Republican talking point whack-a-mole, yet again

The argument by talking point style that characterizes all sections of the political right in the US has been evident as usual in relation to the financial crisis, so I guess it’s time to play whack-a-mole yet again. The most prominent points I’ve seen are

* It’s all the fault of the Community Reinvestment Act, which forced banks to lend to low-income borrowers. Quite a few people have pointed out that many of the subprime loans weren’t required under CRA. More to the point, given that the market structures in the bubble made mortgages a fungible asset, the CRA was a nonbinding constraint. It’s clear that many more subprime loans were given out in the bubble years than were required under the Act and that the excess was greatest in the areas where the bubble was worst. The CRA had no effect at all under these conditions.

* If regulation were the problem, how come the hedge funds haven’t been affected? In fact, it was the failure of Bear Stearns hedge funds that signalled the spread of the crisis beyond the subprime mortgage market. And the main reason hedge funds haven’t yet been hit by the crisis of the past few weeks is that they don’t allow redemptions except at stated dates (for most of them it will be next Tuesday. Perhaps there won’t be a problem, but that’s not what the markets think. In any case, those making the claim seem to be unaware of the redemption restrictions.

42 thoughts on “Republican talking point whack-a-mole, yet again

  1. Every heard of “Competition”?

    If the state or government strong arms one part of the market (its favored and sponsored parts mae and mac) the other parts run to keep up, catch up and overtake.

    Clinton administration went even further using the Office of the Comptroller of the Currency to pressure banks to lend more money to the disadvantaged.

    And even the hard moonbat left went even further, they used litigation to pressure banks to lend, and if they did not you would have the worlds most famous social worker would be on your back with his mates at Acorn.

    Its called a culture, here creates the conditions where the worse gets much worse. Whats the saying the road to hell is paved with good intentions?

    all in all I think the best idea is to keep the Pols out of the market place, when you distort a market with bad ill conceived legislation inject two big beasts with plenty of clout on the hill, you can expect fireworks.

    The world is all about unintended consequences, text books don’t teach real life.

  2. If the state or government strong arms one part of the market (its favored and sponsored parts mae and mac) the other parts run to keep up, catch up and overtake.

    Sometimes the reverse is true, the industry strongarms the government. Both parties of Congress failed to reign in this in.


    Near the end of the Clinton administration, some of its officials had concluded the companies (Fannie and Freddie) were so large that their sheer size posed a risk to the financial system.

    In the fall of 1999, Treasury Secretary Lawrence Summers issued a warning, saying, “Debates about systemic risk should also now include government-sponsored enterprises, which are large and growing rapidly.”

    It was a signal moment. An administration official had said in public that Fannie Mae and Freddie Mac could be a hazard.

    The next spring, seeking to limit the companies’ growth, Treasury official Gensler testified before Congress in favor of a bill that would have suspended the Treasury’s right to buy $2.25 billion of each company’s debt — basically, a $4.5 billion lifeline for the companies.

    A Fannie Mae spokesman announced that Gensler’s remarks had just cost 206,000 Americans the chance to buy a home because the market now saw the companies as a riskier investment.

    The Treasury Department folded in the face of public pressure.

    There was an emerging consensus among politicians and even critics of the two companies that Fannie Mae might be right. The companies increasingly were seen as the engine of the housing boom. They were increasingly impervious to calls for even modest reforms.


  3. I guess in hindsight with the Freddies and Fannies we should have been aware that home mortgageship isn’t exactly the same thing as home ownership-

    “What went wrong? The illusion that the companies were doing virtuous work made it impossible to build a political case for serious regulation. When there were social failures the companies always blamed their need to perform for the shareholders. When there were business failures it was always the result of their social obligations. Government budget discipline was not appropriate because it was always emphasized that they were “private companies.â€? But market discipline was nearly nonexistent given the general perception — now validated — that their debt was government backed. Little wonder with gains privatized and losses socialized that the enterprises have gambled their way into financial catastrophe.”……..

    “It is hard in this world to do well. It is hard to do good. When I hear a claim that an institution is going to do both, I reach for my wallet. You should too.”

  4. Its called a culture, here creates the conditions where the worse gets much worse.

    I imagine that Charlie Manson might use a similar argument in self-exculpation.

    If we refuse to accept this argument from serial killers, why should we allow the apologists of shadow bankers to get away with it?

    JQ’s point about nonbinding constraints destroys this special pleading.

