A Question of Consumers

“But the conservatives had their revenge. What the Republicans under Reagan did was to suddenly announce that government was bad, and the less you had of it, the better. Reagan undid a whole, vast field of regulations on security marketing, resurrecting the doctrine of Mellon and the 1920s Republicans, that the market was self -regulating, that businessmen were too sensible to be subject to greed. Reagan even brought back to life Mellon’s tax cuts for the rich.” Richard Sale

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41 Responses to A Question of Consumers

  1. Will says:

    That was good reading.
    NYT columnist and Nobel Prize winner Krugman has a good column titled Franklin Delano Obama. He aruges that FDR really blew it and wasn’t audacious enough. Maybe that’s why he engineered Pearl Harbor w/ his ultimatum! The salient part follows:

    Well, it wasn’t as major as you might think. The effects of federal public works spending were largely offset by other factors, notably a large tax increase, enacted by Herbert Hoover, whose full effects weren’t felt until his successor took office. Also, expansionary policy at the federal level was undercut by spending cuts and tax increases at the state and local level.
    And F.D.R. wasn’t just reluctant to pursue an all-out fiscal expansion — he was eager to return to conservative budget principles. That eagerness almost destroyed his legacy. After winning a smashing election victory in 1936, the Roosevelt administration cut spending and raised taxes, precipitating an economic relapse that drove the unemployment rate back into double digits and led to a major defeat in the 1938 midterm elections.
    What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy’s needs.
    This history offers important lessons for the incoming administration.
    The political lesson is that economic missteps can quickly undermine an electoral mandate. Democrats won big last week — but they won even bigger in 1936, only to see their gains evaporate after the recession of 1937-38. Americans don’t expect instant economic results from the incoming administration, but they do expect results, and Democrats’ euphoria will be short-lived if they don’t deliver an economic recovery.
    The economic lesson is the importance of doing enough. F.D.R. thought he was being prudent by reining in his spending plans; in reality, he was taking big risks with the economy and with his legacy. My advice to the Obama people is to figure out how much help they think the economy needs, then add 50 percent. It’s much better, in a depressed economy, to err on the side of too much stimulus than on the side of too little.

  2. I understand that several skilled investigative reporters and researchers are already under contract to document who the brightest boys in the room were this time. My guess is that the last 30 years will yield more than enough of a witch hunt and blame game before we are through with this economic catastrophe. Note the lack of transparency so far so that almost impossible to judge what confluence of events, data, knowledge and hopefully skill and competence are being mustered to deal with the situation. Between now and the end of the year hedge fund redemptions will roil markets. In the meantime Congress needs to grant very broad authority, e.g. the Economic Stabilization Act of 1970 which Nixon used to deal with the hyper inflation and economic turmoil of the “guns and butter” syndrome. Went off the gold standard, wage price and rent freeze, floating exchange rates, and other incentives to speculation but really not understood at the time. I would start with Nixon to deal with the history of this crisis and yes it is a crisis. Depression and deflation may be the least of the problems. A very very unstable political situation in my opinion. I am glad we don’t have to wait until March for a new President and administration but crouching down in Chicago is not giving me confidence in OBAMA and I voted for him. A lot of damage can be done in the next 68 days by Bush, and his minions. And of course this is the most severe financial crisis since paper money and books have been lost to the virtual world of bytes and bits. WOW! What an opportunity for GREED to will out.

  3. Cieran says:

    Timothy, Chapter 6, Book 1:
    We brought nothing into the world, and we can take nothing out of it; but as long as we have food and clothing, we shall be content with that.
    People who long to be rich are a prey to trial; they get trapped into all sorts of foolish and harmful ambitions which plunge people into ruin and destruction.
    The love of money is the root of all evils and there are some who, pursuing it, have wandered away from the faith and so given their souls any number of fatal wounds.

