Tech Policy

Obama taking the country to war with Syria

I'm certainly not the only one who is reminded of the days before Iraq war when Bush administration had similarly decided to launch a war against Iraq. Of course, this war isn't going to cost much, like the last one that was supposed to pay for itself, right?

Al Jazeera has the best coverage...

It is perhaps befitting that the best news coverage of the crisis in Egypt (or for that matter Tunisia or Algeria) comes from another new agency in the region -- Al Jazeera is covering these events in a manner shows it's undisputed leadership in reporting important political events of our times, far ahead of any news source I have seen.

Brother, can you spare a dime?

Just because I'm in a foul mood tonight. I have always liked this song -- I first heard it when Jesse played it as a background on his website, before he moved to blog. I am grateful that we are currently not as deep a depression as the 1930s, but I have little doubt in my mind that we are deflationary period in the US economy. My personal opinion is that a long hard slog (at least five years) is ahead of us.

Ben Bernanke Blows my mind....

Ben Bernanke just blew my mind by saying that the success of QE2 can be measured by the 20% increase in the S&P since Fed announced its intention to launch the program! I'm sure that when QE2 ends in the summer, and the stock market is even more overvalued than it is now, Bernanke will launch QE3 to take the S&P towards its 2007 high! This will end badly.

Hatzius, Krugman and Feldstein at the Newseum

Who is more pessimistic? As Hatzius says, the next six months or so will be telling as to whether we are going to double dip. As far as unemployment goes, we are sure to retouch 10 handle.

Only when the tide goes out....

I have (had?) a lot of respect for Warren Buffet. He once said famously that only when the tide goes out do you find out who has been swimming naked. Sad to say that the Financial Crisis and the Great Recession has revealed that Buffet and Munger -- the great investors of Berkshire Hathaway, beneficiaries of TARP and other bank bailouts, and Goldman defenders among other things -- have been found wanting appropriate beach wear.

Summers to go at the end of 2010, when will Geithner go?

Barry captures my emotions about departure of Larry Summers from the WH, and failure of Obama on economic front perfectly.

Obama officially out of ideas...

When stupid spending freeze that counts for nothing is your official answer to the disastrous first year in office, you have officially ran out of ideas.

Lights out!

Instead, enjoy this video about Hayek and Keynes (Note that one is not necessarily right and the other wrong):

Also, since it's Bernanke confirmation season, here is my old favorite:

Mr. Obama's ironically titled legislation "Financial Stability Improvement Act" is likely disastrous

I started writing this post after watching the Frontline episode titled "Close to Home". You are more likely to appreciate the documentary if you decide to not judge the people in the documentary, and lament the mistakes that some of them might have made.

The timing of the documentary is also very good. While Mr. Geithner and company would have you believe that things are getting better, close to home, filmed in the summer of 2009, shows the opposite.

Watch it!

 

I was personally touched by Rob's story, but the documentary is just but a small sample of hardships faced by millions of people all over. While all this is happening, Mr. Obama and his economic team are busy preserving financial system that existed before the collapse. Josh Rosner's critique of the ironically titled "Financial Stability Improvement Act" is well worth watching.

What will happen to Obama Financial Regulatory Reform initiative?

Perhaps it is unfair to place the blame on Mr. Obama, but I continue to believe that Obama administration should be held responsible for the economic problems facing the country and their continued lack to address the fundamental causes behind the current economic crisis.

Yes, the Obama administration has put forward an agenda for financial regulatory reform, but their seem to little signs right now that this agenda will move forward in any meaningful fashion. The fact that Mr. Obama does not seem to be listening to the likes of Mr. Paul Volker is not a good sign at all.

One part of the regulatory reforms concerns the over-the-counter (OTC) derivatives market. Mr. Geithner has indeed put forward a plan to move forward on this front, and recently the house panel has approved a diluted version of the same.

In this particular regard, Tuesday's Frontline episode titled "The Warning" tell the story of Ms. Brooksley Born who tried to regulate the OTC derivatives market back in 1998, and was shot down by none other than the committee to save the world.

I hoper that Mr. Summers and Mr. Geithner have learned from the recent experience and their past mistakes, and will take forward the ideas of Ms. Born in earnest. 

The regulation of OTC derivatives was not the sole cause of the current crisis, and regulation will not necessarily prevent a future crisis, but as Mr. Stiglitz put it:

I think to understand the crisis of 2007, 2008, 2009, you have to understand that it had many, many sources, many, many factors that contributed to it. The underlying recklessness of the banks, their perverse incentive structures, the fact that they were too big to fail encouraged them to engage in excessive risk taking; meant that if you had tied their hand in one direction, it's likely that they would have moved in another direction.

But it's absolutely clear to me that if we had restricted the derivatives, some of the major problems would have been avoided. Some of what it has cost American taxpayers -- a great deal would have been avoided. I think there is a very high probability, for instance, that we would not have had to pay out the hundreds of billions of dollars that have gone to AIG, that much of the other financial turmoil we would have avoided. But we still would have had the problems of the mortgages; we still would have had the problems at rating agencies.

So I think it's too simplistic to say that if we had done this one thing, we would have avoided the crisis. ... I view her experience as a dramatic illustration of what was wrong with the system and the power of the financial markets to resist doing what should have been done. But they did it with predatory lending; they did it with mortgages; they did it in area after area. And it would have needed a comprehensive attack to stop that. ...

And, that's what makes the overall financial regulatory reform so critical.

Watch the Frontline Episode here:

Posted by APB on October 21, 2009 | Permalink | Comments (2) | TrackBack (0)

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