Monday September 15, 2008, 3:56 pm
Excellent story Ariel
Here is a link that I fear go hand in hand with what is said in your article. The rich just keep getting richer at the expense of the America workers (& taxpayers)

http://journalism.org/node/10769

In a $5 billion agreement in 2007, Rupert Murdoch’s News Corp. bought out Dow Jones & Company. Since the takeover, Journalism.org reports that “the Journal’s front page has clearly shifted focus, de-emphasizing business coverage,” although it does not cover as broad a range of content as The New York Times. Murdoch also owns rights to Fox television and the Times of London.

PS
He also owns myspace:(
What Myspace means to Murdoch

http://news.bbc.co.uk/2/hi/business/4697671.stm

On 19 July, what appears to be the first really substantive part of the new strategy swung into action: the purchase, for $580m, of the firm behind the wildly popular Myspace.com online community.

Monday September 15, 2008, 4:19 pm
hi thanks ariel and i agree with you kathy c.any sort of mess like this the poorer man or woman has to pay for it and suffer more hardship its something the poor dreded happening more than the rich ,thanks for forwarding this kathy c.

Monday September 15, 2008, 4:28 pm
When will this madness stop!!!!!
Thank you Ariel and Kathy!
How much more can the regular hard working people take?
Right now I am at a loss for words!

Monday September 15, 2008, 4:45 pm
why do the poor always end up bailing out the rich. but yet the rich never get poor? it's time for real change. a community organizer is exactly what we need here:)

Monday September 15, 2008, 4:55 pm
But--But--But our current administration, and their presidential candidate say 'Everything is fine, our economy can adjust, we will survive, so don't worry!" Well, do I look worried? I'm secretly pulling my hair out!!!

Monday September 15, 2008, 5:02 pm
Robert I agree times have not seemed this uncertain in a long time ....I heard on the news today President Bush said no one has anything to worry about.....I hope people are not believing that....
Don't forget this is the same president who 2 days after 911 advised people to go shopping ....

Monday September 15, 2008, 5:21 pm
Rich people have nothing to worry about and the poor they are there already the missle class thats on the edge is the ones are getting hard and also me and my husband which are both on disabilty. We have goverment insurance called Humana they only allow you 2,450.00 a year for precitions then you hit the doughnut hole in other wods your done until Jan of 09. I hit mine in Auguest, I even had help with ppo's with 2 other meds that they didn't help with. Medicare wanted $3,000.00 before they would only pay 50% wow what a wonderful goverment we have hua? And one day everyone of you will be there too. I only hope you can afford other insurance for we can't. Thanks Kathy. Bail them out my hind end the rich needs to bail them out like Bush Chaney NObama mCShame they can afford it the greed Bas$$$ds.

Monday September 15, 2008, 5:22 pm
That is exactly what is happening in France. The poor work harder and... earn less ! The rich have drug benefits and earn more. The poor bear the brunt of increases in large companies (gas, electricity...) The consumer goods increased the most. The various taxes fall on what is needed for everyday life. The power of the poorest decreases. The rich are increasing at a frightening speed. The middle classes are close to the poor. The poor are cared for when they can not do otherwise... The famous minimum wage is no longer guaranteed... And there is no guarantee at all. Unable to rent a modest apartment. Especially for those who are pure French origin and race... White !!! Ah... it is not beautiful "country of human rights". It has become a country for the rich and / or corrupt. Our National Nicolas... is a worthy friend of Berlusconi and Putin! Many Français regret for having voted for him! But "fucking shit"... everyone knew before he is elected. So what! It is true that in 2002, to give the Government a lesson with Lionel Jospin (Prime Minister) a staggering number Français voted for the extreme right ! And we had no choice but to vote for Chirac ! And today we have a kind of Czar to the nut whose best friends are millardiaires ! So... social protection and living standards of smaller... it's cat pee !!! So we are following with great concern the conduct of the election campaign in the USA !

Monday September 15, 2008, 5:57 pm
Noted with great concern for American and the rest of the world. Thanks Kathy and Charles for the forward.

Australia's economy is good at this time, but we are not immune to what is happening in America; so like Yvette says of her country, many of us are concerned with what's happening in America regarding your upcoming election.