  5. Sean, @3,

    I think the article you cite frames the consequences of the article I cited @2.

    Observa, @4,

    Thank you for the excellent link and site — I didn’t know about CreativeCapitalism.

    The money quote for me (from your link):

    The illusion that the companies were doing virtuous work made it impossible to build a political case for serious regulation.


    it makes more sense for me when I’m doing well to make capital investments for my family. In the 90’s, we had cheap energy, relative peace and prosperity in the world, a rising middle class, rising employment, close to a balanced national budget. And a home is the smartest form of stable wealth for most people — it almost defines middle class.

    The Bush years are the opposite in every respect, and the effort to encourage a middle class that is getting poorer every year into homes with zero-down adjustible-rate mortgages has the appearance of a program to harvest money for the wealthy. The bankruptcy laws were changed to make the fleecing easier.

    Even during the current crisis, the Office of Federal Housing Enterprise Oversight “never even acknowledged that there was a housing bubble” and the government continued to claim the fundamentals of the economy were strong.

    As much as you dislike Clinton, Bush is not your friend. When Bush entered office, the National debt was close to $5.8Bn. Now it is going to be $11.3Bn. You and your children and your grandchildren will be paying taxes on that your whole lives.

  6. “JQ’s point about nonbinding constraints destroys this special pleading.”
    Presumably ‘moral suasion’ by Govt is dead and buried then Katz?

  7. #1 “the best idea is to keep the Pols out of the market place”.

    With more oversight of the labour market then the people unable to pay their mortgages might have managed. To have such extremes of wealth and the problems arising from health and limited welfare, individuals can go from in control of mortgage payments to unable to pay very quickly.

    Markets by themselves are heartless. Whilst we can take a position of “bad luck you loser” this creates a fractured society and goes against the herd instinct.

  8. You just have to look at the MO of the political parties. The left in general have supported increases in the minimum wages and reduction in taxes for the poor and middle class, which would have helped the disadvantaged to pay off their debts. The right with their capitalism for the poor and socialism for the rich have not.

  9. Presumably ‘moral suasion’ by Govt is dead and buried then Katz?

    Is it necessary for government to advise businesses: “For your own sake, don’t succumb to your worst greedy instincts”?

  10. “since my intent is to write something useful to whoever understands it, it has appeared to me more fitting to go directly to the effectual truth of the thing than to the imagination of it�(Machiavelli 61)

    the american power structure has been for the best part of thirty years increasingly what mussolini described as corporatism, the merging of business and government interests

    to try and argue that capitalism or government is responsible for the collapse in financial markets is to mistake the system at it its fundamental level

    corporate welfare is the norm,
    this magical 700 billion pulled from a hat is merely the biggest incident to date

    to think that paulson or dodd represent government is ignorance in the extreme,

    and to think that obama is somehow outside of it is a willfull fairytale construction

  11. “I think the following rule would be found generally true:
    that ages in which the dominant weapon is expensive or difficult to make will tend to be ages of despotism, whereas when the dominant weapon is cheap and simple, the common people have a chance” – Orwell

    i reckon this line from orwells essay on the A-bomb has more relevance for what is going on than most of the crap opinions being garbled out at the moment,

    the elites of the planet simply do not have to worry about mass mobilisation of the decimated middle classes anymore, america will end up looking more like saudi arabia than the other way round

  12. “It’s all the fault of the CRA” is a strawman.

    What some economic liberals (including me) have mentioned is that some US regulations have encouraged handing out more loans to low-income people who may not be in a good position to pay them back. That’s fairly uncontroversial.

  13. What some economic liberals (including me) have mentioned is that some US regulations have encouraged handing out more loans to low-income people who may not be in a good position to pay them back. That’s fairly uncontroversial.

    There’s a huge gap between saying something that’s uncontroversial and making a sensible case expaining the causes of the US financial collapse.

    But what percentage of these folks were given preference under CRA?

    If the only folk who defaulted were beneficiaries of the CRA would the US financial system be in a state of collapse?

  14. “What some economic liberals (including me) have mentioned is that some US regulations have encouraged handing out more loans to low-income people who may not be in a good position to pay them back. That’s fairly uncontroversial.”

    How about you quantify this effects of this problem Mr Humphreys rather than simply repeat the same talking point.

