Paul Volcker, the former chairman of the US Federal Reserve, has warned that the economic slump has begun to metastasize after a shocking collapse in output over the past two months, threatening to overwhelm the incoming Obama administration as it struggles to restore confidence.

“What this crisis reveals is a broken financial system like no other in my lifetime,” he told a conference at Lombard Street Research in London.

“Normal monetary policy is not able to get money flowing. The trouble is that, even with all this [government] protection, the market is not moving again. The only other time we have seen the US economy drop as suddenly as this was when the Carter administration imposed credit controls, which was artificial.”

(…)

He advised Mr Obama to tread a fine line, embarking on bold action with a “compelling economic logic” rather than scattering fiscal stimulus or resorting to a wholesale bail-out of Detroit. “He can’t just throw money at the auto industry.”

(…)

“There has been leveraging in the economy beyond imagination, and nobody was saying we need to do something,” he said. “There are cycles in human nature and it is up to regulators to moderate these excesses. Alan was not a big regulator.”

I’d note, from everything I’ve seen, BO has ignored Volker’s advise (2nd to last paragraph above):

* embark on bold action w/a “compelling economic logic”
* (avoid) scattering fiscal stimulus or resorting to wholesale bail-out of Detroit

Seems to me Volker’s logic is self-evident, and what I’ve been wanting to see. That BO has gone the other way further makes me wonder who’s pulling Obama’s brain into Volker’s unrecommended direction.

If anyone has a trackrecord demanding attention, it’s Volker. Maybe people forget, he’s the guy who saved Reagan’s economic ass, and did so w/principles he’s recomending to BO. Unfortunately, only thing repubs remember about Reagan is tax cuts, something Volker had nothing to do with.

Although it didn’t hurt… in fact seemed to give him a small boost, BO’s infomercial made me nervous. I had been hoping for more details on fundamental economic “change”, instead it was a walk through pockets of blue collar America w/focus on some of their challenges.

I thought that may push BO support from those “free marketers” who abandoned McCain because of econ meltdown back into his camp, but it did not. Good.

Most of feedback on that infomercial that I heard/saw/read was more or less as intended, eg. highlighting blue collar econ hardships. However, what really struck me… all but one of those folks was hugely (dangerously) overweight. They also had boxes of pills for unidentified maladies. I’d guess diabetes, cholesterol, various blood pressure medicine could be found in those shoeboxes based on way those folks looked.

I live in Albuquerque. I’m 52, really fit and have been so for long time. I eat organic brown rice & steamed veggies, organic yogart and organic peanut butter. We bake our own organic bread. In last 18 mos or so, gone even further towards verifiable organic (there’s a lot of stuff sold organic that’s not) because of increasing unreliability of food quality, particularly given our close proximity to Mexican border.

I’m not off the charts with this stuff: I’ll eat occasional chicken/steak etc. and what have you, but only a few times a year. Paying attention to “what goes in” seems like a no-brainer to me. And payoff in really good health at my age validates all that.

We have now an environment in US where an entire infrastructure: media/fast food restaurants/distribution/labelling etc. powerfully exerts and promotes consumption of really bad food while masking doing so w/images of joy, health, convenience etc etc. This condtion has greatly accelerated under Bush.

Ads everywhere… TV, radio, billboards… drink more coke, eat more processed sugar (it’s poison) infested burgers, bleached (entirely of nutrition) flour… on and on it goes. Most of stuff in grocery stores now uses processed sugar in same way tobacco companies used nicotine: to addict people. Have you read labels of “healthy” yogurt brands (Yoplait)? Full of processed, organ corroding processed sugar.

Repubs have diluted food labeling to point it is impossible to distinguish very unhealthy chemical preservative ingredients from those w/out. It’s now all “health” food and such.

In Albuquerque, I’m constantly shocked… (I’m a bike rider) riding past schools seeing huge % (off top of my head 75%) of these young kids way overweight. Not just a little bit, they’re fat, and it’s a majority of them. Around here, as percentage of entire populace, adults in even worse condition.

And most of ‘em don’t care… unconscious about it. Oblivious. No health context whatsoever.

Any of you had a hair analysis lately? WARNING: results will inventory poison that’s taken residence in your bodies in volumes that very well may scare the shit out of you.

There is a whole lot of social influence pushing people towards utter abandonment of knowledge, responsibility… any influence whatsoever over relationship between food and health. In last (xxx) years I can’t tell you how many arguments I’ve had w/libertarian “free-marketers” who say everyone has a choice, they’re responsable, and whatever advertising influences move more people towards obesity/diabtes etc. is their own damn fault. Really bad food (not food at all AFAIC, just filler) pushed as “happy meals” and such doesn’t bother these guys at all, rather it’s just business.