Yes, the rich getter richer and the middle class and poor get poorer. It reflects a society based on corporate power and greed.

Monday September 15, 2008, 9:55 pm
Boycotts!

Noted, thank you Kathy.

Monday September 15, 2008, 10:41 pm
The RepubliCONs have learned: 1. Lies have NO Consequences for Them, 2. Lies are Better for Them, 3. Bu$h-League NeoCONs were right - you Can Create your Own Reality!

Eight years of policies that have shredded consumer protections, loosened oversight and regulation, and encouraged outsized bonuses to CEOs while ignoring middle-class Americans have brought us to the most serious financial crisis since the Great Depression... Mc$ame voted For those Policies - he would continue those policies! He Doesn't CARE about anyone but Mc$ame!

Monday September 15, 2008, 10:52 pm
Done, good luck.

Monday September 15, 2008, 11:06 pm
Our medium of exchange must be minted by the government and paid for by taxes. Our money must say payable to the bearer on demand in ....and it must be an actual good behind it not more IOUs.
We should have direct taxation not indirect income tax.
Our fuel supply should be local not foreign.
Our homes should not be taxed. People should own land free and clear!
Presidents should not be allowed to hold office and simultaneously have corporate trusts or interests because it creates a conflict of interest. Creation of fiat currency should be punished by prison sentences because it is treason.
Banks should not be permitted to charge high interest rates.

Monday September 15, 2008, 11:36 pm
At this rate the US citizenz will be going to the malls with sacks full of money to buy hadfull of items.
There is a MArket Mafia or Business Mafia that is making the people pay more for less.
With 1.11 Trillion dollars that the US Owes to China and almost equal amount to all other countries, every US citizen is owing US$ 6000 to China alone. the other debts are not yet to be calculated.
The Mighty US is soon becoming a bankrupt nation.
What happened in the 1920s and 1930s - a gun toting Mafia made life of common people miserable. Now it is the Business Mafia that is making every citizen cough uo huge sums for essential items of daily life.
It is high time the people of US woke up.

Tuesday September 16, 2008, 2:13 am
Thanks. Noted.

Tuesday September 16, 2008, 2:32 am
Raja i agree completely the whole world is run by the business mafia and you know what they will get away with it!

This story is great even though it is wrong just look at the first line:

First it was Bear Stearns, then came Freddie and Fannie and now they are spending a whole weekend working out how to spend your hard earned money to save Lehman Brothers.

The FED will not spend any of your money to save Lehman Brothers but you will pay for the resulting costs of the crash! The USA will see what Japan has seen 10-15 years of stagnation! No more world leader! China and India are the new world leaders much sooner than everybody had expected! Why do people from India put that much money in the USA and loose Billions and Billions? The give the USA money in dollars and the pay back is in dollars that are completely worthless! The dollar will need all the support of all the federal banks in the world to make it..But maybe the Dollar should not make it?
Maybe the AMERO is allready printed and can replace the weak dollar as a new and strong currency for the USA Mexico and Canada?

Tuesday September 16, 2008, 2:35 am
How can rich people be rich and become richer? Simple! By making the poor poorer!And the poor agree by voting for those who make them poorer or keep the status quo.

Tuesday September 16, 2008, 2:54 am
Isn't it always, folks? WE pay the taxes that the government so gleefully spreads around to big business. If those who are supposed to represent us spent HALF of this $$$$ on health care, we'd all be able to see doctors and get the care we need without worrying. If they spent HALF on Social Security replenishment, we'd never have a fiscal crisis in that area again. Yes, the economy IS the linchpin that drives it all...but sometimes people who F*CK UP need to be allowed to fall down. This regime clearly embraces social Darwinism...how about a little FISCAL Darwinism?

Tuesday September 16, 2008, 6:23 am
Everyone is invited to read:
http://www.volconvo.com/forums/blog89.html

Tuesday September 16, 2008, 8:28 am
Thank you Ariel and Kathy! Robert, I am going bald in the front from the hair pulling :o(

Tuesday September 16, 2008, 11:11 am
Noted........

Tuesday September 16, 2008, 11:56 am
The next decade is going to be a long one.

