GALBRAITH was a guy who knew how to make government work to improve life for ALL Americans.

[Octafish]

Younger DUers, you may not believe it, but there was a time when the big and powerful didn't prey on the weak and small.
Some believed the powers of government should be used to actually help the weak and small and poor, as well as the middle classes.
In fact, they believed the powers of the U.S. Government should be used to help ALL Americans, not just the well-to-do.
One such person was John Kenneth Galbraith, diplomat, economist, author, intellectual, humanitarian and Liberal Democrat.

A Galbraith Revival

James K. Galbraith
June 07, 2005
TomPaine.com

EXCERPT...

It's therefore not too early to give a blueprint for a Galbraith revival.

SNIP...

Democracy. The civil rights struggle of our time must be to regain, for all Americans, the right to vote, the practical capacity to exercise that right, and the right to a full, accurate and verified count. I was in Columbus, Ohio, on election day. I saw the voting machine shortages and the two and three hour lines they produced. I spoke with voters who came to vote and could not stay. That's the simple reality, in part, of how the court-picked government of 2000 was returned to power in 2004. I ask you not to let it happen again—not in Florida, not in Ohio, and not anywhere else.

Peace. The world is dangerous but war is no solution. Sixty years ago my father showed what bombing cannot do. Iraq now shows what an occupation army cannot achieve. Undaunted, some seek a wider war and a deeper disaster. We say, No. Let's work instead to end the war we are in. And if we need new strategists, unafraid to weigh the costs of war, let's get them. My father contributed one line to John F. Kennedy's inaugural address: "Let us never negotiate from fear, but let us never fear to negotiate."

It's not the most soaring line in that speech, but it's perhaps the one we need most today. Above all, let us rise to the warning just issued by Robert McNamara, that our nuclear policy is "illegal, immoral, militarily unnecessary and dreadfully dangerous." Life itself is at stake on this point, and about no other does my father care more deeply. It is truly time to stop the bomb.

Truth. Yesterday, we were reminded dramatically that three decades ago Watergate taught us the potential for malice in high office and cleansing power of revelation. When did Bush decide to invade Iraq and why? Who ordered and who approved the disgrace of Guantanamo and Abu Ghraib? Why and how did the trail of Osama bin Laden grow cold? We are passing through a sorry moment of history. These and many other questions demand answers, and they will continue to do so, long after this administration leaves town.

Finally, inevitably, a word on economics. Full employment prosperity is not a birthright, it must be earned. It doesn't come by magic, by cutting deficits or through prayer to the Great God Greenspan. Full employment prosperity must be created in the solution of our own national problems. Let's therefore rebuild our cities, conserve our energy resources, save education, extend health care, restore the environment and preserve Social Security. When we have taken back America, we will surely have to rebuild it, finally ending the long age of "public squalor" of which my father wrote in The Affluent Society 50 years ago.

CONTINUED...

http://www.tompaine.com/articles/2006/05/01/a_galbraith_revival.php

The above was written in 2005. More and more each day, we can see the United States needs a New Deal for the 21st Century.

Here's hoping we start in 2011.

[truedelphi]

1. Contrast John Galbraith with Tim Geithner, and you can

Easily see everything that is now wrong with this nation.

While Geithner allowed Bernakne funnelled gawd knows how many dollars out of our Treausry, (Thirteen trillion? Thirty trillion?) Galbraith understood that unlimited largesse to the banks was not a smart move.

Notice that during his lifetime, the nation adopted Glass Steagall. And despite all the hullabaloo about the "historic" Financial regulation of 2010, our elected officials have stayed away from, re-implementing anything with the teeth of a Glass Steagall.

[Octafish]

5. Obama's Problem Simply Defined: It Was the Banks

Galbraith's son's fiscal analysis matches yours, precisely, truedelphi.

Obama's Problem Simply Defined: It Was the Banks

James K. Galbraith
Huffington Post
November 5, 2010 04:16 PM

Bruce Bartlett says it was a failure to focus. Paul Krugman says it was a failure of nerve. Nancy Pelosi says it was the economy's failure. Barack Obama says it was his own failure -- to explain that he was, in fact, focused on the economy.

