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US Financial Crisis: The Constitutional Moment Arrives

by NBBooks Sat Sep 20th, 2008 at 03:11:17 PM EST

Crossposted on DailyKos at http://www.dailykos.com/story/2008/9/20/143821/377

In an extraordinarily important article today The Constitutional Moment Arrives, Stirling Newberry observes that

The key question is this: the American tax payers just bought the banking system. We are going to pay, with interest, upwards of three trillion dollars for it. A relative bargain actually. The question is what we are going to do with it now that we own it.


To fully understand this moment and its historic proportions, Stirling explains, it is important to understand that this is not really a financial crisis or economic crisis, though those are the most identifiable manifestations of the crisis. It is first and foremost a political crisis, a fundamental crisis of the American constitutional order. To understand this you will probably have to read a number of Stirling's articles, but you will get a little sense of it in the exceprt below from The Constitutional Moment Arrives:

The problem is political. Having a sensible fiscal regime half the time, and the other half a criminal plundering of the treasury under corrupt cronyism, is not sustainable. The political problem is a vicious circle. With each failure to hold those in power accountable, they grow wealthier, and thus harder to ignore in the body politic. The malefactors of great wealth are not only too big to fail, they are too rich to prosecute. And with each failure to prosecute, they grow richer. Name one high official of this administration that will see the inside of a prison cell. Are the CEOs of the failed banks going to spend the rest of their days lighting cheap gas stoves with matches begged from the corner store? I think not.
While a better economic theory is needed, and would point the obvious way out of this crisis, no economic theory will suffice if the underlying political infirmity is not addressed.

What then is the source of this crisis? It is relatively simple. The United States has an economy which uses the development of land as the basis for money. At the time this system was created, America had unexploited oil reserves, unexploited land, and untouched reserves of labor and capital. The trick was to convert raw oil and land, into demand that would turn the factories. This, in turn, meant creating an incentive for those who ran the factories, and the ability to direct the national effort.

In the 1970's we reached the limits of domestic oil production. The liberal movement was unable to create a different direction, and America entered a neo-conservative era, whose mandate was to keep the land casino churning, regardless of how. This led to the creation of the paper for oil economy. The trick being to constantly create new ways of inflating paper, to buy oil.

This provides the substantial outlines of why I assert that the system itself is the problem. The real purpose of the present bailout, Stirling points out, is not really saving the financial system, per se, but actually preventing control of the financial system being bought from U.S. elites by the foreign holders of trillions of U.S. dollars. If you read only one thing this weekend, The Constitutional Moment Arrives should be it.

Regarding the sudden appearance and adoption of the Resolution Trust Corp. idea, Stirling dismisses it out of hand, but following some links lead to a more substantial discrediting of the idea This Federal Bailout Proposal is a Disaster:

Why should we have to pay a trillion dollars of our own money to save the asses of bankers who already made a killing from these loans? Now, they get to unload all of their "toxic assets," as Paulson is calling it, on us. Who in their right mind would support that?
Wall Street is ecstatic. The market is through the roof right now because they can't believe they got such a good deal. Understand this is not an isolated bailout here and there. The Treasury Secretary just said he is going to take ALL of their bad loans off their hands. Why wouldn't they be elated?
The Bush administration and the Republicans (especially Phil Gramm) pushed for deregulation that allowed for, and almost encouraged, these mistakes. Now, the guys who told us they didn't believe in big government are going to send in big government to pick up the tab. Privatize the profits, socialize the debts. We have been robbed!

In another excellent article he wrote the day before, A National Commonwealth, Stirling pointed out that my idea of just letting Wall Street burn was not a solution, and advocated instead that we just keep going and nationalize the entire financial system. A shocking idea at first, but then you realize the shock has been inculcated by decades of dominance by the radical "free market" economics of Milton Friedman, Margaret Thatcher, Ronald Reagan, and so on. We just need to drop the fiction that the nationalization of Freddie Mac, Fannie Mae, AIG, and soon many other institutions, is a temporary "bail out." By nationalizing the financial system, we directly attack the problem of how to get the financial system to actually invest in what is required to achieve national goals, such as transforming the economy off its dependence on fossil fuels.

As Stirling wrote at the end of A National Commonwealth:

The Liberal Democracy is dead; its fundamental agreements are broken. We are now facing a crisis in which institutions are corrupted and the implied bargain not go beyond certain bounds is being violated by the very people who opposed it, requiring a yet broader mandate of government. What can and must follow the Liberal Democracy is a National Commonwealth, which by removing old intermediaries directly bonds the citizenry with the government, because the citizenry are directly responsible for the debts that that government has taken on. If pride of ownership is to mean anything, then it is applicable here: Americans must see themselves, not as adversaries of their government, but as owners of it.