Tuesday September 16, 2008, 2:38 pm
Marion is SO right, it's gonna be damned-long.
Raja's comment reminded me of conditions in
Germany following the end of WW1. By 1923,
inflation in Germany was at something like
800 billion percent, and it literally did
require wheelbarrows full of (worthless) cash
to buy a loaf of bread.
Thanks, Ariel.
noted.

Tuesday September 16, 2008, 3:34 pm
Remember this one when the rich or well off start complaining about helping the poor and homeless. The government already helps the rich-maybe they should be helping the poor with more of those government programs the republicans complain about.
.

Tuesday September 16, 2008, 8:22 pm
Notice how you all talk about that thing called "money"?
You are all bound by it, you all are stuck with it, and you are all trapped because of it.

Even if you were allowed to argue and take action against it, that does not change the fact its still there and you all dont realize as long as you live by it you will never be free.

As long as you live by it, you are exploitable, you have a vunerability, this gives the ones in charge the power to rule you all.

It also gives the rich a slice of this power, such as the Builderberg group. They have a nice big chunk to throw around with. But they aint the top SCUM, no they only get part of this financial power. The bigger SCUM regulate the money themselves.

You can argue, complain, protest, strike but you still dont get the fact what you think you know when you dont.

When one should get a pay rise it sounds good to you, the salery is bigger, but then so is the tax and then the shoppig bills also go up because then the prices rise.

Money is a system, a delicate one to regulate, if a part of it is altered the rest cannot just be ignored or someone will notice this.

Counterfeiters, bank robbers can be a pain to the SCUM but that can be only understood in part by the organizations below the top brass of SCUM.

Also petitions do not work and no this is not one of those troll responses to annoy others Ive seen enough petitioning to know none of it works and all of those petitions go straight to the bin.

Look up someone called Bette Overell she campaigned against vivisection got thousands of signatures sent those signatures off and not one of them was seen again. They got rid of those petitions.

So despite me putting this on my profile Ill say it again: DO NOT SEND ME PETITIONS!!

Tuesday September 16, 2008, 8:49 pm
Shroedinger as scarey as it is you are 100% correct. Those indeed are the facts. But please see the hope in the truth that so many sheep are waking the hell up. As you well know, it is a process to remove the viel of perversions bestowed on us from many, many generations passed down. If anyone would like to go more into depth about Shroedinger's statements visit georgegordon.org and listen to hundreds of his radio and talk show archives. http://georgegordon.org/radio.html may also be a direct connect. But over all please don't knock the concept "if there is any life left in us at all there is still our common fight for what is right."

Wednesday September 17, 2008, 6:43 am
USa is ppart of the free capitalistic world where a poor person can become rich this is nothing new it is also a country where people pay taxes,probably less than other countries, it is the most powerful nation in the world still today,as with every country it has the positives and negatives.probably today one of you wins the lotto, gets a job paying 7 figures, in the USA you go from state to state freely withot thinking that the government will stop you and put you in jail unless you have committed a crime it is a wonderful nation How much does it cost? Ask people from Haiti, Cuba,the dominican republic,China,and so many others that die trying to make it, God bless America where you and I can talk about it without being pursued,again How much is the price?

Wednesday September 17, 2008, 7:00 am
PERSONAL INCOME TAX RATES,AUSTRIA-50%,FRANCE-40%,DENMARK-48% GERMANY-15-45%,ITALY 45%,PORTUGAL-42%,SPAIN45%,U.K.-22-40% ABOVE 36000.AMERICANS, LEARN WHAT IS HAPPENING ABROAD AND EVALUATE WHAT YOU HAVE BEFORE YOU KEEP ON BLAMING THE GOVERNMENT

Wednesday September 17, 2008, 7:33 am
Dear Hector...The USA you are referring to was many years ago. Yes, our quality of life is better than many countries, but that is rapidly slipping away under the current regime of Bush. The folks you read here who seem to be complaining, are people who love America and enjoyed a better way of life in years past. Countries that are starving should not be compared to the USA. We aren't even close to that. However, our entire middle class is rapidly approaching the poor class. Please, do your homework on our economy and...God Bless Puerto Rico!

By the way, this conversation has been recorded...

Wednesday September 17, 2008, 8:29 am
there is plenty of food in haiti,cuba and the dominican republic but there is a lack of freedom god bless puerto rico there is food here also

Wednesday September 17, 2008, 9:38 am
Come join us then, Hector. Our elections are about to be suspended...indefinitely...due to economic emergency.

