Brains with a Secret Thrill

[elfs]

Obama calls on blogger Sam Stein at press conference

Last night at his first press conference, President Obama called on Sam Stein of the Huffington Post to ask a question. The NY Times calls this a 'first.'

It's not. The first blogger ever to be called on at a presidential press conference was Jeff Gannon, who blogged at The Talon, a website funded entirely by the GOP. Remember him?.

How the World almost Came to an End

This has been going around, so I recommend you watch it. Representative Paul Kanjorski explains to an angry caller on a CSPAN radio show just what went down that day, and why the Fed panicked. The Fed was watching trends that morning and saw that big investors were pulling out of money market accounts, and they became terrified that 5.5 trillion dollars in liquidity was going to vanish in one day. Scary stuff.

Comments

[shunra.livejournal.com]

*Is* there 5.5 trillion in liquidity?

Would that not have meant either the US going bust or some *really* fast money-printing (a.k.a. inflation)?

I came of age in an economy that was doing 800% inflation a year. It was very unpretty. (Although my parents paid off their mortgage, which was not linked to the CPI, with the cost of a movie ticket, when the currency got to that level.)

[elfs.livejournal.com]

I don't think there is, which may explain why the whole thing ended in a terrible panic. What I still want to know is, why aren't the regulators responsible for letting this thing go to hell sitting in jail?

[shunra.livejournal.com]

Because it is the most pure form of con game. The entire system exists due to the confidence of its participants.

Sending regulators to jail would jolt the system and reduce confidence in the short term. Loss of confident would cause a run on the banks: not viable. Failure to prosecute the regulators responsible will cause a slower run on the banks, and is also not viable (although the repercussions take longer).

[heofmanynames.livejournal.com]

Honestly, I've begun to wonder if traditional private banks are still viable, given the scale & complexity we're forced (by circumstance to deal with).

People keep talking about bold action being needed: how about we establish a policy that banks who seek public funds to prevent failure are de facto nationalized by their own hands: executives leave without severance, stockholders and creditors take a bath, debtors' accounts are cleared, the bank is re-chartered & returned to service - as a credit union, with no debts, and whatever assets remain.

Yes, I have qualms about such a course; but it would distribute the pain more honestly and accurately, it would go a very long way to resolving the mortgage crisis, and could well serve as an excellent object-lesson on the limits of private greed at public expense.

[shunra.livejournal.com]

what would you do with current bank deposits?

fair question

[heofmanynames.livejournal.com]

Remembering that this is barely the rough outline of an idea, the deposits would be the reason to "reset" the bank & return it to banking, rather than, say, liquidating it & auctioning off the assets.

Of course, I have no real idea how workable this might be; however, as I observed, it would spread the pain more or less evenly. Given the first round of the Treasury's Wall Street gift basket, I think these banks and the people who own and run them should feel the pain of the failure - not just the customers and employees.

What do you think should be done about continued casualties on Wall Street? I'm not married to my ideas, but I think we really need ideas that aren't straight out of MBA school.

Re: fair question

[shunra.livejournal.com]

One of the foundations of the capitalist system is the way risk and reward are handled. By allowing depositors (who have a promise both by the bank and by the FDIC, backing it with the full power of the US Treasury) to fail, the system flops. No one who had been through it would ever trust it again.

That isn't hyperbole: surely you've talked to people who had lost money in the depression.

(Interesting thought: the actual dollars that they deposit? They're a third layer of promises. It's all credit. Deposited money involves a promise by the Treasury to back up bank promises to hold safe treasury promises... ...a little infinite looplike, isn't it?)

It seems to me that a good response would be to declare a close-down of the banks, figure out what they actually have in them, and perhaps restrict access to funds for a period - all funds for a short while, funds beyond a certain level for a longer while - basically, making a run impossible by slowing the liquidity, but still guaranteeing the value stored.

If the banks are crazily over-leveraged - Iceland style - it would be helpful to find it out and act accordingly, mitigating the results. I suspect they are. But doing so without panic (or with minimal panic) would be wiser than just waiting for the next run.

[fallenpegasus]

"debtors accounts are cleared".

Which makes it my interest to try to find a bank that is about to fail before most everyone else notices, get a credit card from them, and then run up a huge tab.

Not wise.

[heofmanynames.livejournal.com]

I agree: your 'plan' there would not be wise at all.

[tagryn]

Would work, though, if you could ID the banks that were about to go under where depositor's debt would be written off. That's free money, like the TARP I $$$ was for the banks. From an individual perspective its a sensible calculation, much as some are choosing to stop payments on their mortgages now that their houses are worth much less than what they owe & aid doesn't kick in until the house is in foreclosure.

[heofmanynames.livejournal.com]

Oh, and on the first-time blogger thing?

I think it's unfair to describe Gannon as "a blogger": he was a softball-pitcher known to the President as an 'escape hatch' when under heavy questioning.

Stein & HuffPo are in an entirely different game.

[elfs.livejournal.com]

What's a blogger? Are you? Am I?

If we are, then Gannon was.

[heofmanynames.livejournal.com]

Well, I blog- and while that's of some importance to me, It's perhaps the smallest part of me. I suspect the same may be true of you.

By the same token, I figured Gannon's roles as male prostitute, Republican shill, and public laughing-stock outweighed his worth *as a blogger*. Have you seen a blog by him? I have not. I had heard about you - as a writer, but *not* as a blogger - long before I got on LJ & found your blog. You are definitely a blogger, and not just 'a guy with a blog account' (based entirely on my own standards, tastes and preferences).

I wonder if Gannon would pass that test; I wonder if *I* do. It does at least matter to me.

[tagryn]

Not as scary as what happened in '83. By all rights, none of us should be here, if not for a Russian colonel who disobeyed standing orders.

The Kanjorski Meme

[ideaphile.livejournal.com]

http://www.portfolio.com/views/blogs/market-movers/2009/02/10/the-kanjorski-meme

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Re: The Kanjorski Meme

[elfs.livejournal.com]

That's a good response. I, too, would like a clearer picture of what he was talking about. I don't think he was "incoherent"; he laid out a description on that day of what he heard from Bernanke at that infamous closed-door meeting, when the congressmen came out looking quite pale and scared. But we've never had details on what Bernanke and Paulson actually said that led to Congress's free pass.