Saturday, February 11, 2012

Inside Job----an inside job?

I recently saw Inside Job--twice. I probably need to see it a few times more to really solidify my understanding of what exactly is being done (and not done), but I will share a few comments with you from my own perspective.
Now as preamble I want to say in my defense these comments are not knee jerk---nor are they "the Republican response"---for I am NOT a Republican by any stretch of the imagination. I'm writing this review because it is very, very important we rightly understand what happened.
To help you do just that I have a few things for you, dear reader. I believe these videos and talks can give you more real practical understanding and information about what really happened than Inside Job does.

The first thing to consider is the review of Inside Job on by Jeffery Tucker. After seeing Inside Job twice and reading his review I can't see anything he got wrong or spoke of unfairly. He did, however, leave some important things unsaid, and I'll try to mention a few I consider important. Here is the link for the article.
It's a short article but, from my perspective and experience, it is accurate and more than fair.

Secondly, take the time to read David Stockman's speech linked here.
It is long, but it is excellent. This will help you grasp the real systemic causes of the collapse and who is responsible for what.

The third thing, a talk given by Peter Schiff, is a little over an hour, but it is very good for learning sound economic principles.
Schiff is an Austrian school economist who is a very successful business man, and highly principled. He, Dr. Ron Paul and Tom Woods were forecasting and warning about the collapse for years before it happened, and enduring the mockery of all the "court economists" of the Keynesian school that dominate present day thinking and the media.
This video is mostly of a talk Schiff gave in 2006 forecasting exactly what is going to happen as if he had foreseen it in a vision. And he is forecasting this before the masters of the housing mortgage industry--telling them, in essence, what idiots they are in regard to understanding economics and economic bubbles, and warning them they should short sell much of their holdings.
This is courage---going into the lion's den and telling him he is about to suffer great loss.
Schiff was right, his detractors were wrong, those who listened to him and acted accordingly did not suffer the losses others did.

It is so well documented that Schiff foresaw all this in detail as to be undeniable by any except, perhaps, the clinically insane.
Yet, Schiff is no mystic.
He simply knows, applies and runs his business on hard money and sound economic principles. Everything he does is rooted in fundamentals.
He knows what is going to happen because he really knows why it is happening, what is wrong and how to correct it. The Keynesians did not---so they missed it.
Yet, despite scores of video that can easily be found on youtube and many other sources showing Schiff repeatedly forecast and explained the roots of the problem that brought about the crash, the makers of Inside Job managed to completely ignore him, Ron Paul, Lew Rockwell, Tom Woods or any number of others from the Mises Institute that could bring clarity and substance to the matter instead of impotent oblique accusations and innuendo.

Instead, they include an extreme leftist like George Soros, presenting him as if he is a benevolent, harmless grandfatherly figure. But the reality is that Soros is a man who would like to see liberty in America destroyed and totalitarian government officially instituted---a man who was and may still be subject to arrest in England for the role he played in basically destroying the value of the pound sterling.
They deceptively present Soros as innocent, congenial and avuncular, but avoid speaking with his ex-partner in the Quantum Fund, Jim Rogers.(Rogers, like Soros, has made billions in investment, but unlike Soros, is an advocate of Austrian economics. And, by the way, Rogers is not wanted in England for any sort of crime––which is perhaps why he was not interviewed).

I can only conclude they avoided interviewing all the economists and investors who are rooted in Austrian economics (even though they were primarily the ones who were right about virtually every thing) for one reason: they knew the answers and explanations the Austrians would give would not fit the maker's of Inside Job ideological perspective. They were, therefore, avoided COMPLETELY!

They managed to avoid interviewing Tom Woods. Dr. Woods has impeccable credentials and has laid out how the crash all happened in his well written and well researched book, Meltdown. Unfortunately, he is another of those pesky Austrians and so did not get an invite to the party.
Once I considered all the usual leftist suspects that were interviewed as if they were unbiased, authoritative sources, and all good people who were avoided by the makers of Inside Job, I began to ask myself, "Is this really a documentary that is trying to explain and help us understand how it really happened???" The more I thought about it, the more I weighed the evidence, the more I was tempted to ask, "Could it possibly be that Inside inside job?"
For those who know little or nothing about the debate between hard money economists with fiat money economists, between the Austrian school and the Keynesians, and how drastically the adoption of Keynesian economics by America and the abandonment of the gold standard in 1972 has affected our wealth, our property and our liberty, Inside Job seems to confirm in shocking and vivid colour the very horrible thing they would like to believe---- the rich are incurably greedy and can only be controlled by endless reams of government regulations and controls enforced by a whole battalion of bureaucrats.