Wednesday September 17, 2008, 10:58 am
we are part of the USA since 1898 I live here and also in Florida whose first inhabitants apart from the native americans that lived there were from puerto rico and spain brought to Florida by Juan Ponce De leon Puerto ricos first governor ,the first governors in the island were all appointed by the us congress after 1898 prior by the king of spain I studied and lived both in continental Usa and in Puerto rico i constantly as an american citizen visit the states our tax rates in Puerto rico are higher than the tax rates in the mainland,very similar to europe's

Wednesday September 17, 2008, 11:17 am
Don't you like Puerto Rico?

Wednesday September 17, 2008, 1:04 pm
In their haste to do anything Wall Street wants, Congress and the lame-duck President are sowing far more profound troubles for the country.

Washington can act with breathtaking urgency when the right people want something done. In this case, the people are Wall Street's titans, who are scared witless at the prospect of their historic implosion. Congress quickly agreed to enact a gargantuan bailout, with more to come, to calm the anxieties and halt the deflation of Wall Street giants. Put aside partisan bickering, no time for hearings, no need to think through the deeper implications. We haven't seen "bipartisan cooperation" like this since Washington decided to invade Iraq.

In their haste to do anything the financial guys seem to want, Congress and the lame-duck President are, I fear, sowing far more profound troubles for the country. First, while throwing our money at Wall Street, government is neglecting the grave risk of a deeper catastrophe for the real economy of producers and consumers. Second, Washington's selective generosity for influential financial losers is deforming democracy and opening the path to an awesomely powerful corporate state. Third, the rescue has not succeeded, not yet. Banking faces huge losses ahead, and informed insiders assume a far larger federal bailout will be needed -- after the election. No one wants to upset voters by talking about it now. The next President, once in office, can break the bad news. It's not only about the money -- with debate silenced, a dangerous line has been crossed. Hundreds of billions in open-ended relief has been delivered to the largest and most powerful mega-banks and investment firms, while government offers only weak gestures of sympathy for struggling producers, workers and consumers.

The bailouts are rewarding the very people and institutions whose reckless behavior caused this financial mess. Yet government demands nothing from them in return -- like new rules for prudent behavior and explicit obligations to serve the national interest. Washington ought to compel the financial players to rein in their appetite for profit in order to help save the country from a far worse fate: a depressed economy that cannot regain its normal energies. Instead, the Federal Reserve, the Treasury, the Democratic Congress and of course the Republicans meekly defer to the wise men of high finance, who no longer seem so all-knowing.

Let's review the bidding to date. After panic swept through the global financial community this spring, the Federal Reserve and Treasury rushed in to arrange a sweetheart rescue for Bear Stearns, expending $29 billion to take over the brokerage's ruined assets so JPMorgan Chase, the prestigious banking conglomerate, would agree to buy what was left. At the same time, the Fed and Treasury provided a series of emergency loans and liquidity for endangered investment firms and major banks. Investors were not persuaded. Their panic was not "mental," as former McCain adviser Phil Gramm recently complained. The collapse of the housing bubble had revealed the deep rot and duplicity within the financial system. When investors tried to sell off huge portfolios of spoiled financial assets like mortgage bonds, nobody would buy them. In fact, no one can yet say how much these once esteemed "safe" investments are really worth.

The big banks and investment houses are also stuck with lots of bad paper, and some have dumped it on their unwitting customers. The largest banks and brokerages have already lost enormously, but lending portfolios must shrink a lot more -- at least $1 trillion, some estimate. So wary shareholders are naturally dumping financial-sector stocks.

Most recently, the investors' fears were turned on Fannie Mae and Freddie Mac, the huge quasi-private corporations that package and circulate trillions in debt securities with implicit federal backing. Treasury Secretary Henry Paulson (formerly of Goldman Sachs) boldly proposed a $300 billion commitment to buy up Fannie Mae stock and save the plunging share price -- that is, save the shareholders from their mistakes. So much for market discipline. For everyone else, Washington recommends a cold shower.

Talk about warped priorities! The government puts up $29 billion as a "sweetener" for JP Morgan but can only come up with $4 billion for Cleveland, Detroit and other urban ruins. Even the mortgage-relief bill is a tepid gesture. It basically asks, but does not compel, the bankers to act kindlier toward millions of defaulting families.

