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http://www.reuters.com/article/ousiv/idUSSP21695020080819

SINGAPORE (Reuters) - The worst of the global financial crisis is yet to come and a large U.S. bank will fail in the next few months as the world's biggest economy hits further troubles, former IMF chief economist Kenneth Rogoff said on Tuesday.

"The U.S. is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say 'the worst is to come'," he told a financial conference.

"We're not just going to see mid-sized banks go under in the next few months, we're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks," said Rogoff, who is an economics professor at Harvard University and was the International Monetary Fund's chief economist from 2001 to 2004.

"We have to see more consolidation in the financial sector before this is over," he said, when asked for early signs of an end to the crisis.

"Probably Fannie Mae and Freddie Mac -- despite what U.S. Treasury Secretary Hank Paulson said -- these giant mortgage guarantee agencies are not going to exist in their present form in a few years."

Rogoff's comments come as investors dumped shares of the largest U.S. home funding companies Fannie Mae and Freddie Mac on Monday after a newspaper report said government officials may have no choice but to effectively nationalize the U.S. housing finance titans.

A government move to recapitalize the two companies by injecting funds could wipe out existing common stock holders, the weekend Barron's story said. Preferred shareholders and even holders of the two government-sponsored entities' $19 billion of subordinated debt would also suffer losses.

Rogoff said multi-billion dollar investments by sovereign wealth funds from Asia and the Middle East in western financial firms may not necessarily result in large profits because they had not taken into account the broader market conditions that the industry faces.

"There was this view early on in the crisis that sovereign wealth funds could save everybody. Investment banks did something stupid, they lost money in the sub-prime, they're great buys, sovereign wealth funds come in and make a lot of money by buying them.

"That view neglects the point that the financial system has become very bloated in size and needed to shrink," Rogoff told the conference in Singapore, whose wealth funds GIC and Temasek have invested billions in Merrill Lynch and Citigroup

In response to the sharp U.S. housing retrenchment and turmoil in credit markets, the U.S. Federal Reserve has reduced interest rates by a cumulative 3.25 percentage points to 2 percent since mid-September.

Rogoff said the U.S. Federal Reserve was wrong to cut interest rates as "dramatically" as it did.

"Cutting interest rates is going to lead to a lot of inflation in the next few years in the United States."

Rampant, unregulated capitalism
1929/2009
 

 

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cute pic Dissident!


but i digress:

I've been hearing chatter that WACHOVIA is going to go under. Wouldn't that be a mess? Wasn't Wachovia under scrutiny regarding blacks and loan practices not long ago? Still, a lot of black people i know do their banking with Wachovia.

Did anybody notice the number of Federal reserve people making the talk show rounds after IndyMac, and reassuring folks that as long as their accounts are FDIC insured, they're safe?

Also, they kept stressing that banks fail all the time, we're just not aware of it

troubling times...
quote:
Originally posted by negrospiritual:
cute pic Dissident!


but i digress:

I've been hearing chatter that WACHOVIA is going to go under. Wouldn't that be a mess? Wasn't Wachovia under scrutiny regarding blacks and loan practices not long ago? Still, a lot of black people i know do their banking with Wachovia.

Did anybody notice the number of Federal reserve people making the talk show rounds after IndyMac, and reassuring folks that as long as their accounts are FDIC insured, they're safe?

Also, they kept stressing that banks fail all the time, we're just not aware of it

troubling times...


Thanks.

On point, NS.

I'm trying to figure out where this is heading. I'm certain there's much the Federal Reserve is withholding. A number of economist often contradict the rhetoric coming from the board of governors on the federal reserve. Some say the worst is yet to come. Very troubling times indeed.

Recently my mortgage lender received a federal bailout, then later purchased by a major bank which is experiencing it's own financial troubles. There isn't a day that goes by where I'm not nervously reviewing my lenders stock - preparing for the worst case scenario. Between this economic crisis and Schwarzenegger trying to terminate our arbitrary contracts, this political and economic system needs massive restructuring.

