Monday, September 22, 2008

You can print and hand this out at the Train Station to counter propaganda in the Metro Magazine.

Grassroots Action: “Crisis on Wall Street” Handout

The Campaign 4 Liberty staff has developed a simple one page handout that can be distributed door-to-door or easily handed out to anyone you come across. This handout sums up the current situation, gives a four-step solution to getting our country out of this mess, and includes contact information for people to reach their representatives and senators. It’s designed to get as much information in the hands of as many people as possible as fast as possible. Get the PDF here: Crisis on Wall Street

Posted by planning4acrash @ 09:40 PM (1086 views)
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8 thoughts on “You can print and hand this out at the Train Station to counter propaganda in the Metro Magazine.

  • planning4acrash says:

    As Tom noted earlier, C4L is taking several steps this week to help you combat the economic power grab being attempted by the Treasury and the Fed. Be sure to listen to Scott Horton’s Antiwar radio show from noon – 1 ET all this week as he interviews economic experts who will break down this crisis and give practical solutions. And stay tuned to our website for the latest updates on what you can do.

    (I routinely listen to Antiwar Radio – Can be a bit pro Democrat sometimes, but a great load of info about the war from reporters shunned from mainstream media)

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  • planning4acrash says:

    We should create our own for the UK, but, if you are in places like Canary Wharf, lots of Americans there, so, you may want to hand out a few.

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  • I’d agree with Ron Paul’s steps 1, 2 and 3, but ‘reforming the money system and returning to gold standard’ is just rubbish. If people wanted to use gold then they would, it being a free world (assuming we scrapped VAT on gold, that’s spiteful).

    To fix banking system;

    1. Just have proper capital adequacy ratios and proper supervision. I am no fundamentalist who says 100% own capital, no fractional reserve banking, as this would mean that you can’t deposit your money and earn interest. But OTOH the banks have been pushing things far too far. Heck knows what the right minimum capital ratio is, maybe 15% or so? 20%?

    2. Encourage small investors to own shares by reducing tax breaks for pensions funds (institutions and senior management are in cahoots and nod each others’ ludicrous bonuses through) and instead get rid of Stamp Duty, higher rate tax on dividends and capital gains tax. They’re the best watchdogs what is, those small investors.

    3. Obviously, take other steps to reduce property price bubble via liberalising planning laws and/or having Land Value Tax.

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  • last_days_of_disco says:

    @mark wadsworth

    Everything you say above makes practical sense.

    The solutions are all really obvious to anyone who hasn’t been on the merry go round (i.e. drunk the koolaid) and has an engineering or similar hard skills education (i.e. not arts or social “science” or politics or law). People that deal with the immutable physical laws in a practical way who can’t manipulate “reality” with words. Its all really obvious. Simple honesty and integrity and no free ride. If you won’t work (and I mean practically and gainfully making real things) you won’t eat.

    As someone else said so brilliantly on this blog our parents (the baby boomers) all ran away to join the circus and now we have to pay for their folly. The financial shenanigans have to stop. They have been voting themselves the good life forever and now its going bang.

    No you can’t be a rock star, grow up and get a real job.

    I mean, this is not so hard, really. The elite bankers are just trying to BS us because they have been mortally stupid but its been driven by the policies of
    the morally bankrupt baby boomer generation. A slight digression here, please forgive me: “To my mind, Palin is a good example of the new hard line generation coming through. I like her style basically because she kicks these selfish pr*cks in the @ss. McCain better watch out she doesn’t kick his.”

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  • It’s a bit more complex than bank’s capital ratios. First there are hedge funds that operate largely outside the regulated world and create leverage by borrowing or by using derivatives. It’s difficult to estimate their leverage since they can be very flexible regarding the assets in which they invest. Then banks can transfer leverage to the world of securitised products, which can increase overall leverage. Some may look relatively unleveraged, but then investors in them may use debt for the purpose and thereby increase leverage. Also there are investment companies like Fannie and Freddie which buy loans, issue debt, use the loans as collateral for debt and are supported by a fairly low level of equity. If their bonds are bought by institutions like Pension Funds and insurance companies that are funded with debt then overall balance sheet leverage increases significantly.

    Then there’s the question of capital ratios relative to risk. When yield spreads came down it was difficult to offer attractive yields on the senior tranches of CDOs. Sponsors had to arrange AAA ratings to bring down capital ratios considerably – under Basel II assets with AAA ratings could apply a 7% risk rating to be multiplied by the 8% capital requirement = 0.56% capital cover on balance sheets. This served the purpose of greatly increased yields.

    The other complication is that the SIVs and conduits that bought these senior tranches funded themselves with short-dated instruments. This meant that they were not locked in for any great period and when there was any threat they could force fire sales, which led both to the collapse of asset values and the devastation of many junior/equity investors (and greatly exacerbated the crisis).

    This pervasive use of short-dated funding (created by transforming long-term assets like municipal bonds into short-term debt, or commercial paper backed up by insurers and banks – either way it became effectively new cash for investment purposes) is important because it lives outside the regulated world of banks, it is big – it’s been estimated at 40% of all short-dated funding – and can cause great volatility (e.g. the fire sales of assets jusr mentioned).

    Bottom line – you have to know the beast if you’re going to tackle it.

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  • planning4acrash says:

    Mark, Gold is VAT free!!!

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  • mark wadsworth says:

    LDOD, thanks.

    P4AC, you’re right, they made coins VAT exempt again in 2000. http://www.taxfreegold.co.uk/capitalgainstax.html

    Icarus, agreed, there are ways round rules on minimum capital ratios, but none of it is rocket science. All those steps you describe are just assets and risks being PASSED on, this does not multiply them, it just transfers them. If e.g. Northern Rock had completely transferred assets and risk to SIV’s on a no-recourse basis, this wouldn’t be so bad, provided the investors in the SIV know what they are doing*, the point was that NR guaranteed the risks of the SIV.

    * Never forget – a bank is just a middleman. If I decide (as a private individual) to lend somebody money to buy a house (at my own risk) then there is no harm in that. Similarly, there is no harm in it if I decide to acquire mortgages off Northern Rock, provided I have no recourse to NR for bad debts, it comes to the same thing. In either case, I am only risking my own money, “the buck stops with me”, so to speak.

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  • mark w – this is now yesterday’s post so there’s no point in saying much, but if it’s just a question of assets and risks being passed on we need to understand how such excessive leverage was generated so that it can be reduced in future. Addressing the issues I raised does require a lot of work by people who know what they’re doing. Then there’s the problem that the government doesn’t know a lot so they need ‘insiders’ to help them and those insiders will either bat for the industry or will no longer have an inside track on what’s happening.

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