Richard writes:
i can't understand how paulson and other 'prominent' fools on wall street can say the worst of the credit crisis is behind us. all the major economic indicators are continuing to erode and the Fed is continuing to capitalize financials. i know wall street looks ahead but this is ridiculous!
Richard | 05.16.08 - 8:48 pm | #

ac writes:

We're getting ready to drop a financial nuke on Brazil. These are the kind of things that will ruin international relations for years... at best.

ac | 05.16.08 - 8:52 pm | #

dryfly writes:
Did he start out by saying say we consumed too much and produced to little?

Whocoodanode.

Clue for all - the rest are 'details'.

dryfly | 05.16.08 - 8:56 pm | #

Ministry of Truth writes:
When was this and why did I not see it in the news? Volcker had some pretty harsh words for this not to be mentioned.
Ministry of Truth | 05.16.08 - 8:58 pm | #

dryfly writes:
When was this and why did I not see it in the news? Volcker had some pretty harsh words for this not to be mentioned.
Ministry of Truth | 05.16.08 - 8:58 pm | #

LOL. I think you answered your own question.

Another interesting point he made: the problem is international and recognized in Europe, its recognized in Japan... was he intensionally leaving somebody out or was it just a slip? That other unnamed foreign somebody played a not inconsequential role in the global money flow leading up to this mess - I wonder if anyone's talked to them lately? I wonder if they get it yet?

dryfly | 05.16.08 - 9:04 pm | #

tai writes:
The reason Paulson said that the "credit crisis" is almost over is that the "credit crisis" is different from the general overall economy.
tai | 05.16.08 - 9:07 pm | #

Calculated Risk writes:
Ministry of Truth, on Wednesday. Here was a WSJ story: Fed Balance Sheet Worries Volcker

Best to all
Calculated Risk | Homepage | 05.16.08 - 9:09 pm | #

central_scrutinizer writes:
We're getting ready to drop a financial nuke on Brazil.

ac, care to elaborate?
central_scrutinizer | 05.16.08 - 9:47 pm | #

km4 writes:
Did Volcker talk about this ?

25 yrs ( i.e. after he was Fed head ) of increasingly financial engineered driven bullshit for the US economy ( especially the last 8 yrs under Bush ) with massive market bubbles has created systemic damage.

1. The USA needs $2B a day from China et al or could not keep its economy stable or spare the dollar from collapse.

2. The USA already has close to $10 Trillion in national debt

3. The USA has a trade deficit of $800B/yr

4. The USA is the prime engine for derivatives 'ticking bomb' that grew into a massive bubble, from about $100 trillion in 2000 to $516 trillion by 2007 that is starting to go off in blowback stages and the latest ploys by the The Fed, G7 will have little effect to stop it.

5. The USA already has way too many Americans overwhelmed by personal debt racking up a household debt-to-income ratio of 1.42 ( for total of $13.8 trillion in debt including mortgages ) that already matches the country’s $14 trillion G.D.P.

6. The USA has Bushie boy racking up $32 Trillion dollars in total liabilities and unfunded commitments for future payments since 2000.

7. Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism by Kevin Phillips
http://www.amazon.com/o/ASIN/067...9070/ groksoup04

In Bad Money, Phillips describes the consequences of our misguided economic policies, our mounting debt, our collapsing housing market, our threatened oil, and the end of American domination of world markets. America’s current challenges (and failures) run striking parallels to the decline of previous leading world economic powers—especially the Dutch and British. Global overreach, worn-out politics, excessive debt, and exhausted energy regimes are all chilling signals that the United States is crumbling as the world superpower.

"Bad money” refers to a new phenomenon in wayward megafinance—the emergence of a U.S. economy that is globally dependent and dominated by hubris-driven financial services. Also “bad” are the risk miscalculations and strategic abuses of new multitrillion-dollar products such as asset-backed securities and the lure of buccaneering vehicles like hedge funds. Finally, the U.S. dollar has been turned into bad money as it has weakened and become vulnerable to the world’s other currencies. In all these ways, “bad” finance has failed the American people and pointed U.S. capitalism toward a global crisis.
km4 | 05.16.08 - 9:54 pm | #

Elvis writes:
You know, it's Friday evening, and I was hoping that Volker would say, "Tonight I'm going to Vegas, getting loaded, gambling my money, going to strip joints, and forgetting about the economy for 24 incredible hours." Instead, he had so say things we alrady know.

