Two and a half years ago, with our country on the edge of a second Great Depression, we met with the president in the White House to discuss whether to move in those first months of his administration to legislate fundamental reform of the financial system—or wait until we had put the crisis behind us.
The president made two key decisions. First, he chose to move forward, knowing that the forces of opposition to reform would grow stronger as the memory of the crisis receded. And second, he asked us to write draft legislation rather than propose broad principles. The president did not want the new rules to end up being written by those who brought us to the edge of catastrophic financial failure.
So…. he asked you to help write it, yes? And what did you do while at FRBNY [Federal Reserve Bank of New York]?
Besides cheating on your taxes, that is.
Well, it appears you sat there and allowed the playing of derivatives by firms who had no money, yet promised to pay. They couldn’t, of course, and when that became apparent the entire world blew up.
But that wasn’t bad enough – oh no, you then had to rescue them. And rescue you did – in fact, that was the gist of everything wasn’t it?
See, it wasn’t about the money per-se – it was about the lies. Lies that still continue to this day.
Like, for instance, the lies that enabled the market to bottom in 2009. Remember Kanjorski and his little committee meeting? Either allow the banks to mark to whatever they think they can defend, whether it’s real or not, or we’ll force it with legislation.
Yeah, I remember that.
Then of course there’s the derivatives. They’re still traded over the counter. The so-called “clearing houses” do nothing to prove nightly margin, nor to prevent chain risk. And yet those two things are the key items in how we found ourselves on the wrong side of that mess. To be blunt, Brooksley was right (along with other few who said you, and the entire bankster business, were certifiably insane) and yet I haven’t heard an apology from you in that regard, nor one from Greenspan. Why not?
Of course you continue to pat yourself on the back for things that are, well, not real. Averting a second Great Depression? More like covering one up that’s still going on. After all, when you deficit spend 12% of GDP, well, GDP is 12% higher than it would otherwise be – plus the knock-on effects. I don’t call that “avoidance”, I call it a scam because there is no credible plan available to stop that deficit spending.
But stop it will. At roughly six times present GDP growth it will end soon too, and in a rather dramatic fashion. We still can change to some extent exactly how it happens, but that optionality will not exist for long, and the Congress seems to be ignoring you these days Turbo – with good cause.
After all, it was Hanky Panky who promised us tanks in the streets just a couple of years ago, and then of course we got more of the same from you and Obama if we didn’t “help the banks.” But the so-called recovery you claim is happening isn’t reflected in the employment numbers, nor in those for food stamps. We have fixed nothing with trade balance, particularly with China, since both you and Obama have spent your time knob-jobbing the Communists instead of protecting American jobs and imposing sanity on a mercantilist regime.
As for Fannie and Freddie, you’d done nothing. Those firms debt never had a guarantee – it’s right on the front of the page. But you never met a billionaire you wouldn’t perform an obscene act upon, have you Turbo, and neither has your boss.
That’s ok Turbo. This isn’t under your control nor Obama’s. It’s under the control of immutable mathematical facts, and when they come to the fore, as they are over in Europe and soon will be here, the time for you to act in a reasonable and sound manner will have expired.
We’ll all be in much worse economic shape for it, but the good news is that you won’t be able to escape responsibility, nor will your boss.
This far into the term, you own it Timmy.