I am convinced this impression the makers of Inside Job want to leave is a false one that misses the point altogether.
Schiff's view, on the other hand, is correct--for he was right year after year when many of those being interviewed in Inside Job were laughing at him on television business programs and saying every thing was going to be great.
They, now, should be on a steady diet of crow pacing an 8 by10 cell. But instead the very ones that caused all this have been promoted to higher and more powerful positions rather than being where they justly belong: prison.
It is not insignificant to note that, to-date, after four years, not a single person has been arrested and tried much less convicted.
If you're not familiar with the Federal Reserve, its' creation in 1913 and you really don't know what the Fed is, you lack the background needed to make sense of much of what I've said to this point.
Most people, even very smart people, have no idea where our money comes from and how it is "created"---and how it now represents debt not wealth. They also have no idea how the Fed influences and even coerces behavior in the markets--especially investment banking.
I certainly did not, but I do now at least grasp some of the basics---and I most certainly don't consider myself in the class of the "very smart"---or even the reasonably intelligent. So, if I understand it then it can't be all that hard to grasp. The reason most of us don't is because the information is not readily available--you have to dig it out--you have to know where to look. You'll seldom if ever find it in a college class room or a high school text book. You'll never hear it on TV from one of the "court economists."
I was shocked once I found out--I couldn't believe it. I thought it was just conspiracy BS--that's how amazing it really is. But it's true. You can, if you care to, get quickly educated on the basics of what the Fed is, who created it, how it works and why it was desired by both the political and banking class by listening to this:
If you don't understand this you'll not be able to make ultimate sense of what has happened.
G. Edward Griffin, who speaks in this video, is a warrior for freedom and a brave and courageous man; a man of great and unimpeachable integrity. Hearing this video is learning about the Federal Reserve from the horse's mouth--he wrote the book on it.
In my opinion, understanding the Federal Reserve's relation to the American Economy is the beginning of wisdom...a wisdom that I believe is lacking in the makers of Inside Job--who, it seems to me, are only interested in getting the viewer to do what most of them already want to do: hate the rich and enlarge the power and control of centralized government to a full-blown Soviet-style bureaucracy.
To that I only have two comments in the form of questions.
1. Who is it that assures us that while the rich business men are devils the powerful politicians will be angels?
2. Who will oversee the overseers---and oversee the overseers who oversee the overseers, in a reductio ad absurdum?

Perhaps we should have a nation of mutual spying, where every one oversees every one else?
This would create one of the most powerful conditions for totalitarian governments controlling the people: paranoia.
The Obama administration is carrying on the Bush administration tradition of doing that very thing--and, I think they're doing a better job as they are increasing spying on people on every level and they're getting all set up to use the IRS as the weapon par excellence against enemies and detractors from the policies of the regime.

My sense is the perils of real failure, and real collapse, and real loss that exist in free markets where no bailouts can be expected and none will be given is the best and fairest of all overseers to keep the monsters of human avarice and concupiscence in check. Nothing, of course, will do it perfectly. But these are the best and fairest means I know...and it makes We the People the stars of the Republic, NOT the Investment bankers and the politicians--both of whom tend to be imperialists.

One thing is for sure: the moral hazard created by the government's promise to subsidize private losses suffered by some special entities with public money has encouraged daring and risk taking to the point of madness, rather than put any real check on them or given us any real economic security and stability.
Every time the government meddles or intrudes the results are always counterproductive.
What the Hell is the difference whether we experience the loss of our money and property directly through bank failures or those same losses through the inflation created by government to bailout those very same entities with tax payer monies through borrowing from the Chinese?
At least if we experienced loss directly through bank failure the corrupt entity would have gone down and the market would be cleared for better managed companies. But with bailouts these failing institutions become zombie companies buttressed and sustained by government with borrowed money WE the People must pay back-----these companies get caught in the cold rain and We the People get pneumonia.
Look at it this way, if you were a tight rope walker instead of a CEO, which conditions would tempt you more to perform your most difficult and risky maneuvers on the high wire; with the (tax-payer funded) net, or without the (tax-payer funded) net?
The assurance of the bailout for those "too big to fail" IS nothing more than a classic instance of moral hazard.
A free market economy would not have this. Foolishness and foolhardiness is not greeted with bailouts and promotions in free markets, but failure and loss.
Yet, such an answer to the makers of Inside Job cannot even be found in the furthest reaches of their universe. What we are left with is the endless escalation of the disastrous cycle of bailouts and regulations, while the bankers and politicians promote each other with knowing winks. And this, they seem to strongly imply, is a solution...and it is. But only for the bankers and the politicians.
These are perilous times in every way, and it is important to find out who and where the real villains are. It is important that we understand things to the point that when we hear something or speak of something we know whether what is being talked about is an effect or a cause.
The source of all this folly is not Wall St., but Washington. That is where the cleaning of house must begin, for that is where the power is. Washington power is why lobbyists come there rather than politicians going to Wall St.. Politicians wanted it that way.
What we see from Wall St. is merely the effect. The cause, the source, is Washington and its darling, the Fed--for that is where the power really is.
I never heard it said better than the quote from Willie Stark in All the King's Men. To the assertion that the oil men in Louisiana will stop him from doing what he has proposed Penn Warren has him respond:
"They ain't got the power.
The power is in the hands of the powerless, and they've given it to ME."