Fundamental drivers of our current economic problems

[Allan from Fallbrook]

Dave: If you want to really underscore your point, set it in contrast to what the function of Wall Street is supposed to be: A means or mechanism to efficiently allocate capital where that capital will be most productive.

So how do we explain when all of that capital is egregiously misallocated and over a protracted period of time? I say, look to the compensation packages attached, especially the bonus structures, and it becomes patently obvious.

As odious as certain government regulations are and can be, a nearly complete lack of oversight only emboldened the various players further and deepened the effects of the crisis.

If you want an explanation of what is behind the agent/principal disconnect, look no further than pure, unfettered greed. Greed unhampered by oversight, regulation, ethics or simple common sense. It is completely impossible to have so much collective talent and business acumen so totally miss the obvious signs, unless they were incompetent, willfully ignorant and avariciously greedy.

There was no conscious sense of responsibility that these agents felt for their principals, anymore than the partners at Arthur Andersen Houston felt for the employees at Enron or the citizenry at large (CPA means Certified PUBLIC Accountant and you have an ethical and legal responsibility to act on behalf of not just your clients, but the general public as well).

House in the Hamptons, new Maserati, $2,000/hr escorts, cocaine, Cristal champagne and that custom made French yacht. Why be responsible to your clients when all those toys beckon?

[patientrenter]

Do we agree that only government can change the agent – principal problem? And that agents have the upper hand in lobbying our govt reps?

I don’t see how this can change. The general public howls for foreclosure forebearance, but barely recognizes the agent principal problem. I am usually optimistic, but here I wonder if we’ve crossed the point of no return. Our pols are pretty much captive to these agents. If this is the case, then there will be ever larger amounts of ‘stupid’ money that’s taken advantage of. I don’t like it, but as Authers points out, it does open opportunities to those who choose to take advantage.

[patientrenter]

Do we agree that only government can change the agent – principal problem? And that agents have the upper hand in lobbying our govt reps?

I don’t see how this can change. The general public howls for foreclosure forebearance, but barely recognizes the agent principal problem. I am usually optimistic, but here I wonder if we’ve crossed the point of no return. Our pols are pretty much captive to these agents. If this is the case, then there will be ever larger amounts of ‘stupid’ money that’s taken advantage of. I don’t like it, but as Authers points out, it does open opportunities to those who choose to take advantage.

[patientrenter]

Do we agree that only government can change the agent – principal problem? And that agents have the upper hand in lobbying our govt reps?

I don’t see how this can change. The general public howls for foreclosure forebearance, but barely recognizes the agent principal problem. I am usually optimistic, but here I wonder if we’ve crossed the point of no return. Our pols are pretty much captive to these agents. If this is the case, then there will be ever larger amounts of ‘stupid’ money that’s taken advantage of. I don’t like it, but as Authers points out, it does open opportunities to those who choose to take advantage.

[patientrenter]

Do we agree that only government can change the agent – principal problem? And that agents have the upper hand in lobbying our govt reps?

I don’t see how this can change. The general public howls for foreclosure forebearance, but barely recognizes the agent principal problem. I am usually optimistic, but here I wonder if we’ve crossed the point of no return. Our pols are pretty much captive to these agents. If this is the case, then there will be ever larger amounts of ‘stupid’ money that’s taken advantage of. I don’t like it, but as Authers points out, it does open opportunities to those who choose to take advantage.

[patientrenter]

Do we agree that only government can change the agent – principal problem? And that agents have the upper hand in lobbying our govt reps?

I don’t see how this can change. The general public howls for foreclosure forebearance, but barely recognizes the agent principal problem. I am usually optimistic, but here I wonder if we’ve crossed the point of no return. Our pols are pretty much captive to these agents. If this is the case, then there will be ever larger amounts of ‘stupid’ money that’s taken advantage of. I don’t like it, but as Authers points out, it does open opportunities to those who choose to take advantage.

[Allan from Fallbrook]

PR: Our pols are not only captive to these agents, in many instances, they ARE these agents. Look at Rubin, Paulson, Summers, et al. All of them, at one point or another in their careers, were significant players on The Street.

The MSM have aided and abetted in either obscuring these relationships or mis-reporting the significance of them. Paulson is an excellent example. I can understand why the WSJ hasn’t done an in-depth investigative piece on him, but why not the NYTimes or WashPost? Isn’t that their job?

Someone mentioned a swamp in an earlier post. I think it’s time to drain the damn thing and start over.

[Allan from Fallbrook]

PR: Our pols are not only captive to these agents, in many instances, they ARE these agents. Look at Rubin, Paulson, Summers, et al. All of them, at one point or another in their careers, were significant players on The Street.

The MSM have aided and abetted in either obscuring these relationships or mis-reporting the significance of them. Paulson is an excellent example. I can understand why the WSJ hasn’t done an in-depth investigative piece on him, but why not the NYTimes or WashPost? Isn’t that their job?

Someone mentioned a swamp in an earlier post. I think it’s time to drain the damn thing and start over.

