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Wednesday, November 19, 2008

Former Federal Reserve speaks with honesty on economy

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

The article quoting Paul Volcker, former Federal Reserve chairman can be found by clicking here.
The most interesting to me was this piece of honesty, which is one of my rants on why I believe America has collapsed. The abuse by company executives in pursuit to bonuses by manipulate accounting and assumptions to achieve these bonuses, which where in effect, outright FRAUD to "steal" from the taxpayer, years before the government decided to have the taxpayer fund the losses once the fraud was realized. This action was allowed by the government, who's JOB it is to ensure fraud does not occur, and protect the taxpayer and the country.

"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."

Even so, he said the arch-culprit was the bonus system that allowed bankers to draw forward "tremendous rewards" before the disastrous consequences of their actions became clear, as well as the new means of credit alchemy that let them slice and dice mortgage debt into packages that disguised risk.

Unfortunately, I have stated in the past, the next president the stage is set for next 2 to 10 years, the best the next president can do is set the stage by the time they are up for re-election.

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