Display:
As published today in the NYT

LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY

TO PURCHASE MORTGAGE-RELATED ASSETS

Section 1. Short Title.

This Act may be cited as ________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.--The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets.--The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets.--The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary's authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.--The term "mortgage-related assets" means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.--The term "Secretary" means the Secretary of the Treasury.

(3) United States.--The term "United States" means the States, territories, and possessions of the United States and the District of Columbia.

H/T Mish

Diversity is the key to economic and political evolution.

by Cat on Sat Sep 20th, 2008 at 05:55:46 PM EST
The key reason why the Swedish equivalent of the Resolution Trust Corp, Securum, was so succesfull (half of the bailout money given back to taxpayers within three years after the end of the crisis and eventually turning out as a profit for the taxpayers) was just because of the section 8 above: they got free hands to ignore finacial legislation and do what they felt was necessary to complete the job.

I'm feeling tempted to reach for that saying... The Constitution is not a suicide pact.

Even if it were, I believe the Supreme Court could invalidate section 8 if it feels like.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat Sep 20th, 2008 at 08:00:00 PM EST
[ Parent ]
I'm unwilling to speculate about the details of the financial panic in Sweden. The SEK is a small component of the dollar index. (The statutory insulation of SEK and CHF to US financing is implied here, ESF.) I will venture to say the Securum is analogous to the FRB, not the RTC. The RTC was an entity established to liquidate FDIC dependents' "assets", a receivor. The FDIC is required by law to maximize recoveries for all creditors and simultaneously minimize losses to the deposit insurance fund. Until this weekend only the FDIC was authorized to adjudicate state- and national-chartered bank bankruptcies.

When a number of MCorp's subsidiary banks were closed in 1989 and taken over by the FDIC, the holding company filed for Chapter 11 protection. The Federal Reserve as supervisor for the holding company sought to compel the bankruptcy court (and trustee) to downstream assets from the holding company to the banks, in effect transferring assets from the holding company creditors to the FDIC (as creditors of the failed banks). The Federal Reserve asserted its claim under its "source of strength" doctrine. The matter was litigated all the way to the US Supreme Court. The substantive issue (the claim that the FDIC stands ahead of other holding company creditors) was never resolved an the matter was finally settled. [Bliss 3005: 22]

There are other significant structural differences between the US and Sweden governments that supercede the Securum's license, as it were, and benefits of profit to Swedish taxpayers. Even the wiki notes litigation in any case is not : "Sweden lacks compulsory judicial review, although the non-compulsory review carried out by lagrådet (Law Council) is mostly respected in technical matters but less so in controversial political matters. Acts of the parliament and government decrees can be made inapplicable at every level if they are manifestly against constitutional laws. However, due to the restrictions in this form of judicial review and a weak judiciary, this has had little practical consequence." On the other hand, US being all Anglo-Saxon, due process is the foundational principle of the republic, democratic so-called. Due process is vested in the 4th Am.

I highlighted Section 8, because I have noted with interest commentators' outrage or, conversely, silence on the matter of authority exercised in concert by Treasury and FRB agents. Voters do not read the law. Business press may read the law but do not articulate the facts, preferring instead to propagandize the objective of its employers which is, as always, to normalize peonage. I have been reading the law intermittantly since writing the PFF series "The Raw Deal" re: publication of "Blueprint for a Modernized Financial Regulatory Structure."  It has since been scrubbed from the www. Let that be a lesson.

In any event, I've come to the conclusion that case law competes with the US Consititution (as well as nationalist polemic) to institutionalize peonage within the guise of political dynamic. Consider "Are Bank Holding Companies a Source of Strength to Their Banking Subsidiaries?" by Adam Ashcraft or the "source of strength doctrine" affirmative DoJ brief re: MCorp et al vs Board of Governors of the Federal Reserve System (1990). The latter instance is most pertinent to §8 (above) in that DoJ argues

The Federal Reserve Board's source of strength regulations are not subject to judicial review under the doctrine set forth in Leedom v. Kyne, 358 U.S. 184 (1958)

citing FISA and ILSA, BHC, and National Bank Acts. More recently, the SCOTUS decided Watters vs Wachovia (2007) re: primacy of national charter and Hein v. Freedom From Religion Foundation (2007) re: "taxpayer" standing such that "The plurality determined that the plaintiffs in Hein had no right to sue because the expenditures they complained about were not authorized or directed by any statute or Congressional appropriation, but instead were paid out of general appropriations to the Executive Branch (which could be used for any purpose that the Executive Branch wanted)."