[Allan from Fallbrook]

PR: Our pols are not only captive to these agents, in many instances, they ARE these agents. Look at Rubin, Paulson, Summers, et al. All of them, at one point or another in their careers, were significant players on The Street.

The MSM have aided and abetted in either obscuring these relationships or mis-reporting the significance of them. Paulson is an excellent example. I can understand why the WSJ hasn’t done an in-depth investigative piece on him, but why not the NYTimes or WashPost? Isn’t that their job?

Someone mentioned a swamp in an earlier post. I think it’s time to drain the damn thing and start over.

[Allan from Fallbrook]

PR: Our pols are not only captive to these agents, in many instances, they ARE these agents. Look at Rubin, Paulson, Summers, et al. All of them, at one point or another in their careers, were significant players on The Street.

The MSM have aided and abetted in either obscuring these relationships or mis-reporting the significance of them. Paulson is an excellent example. I can understand why the WSJ hasn’t done an in-depth investigative piece on him, but why not the NYTimes or WashPost? Isn’t that their job?

Someone mentioned a swamp in an earlier post. I think it’s time to drain the damn thing and start over.

[Allan from Fallbrook]

PR: Our pols are not only captive to these agents, in many instances, they ARE these agents. Look at Rubin, Paulson, Summers, et al. All of them, at one point or another in their careers, were significant players on The Street.

The MSM have aided and abetted in either obscuring these relationships or mis-reporting the significance of them. Paulson is an excellent example. I can understand why the WSJ hasn’t done an in-depth investigative piece on him, but why not the NYTimes or WashPost? Isn’t that their job?

Someone mentioned a swamp in an earlier post. I think it’s time to drain the damn thing and start over.

[Bob]

The above article is a good read, but I take issue with naming it the “driver of the current economic problems”. Rather, the article decribes some of the symptoms of the problem – a problem which was, and continues to be, the Federal Reserve.

No matter how one slices it, the fact is, the Federal Reserve had the constitutional authority to mandate tighter lending guidelines on all lenders. Greenspan could have stopped the ridiculous practices by lenders which gave loans to people with no money down, bad credit scores, etc…But he didn’t because the banks which he represents were bringing in record profits during the boom. When Bernanke took over, he was slow to act as well. It wasn’t until it was painfully obvious that a severe contraction in the housing market was occurring did Bernanke finally mandate new lending guidelines, but by then it was too late to stop the deflationary contraction. Once Bernanke realized the true extent of the problem on Wall St. he jumped in and paved the way for bailouts for the big banks.

[Bob]

The above article is a good read, but I take issue with naming it the “driver of the current economic problems”. Rather, the article decribes some of the symptoms of the problem – a problem which was, and continues to be, the Federal Reserve.

No matter how one slices it, the fact is, the Federal Reserve had the constitutional authority to mandate tighter lending guidelines on all lenders. Greenspan could have stopped the ridiculous practices by lenders which gave loans to people with no money down, bad credit scores, etc…But he didn’t because the banks which he represents were bringing in record profits during the boom. When Bernanke took over, he was slow to act as well. It wasn’t until it was painfully obvious that a severe contraction in the housing market was occurring did Bernanke finally mandate new lending guidelines, but by then it was too late to stop the deflationary contraction. Once Bernanke realized the true extent of the problem on Wall St. he jumped in and paved the way for bailouts for the big banks.

[Bob]

The above article is a good read, but I take issue with naming it the “driver of the current economic problems”. Rather, the article decribes some of the symptoms of the problem – a problem which was, and continues to be, the Federal Reserve.

No matter how one slices it, the fact is, the Federal Reserve had the constitutional authority to mandate tighter lending guidelines on all lenders. Greenspan could have stopped the ridiculous practices by lenders which gave loans to people with no money down, bad credit scores, etc…But he didn’t because the banks which he represents were bringing in record profits during the boom. When Bernanke took over, he was slow to act as well. It wasn’t until it was painfully obvious that a severe contraction in the housing market was occurring did Bernanke finally mandate new lending guidelines, but by then it was too late to stop the deflationary contraction. Once Bernanke realized the true extent of the problem on Wall St. he jumped in and paved the way for bailouts for the big banks.

[Bob]

The above article is a good read, but I take issue with naming it the “driver of the current economic problems”. Rather, the article decribes some of the symptoms of the problem – a problem which was, and continues to be, the Federal Reserve.

No matter how one slices it, the fact is, the Federal Reserve had the constitutional authority to mandate tighter lending guidelines on all lenders. Greenspan could have stopped the ridiculous practices by lenders which gave loans to people with no money down, bad credit scores, etc…But he didn’t because the banks which he represents were bringing in record profits during the boom. When Bernanke took over, he was slow to act as well. It wasn’t until it was painfully obvious that a severe contraction in the housing market was occurring did Bernanke finally mandate new lending guidelines, but by then it was too late to stop the deflationary contraction. Once Bernanke realized the true extent of the problem on Wall St. he jumped in and paved the way for bailouts for the big banks.

[Author]

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