I'm a fierce opponent of runaway, unfeathered capitalism which led to this banking and real estate mess. These right-wing stooges (Jlokes AKA Constructive Feedback) who continually support predatory capitalism don't comprehend that the maldistribution of wealth almost always leads to an unstable economy which we are currently experiencing today.
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quote:
Originally posted by jlokes:
Anyone with under 150,000 dollars in their account is just fine.


Tell that to all the people now living paycheck-to-paycheck, experiencing living standard decreases, having to move into cheaper houses, eye-deep in debt or living in a state of fear at work of being fired at any moment because busineses are now allowed to fire people for no reason.
quote:
Originally posted by jlokes:
Anyone with under 150,000 dollars in their account is just fine. Anyone with over that amount deserves to lose their money because they made bad investments.

The governments job is not to bail out these rich assholes, they can fail just like the rest of us.


LJokes, er ... JLokes,

$150K? Try $100K, but that still wouldn't effect anyone I know.

quote:
I've been hearing chatter that WACHOVIA is going to go under.


NS, I've heard the names WaMu (Washington Mutual) and Citicorp.

quote:
right-wing stooges (Jlokes AKA Constructive Feedback) who continually support predatory capitalism don't comprehend that the maldistribution of wealth almost always leads to an unstable economy which we are currently experiencing today.


I heard something [about 6 years ago] that made me think. I read where the Clinton and Bush administrations through deregulation and globalization have set the stage for the largest transfer of wealth in history. And sure enough, it is coming to pass.

The Globalization [that we are subsidizing via our tax dollars] is costing the US jobs and standard of living. Though the worker is being hurt, the wealthy are not because their wealth is not dependant on their effort [i.e., work], but on the work of others. In fact, as the US worker falls, the US wealthy rise.

The majority of americans store[d] the vast majority of their wealth in their homes. Folks are losing value in, if not outright, their homes, i.e., wealth.

And, it ain't over, the next crunch to hit is in consumer credit and our government has already moved to tighten the BK rules, making it almost impossible for other than the wealthy to get completely from underneath unsecured debt.

I saw something else the other day ... a bumper sticker that read: "If you're not angry - You're not paying attention."

And Wiz,

quote:
Wow this is such a mess. People are being forclosed and it seems that because of the construction of mortgage backed securities, the owners of the mortgages can not be found.


Thanks for reminding me. I had been following several lawsuits filed by community organizations like ACORN asserting exactly that ... the foreclosures fail to identify the proper owner of the paper [the servicer is insufficient] therefore the forecloses are defective, and unlawful.

I really need to get back to this issue.
quote:
Originally posted by Kweli4Real:

I heard something [about 6 years ago] that made me think. I read where the Clinton and Bush administrations through deregulation and globalization have set the stage for the largest transfer of wealth in history. And sure enough, it is coming to pass.



at the same time they were "ending welfare as we know it", but not as we don't know it (corporate welfare and tax breaks).

Heard a discussion on how the investor class is given tax breaks on damn near everything, but when their ventures fail...

it's the TAXPAYER, not the investor class that has to bail them out. so taxpayers are really getting screwed with no vaseline because taxpayers give tax breaks to entice businesses to certain locations in the first place...

they they get laid off or outsourced....

the companies pay very little income tax...

and then taxpayers bail them out....
quote:
Originally posted by Dissident:
right-wing stooges (Jlokes AKA Constructive Feedback) who continually support predatory capitalism don't comprehend that the maldistribution of wealth almost always leads to an unstable economy which we are currently experiencing today.


And that's what floors me about most right-wingers (and some centrists and some on the center-left). It's one thing to be a capitalist. Even though I'm not a capitalist, I don't believe a person is unethical for supporting capitalism in and of itself. What floors me is that they tend to support a predatory, rapacious form of capitalism. They'll sit around day and night being apologists for it and accuse more ethical, progressive forms of capitalism to actually be unethical. In their minds, supporting labor rights is unethical. Right-wingers tend to be pro-management and anti-worker because they view workplaces as "Well, it's the owner/manager's property and they can do whatever they want on it" and workers are just supposed to put up with whatever happens there or just leave. Worker rights are actually seen as being unfair to the 'poor, oppressed' management.

