Being in the Old Guard

Watching Henry Kissinger on C-Span and Alan Greenspan frequently in the media, I keep wondering why they are forever recycled. Are there no other experts that know about foreign policy and finance? In fact, considering some of their covert destructive actions and faulty policy decisions, some may say that these gentleman are not experts, at least honorable ones. I honor age and appreciate wisdom. But I also wonder if some views that are being propagated are not always advantageous and if there are other ways to look at issues of foreign policy and finance that will advance the cause of peace and prosperity not only in America but throughout the world.

Being the Federal Reserve II

President Obama proposed a plan that would give the Federal Reserve more regulatory power. My only question is why didn't the Fed use the power it already had to avert a near collapse of the global economy? It seems that Alan Greenspan, former Federal Reserve Chairman, allowed some things to occur for so many years and Timothy Geithner, the current Treasury Secretary, was over the Federal Reserve of New York during the time that Wall Street nearly brought the global economy to its knees. What was Geithner doing then? It seems that he was not able to handle the power he had in New York. Why give Geithner and the Federal Reserve greater power now? And make no mistake about it, we are talking about power here and lots of it! Maybe someone can break all this complicated stuff down to me like I'm a two-year old. Sometimes I wonder if the complications are purposeful.

Being Arianna Huffington VI

This Tuesday morning on CNBC's Squawk Box from 7-9 Arianna Huffington will be the guest host. The show will feature Nassim Nicholas Taleb, Nouriel Roubini, and Congressman Barney Frank. Maybe this will begin the process of resuscitating CNBC's tattered image. After the Jon Stewart evisceration of CNBC's financial analysts, we all know they need it. Arianna Huffington's piece on Jon Stewart's interview with Jim Cramer and John King's interview with Dick Cheney is great.

The Huffington Post article can be read here. Brilliant comparisons are made between the Jon Stewart and John King interviews. Squawk Box this Tuesday promises to be interesting with both professionalism and punch. While the intentions and knowledge of Huffington, Taleb and Roubini my be trusted, the same may not be said of Barney Frank. I tend to distrust politicians generally. Senator Chris Dodd (D) and Senator Richard Shelby (R) would be among these. Neither would get my vote if I were constituents in theirs states.

I have some thoughts about Congress and some questions for Congressman Frank. Has the Federal Reserve become a hindrance to a viable democratic capitalistic system where there should be checks and balances? The Fed does not have absolute power! Not only has the Federal Reserve failed us, but Congress too in their lack of oversight of the Fed—instead there appears to have been, rightly or wrongly, collusion in regulating these big American banks with ties with hedge funds and the likes of Barclays in London and Deutsche Bank in Germany.

This week Treasury Secretary Geithner asked that the Treasury be given more power to regulate some companies, namely those such as AIG, and perhaps GE, who are not banks but behave as such. To give the Federal Reserve more power seems like a sick solution. How do you give more power to those who have utterly failed the American people who seem bent on a global imperialistic financial agenda to concentrate wealth among the few in the world? JP Morgan, the founder, was astute at this kind of global financial focus many years back shortly after the Civil War.

There is no surprise that Wall Street bankers are arrogant and self-centered. Although JP Morgan served the US well with his financing of Thomas Edison, and his investments in infrastructure, big banking seems to have been conceived out of arrogance and dominance, the necessity of centralized global power in banking. Some may assert that it is simply human nature. OK. Regulation is then mandatory, perhaps the kind that is revisited for efficacy and maintained for stability.

As a member of Congress how is it that Congress' oversight of the Federal Reserve went completely unwatched? For many yeas Alan Greenspan was instead a revered demigod of sorts with Congress shaking its heads in agreement to everything he proposed. I have written here on Being Alan Greenspan that included a scathing critique by Bill Flickenstein. He has written of Greenspan often, beginning some years back. Mr. Flickenstein provided more oversight over the past years than members of Congress on the right, left and center. They, by and large, seem to have their self-interest at heart, one that seems to go straight to the heart of campaign financing in order to keep their "illustrious" civil servant careers.

I hope that Mr. Frank will have to answer hard-hitting questions, perhaps from those coming from the people. While Arianna Huffington never seems to shy away from hard-hitting questions for all sides, Democrats and Republicans, I also understand that polticially sometimes it is not always the platform, especially considering certain shows on certain networks work, not to mention the rescuitation of CNBC. My very wealthy Republican partner said that since Taleb and Roubini will be on Squawk Box with Huffington that he will sell short on Tuesday. As one who does not take tips from anyone, he took Huffington's guest appearance on Squawk Box with Taleb and Roubini as Tuesday tip. That was funny! Truth generates short-selling.

