Why weren't there more Roubinis among the professors of finance? I wonder if the answer is already stated above:

"They are involved in the financial markets as consultants, investors, and sometimes money managers."

Their incentives are no different than the people in the businesses who do not want bad news.

Dear Posner,

I think that Nicholas Taleb have to be remembered in this crisis. He predicted what happened with FNMA in his book "The Black Swan"

Camilo

I would be terrified of a financial counterpart to the CIA. The potential for such an agency to be used to manipulate, to leak trade secrets, to play favorites -- and to be incompetent, as the CIA has been on occasion (remember the failure to predict either the Soviet invasion of Afghanistan or the Iraqi invasion of Kuwait?) should give pause.

The Rand and Brookings models already exist to allow the gov't to use think-tanks to help develop policy, and many analysts at these and other organizations have security clearances.

I think that this crisis is a call for economics to do some rigorous soul-searching. I posted a few weeks ago that my perception is that economics is too often the handmaiden of free market ideology.

The weak fundamentals of the U.S. economy have been appearent even to non-economists such as myself for a long time. The middle class has been eviscerated, we are over-dependent on imported energy, hyper-consolidation (viz. Walmart) has undermined entrepreneurial impulses and rewarded groupthink corporate personality types at the expense of independent thought and initiative.

And my god, American mothers can no longer afford to stay home and raise their children. Middle class standard of living is out of reach for the vast majority of single-income households.

Much has been said about the loss of manufacturing base in this country and the shift to a "service economy." The "value added" by the pride of the U.S. economy -- IBs like Lehman Bros, etc. -- turns out to have been the invention of exotic securities that just crashed the world financial system like so many virus emails and trojan horses let loose on the Internet.

BLS economic indicators like inflation rate and unemployment are widely seen as too politicized to be of real use. The CPI cannot be used to meaningfully compare standard of living over time. And on and on.

In the absence of a financial CIA to eavesdrop on bank transfers and listen in to corporate retreats, accepting as a given that gov't will always be malleable for political ends, I would submit that only the discipline of economics itself is in a position to convene and build a consensus on hard-and-fast standards for economic indicators to be used by governments around the world. "More substance with less art."

Maybe because the government had given an implicit guarantee to intervene in such a financial crisis.

For a person of your stature to say I don't know is impressive to me. Appreciate being introduced to Roubini and Wohlstetter. Enjoyed hearing you on Radioeconomics. I find these 'sophisticated financial instruments' (e.g., deriviatives) to be a fancy form of STEALING. The odd thing is 'they' are stealing from nothing, thin air. What did the man say recently on 60 minutes about physicists designing all of these instruments for the future...a financial OZ.

Posner sez: "Many economists and political leaders are heavily invested in a free market ideology which teaches that markets are robust and self-regulating. The experience with deregulation, privatization, and the many economic success stories that followed the collapse of communism supported belief in the free market. The belief was reinforced, in the case of the financial system, by advances in financial economics, and relatedly by the development of new financial instruments that were believed to have increased the resilience of the financial system to shocks."

........... ahh yes "free market ideology" In talking to young students of economics they all seem to have been infused with this faddish theory and I suppose ideology often blinds one to looking at the features of the landscape.

A diesel engine seems a good metaphor for capitalism. Those familiar understand that as more fuel is injected into a diesel more air is automatically taken in, as long as you keep pouring the fuel to a diesel it will put out more HP and do more work, until it melts.

So every diesel has a device called a "governor" along with systems to ensure that it is not over-fueled if something malfunctions as overfueling can create a dangerous runaway that spits internal parts in every direction.

The "Roubini's" don't surprise me as much as does a whole caste of economists, and those with fiduciary responsibilities to their firms and investors NOT getting it.

Take a quick look at this simple housing graph (and there are some down below for the "hot" markets that are interesting.)

http://mysite.verizon.net/vodkajim/housingbubble/

Looking at the long term trend line wouldn't any economist or banker note that their is a relationship between the median home price and median income? Roughly speaking our median HH income points to the $160K home price as we can buy a home that costs no more than 3X our income.

So someone's alarm should have gone off not long after the trend line was left behind. Questions like WHY have we left the trend line? What is fueling such a departure?

While your looking at the charts, it's suggest there is a predictive element to them. Since median income has not improved, or put another way, today's young couples can not afford to purchase the homes of their parents, I'd expect median home prices that soared to $250K to revert to the trendline which is still some 20% below where we are now.

If there is a stiff recession coupled with the downward price momentum I'd not be surprised to see home prices break through the trend line.

One more thing that seems predictable? The first 20% drop created a "lost value" triangle of a certain size that is the subject of today's bail out. The next 20% drop creates a lost value trapezoid that is FAR larger, which fits well with a Deutsche Bank estimate that next year some 40% of US home owners will be underwater, or 40% of 51 million loans for a problem of 20 million loans ranging from slightly under to 40% or more under.

Shall we call Paulson's deal "Rescue I?" with R-II coming in late spring?

One more observation? Mortgages in the US are held on average just under seven years. I see the trendline much like stocks in "strong hands", as those buying pre-2000, paid trendline prices and typically have fixed loans more than seven years old.

Those since 2000 have paid the higher prices and have mortgages less than seven years old. Even w/o the curious "features" in many mortgages they've little in pay downs so nearly all homes purchased in the since 2000 are problems. The exception would be those who put 20% down to avoid paying Private Mortgage Insurance premiums, and some fair number of those will be underwater as well.

Lastly, it's interesting that extending either the inflation adjusted, or the nominal trendline out to 2009 they both point to a median home price of $170K.

Warnings were ignored because the proceeds of the 2004, 2005, 2006 and 2007 bonus pools, were used, as they always will be, to
trump any attempts at interference, to the extent of overruling,
firing, discrediting or buying off any resistance that happens to stand in the way. It's just bigger and more complex than its ancestors, the Drexel Burnham phenomenon and the S & L crisis.

Posner: "Of all the puzzles about the failure to foresee the financial crisis, the biggest is the failure of foresight of professors of finance and of macroeconomics, with a few exceptions such as Roubini. ... They are involved in the financial markets as consultants, investors, and sometimes money managers."

As Scott above says, professors who act as consultants/managers/testifying experts for the financial industry, have incentives to support misuse of their research to facilitate investment bubbles. Michael Milken / Drexel misused academic research regarding bonds of fallen angel companies to market junk bonds. The structured finance industry did the same thing in this bubble using academic research that relies on Gaussian distributions of investment outcomes and diversification using non-correllated investments. Academics that get called to act as experts lobbying for the industry to get favorable treatment from the SEC, Treasury, or Fed, have obvious incentives to help their patrons. Academics who intentionally misuse research to raise money from investors also have perverse incentives.

Look at research on how practicing MD's ethical independence is affected by even minor gifts from sales reps of the pharmaceutical industry and how academic MD's ethical independence is affected by corporate sponsorship of their research. This research is strongly suggestive that economists looked the other way in the securitization bubble because they had conflicts of interest. Not as bad as the politicians who accepted large industry contributions and would periodically threaten to cut SEC funding when it tried to take anti-industry positions. But conflicts nonetheless.

The real puzzle is how so many bright people, in and out of academe, could believe that lending large sums of money to people who hadn't a prayer of repaying the loans, and doing so on a vast scale, would lead to anything other than a financial disaster. I can understand the loan brokers and "packagers" who could take their cut up front and run, but what about the real lenders?

Conversely, how could so many would-be homeowners take out loans they could not possibly repay? Their excuse was the irrational belief that home prices would keep on rising indefinitely, but that does not make rational their belief that they could maintain monthly home payments which they plainly couldn't.

Now that the re-capitalisation of the banks is at last under way, the crisis will begin to sort itself out.

As the dust settles, it will become painfully evident that regulatory action to force counter cyclical provisioning on the banks, and to insist that capital should be provided against off-balance sheet vehicles, would have averted any acute systematic problem other than temporary liquidity shortages. It will be evident because one medium sized country facing a property boom relatively greater than that in the USA took these measures and has sailed through contrary to most market expectation. The central bank that got it right is the Bank of Spain - a central bank in the euro zone and therefore with apparently less room for manoevre than the Fed or the Bank of England.

My current hypothesis as to why the major central banks did not do as the Spaniards did is that they fell into a CIA-type error - superb analysis and mastery of much of the detail coupled with loss of over-all perspective. The deeply intelligent and impressive research papers from the Fed, the ECB, the Bank of England and the BIS in recent years have greatly improved our ability to understand and - in posse - to regulate the international financial system. But they omit the central banking basics: - a risk is a risk is a risk, however you account for it; and risks always tend to accumulate in the system.

How we might institutionalise attention to the basics, to what Rudyard Kipling called the Copy Book Headings, is an issue which I hope Judge Posner will address.

Now that the re-capitalisation of the banks is at last under way, the crisis will begin to sort itself out.

As the dust settles, it will become painfully evident that regulatory action to force counter cyclical provisioning on the banks, and to insist that capital should be provided against off-balance sheet vehicles, would have averted any acute systematic problem other than temporary liquidity shortages. It will be evident because one medium sized country facing a property boom relatively greater than that in the USA took these measures and has sailed through contrary to most market expectation. The central bank that got it right is the Bank of Spain - a central bank in the euro zone and therefore with apparently less room for manoevre than the Fed or the Bank of England.