Another thing that gets me is they call giving unlimited power to management "laissez-faire" and taking power away from them "big government" or "economic redistribution". The fact that handing over all power to management and giving them unlimited property rights and power over profits (thus internal economic distribution) is also form of economic redistribution never seems to dawn on them.
quote:
In their minds, supporting labor rights is unethical. Right-wingers tend to be pro-management and anti-worker because they view workplaces as "Well, it's the owner/manager's property and they can do whatever they want on it" and workers are just supposed to put up with whatever happens there or just leave. Worker rights are actually seen as being unfair to the 'poor, oppressed' management.


The only reason i am against "labor rights" is because of my experiences with them. I was a member of the teamsters union for 6 years, and will never forget the ridiculous demands the stewards put on the company. I argued with the asshole stewards for weeks, that the management could not meet the demands the the union wanted. It came down to the fact that the union people wanted to make more then the position demanded. It was not very hard to see what was coming. The company simply fired everyone and moved to a more profitable area.

I see the same thing happening with the UAW.

There is a market wage that needs to be followed. If you can pay people 15/hr to do the same job as the people making 35/hr why wouldn't you move. The free trade agreements killed the high paying unskilled jobs in America.

Mr democrat himself pushed NAFTA through
quote:
Originally posted by Empty Purnata:
quote:
Originally posted by Dissident:
right-wing stooges (Jlokes AKA Constructive Feedback) who continually support predatory capitalism don't comprehend that the maldistribution of wealth almost always leads to an unstable economy which we are currently experiencing today.


And that's what floors me about most right-wingers (and some centrists and some on the center-left). It's one thing to be a capitalist. Even though I'm not a capitalist, I don't believe a person is unethical for supporting capitalism in and of itself. What floors me is that they tend to support a predatory, rapacious form of capitalism. They'll sit around day and night being apologists for it and accuse more ethical, progressive forms of capitalism to actually be unethical. In their minds, supporting labor rights is unethical. Right-wingers tend to be pro-management and anti-worker because they view workplaces as "Well, it's the owner/manager's property and they can do whatever they want on it" and workers are just supposed to put up with whatever happens there or just leave. Worker rights are actually seen as being unfair to the 'poor, oppressed' management.

Another thing that gets me is they call giving unlimited power to management "laissez-faire" and taking power away from them "big government" or "economic redistribution". The fact that handing over all power to management and giving them unlimited property rights and power over profits (thus internal economic distribution) is also form of economic redistribution never seems to dawn on them.


I hear ya, EP. Everything you conveyed is on point as usual. Pro-management right-wingers consistently fail to comprehend or simply don't give a damn they are NOT giving the employee anything. We (labor) are entering a mutual and binding contract with the employer. Employees are paid to perform for a specific service. However the employer/management routinely tries to undermine labor and force the employee to accept conditions out of terms while the employer fails to live up to their initial obligations in accordance to an arbitrary and binding contract with the employee. This is capitalism at it's worst. I'm tired of it. And I'm tired of laissez-faire economics which will eventually bring this country the second great depression.

But to top that off, what's worse are democrats who vote for politicians who are knowingly anti-worker/anti-union. This is the problem California state employees are going through right now. Schwarzenegger hoodwinked more dems to vote for him than the usual percentage - many who were state employees and some who are in my department. Now this son of a bitch wants to layoff thousands of state employees and reduce our salary to the federal minimum wage. Cant survive on minimum wage in California. People around here are rightfully scared. I tried to convince my cohorts not to vote for Schwarzenegger. They didn't listen. They were too busy being starstruck with a narcissistic bad actor who didn't give a hoot about workers rights. Now we are all paying the price.

Nothing good can ever come from the right-wing. Moderates and conservatives are almost always anti-labor. Their dream is to turn this country into a Pinochet-style corporatist dictatorship. Those dems that voted for Schwarzenegger, a closet fascist, look rather foolish right about now. I don't know where all this is leading but it isn't good. Sometimes I feel like throwing my hands up.

Anyway you're on the right track which is the LEFT, EP. Keep on doing your thing.