As Krugman rightly stipulates, Monday-morning quarterbacks should say exactly what different play they would have called. Paul's answer is that the stimulus package should have been bigger. No disagreement: I was one voice calling for a much larger program back when. Yet this answer is not sufficient.

The original sin of Obama's presidency was to assign economic policy to a closed circle of bank-friendly economists and Bush carryovers. Larry Summers. Timothy Geithner. Ben Bernanke. These men had no personal commitment to the goal of an early recovery, no stake in the Democratic Party, no interest in the larger success of Barack Obama. Their primary goal, instead, was and remains to protect their own past decisions and their own professional futures.

CONTINUED...

http://www.huffingtonpost.com/james-k-galbraith/obamas-probelm-simply-def_b_779711.html

Great thinks, minds alike.

[sabrina 1]

31. It makes you wonder why the president did not appoint

Galbraith, rather than tax cheat, Geithner? Was Geithner his choice, or do presidents get to the WH and then discover that all they are are PR people for the real rulers of the country, 'or else'? I know that's a crazy thought but the difference in this president and the candidate he was is so remarkable you have to wonder 'what happened'?

[truedelphi]

2. Proud to be kickety number five.

Off to the greatest with ye, Octafish.

[Octafish]

7. As Ambassador, Galbraith was to lead JFK's peace process for Vietnam.

Evidently, Averell Harriman and his people at State had other designs.

Thank you, truedelphi! Happy New Year to You and Yours!

[earth mom]

3. K & R for the good guys!

:kick:

[Octafish]

10. The Galbraith I Knew

His biographer recalls how the late economist warned JFK about Vietnam -- and faulted conservative policies for worsening inequality in America.

Thank you for the kind kick, earth mom! Happy New Year to You and Yours!

[earth mom]

15. Happy New Year to you too Octafish! And Thank you for being one of the good guys!

:yourock:

[jwirr]

4. I remember him as a man you could trust. Wish we had more like him

today.

[Octafish]

16. Galbraith: An Appreciation

Oh, yes. We the People could use a thousand thousand like him.

Galbraith: An Appreciation

by William Greider
The Nation
March 14, 2005

John Kenneth Galbraith was famous long ago as America's most widely read economist, until his expansive understanding of economic liberalism was pushed aside by political events and conservative ideology. Galbraith is still alive, however, and at 96 still writing provocative books (his latest, The Economics of Innocent Fraud, was a bestseller last year in Britain). Let's hope the professor is around long enough to enjoy a Galbraith revival. His books, I feel certain, are going to come back in vogue. When the right's rigid ideology falters and breaks down, sooner perhaps than people imagine, Americans will need an explanation for what went wrong. They can read Galbraith.

The striking quality about the man and his work is how forcefully the books he wrote across nearly fifty years speak to our present circumstances. Read Galbraith to recognize the many important matters--society's condition, for instance--excluded from the brittle, math-obsessed economics that poses as hard science. Study Galbraith's critical voice in the serious public policy debates of his time to appreciate what is missing from today's politics and media. Listen to Galbraith address such taboo subjects as corporate power to understand what honest economists should be confronting now.

The occasion for these observations is the publication of John Kenneth Galbraith: His Life, His Politics, His Economics, a fine new biography by Richard Parker. Parker has wisely chosen to provide a readable historical narrative of large events and intellectual arguments interwoven with the course of Galbraith's extraordinary life. From the New Deal onward, readers can grasp what was driving the country, its politics and economics. Galbraith was a major actor in both. But the book is not just a softheaded homage. His many critics are treated with judicious fairness, as are Galbraith's oversights and corrections. One can observe, with no special pleading by the author, an indomitable spirit--a man often disappointed by events, his ideas repulsed by conventional thinking, yet never embittered. Above all, Galbraith is an empiricist--he understands that facts trump theory--and a sharp contrast with the current crowd of conservative ideologues. Across many decades, Galbraith's liberalism evolved in new directions-- usually tougher and more critical of the complacent mainstream as he proceeded--but always confident that the liberal tradition acts on behalf of common sense and powerless people, that imagining a more perfect world helps to achieve the possible.