The distinction in appropriations --off-budget, i.e. public debt-- is borne by §7 (above) and cabinet level status of the Über Conservators (Emergency Banking Relief Act of 1933, Banking Act of 1935, engrossed by 13 USC). So, no, the Supreme Court would not "invalidate section 8 if it feels like". Even though USC suborns circumvention of the 4th Am. the indemnification of reserve bank extra-legal authority has not been successfully subverted. There is also ineffectual litigation of "unitary doctrine" (a/k/a "Bush doctrine, a/k/a "preemtive doctrine", a/k/a "Monroe doctrine") seeking sanctions of executive reach deserving consideration of likely SCOTUS decisiions and law enforcement. Neither presidential candidate has acknowledged the precedents forming fiat authority in federal scope.

Because ThatBritGuy asked for a brief on "unusual circumstances" identified with the prospective bailout, I happened to read  also "Multiple Regulators and Insolvency Regime: Obstacles to efficient supervision and resolution," Robert Bliss with Federal Reserve Bank of Chicago, discusses  "competition among resolution authorities" and "legal uncertainty" that necessitate "universalist" coordination of financial holding compannies and their creditors. The discussion foreshadows certain remarks by Mr Geithner that advocate industry consolidation, "structured" financial product standardization, and "unitary" supervision vested in the FRB prior to the JPM-BSC merger.

"Progress has been uneven at best, and cultural, political, and structural barriers continue to impede cross-border expansion and consolidation. However, EU financial liberalization legislation is decidedly aimed at achieving a unified financial services market and progress has been made in Scandinavia and the new member states which did not have entrenched domestic banking institutions prior to 1990." (Bliss 2005:13)

Finally, US law and regulatory practice, as it applies to financial firms, distinguishes between foreign and domestic institutions and individuals. (Bliss 2005:25) The universe of motives assigned to China et al tend to contradict the real power of treasury clients and prospective foreign investors.

  • Deposits given priority in settlement of a failed bank's creditors' claims, excluding those held at foreign branches and International Business Facilities(12 USC 1821)

  • Only deposits of US citizens held in US branches of foreign banks are insured(12 USC 1813)

  • In the event of foreign bank branch or agency insolvency, the receiver can seize all the foreign parent's assets in the US. (12 USC 3102)

  • The FRB affirms its consolidated supervision and application of foreign financial holding companies (FHCs) by lead bank (FRB Regulation Y §225)

Over all, nothing in the draft bill above affirms public protections, including "right" to profit by FRB conservator actions. To assume otherwise in the US  is simply ludicrous, deluded. The plan is to purchase securities attached to nonperforming mortgages at any price the "conservator" is willing and able to pay for godssakes. And that transaction has no velocity other than settling obligations to bondholders. Think of the inventory overhang. The plan is to preserve inflated residential and commercial RE market value --AND-- tight consumer credit qualifications. Cement "core banks" and "primary dealers" of the world's reserve currency.

Diversity is the key to economic and political evolution.

by Cat on Sun Sep 21st, 2008 at 05:52:03 AM EST
[ Parent ]
Title 12 USC

Title 31 USC re: money and financing

Diversity is the key to economic and political evolution.

by Cat on Sun Sep 21st, 2008 at 06:17:22 AM EST
[ Parent ]
The nekkid capitalist is ignorant. Ranks right up there with Felix "I prefer a Bear-Stearns liquidity crisis to insolvency" Salmon. I guess that's why they get the quotes.

Diversity is the key to economic and political evolution.
by Cat on Sun Sep 21st, 2008 at 02:22:26 PM EST
[ Parent ]
The Swedish system functions nothing like the US system, and without judicial review, the US is in serious trouble and ultimately ceases to be a Republic.  Judicial review is the only means we have in this country to ensure the rule of law.  IMNSHO, anyone who backs Section 8 is bucking for a Section 8.
by rifek on Mon Sep 22nd, 2008 at 11:07:26 PM EST
[ Parent ]
What can and must follow the Liberal Democracy is a National Commonwealth, which by removing old intermediaries directly bonds the citizenry with the government, because the citizenry are directly responsible for the debts that that government has taken on. If pride of ownership is to mean anything, then it is applicable here: Americans must see themselves, not as adversaries of their government, but as owners of it.