I'm really looking forward to the show on Tuesday. Maybe Huffington should have a show every Tuesday. It would be great to have a finance show that addresses critical issues and how decisions made by government and private coroporations affect the masses. The perfect storm seems to have been created in that the masses were duped, though not without culpability with the complicit will of Congress through legislation and the creation policy for the likes of Fannie Mae and Freddie Mac, to accept mortgages so that individuals and Wall Street banks could collect billions of dollars in fees beforehand and a bailout thereafter.
These are some of the questions and thoughts that I'd like to see addressed when Arianna Huffington hosts Squawk Box this Tuesday. What would you like answered or what comments would you make?

Being the Federal Reserve

According to Wikipedia, the Federal Reserve has the responsibility of "ensuring the the stability of the financial system." Its current responsibilities include:

To address the problem of banking panics
To serve as the central bank for the United States
To strike a balance between private interests of banks and the centralized responsibility of government
To supervise and regulate banking institutions
To protect the credit rights of consumers
To manage the nation's money supply through monetary policy to achieve the sometimes conflicting goals of maximum employment stable prices, including prevention of either inflation or deflation moderate long-term interest rates
To maintain the stability of the financial system and contain systemic risk in financial markets
To provide financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system
To facilitate the exchange of payments among regions
To respond to local liquidity needs
To strengthen U.S. standing in the world economy

Considering that we have had major financial crises, including the Saving and Loans Crises of the 1980s and 1990s with the then revered Alan Greenspan as the chairman for nearly 30 years from 1987 to 2006 under 4 presidents, can the Federal Reserve accomplish these goals?

Should the Federal Reserve be disbanded? If so, for what if anything?

Being Alan Greenspan

While watching Alan Greenspan speak before the Economic Club of New York yesterday, I must admit to being a little more than miffed as he spoke about the financial crisis. I wondered if he should be in Florida relaxing and not speaking as he was the Fed chairman for nearly 30 years from 1987 to 2006.

As I listened to Mr. Greenspan explain away the crisis as something that happens once in "99 years," I was extremely annoyed. Is this a way to excuse his apparent incompetence and that of other economists? As he spoke I could not help but say aloud, "words words words."

Last week President Obama joked in a press conference that "we are all economists now." As I write these words, I am fully aware that I am not an economist. But that does not mean that I lack common sense, neither does it stop me from being livid at those trained experts that are now addressing the crisis.

During the New York conference I heard the term "financially literate" to refer to economists. Can we really refer to those who brought us to this moment of international financial collapse as "financially literate?"

In an article, "Greenspan the Worst Fed Chief Ever," Bill Flickenstein has doubts about the ability and honesty of some economists. He says of Mr. Greenspan:

Even if any of his protestations were true (which I don't believe) and the Fed was afraid of damaging the economy, it has been granted specific tools to deal with periods of speculation. Among them: Regulation T, whereby margin requirements can be raised to reduce risk and change market psychology. (While raising margin requirements to even 100% may or may not have been sufficient to break the stock bubble, the Fed could have at least tried. If that failed, the Fed could then have tightened.) However, for Greenspan to pretend that all he could have done was to raise rates shows that either he doesn't know what the Fed's tools are (i.e., he's clueless) -- or he's not being truthful...

The Fed could also ask Congress to resuscitate the old Regulation X. Part of the Defense Production Act of 1950, this regulation let the Fed set minimum downpayments and maximum mortgage-repayment periods for residential properties. The Fed gave up the authority a few years later.

Of course, when Greenspan wails about not wanting to hurt the economy with rate hikes, none of his lapdogs in the press ever seem to question why the Fed hasn't used the tools at its disposal.

In any case, part of my reason for re-titling Greenspan's speech is due to the following comment: "After the bursting of the stock market bubble in 2000, unlike previous periods following large financial shocks, no major financial institution defaulted, and the economy held up far better than many had anticipated." And we all lived happily ever after.

What I'd like to know is: If this was all so benign, why did he and helicopter copilot Ben Bernanke panic -- to the tune of 13 rate cuts, all the way down to 1% -- about the possibility of deflation in 2001 as the stock bubble unwound? Were it not for the even bigger, more dangerous housing bubble that Greenspan has in turn precipitated, which has only postponed the inevitable, the fallout would have been commensurate with the size of the boom...

Now, do you see why I, an avowed non-economist, would say "words words words?"