Other economists, including some fellow liberals, loathed the man for roughly the same reasons readers loved him. His success as an author made professional colleagues crazy with envy. By Parker's count, he has written a staggering forty-eight books, and the big, celebrated ones sold hundreds of thousands of copies each (an awesome total of 7.5 million). For starters, Galbraith was a bestseller because he writes in English--fluid, magisterial prose with a generous clarity that leads readers across dense and difficult terrain. With droll detachment, he further entertains them with an occasional aside tweaking self-important authority figures, including orthodox economists. His readers were flattered to be included in the joke. Fellow economists retaliated with overwrought rebuttals and muttered contempt.

Memorable aphorisms, scattered throughout the work, are still timely. "What is called sound economics is very often what mirrors the needs of the respectably affluent." Does that not speak to our own times? I first came across this line in one of his unheralded books, money: Whence It Came, Where It Went (1975). These words, I thought, should be engraved on the wall at the House Ways and eans Committee and maybe the Treasury. Though Galbraith was an unwavering adherent of John Maynard Keynes, Money rovided the most succinct, dry-eyed explanation I have read on why Keynesian economics was not used to curb inflation during the 1960s. The doctrine, he explained, expected politicians to raise taxes at the very time citizens were already suffering from inflation--"a peculiarly gratuitous action," Galbraith observed, that would have added insult to injury.

"American liberals have made scarcely a new proposal for reform in 20 years. It is not evident that they have had any important new ideas.... Rather they had a file. Little is ever added. Platform-making consists, in effect, in emptying out the drawers." Does that sound familiar? Galbraith wrote that in 1952, when he found the political imagination of New Deal liberalism already exhausted. "The threat to men of great dignity, privilege and pretense is not from the radicals they revile; it is from accepting their own myth." That line is from The Great Crash, 1929, a book that sold nearly 800,000 copies. His observation also describes the self-inflated corporate titans of recent notoriety.

CONTINUED...

http://johnkennethgalbraith.com/index.php?page=press&display=33

Thank you, jwirr! Happy New Year to You and Yours!

[cali]

6. No, sorry. That's a myth. There was NEVER a time when the rich and powerful

didn't prey on the weak and small. Certainly not in this country.

[ladjf]

9. True, but, there have been times with the rich were

paying a fairer share of their taxes. Our economy worked lots better then.

[cali]

12. Absolutely. But let's not purvey the myth that the rich were once kind and beneficent.

[ladjf]

14. Of course not. I understood your point in your first post.

I simply wished to advance the idea that the rich need to be paying much more than they now do in order for this Country to thrive. Unfortunately, the rich all over the world are doing the same thing. They are neurotically hoarding more wealth and power than they could ever dream of needing.

The final outcome: .005% of the World's population will own 95% of the wealth, a calamity for life on Earth. ALL will suffer.

[H2O Man]

17. While I did not

write the OP -- obviously -- I will venture that the point was that there was a time when an individual who not only elieved in fairness, but who was able to enact policies which aimed for economic justice, were actually able to be in positions of power. And that changed in 1980.

[Octafish]

19. Machine Gun

"Happy new year first of
all. I hope we'll have
a million or two million
more of them... if we
can get over this summer, he- he-he
Right.
I’d like to dedicate this one to
the draggin' scene
that's goin' on all the
soldiers that are fightin' …
in Chicago, Milwaukee and New
York... Oh yea, and
all the soldiers fightin' in
Vietnam. Like to do
a thing called 'machine gun'."

--Jimi Hendrix
New Year’s 1970
Filmore East



Machine Gun

Machine gun,
tearin' my body all apart.

Machine gun, yeah,
tearin' my body all apart.

Evil man make me kill you.
Evil man make you kill me.
Evil man make me kill you,
even though were only families apart.

Well, I pick up my axe and fight like a farmer,
You know what I mean?

Weh, hey, and your bullets keep knockin' me down.

Hey, I pick up my axe an' fight like a farmer now,
yeah, but you still blast me down to the ground.

The same way you shoot me baby,
you'll be goin' just the same, three times the pain.
And with your own self to blame, machine gun!

I ain't afraid of your bullets no more, baby.
I ain't afraid no more.