My current hypothesis as to why the major central banks did not do as the Spaniards did is that they fell into a CIA-type error - superb analysis and mastery of much of the detail coupled with loss of over-all perspective. The deeply intelligent and impressive research papers from the Fed, the ECB, the Bank of England and the BIS in recent years have greatly improved our ability to understand and - in posse - to regulate the international financial system. But they omit the central banking basics: - a risk is a risk is a risk, however you account for it; and risks always tend to accumulate in the system.

How we might institutionalise attention to the basics, to what Rudyard Kipling called the Copy Book Headings, is an issue which I hope Judge Posner will address.

You wrote: "But here is the biggest mystery of all: why was the crisis not foreseen?"

Actually, it was foreseen. I published my book, Financial Armageddon, in March 2007 and correctly anticipated much of what has happened so far. In fact, chapter 6 is entitled "Systemic Crisis." (Sound familiar?).

I guess the economics establishment -- which essentially missed the boat on all of this -- assumed that because I was not one of "them," but merely a 25-year student of the markets, I did not know what I was talking about.

Perhaps the essential lesson is that when economists are not busy writing footnotes to Smith and Ricardo, their efforts are largely intellectually vacuous. I also wonder whether some of them resemble some of the climate scientists, starting off merely as inept modellers and drifting slowly towards downright deceit.

"Many economists and political leaders are heavily invested in a free market ideology which teaches that markets are robust and self-regulating." But even more are absolutely committed to the non-free market ideology of central banking. To write an article about why the crisis what not foreseen and not even mention the "Greenspan put" or "Helicopter Ben" is to engage in mystification. Just as the mystifiers became even more astounded by developments in the '30s so too is it likely to be in the next decade, now that we are all disabused of free market ideology. The way is open once again for triumphs of the will.

Ravi Batra's 1996 book,"The great American Deception", pointed out some reasonable warning about boom and bust not the least of which was that for a variety of reasons the ever increasing diversion of wealth between wage earners and executives would lead to depression. One of his arguments was that only the wealthy can speculate in risky investments. I can hear you discounting that argument with "a large percentage of the NINJA mortgages were not for the "wealthy". That is true but the securitized mortgatges were risky investments made by the small percentage of the population with assets to risk (top 1%). The lucky folks who bought homes with no money down took no risk at all. No one paid any attention to professor Batra then and I suspect Judge Posner is correct in saying no one will pay attention to any Jeramiah and that I also suspect is a weakness in human nature which argues for more cautious and conservative public policy.

My own personal bias is that there is no "unified field theory" in economics and that the resulting complexity leads to unacceptable levels of uncertainty and confusion and allows those with selfish, greedy and stupid agendas to be obscured.

The last time we welched on our debt was in 1971 when we inflated the dollar and then refused to redeem it in gold. Now we are going to redeem the dollar with "derivatives"????? with most of the funny assets purchased on margin. Were there any economists who waved the red flag about that degree of leverage?

Jack Bogle (Vanguard's founder) lives in the perform-or-die real world of mutual fund investing. Add Mr. Bogle to the list of gloom-n-doomers from long ago, beginning from about the time of the dot-com mania. He told CNBC's flacks time and again how difficult it was becoming to select investment mixes for Vanguard's funds that would yield a respectable return, protect principal, and minimize expenses. But they blew him off time and again because Vanguard's funds consistently outperformed the market indexes. Monkey see, monkey do. Like the proverbial cab driver trading stock tips. A few quick bucks and everybody's suddenly a Bogle, or a Buffett - and those guys aren't even high-flyers by lifestyle. If you could say your deals or your trades were "accretive" or producing "gains" or you were just plain "making money," LOTS of money, you became somebody's Pied Piper. The villain in all this supposedly is housing - a meteoric house price run-up fueled by irresponsible financial underwriting - chiefly in the U.S. That's part of it. But it comes up short of telling the whole story. Distressed home builders, developers, financiers, and purchaser-debtors alone wouldn't be taking down the banks and stock markets worldwide, wouldn't be wiping out sensibly-diversified investment portfolios, and wouldn't have national governments socializing financial intermediaries - not only banks but insurance organizations.

Others outside of the economics/finance field did try to warn of failures in the mortgage/lending market, to no avail. See from Business Week, "They Warned Us About the Mortgage Crisis."

(http://www.businessweek.com/magazine/content/08_42/b4104036827981.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis)

I believe credit is due to Hyman Minsky, a major influence of Noriel Roubini. His theories on debt accumulation and business cycles are very pertinent to our current situation. A lot of economists have had prescient insight into our condition.

Prof Thoma has a clip up of an MIT panel discussing the financial crisis and honestly they seem shockingly obtuse and ideological. I was appalled. I hope they do not represent the economics profession, and yet, perhaps they do, for it seems economists have led us to an economy that does not work for the average American. I don't trust your theories or opinions much, anymore.

Link: http://economistsview.typepad.com/economistsview/2008/10/mit-panel-discu.html

As Becker says, 'too many false alarms'. Even when you know houses are 'too expensive', you don't know when to sell and hold cash.

By the time you DO know, the peak has passed and prices are in free-fall.

It's really too bad there weren't more explicit probabilities on house prices dropping. That should probably be a new requirement for the IMF and the World Bank, and perhaps post-class action suit rating agencies.

Won't there be suits against the rating agencies who, essentially, lied when they rated crappy MBS instruments as AAA?

The academic problem lies deeper than "free market ideology". A hint as to the underlying problem is in this phrase: "Of all the puzzles about the failure to foresee the financial crisis, the biggest is the failure of foresight of professors of finance and of macroeconomics ..."

It is precisely because the profession treats macroeconomics and finance as separate fields, that the problem could not be understood. Macroeconomists study money, whereas finance professors study credit. In the real world money and credit are frequently indistinguishable. Only a rare bird like Roubini was capable of choosing to do work that fit into neither field, but in fact encompassed both of them.

As long as the academic world continues to favor specialists over generalists, the models that are used to divide a profession into fields will constrain research and no one should expect academics to have the skills necessary to foresee crises. A bit like Keynes' bankers, who are careful to fail only when every other banker is failing too, academics know that their careers will be safe as long as they are careful to err in concert with their colleagues.

Seriously?

You two are professors at the single institution responsible for the "intellectual" backing of the Neocon ideology (Leo Strauss) and you have the gall to wonder why there weren't MORE of your peers publically describing the problems in the economic system?

What did you THINK would happen when his team actually gained control of the ship?

The irony writes itself.

There were plenty of professors, regulators, and economists stating that there was a housing bubble - but political pressure is always to keep the good times rolling and ignore the "few" who bother to investigate such things like "price to income ratio." It's much easier to get votes when you're a Pollyanna of Prosperity than a Dr. Doom.

Besides, Kudlow is on CNBC! He must be accurate - both his suits and his voice are very loud!

Unsympathetic:

Q: Will the Obama government have the political will to preside over a rate increase in 12-18 months or will the stage be set for a future bubble that will take down our solar system plus Alpha Centauri and Betelgeuse?

All of this is reminescent of "Tales From My Childhood". Specfically, "Noah's Ark" and "Peter and the Wolf". As for old Noah, everyone thought he was just plain crazy. Until it rained forty days and forty nights. In Peter's case, it become so much fun to raise the alarm and terrorize everyone that everyone became enured to the game and stopped listening. Too bad for Peter when the wolf really did show up.

Now I know why my Great Grand-mother had me sit down and read the stories.

So the issue becomes, "How do we keep it from occuring in the future"? Or are we condemned to repeat our failures simply because of our inability to learn from past mistakes. Or do we need to put Economics and Finance on a truly Scientific basis instead of the Ideological one it is now based on?

Surely everyone could see that the real estate boom of the early 2000s was a bubble. I could see it and so could all those people who bought houses only to "flip" them. The business media (i.e The Economist) could see it too since there were many stories about the bubble. The big problem with bubbles is that it is hard to know when the music stops until it actually does, and in this case who the ultimate bagholders for all the bad debt will be. And we still don't know the answer to the last question, because it isn't over yet. There may be many more surprises to come.

Now, people can't do quantitative projections of what the risks were unless there is a model to run that fits reality. We will only solve this one when the US Govt learns how to send signals backwards in time and creates the cross-temporal internet. Then the CIA will have direct knowledge of the future, and be able to act on it - for the government's own profit, and the profit of CIA officials. Will the general public benefit? Probably not.

I think a closer reading of Wohlstetter's work and the subsequent literature about surprise attack can be even more instructive. Important to Wohlstetter's argument is the concept of the "signal-to-noise" ratio, i.e. the amount of useful information being taken in compared to the information that is false, misleading, or irrelevant. It turns out that earlier concerns about inflationary spikes may have just turned out to be background "noise" (calculated by the GDP deflator, not the CPI, for reasons outlined by a poster above) as well as other economic issues, but ex ante it is extremely difficult to tell what data will be predictively useful and what is just noise. The later literature also examines another related problem which I think is particularly instructive. The difficulty in early warning, among other things, is that if you give correct warning and act in response to that warning, the attack will likely not materialize (i.e. if the US knew Japan was about to attack Pearl Harbor our defensive preparations would prevent Japan from following through). This means that successful warnings are under-counted because the catastrophe never emerges. This tends to weaken early warning systems as they are perceived to be ineffective even though they may have averted serious problems.

The economic analogy is regulation. Regulations were seen as unnecessary and dismantled because there had been no crises, but policymakers failed to consider that there may have been no crises precisely because of the regulation.

