Comments on: New President, same inadequate economic tools Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 By: khonea Sat, 08 Nov 2008 16:51:25 +0000 Mr. Saft, what you’ve just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul….

By: Vardis Fri, 07 Nov 2008 21:18:09 +0000 It was all well and good for many years for these institutions to earn more and more money through these means. Only now it has failed are people looking at regulation. A bit late, perhaps?

By: Mark Fri, 07 Nov 2008 08:10:09 +0000 this experiment with paper currency not backed with commodity and created out of thin air is now collapsing like a Ponzi scheme

the only regulation we need is: sound money backed by commodity and 100% reserve requirement for banks

money should be created through savigs, not via new debt

By: Anubis Thu, 06 Nov 2008 16:07:14 +0000 We all should live within our means. However, wage earners are faced with layoffs while commissioned workers are simply starved out as the current contraction has caused these workers earnings to drop 50% or more. It hardly seems plausible that any one can sustain a mortgage under such conditions. Currently as many 10 million families Could be facing foreclosure. As the economy worsens the number of those at risk will only worsen. Where will all of these people live when they loose their homes. Should the federal government do as Alan Greenspan suggested and borrow or print money and absorb loses that mortgage holders incur? Is the alternative to have federal run banks to simply rent or assign places for the homeless families to live? Either is surely better than to have millions homeless and the inevitable consequences of such a disaster.

The free market is good at finding profitable enterprise’ and developing them to their full potential. It has not been able to direct resources to developing sustainable energy and food production allowing to move away from fossil fuels. The current collapse in crude and commodities makes alternatives more expensive and no ability to generate profits.

Some profitable endeavors are not good. Some good endeavors are not profitable. Thomas Paine stated that the choicest of gifts the the Creator bestowed apon us was Reason. Le us use it. We must loose our religion of economic and political thinking. Open minded deliberation will lead to pragmatic action. As citizens the responsibility is ours to clear our minds and inform our selves. Then we must all make our voices heard by our elected representatives. Trusting our leaders to address these problems on their own has failed. I trust the judgment of an informed citizenry far better.

By: Jonathan Cole Thu, 06 Nov 2008 15:45:34 +0000 The disclamer at the end of the article is a bit ironic. It says, “At the time of publication James Saft did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund.”

Actually that disregards the central investment of everyone in the U.S. and most of the world for that matter. The U.S.dollar. We all have a direct investment in that security/asset class. After the government runs out of peas for their economic-rescue pea-shooter, the only thing left will be to monetize the debt created by the rescue. Of course the beauty of that is only the cogniscenti will actually realize the huge tax being levied without the consent of the taxed population.

That’s when we get really impoverished. That’s when the U.S. dollar becomes a third-rate currency. That’s when governments world-wide stop supporting the U.S. by staying away from Treasury auctions. Who cares if the U.S. Treasury debt is backed by the full faith and means of the U.S. government if it is a degenerating asset?

I believe James Saft is dancing around the obvious conclusion of his well-stated appraisal. We are off the cliff. The brain simply has not yet responded to the signals of gravity and acceleration. If you want a parachute, it will probably not be made of U.S. dollars.

By: ckh1213 Thu, 06 Nov 2008 15:43:11 +0000 Money is based on nothing. That is the problem. Furthermore, anyone who puts their retirement in the stock market deserves what they get. People need to learn a trade and get paid for what they do. Until the bankers and their greedy politician friends are prosecuted for what they have done, this problem will never be fixed. Obama should address the criminal aspects of the credit crisis and begin promoting individual lifestyles that arent based on credit. What happened to saving money then spending? It’s all just one big Enron!

By: Huw Sayer Wed, 05 Nov 2008 21:01:55 +0000 The US and UK economies are off balance – there has been too much use of highly geared and hidden debt to fund unsustainable spending at all levels of society leading to a massive misallocation of resources.

The great debt unwind needs to happen – but governments have deeper pockets than individuals and companies so can shoulder more debt for longer. However Government spending is frequently inefficient and arbitrary, making so called Keynesian policies dangerously slow and ineffective as well as potentially inflationary (so damaging to currencies and the cost of long term borrowing).

Governments therefore need to cut back hard on all non-essential spending (to avoid crowding out private investment and exacerbating the problem of resource misallocation) – aiming to bring spending below 30% of GDP. They should then increase short term borrowing to provide massive tax cuts to the 80% of the population with the lowest earnings and to the 80% of companies with the lowest turnover (who are most vulnerable to short term liquidity problems).

All borrowing is a tax on future earnings – but by cutting spending and handing money back to the people now, governments can help ensure that earnings continue to grow (although at a slower rate as people repair their own balance sheets).

True many people and companies will use spare cash to save or pay of debt in the first instance – but that is an essential first step to recovery. Making the tax cuts deep enough to make work more rewarding (and company investment more profitable) is the quickest route to stimulating new growth in the economy that meets the needs of individuals (the market is still the best allocator of resources).

At the same time essential government spending, wherever possible, should be directed through the beneficiary (so school vouchers and training vouchers for all).

This way to recovery may be harder and possibly longer than simply inflating away the debt – but the results will be all the more enduring for rewarding savers and the pain of learning to live within our means.