    I have an open mind and I’m ready to be convinced 🙂

  15. No rescue bill through Congress and “Hedge Fund Teusday” heading our way! Looks like we do live interesting times. I’m wondering when the Chinese sharemarket will tank. If that’s not over-valued, I’m a monkey’s stockbrocker.

    I notice the Russian authorities showed their usual trust in the market. It was open 1 minute and then they shut it down. Even Ikono does not distrust markets that much.

    I’m thinking of buying a few pallets of tinned baked beans; food, fibre and the intestines will produce a supply of home-grown methane! Now, how can I “harvest” that for my burner?

  16. 6, ehj2

    As ive said before I am just as much against big government Conservatism as I am against Big Government leftism.

    And this is not an Ideological small government, free market position.

    The reason that I support this idea is simple, and Taleb explains it well, the more the world get interconnected the more black swans will appear (bio fuels are a good example, just look at how it impacted rice prices)

    Some of these black swans will be good, but some will be bad and the bad ones tend to come from Big Government, so these unintended consequences have bigger effects.

    No disrespect to our host, but it is in the interest of academia who are part of the managerial class to support the large bureaucracy of Big Government. For example lawyers invent new terms and phrases in order to charge more for their “professional” services, they tend to support further law and extensions of laws, economists tend to support more and more forecasting, statistical analysis, theory ect.

    Its not in there interest to say, well you know I think we might be a bit of a burden on the state, cut things down a bit, simplify it.

  17. Sean, @19,

    People seem to forget that the government is “them,” not some amorphous abstraction “over there.” You’re it — the agency of last resort for every unintended consequence. Sure governments make mistakes, but they have all the resources and can change their minds and remedy or alleviate them, and the mistake here (in the financial crisis) is giving corporatism too little oversight.

    The tendency of unregulated markets to run off cliffs is not an unintended consequence, this is what always happens when corporations are unregulated. Note that it is always a government (you & me) that must step in and clear the mess.

    I’m in energy engineering, so I can assure you that your bio-fuel example (specifically “corn to ethanol” — resulting in rice price fluctuations) has nothing to do with black swans or unintended consequences — and has everything to do with “the managerial class (supporting) the … govt” and the elasticity (not very) of grain production in the world (because all available crop land is in play and it’s hard to add more). Energy engineers knew this wouldn’t work (the energy inputs exceed the outputs), and agricultural engineers knew this would impact world food prices, but Big Agriculture (corporations again) wanted the subsidies (the actual intended consequence).

    The “large bureaucracy of Big Government” is now a strawman (doesn’t exist) — America’s Executive-managed agencies are all hollowed shells of their former selves, and the only remaining big piece is DoD (which costs about 1$Tn/Yr and is thus a centrally-managed economy larger than most countries and should demonstrate the relative effectiveness of central management) is never included in this frame (“big government”).

    Please be careful with your use of the term Black Swans, or this will become in the language as misused as the Incompleteness Theorem and the Uncertainty Principle, bandied about casually to support all sorts of things with which they have nothing to do.

    The government is the insurer of last resort and owns the consequences of all failed ideas and realized risks (like the storm in the Gulf, Katrina). What we should learn from the mathematics of Black Swans is that we must be even more risk averse in areas of extreme uncertainty, and that the insurer of last resort (the government, you and me) must demand more oversight and regulation to manage exposure to this risk (which corporations cannot see given their commitment to quarterly profits).

  18. Melaleuca,
    If you are genuine about having an open mind… CRA is often put forward as part of an argument that government action had a role in the current credit issues. The fact that the CRA existed is clear evidence of a government policy that caused banks to make riskier loans. I don’t think you need to abandon your argument to say that the CRA was not a very clever idea. There were other factors at play, but that was certainly one factor. I have a lot of time for smart social democrats, but not much people who blindly defend any government action because they don’t want to give an inch to classical liberals/libertarians/whatever. It is a brand of barrow-pushers to deny all arguments of their opposition, no matter how small. Genuine debate requires a more genuine desire to understand.

  19. 21,

    Again, the govt. is just “us,” and of course all govt. actions (our actions) had a role in the current crisis. The role of the CRA was minor compared to our decision (govt decision) to fail in oversight of corporatist activities. But we chose the Bush administration and low oversight and corporatist indulgence and we now learn that ideas do indeed have consequences.

    The idea in play with the CRA is the utility of a middle class in a democracy. I believe a middle class is crucial and am willing to accept purposive investment in maintaining one.