After awhile, your cheap talk won't even cause me pain,
so let your bullets fly like rain.

'Cause I know all the time your wrong, baby,
and you'll be goin' just the same.

Machine gun,tearin' my family apart.
Hey yeah, alright, tearin' my family apart.

-- Jimi Hendrix, Band of Gypsies

Happy New Year to You and Yours, H20 Man! Message of Love Your Way!

[H2O Man]

27. Oh, yeah!

I love that one. Just love it.. And it fits today's situation so well.

[Octafish]

20. True. But the opposite also is true. Some good leaders have stood up to the rich and powerful.

For example, President Kennedy was against the colonization of the Underdeveloped World. He was more than starting the Peace Corps for show -- it was a way of making the world a better place through peaceful means.

So, rather than forcing nations at the barrel of a gun to do our will, he worked to help people around the world grow crops, build schools, start hospitals, sanitize water supplies. That way, through peace, would build friendships between people and peace between nations.

One example of what I'm talking about is Congo. Imagine what more he could have done with five years?

Maybe we can do it, eh, cali? Happy New Year to You and Yours!

[ladjf]

8. Good piece. Thanks for the share. nt

[freshwest]

18. Same here. Brought up on the man.

[Octafish]

22. Sisyphus as Social Democrat the Life and Legacy of John Kenneth Galbraith

The guy wanted to extend the New Deal into the 21st Century.

Sisyphus as Social Democrat: the Life and Legacy of John Kenneth Galbraith

May 01, 2005

If there were justice in the world, John Kenneth Galbraith would rank as the twentieth century's most influential American economist. He has published several books that are among the best analyses of modern U.S. history, played a key role in midcentury policymaking, and advised more presidents and senators than would seem possible in three lifetimes. Yet today, Galbraith's influence on economics is small, and his influence on U.S. politics is receding by the year.

In this lively and thoughtful biography, Richard Parker sets himself the task of explaining Galbraith's career: why it was so dazzling, and why its long-term impact has turned out to be so much less than expected. The result is not only the story of a smart, witty, and important man, but also a fascinating meditation on the rise and fall of twentieth-century American liberalism.

A MAN FOR ALL SEASONS

That Galbraith's career has been dazzling nobody can dispute. Professors of post-World War II American history can still do no better than to assign his books The Affluent Society and The New Industrial State to teach students how the midcentury U.S. economy came to dominate the world (and what should have been done to make it work better). Anyone wanting to learn about the beginning of the Great Depression should start with The Great Crash; there is no other history of the stock-market crash of 1929 that is as short and even half as worthwhile. During World War II, Galbraith helped run the Office of Price Administration, working to square the growth-inflation circle by pushing production far above economists' measures of potential output without sparking runaway price increases that would threaten the economic mobilization. And after the war, his work on the Defense Department's "United States Strategic Bombing Survey" made Washington rethink the efficacy of its standard war-fighting policy -- staying high in the sky and dropping lots of explosives on all kinds of people far below -- although perhaps the rethinking did not go far enough.

Lots of ideas in the background of contemporary U.S. political and economic thought are Galbraith's. His work as an economist was a scattered but comprehensive attempt to think through the consequences of the transition from a nation of small farms and workshops to one of large factories and superstores. In doing so, he took on many of the questions most central to the new U.S. economic landscape: How much can advertising shape demand? In a world of passive shareholders, autonomous managers and engineers, and firm decisions that emerge out of internal bureaucratic contests, just what are the objectives that drive big firms? How does competition work when its principal dimensions are quality and marketing rather than price? And critically, how do the limits of polite discourse allow the system to hold itself together while constraining its flexibility?

For decades, Galbraith's influence in politics was unmatched by any other economist. The pieces of his advice best remembered are those that went against the "conventional wisdom" (a now ubiquitous phrase that Galbraith coined): strategic bombing did not win World War II; Vietnam was a strategically unimportant quagmire where the United States would do more harm than good; macroeconomic "fine tuning" is likely to blow up in the face of policymakers; the businessman's capacity for self-delusion is nearly infinite. Galbraith sees the United States as a would-be social democracy that has lost its way, assuming that if only the self-serving declarations of the right could be wiped away, the benefits of a bigger, more activist government would become obvious to everyone. The right-wing claim that the most efficient economy is one in which the gales of perfect competition scour the land is, in Galbraith's view, nonsense. Modern industrial and post-industrial production is a large-scale process, large-scale processes require planning, and planning requires stability -- which means that the gales of the market must be calmed.