A generation of conservative propaganda, arguing that markets make wiser decisions than government, has been destroyed by these events. The interventions amount to socialism, American style, in which the government decides which private enterprises are "too big to fail." Trouble is, it was the government itself that created most of these mastodons -- including the all-purpose banking conglomerates. The mega-banks arose in the 1990s, when a Democratic President and Republican Congress repealed the New Deal-era Glass-Steagall Act, which prevented commercial banks from blending their business with investment banking. That combination was the source of incestuous self-dealing and fraudulent stock valuations that led directly to the Crash of 1929 and the Great Depression that followed.

Even before Congress and Bill Clinton repealed the law, the Federal Reserve had aggressively cleared the way by unilaterally authorizing Citigroup to cross the line. Wall Street proceeded, with accounting tricks described as "modernization," to re-create the same scandals from the 1920s in more sophisticated fashion. The financial crisis began when these gimmicky innovations blew up.

Democrats who imagine they can reap partisan advantage from this crisis don't know the history. The blame is bipartisan; so also is the disgrace. In 1980, before Ronald Reagan even came to town, Democrats deregulated the financial system by repealing federal interest-rate ceilings and other regulatory restraints -- a step that doomed the savings and loan industry and eliminated a major competitor for the bankers. Democrats have collaborated with Republicans on behalf of their financial patrons every step of the way.

The same legislation also repealed the federal law prohibiting usury -- the predatory practices that ruin debtors of modest means by lending on terms that ensure borrowers will fail. Usurious lending is now commonplace in America, from credit cards and "payday loans" to the notorious subprime mortgages. The prohibition on usury really involves an ancient moral principle, one common to Judaism, Christianity and Islam: people of great wealth must not be allowed to use it to ruin others who lack the same advantages. A decent society cannot endure it.

The fast-acting politicians may hope to cover over their past mistakes before the public figures out what's happening (that is, who is screwing whom). But the Federal Reserve has a similar reason to move aggressively: the Fed was a central architect and agitator in creating the circumstances that led to the collapse in Wall Street's financial worth. The central bank tipped its monetary policy hard in one direction -- favoring capital over labor, creditors over debtors, finance over the real economy -- and held it there for roughly twenty-five years. On one side, it targeted wages and restrained economic growth to make sure workers could not bargain for higher compensation in slack labor markets. On the other side, it stripped away or refused to enforce prudential regulations that restrained the excesses of banking and finance. In The Nation a few years back, I referred to Alan Greenspan as the "one-eyed chairman" [September 19, 2005] who could see inflation in the real economy -- even when it didn't exist -- but was blind to the roaring inflation in the financial system.

The Fed's lopsided focus on behalf of the monied interests, combined with its refusal to apply regulatory laws with due diligence, eventually destabilized the overall economy. Trying to correct for previous errors, the Fed, with its overzealous free-market ideology, swung monetary policy back and forth to extremes, first tightening credit without good reason, then rapidly cutting interest rates to nearly zero. This erratic behavior encouraged a series of financial bubbles in interest-sensitive assets -- first the stock market, during the late 1990s tech-stock boom, then housing -- but the Fed declined to do anything or even admit the bubbles existed. The nation is now stuck with the consequences of its blindness.

The Federal Reserve's dereliction of duty is central to the financial failures. It betrayed the purpose for which the central bank was first created, in 1913, abandoning the sense of balance the Fed had long pursued and that Congress requires. Most politicians, not to mention the press, are too intimidated to question the Fed's daunting power, but their ignorance is about to compound the problem. Instead of demanding answers, the political system is about to expand the Fed's governing powers -- despite its failure to protect us. Treasury Secretary Paulson proposed and Democratic leaders have agreed to make the insulated Fed the "supercop" that oversees not only commercial banks and banking conglomerates but also the largest investment houses or anyone else big enough to destabilize the system. This "reform" would definitely reassure club members who are already too cozy with the central bankers. Everyone else would be left deeper in the dark.

The political system, once again, is rewarding failure. The Fed is an unreliable watchdog, ideologically biased and compromised by its conflicting obligations. Is it supposed to discipline the big money players or keep them afloat? Putting the secretive central bank in charge, with its unlimited powers to prop up troubled firms, would further eviscerate democracy, not to mention economic justice.