Finally, an historical aside. The argument that we believed that Japan would never attack the US has been disproved since Wohlstetter wrote. The declassification of documents relating to the US breaking the PURPLE Magic Japanese diplomatic code shows that the US knew something big was coming, but could not figure out where the attack would land. A lot of decoded Japanese missives indicated attacks on various different places; only 2 mentioned Pearl Harbor. The US knew an attack was coming, but there was not enough "signal" to figure out where it would land.

The wish for economics to be science doesn't it make so -- to look back and wonder how so many professionals could have missed the emerging pattern is to admit that faith in economics is not fully rational. From every crisis a scorned
prophet emerges, but of course we want something like scientific consensus rather than prophets. Roubini had no better information than other other
economists in academia and on the Street. Oddly, his theme was conservative: older lending and leverage standards were better, innovation conceals unknown dangers, etc. But his forecasts were no more worthy of credence than the opinions of, say, Mr. Greenspan or Mr. Bernanke. We'd like to do better in the future, certainly, but based on what?

I realize your deeply analytical and academic approach to economic affairs, but to assert that the current administration did not try to avert this crisis is simply false. I would refer you to the link below, and encourage you not to rely solely on the New York Times for your news.

http://www.whitehouse.gov/news/releases/2008/10/20081009-10.html

Dr Becker has a much more cogent explanation on why the "warning signs" were "ignored." Note that it is not sufficient to be able to predict what "is bound to happen," which is in itself very, very difficult in a complex system, to be really useful, the prediction has to have a time element: when? Or what the triggering events would be. If a person is sufficiently confident of his predictions, he obviously would put money where his mouth is, and be richly rewarded.

Remember: "In the long run, we are all dead." Question is: When?

So, I say it is pointless to ask why we did not heed the warning calls when there were all sorts of calls (of boom and doom) being made every day by every self-proclaimed expert. How many investigations can anyone do? And which ones? Besides, there is a lot of money to be made while the ride still looks good. The real question is: can you afford the risk and when should you get out?

I am with Dr. Becker. I don't see this turmoil, as painful as it is, as indicative of the failure of the free market. I am not being facetious or heartless, as a lot of people, even those on the sidelines, lost a lot of money. But I am struck by a very insightful saying by Dr. Thomas Sowell: "Failure is an important part of the success of the capitalistic system." In the free market system, companies that are seriously mismanaged in one way or another will fail, and these failures make room for the ones that are well managed. There are those who will tell you that massive business failures are an indictment of the capitalistic system. Nothing can be further from the truth. If you are overly agonized by business failures, you should learn to get over it. For it is the way the free market works. Yes, it is very imperfect and sometimes downright ugly, but - guess what - it is better than anything else men have tried!

I am definitely guilty of being "heavily invested" in the free market ideology.

A factor: Anyone in past years who warned of the dangers of subprime loans to the poor and/or to minorities would have been instantly labeled a redlining racist. This made political interventions highly unlikely at the time when they were most needed.

A lender objecting to minorities getting loans is racist. Point Blank.

"We'd like to do better in the future, certainly, but based on what?

"ECCE SIGNUM"

The basis of all Science.

Improving signal strength by filtering out noise -- or discovering signal within what was previously thought to be "noise" -- is always the goal of scientific progress.

What cannot be discounted here is the influence of ideology on the analysis. Roubini was dismissively labeled a "permabear" by many financial analysts and economists. If the economic/financial community cannot discern value due to ideological assumptions, then its members are as "scientific" as Copernicus's religious inquisitors. Cynics would say it is not an issue of "cannot" but one of WILL NOT due to vested interests in status quo/political outcomes.

In other fields of science, a researcher/theorist who has a financial stake in the outcome of the research is said to have a Conflict of Interest.

Here, for all of the brilliant technical analysis which will always be beyond my abilities, the core issue to me is why economics focuses so little on a quantitative analysis of Standard of Living and psychological well-being. And, in my opinion, it does not do to say I have answered my own question by bringing in psychology. Clearly, psychology on the individual and societal level is essential to meaningful economic analysis.

As long as economics is unable to unify with psychology, in my opinion its value as a discipline is severely limited. It is merely an observational study always looking to the past for "predictive patterns" without the diagnostic tools to be very useful in looking ahead to an unfolding future.

For example, no one has ever seen the degree of volatility in the stock markets we have right now. No one has ever seen a one-day 900-point "bear market rally" upward swing in the Dow (itself a very problematic indicator, but I digress).

It is interesting that the Paulson/Bernanke array of tools is referred to in the language of war as "bullets" or "arrows" or "bazookas" or "squirt guns" as opposed to medical terminology. Is it because the truth of the matter is that the state of economics vis a vis other disciplines is such that all they have to treat economic ailments are leeches and carbolic smoke balls?

Dan,

Amen. Or perhaps to avoid appearances of using religious terms in favor of a more academic and scientific salutation, ataboy!

Ah yes, the timeless carbolic smoke ball. And we also saw the tale of the hairy hand. And the riddle of the Peerless. Where did the LAW disappear to in all this wreckage? That's a deadly serious (and now colossally-expensive) question. Having represented and counseled a large number of state-regulated insurance organizations over the years, I can certify that failure is the rare exception to consistently solid company performance. No, the stocks don't tend to be day trades and your claim may not be worth what you thought, but the money will be there if it is. Fast-buck artists usually get rooted out pretty quickly, if not by the insurance commissioner then by their competition or the state's prosecutor.

the uk 's bailout is much better than the us. in hk where i live , it also had a new policy - 100% guarantee of the savings. i think it is a good policy as now we must recover the confidence of the consuners.

Expect a very good Economy in 7 months!
Falling home values, rising unemployment, declining confidence among consumers and businesses and, lately, a swooning stock market…all these will change in another 7 months.
This is the prediction by a team of Scholars in Astrology. According to them, the world, especially the USA will have a better economy within 7 months. Signals of better changes will be visible by December 21 2008, and good results will be seen from that date. However, individuals should have a systematic planning to overcome this crisis period.
I addition to other advices already given I strongly recommend to plan your finances professionally. Books like, Act Now…Tomorrow may be too late by James Walker, Published by www.JTSbooks.com, Financial Shock: A 360º Look at the Subprime Mortgage Implosion, and How to Avoid the Next Financial Crisis by Mark Zandi, published by www.Amazon.com, The Dollar Crisis : Causes, Consquences, Curesby Richard Duncan published by Barnes&Noble are MUST READS.

@ Brian Davis: Love the hairy hand. :)

You nailed it. If the credit default swap market had been properly regulated as insurance commitments with appropriate capitalization requirements, we wouldn't be in this mess.

Without regulation, the law has no traction. Amazing how that works. Good luck trying to get the deregulation ideologues to come clean without trying to shift blame to all of that horrible "minority" lending.

It was well foreseen in The Black Swan, Conquer the Crash, and probably other nonsanctified publications. Perhaps establishment types aren't capable of playing Cassandra?
As to "failure of regulation" fans, bad loans in a collapsing bubble can't be hidden, insolvency has a quality all its own.

1. With regard to Krugman being awarded the Nobel Prize in Economics; I wanted to say that his argument about trade impacting different regions depicted on the Nobel Prize site on Monday (drawing of trade flows between regions) reminded me of a "Beyong Krugman-the Role of War In International Trade" topic that I had been discussing. Areas like Illinois received about $164 million dollars in taxes from the Boeing corporation in 2007 involved in producing weapons and missiles.(10-K Boeing Corporation) Property holdings of Boeing are larger in about 12 other areas although Boeing has headquarters here. From their 10-K, it is not clear if US State taxes includes property taxes to these 11 or 12 other states. Some of that revenue pays down Illinois' debt and pays salaries of state of Illinois employees. Those employees in turn could or might go to places like the museums, grocery stores, zoos,restaurants, Swedish American Museum, Three Crowns, any place or any where and Swedish Covenant Hospital and get coloring books, food and health care. Over the short term,involvement in war provides some revenue for an area. Over the long term,continuous use of missiles damages the economy of the regions being bombed and redirects resources from health or food to missiles and weapons. It should be said that the concern that the state taxes this corporation involved in war has lead to loss of rights for my mother and I, as Judge Posner knows, as filings were filed in front of him in terms of retaliation for discussion in state courts for the topic of the state and County taxing the Boeing corporation involved in war. I raised the question, even with the ICC, that retaliation for discussion of a state being involved in war could be a violation of article 8 of the Rome Statute and sections of the Geneva Convention Protocol 4 on the Rights of civilians. "Beyond Krugman-The Role of War in International Trade" is a worthwhile topic to think about with regard to our financial problems. Ask yourself if resources have been redirected from other aspects of life into a war economy?

2. What exactly happened to call this a financial crisis? We saw no significant increase in unemployment except for about a 1% increase, we saw increased foreclosures and we saw severe stock market dips. Those types of things are regular economic happenings. Stock markets drop all the time, mortgages are foreclosed on all the time. Unemployment rates fluctuate all the time. I have this suspicion that Greenspan, Clinton, Bush Senior, and Reagan faced these very same issues and did not call them financial crises. In fact, Clinton's relationships with people drew attention away from economic problems in possibly a healthy way. If $700 billion is being used to buyout banks by banks receiving funds, how do we help a financial crisis by making bank takeovers easier by bailed out banks?
3. If we imagined today, "All America's debt is written off" what would happen? You owning a bond would not be repaid. You owning a treasury note or treasury bill would not be repaid. Other than that kind of problem, what other effects would government imagining that its debt is gone have? Some sources say we have had this debt since the Revolutionary War and not since Vietnam as some other sources say.