  4. Watcher says:

    This where Reagan’s (and follow on administrations) philosophy of smaller government has failed us. One could easily argue that by the time Reagan entered into office we were starting the current wave of globalization we are in today. When looking at globalization and the role of governments, government has the implicit role of both encouraging the conditions that allow the country to reap the economic benefits of globalization but to also put in place the safeguards that protect the population from the negative effects of businesses that focus solely on profit above all else. In that regard, we have failed. As a result we have now generated a population that sees how much they are putting into the system and getting so little out while those on top are fat and happy. And the republicans wonder where they went wrong…

  5. How many readers listened to Public Radio’s Market Watch today (Nov. 13) in which Anne Pettifor described how Nixon undid Bretton Woods, leading to this crisis (in her view).
    She wrote this book:
    I am not qualified to criticize her history and analysis, but it sure made a good story. The laywoman’s summary:
    Bretton Woods during WWII (including Keynes and FDR) laid out a framework for countries to deal with their indebtedness, in order to prevent crashes like that of 1929. for X years until 1971, all the countries party to Bretton Woods agreed to restructure their economies if they got into too much debt. And somehow they were using gold to do this. But in the late 60s and early 70s America began racking up big debt due to Vietnam. Nixon decided to quit abiding by Bretton Woods; quit using gold to settle accounts; start using US Treasury bills. This meant that we could just print money I guess.
    Add to that the way banks began lending money to consumers on looser and looser terms, and Pettifor says we got a double whammy.
    THat’s just my very crude, remembered summary from the radio show, heard while I was driving myself in SF. You can listen to the show here:
    I’d be interested in Col Lang’s take, especially since Pettifor was a driving force behind Jubilee 2000. Wondering if our host has an opinion on her current analysis and the concept of debt forgiveness behind Jubilee 2000.

  6. Patrick Lang says:

    I think that the present crisis results from an estrangement between the worlds of finance and economics.
    Given the chance to do so, the clever progressively detached risk from opportunity and turned banking and related activity into a confidence game.
    My educational deformation leads me to say that the guilty in this matter are and were without virtue.
    They are merely wealthy. pl

  7. Will says:

    interesting that Prof Parker teaches at Carnegie-Mellon U.
    the wiki leaves one w/ the impression that Mellon is remembered economically for two things:
    1) lowering the progressive tax rates on the wealthies from 78% to no more than 25%. That seems to have worked out rather well.
    2) contracting credit and trying to weed out the weaker banks at a time of trouble. Now that was disastrous and anti-Kensyian. What was needed was more money supply not less.
    Now the lower marginal tax rate is the idea that Reagan picked up on. I remember the adherents using the quote from Ibn-Khaldun

    In the early stages of the state, taxes are light in their incidence, but fetch in a large revenue…As time passes and kings succeed each other, they lose their tribal habits in favor of more civilized ones. Their needs and exigencies grow…owing to the luxury in which they have been brought up. Hence they impose fresh taxes on their subjects…[and] sharply raise the rate of old taxes to increase their yield…But the effects on business of this rise in taxation make themselves felt. For business men are soon discouraged by the comparison of their profits with the burden of their taxes…Consequently production falls off, and with it the yield of taxation.
    wikiquote “” * This sociological theory includes the concept known in economics as the Khaldun-Laffer Curve (the relationship between tax rates and tax revenue follows an inverted U shape).”

  8. OK that’s a general description of the guilty. Wondering if you credit Pettifor’s accusation that deconstructing Bretton Woods made it possible for the clever and the guilty to do this. (this question may be rephrasing her point incorrectly).

  9. Patrick Lang says:

    I can see that the Bretton Woods regime created a stable financial system that made it much more difficult for those without conscience to speculate in ways that were conducive to creating false value. That would make the answer to your question be “yes.” pl

  10. TR Stone says:

    My problem with the most recent governing political philosophy (1980-2008) was that you could cut taxes and continue with the necessary services at their existing levels.
    Look around you at the roads you are driving on, or the people you deal with behind the cash registers(terminals),–taxes pay for the “tangibles” (infrastructure, education, etc.).
    That “please elect us” agrument was based on the message that there are our fellow Americans who are gaming the system so we can not be successful.
    Unfortunately, they did not specify that those Americans were the “haves”!