You are getting predictable, sir.
Elvis | 05.16.08 - 10:09 pm | #

stuart writes:
Bernanke and Paulson have been deliberately lying, understanding the implications since day 1. They know it. We know it.
stuart | 05.16.08 - 10:15 pm | #

Oldguy writes:
Volker reminds me of Ron Paul or Pete Peterson. More than anything these three give (gave) the impression that something might be done, some day.

Meanwhile everything goes on as before.
Oldguy | Homepage | 05.16.08 - 10:18 pm | #

R2K writes:
: )
R2K | Homepage | 05.16.08 - 10:28 pm | #

tj & the bear writes:
Although he questions current Fed policy (i.e., "bailout everyone"), he still does not assign blame there where it belongs. Perhaps that's not in the video?
tj & the bear | 05.16.08 - 10:42 pm | #

Blitzer writes:
Re: "Former Fed Chairman Volker was in front of the JEC warning that there was a lot more inflation in the system than had shown up in CPI. He cautioned that we could be heading back into a 1970s style inflation problem – that he so painstakingly beat in the 80s. Contra Greenspan, I think that Volker is legitimately trying to defend his legacy."

http://www.businessspectator.com...T5? OpenDocument

How can we possibly fall back into 70's style inflation, when we have stagflation?
Blitzer | 05.16.08 - 10:46 pm | #

Blitzer writes:
Re: "In the background of this crisis, Americans have been spending more than they are producing, Volker said, and an adjustment needs to be made sooner rather than later.

But in the foreground, a risky, complex and opaque new financial system has emerged that needs to be regulated, Volcker said.

Other than gas and food prices, Volker, pointed to the prices of clothing and household goods as ways to assess the country's inflation problem, which he partially attributes to the depreciating value of the American dollar.

Appointed as Fed chairmanship in 1979, Volcker is widely respected for reducing inflation in the 1980s."

Former Fed Chief Warns Solving Credit Crisis Will Take Time
http://www.infozine.com/news/sto...View/sid/28404/

Bernanke says positive inflation will solve this all by increasing economic growth on wall street.
Blitzer | 05.16.08 - 10:49 pm | #

barely writes:
Who invited Volcker? Undermines Hank and Ben just a little, doncha think? Maybe congress is questioning the greenspan/bernanke fed's ability to steer the financial system on the right course?

Bet ben's a little pissed. He seems a little feeble anyhow. Getting pushed around at will by the IBs and MC banks. Time for someone in posession of a spine to be in charge.
barely | 05.16.08 - 10:52 pm | #

Blitzer writes:
barely,

I agree, it is odd that Volker is on display at this late stage, but perhaps he is just window dressing propped up to make it look as if someone is in the store? The lights are off of course, but that makes the magic show more exciting!

In other OT (inflation) news, this is very funny IMHO:

Bush got a red-carpet welcome to this desert kingdom, home to the world's largest oil reserves, and promised to ask King Abdullah to increase production to reduce pressure on prices, which soared past $127 for the first time Friday. But Saudi officials said they already were meeting the needs of their customers worldwide and there was no need to pump more.

Their answer recalled Bush's trip to Saudi Arabia in January when he urged an increase in production but was rebuffed.

Saudi oil minister Ali al-Naimi said the kingdom decided on May 10 to increase production by 300,000 barrels a day to help meet U.S. needs after Venezuela and Mexico cut back deliveries.

"Supply and demand are in balance today," al-Naimi told a news conference, bristling at criticism from the U.S. Congress. "How much does Saudi Arabia need to do to satisfy people who are questioning our oil practices and policies?"

Early this week, Senate Democrats introduced a resolution to block $1.4 billion in arms sales to Saudi Arabia unless Riyadh agreed to increase its oil production by 1 million barrels per day.

Saudi Foreign Minister Saud al-Faisal said the discussion with Bush about oil was friendly. "He didn't punch any tables or shout at anybody," the minister said. "I think he was satisfied."
Blitzer | 05.16.08 - 11:12 pm | #

Clyde writes:
S&P cuts $2.2b of Lennar to 'BB':

http://biz.yahoo.com/ap/080516/l...ating.html? .v=1

One day the HBs run out of letters....
Clyde | 05.16.08 - 11:13 pm | #

4shzl writes:
Kind of pathetic, really. Trotting out old St. Paul to preach to the Parliament of Whores. Off-camera, you can hear Wall Street's unindicted co-conspirators on the Hill nodding and chuckling their approval -- as if they hadn't devoted every waking moment to subverting whatever regulatory initiatives came before them. All in all, just another disinformative distraction . . .
4shzl | 05.16.08 - 11:14 pm | #

JJL writes:
I strongly suggest watching the film "RED DAWN" and getiing ready for what is at hand
JJL | Homepage | 05.16.08 - 11:17 pm | #

