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Web Letter

These investigations are not going to turn up anything significant. All they will find is a few more straws that might have been broken the camel's back. The root causes are well known, and Grieder lists them.

The financial system should be considered infrastructure. We don't build highways that loop round and round until drivers are dizzy and lost. We keep them relatively simple. The same principle should be applied to the financial infrastructure: Keep it simple: simple enough that almost anyone can understand it and oversight is straightforward. Simple also means minimal interdependence among institutions, and nothing so large that agencies like the FDIC cannot handle it. Financial innovation is a misnomer--it's just loops going round and round. Leave innovation to manufacturing, non-financial services and the arts.

David Hawla

Barrington, RI

Oct 14 2009 - 11:40pm

Web Letter

Yeah. Those toxic assetts, I suspect, are being used as collateral for loans from the Federal Reserve. First the values were inflated by changing mark-to-market rules, now those inflated assetts are being used as security for cash.

The whole business stinks to high heaven. By the time investigators get around to stopping it, the financial institutions and their investor friends will have cashed out.

Bud Ilic

Bloomington, IL

Oct 14 2009 - 9:35am

Web Letter

This article gives a lot of factual information. and my comments will attempt to look at some basic concepts. Since, at least, the beginning of the twentieth century, the American market has been consumer-driven. In an attempt to create a market for his cars, Henry Ford paid his workers a high enough wage that they could afford to buy the cars they produced. He consciously created "consumers" for his very new product. When Ford and General Motors moved into Europe, they built their cars in Europe, and created more consumers in the markets they served.

What would have happened if they had made their cars in America and exported them? A few years back, American companies tried that in Japan, but couldn't sell them because the steering wheel was on the left side of the car, instead of the right. Before the Americans came along, Japan looked to the British example in building their nation.

What America and Western Europe had was consumer markets supported by the high wages of ordinary people. This is the basic fact.

However the purpose of "free trade" and no tariffs is to drive down wages and have workers compete in a race to the bottom. Low wages means the consumer driven economy loses the means to sustain it, and it disappears. "Free trade" is an economic theory that does not rely on facts, and we have a worldwide depression/recession. It is a one-trick pony, because low labor costs are its only purpose.

Pervis James Casey

Riverside, CA

Oct 8 2009 - 2:51pm

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