Submitted by Edward Harrison of Credit Writedowns.
Janet Tavakoli was a recent guest on “On the Edge with Max Keiser” and had some troubling things to say about the state of the present U.S. financial system.
She believes the liquidity pumped into the system will not be sufficient to reflate the economy because of over-leveraged U.S. households. The real burden of debt is already increasing as nominal GDP contracts. This means the system is now more fragile than ever.
Meanwhile, banks have been recapitalized in an effort to save the system when mechanisms to organize a bankruptcy resolution process for too big to fail institutions would be much less costly for the economy. This is a topic I covered in a recent post.
Steve Keen told Max that the only way out of this is a debt jubilee – a notion I believe is a political non-starter. So expect this end in a debt deflationary scenario as the Fed and other central banks are not yet getting any traction except in asset prices.
Below is the video of Max Keiser talking to Tavakoli by phone. Tavakoli provides some enlightening words about fraud, derivatives, and broker-dealer bankruptcy. The video runs about 10 minutes.
If the video is not viewable, click here for the original post.
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A debt jubilee is a political non-starter for us (citizens..sorry, “consumers”), not them (TBTF banks).
Based on what I know of Steve Keen, a “debt jubilee” means actually writing off debt, which would be a political non-starter for TBTF banks and not for us citizens/consumers.
Here’s more on system fragility and the setup for the next Minsky moment http://www.ritholtz.com/blog/2009/10/another-finger-of-instability/
why are some ‘analysts’ so persistently harping the deflation tune?
eurozone PPI dropped 7.8% YoY, CPI dropped 1.2% YoY last month. where did the difference go? corporate profits? no. actually hurt profit margins at all levels of the supply chain, the end consumer barely felt the difference.
the true story is that incomes are falling much faster than prices (income taxes vs. CPI). is such an environment deflationary??? measured in nominal dollars, yes, measured in purchasing power, no.
The Monetary and Financial Security Act of 2009.
The Chicago Plan for Monetary Reform.1933
A Program for Monetary Stability.1960
A Program for Monetary Reform. 1939
It has all been written.
Look behind the curtain.
The Money System Common.
What is needed is a debt debunkle. You can’t borrow your way to properity. Repudiate the debt that cannot be serviced. Put the bankrupt banks into conservatory ship. Sell what’s viable to NEW ownership. Jail the kleptocrats. This latter is really critical, it is the kernal of the incentive that is needed to re-introduce fiduciary responsibility to the financial markets. TBTF is a canard that needs exposure. In that exposure it will become clear that Mr. Bernanke etal have not served the public very well at all.
“Steve Keen told Max that the only way out of this is a debt jubilee – a notion I believe is a political non-starter.”
At the moment, yes, Ed. Short of the realization of their worst fears, the maggots who have sold-out our democracy to their K Street paymasters would never allow something as helpful as a debt jubilee to those they’ve turned into peons. Michael Hudson, an economist who posts with some frequency at CounterPunch, has been way out ahead of Keen and everyone else with this notion of a jubilee, perhaps the only escape hatch for these lice once the effects of a deepening deflation have hundreds of thousands of
angry faces peering at them from the public malls and streets of D.C.:
http://www.youtube.com/watch?v=3pwAFohWBL4
If the ruling clique wishes to hold itself harmless from detention behind razor wire, it had better begin thinking of ways to accomdate such a construct as a jubilee. We’ll just have to see if its a nonstarter.
Here is some additional commentary by Tavakoli –>
http://www.tavakolistructuredfinance.com/Fraud.pdf
Separately, According to Wiki, this “On the Edge” is funded by Iran. I find this troubling.
“Separately, According to Wiki, this “On the Edge” is funded by Iran.
I have absolutely no axe to grind concerning Tavakoli. I wouldn’t have known if she’d even been born if it weren’t for you. But what I find troubling are unsupported statements such as yours here. Perhaps even more troubling is the lack of any relevant Wiki article concerning “this ‘On the Edge'”. Either post your support for this claim or have it labeled a smear which, at this point, I fully suspect that it is. Anything, just anything, to breed hostility toward Iran, eh, Allen?
http://en.wikipedia.org/wiki/Max_Keiser
“host of On the Edge, a program of news and analysis hosted by Iran’s Press TV”
I have respect for Tavakoli as one of a few that foresaw our the debacle.
I am naturally suspicious of ANY state sponsored media. I presume most are capable of performing simple internet searches.
“I presume most are capable of performing simple internet searches.”
With respect, they are simple if you point someone in the right direction, Allen. Ed’s piece focused on Tavakoli not Keiser. Even a search for On The Edge offers nothing in the way of help that I can find. One needs locate the article on the person of Keiser – a reference bordering on the remote, I’d say – in order to follow your reasoning. And, I presume, most would be incapable of conjuring up either the patience or the interest in searching out something this far afield. There is also the difference between “funding” and “hosting”. PBS hosts the Nazi, Kagan, regularly but is this funding him?
http://en.wikipedia.org/wiki/Lavrentiy_Beria
Dark…
“Dark…”
Its awful. They always leave out the part of the tender affections I held toward Stalin’s daughter. So I’m pleased to see you’ve brought that photograph and its potrayal of my – how shall we say – “grandfatherly” side. So many deportations and executions, so little time.
“So expect this end in a debt deflationary scenario as the Fed and other central banks are not yet getting any traction except in asset prices.”
*Sigh* This is the course of least resistance, and so is almost certainly the course we will follow. I’m glad to see Steve Keen mentioned more and more. He’s one of the most clearheaded thinkers on economics/finance IMO, and I appreciate that he’s not much of an ideologue like so many out there: Shiff, Mish, Krugman, etc.
Thanks for that info on Max Keiser. I actually looked at Press TV and they are openly based in Iran, nothing secret about it, one can click on About PressTV, and find that out, and Max Keiser’s On the Edge is one of their programs.
I like to know where stuff is coming from, but Max Keiser’s rants and interviews are so illuminating, I perhaps sadly have to trust him and PressTV to tell me the truth, far moreso than ABC, CBS, NBC, and even PBS.
sad for our country………we used to rely on our press to tell us the truth……..no more.
I find it inappropriate that an external state, especially one that we have official issues with, is associated at all with an internal disagreement of this magnitude.
I am unaware of Max Keiser’s motivations for associating with Iran. They may be totally innocent. It remains inappropriate.
Janet Tavakoli is a German girl from Chicago, who went to ITT in chemical engineering and married an Iranian immigrant in the same field, while working for refineries. Upon divorcing a few years later, she went to U. of C. B-school and started her career in financial engineering. Her Iranian connection, in the current context is slim to none. Max Keiser is another story.
for info on that really scary iran, please see this from Prof. Juan Cole:
http://www.juancole.com/
Boo, I’m radical and will attack you with WMDs (weapons of mental diminishing).
Side note to the Afghan content: Yep if the terrain don’t get ya, the built in redundancy via tribal affiliations will.
Skippy…Westren mind sets meet alien foreign thought, see Vietnam. McNamara: but we would have given you every thing you wanted if you came over. “Mr. McNamara, You must never have read a history book. If you’d had, you’d know we weren’t pawns of the Chinese or the Russians. McNamara, didn’t you know that? Don’t you understand that we have been fighting the Chinese for 1000 years? We were fighting for our independence. And we would fight to the last man. And we were determined to do so. And no amount of bombing, no amount of U.S. pressure would ever have stopped us.” – Thach, former Foreign Minister of Vietnam, 1995, as recalled by McNamara.