    Sean, at the end of 19, argues against what he thinks economists want,”more and more forecasting, statistical analysis, theory, etc.” as if this stuff means big government. I call this stuff dashboard instrumentation, and more (not less) is necessary when the risks are high.

    CRA simply needed to be monitored and its application adjusted in the context of monitoring all the other financial data streams we have; sometimes more, sometimes less, just as with the money supply or interest rates, etc.

  20. Again,

    The problem is not the program, but who benefits in how it is implemented.

    Under Clinton, during a strong economy and a balanced budget, CRA strengthened the middle class.

    Under Bush, the program should have been turned down. Instead, zero-down adjustable rate mortgages were introduced and the CRA program turned “up” and bankruptcy laws modified. Who benefitted? Not the middle class, which got hosed. The CRA was turned into a spigot to funnel wealth to the rich and the government (as an instrument of corporatism not socialism) actively encouraged people to invest even though it knew the cliff was close.

    But, just as when you press any accelerator too far, whether money supply or interest rate, you cause failure. And when the crushed middle class started defaulting on mortgages, other problems in the system (CDSs, interbank credit, etc.) started to unwind.

  21. ehj2.

    Sorry I meant to say Wheat and not rice. The black swan was the meeting of political pressure from the public and the pols, without this the evidence would have been better evaluated as in other areas it is.

    (People seem to forget that the government is “them,�) No its not, its the elected (in a democracy) executive of the state.
    When we go into the ballot booth we transfer power from ourselves to the pols.

    Its an important issue, Hegel who is the real father of socialism said in essence that we are only ourselves through the personality of the state, this sort of turns the state into a secular god, a very dangerous (has history proved) idea

    “dashboard instrumentation”
    No I dont except that at all, fewer dials with more accuracy is what is needed. more dials create more unknown risk as they make us feel safer.

    All we seem to be doing is creating a snowball bureaucracy, staffed by the a bigger and bigger managerial class, that in the end is engaged in clearing up its own mess. (as now) I also believe that in a crisis we tend to ignore data and make value judgments, as displayed now with the bailout, we dont know if it will work, we dont have the full data, ( the banks dont even after one year do not seem to have an idea of their actual liabilities) so a value judgment is being made to protect the paradigm.

    Take the issue of tax for example, we can argue about the effect of less tax on fairness and growth or more tax on the needs of greater social provision but in the end to me its a matter of principle and a value judgment that people should be taxed as lightly as possible, and the state should not intrude in the citizens life without good reason. So the economist can keep their graphs and data, I dont need any dials.

    I dont think you risk aversion point is right.
    it seems all these complex financial models that created these instruments had the effect of making people feel safer and thus taking more risks, thus we has a situation where the political good of getting loans to poor people was meet with the banks saying we can handle the risks, it seems to me the more we are aware of the risks the more responsible we act, over regulation has the effect on folks of spending more time working on complying and getting around them. Its a very fine balance, but it seems to me (esp here in the UK its a governance issue, or who is best to monitor the banks, the FSA have sort of been trying, but it is really a job for the BOE)

    A few years ago Halifax (HBOS)was a mutual, then became a PLC bank, what they did was abandon their older business model of taking in the cash at one end and lending it out at the other end.
    they looked at the market and decided that as the money markets have never failed they could use this as a model for expansion with little risk, as too many other banks. So as they went into the money market to fund their lending they had the effect of reducing the odds of the money markets failing. No one expected this because it had never happened before, The risk models where useless, the only way this might have not happened is had someone had authority and experience who would have said “I dont like the look of this”, in the end we need the right people to make value judgments. More and more rules and regulation turns people into robots to fulfill the illusion of control.

    enjoyed your posts btw!

  22. Sean,

    Pick something you like, perhaps defense. You must have a desired and measurable amount that enables you to know when you have enough and can stop spending. The right amount of military is also context sensitive, you dial it up (expenditures for) when you’re at war, you dial it down (spend less) when at peace (as in a car you slow down in mountain passes).

    I think your examples of failures are consequences of insufficient oversight (Halifax banking), enabled by insufficient dashboard instrumentation.

    The bigger and more complex something is, like a nuclear reactor plant or a 767 aircraft, the more dials and gages. You can indeed pretty much ignore most of them most of the time. But you can never know enough and they help capture sensitivities you didn’t know you had.

    A car is a machine that is designed to fail “gracefully.” It doesn’t explode when something fails.

