Krugman says, "The reality is that when it comes to dealing with the banks, the Obama administration is dithering."
The issue is that while a boom is made of irrational exuberance inflating demand, the laissez-faire capitalist, as opposed to the mixed economist, believe that during a bust, there is an irrationality working in the other direction deflating demand (which is true enough); but, those laissez-faire, or more laissez-faire leaning (think deregulation) economists skew the psychology to the boom-side throughout the entire cycle. What I mean here is that they don't view the stability of the middle of the cycle as the more realistic target but want to buy low and ride the irrational wave again to sell high while the rest of the masses haven't a clue that stability is the enemy of the greedy. Therefore, and Paul Krugman agrees with me, we see the neoliberal economists in the Obama administration and the Federal Reserve working to prop up the exotic derivatives that no one is working to sort out because there's not enough value left after that process apparently or because there's money to be made in passing off the same old toxic sludge with whatever might have been of value in those tranches. Remember, they bundled the good with the bad and effectively dissolved the audit trail behind them. They can't tell which mortgage and which property, bank, borrower, etc., is behind which portion of the securitized bundle of mortgages, or so we've been led to believe (just trust us, say the Bernie Madoff's of the world to the flies), and the credit default swaps ostensible to insure those are consequently too risky. We're talking tens and even hundreds of trillions of dollars of superheating air that has blasted away with the bursting of the huge bubble.
2 million mortgages have gone belly up. AIG is on the line for many policies against which it can't pay off. The people are being asked to cover the bad underwriting. Why? The rest of the people only have a very small and low safety net below them if one may rightly call it that. Why do the superrich not have to fall to the safety net (street) with the average workers?
Tim Geithner and Ben Bernanke are throwing hard-earned taxpayer dollars at artificially re-inflating the bubble for the sake of those holding the worthless garbage. This is what they mean by the psychology of the markets. Rather than the bubble bursting, the truth is that the curtain was drawn back so the people can now see how the sausage was being made. Bernie Madoff was far from the only Ponzi scheme artist. The boom was the result of confidence men.
They want all to fall back into having confidence in them again. It's where we get the term conmen. Good Risk Management tells the honest not to fall for it.
Those with a gambling addiction and who are wild risk takers, even daredevils, want to get back into the game as soon as possible to take the suckers. These are professional riverboat gamblers who know every trick (cheat) in the book and have perfected their art of deception.
As The Real Liberal Christian Church looking out for the best interests of the Christian fold and the lost and soon to be found lambs and sheep, I want you to be fully aware of the capitalist sorcerers constantly conjuring up new twists on old schemes.
You see, the "unknown unknowns" can really be anticipated. We are given visions and dreams. We know them by their fruits. We know not to trust them. We know that in the end though, God is just. We know that leaving the flesh, we are our souls.
Do you want to gamble and if so with whom do you want to sit at the table? What measures are in place to detect and to stop cheats before they take you?
The question at-large is, do the people nationalize the banks to put into place the detection features and preventative features before allowing the plutocrats to continue building up the lending pyramid via the privately controlled Federal Reserve System and its underlying fractional-reserve banking, debt financing of the national budget deficits ($3.6 trillion 2010 fiscal-year federal-budget plan with an estimated $1.7 trillion deficit - 50% red ink added on which to owe interest to the private bankers for no good reason) and cumulative National Debt? It's no way to run a global economy for the highest and best interest of the people at-large.
The deficits are a problem because the spending is not all productive. Were it productive, future earnings would amortize it. As it is now, much of it is simply designed to transfer wealth from the bottom to the top via interest payments for no service received. It's just free money to the superrich. You and I, the middle and working class, are paying for it with our hard work and long hours.
Concerning the Geithner Plan (Public-Private Investment Program) released Monday, March 23rd 2009, Paul Krugman made the following, prescient, common-sense statement on his blog:
The Geithner plan has now been leaked in detail. It's exactly the plan that was widely analyzed - and found wanting - a couple of weeks ago. The zombie ideas have won.
The Obama administration is now completely wedded to the idea that there's nothing fundamentally wrong with the financial system - that what we're facing is the equivalent of a run on an essentially sound bank. As Tim Duy put it, there are no bad assets, only misunderstood assets. And if we get investors to understand that toxic waste is really, truly worth much more than anyone is willing to pay for it, all our problems will be solved.
To this end the plan proposes to create funds in which private investors put in a small amount of their own money, and in return get large, non-recourse loans from the taxpayer, with which to buy bad - I mean misunderstood - assets. This is supposed to lead to fair prices because the funds will engage in competitive bidding....
This plan will produce big gains for banks that didn't actually need any help; it will, however, do little to reassure the public about banks that are seriously undercapitalized. And I fear that when the plan fails, as it almost surely will, the administration will have shot its bolt: it won't be able to come back to Congress for a plan that might actually work.
(Source: "The Big Dither," by Paul Krugman. New York Times. March 5, 2009.)
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And when they were come to Capernaum, they that received tribute money came to Peter, and said, Doth not your master pay tribute? He saith, Yes. And when he was come into the house, Jesus prevented him, saying, What thinkest thou, Simon? of whom do the kings of the earth take custom or tribute? of their own children, or of strangers? Peter saith unto him, Of strangers. Jesus saith unto him, Then are the children free. (Matthew 17:24-26)