Peace.
quote:
U.S. bank will fail in the next few months as the world's biggest economy hits further troubles, former IMF chief economist Kenneth Rogoff said on Tuesday.


quote:
Rogoff received a B.A. from Yale University summa cum laude in 1975, and a Ph.D. in Economics from the Massachusetts Institute of Technology in 1980.

http://en.wikipedia.org/wiki/Kenneth_Rogoff

So he is old enough to remember the moon landing. Couldn't he figure out planned obsolescence has been going on in cars by now?

I haven't heard any economists talking about mandatory accounting or how much wealth Americans lose on depreciation of crapmobiles. But those banks make money on car loans and we can be sure they do their accounting to try to collect. The greed just gets carried away periodically and they start giving lots of bad loans.

50 years of bad loans on cars. The people that borrowed the money and payed the loans have nothing left to show for it. And the economists don't even have the courtesy to compute the depreciation.

um
quote:
Originally posted by jlokes:
The only reason i am against "labor rights" is because of my experiences with them. I was a member of the teamsters union for 6 years, and will never forget the ridiculous demands the stewards put on the company.


I'm not sure which demands were ridiculous, having never been a union member myself (I was actually a manager at the job before my last one), but I have heard people complain about some of the actions of today's unions. That's largely because today's unions are nothing like the ones which were formed in the US between the 1880's and the 1940's. Most unions today are friends with management and arranged in avertical, hierarchical fashion where the people at the "bottom" of the union, the "unskilled laborers" have almost no say while the union managers are out having lunches with the company executives. Unions today rarely do anything that actually challenges unfair practices or exploitation and prefer to go after mickey mouse issues. Not unlike the NAACP today.

That said, even though I think unions today need to be reformed from the ground up, better weak unions than none at all. One only needs to look at places like Chile under Pinochet, South Korea under Park Chung-hee's dictatorship in the 60's and 70's and Zaire under Mobutu to see how much worse things could be when management is given absolute power in an economy. Those places were virtually countries turned into one big sweatshop.

quote:
I argued with the asshole stewards for weeks, that the management could not meet the demands the the union wanted. It came down to the fact that the union people wanted to make more then the position demanded. It was not very hard to see what was coming. The company simply fired everyone and moved to a more profitable area.


I don't know what all your working experiences are, but in my working experience, and my parents', the most problems have always come from management. In my last two jobs management was inept and incompetent, but there were no unions so all the employees had to make up for and fix the fuck-ups of management. The employees ran the damn company better than 90-95% of the managers. And since shit rolls downhill in companies, labor would always have to take the fall and the paycheck losses for when management would screw up and cost the company money or lose profit. In my second-to-last job, I was harrassed by other managers because I was one of the few managers who treated the employees like equal humans and would go out of my way to help them clean up or fix problems caused by some of management's stupid reforms and shortcuts. Most of which involved lowering the minimum wage at the job, reducing break time, reducing employee perks, giving customers more absolute power even when they screw up, and charging employees for meals when they had previously been a job perk. All while giving managers a 20% annual pay raise and shorter work hours.

quote:
There is a market wage that needs to be followed.


Markets don't determine wages, employers do. That's one of the myths of modern 'laissez-faire economics'. Or should I say "neoliberalism" since modern "laissez-faire" has little to do with classical laissez-faire theories of Adam Smith and David Ricardo.

quote:
If you can pay people 15/hr to do the same job as the people making 35/hr why wouldn't you move.


That's almost never how it works. Often people are payed $17/hr to do a particular job while management pays itself $250/hr to do a job that is not really any more difficult than the non-executive job. Often management jobs just consist of overseeing, making some decisions on what to do with revenues and costs and occassional meetings. Nothing truly worth a $350,000-$1,500,000/year salary. Management jobs usually aren't much more difficult than labor jobs. Sometimes they can be easier.

quote:
The free trade agreements killed the high paying unskilled jobs in America.

Mr democrat himself pushed NAFTA through


I know, and I'm not going to defend Clinton. I'm not a Democrat and even if I was I still wouldn't defend the actions he took which hurt people in several countries.
quote:
Empty Purnata


Very good argument. I personally have not dealt with the situations that you have, but i can understand the points, and that it does happen.