  11. TomB says:

    This Sale/Parker argument hinting that conservatives/ Republicans/Reagan were really responsible for what’s going on now reminds me of why the law focuses on something called “proximate cause” rather than “cause” in general or some other formulation.
    If for instance you simply and generally say that “whoever caused this crash is liable” you get into insanities, because one can then argue that “oh, if person X involved in the crash had only left their house five minutes later that intersection crash with person Y would never have occurred.” Indeed you can say that if either person X or Y were born five minutes later or earlier the crash would not have happened and thus it’s the fault of their mothers. Or their grandmothers, or etc., etc. Thus the law talks about “proximate cause” instead.
    But what Sale/Parker suggest is to go back with something like one of those infinite regressions and, ta-da, amazingly land blame on conservatives they don’t like and I’d bet they never liked. Gee, how surprising. As the Church Lady would say, “How conVENient.”
    Seems to me there’s heaps and heaps of far clearer and far more proximate cause here that’s gradually coming into focus and that both parties are responsible for. The late ’90’s repeal of the Glass-Steagal Act, Greenspan’s (admitted) refusal to go along with some regulations in the late 1990’s, these “credit default swap” mechanisms, the government’s insane degree of not only facilitating sub-prime mortgages via allowing Fannie Mae and Freddie Mac to buy ’em but then also things like the Community Reinvestment Act strong-arming banks and etc. to make such loans, and etc., etc. And certainly as Lang hints there’s just the psychological zeitgeist of greed that took over on Wall Street for the last twenty years or so.
    I don’t know if any regulations or laws will ever be sufficient to guarantee what’s happened will never happen again. But one thing that’s clear to me is that we’ll never really get such regulations and laws and etc. if instead of looking at what’s happened in a cool analytical way we turn it into some hack partisan opportunity to make political hay and advance political agendas. Back at the start of the Great Depression that of course is exactly what the Democrats tried to do blaming Hoover and the Republicans. … Until of course it turned out that *they* couldn’t solve it either. (And indeed had almost certainly played their part in starting it too such as with the Smoot-Hawley tariffs.)
    Haven’t we had enough recent experience making complex decisions and diagnoses not via cool analysis (is Saddam really a threat to us even if he *does* have some few big weapons of mass destruction?), but instead on whooped up political polemics?
    At the very least with all these snap, oh-so-knowing post-hoc analysts someone ought to ask ’em why if they knew it all along how come they didn’t predict it in some detail? As far as I know that Roubini guy (sic?) is about the only one who can lay claim to that, not this Parker fellow. So if it’s all so clear to him now, how come he wasn’t screaming warnings about it before? And how come Sale didn’t even *ask* him why he didn’t?
    Moreover, the whole thesis of the article can sound so foolish it makes it seem like some caricature of tortured tendentiousness. After all the entire basis of the piece lays the blame on … a supposed lack of consumer purchasing. But for the love of God doesn’t it seem that the genesis of this problem is consumers (and others) purchasing *too much*? Buying houses they can’t afford, carrying too much credit to live beyond their means? Are Sale and Parker *really* meaning to say that somehow but for conservatives/Republicans/Reagan a person earning $50,000 per year *would* be able to afford a $500,000 house? And how does the lack of consumer purchasing power explain mortgage lenders *making* such loans in the first place?

  12. Matthew says:

    John Kenneth Galbraith said we have these collapses every 30 years because that is the limit of collctive memory.
    My prediction: In 8 years another Republican will run on the “cut taxes” platform and the deficits will explode–again.
    Their snakeoil always makes a comeback.

  13. Fred says:

    I believe a key quote from the article is “. What the situation required was higher wages to allow an increase in consumer buying power – for those goods.”
    Conservatives have been waging war on high wages for years. The less they pay, the more they make – in the short term. Combine that with finally achieving Grover Norquist’s goal: drowning government in a bathtub (of debt). Are congratulations in order?

