provisions_of_American_Recovery_and_Reinvestment_Act.pdf?CFID=4043629&CFTOKEN=40573040 . In addition to -- http://readthestimulus.org/amdth1.pdf , along with -- http://www.readthestimulus.org/ . Final version, Feb. 13th, 1500 pgs. worth -- http://www.whitehouse.gov/the_press_office/arra_public_review/ , more details on the final version -- http://www.taxpayer.net/resources.php?category=&type=Project&proj_id=1913&action=Headlines%20By%20TCS , including spending -- http://cbs4denver.com/national/Web.government.accountability.2.937188.html

[Skink]

Superbubbles bad.

Uber something.

[barb162]

39. Heh,

No shit :)

[CJPR]

5. The Right-Wing Wrecking Crew

The Stimulus Plan is a great plan for America and will save our economy from the brink of destruction. Obama's new plan to bail out homeowners is also outstanding and is very necessary. Yet Right-Wing Talk Radio keeps railing against Obama's programs and the GOP in Congress has been virtually unanimous in its opposition. Conservatives have not only wrecked our country during the past 8 years when they were in power, but they are doing their best to stop anyone from rescuing our economy and doing all they can to perpetuate the wreckage.

Please visit my Blog: "Conservatives Are America's Real Terrorists"
http://conservativesarecommunistss.blogspot.com/

[FieldsBlank]

8. the right wingers scare me more than the economy

the hardcore righties are starting to freak me out
many of them are armed to the teeth
and some are now speaking openly of some type of revolt
they hate Obama, they hate Wall Street
they hate anyone that opposes them

[dreamnightwind]

12. I agree

Yes, I think the right wing of this country is extremely dangerous, making it nearly un-governable, and there is a violent aspect of it too, plus these deranged madmen have an insane belief in their own self-righteousness that makes them rabid advocates for their cause. If we're not scared of them we're not paying attention.

[girl gone mad]

6. I posted some video of his talk over in the Political Video forum..

if you're interested.

[HuskiesHowls]

7. Gee, I wonder if executive pay factors into this, too??

When the people not producing anything are getting paid 3, 4, or 5 HUNDRED times what the worker bee makes, could that upset anything? I think it may have a little bit of an effect, having that kind of overhead built into the price of any and every thing we buy.

[babylonsister]

9. The sky is falling! nt

[Jeep789]

11. It has been falling

some just have to have a meteorite land on them before they acknowledge it.

[Jeep789]

10. Maybe we should just ask Bin Laden

He seemed to know exactly what would occur. Looking more and more like he predicted it quite accurately. I wonder whether the Saudi's close relations with so many neocons gave Bin Laden the inside knowledge necessary to know exactly how they would react.

[Generic Brad]

13. And, of course, Volcker has the solution

Global monetary policy. One central bank for the whole fucking world. Isn't it interesting that every economic crisis can only be solved by giving the richest of the rich more economic power over the rest of us?

[CoffeeCat]

14. Times were so different in 1930...

People lived modestly in 1930's.

They didn't have credit-card or student-loan debt. They actually saved money. There weren't endless swaths
of Mc Mansions and 4,000 square-foot homes. People didn't commute 40 miles to work in giant cars. There were
no cable bills, gym memberships, flat-panel televisions or cell-phone bills. People didn't evaporate their
home equity by buying vacations or leather furniture.

Most households in this country are incredibly high maintenance. Most households have no net worth.

In 1930, people knew how to grow and can food. They knew how to sew, build things and fix things. Neighbors
hung out on their front porches and knew each other. Now, we hide in our enclosed sun rooms and we barely
know our neighbors.

We'd damn well better get to know our neighbors fast. Because we're going to need each other.

[a777pilot]

15. Who Would Have Guessed?

First, think of Bush's TARP. ($700+ Billions)

Second, Think of the just passed "Spending ill" ($800+ Billions)

now

Remember the words of Milton Freeman.


To paraphrase.......

If you pay people to be stupid you are going to have a lot of stupid people.


In that decaying citing in a swamp, two bills have been passed in two very different administrations and in neither case was there anyone that had any idea what was in either of them. The Congress voted twice out of shear fear and greed. We the People (anyways those of us that work or use to work) will now have to pay for the One point Five Trillion (plus) debt. Way to go there government. Now please, for the sake of the children and any possible future generations, take your collective heads out of your asses and take a breath. WE can't afford any more of this stupidity.

[FieldsBlank]

23. so true a777pilot

Aren't these the two biggest spending bills in history?
and both passed without proper debates and modifications.

And let's not forget
what exactly has the Fed taken on its balance sheet?
will taxpayers be on the hook for those toxic assets also?