    The world economy is the largest virtual machine on the planet, and we don’t know enough about it (have enough knowledge or dials) to keep it from failing horribly. The U.S. economy is the largest component within that virtual machine, with some of the most aggressive drivers (who think they can still do 80mph in foggy mountain passes). I want as many dials and people watching those dials as possible, because dials are cheap and having them helps reduce asymmetry in the availability of market information (making for safer and more honest markets).

    Return to the example of diverting corn to ethanol and its impact on world food prices. Here the dial was well known, I’m in the industry that maintains it. Corporatists lobbied government and got their way in spite of the knowledge widely held in the engineering and agricultural communities. Because the “dial” was insufficiently “public,” bad policy was implemented.

    My government knew Fannie and Freddie were in trouble 18 months ago (the oil light on the dash started blinking and they pulled it), and not until after their catastrophic demise did the Office of Federal Housing Enterprise Oversight (which oversees Fannie and Freddie) acknowledge they had a crisis.

    Understand that the dials I want are for us to monitor the government, which is simply running stuff on our behalf, and ensure that it meets its promises to us. Dials give us knowledge and power over them (that’s one reason there’s not enough).

    When Bush and the Republicans decided we didn’t need M3 anymore, they ripped a dial out of the dashboard that economists everywhere used to monitor an important money supply aggregate. If they’re really running the economy well, why take out a cheap monitoring device that can confirm the “quality” of their stewardship?

    I think if you had known that the value of Credit Default Swaps awash in the economy had increased from $900Bn when Bush entered office to $62Tn at the end of 2007, this would have influenced your thoughts about something going on in the economy.


  23. “Energy engineers knew this wouldn’t work (the energy inputs exceed the outputs), and agricultural engineers knew this would impact world food prices,..”

    A man of harder science ehj2?. Come to throw a bit of light on the confounding dismal science. Apparently there is a trend toward the multidisciplinary approach in our venerable institutions as Greg Mankiw notes. Princeton freshman Physics 101 meets modern alchemy by the looks of things-

    Problem 1. A famous thought experiment in economics involves dealing with a financial crisis by dropping money from a helicopter.

    Ben Bernanke, Federal Reserve Chairman and former Princeton Economics Professor, decides to try this out over his old hometown. With his helicopter flying 1.0×10^1 m above the center of Fine Tower and in the direction of Nassau Hall, Ben gently releases a briefcase containing $1 million. Using the information that (i) Fine Tower is 6.0 × 10^1 m high, (ii) Nassau Hall is 1.5 × 10^1 m high and (iii) the centers of the two buildings are 3.0 × 10^2 m apart, and ignoring air resistance as you normally would:

    a. [2 pts] How fast should Ben’s helicopter fly so that the briefcase lands in the center of the roof of Nassau Hall?

    b. [1 pt] How long is the briefcase in the air?

    c. [1 pt] How fast is the briefcase moving when it hits the roof of Nassau Hall?

    d. [1 pt] How much faster would the financial relief have reached Nassau Hall if the briefcase had contained $2 million instead?

  24. you economists stole and ruined a perfectly good word.

    derivative shouldn’t have been mucked up to mean “a mash of unlikely things thrown together.”

    and I’m not falling for your liquidity trap.

  25. Observa,

    If, in the rendering of the gentleman at the top, we could substitute a feces-flinging howler monkey with a diamond-encrusted watch, the image would have more verisimilitude.

    Krugman now calls us a banana republic with nukes. But we’ve been a rogue nation for a long time.

    Most people I meet think Laos is just part of Vietnam. Laos is the most bombed country on earth. The US dropped 2.4 million tons of bombs on it during the Vietnam War — more than the allies dropped on Germany and Japan combined in World War II. An estimated 270 million cluster bombs were dropped.

    I don’t know why I thought of that just now.

  26. Tyler Cowen of Marginal Revolution has argued that CRA, while being bad policy, did not worsen the housing bubble (and consequently the subsequent crash) significantly.

  27. John, had distressed financial institutions put into practice the three Pillars in treating the calculation of capital requirements, supervisory review, and the disclosure necessary for effective market discipline as set out in Basel Accord Mark II then the risks and failures in the global financial system could have been minimised and/or even avoided.