Such an approach could work in theory, but it is hard to see the existing administration running the financial system for the good of the people if they have any way to favor their cronies. Unless the role of campaign contributions in government is reformed even an Obama administration is unlikely to be able to implement necessary measures to reform the economy and governance.  Especially if it is not politically possible to hold accountable those who have looted the economy and hijacked the government. A final resolution of an unworkable, un-reformable corrupt disaster of a financial and governmental  system could end up being the dissolution of this government and forming a new government or governments.  One can hope that any successor government(s) would be better founded than this one has come to be, but not too confident.  Perhaps the best we can hope for is for a domestic Vlad Putin to emerge.  It may have come to that.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Sep 21st, 2008 at 12:13:33 AM EST
Perhaps the best we can hope for is for a domestic Vlad Putin to emerge.

Dick Cheney in complete control you mean, minus the Democrats and any even semi-functional opposition from the congress?

by MarekNYC on Sun Sep 21st, 2008 at 01:08:39 AM EST
[ Parent ]
Cheney may match Putin in ruthlessness, but I doubt if he is nearly as competent or effective.  Putin has taken much better care of Russia's interests than Cheney has of US interests.  Putin's only military adventure was a win in Georgia.  Cheney's was a disaster in Iraq.  In terms of intrinsic evil, Cheney wins by ten lengths.  Putin at least does what he can to build and maintain Russia's financial strenght.  Cheney's tenure has seen the greatest financial disaster since the Great Depression directly as a result of policies he has advocated since he was a congressman under Nixon.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Sep 21st, 2008 at 01:37:48 AM EST
[ Parent ]
So you're saying that the American Putin will arrive in the midst of another Great Depression and political chaos, then benefit from a huge jump in oil and gas export revenues that will allow him to simultaneously improve the economy while funneling billions to his cronies?
by MarekNYC on Sun Sep 21st, 2008 at 12:07:53 PM EST
[ Parent ]
Marek, I am not suggesting that our situation is properly analogous to that of Russia through Putin's rule.  Economically, they have advantages we don't have.  Worse, the advantages we should have are negated by unchallenged  looting and subversion of the constitution here.  Under the, perhaps well intentioned Yeltsen, and following the disasterous advise of American academic "economic" advisors, he undertook a privatization that, in many ways , turned the Russian economy over to a bunch of oligarchs whose actions were often arguably criminal.  Putin was able to undo some of that and guide the creation of a functioning state.  I don't see anyone on the US scene who appears likely to do the same for the US.  What we need is another FDR. Obama is not giving much indication of being up to the task or being willing to try.  I hope I am wrong.  One risk brought into view by this diary by NBBooks is that the actions being proposed by Paulson could turn into the final phase of "all power to the cleptocrats."

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Sep 21st, 2008 at 12:46:03 PM EST
[ Parent ]
Well...

It is one major criticism of this forum (on my part) that is it is far too forgiving of Putin.

I don't reckon that "the enemy of my enemy is most probably my friends" ever really worked. Talking Putin up in no way reinforces the pertinence of criticism of the US.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Sep 22nd, 2008 at 05:58:24 AM EST
[ Parent ]
And for the record: I am no great fan of Putin except for those items I have stipulated above.  Right now we need competence alloyed with integrity.  I just don't know if the US electorate will buy it even if it comes to be on offer.  Obama is showing signs of rising to the occasion.  The problem is that we won't know until and unless he is elected.  He is the only realistic hope and that seems like a frail reed to which to grasp, but it beats despair.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Sep 22nd, 2008 at 11:27:40 PM EST
[ Parent ]
And BTW, this is not something I would like to see as an end in and of itself.  It is just that the alternatives may well be worse.  If you are going to have an authoritarian state in hard times, it is better if it is run by competent people.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Sep 21st, 2008 at 01:46:33 AM EST
[ Parent ]
The real purpose of the present bailout...is not really saving the financial system, per se, but actually preventing control of the financial system being bought from U.S. elites by the foreign holders of trillions of U.S. dollars.
This could be what the assembled Senators and Congressmen found so stunning when Bernanke and Paulson addressed them Thursday night.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Sep 21st, 2008 at 12:39:28 AM EST
So the British Primer Minister establishes the symptoms and hence the cure will follow. It is not anymore the US financial markets that need to be regulated, it is the global markets that need to be regulated.

So we cannot allow only the G7 economies to regulate Russia, China, India and others without allowing their participation into the WORLD GOVERNMENT.

So that is means that the US government, which has become the biggest mortgage bank in the world with half the US mortgages on its books, will have to give in and take its appropriate place. China of course should be at the rudder.

"Only puny secrets need protection. Big discoveries are protected by public incredulity." MMcL

by igor vincha (svjeronimatgmail.com) on Sun Sep 21st, 2008 at 05:06:11 AM EST
God preserve us from a World Government.

