As much as we admire Paul Volcker, we can't help but notice that he, like so many others, did not have all that much to say while Greenspan and his merry banksters were running around setting fire to the economy while President Zero fiddled.
Also, he is not offering much in the way of innovation or suggestions for the incoming administration, at least so far.
Perhaps they should trigger a nasty inflation and then they can roll Volcker out to fix it. Hmmm, that seems to be in the works.
The 1930's script says that we have a Republican minority and a conservative Supreme court that block the many attempts of an incoming Democratic president to help the general public survive a devastating economic downturn, after a decade of seriously greasing the elites' monetary skids, pushing us to the brink of domestic insurrection, until it takes a world war to pull us out.
Wow, déjà vu!
UK Telegraph
Volcker issues dire warning on slump
By Ambrose Evans-Pritchard
10:39 PM GMT 17 Nov 2008
Paul Volcker, the former chairman of the US Federal Reserve, has warned that the economic slump has begun to metastasise 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."
His comments come as the blizzard of dire data in the US continues to crush spirits. The Empire State index of manufacturing dropped to minus 24.6 in October, the lowest ever recorded. Paul Ashworth, US economist at Capital Economics, said business spending was now going into "meltdown", compounding the collapse in consumer spending that is already under way.
Mr Volcker, an adviser to President-Elect Barack Obama and a short-list candidate for Treasury Secretary, warned that it is already too late to avoid a severe downturn even if the credit markets stabilise over coming months. "I don't think anybody thinks we're going to get through this recession in a hurry," he said. (Perhaps Paul needs to send a postcard update to the talking heads at CNBC and Bloomberg - Jesse)
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."
Mr Volcker is a towering figure in the US, praised for taming the great inflation of the late 1970s with unpopular monetary rigour. He is no friend of Alan Greenspan, who replaced him at the Fed and presided over credit excess that pushed private debt to 300pc of GDP. (Funny how Greenspan has so few friends now, but was so widely lionized by the corporate support structure while he was helping to destroy the economy - Jesse)
"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." (There were quite a few people warning about a credit bubble but they were largely shouted down, ignored, and dismissed by the cognoscenti, largely fueled by conservative think tanks and corporate funding - Jesse)
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. (So let's make sure we try to prolong that system by handing them billions of dollars in taxpayer money without conditions or serious reform - Jesse)