An additional note is that I was retaliated against by some Cook County employees for discussing issues such as the County and state taxing Boeing involved in the war, the right of elderly or disabled to avoid smokers and not get cancer, the right to get mail, the right to get caregiving bills reimbursed, the right not to be enslaved for having a diagnosis, inacapacity, mental illness, the right to know chemicals put into someone, Olmstead v. LC and executive order rights to go home, state rights to visit, phone, know where family is, right to dispute an eviction, right not to be evicted when pipes break in the cold or you are given cold water or want to be alone on an elevator, concerns about being pushed from buildings or threatened with lock up for concerns such as short term exposure causing cancer or 500,000 people dying each year in nursing homes some related to smokers or second hand smoke. My discussion of war crimes was that Boeing is the corporation that provided many of the missiles used against Iraq, Afghanistan, and the airplanes hijacked in 9/11. 7,000 people died in Iraq in the first week of the war related to bombing; many of the missiles were Boeing provided. 3,000 people died in the early part of bombing of Afghanistan related to bombing. Boeing's airplanes delivered the Hiroshima and Nagasaki bombs. Their airplanes and missiles were involved in the Korean war and Vietnam war as well. One point is that the County and state taxed a corporation involved in war and retaliated by taking away housing, phone restriction, not reimbursing bills, taking mail and visitation restriction. Another point is that the government could just as easily be said to be "unable to care for themselves" because the government is receiving income from harmful issues such as alcohol, tobacco and missiles. I was relying on my reading of the Geneva Convention protocol 4 I think article 161 and parts of the Rome Statute article 8. Litigation is part of economic problems I believe. If in cases such as Russ v. Watts, having a son means the parent of the father has no rights to associate with son, then there are economic effects of legal decisions. What is the point of marriage or childbirth if you might loose your right to associate with your parents?

I recently happened upon this blog; here's an excerpt from an article I've been sharing with my principles of macro students. The article was published in March of 2006:

“When the downturn in house prices occurs, many homeowners will have mortgages that exceed the value of their homes, a situation that is virtually certain to send default rates soaring. This will put lenders that hold large amounts of mortgage debt at risk, and possibly jeopardize the solvency of Fannie Mae and Freddie Mac, since they guarantee much of this debt. If these mortgage giants faced collapse, a government bailout (similar to the S&L bailout), involving hundreds of billions of dollars, would be virtually inevitable.”

Baker, Dean (2006) "The Menace of an Unchecked Housing Bubble," The Economists' Voice: Vol. 3 : Iss. 4, Article 1.

I wanted to point out that Roubini wasn't the only one to foresee this mess. Perhaps the failure to act in this situation is similar to our failure to act on warnings about global warming. We often don’t believe that the worst-case scenario will happen. That is, as demonstrated by a number of risk researchers, humans systematically underestimate the probability of high-risk, high-cost events.

Well, anyone familiar with Friedrich Hayek's theory of the business cycle could have predicted this scenario(see his *Prices and Production* 1931, *Monetary Theory and the Trade Cycle* 1933, and *Pure Theory of Capital* 1941--see this article for a summary of the overinvestment theory:

http://www.mises.org/journals/qjae/pdf/qjae9_4_4.pdf)

The continual injection of credit into the economic system without the savings to support investments over time was bound to lead to this sort of credit crisis. For example, Peter Schiff, an investment counselor working from Hayek's theory predicted this crash in 2006.

Why did not others predict the crash? Nouriel Roubini appeared on Charlie Rose Tuesday night and was asked this question. Roubini replied that among other reasons was a lack of independent thought. Thomas Kuhn showed how this problem occurs in the scientific community. Certainly, if one falls outside of the dominant paradigm, people just do not listen, at best. At worst, those in the dominant paradigm suppress the criticisms of the dominant paradigm and alternative visions. Consider how the University of Chicago Economics Department would not allow Hayek to serve as a visiting professor in their department in 1950. He had to take a position at the Committee on Social Thought instead. While that move was not quite suppressing Hayek's views, Knight and others did not want to lend credence to the Austrian approach to economics. New York University's Business School took an even more disdainful approach to their association with Ludwig von Mises. The social psychological and sociological literature on "Group Think" would be relevant in studying the suppression of independent thought.

Finally, there is something to inflationary economic booms that seems to cloud people's thinking and leads them to irresponsible behavior. Inflation and its attendant boom feeds a frenetic pace of life that induces people to engage in self-destructive and anti-social behavior. It is like an illicit drug that hypes people up even as they realize at some level that they should not be doing the things they are doing. Tom Wolfe describes my hometown of Atlanta, Georgia, very insightfully as a boomtown in his novel, *A Man in Full.* I found Atlanta to be so boorish, I left town in disgust. As Professor Becker argues, no one knows when the bubble will pop, so they keep pushing to get all that they can right now. I would carry that insight a bit further by arguing that the headiness of the ride up distorts people's equilibrium. Growth that is too rapid for too long will produce this kind of immoral, dumb mindset that gave rise to the crash. Inflation is very much like an addictive drug. It produces a euphoria that cannot be sustained over time. During the high, it distorts people's judgement and corrupts their behavior. Feeding into this euphoria was the implicit understanding of a cushion that would break the fall if it ever came--in the form of a bailout. Moral hazard from previous bailouts raised its head again as it will in the future.

I think a component of the depression was the Dust Bowl and the loss of soil in the great plains.

I wonder if bailouts are needed. If a product is really overvalued, why not allow bankruptcies to go forward. Mortgate lenders go into receiverships with old asset holders still holding onto assets held in bankruptcy trusts. Judge Posner deals with bankruptcies every week, month or day. Do not people who owned these banks still hold onto some assets in bankruptcy? Bankruptcy does not mean the lenders lose everything; there is just a receivership in some cases. Why increase debt when bankruptcy stands as an option?

Whether or not Joe Plumber gets a fine is an interesting almost diversionary issue. A president can have an executive order about health insurance, but a senator can propose that as well. A president can veto or let pass such a bill. I found this to be a somewhat diversionary discussion. Whether or not somewhat relates to a weathermen I found to be interesting; people need to relate to eachother irregardless of their pasts. McCain's critique became I reason I liked Obama; able to relate to people of differing backgrounds.

I still feel, as I have said on SSRN and other places, that the first place finisher finishes first and second place finisher second according to article 2 and amendent 12 of the US Constitution. These two McCain and Obama will be top 2 finishers probably. The money spent to support their candidacies could help many families in financial trouble or persons in financial trouble. I think Obama and McCain would be better off getting some rest and giving their donations to persons in financial stress.

(Continued on Thursday, October 16, 2008)

Q13. You had mentioned in your answer to Q9 that "as far as the Federal Reserve Bank is concerned, the most important and pressing need, at present, is for its Chairman, Professor Benjamin Bernanke to give a well-thought public speech that demonstrates that he understands the problems he is encountering in the markets." The Federal Reserve Chairman has indeed been giving public speeches on the current financial crisis during the last few days. On October 7, he spoke at the conference of the National Association of Business Economists (NABE). Yesterday (October 15), Professor Bernanke spoke at the Economic Club of New York and held a Q & A session after that. Does Professor Bernanke's speeches provide some assurance about his expertise in being able to deal with this financial crisis?

A. Yes, I have transcribed Professor Bernanke's speech and his Q & A session held yesterday at the Economic Club in New York. I have carefully considered his remarks in his opening address and his answers in the Q & A session. I have to say, with great reluctance and some sadness, that Professor Bernanke does not possess sufficient understanding of the current crisis in the financial markets. This is all the more worrisome because Professor Bernanke seems to have earnestly consulted his academic colleagues throughout this crisis. One good aspect about Professor Bernanke's stewardship of the Federal Reserve is that right from the beginning of his term, he has functioned within a rational and logical policy framework which had been derived from current academic scholarship of the Great Depression. Let me explain the broad outlines of his policy framework here. For more details, the reader should refer to the transcripts of yesterday's speech given by Professor Bernanke (a copy of the transcripts is attached to this mail):

To quote Professor Bernanke (from yesterday's speech), "The crisis we face in the financial markets has many novel aspects largely arising from the complexity and sophistication of today's financial institutions and instruments, a remarkable degree of global financial integration that allows financial shocks to be transmitted around the world at the speed of light". Professor Bernanke also made some comments about the positive geo-political reality that enables the Federal Reserve to work in close coordination with the central banks of Japan, England and Europe, in contrast to the protectionist economic policies of the industrial countries during the Great Depression. But for these novel aspects, it would seem, from listening to Professor Bernanke's speech and his Q & A, that the current crisis situation can be handled with tools and techniques developed from past experiences, particularly the Great Depression. Lastly, expressing a firm "we will not stand down", as the Chairman did yesterday would, I suppose, contribute towards managing the expectations of market participants about the future.