My problem with the unions around here is that they do not understand that when the company is making shit tons of money the employees can also make a shit ton of money and have great benefits. When the company it not doing well, they have to cut costs. This is Usually the working class.

For example:
Toyota had the choice to build a new plant in Michigan or Tennessee.

They built it in Tennessee because they could pay 15$/hr versus union wages of 35$/hr. Screw the tax cuts Michigan offered, a fair wage will always be more profitable , then the salary the unions demand.

In my opinion(and experience) unions hurt the working class more then they help them. It was necessary back in the day, but the people have spoken and the union shop may be dead.

Now granted the union concept was great and very needed back in the day, but the global economy and free trade agreements have taken that off the board.

I made way more money because i was a teamster and they fought for my rights. It was great but my company shut down and went to Minnesota to employ people who where not union employees. The fact that the company could get the same job done for 1/2 the labor costs in another state, jaded me about the effectiveness of unions.
quote:
Originally posted by jlokes:
quote:
Empty Purnata


Very good argument. I personally have not dealt with the situations that you have, but i can understand the points, and that it does happen.

My problem with the unions around here is that they do not understand that when the company is making shit tons of money the employees can also make a shit ton of money and have great benefits. When the company it not doing well, they have to cut costs. This is Usually the working class.

For example:
Toyota had the choice to build a new plant in Michigan or Tennessee.

They built it in Tennessee because they could pay 15$/hr versus union wages of 35$/hr. Screw the tax cuts Michigan offered, a fair wage will always be more profitable , then the salary the unions demand.


That's a bad example. As an amateur economist, that was one of the case studies I had to personally do a report on for one of my Econ classes. They aren't doing anything for workers and the way they hurt the Michigan economy is nothing to pat them on the back for.

http://www.commondreams.org/archive/2007/09/04/3616/

quote:
The UAW raised living standards for everyone in the US. We wouldn't have a middle class without the big industrial unions and how they raised standards and expectations for work. Health insurance at the workplace was created through union contracts. Other businesses followed suit only because they needed workers. You don't like the UAW? Don't use your workplace health insurance. Give back your overtime pay, etc.


I've always found it humorous (in a dark sort of way) that since the late 70's and early 80's there have been a lot of middle class Americans ranting and railing against labor unions and pro-worker measures. The very same measures that built the American "middle class" are now being torn down with the thunderous approval of many in that "middle class", then every year they wonder why their mobility has gone down and why the middle class is dying.

quote:
In my opinion(and experience) unions hurt the working class more then they help them.


That is if you consider their meager work to somewhat look out for the interests of some employees tempting companies to go look for cheap sweatshop labor elsewhere to be "harmful". That sounds like the fault of management wanting cheap labor, not the fault of unions for giving a damn.

quote:
It was necessary back in the day, but the people have spoken and the union shop may be dead.


American companies are trying to rape both American and non-American workers. And the worst part is that these days you have American workers defending the rape of their own economic interests. At least back in the "old days" people were wise enough to realize that they and management had two different goals. The goals of management is to make as much profit as possible for the lowest possible cost. The goals of labor are to make as high a salary as possible for the least strenuous work and hours possible.

It's still that way today but today we have more believers in trickle-down economics and "what's good for the goose is good for the gander" economics.

quote:
Now granted the union concept was great and very needed back in the day, but the global economy and free trade agreements have taken that off the board.


The world is not flat:

http://www.cgdev.org/content/opinion/detail/4793/

http://lisdom.blogspot.com/2005/08/world-is-not-flat.html

And "free trade" (which current trade is anything but, at least when it comes to "free trade" the way Adam Smith and his contemporaries strove for) is doing anything but helping workers receive more:

http://skeptically.org/ecodev/id3.html

quote:
I made way more money because i was a teamster and they fought for my rights. It was great but my company shut down and went to Minnesota to employ people who where not union employees. The fact that the company could get the same job done for 1/2 the labor costs in another state, jaded me about the effectiveness of unions.


So you're saying if the lousy old unions would have just left things alone and let the company keep seeking to lower wages all would have been okay?

Instead of blaming the unions (which I agree are crappy today), sounds like we should be blaming laws which allow companies to use the old "accept my slave wages or I'll leave you people to rot" leverage.

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