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Since December of 2007 the monetary reserves backing the US dollar have been swapped with junk credit paper.
The link I am providing includes charts going back to 1953 as published in Barron's. We can see that the proportion of US Treasury paper backing the US dollar since last year has fallen from 90% to 45%.
I published this article only a week ago. In that time the percentage of US Treasury assets backing the US has fallen to only 37%.
Does anyone care?
Mark Lundeen
Oh, hi, Swiftee; Spot thought he smelled gin.
Your willingness to opine about things you know nothing about is the hallmark of your ilk.
Splut is hoping with all his might that somehow, this will mean that he will no longer be forced to drive his smoking rust bucket past Hummers parked in garages finer than his trailer house.
My belief system is strong enough to definitively preclude such relief for dim-witted, failing, third rate lawyers.
If the intelligent, productive class are all reduced to driving smokey rust buckets, splut, pathetic, whiny losers such as yourself will be riding a schwinn with flat tires.
Don't blame me; it's just the way the world works.
Seems to me that there's a fair amount of room for expression of shame, remorse, and humility, Spotty. Not seeing a lot -- well, any -- of it from, say, Dodd or Rangel.
King is, appropriately, keeping his eye on the ball: the primary goal is to keep the system from melting down, not to make sure that some scoundrels and fools don't lose as much as they should.
(That doesn't mean that he's right about the bailout being less bad than every possible alternative; I dunno. But I think that the way to argue that other alternatives are better/less bad is to point out their virtues and flaws, not try to shame the reporter.)
You can't handle the truth, Swiftee. But it's nice to see your belief system is shaken.
I'm more than ready to jump on government intrusion as the villain, here. But more than that, I'd really like to understand the truth.
As the MOB’s master of all things fiscal, I would love it if King would provide those of us who rely on Quicken to keep us on the straight and narrow with some breadcrumbs to guide us towards understanding.
Are GSE’s inherently bad? Was the CRA to blame? Do capitalists need nannies after all? Is there any shot at all to lay this whole thing at Noam Chomsky's feet?
Where to start, King?
Uber-
"So how does a free market capitalist reconcile the existence of these moral hazards?"
I can only assume you are speaking of the case of fannie mae and freddie mac. The problem with your synopsis is not that they thought that they were mitigating risk by spreading it out, the problem lied in the implied government backing of these companies. Why would these companies not take extraordinary risks, knowing the government would not let them fail? Realizing this makes one wonder how much better off we would have been had we just not created these GSE's in the first place.
Moral of the story: Government causes more problems than it solves.
Interesting, Mr. Shirt. But why 1929? The economy was not necessarily free before that. The year 1913 was perhaps when we knew American economy would never be free again. But even before that it was hard to call America a free economy. William Graham Sumner describes the years from 1846 to 1860 as the "golden years" for free markets. The years 1783 to 1807 were also years of economic freedom.
This is just an aside though. The real question is related to whether financial institutions would have loaned to subprime borrowers in a free capitalistic market. Mr. Shirt argues this happened because they were forced to because of regulations and mandates. This is true to a small extent, but lets consider for a moment the abundance of moral hazards. If a lender can nearly completely mitigate the risk associated with a junk loan by spreading it out or selling it off completely, would he still do it in a free capitalistic market? Surely the answer would be yes.
So how does a free market capitalist reconcile the existence of these moral hazards?
What of Mr. Frank, who suggests that there are actually undervalued assets, that will result in a net (albeit small) gain for the American taxpayer? This actually happened in the 30's. King, I'm completely clueless in this current climate - is there a (decent) chance that this bailout won't kill us?
Looks like lots of folks from the left and the right are sharpening their pitchforks and lighting their torches.
Interesting times...
America versus the financial elite...who will win???
Mr.Shirt does not trust anyone who refers to himself in the third person. It's creepy, just like most leftist philosophy.
So would a capitalist, in a true free market, which does not exist here, ever give money to someone that has no hope of paying it back?