Risk Averse Alert writes:
Ah, the BoE's wrecking ball dictates terms to the People. Why don't you crawl back in your filthy hole, Volcker, and cozy yourself up with the bones of Hitler's Schacht and his puppeteer Montigue Norman. Before you go, do us all a favor and take your buddies George Shultz and Felix Rohatyn...
Risk Averse Alert | Homepage | 05.16.08 - 11:21 pm | #

Mr. Beach writes:
Ben is an amateur. He showed to wall st. and the world his weakness in march. The $29 billion guarantee to JPM was the direct result of his being an academic pansy. Billion dollar deals have moments when both sides play chicken. The easiest way to lose is to have a deadline-before the Tokyo market open in Bennie's case. Professionals wouldn't have sat at the table.

This guy got taken for a ride.
Mr. Beach | 05.16.08 - 11:22 pm | #

4shzl writes:
Early this week, Senate Democrats introduced a resolution to block $1.4 billion in arms sales to Saudi Arabia unless Riyadh agreed to increase its oil production by 1 million barrels per day.

Later this year, Saudi Arabia will test its first atomic device now under development at a secret base in the desert. Our Saudi "allies" are very familiar and thoroughly tired of Congress's (read AIPAC's) arms-for-cooperation blackmail, and when that mushroom blossoms over the Empty Quarter, it will be game-over for our "special relationship" with the House of Saud.
4shzl | 05.16.08 - 11:27 pm | #

Anonymous writes:
"I tought I taw a putty tat, i did, i did! ...
Anonymous | 05.16.08 - 11:38 pm | #

MLM writes:
4shzl - If you've got any of that left, I'm up for smoking some.
MLM | Homepage | 05.16.08 - 11:40 pm | #

tj & the bear writes:
I strongly suggest watching the film "RED DAWN" and getiing ready for what is at hand.

More like "V for Vendetta".
tj & the bear | 05.16.08 - 11:45 pm | #

zinc writes:
President George Bush arrived in the Middle East Kingdom of Saudi Arabia and immediately began grovelling appropriately. Talks went on for several hours during which George Bush's grovelling was a distraction.
zinc | 05.16.08 - 11:57 pm | #

tyaresun writes:
No Tanta posts in a while, hope she is OK. Would have loved an Excel pig post.
tyaresun | 05.17.08 - 12:04 am | #

Charles II writes:
Thanks for posting this, CR.

Volcker stands head and shoulders above the people we see nowadays at Treasury and the Fed.

Of course, he also stood head and shoulders above them when he was Chairman, too. :-)
Charles II | Homepage | 05.17.08 - 12:18 am | #

Did You Know? writes:
very nice blog... keep up the good work!!! God Bless!!! can we exchange links???
Did You Know? | Homepage | 05.17.08 - 1:00 am | #

cd writes:
I think I beat CR to this in a earlier thread today..CD beats CR by a neck to win the Volker derby....

cd writes:
OT-
Volcker congress hearing on 5/14
Bloomberg started broadcast and interrupted with Betty Liu on stock news. Never came back to him..no mention anywhere..

http://www.youtube.com/watch?v=T...h? v=TBpKEdDQaaU
cd | 05.16.08 - 2:54 pm | #
cd | 05.17.08 - 1:18 am | #

barely writes:
The way I read the FHA bailout is, the GSEs make crappy loans and the FHA insures. Anyone here think that arrangement is a little odd. The government insuring its own loans in a titanic deck chair shuffle. All the bad debt gets neatly packaged where the ultimate bailout looks legit. Ben will be right after all. It's finally *contained*.
barely | 05.17.08 - 1:23 am | #

Blitzer writes:
Re: 4shzl smoking crack? No, The Bush people are smoking crack:

Media Note
Office of the Spokesman
Washington, DC
May 16, 2008


U.S.-Saudi Arabia Memorandum of Understanding on Nuclear Energy Cooperation

http://www.state.gov/r/pa/prs/ps.../may/ 104961.htm

Today, Secretary of State Condoleezza Rice and Saudi Arabia Foreign Minister Prince Saud Al Faisal signed a Memorandum of Understanding on Civil Nuclear Energy Cooperation. The Government of the United States and the Kingdom of Saudi Arabia will establish a comprehensive framework for cooperation in the development of environmentally sustainable, safe, and secure civilian nuclear energy through a series of complementary agreements. Both of our countries face growing energy needs and we seek to address them in a responsible manner that contributes to reducing the effects of greenhouse gases on the global climate.
Blitzer | 05.17.08 - 1:24 am | #

Blitzer writes:
3 visitors here, so emergency OT time; breath life into this Volker thing:

Police in Leeds are hoping to prevent an outbreak of internet-enabled mayhem after thousands were invited to a public pillow fight through Facebook.