This political vision, however, has been in retreat since the early 1980s. Nobody wants to hear about the importance of Big Government, Big Bureaucracy, or Big Labor (which hardly even exists). Galbraith's economic views have undergone an even more distressing eclipse. Among economists (excluding economic historians), the 70-year-olds have read Galbraith and think he is very important; the 50-year-olds have read Galbraith and know that the 70-year-olds think he is important but are not sure why; and the 30-year-olds have not even read him.

CONTINUED...

http://johnkennethgalbraith.com/index.php?page=press&display=38

Imagine what a nation -- and what a world! -- this could be.

Thank you, ladjf. Happy New Year to You and Yours!

[xchrom]

11. his influence and like will never come again i'm afraid. nt

[cali]

13. his influence will perhaps not come again, but his like? Of course.

[Octafish]

23. James Galbraith picks up the argument for government intervention where his father left off...

Capital still FEARS Galbraith...and the Truth.

And that's where we come in, my Friend:

Galbraith on the Crash... It Has a Familiar Ring

James Galbraith picks up the argument for government intervention where his father left off. His prescription: Spend now, spend a lot, and spend some more.

by Pat Regnier
Published on Thursday, February 5, 2009 by Fortune Magazine

Until about Sept. 20, 2008, the day Henry Paulson asked Congress for a $700 billion blank check, most of us probably thought we had a decent layman’s grasp of how the economy works and how it grows.

Something like this: Buyers and sellers meet in the marketplace and strike their best bargains. Those may not always turn out to be perfectly fair or wise, but consumers generally know better than the government. Growth comes from the efforts of savers and entrepreneurs, so taxes on them must be kept low. Few argued about this stuff. Liberals just wanted to put a bigger social safety net underneath the markets; conservatives, not so much.

Jamie Galbraith says, ‘Wherever he is, my dad is laughing.”Now that all hell has broken loose, none of that seems obvious anymore. Consumers and businesses know what’s best for them? Allow us to introduce the erstwhile homeowners of San Diego and Las Vegas, and the MBAs of Citigroup (C, Fortune 500) and Lehman Brothers.

The conventional wisdom about economics is up for grabs right now. We’re not speaking here of the conventional wisdom in the economics profession - that moves pretty slowly, and is anyway less wedded to a caricature of infallibly rational markets than most people think. We mean the assumptions that lawmakers, businesspeople, journalists, and educated voters use when they talk about economic problems. Ideas that had been banished to the dustbin are suddenly back on the table, and last year’s gadflies now seem as if they were ahead of the curve. Exhibit A: James K. Galbraith, go-to economist of Nation magazine-style liberalism, unabashed market skeptic, and rock-ribbed Keynesian since before Keynesianism was cool (again).

“Events have moved me to the center - I have not moved,” says Galbraith, sipping coffee in his University of Texas office, which overlooks the presidential library of Lyndon B. Johnson, architect of the Great Society. It’s December, and Galbraith has just returned from Washington, D.C., where he was one of five economists speaking in a closed-door session for House Democrats. In step with a former John McCain campaign advisor and a Clinton administration economist, he argued for a very, very big stimulus package.

“Every previous recession in my professional life has been a shock to a reasonably healthy system,” says Galbraith, who is 57. “This is a general collapse of the core funding mechanism all across the country, and you don’t know what the scale of the base case will be. The task is to come up with a large enough program to get ahead of this unknown tsunami coming our way.”

So what do you call the $850 billion the Democrats asked for in January? For Galbraith, it’s just a good start.

CONTINUED...

http://www.commondreams.org/headline/2009/02/05-6

Thank you, xchrom. Happy New Year to You and Yours!

