How The Economic Machine Works

Ray Dalio's economics lesson on YouTube is a must see for everyone, individuals as well as policymakers.  His take is that increasing productivity is the only pathway toward progress and prosperity. And for me it's a different view of the Keynes versus Friedman debate.

J P Morgan's $13 Billion Settlement

Bill Moyer's interview with Gretchen Morgenson "Why J P Morgan may be getting off easy"  doesn't get to the heart of the matter until late in the interview where she observes that until Wall Street does real banking for the real purpose of investing and growing the economy, instead of playing games with each other, that they are drag on our society that should be disemboweled rather than protected. Where is Andrew Jackson when we need him?

You could almost feel sorry for Jamie Dimon

The next time the Fed's call in a favor by asking you to buy a toxic waste hole such as Bear Stearns, beware of the tail of litigation and bad mouthing from the very people who asked for your help!  I am not giving J P Morgan a free pass here because they apparently did not understand that a fortress balance sheet in a world of financial crisis is to buy the good stuff at distressed pricing and not the bag full of odorous excrement as the Jeremy Irons character in the movie "Margin Call" so colorfully described the firm's portfolio.

The Bernanke Market

Jeff Sommers "Strategies" article in today's New York Times business section rates Ben Bernanke by how well the market did during his tenure which is a rather mindless measure of competence.  I have blogged previously that despite being an Ayn Rand Libertarian, Alan Greenspan failed catastrophically as Chairman of the Federal Reserve because he promoted concentration of the banking system with the systematic elimination of fear, the great economic regulator, among the big players.  Big banks could borrow at lower at rates and leverage higher than smaller competitors so that business drifted their way exacerbating the trend toward bigger and riskier behavior.  As a libertarian I agree there should be less regulation, even banking regulation, but I consider Greenspan a traitor to my ideals by not forcing one small easy to understand regulation. That being whenever a financial institution reaches an asset level of x, let's say one tenth of a percent of GDP, that it is required to break up into independent pieces, spin offs in Wall Street parlance. After all Adam Smith's Wealth of Nations describes free markets as having many players on both sides, which apparently is something the former Chairman forgot.