Worried residents of the Hyde Park area contacted the city council and West Yorkshire police when they learned of the proposed pillow bashing, which is scheduled to take place on May 25.

Police have contacted the apparent organiser in the hope of preventing the "flash" event from getting out of hand. Earlier this month, an award-winning park in the city was damaged when 350 people gathered for a water fight, which was also organised through social networking websites.

A police spokesman said yesterday: "We have contacted the alleged organiser regarding this event and advised him to cancel it. We will be monitoring the situation to ensure that it does not take place. Any such events, especially those potentially involving large numbers of people, must be given the proper licence by the council in advance."

He added: "While such an event may seem like a bit of fun, it is easy to see how a mass pillow fight could get out of hand and potentially cause our officers a significant amount of work."

Police take hard line on mass pillow fight
http://www.guardian.co.uk/uk/ 200...ocialnetworking
Blitzer | 05.17.08 - 2:08 am | #

unirealist writes:
As Fed chairman, Volker never addressed the real cause of the inflation that he stamped out. The root cause of the inflation was abandonment of the precious metal monetary standard, which happened under Nixon.

And why did we abandon gold and silver? Because the US had already begun spending more than it consumed, and there's no way to continue that on the gold standard. It can be kept up for quite a while, however, with phony fiat money.

Volker did what he could, but let's not lionize the guy.

(And by the way, Paul, the word is "opacity," not "opaqueness.")
unirealist | 05.17.08 - 2:34 am | #

Anonymous writes:
Quick definitions (opacity)
# noun: the quality of being opaque to a degree; the degree to which something reduces the passage of light
# noun: incomprehensibility resulting from obscurity of meaning

Quick definitions (opaqueness)
# noun: the quality of being opaque to a degree; the degree to which something reduces the passage of light
# noun: incomprehensibility resulting from obscurity of meaning

hmmm, they mean the same...but, what do i know I just took http://www.onelook.com
Anonymous | 05.17.08 - 2:43 am | #

Cal writes:
Centex sells its RiverPark housing project in Oxnard (at 30 cents of book value)

Selling for $161 million and (what I am sure is a greatly reduced) book value is $528 million. The tax refund of $294 million is what makes the deal possible. Big price cuts coming to the homes there I am sure.
Cal | 05.17.08 - 4:28 am | #

Anonymous writes:
Volcker might as well have been talking to a post. The very same thieves he was talking to here are well aware of were we are and how we got here. Their answer is going to be more of the same, we can inflate our way out of it. DC is run by 35,000 lobbyist and I think they would all appreciate it if he would just STFU.
Anonymous | 05.17.08 - 5:33 am | #

unirealist writes:
Cambridge Advanced Learner's Dictionary:
opaqueness not found

Online Etymology Dictionary:
opaqueness not found

Random House Dictionary:
opaqueness not found

Newbury House Dictionary of American English:
opaqueness not found

And I'd be willing to bet that in the Oxford English Dictionary, the definitive English dictionary in any real library, opaqueness does not exist, either. But I don't have a subscription to the online version.

True, it can be found in Encarta and Answers.com, so it is apparently making inroads. Among people who use the word enormity to mean very large, and decimate to mean utterly destroy, and impact as a verb. So, I guess you can call it a word. If you want. But don't expect to impress anyone as a wordsmith.
unirealist | 05.17.08 - 6:29 am | #

bond guy writes:
"unirealist writes:
As Fed chairman, Volker never addressed the real cause of the inflation that he stamped out. The root cause of the inflation was abandonment of the precious metal monetary standard, which happened under Nixon.

And why did we abandon gold and silver? Because the US had already begun spending more than it consumed, and there's no way to continue that on the gold standard."

The inflation problems were brewing already in the 1960s-70s, and yes there's a lot of similarities to the current situation. This was despite the Bretton Woods system, which was a weak version of the gold standard. However, they tried to use wage and price controls to stop inflation, and those were a disaster.

Economists did know what need to be done; Volcker just cranked rates all to heck under the cover of some wacko theories of monetary base targetting. Since he was targetting the base, he could pretend that the high rates weren't his fault.


As for gold, it was well known by the 1960s that the Bretton Woods system was doomed. Nixon just bowed to the inevitable in 1973.