[Manifestor_of_Light]

21. they refuse to use economics that puts people to work

They deliberately use supply side which does not work.
Galbraith and John Maynard Keynes had doctrines which put people to work and kept the economy going.
I was stunned when I researched Keynes and read some of the things he said. Bertrand Russell said that he was intimidated by Keynes' intellect.

Will nobody listen to the younger Mr. Galbraith, Mr. Krugman, Mr. Reich, or anyone else who says people need jobs for the economy to move??

[Octafish]

25. Just during the campaign...

...then, after the election, the idea of putting people to work seems to have become secondary.

Galbraith on the Crash... It Has a Familiar Ring

James Galbraith picks up the argument for government intervention where his father left off. His prescription: Spend now, spend a lot, and spend some more.

by Pat Regnier
Published on Thursday, February 5, 2009 by Fortune Magazine

EXCERPT...

People are listening

During the presidential campaign, Galbraith was an informal advisor to the Obama team. This was largely a matter of sending e-mail memos, but it helped soothe progressives who worried that the rest of Obama’s economic team was drawn from the centrist, Robert Rubin wing of the party.

And in the midst of the present crisis, Galbraith’s voice reaches beyond the lefty netroots. Last September he played a small role in the Capitol Hill battle over the TARP bailout. On the eve of the failed House vote Galbraith, along with another prominent liberal economist, Dean Baker, and former FDIC chairman William Isaac, spoke before a group of 40 skeptical Democratic members in a basement room of the Capitol, laying out the flaws of the Paulson plan. (Galbraith, alone among that group, recommended voting for it anyway: “I didn’t think Democrats should take responsibility for this bill going down.”)

Galbraith was on the Hill thanks to an invitation from California Representative Adam Schiff, a fiscally conservative Blue Dog Democrat who had read a Galbraith op-ed in the Washington Post proposing an alternative plan. “I was concerned we were not getting a broad enough spectrum of opinion from economists,” says Schiff, who voted against the first version of the bailout bill in part, he says, because of Galbraith’s critique. Galbraith recommended raising the cap on federal deposit insurance and allowing the Treasury to buy preferred shares in banks; both ultimately happened. He also called for a bigger, more direct homeowner rescue and a massive increase in federal spending.

Even in today’s climate Galbraith sits at the leftward edge of polite political conversation. He jokes that he is doing his best to make Larry Summers look like a moderate. Economists across the spectrum, from Krugman to former Reagan economic advisor Martin Feldstein, have blessed the idea of a fiscal stimulus. But Galbraith thinks it needs to be huge and should provide fast, direct aid to people in the form of higher Social Security payments and slashed payroll taxes.

For Galbraith, this is about more than a temporary stimulus. He thinks the crisis is proof that the economy needs the very visible hand of government to ensure long-term stability. And although he concedes that the pervasive wartime price controls administered by his father wouldn’t make sense today, he sees lots of room for government to set wage standards (including caps on CEO pay) and to control prices in key sectors like energy and health care.

Put so baldly, it seems unlikely that this agenda would get much traction in Washington. Then again, the first steps toward nationalizing the banking system came under a Republican administration. Or look at the health-care debate. Almost every liberal reform proposal making the rounds attempts to tackle, in some way, the relentless rise in the cost of health care. Perhaps Galbraith’s most urgent contribution is mainly rhetorical: the idea that it’s okay to speak about “planning” again.

CONTINUED...

http://www.commondreams.org/headline/2009/02/05-6

Than you, Manifestor_of_Light. Happy New Year to You and Yours!

[Overseas]

24. K&R ! I share that hope.

I have been hoping for a New Deal for the 21st Century for a long time now.

It is not a selfish dream. It is a practical need in our country when so much of our infrastructure was allowed to crumble through Republican policies focused on private gain rather than public good. None of us want the next bridge collapse to occur in our own cities. We would love to have "full employment prosperity created in the solution of our own national problems."

We would love it if millions of jobs rebuilding our infrastructure included green technologies and our national oil consumption could be reduced. We know we will need oil for decades to come, and our grandchildren will need it too, so anything we can do to reduce current depletion rates will help them.