  14. Will says:

    purchasing power, marginal tax rates- it all comes down to money supply and marginal tax rates.
    too much money supply then inflation. too little then deflation. forget gold. Why tie a nation’s well being to the capriciousness of discovery of a metal in the ground?
    the marginal tax rate? In Reagan’s mind, it was intuitive. During World War II while James Stewart was actually in the Army Air Corps on bombers, Reagan was making films and apparently getting taxed at the rate of 90%, ouch!
    Current research points to a rate of about 60% or so at where people feel, screw it, I ain’t working for the goverment’ssake.

  15. bstr says:

    Dear Sir, you have indicated that those responsible were without virtue, merely wealthy. If we assume for a moment that prudence is a primary virtue to be associated with aquistions then responsibility must extend to the (un) wealthy. I do not think you will find many who do not feature property ownership, and property in the form of a family home in particular, as a major part of the “American Dream.” There seems to be some virtue, perhaps charity, in extending howme ownership to a part of the (un)wealthy. But that being done is there not an increased need for prudence on the part of those now able to purchase a home?

  16. johnf says:

    Ann Pettifor’s website is:
    There’s an excellent discussion in which Pettifor features on:
    why the media by and large missed the oncoming Crash. Also featured is Gillian Tett of the FT who also called the Crash. But she didn’t train as an economist but as an anthropologist, and when first joining the FT she decided to look at the City (of London) in the same way an anthropologist would look at a Papua New Guinea tribe. And in doing this, apparently, anthropolists are trained to look for social silences – the things which aren’t discussed – as much as the social noises. So she looked not at the glamour end of the City – equities, financial markets – but at the nine tenths of the City no one ever notices – all the unofficial banking and leveraging markets. The dark and enormous continent. At first she worked out of a broom closet at the FT, but has since gone up.
    Also well worth reading IMHO on people who caught onto all this crap before it happened are the guys in Michael Lewis’s article:

  17. Andy says:

    Excellent comment, TomB, I agree with it.
    The most vexing part of this entire mess is how the problem is wrongly framed in either-or terms of “regulation” vs “deregulation.” All markets, by definition, have some amount of regulation – the problem, it seems to me, is not so much one of how much (as in the amount) of regulation; it’s about the content and character of regulation. One can look at almost any industry and find bad regulations and the mortgage crisis is no different. For example, regulations that sought to increase home ownership by lowering lending standards had the effect of increasing the number of risky loans and was a major factor leading to the demise of Freddie and Fannie. In the case of Freddie and Fannie the problem was really too little regulatory oversight (which is quite different from too little regulation) in some areas and plainly bad regulation in others. Cutting out the bad regulation is a good thing, even though doing so might amount to “deregulation.”
    The irony is that those who supported the regulations lowering lending standards are some of the same who are singing about the evils of deregulation and the GoP. Sorry, but one can’t have it both ways.
    So the way I see it is (simplistically) that both the Dems and GoP were busy appeasing particular demographics and ideological itches by changing regulations to benefit their various interest groups. It was the combination of both that caused this mess, not some vague notion called “deregulation.”
    What we really need is the minimum amount of regulation necessary to ensure transparency (so that people can make informed decisions) and market stability over the long term. We need the resources to enforce those regulations. We also need to minimize “social engineering” regulation as much as possible – regulation that attempts to create outcomes for particular demographic groups. I realize this is a hopeless desire given the venality of Congress (just look at the tax code), but we should strive for it nonetheless. We shouldn’t be forcing or incentivizing lenders to make risky loans to benefit some and we shouldn’t allow speculators to exploit loopholes and transfer and hide risk while reaping the profit at someone else’s expense. Such social engineering-type regulation tends to result in many unintended and unforeseen negative consequences down the road. When we do engage in such regulatory practices, we need to build in mechanisms to guard against negative second and third order effects. Otherwise, we’ll be down this road again in another few decades.
    Finally, unless we ignore much of the partisan politic polemic that passes for analysis on this and other topics – polemic that seems more interested in fixing the blame rather than fixing the problem – we are going to make poor regulatory decisions that will come home to roost. Analyses that, as TomB puts it, lay all the blame at the feet of one’s political opponents is awfully convenient for advancing political agendas, but creates less understanding of the problem impeding our ability to forge a cogent path forward.