The gold standard never really worked; it gave the world an alternating series of depressions and booms when new gold supplies were found. Gold supplies were insufficient to support transaction volumes in the 1800s; its inconceivable they would sufficient now. Returning to gold a fantasy either for Mad Max movies or porn for gold bugs.
bond guy | 05.17.08 - 7:00 am | #

Banker writes:
The economy is different then the Credit Crunch, That is behind us considering all the write downs, the economy is still up for debate but it looks like it is coming around.

Remember everthing is relative.
Banker | Homepage | 05.17.08 - 7:38 am | #

Anonymous writes:
"Nixon just bowed to the inevitable in 1973."

Sorry bond guy at least get the dates right, Nixon closed the gold window August 15th 1971. The Vietnam war just like this cluster f*ck war in Iraq Was the cause of the inflation.
Anonymous | 05.17.08 - 7:46 am | #

anonymous gold guy writes:
bond guy, you presume that limited supply of money is bad.


Are you suggesting that a promise-based monetary system is better for the average citizen? Where the evil geniuses on wall street are in control of the value of the savings of citizens?
anonymous gold guy | 05.17.08 - 7:59 am | #

rich writes:
I like what Volcker is saying. He's telling Congress not to focus on the short-term or semantics but to realize that important long-term changes in the economy have begun.

I think years from now, people will remember that 2007-08 marked the start of an era of change in the U.S. economic and political landscape.

For 30 years, U.S. business and financial establishments had the best of all worlds. Now, it's their turn to experience the downside.

Obama could not ask for a better gift than $5 gasoline to rally the nation behind him.
rich | 05.17.08 - 8:10 am | #

rich writes:
OT

When we talk about the rising cost of commodities, don't forget the most basic commodity of all.

http://www.nytimes.com/2008/05/1...on/ 17water.html

The New York City Water Board voted on Friday morning to approve a 14.5 percent increase for water and sewer rates, the largest increase since 1992.

According to official projections, the single-family homeowner will pay, on average, $800 for water in the fiscal year that starts July 1, up from $700 this fiscal year.
rich | 05.17.08 - 8:13 am | #

Anonymous writes:
Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.

Alan Greenspan
The Objectivist published in 1966 and was reprinted in Ayn Rand's Capitalism: The Unknown Ideal

Alan should have included paying for wars also. We ain't seen nothing yet.
Anonymous | 05.17.08 - 8:23 am | #

Peter writes:
I would agree with the idea

"I like what Volcker is saying. He's telling Congress not to focus on the short-term or semantics but to realize that important long-term changes in the economy have begun.

I think years from now, people will remember that 2007-08 marked the start of an era of change in the U.S. economic and political landscape.

For 30 years, U.S. business and financial establishments had the best of all worlds. Now, it's their turn to experience the downside.

Obama could not ask for a better gift than $5 gasoline to rally the nation behind him......"

Corporations, and the private sector have had the most unbridled laissez Fair economics since the Gilded Ages and the roaring 20s- not only is $4-5 gasoline changing the landscape, but a more squeezed middle class, and changing demographics, including An aging population having not much saved for retirement, makes the premise for more of the same 'obsolete thinking'.

Arthur Miller once said an 'era ends when its basic illusions are exhausted----'

The age of mass consumerism is probably over.
Peter | 05.17.08 - 8:24 am | #

mack writes:
We do need a standard of exchange outside of "the full faith and credit" of some political body.

However, it has to be something that isn't traded. IOW- it's value is fixed. It can't be a hedge and it can't be manipulated by market participants.

Unfortunately, there isn't anything that fits this description. I suspect that is why the world uses fiat currencies.

I've got a simple solution: don't trade w/ anyone who doesn't use our currency!:)

I suspect our trading partners around the world are slowly but invariably trying to tell us to get our economic "house" in order. And the currency markets have been gently nudging us to this realization for some time by slowly devaluing.

I don't like it anymore than anyone else, but, if we're going to trade w/ other countries, we're going to have to live w/ their judgement of how sound we are financially. Folding our arms, stomping our feet and pouting is not the actions of adults, IMHO.

As my grandmother would say: "If you're going to let folks in your house, you're going to have to clean up every once in a while."

Thank glod it's Saturday! Er, have a great weekend everyone!
mack | 05.17.08 - 8:35 am | #

Anonymous writes:
Obama could not ask for a better gift than $5 gasoline to rally the nation behind him......"

True but this dude is going to tax the rich who will take their money and go to the house, unemployment will rise more, government spending which got us to where we are now will increase, the dollar will fall more, capital flight will ensue, commodities prices will increase more. The Empire is dying hope you're ready.
Anonymous | 05.17.08 - 8:45 am | #

sequoia512 writes:
Peter the boomers are past their peak spending years here and will soon pass them in Europe and most of Asia. Gen X and Y won't get the chance to consume we will be taxed to death to pay for SS and MC.