[a777pilot]

47. Hand Written Changes

There were hand written changes in this spending "ill". WTFO? Hand written notes in the margin and this is the "ill" these 535 idiots voted on? There was not ONE of the entire bunch, not ONE, that had any idea what they were voting for or against. Next, why do we just have them vote on a hundred pages of blank pieces of paper. Some
Staffer can fill in the words at a later date.


....and we keep returning these idiots to Washington? I guess WE are the real idiots!

[barb162]

37. Milton Friedman was wrong about a lot of things

He was a big time free trader and you can see where that has got us. All we do is one dumb stupid free trade deal after another and all we end up with is cheaper towels and a lot of lost US jobs. I dislike the idea of all this monumental debt being incurred with these stimulus bills, but the alternative is total collapse. Deregulation, fraud, capitalism run amok, etc., has got us into this hole.

[a777pilot]

48. Milton Friedman was wrong about a lot of things.....but

he was right about a lot more things. Free, open and fair trade is a good thing. Don't think so? What State of the Union do you live in? Makes no difference. Do you think that if you live in Iowa and buy a produce from Nebraska you are destroying jobs in Iowa?

All our problems are a product of governmental interference and greed. Greed my all.....owners, executives, unions, governments.

The role of government ought be as a referee. An entity that levels the playing field. The market place will take care of its self if left alone. Not without limits but reasonable limits. I give you Teddy Roosevelt as an example.

To say that the Federal Government ought be in charge is to say you do not trust yourself or anyone else with their own money. Is that right? You can't trust yourself? Sad.

[lostnotforgotten]

53. Free Trade Is A Race To The Bottom As Multinational Corporations Engage In Labor Arbitrage

Free Trade is not a good thing, just ask any skilled US worker that has seen their job outsourced overseas.

[Danascot]

17. When does a recession become a depression?

Article at Forbes:

http://www.forbes.com/forbes/2009/0302/028_d_word.html?loomia_ow=t0:a38:g26:r3:c0.0581859468352:b22151556&partner=loomia

[a777pilot]

18. When does a recession become a depression?

That's easy.

A recession becomes a depression when government get involved. Only our Federal government can take something that is bad and with "great effort and much thought", make it worse.

[Danascot]

19. Alan Greenspan in da house!

That's right, deregulation and the free market will get us out of this mess in no time.

... need I add?

:sarcasm:

[Name removed]

20. Deleted message

Message removed by moderator. Click here to review the message board rules.

[northernlights]

21. Great idea!!!! Let's De-regulate again!!!!!

Seriously, government is still getting in the way. So let's de-regulate so that we can unleash the creative power of the marketplace and the small business owner! The government doesn't create any jobs or provide anything of value -- it only gets in the way!!!!


Let's see. What's left to de-regulate, anyway? Anything?

Hmmmmmm....my last employer, a family-owned, Kristian Konservative small business, complained excessively about excessive regulation. And knowingly and deliberately poisoned new employees via their contaminated well (while they sat upstairs in the big offices drinking poland springs water). That DAM OSHA fined them for it to. Dam BIG GOV and those EXCESS REGULATIONS?!?

Seriously, how the fuck is a nice little family-owned company supposed to keep employees in line if it can't keep them too sick to leave. I mean, they had the well set up just right...not sick enough to go to hospital, but too sick to look for other work.

Yeah, de-regulation. That oughta do it. What's getting in the way of Wall Street and Big Bankers is ALL THOSE GOMMINT REGULATIONS that kept them from stealing EVERYTHING THAT'S NOT NAILED DOWN, ALONG WITH EVERYTHING THAT IS NAILED DOWN.


And, of course, TAX CUTS FOR THE RICH. That oughta do it. Give the rich tax cuts -- they're the ones that actually create jobs. After all -- we're a service economy now. Cut the taxes of the rich so they can hire more maids and butlers and gardeners and chauffeurs and cooks...

Oh, and go fuck yourself while you're at it, freeptard.

[a777pilot]

22. Great idea!!!! Let's De-regulate again!!!!!

Hey, northrenlights, when was the last time you got a paycheck from a poor person.

What is wrong with tax cuts? If one really wanted to get money to the people the fastest way they could, I would opine that the quickest way would be as a start...STOP taking it in the first place.

This present government, and the last, seemed to be going out of their way to reward failures.

To paraphrase Milton Friedman: If you pay people to be failures you will have lots of failures.

Unlike you, I will show some class and NOT tell you to go fuck yourself. Although it's quite possible that from the manner in which you write you could really be in need of getting laid.

[GliderGuider]

24. Enjoy your stay at DU!

And it's "Friedman", not "Freeman". At least get the names of your Chicago School heroes right.

[a777pilot]

25. Correction

Thanks for the correction.

I shall attempt to correct my post.

[whatchamacallit]

27. Milton Friedman was a colossal douche bag (nt)

[GliderGuider]

29. Full of sulphuric acid...

:puke:

[a777pilot]

31. "Milton Friedman was a colossal douche bag"

You so funny!

