Saturday, July 19, 2008

Essential reading

Why no outrage?

America's 21st-century financial victims make no protest against the Federal Reserve's policy of showering dollars on the people who would seem to need them least. It wasn't the nation's small savers who brought down Bear Stearns, or tried to fob off subprime mortgages as "triple-A." Yet it's the savers who took a pay cut. To facilitate the rescue of that system, the Fed has sacrificed the quality of its own balance sheet. In June 2007, Treasury securities constituted 92% of the Fed's earning assets. Nowadays, they amount to just 54%. In their place are loans to the nation's banks and brokerage firms, the very institutions whose share prices have been in a tailspin. A currency draws its strength from the balance sheet of the central bank that issues it.

Posted by little professor @ 10:43 PM (1022 views)
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6 thoughts on “Essential reading

  • Some good quotes in this article:-

    ‘there aren’t enough thrifty voters in the 50 states to constitute a respectable quorum’

    ‘the lack of popular anger at the well-paid people who seem not to be very good at their jobs’

    ‘”Leverage,” as the laying-on of debt is known in the trade, is the Hamburger Helper of finance’

    It does seem a great pity that the celebrity media bombarded mainstream sector of the populace does not read quality newspapers, now that unions are neutered and people no longer communicate with each other at a local social level what hope does the average member of UK or US society have of raising hell with our deaf and corrupt democratic representatives.

    GREAT ARTICLE

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  • I think “raising hell” will come. The celebrity obsessed populace are slow and lazy and used to a good time but just you watch what happens when the standard of living they’re “entitled” to comes to a juddering halt. Things will turn nasty very quickly but sadly it will happen when it’s already too late.

    Weren’t there ‘scenes’ outside some branches of Indymac last week?

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  • gardeniadotnet says:

    Nowadays, nothing short of hunger will bring people to the streets in any significant numbers, both in the States and the UK.

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  • gardeniadotnet says:

    BTW: Great article LP – duly printed and stored for posterity in my Blue Peter>Zeitgeist time capsule.

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  • last_days_of_disco says:

    Nothing has really happened yet. Even the folks who have lost their jobs are still able to live on their final pay cheques. Still another month of three to go.

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  • This article skirts around the question it sets itself: Why no outrage? It’s as if the subject is defined by the negative space of the piece. But it’s an important question, isn’t it? What about the collusion of the media and the cynicism of politicians? How does the mass psychology of denial work after years of decadence? As the populace sleep-walks towards catastrophe and Ron Paul sounds ever more shrill, what will trigger wide-spread recognition of the problem? Disco spoke more to this in a few sentences than the WSJ did. To what extent is this a problem in the US mirrored in the UK, which also seems disturbingly acquiescent? The article dances around an important question but comes nowhere close to addressing it.

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