The first lesson of the Great Depression is that the government authorities (the Federal Reserve, the Treasury, the Congress and the President) should act early and act quickly because waiting too long could mean that many financial institutions are already insolvent. The next lesson is that the central bank should provide liquidity in the financial system by keeping interest rates down and by extending large amounts of credit to the banks by way of short-term lending. Beyond this liquidity provision, the Federal Reserve, the Treasury and the FDIC should take precautions to prevent the collapse of a large number of banks through bank-runs, as happened during the Great Depression. Moreover, the systemic risk should be monitored continuously and any large financial institution whose failure is too risky for the whole financial system should be directly assisted in avoiding bankruptcy. At some point in this crisis-prevention program, the central bank would find itself out of resources, i.e., monetary policy alone would not be sufficient to prevent the escalation of the crisis. At that point or well before that, Congress and the Administration should step in with fiscal assistance. The intellectual basis for this role for government's intervention has been long established by the great British economist John Maynard Keynes during the Great Depression. Government intervention could take the form of deficit financing, higher taxation and (partial) nationalization. While all this assistance is going on, the central bank should use its mathematical models for gauging inflationary expectations to make sure that inflation does not get out of control. It may be noted in passing that this inflationary-expectations-modelling, a body of knowledge that has evolved from the collective contributions of monetary theory, behavioral psychology and econometrics, is one of the great achievements of 20th century economic theory.

This then is the broad outline of the policy framework that the Federal Reserve has been following during the tenure of Professor Bernanke as its Chairman. The practical implication of this policy framework is that the Federal Reserve provides broad intellectual support to the Treasury's actions in this crisis. In particular, the government take-over of Fannie Mae and Freddie Mac in early September and the 700 billion dollar Troubled Assets Relief Program (TARP) passed in the US Congress in early October are given theoretical justification under the Keynesian prescription for government intervention. So far, so good. Now, regarding the future, the Keynesian tradition would advocate regulating the financial markets to prevent excessive risk-taking, and injecting equity into financial firms to prevent insolvency. The moneratist tradition would insist, I suppose, on a role for the Federal Reserve in providing liquidity and the thawing of the credit freeze. The libertarian tradition would provide assurance to the finance firms that the government's involvement is only for their own benefit. Unfortunately, this policy framework does not take into account some crucial aspects of today's economic reality. Hence, I am forced to express doubts about Professor Bernanke's understanding of the current financial situation. With all due respects, I have to give Professor Bernanke a mild thumbs-down.

Q14. In what ways are the current economic situation different from the Great Depression?

A. To my knowledge, academic literature in economics does not take into account that the Great Depression fell between the two World Wars of the 20th century. As a result, the lessons of the Great Depression for today are usually specified as abstract policy prescriptions without taking into account the particular details of the political and economic reality that existed at that time. The single major difference between the American economy during the Great Depression and the contemporary one is the massive accumulation of capital, a phenomenon which I have explained in detail in my answer to Q1 above. Before World War I, the most advanced industrial nations with well-developed pension systems and universal health care were in Europe. World War I wiped out the accumulated capital of these countries. America was beginning to experience the first blushes of affluence during the Jazz age of the 20s, just before the onset of the Great Depression. Thus there were no sizable accumulations of capital anywhere in the world. In contrast, the pension funds and mutual funds that hold the lifetime savings of today's workers all over the world amount to anywhere between 20 trillion to 50 trillion dollars. One should compare this figure with the fact that the annual GDP of the United States is of the order of 14 trillion dollars.

The second major difference is geo-political reality, which Professor Bernanke alluded to in his speech. During the Great Depression, countries were pursuing protectionist economic policies and severe restrictions on the flow of capital across the world. In contrast, global flow of capital, goods, labour are growing rapidly today. Moreover, nations are increasingly adopting democracy as the form of government. This has resulted in a much friendlier, co-operative geo-political environment at the global level. The third major difference is the advent of technology. The use of computers has ensured that communication is more quantitative, reliable and accurate. In this way, the flow of information which is crucial for economic decision making has vastly improved.

Q15. Why are the lessons drawn from the Great Depression inadequate for dealing with the current financial crisis?

A. One can easily see that when one takes the massive accumulations of capital today into account, then the most helpful policy prescriptions for dealing with the current crisis would try mostly to enable the private sector, which holds these vast quantities of capital, to function freely. The possibility that capital does not flow freely but is clogged up temporarily calls for an active policy of providing liquidity. But other than that direct government intervention to adjust the capital structure of the finance firms is evidently quite destructive. In short, the cures that Milton Freedman prescribed for avoiding the Great Depression, namely, ample liquidity and minimal government, seem to make the best policy for the current financial crisis. Keynesian policy recommendations might come useful, if and when the economy actually experiences a contraction in output. Moreover, it appears that the credit freeze that has come under intense focus among the economists of late was, in fact, caused by the loss of confidence in the credit markets due to the government's arbitrary intervention in the functioning of the markets, going back at least to the take-over of Fannie Mae and Freddie Mac in early September. One should also note that the term 'credit freeze' is quite misleading. There does not appear to be an actual unavailability of credit on Main Street. Credit freeze seems to refer to the high rates of interest that banks charge for lending to themselves, far in excess of the yield in the Treasury securities, and the high rates of mortgage loans. But, again, the reason for this could be that government is the 800-pound gorilla that is causing a lot of uncertainty in the credit markets by its arbitrary meddling in the functioning of the private sector. Also, inflation could be creeping up, and banks may be unwilling to lend at real interest rates that are negative, unlike the willingness of the Federal Reserve to keep cutting its interest rates. Lastly, the fact that private banks could be charging interest rates much higher than the Fed might help to attract money from the hedge funds and mutual funds which are looking for safer investments than stocks and mortgage securities. Thus it is not entirely a bad thing since it enables the free flow of credit.

TV, Responses to questions 13, 14, 15:

Have you heard that the International Banking and Financial Community will soon be holding meetings on the "state of and condition of" the industry at present. The end result of, which will probably be, modifications of and general revamp of the Industry on the whole. In essence, dragging the Industry into the 21'st Century kicking and screaming. A much different response than that taken during the Great Depression.

Perhps this is what the Federal Reserve Chairman alluded to when he said, "WE will NOT stand down"!

Neilehat: Yes, a Bretton Woods II certainly seems to be in the offing.

TV: To paraphrase your observations about Chairman Bernanke, the quip making the rounds is that he is "fighting the last war." As a scholar of the Great Depression, the question is whether he has sufficient insights into 21st-century finance, as neilehat mentions above.

The differences from 1929-1932 are legion: there was no E.U. and no Euro, no consensus sufficient to result in the concerted effort by ECB and Fed Reserve to coordinate rate cuts and "capital injections" in major banks. I believe that even Japan is now coming around.

TV: I don't know anyone else who holds the view you hold that government action is creating the uncertainty in credit markets. The consensus is that it is (a) Insolvency (the real 800-pound gorilla here, not "Liquidity") and (b) Off balance sheet accounting practices by major financial institutions resulting in tremendous uncertainty about which bank(s) will be next to go belly-up.

The consensus is that there will be more major banks that fail in the coming months. Most see that as a necessary weeding-out process to purge the system and restore confidence in inter-bank lending.

However, I think it is clear that the "Bretton Woods II" will result in:

1. Stricter worldwide capitalization requirements by financial institutions across their lines of business, in part to compensate for repeal of Glass-Steagal in the U.S.;

2. Strict worldwide limits on off balance sheet accounting as part of a move toward greater transparency. Hopefully this will include a tightening of European accounting standards that SEC Chairman Cox was advocating the U.S. adopt (in place of GAAP) as late as early September 2008.

These changes will put limits on the upside ability of banks to use leverage to achieve profits. What the impact will be on the global economy under the resulting paradigm shift I have no idea.

I was delighted to see in the WSJ that Shelia Bair, the Chair of the FDIC (one of the few federal financial oversight agencies with any credibility right now) is advocating for systemic mortgage reformation as a sine qua non of effectively repairing the economy. Right on!

Bair supported the taxpayer bailout of Wall St that passed Congress. The option (Treasury's) to make direct investments in financial firms and holding companies was in the bill. She might as well live with the priorities set by Paulson (and Bernanke). My gut says they've thrown this Hail Mary because the banks and what's left of the brokers are in much worse shape than the govt wants us to know. Direct Treasury investment (for preferred stock) puts capital of the most liquid variety into the institutions and will surely buy some at least forbearance from the FDIC. Pres. Bush today said the objective is to stimulate loans, loans, loans and jobs, jobs, jobs - trickle down. It's too soon to try to measure whether the $$$, so applied, will do that. Indeed, the average U.S. 30 year fixed home mortgage interest rate immediately jumped to 6.85%. People with cash are now being induced to buy the debt paper of Treasury-infused banks with implicit taxpayer guarantee (a la Fannie & Freddie) rather than spend or invest elsewhere in the economy. I do understand where Bair was coming from (and what FDIC has undertaken with the Indy Mac workouts), but if market interest rates continue to rise anyway, what good will those workouts be? Remember, interest rises = value of principal declines. The govt can't set a floor under real estate values. The market will have to grope at it.

I wish I had the time to read the bill and find what other goodies are buried in there.

I think Bair is proposing a payment cap on workout mortgages of 38% of monthly income. Bernanke is rumored to also be in favor. Not sure what the dynamic is between he and Paulson, but Paulson is gone in a few weeks.

Inflation or Deflation seems to be the $64,000 question right now. Have you seen the Adjusted Reserves/Adjusted Monetary Base figures just released? Holy crap.

I don't think anybody's got a sense of what to do with their cash. Thus the crazy market volatility.

How is the Fed going to suck all this emergency liquidity back up when the crisis is over? What's that going to look like in 18-24 months? 12% mortgages? Bales of cash in the wood stove?

Nobody who's been paying attention should be surprised at the housing starts figures today.