If Congress enacts this concept early next year, the privileged group of protected financial interests is sure to grow larger, because other nonfinancial firms could devise ways to reconfigure themselves so they too would qualify for club membership. A very large manufacturing conglomerate -- General Electric, for instance -- might absorb elements of banking in order to be covered by the Fed's umbrella (GE Capital is already among the largest pools of investment capital). Private-equity firms, with their buccaneer style of corporate management, are already trying to buy into banking, with encouragement from the Fed (the Service Employees International Union has mounted a campaign to stop them). A new President could stop the whole deal, of course, but John McCain has surrounded himself with influential advisers who were co-architects of this financial disaster. For that matter, so has Barack Obama.

The nation, meanwhile, is flirting with historic catastrophe. Nobody yet knows how bad it is, but the peril is vastly larger than previous episodes, like the savings and loan bailout of the late 1980s. The dangers are compounded by the fact that the United States is now utterly dependent on foreign creditors -- Japan and China lead the list -- who have been propping us up with their lending. Thanks to growing trade deficits and debt, foreign portfolio holdings of US long-term debt securities have more than doubled since 1994, from 7.9 percent to 18.8 percent as of June 2007. If these countries get fed up with their losses and pull the plug, the US economy will be a long, long time coming back.

The gravest danger is that the national economy will weaken further and spiral downward into a negative cycle that feeds on itself: as conditions darken, people hunker down and wait for the storm to pass -- consumers stop buying, banks stop lending, producing companies cut their workforces. That feeds more defaulted loan losses back into the banking system's balance sheets. This vicious cycle is essentially what led to the Great Depression after the stock market crash of 1929. I offer not a prediction but a warning. The comparison may sound farfetched now, but US policy-makers and politicians are putting us at risk of historic deflationary forces that, once they take hold, are very difficult to reverse.

A more aggressive response from Washington would address the real economy's troubles as seriously as it does Wall Street's. Financial firms have lost capital on a huge scale -- more of them will fail or be bought by foreign investors. But Wall Street cannot get well this time if the economy remains stuck in the ditch. Washington needs to revive the "animal spirits" of the nation at large. The $152 billion stimulus package enacted so far is piddling and ought to be three or four times larger. Instead of sending the money to Iraq, we should be spending it here on getting people back to work, building and repairing our tattered infrastructure, investing in worthwhile projects that can help stimulate the economy in rough weather.

An agenda of deeper reforms can boost public confidence even as it undoes a lot of the damage caused by the financiers and bankers. Some suggestions:


Nationalize Fannie Mae and other government-supported enterprises instead of coddling them. Restore them to their original status as nonprofit federal agencies that provide a valuable service to housing and other markets. Make the investors eat their losses. Buy the shares at 2 cents on the dollar. Without a federal guarantee, these firms are doomed anyway.


Resolve the democratic contradiction of "too big to fail" bailouts by dismantling the firms that are too big to fail -- especially the newly created banking conglomerates that have done so much harm. Restore the boundaries between commercial banking and investment banking. In any case, market pressures are likely to shrink those behemoths as banks sell off their parts to survive. For the remaining big boys, revive antitrust enforcement. Set stern new conditions for emergency lending from government -- supervised receivership, stricter lending rules to prevent recidivism and severe penalties for greed-crazed shareholders and executives.


Assign the Federal Reserve's regulatory role to a new public agency that is visible and politically accountable. Make the Fed a subsidiary agency of the Treasury Department and reform its decision-making on money and credit to restore an equitable balance between competing goals and interests -- seeking full employment but also stable money and moderate inflation.


Begin the hard task of re-creating a regulated financial system Americans can trust, one that recognizes its obligations to the broad national interest. This requires regulatory reforms to cover moneypots like private-equity funds and to clear away the blatant conflicts of interest and double-dealing on Wall Street, and also to give responsible shareholders, workers and other interests a greater voice in corporate management and greater protection against rip-offs of personal savings.


Re-enact the federal law against usury. The details are difficult and can follow later, but this would be a meaningful first step toward restoring moral obligations in the financial sector. People would understand it, and so would a lot of the money guys. Maybe in the deepening crisis, Washington will begin to grasp that money is also a moral issue.