“Get over it”, they say. End-of-conversation.

Aside from difficulties/challenges/travails of blue collar America Obama high lighted, at least for me… what I saw in that documentary was effects of so many hi tech environmental resources dedicated to persuading whole lot of people to live in a way that’s really bad for them.

Obama’s featured workers, & God bless ‘em… somehow infomercial’s message did not connect all those shoe boxes full of pills and massively overweight conditions they all had with…
a) why their health is at such risk
b) metric of their bad health vs. good
c) costs of unaffordable health care for them, society, etc, not to mention greatly expanded HC infrastructure required to keep ‘em all breathing.
d) cost/benefit of energy (eg. mass of advertising, (xxx) fast food restaurants per capita, mis-leading labelling, etc etc.) devoted to infrastructure persuading and supporting people to practices/habits that are killing ‘em.

I mean, what if all the grocery stores sold only real food… could all those MacDonalds be converted to schools?

These dots were not connected nor even suggrested in this infomercial.

With so many people living this way, US as a society is paying a huge price both in massively increased Health care, lack of productivity otherwise healthy people would contribute… not to mention hugely misdirected resources in infrastructure.

These conditions need a really careful, studied, serious consideration. And AFAIC, the momentum behind these corrosive influences is the same stuff… eg: bull shit, that has driven huge misinformation resulting in current economic woes: deception, $$ for $$ sake w/o regard to purpose… I could go on & on.

In my view, this means review of exactly what this “free market” ReaganComics economy gives us: it is good stuff, is it the solutions that free marketers promised, or is it junk… is it treating a populace as guinea pigs generating profits w/o regard to overall health of a society?

Are there alternatives? Big questions. Why are they not being asked?

For me anyway, very frustrating to see all this Health Care debate w/out taking any of this into consideration. A side by side comparison of where and how $$ flow, with:

a) current avg. citizen health care cost
b) optimum avg. citizen health cost

… at the very least, might be a useful image in this overall debate. Journey of a 1000 miles begins w/the first step.

I agree, but look at the inertia that a BO admin will still be up against.

What I see is inertia BO has. Confluence of cascading econ collapse, utterly vapid work product of BushCo’s “conservative values”, and whole bunch of other things… this is most unique, wide open opportunity for incoming president I’ve seen in my lifetime.

I’ve expressed frustration, worry, over BO’s relative silence since election and some of his appointments. I mention this because you talk of (I’ll call it) conservative inertia. What bothers me (among other things): confluence I mention, on econ side, is endemic failure on every level:

* structural (opaque, obfuscated, decides $$ flow and decides wrong)
* moral (bribed rating agencies, for ex.)
* intent (worthless paper called “creating wealth”)
* personel, or “generals in charge of WS”

Belatedly, public is starting to see it. But not clearly. Every day since election, on WSJ OpEds and whole lot of other media, I’m seeing bs explanations for econ problems, possible to proffer only because of large body of ignorance. Things like blaming mortgage meltdown on CRA, Bolton saying we need to bomb Iran/do missile shield, all wrapped around conservative mantras like “patriotism”, “free market principles” and such.

Why is BO and co. not driving a stake through heart of this shit? He’s got the truth on his side, the damage from it’s implementation is cataclysmic, and (presumably) best solutions require jettisoning whole large portions (if not whole damn thing) of it.

To summarize: why is he not…
a) driving stake through heart of monster
b) prepping public with tangeable ideas/proposals/goals outlining where he’s going. If for no other reason, give this excited public who elected him something to hang onto against this momentum you speak of.

I’d remind… BO pulled away from McCain as result of long simmering cascading econ failure only in last +/- 6 weeks. Very short period of time. Our citizens, as a whole, just not that well informed. W/out serious movement confronting economy, that support can & will disappear just as fast.

Just looks to me like a huge, huge opportunity, and a short window.

http://www.chinacartimes.com/c…..rporation/

Thanks to all.

As my dear pops used to say: “Beware the sleeping tiger.”

Course, he also used to tell me we were our own worst enemy. That’s sure proved to be right time after time from the 50’s on . . .

Again, masterful thoughts, commentary and stats/info. Thanks for sharing it all. Much of all of it I knew very little about . . . . all y’all sure raised MY horizons to new heights.

I’m not being defeatist; the world is always full of surprises.
But the problems endemic in making more out of servicing the debt for autos, than out of the autos themselves — ‘autos as debt drivers’, if you will — are so complex and formidable that I think it’s hugely important to try and key in on the most strategic aspects and elements.
Which I think EW is leading us to try and ferret out.