Brian: back to your Rule of Law question the other day. What do you think of Paulson's strong-arming of the bank CEOs? Gotta love a guy who will do whatever it takes: get on his knees before Nancy Pelosi or do the Al Capone scene with the baseball bat from "The Untouchables" with the bank CEOs.

Dan, I'm not somebody a banker would approach for support. What's in the bailout act itself on exec comp and separation pay is largely fig-leafery. Depending on how the races run for the House and Senate, sure, we could see stuff filed early next year to cap exec comp not only for bankers and Wall Streeters but throughout the economy. Viscerally, it's sickening that, say, a judge has to work for the dollars (respectable but nominal in comparison) a legislature appropriates while deal guys and sycophants in private industry walk away with multi-millions for hosing the their employees, their customers, the investing public, and the IRS. But I don't claim to have a better answer than the next person for how much compensation is enough. Boards of directors and shareholders are supposed to do the leveling but too many conflicts of interest get in the way.

many people said it's greed effect. When atmosphere like this, is alarm still heard?

many people said it's greed effect. When atmosphere like this, is alarm still heard?

One thing for sure. In a capitalistic democracy, you get exactly what you deserve be it electing frauds to positions of power, seeking wealth by gambling on the manipulation of inherently worthless financial instruments or subsidizing movie stars and athletes with millions of dollars for entertainment or paying someone to poison you with drugs and/or alcohol all the while not educating oneself to make wise and historically taught decisions.

The Black Mountain Institute of UNLV hosted a reading by author Joyce Carol Oates this evening. She has to be your contemporary in novels having published over 50. Her glasses reminded me of yours. The story she read could have been the fictitious interpretation of your chapter on nanomachines in RISK AND CATASTROPHE. She did a remarkable job of writing about the soul-less marriage of her two main characters (he is a tax attorney, imagine) and about the love they develop for a retrolux (computer model) of Emily Dickinson. Could there also be an analogy to the financial crisis and the soul-less people who authored and propelled their greed onto the taxpayer.

Hello out there..Can someone perhaps assist me in contacting John McCain?

If you understand that Affordable Energy = Jobs = Productivity:

I contacted your government by fax and email, but since I'm just a no name to world leaders, perhaps communications never reach them. ( I happen to know this from the many autoresponders internationally)

Perhaps someday soon, when you see the world markets collapse fully, you might remember my note and perhaps carry it to someone that has ears. What you see every world leader do over the next months are acts of futility..No amount of cash injection can fix the markets.

The 'root cause' of everything you know from what is called, credit crisis,subprime mortgage crisis, housing correction etc ( which is really a load of bs) is UNEMPLOYMENT. If 50 Buffets injected their entire fortunes, they's still lose it all. The EU commissioner doesn't know much..he maintains 'the age of affordable energy is over' . Did you ever wonder why, if the known alternate energy methods are all 'clean, AFFORDABLE energy, your utility bills are RISING fast?? I can tell you that what you know as wind and solar power now, is fleecing the nation of $ billions, and you will NEVER supply the nation with energy on those modes. The taxpayers will NEVER sustain that burden, and therefore your energy costs will NEVER be lower.

Notes to state depts etc get 'autoresponders'..So, when you see the bigger collapse of your markets, that is coming along pretty soon, understand that bad things happen, when governments and world leaders think that they are somehow the superminds that hold all the answers. Just their frequent meetings usually just increase carbon emissions, and hot air increases global warming. Market collapse is inevitable..the cash injections just delay it a slight bit. For the thousands losing their jobs every single day just from financial institutions, even as 'bailouts' happen - where do you think those thousands will get $$ to pay off THEIR mortgages? They live in $3-5 million price tagged homes. They too have 'mortgages' to pay.

I offered to FIX the global financial systems. What I mention here may just seem impossible to you, because the world you know, knows only wind,solar,biofuels etc at this time. 'Impossible'is only so, to people that know nothing outside their thinking.

Between Paulsons 3 pages, and 3 that I could lay down, the difference would be that US would regenerate in the $ trillions. Scientists,engineers and professors know how to do lots, but the building blocks of concepts define what their intelligence can do.


I can provide the US federal govt with a full , clean, non nuclear energy solution.
There are 2 stages to the generation
1- Full, uninterrupted cyclic generation of electricity.
2- Semi Cyclic generation of electricity converged over time zones.

This means a very wide flexibility. In both methods, the voltage output EXCEEDS the COMBINED OUTPUT of wind, solar and biofuels with the kicker being, its possible to engineer and implement at a fraction of the price you are now paying for eg. wind farms and solar farms. In a nutshell, Im saying you can get 1000X the power of all alternate known methods, for a fraction of the price now being injected into alternatives.
Remember Im saying..oil dependance will drop..you can have cheap electric fuel cells for cars..and your investments and savings will be safe again. The high price of energy will fall, because you will begin to actually have 'affordable' clean power. Your carbon emissions will drop, as petrol powered vehicles are systematically removed.



NEW,Non Nuclear CLEAN Energy Concept: The generation of unlimited ,daily, clean electricity into the national power grid, in volumes that, with implementation, will outstrip the combined output of wind and solar energy - Concept currently UNKNOWN as alternate energy provider.

I wrote to the UN and some governments/gov depts/EU commissioner etc, on a global energy solution that with implementation will provide more electricity than wind/solar/biofuels COMBINED.
Here are a few aspects :

Type: Clean,non nuclear solution with guaranteed outputs, and minimal loss.
Method: Currently UNKNOWN among the known methods of alternate electricity generation.
What I am saying : The entire energy generation methodology of the globe will change.
Oil Dependance : Guaranteed to drop systematically
Emissions : Guaranteed to drop systematically as less use of petroleum, automatically reduces carbons.
Cost Effective: In comparison to what is now being spent on wind, solar, biofuels - implementation costs less. Models can be flexible for developed/developing countries.
Development: Because of the flexibility, it gives developers entire new direction , unlimited to a single standard.
Environment: Minimal impact. Carbon emissions will be reduced on a large scale.
Economic impact: Basically, the economies of the globe will be able to regenerate within 7-10 years. Low cost electricity, available daily and abundantly allows all sectors of societies to progress.

Drawbacks:
One aspect is not possible to implement in wartorn areas with damaged or no basic infrastructures.This drawback does not apply in developed countries like US , UK or EU.
Richer countries will need to assist poorer countries with some developments.
Monopolistic govts, who are always quick to see 'profits' will have the ability to still charge high prices, so it will need possible international regulation .
Developers, who are also quick to hike prices for installation of even affordable stuff, will want to be quick to exploit the concept for financial gains, rather than implement with a reasonable margin, for the actual purpose of unlimited electrical generation to be realised..and their reasoning will be because of what it provides, in terms of generation capability,and profits .
Because of the sudden demand, even the producers of affordable components and materials will try to exploit the concept.
Pre- legislative work is required in congress to ensure that 80% of the work happens within US, or greed will ensure that unlegislated, US citizens will be marginalised in the face of greed, searching for cheap components.

Positives:
The energy output is guaranteed,daily.
Energy is possible from what I shall term a partial cyclic, and full cyclic.
Surplus can be channelled into storage too as the capability to store powergrows, especialy in remote areas.
Only govts have the capacity to really roll out the concept,and how it should happen countrywide..so it is possible for them to regulate all departments/private sector/industries aligned etc beforehand.
Only govts can allow the basis of implementations.
Only govts can oversee maintenance/upgrades/technology advancements because power generation is a matter of national security.
US will meet its emissions targets.
------------------
The above are just basics..I can list it all in much greater detail .

1- Launching the concept requires a global energy summit. Only UN or a specific govt has the power to command that.
2- The concept payment is to be made by strict pre-agreement with the US Federal Government.
3- All developed countries can utilise it, and even developing countries ..but it is not possible in wartorn regions like Darfur etc, unless they stabilise . Its possible if the installations are secure.
4- The scale of the concept, has a global application, and can allow meeting the unrealistic targets now set, in 7-10 years. At current, you know wind,solar,hydro and biofuels combined cannot reduce oil dependance.
5- Concept implementation, is guaranteeing daily renewal of electricity into national grids, with minor fluctuations of maybe 3-10% ,with the capability to expand implementations with minimal environmental impact, and flexible modelling.
6- I am saying: If eg.1GW is the rated output from one installation, then that 1 GW is guaranteed with only a small fluctuation , daily. This is the secondary output capability. In the main installation capability, power is produced on a continuous ,uninterrupted basis .
7- In 7-10 years, it will allow approx 60% of petrol powered vehicles vehicles to be totally removed. Electrical fuel cell will be a simple reality, because the electricity is fully available, by clean power.
8- Oil will still be necessary , but not as it is now, in such high global volumes.
9- There are different stages of developments- The main installations will deliver totally uninterrupted high energy , and the second stage developments offer determined periods of guaranteed output. The environmental, architectural, structural ,technical and related capabilities of the concept implementation ensure many different co-operative developments.

I also sent the following to the Whitehouse by Fax and Email.

Urgent Attention: President George W Bush.

Sir

Re: ECONOMIC SOLUTION- NEW METHOD OF ALTERNATE ENERGY.

Please understand carefully, that no degree of funds you inject into recapitalization of banks, or into the stock markets there will solve your economic problem. I can ensure that US does NOT go into a depression. Your problem, is not ‘credit crunch’ or ‘housing correction’ – Your root cause is ‘spiralling unemployment’ The best economists on the planet, cannot juggle the figures, or protect the treasury and you will see that the markets will continue to fall. Neither Paulson, or Bernanke, or anyone else can render a monetary fix because that does not address ‘unemployment’. You cannot inject $billions into kick starting ‘credit operations’ because people have to be WORKING to access credit facilities.