  18. Cieran says:

    There is an undercurrent of belief present here (and in the larger media sphere) that this crisis is something readily solvable with the tools at hand. Maybe it’ll take some time to repair, maybe not. Few seem to recognize the full extent of the threat involved.
    The simple truth is that this is an existential crisis, and it has a substantial likelihood of being much worse than the Great Depression. And those who practice the “a pox on both political houses” arguments miss perhaps the most fundamental point of our current electoral picture, namely that both parties are indeed heavily invested in the redistribution of wealth and of its attendant risk: their differences lie primarily in direction.
    The GOP has demonstrated that it is the party that advocates redistribution of wealth up the financial ladder, and redistribution of risk down it. Thus blue- and white-collar working class citizens are now responsible for bailing out those plutocrats who were happy to take the money and run when markets permitted them to, but who now want to socialize the downside risks when they can no longer make a fast buck via their financial shenanighans.
    Democrats tend towards the opposite persuasion, of redistributing wealth downwards and redistributing risk up the financial ladder towards those who can most afford it. That belief is based on the simple notion that working-class people are not the cause of this problem (not even in the subprime sector… because that’s why it’s called “subprime”!), so they shouldn’t be forced to clean up the mess for any parties they were not invited to attend.
    In years past, this approach was known as “accountability”. It’s still a remarkably good idea.
    Only one of these competing philosophies has a prayer of working successfully in the real world. Only one of them bears any resemblance to the laws of economics, or for that matter, to the laws of this nation. The electorate has apparently figured this difference out, and here’s hoping our political leaders can come to understand it, too.

  19. mlaw230 says:

    Interesting stuff, it appears that we have forgotten how to run an empire.
    As a colony we were forbidden by the crown to make steel/iron tools, India similarly could export cotton (replacing the south)but had to leave the textile industry to England. As an empire one can privatize the profits and socialize the costs, but one has to look after your working people on some level.
    Our elites have revolted, they no longer feel any burden to employ their countrymen or to pay a living wage. They will move across the globe to reduce labor costs without even increasing hourly productivity. Their allegiance is to their own “class.” The elite of Manhattan have more affinity with the rich of Dubai than they do with the line worker in Detroit.
    America and Americans have maxed out their credit cards, literally and figuratively. There will be no increase in wages just a slow dissolve as more work goes off shore, and as the auto industry dies the last bastion of unionized labor dies with it.
    In short, whilst most Americans have been discouraged from thinking in terms of class, and those that do are painted with the scarlet “S” word, the truly wealthy corporatists have quietly stolen a march and now dictate terms to governments large and small.
    There is solace only in knowing that this is not sustainable.

  20. Sidney O. Smith III says:

    Perhaps this economic crisis will settle the debate between the Keynesians and the Austrians as to the cause of the Great Depression.
    Admittedly, I grew up in the FDR tradition but the work of Ludwig Von Mises is absolutely fascinating and, in my view, should not be dismissed with prejudice. And while I am more partial to the work of Hayek and Von Mises, Murray Rothbard’s work is breathtakingly brilliant and certainly presents a qualified opposing argument to the big government Keynesian approach.
    So I say let the debate begin in earnest. Ron Paul vs. the Keynesians, I suppose.
    As an example of extreme irony, people refer to Reagan as Mr. Small Government but one visit to the Reagan Building in DC, presumably a government project to memorialize his tradition, and I beg to differ. Looks like an example of wretched excess at taxpayer expense (although a good venue for the performing satire group Capitol Steps). Not saying the Reagan building is the man’s fault but here’s Wiki: “At the time it was built, the Ronald Reagan Building was the most expensive federal building ever constructed, at a cost of $768 million. As a federal office building, it is second in size only to the Pentagon…”
    And the beat goes on…