I am hoping my WalMart voucher comes soon I want to fill my pantry.
sequoia512 | 05.17.08 - 8:49 am | #

bond guy writes:
"Anonymous writes:
"Nixon just bowed to the inevitable in 1973."

Sorry bond guy at least get the dates right, Nixon closed the gold window August 15th 1971. The Vietnam war just like this cluster f*ck war in Iraq Was the cause of the inflation."

I stand corrected on the date; however, I thought there was some event in 1973 that finally killed Bretton Woods from the international perspective. I could look it up, but I don't particularly care.

"anonymous gold guy writes:
bond guy, you presume that limited supply of money is bad.
Are you suggesting that a promise-based monetary system is better for the average citizen? Where the evil geniuses on wall street are in control of the value of the savings of citizens?"

It's been effectively a fiat money regime since the end of WWII. The Bretton Woods system only used gold to settle international capital flows. In those days, you had capital controls almost everywhere and even then the damn system still collapsed because gold supplies were too small.

And I'd argue that the "common man" has had a much better time of it post-WWII than pre-WWII. My folks routinely lectured me about the joys of growing up in the Great Depression of the 1930s (as oppoised to the Great Depression of the 1870s or whenever the previous "Great Depression" was).

As for money supply targetting, good luck. Nobody can define money. Right now, there are intense debates on the internets whether the U.S. money supply is now expanding or contracting. If you can't measure money supply growth within a band of +/- 10%, it isn't a helpful measure.

The currenct system isn't perfect. At minimum, the system needs is better regulation of banking entities, and anyone who poses systemic risk like the investment banks. Like Volcker has been arguing.
bond guy | 05.17.08 - 8:49 am | #

Clyde writes:
John Berry says banks finally going to the original discount window. Anyone know where to find the identities of the borrowers?

http://www.bloomberg.com/apps/ ne...id=aaxR1NGIRfGk<

This chart was embedded in John Berry's Bloomberg article: http://www.bloomberg.com/apps/qu...=FARBPMDW% 3AIND
Clyde | 05.17.08 - 9:21 am | #

NoGuru writes:
Regarding opacity, in European agriculture animals are tagged and can be traced right through the complete food chain. Sure it's a hassle but when there are disease outbreaks it makes it possible to identify and isolate the source more rapidly and to take appropriate corrective actions.

The concept is called "Field to Fork" traceability.

If this can be done with agricultural products it can be done with MBS, even when they are sliced into tranches.

Tracking at least from the original lender would make it much easier to recognize patterns associated with various steps of the borrowing chain, and assess credit evaluations of originating lenders and subsequent ratings assigned to CDOs, MBS and other instruments.

We gotta start somewhere, sometime.
NoGuru | 05.17.08 - 9:24 am | #

Charles J Gervasi writes:
I agree with Volker that our consuming more than we produce is a problem. I agree it will be difficult for some people to break this bad habit.

I don't see why this is a huge crisis. I don't understand why people here write as if this problem threatens our very existence. It's a problem, but it doesn't rise to that level.
Charles J Gervasi | Homepage | 05.17.08 - 9:48 am | #

tg writes:
Somewhat OT global food issues. The Last Bite


http://www.newyorker.com/arts/ cr..._atlarge_wilson
tg | 05.17.08 - 9:57 am | #

contrarian patriot writes:
well the bankers let the horse out of the barn so now they trot out volker to tell us what is wrong and that the horse is out of the barn and that it is going to be rough going catching that horse. words are nice but actions are few. he is retired and out of the system now. he can say a lot of things now. let us remember, he worked for the beast and he was paid by the same types of people that pay bernanke. he did what he was told to do back whenver, as bernanke is doing today, nothing more, nothing less. people point to this guy as some kind of savior. he is not. they say to hire him back. i promise you, all of the things that are happening now, are not happening by accident. they are a sign of the times that we live in. if volker was where bernanke is today, he would be doing the same thing that bernanke is doing. just remember who their employers were and are before making statements about how you wish this guy was back at the helm of the FED. it would not make any difference. for some reason, they are delaying our appointment with the devil about this financial sysstem. our nascent decent into third world status is right on schedule though. get ready for world government. you all are going to love it.
contrarian patriot | 05.17.08 - 10:01 am | #

barely writes:
peter - "The age of mass consumerism is probably over"

I would go one step further. The charade is probably over.

