Mish's Global Economic Trend Analysis |
| Stockman Fires Back at Krugman, Labeling Krugman "Utterly Disingenuous" Posted: 03 Apr 2013 05:19 PM PDT I have an advanced copy of Stockman's book, "The Great Deformation" but have not had time to review the book because of my conference. I hope to get to the book next week, but it is an amazingly long 712 pages. In reference to an op-ed piece by Stockman in the New York Times: Corruption of Capitalism in America, Krugman dismissed the ex-congressman as a "cranky old man" without even reading the book. Actually, I was disappointed in Stockman's piece. I thought there would be some kind of real argument, some presentation, however tendentious, of evidence. Instead it's just a series of gee-whiz, context- and model-free numbers embedded in a rant — and not even an interesting rant. It's cranky old man stuff, the kind of thing you get from people who read Investors Business Daily, listen to Rush Limbaugh, and maybe, if they're unusually teched up, get investment advice from Zero Hedge. Sad.Stockman Fires Back Today MarketWatch reports Stockman Fires Back at Krugman, Critics. Here is an excerpt of the interview.... MarketWatch: Since Nixon's "abomination" as you call it, we have had some periods where government spending to GDP actually went down, like during the Clinton era. Doesn't that show it's just the choices made by Congress rather than the Fed to blame [for rising debt]?Nixon's Abomination Explained Wikipedia refers to "abomination" as "Nixon Shock". "The Nixon Shock was a series of economic measures taken by United States President Richard Nixon in 1971 including unilaterally canceling the direct convertibility of the United States dollar to gold. It helped end the existing Bretton Woods system of international financial exchange, ushering in the era of freely floating currencies that remains to the present day."I side with Stockman. Krugman is disingenuous, and closing the gold window was an abomination. Deposit Insurance a Moral Hazard Stockman claims FDIC deposit insurance is a "moral Hazard". Here is the pertinent snip from the interview. MarketWatch: With what we've seen in Cyprus, doesn't that argue for more and a more credible deposit insurance system rather than pulling back?Safe Way to Bank I said nearly the same thing in Fraudulent Guarantees; Fictional Reserve Lending; Comparison of US to Cyprus; What About New Zealand?. And the solution is so easy too. Open a bank that charges nominal fees for checking and makes no loans. Such a bank would not need loan officers or other high-priced personnel. It would offer safekeeping of money and simple checking accounts for a fee. Those who want interest on their money should have to take a risk, the risk of a possible loss. Finally, and as I have pointed out before, lending of checking accounts is outright fraud. Checking accounts are supposed to be money available on demand, but since Greenspan authorized Sweeps in 1994, almost none of it is. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Posted: 03 Apr 2013 07:41 AM PDT Proving that fools never learn, the Obama administration pushes banks to make home loans to people with weaker credit President Obama's economic advisers and outside experts say the nation's much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.Here We Go Again Mark Hanna commented "And Here We Go Again" Indeed. Home markets are booming again so let's get everyone in on it. The whiners are piling on already. "If you were going to tell people in low-income and moderate-income communities and communities of color there was a housing recovery, they would look at you as if you had two heads," said John Taylor, president of the National Community Reinvestment Coalition, a nonprofit housing organization. "It is very difficult for people of low and moderate incomes to refinance or buy homes."Proven Results We tried this already. The results were not pretty, to say the least. In spite of all the huffing and puffing by this administration, no one went to jail. Heck, no one was even prosecuted. And now, after whining for more bank regulations, the White House wants even looser lending standards. Let's lower our standards so everyone qualifies for a loan. Again! And while we're at it, let's make the banks immune from prosecution! Then let's put taxpayers at risk via "taxpayer-backed programs" for the whole boondoggle. This is all so obviously stupid that only a fool could propose it. And a fool in the highest spot did just that. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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