  21. Jim V says:

    At other blogs where this issue has been debated, I have seen comments alleging that the additional loans granted due to the Community Restoration Act were not a significant cause of the Fannie Mae problem, because they were a small part of Fannie Mae’s portfolio (less than 5%), and in fact defaulted at less than the average rate. I don’t have the data to confirm or refute this myself, but would ask those who blame the CRA to present their data.
    The CRA may have been a bad idea in any case, or not, but it should be assessed on a factual, not ideological basis.

  22. TomB says:

    Andy wrote:
    “the problem, it seems to me, is not so much one of how much (as in the amount) of regulation; it’s about the content and character of regulation.”
    Yeah, but the problem as any Public Policy 101 Class will drill into you is the “iron triangle” that will see the special interests with a stake in any regulations either quickly extract whatever teeth they have, or find their way around them. And now they’ve gotten so good and quick about it….
    That’s why I argued awhile back for an over-arching, non-“process” regulation that simply gives someone—the Fed?—the power to say essentially say to any corporation “you are getting to big to fail, you may not get any bigger.” I hate the idea as big free-market person (former?), but my God look at this sordid bailout carnival. Cieran is exactly right that it’s nothing but an Amazon of money flowing upwards.
    After all as Andy pointed out there’s tons of regulations covering what supposedly is the genesis of all this, meaning the sub-prime mortgage thing. Starting with all the now-hilariously naive ones requiring mortgage lenders to “disclose” in agonizing detail every jot and tittle of what the mortgage means, all in the ridiculous belief that if people know what they’re getting into they won’t go wrong. Beyond funny now.
    And just wait for the worse political shenanigans to start. All these stakes Paulson and the Dems are taking in all these various banks and now probably the car makers: Who is gonna be surprised when they start using that ownership stake to start telling those enterprises to start doing business like they told Freddie Mac and Fannie Mae to do their business?
    And as to Sidney’s comment, you know Sidney my best econ professors were able to note that there’s nothing fundamentally incompatible between Keynesianism economics and the Austrians, although on the margins of course there’s always disagreement. And as Nixon acknowledged by saying in 1970 or so that “we are all Keynesians now,” there just too much proof that Keynesianism has worked any number of times. When there’s been a weakening of confidence in the markets, that’s not the time for the gov’t to tighten it’s belt but to spend and shore that confidence up. In essence, lend some of the confidence people have in it to the private sphere.
    My concern with this present thing is that at some point of debt people will lose all confidence in the government *itself,* and *then* what happens? Once people believe that by bailing out the private sector the government itself is only committing suicide itself in way—guaranteeing hellacious future inflation say, or etc.—well hell that’s it. Time for everyone to change to gold and keep it under our mattresses and start using cigarettes for currency like in Germany after WWI.
    I could see our gov’t’s early moves in this shoring up and even bailing out a few of the big boys. But it seems to me we’ve gone way beyond this now. It’s like a bunch of drunken monkeys who’ve broken into a food locker. $85b. for AIG, no … 125b now; $50-75b for Detroit; GE—GE for God’s sakes who doesn’t even need it!—sticking its beak in the bowl for some millions. And now comes California and the cities and on and on.
    Given that it’s the Dems now who seem to constitute most of the monkeys, wonder what Mssr.s Sale and Parker are saying about that? The Republicans are making ’em do it?
    I feels sorry for Obama; obviously has a good-faith intent to really do sound things I think, all of which will soon be shown to be impossible given the certainty that it’s way too late for that economically. Thus he either condemns his Presidency to being viewed as a Scrooge now and a real hero only to the future and putting things on the right path, or to just join in the game-playing and hope that things don’t crash until after he gets out.
    Interesting that he seems to like Paul Volcker, the absolute incarnation of a guy who (in my opinion at least) embodies that kind of heroism. Remember how he was excoriated when he was the Fed. Chair under Reagan and he was wringing inflation out of the system and making way for the incredible boom we had for the next 20+ years?
    Hope that Obama indeed recognizes this. Like they say, the first sign of insanity is an inability to recognize your friends.