When such a person asks the capitalist for the money, in a true free market, would the capitalist just take the requester's word that he has a job & an income, without a background check?
The answer is no, but we have not had
a free market since 1929. It now appears The government, through coercion & regulation, encouraged & to an extent, mandated that this happen. That is not a free market ideal.
Welcome to the People's republic of Wall Street. Nash, Hudon, Republic Steel, Eastern Airlines, TWA, were all too big to die. I don't recall the end of the Republic because these firms died.
The sooner Fannie May, Freddie Mac and the other lossers are gone the sooner the nation will be back to what it does best. If we have enough politicians with the cou4rage to show the experts, corrupt bankers, and worse politicians to the door.
Its time for some frontier justice. Hang Raines, Johnson, and all the other fraud mongers like Schumer, Frank, and Obama.
I certainly don't advocate bloodletting.
However, if laws were broken and crimes proven in a court of law, then these people should serve time.
There's a legal system and process in place. When hundreds of billions of dollars of economic damage is caused (and the taxpayers are dragged into this mess), accountability needs to be assessed.
Rule of law, anyone?
Damn straight it is, splut.
That's "avarice," Swiftee.
Pfft.
I'm sure that Prof. Banian appreciates the thoughtful insights of a scroungy third rate lawyer that is so consumed with averice that he spends his free time driving by and videotaping the homes of his more successful neighbors.
Have you learned any new Latin terms you'd like to try out on us, splut?
Heh.
"I've known plenty of people who've been through bankruptcy, and the social stigma and loss of friendships has stung much more than the loss (or lack of loss) of income."
And Spot is sure they came to you for comfort, right Professor?
Kevin Phillips, who strikes Spot as somebody who calls 'em as he sees 'em, says this is just another case of "bad capitalism," which operating like Gresham's law does with money, drives out "good capitalism."
And regarding bloodletting: that's rich coming from one of the purest Social Darwinists that Spot knows.
If there is a God, and She is just, you and yours are gong to eat this one, Professor.
E Gads, King! You have a nasty patch of asshat weed growing in your garden...just let me know if you want to borrow my 'wacker!
Anyway, to the point.
I've been reading various analysis of this mess, and one aspect intrigues me.
How much effect did the Community Reinvestment Act of 1977, and the subsequent manipulations of it have to do with this meltdown?
I've known plenty of people who've been through bankruptcy, and the social stigma and loss of friendships has stung much more than the loss (or lack of loss) of income.
Here's the problem with the burn-the-capitalist-witches theory: You encourage them to lie, cheat and hide their penury. Had these banks stepped forward earlier, the problem would be much reduced. It's the bloodlust of the socialist and his friends in the State that drives the capitalist to hide.
There are certainly crooks among the capitalists, and they should be shunned by all good men for abandoning their values by deceiving people of their money. But they do not use guns; government does, and a gun, as Rand said, is not an argument. "The businessman's tool is values; the bureaucrat's tool is fear."
How appropriate that today, the day in history when the French First Republic started in 1792, which began the Reign of Terror, that you would offer terrorizing bankers as public policy!
" It's plenty humiliating for those who did the deed;..."
Really?
To the point that guys like Bill McGuire will give back a few hundred million or so - each?
I didn't think so.
Spotty-
"It's the free market privateers and pirates who got us into this mess." That's quite an absolute statement, wouldn't you say? Perhaps you should study the situation a bit more before you cast final judgement, no?
It's plenty humiliating for those who did the deed; for those of us who support capitalism, we believe these things are part of the natural course of events, and that bloodletting is something we leave to the Mugabes of the world. I take it you're not part of that crowd?
"The bailout is bad, except for every possible alternative."
Well, that's pretty glib. So, once a generation or so we just bail the scoundrels out? Give us the money or the country tanks?
It's the free market privateers and pirates who got us into this mess. The expression of shame and remorse is in order here, Professor.
And maybe a little humility, too.
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