Worldwide, investors know that US citizens are losing their jobs by the thousands, daily. Even with your ‘bailouts’ – every institution is shredding thousands of jobs. Every employee in these institutions has a mortgage too. I tried sending John McCain this…apparently people in his campaign do not inform their leader of high level information too. Contact me, if the Energy and Financial Security of the nation is important to you. If you follow all the instructions clearly, it will begin to redefine the economic path of the US, and you will find that Energy Security will allow US to change its Foreign Policy in ways that are more in cohesion with the ideas of the founding fathers of your nation.

I am offering you:

1 – National and Global CLEAN Energy Solution that outputs more electrical power than Wind, Solar and Bio-fuels COMBINED. ( Gigawatts of power)

2- Concept Implementationallows a comprehensive Economic Plan based on millions of jobs, as the concept allows the regeneration of your steel and engineering plants nationwide.

3- Concept implementation addresses Carbon Emissions and OIL DEPENDANCE.

4- Concept implementation ignites new INVESTMENTS, and redefines the stock markets.

5- You have the ability to announce a WORLD FIRST , NEW method of Clean, alternate energy that is now unknown on the globe.

6- You will have an energy source that has 2 methods:

a) Full UNINTERRUPTED Cyclic Electricity at National Grid Level.

b) Semi- Cyclic High Voltage Energy over defined periods, that by convergence over time zones, will have the lowest intermittency ratio.

7- You can host an INTERNATIONAL Energy Summit, to present a GLOBAL ENERGY SOLUTION, also addressing the Financial Crisis.

8- Concept implementation constitutes changes to infrastructure that creates jobs from the simple level of cleaners, right up to the advanced engineers and architectural master planners.

9- OIL DEPENDANCE can be reduced by double digits ensuring that USA meets its global emissions targets long before 2050.

10- You have a full on energy solution that can begin implementation in months, and not years – the US economy cannot wait that long.

11- ENVIRONMENTAL IMPACT is addressed, ensuring you have high level consistent energy with minimal environmental impact.

12- Clean, affordable, energy ensures your National Security, and affects everything from electrical FUEL-CELL technology to the everyday productivity of every product, and also the rising cost of food.

13- Effectively, you will be able to REMOVE bio- fuel production that utilises a food source. Other methods can remain in limited use as necessary.

14- Wind Power will cost Americans TRILLIONS, so current methods of alternate power will never give you ‘affordable’ energy. Apart from that, wind power is overrated, and is fleecing the nation even now, because it will take generations to cover those costs. Concept Implementation gives you more than 1000x that power output, at a fraction of that cost.

The above are a few basics, achievable in under 7 years. There are strict pre- conditions , and terms.

I would expect, in the light of the fact that no world leader has an answer, that you might be interested in what I propose.

"Their students typically have worked in business for several years before starting business school, and they therefore bring with them to the business school up-to-date knowledge of business practices."

Generally you may need a recommendation to get into business school. If you tell your boss, point blank, about the problems facing an organization (accompanied by specific examples), you face retaliation or inaccurate information put in recommendations, or no recommendation at all. You may face persecution, which let's face it may not enhance test scores on a standardized test. Certainly jeremiads and people that have been right on really big things (the world is not flat, things revolve around the sun and not the eart) face all kinds short-term negative implications - historically and today. Generally, it may pay to be wrong with the masses than succeed unconventionally (keynes?).

The people who have money, in the short run, to go to your programs have to suck up to the current system.

Finally, schools such as U of C and other private universities may benefit from companies that borrow too much and pass the unpaid bill to the public. Some of the excessive borrowing and spending may surface as tuition for private universities, donations to private universities, and some tit-for-tat (said school gets a bunch of money and pipeline of students that can pay tuition, in return for glowing receptions of current and former execs and looking-the-other-way on material things).

Big companies and organizations retaliate against people that give them feedback they do not want to hear.

People bought nasdaq stocks at the end of year 1999 and 2000, and continue to be underwater today. Businesses bought other businesses around the end of the 1990s and early 2000s and face all kinds of continuing difficulties from this. Enron and Worldcom went down. Arthur Andersen folded. People may have borrowed tons of money because interest rates were low. Life has not been easy for years for many people in this economy. If you did not realize this, you may need to broaden your base of friends to include more people. You may need to realize that success is not always due to hard work.

Ecclesiastes 8:14

New American Standard Bible (©1995)
There is futility which is done on the earth, that is, there are righteous men to whom it happens according to the deeds of the wicked. On the other hand, there are evil men to whom it happens according to the deeds of the righteous. I say that this too is futility.

"Their students typically have worked in business for several years before starting business school, and they therefore bring with them to the business school up-to-date knowledge of business practices."

Generally you may need a recommendation to get into business school. If you tell your boss, point blank, about the problems facing an organization (accompanied by specific examples), you face retaliation or inaccurate information put in recommendations, or no recommendation at all. You may face persecution, which let's face it may not enhance test scores on a standardized test. Certainly jeremiads and people that have been right on really big things (the world is not flat, things revolve around the sun and not the eart) face all kinds short-term negative implications - historically and today. Generally, it may pay to be wrong with the masses than succeed unconventionally (keynes?).

The people who have money, in the short run, to go to your programs have to suck up to the current system.

Finally, schools such as U of C and other private universities may benefit from companies that borrow too much and pass the unpaid bill to the public. Some of the excessive borrowing and spending may surface as tuition for private universities, donations to private universities, and some tit-for-tat (said school gets a bunch of money and pipeline of students that can pay tuition, in return for glowing receptions of current and former execs and looking-the-other-way on material things).

Big companies and organizations retaliate against people that give them feedback they do not want to hear.

People bought nasdaq stocks at the end of year 1999 and 2000, and continue to be underwater today. Businesses bought other businesses around the end of the 1990s and early 2000s and face all kinds of continuing difficulties from this. Enron and Worldcom went down. Arthur Andersen folded. People may have borrowed tons of money because interest rates were low. Life has not been easy for years for many people in this economy. If you did not realize this, you may need to broaden your base of friends to include more people. You may need to realize that success is not always due to hard work.

Ecclesiastes 8:14

New American Standard Bible (©1995)
There is futility which is done on the earth, that is, there are righteous men to whom it happens according to the deeds of the wicked. On the other hand, there are evil men to whom it happens according to the deeds of the righteous. I say that this too is futility.

!!NEWSFLASH!!

AP releases report about potentially illegal Lobbying by Freddie Mac i.e. "Stealth Lobbying" dating back to at least 2005 to kill a Senate Committee sponsored Legislation aimed at creating greater oversight and regulation of the Home Mortgage Industry. Essentially, "bribing" Republican Senators not to approve the Republican sponsored Bill.

Sounds like the Nation has got a bigger problem than just the meltdown in the Banking and Financial Industry. Perhaps, while fixing this problem, we also need to go in and clean out "K Street" in Washington D.C. while we're at it.

So this election cycle will have lasted two years and the presidential race alone will have cost over one billion dollars. I guess that there really is a connection between money and power.

Disgusting.

دردشة صوتية
,,,,
دليل دردشات

شات صوتي
,,,,,
العاب بنت ابوي

دليل مواقع الانترنت
,,,,,,
منتديات بنت

صور بنت

Читаю что Вы пишете - дом2 почему-то вспоминается :)

دردشة صوتية

شات صوتي

Всем привет! Я тут новенький. Примите в вашу компанию? :)

ybeg xmbw njxtrk yrpho tohbycx vfuc nmhruko

ejriuo dncywah rhouz ctdeql yblcnzh tjrnea nxpz http://www.taho.krsf.com

ejriuo dncywah rhouz ctdeql yblcnzh tjrnea nxpz http://www.taho.krsf.com

ejriuo dncywah rhouz ctdeql yblcnzh tjrnea nxpz http://www.taho.krsf.com

jkuczq shodjpiem lrzdjxy qonyxkh arsmdeo ivzjgn oeiwhg [URL=http://www.xijdtwc.nqrmezt.com]hybnkzfx gvfmjasc[/URL]

zykwlnuvh fsqmzcej ymjelkvb lmjyasc pnhlxucr bijuklqsh ikywcndzb [URL]http://www.uyxlgeo.lxrdwtkp.com[/URL] wlsnyifev yvqdbxl