  23. Hyperion says:

    This American Life did two programs on the causes of the meltdown. The first started with a statement about how there was all this money around and folks were looking for some way to make it GROW. Then they cited some HUGE number. Silly me, I’m thinking “Got too much cash? Spend it! What’s not to like?” But no, they had to invent investment vehicles no one understood and open everyone up to this disaster…all in an attempt to turn a huge pile of money into an even HUGHER pile of money. Greed is a enduring human characteristic.

  24. john in the boro says:

    “No, not a commonplace! Hitherto, for instance, if I were told, ‘love thy neighbour,’ what came of it?” Pyotr Petrovitch went on, perhaps with excessive haste. “It came to my tearing my coat in half to share with my neighbour and we both were left half naked. As a Russian proverb has it, ‘Catch several hares and you won’t catch one.’ Science now tells us, love yourself before all men, for everything in the world rests on self-interest. You love yourself and manage your own affairs properly and your coat remains whole. Economic truth adds that the better private affairs are organised in society—the more whole coats, so to say—the firmer are its foundations and the better is the common welfare organised too. Therefore, in acquiring wealth solely and exclusively for myself, I am acquiring, so to speak, for all, and helping to bring to pass my neighbour’s getting a little more than a torn coat; and that not from private, personal liberality, but as a consequence of the general advance. The idea is simple, but unhappily it has been a long time reaching us, being hindered by idealism and sentimentality. And yet it would seem to want very little wit to perceive it…”
    “Crime and Punishment”, by Fyodor Dostoevsky
    I think the erstwhile Fyodor has captured the essence of trickle-down economics aka neoliberalism. He has also captured how its practitioners justify their actions.
    The Sale article is somewhat abrupt, I recommend reading the entire Parker piece http://www.nytimes.com/2008/11/09/books/review/Parker-t.html?_r=1&pagewanted=all&oref=slogin for a more complete picture. I think Parker is on a good track when he locates the current economic disequilibrium and ideological struggle within the more complex historical social sphere in his review of Adolph Berle. We are really talking about how we organize our society. That, in turn, determines how we distribute our incredible wealth, govern ourselves, and treat our fellow man.
    Leila suggests an important question about the future of the international financial system. President Bush made a strong plea for the continuation of the status quo with a few reforms around the fringes.

  25. Sidney O. Smith III says:

    Hi TomB
    You write…”you know Sidney my best econ professors were able to note that there’s nothing fundamentally incompatible between Keynesianism economics and the Austrians, although on the margins of course there’s always disagreement.”
    Can you refer me to any publication and/or written authoritative source that says the same? I am having a difficult time following that one, but I am no economist.
    Agree with you re: Volker. Interesting name — “Volker” — economist of the Volk, perhaps?

  26. richard sale says:

    Dear Pat:
    I was anazed and very pleased by the range and intelligence of the comments provoked by my posting, especially since, as I have plainly said, I am not very knowledgeble in this field.
    A couple of points. Richard Parker teaches at the John Kennedy School of Goverrnment at Harvard, not at Carnagie Mellon. Also in writing as I did, I in no way meant to imply political blame for the current crisis on any political group. I have never belonged to a political party, and never voted until the last two electiions. My view of voting as like that of the little old lady in New England who. when asked if she voted was scandalized. “I never vote,” she said, “it only encourages them.”
    I think perhaps (and this is just a suggestion) that a good way to get a handle on so vast a topic as the crisis is to try and analyze the on-going war between business and finance. One of Roosevelt’s bright aides once called it the “irrepressible conflict” of Ameria life. It was finance which created big business by merging small firms in order to float watered stock back in the 1920s. It was finance that talked of the free market, then did everything to hobble it and advance special interests. It is clearly finance that came up with this whole mess of derivatives which strikes me as so unsound it seems hard for any person to accept as credible unless of course, your impelling force of belief is greed.
    Will’s observation that it was the national recovery program called World War II that ended the depression is quite on target (I am misguoting him — having a senior moment.) FDR was, in fact, a balanced budget man, and it was only before the onset of World War II that he began deficit spending on a scale that finally ended mass unemployment.
    In any case, I hope those who can enlighten us will.
    With greetings to all,
    Richard Sale
    A last point. I still am mystified by the view, held by Secretary of the Treasury Mellon, that somehow cutting the taxes for the rich would act to release the economic genius of America. How anyone could reanimate a corpse like that, so discredited in the 1930s in 1980 truly is a miracle of stupidity.

