The Quiet Coup

[Parsad]

From Atlantic.com:

 

http://www.theatlantic.com/doc/200905/imf-advice

 

Cheers!

[Mungerville]

Very good article.

[Guest Broxburnboy]

Great article by a qualified analyst.. the IMF is one of the few institutions with the necessary expertise, without an axe to grind, which is

qualified to analyse the banking situation. He also offers the logical solution:

 

"The challenges the United States faces are familiar territory to the people at the IMF. If you hid the name of the country and just showed them the numbers, there is no doubt what old IMF hands would say: nationalize troubled banks and break them up as necessary."

 

Important read for all would be investors... good post.

[Carvel46]

I would add the NYT article, Geithner, Member and Overseer of Finance Club

 

http://www.nytimes.com/2009/04/27/business/27geithner.html?_r=2&ref=business&pagewanted=all

 

Explores the intellectual capture on the regulator side...

[Packer16]

Great Article.  We need to get the free back in free enterprise by busting the finance and labor trusts.

 

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[Guest Broxburnboy]

"We need to get the free back in free enterprise by busting the finance and labor trusts"

 

Labour trusts have long since been broken up and their role in acting to counterbalance the power of supply side trusts has long since diminished in a large part by 

the globalization of production .

This crisis is the result of the imbalance of economic power the supply side has accumulated. Right now it has the power and is using it to shift all the finance system's real losses

to the taxpayer and the taxpayers descendants.

Few have commented on the fact that the American taxpayer has a distinct aversion to paying taxes but expects at least a minimum of services for the taxes it already pays.

The balance sheet of the US government is spiralling out of control due to the alarming increase of budget deficits and the projected increase in the accumulated national debt.

This must be resolved by either raising more revenue (taxes), diluting the money supply (inflation), cutting expenditures (eliminating or severely curtailing medicare, education, defense and social security) or a combination of all of the above. In the face of the inability or unwillingess of government to implement these remedies, the inevitable result will be a defacto bankruptcy of the US government and the death of the US dollar.

None of these necessary solutions bodes well for the real disposable income of the american consumer and prospects of an economic recovery in general. Nor does it bode well

for the real purchasing power of the US dollar. The bankers are beginning to be much happier, but the rescue of Wall street is at the expense of the broader economy.

[Carvel46]

Moyers, of PBS, did a few interviews with Simon Johnson.

This one explores the Pecora hearings during the 1930s... really great!

http://www.pbs.org/moyers/journal/04242009/watch.html

 

Simon Johnson also has terrific blog

http://baselinescenario.com/

[Packer16]

I agree that much of the labor trust has been in decline except in two important areas - gov't employees and in the US auto industry.  The gov't employee trust needs to be busted as increasing demand for their services (and more spending on them) will not lead to better outcomes but more money in the hands if the monopolists (i.e. the unions and union employees).  This has and will become more apparent governments try to become better stewards of our dollars but a constrained by these monopolists. 

 

The same can be said for the US auto manufacturers.  How has the labor monopoly helped these firms without a product monopoly to protect corporate profits? It has not.  When I hear of the what these folks think are concessions (i.e. no more company discounts and getting paid for not working), I wonder what planet these folks are from.  I know people in the non-monopoly part of the economy (where the customer is in charge), these benefits were never part of their work package.  I have a hard time understanding how the gov't helping a monopolists helps anyone but the monopolists.  If we want to save auto manufacturers, then putting it in the hands of any monopolist (labor or product) is the surest way to destroy them and waste alot of money doing it.   

 

I am also having a hard time understanding what you mean by supply-side folks.  Are they crony capitalists who are protecting their monopoly positions?  Do they also include free market capitalist that make products and services that add value to society? The across the board tax cuts effects both but the bailouts only effect the former.  I think the reason people don't like the bailouts is because the gains were from their favored position with their gov't and not from capitalist wealth generation where the customer and not the firm providing the service is king.

 

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[Guest Broxburnboy]

Labour unions were not responsible for the fall of the domestic car industry, although they are a convenient whipping boy when things are bad. No one credits the productivity of the union worker when companies are wildly profitable. Shareholders and management take the credit (and the profits) then.  I think it would be far more accurate to say that the troubles at GM are a result of poor management and a complacent corporate mindset which refused to make the necessary innovations and investment. Granted unions were a partner in this complacency, but they were hardly the originators of the mindset. GM  relied on the "moat" they had built in the marketplace through sheer dominance, advertising, and the occasional government subsidy to counteract those market forces which punishes inefficient producers (and drives wages down). Eventually this management model must fail, as government subsidy only entrenches complacency and postpones/worsens the eventual reckoning, from which the unionized worker is not sheltered.

It's always amazing to me when the government worker is dragged out to be publicly chastised because they are paid too much, although private sector workers are almost always better paid for similar work. Again they are a convenient bogey man for those who feel they pay too much tax. But let's look at how one government department is run right now for example the defense department and specifically the Iraq initiative. There are currently about 200,000 military personnel and another 200,000 private sector contractors on the US govt. payroll there. Everyone knows that military pay is minimal, but the private sector contractors doing similar work to the soldier is acually paid quite well.. generous benefits, employment benefits and frequently, danger pay... he may quit and go home if he wants. They work for corporations who have garnered their contracts through political influence often without procurement competition (again due to cronyism/sponsorship/influence buying) . These contracts are wildly profitable and poorly audited, the quality of the work they produce is questionable and again poorly audited. Yet somehow the overpaid military employee is responsible for the failure to produce results?

The fact is that the economy is captained by corporate interests who have consolidated their market dominance by monopolistic practices and the sponsorship of political parties and individuals. Government has been turned into an ATM for Wall Street and connected monopolies/cartels. The government worker, like any other "average" taxpayer is one of the victims

of this economic model, certainly not one of its beneficiaries.

[Packer16]

I think we agree that the best result is to have true free enterprise with the customer getting the benefits and the firms and the employees working as hard as they can to meet the need.  I am just having a hard time understanding how unions (who in my mind in many cases have the same mentality as failed managements & don't get replaced (i.e have no competition)) are helping the situation.  In addition, I am trying to understand who you include in supply-side folks? 

 

If labor unions are not a major part of the problem then why have foreign transplants not had the same problems as domestic firms?  If it was just the legacy health and pension costs, why were they not spun-off in the bankruptcy so a viable set of firms can emerge without these costs.  Everyone knows there are wage gaps and the unions have not taken pay cuts.  I think the issue is more of a competitive industry and unions trying to maximize wages like the airlines and the unions not realizing times have changed.

 

As to the military/contractor analogy, I think it is the exception and not the rule.  I was an officer in the US Air Force and I can tell you the military is filled with some of the best and brightest talent in the country serving the country for many reasons the last of which is money.  I think the wage differential shows just how much they are underpaid but if other government employees played by the military rules of the game (military code of conduct and up and out rules) I wouldn't have a problem hiring as many as needed but many do not.

 

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