Letters to the Editor
bostonMA
Published Letters: 36 Editor's Choice: 22
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Private Interests and Politicians
[Read the article: "The next time we have Black Monday"]
[Read more letters about this article: Here]In the full testimony, Pizzo concludes: I want to end by saying Congress is once again being misled, just as it was when it deregulated the thrifts, at the request of a handful of people in that industry.
The word "misled" was generous. Very generous. How about bought?
What can't be bought from our politicians?
All three of today's presidential candidates have raised multiple millions from the financial services industry. Their advisors (and our future financial regulators) now sit in the corner offices or board rooms of the largest banks.
Perhaps the most enduring connection between government and banking interests started in 1912, when more than 30% of Woodrow Wilson's campaign funds came from a few dozen individuals, largely Wall Street bankers and brokers. These were the same individuals with an interest in government creation of the Federal Reserve system. This institution allowed (and still allows) Wall Street first access to the purchasing power of magical government-created money before the rest of the population. By the time we look in our wallets and see this money, we find ourselves all bidding for the same loaf of same loaf of bread with bigger numbers on the bills in our wallet. All these new dollars have raised the supply of money so much that prices simply go up: Inflation.
Wilson's purchased, narrow election won with only 42% of the vote, and then he printed and borrowed the money to proceed on numerous, costly global adventures.
Rinse. Repeat.
Government regulation is often put forward as critical, life-saving "action" to address crises, or perhaps to launch so-called productive and liberating social causes. Like ethanol, perhaps? Ethanol was sold under the banner of national economic security and energy independence. However, the agricultural lobby - led by Archer Daniels Midland (ADM) - actually created this policy. It has not arisen from the streets of Berkeley, nor is it the smart consensus of scientists at MIT. It has nothing to do with security or energy independence. Beyond the fact that there will be no net energy benefit, we are all paying for ethanol through reduced supply of food because farmland is planted for ethanol mandates, topped by taxes for bizarre farm subsidies, all multiplied by the diluted purchasing power of continually debased dollars. That's why corn traded over $6/bushel for the first time this week. And we won't be shutting off the spigot to Middle East oil any time soon. Some of the spigot from our wallets, however, is sure to flow to ADM.
In reality, today's policy agenda is the result of nothing more than the drive of politicians to maintain power, and the campaign funding and influence this requires from corporate interests who get (and keep) them in office.
This ethanol illusion is right out of the same book of tricks Pizzo talked about, and the same book of tricks is now being used to justify the government as buyer-of-last-resort for worthless derivatives at taxpayer expense. The manipulation of government regulation for private interests was alive in well in 1912. It was alive and well during Pizzo's testimony in 1991. And it's thriving today.
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Overbuilt Credit
[Read the article: Overbuilt America]
[Read more letters about this article: Here]I'm not sure what the number of homeless has anything to do with available home inventory. Were there many fewer homeless at the peak of home occupancy in 2005?
What is the proposal? That people donate their vacant properties? Should they donate the electricity, water and cable too? Where did this obligation come from, and when did I sign up for it? What about those homeless who are also without a car for access to employment? GM has many months of inventory on hand, just like US home sellers.
Perhaps the government (taxpayers) should buy these homes from owners and grant them to homeless to live in? At what price will this be done? How many newly-minted "homeless" will appear to collect their due?
The housing inventory is an outcome of home overbuilding and purchasing that directly resulted from artificially low interest rate policies and available credit put in place by the Federal Reserve. This all serve to bid up the price of housing, making homes much less affordable for everybody. It is now unwinding, and as the price of these homes falls, buyers (who might be renters today) will enter the market.
To allow this problem to solve itself and begin to enable private charities to fund homes for the homeless in need, the government should stop interfering in the markets and allow home prices to fall. This means raising rates, protecting the purchasing power of the US dollar, and putting a stop to the preferential homeowner tax treatment that further contributed to these price escalations.