  28. It was always the moral hazard of cheap money flung from the balcony to the ever cheering multitudes and Bernanke and Paulson still want to continue the party-

    Ron Paul sees through the continuation of their ponzi game and calls it like it must be-

    “Unfortunately, the government’s preferred solution to the crisis is the very thing that got us into this mess in the first place: government intervention. This lowering of prices (ie, home prices) brings the economy back into balance, equalizing supply and demand. This economic adjustment means, however, that there are some winners – in this case, those who can again find affordable housing without the need for creative mortgage products, and some losers – builders and other sectors connected to real estate that suffer setbacks.

    The government doesn’t like this, however, and undertakes measures to keep prices artificially inflated. This was why the Great Depression was as long and drawn out in this country as it was. I am afraid that policymakers today have not learned the lesson that prices must adjust to economic reality. The bailout of Fannie and Freddie, the purchase of AIG, and the latest multi-hundred billion dollar Treasury scheme all have one thing in common: they seek to prevent the liquidation of bad debt and worthless assets at market prices, and instead try to prop up those markets and keep those assets trading at prices far in excess of what any buyer would be willing to pay.”

  29. And to add weight to his words notice how the stock markets have reacted to the on again off again big bailout carrot. The party is over folks and it’s time for hard work for less and real savings and investment again.

  30. #21 Joseph Clark,

    all you’ve done is rehash talking points.

    This seems about right:

    “It’s telling that, amid all the recent recriminations, even lenders have not fingered CRA. That’s because CRA didn’t bring about the reckless lending at the heart of the crisis. Just as sub-prime lending was exploding, CRA was losing force and relevance. And the worst offenders, the independent mortgage companies, were never subject to CRA — or any federal regulator. Law didn’t make them lend. The profit motive did.

    And that is not political correctness. It is correctness.”

  31. Come off it Mel. Have a decko at this stinking pot-pourri of competing means and ends closer to home from the woolly headed Ms Burrow-

    ‘THE peak union body has backed the Federal Government’s plan to inject $4 billion into the non-bank lending sector, saying the step is “necessary corporate welfare”.
    Labor announced last week it would use taxpayers’ money to invest in new residential mortgage-backed securities (RMBS) to reinvigorate the market and provide competition for home lending.
    ACTU president Sharan Burrow says the move is “prudent and timely” but must come with conditions.
    They should include curbs on lending practices that push debt onto vulnerable consumers, a requirement that the $4 billion be offered to institutions that provide lower interest rates and greater protection for homebuyers at risk of default, she said.
    “The Government’s move to support non-bank lenders is necessary corporate welfare, but let’s not lose sight of the real objective here,” Ms Burrow told the National Press Club in Canberra.
    “It should principally be to support and protect those families at risk.
    “Support must also be extended to working families at risk of losing their homes.”
    The union boss said the price tag for assistance to the financial sector had to be tougher regulation and greater transparency.
    “There’s a lot of workers’ capital tied up in this system, and we want it to work,” she said’

    As the man said, when institutions say they want to do well AND good he reaches for his wallet and so should we all.

  32. And here was me thinking that no Govt bailout would protect working families from that $4bill in extra taxes and eschew corporate welfare, whilst foreclosures would free those vulnerable consumers from all the debt that was ‘pushed’ onto them. Instead Rudd is gunna join ‘Aussie to save ya’ all. Where is Mr Aussie nowadays you may well ask? No doubt basking like shareholders in Westpac and its subsidiaries now, trusting Rudd will Rams this through parliament to save them all just like those pet hybrid Toyota shareholders of his. You know it all makes warm fuzzy sense O meboy.

  33. banks dont create money out of thin air…

    “The Bank of International Settlements, which seems to be the only institution that tracks the derivatives market, has recently reported that global outstanding derivatives have reached 1.14 quadrillion dollars: $548 Trillion in listed credit derivatives plus $596 trillion in notional/OTC derivatives.”

    That’s $1,140 trillion. $1.1 quadrillion.

    remember to say to yourselves every morning,
    “australia is different, our banks are different”

  34. “The Bank of International Settlements, which seems to be the only institution that tracks the derivatives market, has recently reported that global outstanding derivatives have reached 1.14 quadrillion dollars: $548 Trillion in listed credit derivatives plus $596 trillion in notional/OTC derivatives.�

    once you reach a number that big – does it really mean anything anymore? or is this what Steve Keen meant when he said that this bail-out was like trying to rescue the Titanic using a thimble.

  35. Gerard Henderson uses his space in the SMH today (7 Oct) to recycle this argument. He manages to take it even further, somehow implicating Obama.

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