Lets not forget that the US and the World paid little to no taxes just a few decades ago, and our economies were thriving, "one" parent worked and the other raised the children, and many more were working. What happened? Corporate Rule and Capitolism!! We have sold our soul to the company store!

Thanks for the article Ariel. Good one!!

Wednesday September 17, 2008, 1:42 pm
Back in 1996 sub-prime lenders would lend at very high interest rates with a very moderate loan to value recently mortgage institutions would lend sub-prime at 3% ARMs with a 3 year balloon without income verification and asset verification these loans would be sold at Wall street through a securitization process that sometimes yielded over 8 points in profit apart from the origination nd discount points charged. The problem lied in the unscrupulous loan officers and unscrupulous mortgagre institutions that closed these loans leaving borrowers with a very high exposure since some of these arm products had nop interest caps and most became double digits after the 3 years,i feel that there are more loans coming in for foreclosure for which probably other institutions would go under very soon the problem here lies in the regulators that did not do their job and the fact that subprime lending became too easy for borrowers that did not meet Fanny or freddie macs guidelines, this led to a very high housing demand since now we had peoplethat didn;t qualify before qualifying for a mortgage,recently Fha trying to solve part of the problem changed their guidelines as to include more expensive mortgages up to 720000.$,I feel that what the government shoul have done was to provide a m,echanism to people yhjat were in arrears in their mortgage payments probably a 30 year second mortgage with deferred payments an interrest subsidy restructuring the first mortgage interest and capping it or some other way ,permitting these foreclosures whAT IT DID was to let the housing market have a fall pof over 1 trillion dollars so far 900 billion have been saved by the feds including yesterdays AIg,

Wednesday September 17, 2008, 2:20 pm
The speculative nature of the financial industry is a threat to national economic security. It requires a serious "exit strategy".

As the Dow hemorrhages, Wall Street firms are betting on which one will bite the dust next, and Federal Reserve Chairman Ben Bernanke probably wishes he could leave as the next administration sets up shop, no one is proposing the long-term solution to the banking crisis: regulating the industry that bamboozled us.

The Fed was right to turn Lehman Brothers away from its window during those final moments of doom on Sunday night. As such, the resulting $613 billion Chapter 11 filing, the largest bankruptcy in U.S. history (WorldCom dropped to second with a mere $104 billion in assets) was secured.

It was wrong to back the $30 billion bailout of Bear Stearns in March, which facilitated JPM Chase's acquisition of Bear. It should not be the Fed's responsibility, or the government's, to back investment bank speculation. Instead, regulators should have been more vigilant as speculation outpaced available capital, and transparent quantification of risk went out the window.

However, it should be the government's job to stabilize the financial system; the question is how. Unfortunately, neither the Federal Reserve, nor the government, nor the presidential candidates have the slightest clue. Neither a blame game nor desperate piecemeal fixes will work. This is not about Republican or Democratic policies, but systemic bipartisan deregulation. Only a quick bout of sweeping and decisive regulation can fix what's broken.

Lets look at history:

In 1932, three years after the 1929 stock market crash, the banking system last stood at a brink of implosion. Franklin Delano Roosevelt zoomed past Herbert Hoover into the White House. The country was struggling through a Great Depression unleashed by the forces of unregulated economic greed. FDR stood up to the unrestrained power of Wall Street and contained it. The resultant New Deal included a stoplight at the heavy intersection of financial capital and unregulated greed, called the Glass-Steagall Act of 1933.

Decisively, the Glass-Steagall Act forced institutions within the banking community to pick a side. If you want to deal with the population at large, take their deposits, give them a safe place for their savings and make reasonable loans for which you are as responsible as the borrowers -- terrific. As a commercial bank, you will have the newly established Federal Deposit Insurance Corporation (FDIC) backing your depositors. We, the federal government, will regulate you.

If you want to raise capital through speculative investors at home or overseas -- fine. But as an investment bank, you don't get our backing and you don't get to mix it up with citizens' lives or use their capital to fund your trading activities. "Take a risk at your own cost"

That simple premise, the pristine logic of the Glass-Steagall Act, not only kept consumer and speculative capital from intertwining within the same institution; it simplified the ability to understand the activities of all financial organizations. Transparency was not perfect, but it was more easily accomplished.