We would love it if national health security was considered an essential part of our tax expenditures, not just for the laudable goal of keeping more old and disabled people out of poverty, but for freeing all our citizens from the terror of medical bankruptcy, especially in times of economic turmoil. Most of us believe that is part of "life, liberty and the pursuit of happiness," and long for the low cost medical services that other industrialized countries have treated as an indispensable human right for many years now. Let's hope we build upon the recent reforms to make that happen.

[Octafish]

28. New Deal 2.0

Thank you, my Friend, for putting it into words. President Franklin Delano Roosevelt did all he could to make life better for ALL Americans. His administration was the model we should be using today to build the nation We the People deserve.

“We need enthusiasm, imagination and the ability to face facts, even unpleasant ones, bravely. We need to correct, by drastic means if necessary, the faults in our economic system from which we now suffer. We need the courage of the young.” - FDR, Oglethorpe University Commencement Address (22 May 1932)

New Deal 2.0

Thank you, overseas. Happy New Year to You and Yours!

[Overseas]

30. Thanks for the beautiful quote and link.

Happy New Year to You and Yours, dear Octafish.

Your posts added a lot to my 2010 and thanks for starting 2011 with our fervent wishes for New Deal 2.0!

[bertman]

26. Excellent post, Octafish. ALL wealthy people are not evil and selfish.

Which begs the question: 'Why is the pathology of More More More so widespread among those who already have More Than Enough?'

REC.

[Octafish]

29. Tremble, Banks, Tremble: The key to financial recovery - restoring the rule of law on Wall Street

Perhaps the greedheads have gotten the upper hand because they've been raised on Reagan and his greed-is-good socio-economic Darwinism.

Better role models were gunned down in their prime, before the Liberal Democrats could inspire, influence and shape even more young people.

Tremble, Banks, Tremble

The key to financial recovery: restoring the rule of law on Wall Street.

James K. Galbraith
July 9, 2010 | 12:00 am

The financial crisis in America isn't over. It's ongoing, it remains unresolved, and it stands in the way of full economic recovery. The cause, at the deepest level, was a breakdown in the rule of law. And it follows that the first step toward prosperity is to restore the rule of law in the financial sector.

First, there was a stand-down of the financial police. The legal framework for this was laid with the repeal of Glass-Steagall in 1999 and the Commodities Futures Modernization Act of 2000. Meanwhile the Basel II process relaxed international bank supervision, especially permitting the use of proprietary models to value complex assets—an open invitation to biased valuations and accounting frauds.

Key acts of de-supervision came under Bush. After 9/11 500 FBI agents assigned to financial fraud were reassigned to counter–terrorism and (what is not understandable) they were never replaced. The Director of the Office of Thrift Supervision appeared at a press conference with a stack of copies of the Code of Federal Regulations and a chainsaw—the message was not subtle. The SEC relaxed limits on leverage for investment banks and abolished the uptick rule limiting short sales to moments following a rise in price. The new order was clear: anything goes.

Second, the response to desupervision was a criminal takeover of the home mortgage industry. Millions of subprime mortgages were made to borrowers with undocumented incomes and bad or non-existent credit records. Appraisers were selected who were willing to inflate the value of the home being sold. This last element was not incidental: surveys showed that practically all appraisers came under pressure to inflate valuations in order to make deals happen. There is no honest reason why a lender would deliberately seek to make an inflated loan.

SNIP...

Upon taking office, President Obama had a chance to change course and didn't take it. By seizing the largest problem banks, the government could have achieved clean audits, replaced top management, cured destructive compensation practices, shrunk a bloated industry, and cut the banks' lobbying power and therefore their capacity to obstruct financial reform. The way to write-downs of bad mortgage debt and therefore to financial recovery would have been opened.

CONTINUED...

http://www.tnr.com/article/economy/76146/tremble-banks-tremble

Thank you, bertman. Really appreciate you caring. Happy New Year to You and Yours!

[avaistheone1]

32. K&R

I visited his Cambridge home decades ago.

[salin]

33. he inspired my father

back when economics was about studying societies - not narrowed to econometrics and game-theory.

[mdmc]

34. ..

[jtown1123]

35. Why is this written in past tense? He's alive. Love Galbraith. Wish he was a White House advisor