Worldwide agreements, on the other hand, are necessary.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun Sep 21st, 2008 at 05:16:13 AM EST
[ Parent ]
If nothing the total collapse of Stalinist soviet enterprise proved there is a limit to "total information awareness" in the service of central planning.

One percenters will try it (because they're psychopaths), and it will end badly for all.

Diversity is the key to economic and political evolution.

by Cat on Sun Sep 21st, 2008 at 06:22:02 AM EST
[ Parent ]

What can and must follow the Liberal Democracy is a National Commonwealth,

Dear NBBooks:

I'm not certain WHAT planet you are from but "what can and WILL follow" is FASCISM.  My freedoms, your freedoms, the freedoms of all generations of Americans to come just got sold.

WAKE THE FUCK UP!!!

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Sun Sep 21st, 2008 at 07:08:49 AM EST
Hey, Hey!

Washington Journal, Sunday A.M.

Callers aren't buying the bailout crap.  Even the idiots are pissed.

Burn Baby Burn!

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Sun Sep 21st, 2008 at 07:22:23 AM EST
[ Parent ]
Has anyone heard VEEP possibility Palin's view on this situation? With her VAST intelligence and experience SHE would know how to lead the country out of this mess.

Sarah ... Sarah ... Sarah!

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Sun Sep 21st, 2008 at 07:59:57 AM EST
[ Parent ]
Twank,  He was quoting Sterling.  Sterling was suggesting a possible way out, IF we could rise to the occasion.  Both NBBooks and Sterling are thoughtful people.  Careful of the tone.  This forum is distinguished by the civility of tone found within.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Sep 21st, 2008 at 12:54:30 PM EST
[ Parent ]
Sorrrrrry Davey. (Remember Davey and Goliath?)

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Sun Sep 21st, 2008 at 07:18:33 PM EST
[ Parent ]
Striling writes wonderfully.

But I am not sold.

I am not sure the rest of the world will ever really reclaim the control of the US assets. If there is a Wall Street meltdown I am not sure the rest of the finantial amrkets will remain in a good shape to buy anything. Probably they would have to control their internal national debt, itneranl bubbles (Spain in mind).

Once said that, if this bill is passed, I precisely foreseee a possibiity of a foreign control of US assets . Basically I disagree with the core arguemnt of Striling.. if the Wall Street meltdown is not a real meltdwon but a slow death motion as Krugman predict for the next years (if Wll Street is not bougth a la Swedish), foreigners could equilibrate their positions slowly, resell dollar and US asets at will precisely because the meltdown will not be dramatic and the basic tendency leads to a sell of US assets to Euroepans, chinese and japanese.

If the credit freezes compleltely there will be noone asking for the US assets at the door of the US government...e ven less demanding the US government to capitalate.. at the most what foreigners could do is destroy the american economy....without no real gain except gettign rid of the superopower (if they wanted so).

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Sun Sep 21st, 2008 at 09:30:14 AM EST
I think the key to how this turns out is what the U.S. public, and the Obama campaign do over the next few days and weeks, because obviously there is no possibility that the Bush bastards are going do anything but save themselves and their cronies. I think that is why Stirling provides the two examples of what Roosevelt and Lincoln did BEFORE they actually assumed the duties of office. It is why I thought it was imperative to spread Stirling's ideas to a wider audience.

Also, let me take the opportunity to apologize here for my limited ability to respond - I am on the road for another ten days and internet coverage is hit and miss because I am reluctant to pay the amount demanded for nationwide wireless internet access from Sprint or ATT.  

by NBBooks on Sun Sep 21st, 2008 at 09:51:19 PM EST
[ Parent ]
Oh sure.. but Striling is quite read around here.. but indeed his theory about the basics of growth is worth propagating, and past historic situations too

I am not sure if the money-oil scheme is the complete picture though, but the idea of paper money for oil makes a lot of sense..a nd actually Paul Krugman is singing this tune a little bit "the US indeed has fair trade with China, they sell us toxic toys and posinous food and we sell them fraudulent securities"" goes precisely along this line. It was not a duo but a triangle money-stuff-oil... but the more importnat part about where ultiamtely wealth comes from and what is the structure behind is a necessary read.

ANd I think Krugman must read it too... it is anotehr way to look at the numbers and the good economists love it

Final Note: I ahve seen Striling changed his view inthe post in dailykos... now it says that a foreigner takeover will ahppen if this bill is passed with a law atached forbiding foreign takeovers... precisley my point.. It hink it is not fair, but it will probably happen.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Mon Sep 22nd, 2008 at 01:57:20 AM EST
[ Parent ]


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