Economic Hit Man or just a Bubble Tester

Flash Flood, 2002, oil on linen,36 x 48 inches, Warren Criswell

In words of N Roubini: "A good journalist has to be one who, in good times, challenges the conventional wisdom. If you don't do that, you fail in one of your duties."

Review of Article by Pat Darnell

It's too bad there were no Economic engineers back when Economics was bubbling up to surface of ponds out from steaming ooze of covet, greed, avarice, and pleonasms that served to liquefy the spirit of humankind over ten thousand years that it has taken to refine our brilliant economic banking structure today.

Only seems like yesterday, a math wizard, Keynes, a theoretical spirit of economic conjecture, tackled essence of social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services. Unfortunately J Keynes is long gone. This is about Banks today February 23, 2009.

Good times are bubbles in our economy? I can't answer that one either. However, it turns out at least once every decade, I get a pepper up my butt to criticize bankers. But you know, bankers are always at a disadvantage, because they seem to be bested on all sides; hemmed in by professionals who have with themselves better judgment, keener math, craftsmanship and better knowledge basis. Steelworkers, Carpenters, Aerospace Workers, Manufacturers, ..., all so much more knowledgeable than Economists that bankers depend on. Let me explain:

Money is important; Love of money is our most deadly sin. Keynes, bless him, set up money supplies with "flow" in mind, and I sincerely think he had in mind a world where money was not the root of all evil. But without putting a long disclaimer post it right here, lets just say Keynes tried to make money like water that flows as needed at the log float ride at Six Flags, okay? And yes trades are actually out there working in the field, making them the first journalists of developing economies.

I say
When Keynesian Economics was born, should not have engineers well-versed in fluid dynamics stepped in to help old man Keynes in reducing friction in his money flow pipes? Shoot, economics without flow-meters is toast without butter; has missed its purpose altogether. The error has cost four hundred years of boom bust cycles.... No -- it is about supply of money as a substance to float upon; to drink from, to recycle...

Ye Gads...
Today in facing down the bank dilemma, [see entire article HERE]

Mr. Nouriel Roubini tells me that bank nationalization "is something the partisans would have regarded as anathema a few weeks ago. But when I and others put it in the context of the Swedish approach [of the 1990s] -- i.e. you take banks over, you clean them up, and you sell them in rapid order to the private sector -- it's clear that it's temporary. No one's in favor of a permanent government takeover of the financial system."

Did someone just say: Nationalize da' Banks... 'Marecan Banks? HUNh!
This article from WSJ reports that there is a "Stud-Hoss Hit Man Bubbagonuasch" of Economics out there. He is Mr Roubini. And like a Presbyterian Minister he is asked -- "how do we add on to the church? How will we heat and cool the addition? and so on..."

Unfortunately, after several add-ons, the once beautiful basilica church now has enormous HVAC plants up on its roof... endless corridors and doors banging into each other, and a hot corner office where the Youth leader has to sit all afternoon taking calls. In other words a sweat box, sweat shop.

And like all good academics involved in social science, he talks about the "Swedish approach" like a panacea for us all to tweak our mustaches:

"I believe that people react to incentives, that incentives matter, and that prices reflect the way things should be allocated. But I also believe that market economies sometimes have market failures, and when these occur, there's a role for prudential -- not excessive -- regulation of the financial system. The two things that Greenspan got totally wrong were his beliefs that, one, markets self-regulate, and two, that there's no market failure."

What... Greenspan... Wrong?
That is where N Roubini is coming from right now. He is putting it to Al Greenspan... and an entire International Monetary Fund. Here in the article we have a group of full-time and part-time economists, who have inherited the current cesspool of World Banking. Do not kid yourself, the USA banking system is the IMF... This group includes:

• US Congress and Senate
• US Executive
• US Judicial
• A. Greenspan
• Doctor Doom Roubini -- Roubini Global Economics

"The idea that government will fork out trillions of dollars to try to rescue financial institutions, and throw more money after bad dollars, is not appealing because then the fiscal cost is much larger. So rather than being seen as something Bolshevik, nationalization is seen as pragmatic. Paradoxically, the proposal is more market-friendly than the alternative of zombie banks."

"They" are talking about nationalizing the US Banks for a colostomy. Yes, a cleansing only the US Government can do. Just like after the War between the North and South, Civil War. Yep, Reconstruction. Here is how that goes:

• Kill millions of people
• Assasinate a President
• Bury all Zombies alive
  
• Go back to Business as Usual

Oh, you say that is too long ago? We have more sooth economics now? Let's look around for some recent government cleansing:

• Invade Iraq
• Kill lots of people
• Chase down and hang a President
  
• Go back to Business as usual

Distortions on incentives?
I temporarily understand this need by busy legislators, and Teddy Kennedy, and the Judges, poor old retired Alan Greenspan, and Economist HitMen like Roubini... to nationalize what is actually "un-nationalize-able..." as I temporarily underestimate the work of any largess:

To Mr. Roubini, the most interesting question isn't the one of who got it right. Instead, he asks why we "over and over again, get into these periods of irrational exuberance, when not only is there an asset bubble and a credit bubble, but people believe these are sustainable over a long time -- Wall Street, policy makers, rating agencies, academics, journalists . . . ."

Thinks of it this way: for the first time in the history of Economics -- Micro Manage the streams of money flowing. All you idiot savants, sans savant, get on all fours and point repair all the sewers, basins and damns, and leaky faucets that you so proudly call the Banks. Be good Dutchmen with your thumbs.

MooPig's big answer for today, stick your thumbs in it -- right before the USA becomes fascist, or communist, or just plain Eat Up as usual; Wait, this is in the subject interview also...

"People like [Robert] Shiller were very worried about the housing bubble. People like Steve Roach were worried about an economy based on asset bubbles leading to consumption bubbles that were unsustainable. People like Ken Rogoff talked about global imbalances in the current account deficit not being sustainable. Nassim Taleb has been worrying for a while about 'fat tail' events . . . . So lots of people signaled concern about things. I was one of those who put the dots together and thus gave a more fleshed-out picture."

Why don't you want to personalize this, Mr Roubini? Are you afraid too, like all those before you who laid down their lives only to be proven too Idealistic, or too sworn to morals, ethics and values? What code will you lay down for us to follow... and for bankers to not follow for the next eighty years of "love of money?"

"Again, I don't want to personalize things, but the last decade was one of self-regulation. But in the financial markets, without proper institutional rules, there's the law of the jungle -- because there's greed! There's nothing wrong with greed, per se. It's not that people are more greedy now than they were 20 years ago. But greed has to be tempered, first, by fear of losses. So if you bail people out, there's less fear. And second, by prudential regulation and supervision to avoid certain excesses."

Hmmmm.. right back where we started: law of the jungle, greed, loss, fear... excesses.. ...? A condition for which there is no levee....

(Varadarajan, Tunku; FEBRUARY 21, 2009; 'Nationalize' the Banks. [retrieved HERE]The Wall Street Journal, page A9; a professor at NYU's Stern School and a fellow at Stanford's Hoover Institution, is executive editor for Opinions at Forbes.)

Special "Thanks" to Pribek.net for pointing out TV's outstanding WSJ article about very crucial contemporary decision making processes....