[whatchamacallit]

32. What's funny about it?

His delusional theories have now been proven to be dead wrong. Too bad we didn't figure it out before his acolytes destroyed the world. Even that shriveled troll Greenspan is starting to get it.

[a777pilot]

33. What?

"His delusional theories have now been proven to be dead wrong. Too bad we didn't figure it out before his acolytes destroyed the world."

I didn't know the world was destroyed. Soon, maybe. Bobo and his administration are working hard on this total destruction as we speak. Just give him and his incredible ego a chance.

[whatchamacallit]

34. Just don't have the discipline to maintain your charade to 30 posts, do you?

Weaker than the average troll.

[a777pilot]

43. What Charade?

Quote:

Just don't have the discipline to maintain your charade to 30 posts, do you?

Unquote.

What charade? I am not flying false colors.

[whatchamacallit]

45. So you refer to Barack Obama as "bobo" and claim he's here to destroy the country?

Did I get this wrong? Cuz if not, you took a wrong turn on the way to freeperville....

[Name removed]

46. Deleted message

Message removed by moderator. Click here to review the message board rules.

[bird gerhl]

50. According to your profile, you're "Retired USMC."

Well I guess that explains your crackling intelligence.

[bread_and_roses]

52. The "Affirmative Action President?"

I can't believe you are still here.

[barb162]

38. Bush started cleaning up the mess he helped create back in late '08

Obama now has has to try to clean up the rest of it, if it is even possible to do.

[barb162]

36. Welcome to DU!

The stimulus bills are not about rewarding failure but about saving the entire system, which is why McCain and Obama were running to Washington late last year when the Wall Street bailout was being voted on. Were the Wall Street executives being rewarded for their grossly negligent management or was that about saving the entire financial system? It's the same thing with the current stimulus package. Some irresponsible types will be saved and rewarded, but the idea is to not a have a total collapse. I'll have to go with not having a total collapse.

"What is wrong with tax cuts?"
They're not very stimulative:
Corporate tax cuts give back thirty cents for every dollar of stimulus, which is not very effective. Aid to states givea back 1.36, infrastructure repair gives back 1.59, extended unemployment benefits give back 1.64.

Where are those 320,000 jobs a month Bush promised with those big tax cuts he did several years back. Only in one month since he made that comment were there 320,000+ jobs a month created.

[a777pilot]

41. The spending ill....

Quote:

The stimulus bills are not about rewarding failure...

Unquote.

Boy, do I agree with you on that one. It is nothing more than the greatest raid on the US Treasury in the history of this county.

The Bush stupid TARP fiasco and the up coming Bobo bailout bills are the ones that are scheduled for rewarding failures and the greedy.

[barb162]

42. I would have to agree with you somewhat on that as these stimulus bills

may not work. Then they will be a collosal waste of money. Look, we are in such deep doodoo, that I am just hoping these stimulus bills ease things. If they keep a few million people stable in their jobs and companies from not going belly up, that may be a great victory in the current environment. This mess has been brewing for years. We just can't keep seeing 500,000 jobs going away every month, thousands of people and companies going bankrupt every month, etc. The idea is to try to spend / stimulate our way out of it.

[a777pilot]

44. Saving Jobs...Creating Jobs

When you see the loss of so many jobs and you all want to do something about it, may I suggest you ask one basic question: Who creates the most jobs in America?

Answer that and you will have an idea of what needs to be done. What are the circumstances that help and those that hinder.

Would you like to venture a guess?

Anyone?

Anyone?

[TomClash]

26. He needs to minimize the 1982 recession

which he created almost singlehandedly.

[barb162]

40. He went too strong on the stagflation fight, I agree

but I don't really blame him for that recession. He was trying to do something good and went too far. Trying to fine-tune an economy this size....

[TomClash]

51. Stagflation had more to do with oil prices

than money. Yes, he cured that well, but at an enormous cost in industrial decline, farm foreclosures, wage disparity, unoin decline, etc.

[Danascot]

30. How Greenspan's Ideas Ruined the Economy

See related thread:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=385x274685

[Hawkowl]

49. President Obama will be become a radical......

President Obama will institute single payer healthcare, nationalize the banks, directly fund and control the car companies, and institute the largest government employment program in history. He will be forced to generate revenue by taxing corporations in the magnitude of pre-Reagan voodoo economics. In short, he will become an ardent socialist--or he will be a failed one term president.

Third way triangulation will not work. Tax cuts have never worked as an economic stimulus. Unregulated, Capitalism, aka Kleptocracy by the rich and stupid, is in an unabated freefall. Either Obama becomes strong enough to stop the organized crime of corporations or we will go beyond the Great Depression into a second Dark Ages.

Every civilization fails. It may be that our time is at an end.