Alan Greenspan Admits America Is A Crony Capitalist System
by ilene - September 7th, 2010 1:44 pm
Excellent, brief summary of where we stand now, by Tyler at Zero Hedge.
Alan Greenspan Admits America Is A Crony Capitalist System
Courtesy of Tyler Durden
We are not sure what is more amusing: the Masetro’s unwitting (and quite correct) observation that America is now nothing but a crony capitalist country, or his attempt to back out of what he said that so perfectly captures the essence of the failed corporatocracy currently raging in America.
In the following exchange from a DemocracyNow interview, Greenspan is forced to respond to his quote from Age Of Turbulence on the definition of crony capitalism: "When a government’s leaders or businesses routinely seek out private sector individuals or business, and in exchange for political support bestow favors on them, the society is said to be in the grip of crony capitalism. The favors generally take the form of monopoly access to certain markets, preferred access to sales of government assets, and special access to those in power."
Greenspan’s pathetic excuse is that while crony capitalism is a "dominant force" in some other regimes, it is "not the dominant force in this country." Perhaps all those who are fighting with the virtual monopoly granted to certain players, such as Goldman in fixed income trading, and Pimco in government bonds, would beg to differ. So yes, according to the Greenspan definition America is now nothing more than a crony capitalist society, which will only get worse as more and more power is granted to those who are believed to be able to ramp various asset classes, and thus the market in general, higher, because as Greenspan himself pointed out recently, nothing is as important a "driver" to the economy as the stock market: "if the stock market continues higher it will do more to stimulate the economy than any other measure we have discussed here". In the administration’s pursuit of Dow 36,000 to prove that all is well, America has given up on its core constitutional tenets, and is now nothing better than a dictatorial regime in some far-eastern backwater country.
Fast forward to 44:40 in the clip below (after the jump) to see the exchange.
h/t Geoffrey Batt
Photo: Courtesy of Jr. Deputy Accountant
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Nations Over Banks (Who Serve Only Themselves)
by ilene - May 19th, 2010 5:30 pm
Great Denninger quotable: "No nation can survive when the rule of law becomes subordinate to a handful of rich and powerful people who simply steal anything they want with impunity. The economy of such a nation ultimately is bled dry by that corruption and theft, with the people over time refusing to innovate and provide their effort when it will simply be robbed away from them."
Nations Over Banks (Who Serve Only Themselves)
Courtesy of Karl Denninger at The Market Ticker
Are you listening Mr. Obama?
First, let’s look at the idiocy among so-called "reporters"
Swaps Soar on Germany’s ‘Act of Desperation’: Credit Markets
Desperation? Or is it more like this?
Merkel Seeks EU Rules After German Short-Selling Ban (Update1)
You know, like the rule of law, for instance?
“The lack of rules and limits can make behavior in financial markets driven purely by the profit motive destructive and lead to an existential threat to financial stability in Europe and even the world,” Merkel told lawmakers in Berlin today. “The market alone won’t correct these mistakes.”
Yes indeed. But the profit motive isn’t evil or bad. It’s only bad and troublesome when it comes with lawlessness and conflicts of interest.
As the housing crisis mounted in early 2007, Goldman Sachs was busy selling risky, mortgage-related securities issued by its longtime client, Washington Mutual, a major bank based in Seattle.
Although Goldman had decided months earlier that the mortgage market was headed for a fall, it continued to sell the WaMu securities to investors. While Goldman put its imprimatur on that offering, traders in the same Goldman unit were not so sanguine about WaMu’s prospects:they were betting that the value of WaMu’s stock and other securities would decline.
Got that? Oh, and it wasn’t just WaMu; the article documents trades against Bear Stearns, the State of New Jersey, AIG and Thornburg, with the worst being AIG that they profited from twice - first by their demise, then again when they managed to get paid at "par" for bets with AIG that were in fact worth zero as the company was bankrupt! Yet Lloyd has said:
“Questions have been raised that go to the heart of this institution’s most fundamental value: how we treat our clients.” — Lloyd C. Blankfein, Goldman Sachs’s C.E.O., at the
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Bernie Sanders Says It Is Time To Break Up The Big Banks As They Are Nothing But Monopolies
by ilene - April 21st, 2010 5:45 pm
Bernie Sanders Says It Is Time To Break Up The Big Banks As They Are Nothing But Monopolies
Courtesy of Tyler Durden
Paging Christine Varney. Finally, what Zero Hedge has been pounding the table on for months is starting to make it through to (some of) the ruling elite. In an interview with Dylan Ratigan, Bernie Sanders, who unfortunately is not quite representative of the prevailing DC groupthink yet, says: "it is not just a too big to fail problem, it is monopolistic control of the economy and the incredible concentration of ownership. If Teddy Roosevelt were here right now, the guy who broke up all the big special interests in his day: if he believed that two-thirds of the credit cards were being issued by four banks, does anyone think we should not be breaking these guys up."
He points out the following simple arguments for breaking up the big banks: 1) four largest banks issue two thirds of the credit cards, 2) they hold 50% of mortgages and 3) $7 trillion in assets (50% of GDP). One can extend these observations from the simple consumer facing side of the banking model, to the intrabanking world, where Goldman has a monopoly in virtually all fixed income and equity (including derivative) trading axes and has infinite visibility into market flow.
The argument for breaking them up is blatantly simple: to protect taxpayers against another TBTF episode, as well as to preempt their concentration of ownership which means "unbelievable power and monopolistic influence over the whole economy."
Sanders, following in William Black’s footsteps, is also painfully blunt: "the issue is not whether Congress regulates Wall Street, it’s the degree to which Wall Street regulates Congress."
No matter what kind of reform you bring forth, if a BofA is about to teeter, and take with it a significant part of the economy and millions of jobs they are going to be bailed out. What you have to do is break them up today."
In conclusion Bernie sumarizes our current predicament perfectly: "Take a breath for a moment and think about where we’re at. You have a middle class collapsing, you have small and medium sized businesses desperately in need of affordable credit so they can expand and create jobs, they’re not getting that help. What you have is a Wall Street living in a parallel universe playing…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site