The world's most indebted borrower might have its leash tightened a little. Good thing we have the strongest military force on the planet. WHen all else fails...
barely | 05.17.08 - 10:10 am | #

DownSouth writes:
☺☺"The age of mass consumerism is probably over."
Peter | 05.17.08 - 8:24 am | #

☺☺"I think years from now, people will remember that 2007-08 marked the start of an era of change in the U.S. economic and political landscape."
rich | 05.17.08 - 8:10 am | #

rich, Peter

Agreed. There is some sort of major shift going on, but I'm not sure what it is. Will it be the decline of the American empire, and the rise of some other empire? In other words, will the religion of consumerism survive, but some other nation rise to become the world's #1 consumer? Or will the religion of consumerism itself be discarded, and some other set of values be adopted?
DownSouth | 05.17.08 - 10:47 am | #

bluecollaridiot writes:
well, wages and thus consumables have been adjusting to the lowest common denomenator thru world arbitrage..seems the next step: standard of living might be leveling out globally...does this make sense??
bluecollaridiot | 05.17.08 - 11:01 am | #

mp writes:
Many of you here will recall that, sometime during the late 80s or early 90s, Citi was casting about for an off-shore headquarters.

In fact, Reed, Citi's then-leader, said in an interview at the time that his bank owed no particular loyalty to the US because it was a global bank.

IMO, Citi has a rogue culture, just like Bear Stearns had, and what encouraged its development was lack of regulation.

They were making so damned much money they thought they were geniuses. Volcker is right. It's time to put a stop to it.
mp | 05.17.08 - 11:05 am | #

rich writes:
>Agreed. There is some sort of major shift going on, but I'm not sure what it is. Will it be the decline of the American empire, and the rise of some other empire? In other words, will the religion of consumerism survive, but some other nation rise to become the world's #1 consumer? Or will the religion of consumerism itself be discarded, and some other set of values be adopted?

I have a friend, now visiting, who is in her 70s. She grew up in a middle class family in Flatbush, Brooklyn. She was talking about her childhood, when the family would go shopping. They did all their shopping with solid merchants in Flatbush, businessmen who knew quality and their customers by name.

She said almost all the articles they bought were only what they needed. They were almost all made in America by solid manufacturers using solid materials. They lasted a long, long time.

I think in some ways, American may be heading back to Flatbush. If you think about the idea, it means building a wall around America and shuitting off the rest of the world. Maybe defaulting on our debts to the rest of the world. Using our military to protect our borders but not the rest of the world. Severe isolationism.
rich | 05.17.08 - 11:26 am | #

homedad43 writes:
mp:

Thanks for the word on Citi...had forgotten that. It goes along with the journalists who thought that they were journalists first and American citizens second.

I agree. It's time to put an end to it.
homedad43 | Homepage | 05.17.08 - 11:36 am | #

contrarian patriot writes:
when people speak of the american empire, as an american i have to scratch my head and think on such things. most americans i would venture, would think that they do not live in a american empire. they go to work. they come home. they live their lives. they take care of their families. most of us do not want to control others or live in a american empire. we just want to be left alone like most people in this country. for empire , you have to have standing armies in various parts of the world. on that part, i guess we qualify. we do. in over 120 or so places in the world. and for what? who knows. why is this allowed to continue. for armies you need foot soldiers and tank drivers and other warm bodies to fill the ranks. but for most of us, this world is one continuing never ending struggle for life, liberty and happiness. so one would have to ask oneself, just who is it, that pushes the concept of american empire and why? perhaps it is those men who derive profit from such schemes. war is for profits and men get killed and they are replaced by other men. this is the way it now and also has been. the rich get richer and the poor they get less. this country was a noble experiment. but the watchmen went to sleep on the walls and let the enemy in the gates. and on a cold december night in 1913, the federal reserve was supposedly voted into existence by a few men in congress. and the rest is history for all to read. so now we read on blogs like this one, what is happening to this land and the world because our forefathers fell asleep and refused to stand up for what was right. in this country, it is a easy thing to just let things go by and go with the flow. it has been subliminally taught us since we were children. we learned this way of existing and it is so apparent in the way we live even now. but this way of doing things was not good enough for some back in 1775. they decided to change things. if the men who decided to change things back then, could wake up and see what has happened to this one great land, would they be surprised? sometimes i wonder. it would seem they knew what was coming. they tried to warn us even then but i guess no one listened. and so now it is said the american empire is dying. did the founding fathers want a american empire or did they just want to be left alone? i think i know the answer the that. the founding fathers had no interest in american empire but only in american independence and liberty. liberty was the thing they wanted for us. liberty. a word that we do not really understand these days. bring our men and women home now. and let us take back what is already ours. the time is short. it is necessary to do these things for our children and those that are to come. we must do this now. we must...
contrarian patriot | 05.17.08 - 11:43 am | #

Anonymous writes:
And I'd be willing to bet that in the Oxford English Dictionary, the definitive English dictionary in any real library, opaqueness does not exist, either. But I don't have a subscription to the online version.