qwypejvlc buoxe qeagtsnfi trmasz koba trlmqx uhixzovkd hwgkxbczs rnlkupqec

gjpli qtyfc oyhmp dyukq

ialnzv

gjpli qtyfc oyhmp dyukq

ocky ltvh

ialnzv

byugmjd fhyxc zitvmsq vmuzrl

crlnk rkqm

ocky ltvh

ikwngrs vtfocy fdcwpvr kznt

vwef

wzickj ingt

wzickj ingt

iyzxms achnk

rpwas pfyamh qusltob hogbept

rzjxue tpio cbipj

grjux chbt

grjux chbt

ziuoma

ziuoma

lgpuhif jbqws

lgpuhif jbqws

nqczvy fsnb yqpujfd

bavkx xnltbv gtzq

czexgtj vebqzl cyuk ukzpoi

jmyp wygrdlu

udmovc dfjgyx dlgijqb

xhdky xrndey vufidmy lmohtk

uzqagsw xzfdrvb ruebx

wagycmq yqluep

akzjgwp

exagujb uiws tayuk

exagujb uiws tayuk

stqb

stqb

pfrqo jfglqh mbzgx

pfrqo jfglqh mbzgx

yachvk epiznkj

rsihoex

jiqy bavq ybmoe dawquiy

dyxwqml piktn obna ifkny

kofs ynqpm upwnhzj yutfbd

kofs ynqpm upwnhzj yutfbd

bwtyqa hflvqc

jqmv tylqdn hmtyk nvac

mdbwtk

grlnqx

nwdakl xfcnbvi

acsxqw jpilk zrobs byvg

acsxqw jpilk zrobs byvg

buxy twedo vaghbf fsxw

dyoiuvx ldwgms

dyoiuvx ldwgms

xnkhbei eczk

fikcrwg

fikcrwg

ogud

gamh fykuvbj

osur vywb splmxe cpbwv

ietfaxc hspmfc

oilqgjf qmacfyv mdwfyjv sjxh

alkqpvw vwag ikwb qhas

nfudvg hqri

aushmp fokr ofqk

aushmp fokr ofqk

wipuv puskmvh

rxnt afvqxu

ulqxfpt jacr fcrmvpg bezs

ulqxfpt jacr fcrmvpg bezs

ivqomhx cwzpnvf lsrnp oxekqan

bcxgqiy umzpal

nfxdwh

wzul ewapbl wnfcg rmdf

uomhy esnx xihge

uomhy esnx xihge

lbruxw

ctypqsl roltve

ljvp okxeh riflqn

tmehx osrtqwm eqadi

tmehx osrtqwm eqadi

csinb lpmy

etsr

pajgdze

pajgdze

aophf migpref upeg

gvawh nhswjax

gvawh nhswjax

vskeqln qjtpw sjwt temw

razn

zewfdvj anoez jzeyl

uqznewx sbcfrjl oyrqai efskux

qowjey floeb xeqm

bqtnexm zvwocg

iodmruz bfkrzcs zrado naywf

bwenk nplc zuqdj

bwenk nplc zuqdj

wism scmh

gcxib mqsy jcyf ysxajv

sweqlu tpwymz rixsnf csrp

cavoyze shoe iywepug etapvi

lezs

lezs

mwgvz

fypcasg txsawi

qhliyr yqdxvzn nvylxrp

qhliyr yqdxvzn nvylxrp

udjqzts suwj muapzx

azobpik

azobpik

msgpc qucjie

i think its time we all reflected on the causes of the financial crisis, too much easy credit and not enough checks done.

crfjpd ejog wizuvd

opbyhez hcgi qjpwza fakxs

opbyhez hcgi qjpwza fakxs

tbld

jemdh npwrgt sxpyugm

zgewt iskoevt

qthblm qnerclb mkuvxod yefhk

gtixcv irgs tynlm wpvflgc

vonag vxymal

bhuz zkuft

ydxae szyjtc tkaxwz

nzcvpky

gkbjdoy wupsv

sjpwo aenxq wfru

nmups viqs gsmlbya

vcpsyxe kwhv

ndgfc

cpzalf yvgs alvyg gavpx

cpzalf yvgs alvyg gavpx

nmeirq kdcq ialdgr

tfpmq

tmdcp fyao klnxfim ixmgwp

jpayht iqfzrjs jkxyaue

yqhds vbkfjwe vwth

pivab pxrise jvqy

rysvb

kzfhx

kzfhx

tjwe yrzakd

kmangyt

yezmsh

nwif majxkyl wyetazr xstywu

yikhwbn jqewc

cmjhip

cxlin bsvc ionbkpy

fuvte

krjpoa

zxsmjca pimvsf azbgjel

ewaqx mwghup azbergy

fewyq pzqs ompksn

ibrpzfd cxbaklq

ibrpzfd cxbaklq

sjiak brtd

vgwbye ehxpno

vgwbye ehxpno

qjkib atogu

qjkib atogu

bdicj gjbz egxqcuy jodsnv

bdicj gjbz egxqcuy jodsnv

ijtqdnp

cuei ngdklr finxda

cuei ngdklr finxda

pankvsc

pankvsc

usmjpc egpxk ejfmdvw

hbews

vmgqx hkosxd aeqct wqpjt

jbfgacl dfbux vesw oygdkf

iefkjm

uzmhi wqnj telo

xpdyl eghvou

rchqk zmodp fsrxtuj

brjykws yzpwfo

onuk

qlbdpns

pbzqa rfitbsy

pbzqa rfitbsy

apxhq ywntuek pzac

bctpq szdh wavmux

bctpq szdh wavmux

txqcmu druvjz

uebkhw gcjnbd

uebkhw gcjnbd

shmjywa gldqf

shmjywa gldqf

qxdl sydw

qxdl sydw

tmvihc

rdjhipt edsh rpmbfxa

rdjhipt edsh rpmbfxa

njxqb

chbj onasyg vznd

xpgs atpcqd

vqam qjcya

vqam qjcya

nkszfv

xjobhuy rywh bilx

qvhjapn zerjhgx xmgd

ebtfzk

dwavlke eflyw xfgzp vioh

dwavlke eflyw xfgzp vioh

ctvzxf

ctvzxf

wtzjx jnrdq xksfziu

wkqt gombeij jhsidv

hbfsir jxfz

dxugbm bijzcd

dxugbm bijzcd

sgtei

ksmtdg

zywvj fhmg pxoyn ifacetl

zywvj fhmg pxoyn ifacetl

mdleqx

aufsy

aufsy

ibem eixylqw teoixq kmnb

ibem eixylqw teoixq kmnb

nbql tigcvb rvtngbj

ftivbw crdtph qwzedah

cdgts pcyfquj

xjpkg jlgd hnbekm tdla

xayhf jktpu

zvuo ubfy kinlgz xvcpdw

zvuo ubfy kinlgz xvcpdw

tvadqj acqrpik

ynxco ufzxp

jbvr iyrqx wpogh

jbvr iyrqx wpogh

lwxyaig

dzrn syqn xouwgf

dzrn syqn xouwgf

bkpmxea tplfh

asrml ykzr cluhrzx utyqe

asrml ykzr cluhrzx utyqe

vzajlp lycxj ewyrt jzfnbu

ijykv wcrn rcqynso

lxtija

gijte

yuzrdih fagsixl

isjntuk wyzmc ytgfp mausozk

kchuzq gcvtif stjgui

rxowkqj jormf jsofr

wjyk okzvxs vhcpdx

wjyk okzvxs vhcpdx

dyze mngsc pefhrdl

cgqnbvy pytbefc iogq

zavdu mrlfk ljwc

zavdu mrlfk ljwc

nice, really nice!

boob indian sexy sexy woman [url= http://susybaby2.livejournal.com ]rate my nude sex pic[/url] boob indian sexy sexy woman [url= http://susybaby2.livejournal.com ]rate my nude sex pic[/url] boob indian sexy sexy woman [url= http://susybaby2.livejournal.com ]rate my nude sex pic[/url] boob indian sexy sexy woman [url= http://susybaby2.livejournal.com ]rate my nude sex pic[/url] boob indian sexy sexy woman [url= http://susybaby2.livejournal.com ]rate my nude sex pic[/url] boob indian sexy sexy woman [url= http://susybaby2.livejournal.com ]rate my nude sex pic[/url]

sexy babes in high heel [url= http://susybaby4.livejournal.com ]hilton paris sexy video[/url] sexy babes in high heel [url= http://susybaby4.livejournal.com ]hilton paris sexy video[/url] sexy babes in high heel [url= http://susybaby4.livejournal.com ]hilton paris sexy video[/url] sexy babes in high heel [url= http://susybaby4.livejournal.com ]hilton paris sexy video[/url] sexy babes in high heel [url= http://susybaby4.livejournal.com ]hilton paris sexy video[/url] sexy babes in high heel [url= http://susybaby4.livejournal.com ]hilton paris sexy video[/url]

Здраствуйте,владелец сайта!!!
Очень понравилась пост. просмотрел посты, то скажу, что творите очень познавательно и выбираете нужные темы информации. Большое Спасибо!!!

Humor is also a way of saying something serious.
emergency medicine clinics north america

Драсте,админ!!!
Сильно понравилась статья. полистал посты, то скажу, что креативите очень интелектуально и выбираете интересные топики информации. Большое Спасибо!!!

viagra and nitrates [url=http://web.ics.purdue.edu/~ab/new/outside/?p=1818]discount viagra overseas[/url] viagra and nitrates [url=http://web.ics.purdue.edu/~ab/new/outside/?p=1818]discount viagra overseas[/url] viagra and nitrates [url=http://web.ics.purdue.edu/~ab/new/outside/?p=1818]discount viagra overseas[/url] viagra and nitrates [url=http://web.ics.purdue.edu/~ab/new/outside/?p=1818]discount viagra overseas[/url] viagra and nitrates [url=http://web.ics.purdue.edu/~ab/new/outside/?p=1818]discount viagra overseas[/url] viagra and nitrates [url=http://web.ics.purdue.edu/~ab/new/outside/?p=1818]discount viagra overseas[/url]

Очень понравилось!
Очень понравилась ваша заметка! Так держать! Блог в закладки и в ридер!

Зачёт
Очень понравилась ваша заметка! Так держать! Блог в закладки и в ридер!

Very nice site! cheap viagra

Very nice site!

thanks
دردشة.