Lehman Brothers got a taste of the intent of Glass-Steagall. Its demise is ugly, not just because of its 156-year history, the 25,000 employees who are suddenly without jobs, or the long list of institutions to which Lehman owed money that will be slugging it out in bankruptcy court.

It is ugly because it underscores the supreme gutlessness of the executive and congressional branches of government. Bernanke is desperately trying to figure out how to save the banking industry from itself. Treasury Secretary Hank Paulson can't wait until the election saves him from himself. And the presidential candidates are giving Wall Street, and each other, a barrage of verbal shellacking.

None of this changes the playing field.

The catalyst for this current crisis may be the housing market -- not because individual borrowers slightly overleveraged, but because the entire banking industry massively overleveraged. The larger culprit is the killing of Glass-Steagall, which paved the way for this recklessness.

Yet, rather than considering the massive risks of merging commercial and speculative banking interests, given the overwhelming evidence, federal officials actually pushed for Bank of America's $50 billion all-stock takeover of Merrill Lynch, rather than questioned it. HUH?

I worked on Wall Street, at Lehman and Bear and Goldman Sachs. Take my word for it: You cannot merge risk management systems more quickly than this economic crisis can continue to unfold. It is technologically impossible.

This knee-jerk move follows the same dangerous green-lighting of mega-mergers that began when Citigroup took over Salomon Brothers after Congress killed Glass-Steagall in November 1999, and continued with Chase taking over JPM and recently Bear Stearns.

The Fed wants to avoid another huge failure in Merrill Lynch by pushing it under the rug of Bank of America. That is bad policy. Bank of America cannot possibly have a clue about the extent of Merrill's potential losses. This commercial bank taking over a speculative giant is much more dangerous than Lehman Brothers tanking. The Fed was within all of its rights and sanity to say no to Lehman's plea for a bailout. But it won't be able to do the same thing with Bank of America, which, unlike Lehman or Bear, is responsible for the accounts of millions of customers -- real people with real money on the line.

The speculative nature of the industry, in which commercial and investment banks can borrow beyond their abilities to repay, is a threat to national economic security. It requires a serious exit strategy.

There is no easy answer, but there is only one solution -- and it lies polar opposite to the Bank of America-Merrill Lynch merger logic. The only real way to stabilize the financial industry is to take it apart, quantify and separate its risks, and begin again. We can do this. FDR did it. The market is larger now, and more global. That is not an excuse for inaction; it belies a screaming need for useful action and meaningful regulation. Period.

Wednesday September 17, 2008, 3:20 pm

Obama Laughs at McCain's Plan to "Take on the Old Boys Network" "...now he (McCain) tells us that he's the one who's gonna' to take on the old boys network. The old boys network? In the McCain campaign that's
called a staff meeting. Come, on!"

Wednesday September 17, 2008, 3:41 pm
Blue - you just have to a political satirist for a living. You are too clever at the satire, wit and intelligence of the political humor. You will be famous someday, I know it.

As for our paying for the Fannie, the Lehman, the Mac the AIG and the Wall Street crooners, I say let the bigwigs pay for it. Hold them accountable. We are just the little guys/gals at the end of the totem pole. Ask Donald Trump or Paris Hilton for a loan.

Wednesday September 17, 2008, 3:42 pm
Ron...excellent articles and these writers are spot on with their solutions.

You may have forgotten to cite the authors of these articles, so here they are:

Economic Free Fall?
http://www.informationclearinghouse.info/article20406.htm

As Wall Street Collapses, Will Washington Get a Clue?
http://www.informationclearinghouse.info/article20406.htm

By the way, citing the article takes up less space.

Wednesday September 17, 2008, 3:56 pm
Blue...So true. The fox guarding the hen house. I feel safer already.

Shroedinger has an outstanding solution: opt out of the system. If we allow money to rule us, we are constantly living for the power mongers in control. If we are dependent on the controllers, we throw our lives to them and we see what they do to us.

There's another, freer way of life for those who are not afraid to jump in the water...

Wednesday September 17, 2008, 4:01 pm
Economic Free Fall? I very much afraid there will be nothing that's 'free' this Fall!