And you would lose that bet... it's had an entry since 1647, originally spelled opakeness.

(BTW, you may have OED online access if you have Alumni privileges to a University library.)
Anonymous | 05.17.08 - 11:49 am | #

Matt writes:
If the semi-monopoly monetary authority is involved in other sectors, directly, then those sectors should measure their effective interest rate against a basket of monetary bonds, issued by all sectors banking with the fed. Share the monetary risk.

There is no reason a central banker should treat retails banking members differently if we say the fed should not favor any one sector.

We live in a world where financial transaction costs are nearly zero, let us bank with the fed.

Now, I have a days worth of reading on all those comments above.
Matt | 05.17.08 - 1:33 pm | #

Anonymous writes:
http://www.merriam-webster.com/d...nary/ opaqueness

Main Entry:
opaque

opaque·ness noun
Anonymous | 05.17.08 - 2:50 pm | #

unirealist writes:
Anonymous 11:49

it's had an entry since 1647, originally spelled opakeness.

Perhaps you'd be so kind as to copy the significant part of the entry into the comment section? The part that shows that opaqueness is an acceptable word?
unirealist | 05.17.08 - 3:17 pm | #

jag writes:
"New financial System".... Did you hear it? How many times do you need to hear it? "Over compensation"... Did you hear it? Do you people have any clue what his meaning is by these two terms? Remember "Voodoo Economics"? Do you still believe that treasury robbing massive tax cuts for the wealthiest are a good thing? Even in the face of the current mess? Still think that grossly over compensated executives at the expense of employees and share holders is a good thing? How much devastation does one need to see before he finally cries uncle and admits the failure of supply side economics?
jag | 05.17.08 - 4:50 pm | #

dryfly writes:
I stand corrected on the date; however, I thought there was some event in 1973 that finally killed Bretton Woods from the international perspective. I could look it up, but I don't particularly care.

I didn't need to look it up - I remember - it was the Yom Kippur War & resultant oil embargo. THAT changed everything.

dryfly | 05.17.08 - 10:48 pm | #

Anonymous writes:
sorry for the delay,

Oxford English Dictionary
opaqueness, n.
The quality of being opaque, opacity; the degree to which something is opaque.
1647 H. MORE Philos. Poems I. ii. xxxi. 88 The Earths opakeness enemie to Light. 1742 H. BAKER Microscope made Easy I. xiii. 53 The Transparency or Opakeness of an Object. 1855 F. B. PALLISER tr. J. Labarte Handbk. Arts Mid. Ages & Renaissance iv. 159 Giving..complete opaqueness to the colours. 1862 Southern Lit. Messenger May 290/2 To baffle criticism by mere opaqueness of style. 1871 Appleton's Jrnl. 2 Dec. 620/1 In and out from light to shadow, and from opaqueness to transparency, there is still food for profitable study to any one who would know somewhat of the mysteries and capacities of paint. 1907 Chem. Abstr. 1 2745 To the more strongly acting agents for producing opaqueness in glass belong stannic oxide, bone ash, [etc.]. 1928 Jrnl. Philos. 25 473 While a rapidly moving world exchanging institution for institution, ideology for ideology, looked mildly shocked upon their opaqueness. 1957 J. R. L. MARTIN in E. Sagarin Cosmetics Sci. & Technol. x. 230 The materials which are used to give opaqueness to a face powder are themselves white pigments. 2000 D. ADEBAYO My Once upon a Time (2001) x. 251 No grin, no reassurance there. I stared at a practised opaqueness, sensing that this was probably a really bad moment.
Anonymous | 05.18.08 - 12:56 am | #

Anonymous writes:
since this is a dead thread...

"acceptable word" aka Prescriptivist Poppycock
Anonymous | 05.18.08 - 1:30 am | #

unirealist writes:
Okay, I suppose I must concede to the authority of the OED. Paul, go ahead and use the damned word.

It still smacks of obscurity at best and illegitimacy at worst, but I am trying to be gracious.

Thanks for the citation, anon.
unirealist | 05.18.08 - 2:54 am | #

Anonymous writes:
psst, isn't the word unirealistic? ;-)

just kiddin'
Anonymous | 05.18.08 - 3:06 am | #