  27. Will says:

    WW2 as national recovery project was Paul Krugman’s phrase not mine
    Mellon’s idea to cut taxes is cyclic, as old as ibn-Khaldun, maybe older- the Laffer curve. If you tax people too much, then you take away their incentive to produce and you wind up w/ less revenue then you would at a lower rate. But recent research says maybe 60% is the breakeven point not Mellon’s 28%. Another point raised is that you need a low capital gains tax rate to permit formation of capital.
    I’m w/ you on derivatives. i really don’t understand them. Haven’t tried to. those funds are like private clubs, need a million to get in- they were making 30% for a while year after year. They had phd physicists giving advise- something about diffusion equations?

  28. TomB says:

    Mr. Sale,
    It appears that in believing you were just some biased journalist using Parker as a stalking horse for your views I slandered you terribly. My apologies, especially since I should have been thanking you for very reasonably and articulately presenting what is obviously a not uncommon view of what’s gone on and so providing food for thought. (Just as your most recent post is so similarly reasonable and literate.)
    Again, my sincere apologies sir.
    What those Prof.s were telling us undergraduate laypeople was that we could too easily make too much of the differences between Keynes and the Austrians and/or Friedman. Their big big disagreements after all lie either in rather technical things (such as whether government should pay attention to interest rates or the actual money supply and etc.), or as to where their different prescriptions would lead us.
    Keynes’ big big big idea/insight, after all (presented in his big book in the mid-1930’s) was simply the then revolutionary one that really recognized there was such a thing as macroeconomics, and that a stimulated demand by government would indeed stimulate supply and thus economic activity as a whole. (With the old classical idea essentially being that no, whatever the situation is means by definition that that is where “equilibrium” would basically force it to lie.)
    And the idea that stimulating demand will stimulate supply too and etc. (and that there is such a thing as macroeconomics that is different from the “micro” economics of business, for instance) isn’t really disputed at all by the Austrians or Friedman. Again, they differed with Keynes elsewise as to some technical things, but where they took issue with Keynes on his “big” prescriptions was only just as to where it would eventually lead. I.e., not that government couldn’t stimulate demand, but that government meddling would fairly inevitably lead to socialism, or at best a terrible corruption of the normal supply/demand state.
    So that was just a disagreement as to where things would lead, not really with the idea/realization that Keynes had that made him so famous and that defines him. For instance, not just Nixon but I think the great Milton F. also once acknowledged that “we are all Keynesians now” in believing that at least in some instances gov’t can and does have a role in the macro economy.
    I’d also note that even as to where they appeared to differ most concerning the future, a good number of distinctly non-economically literate conservative ideologues in the Rush Limbaugh mold like to whoop as if there’s some terrible, irreconcilable war between the Keynesians and the Austrians. Indeed they talk like Keynes was some covert Marxist. And economic layperson that I am, if I hadn’t had those Prof.s I’d probably half believe ’em.
    But the fact is that Keynes thought that there wasn’t a single iota of validity to Marxist economics. And as to the great conservative bugabear inflation, Keynes might be seen as being an even a bigger hater of same than the most right-wing guy you could ever find. Absolutely condemned the hell out of waging the Korean war on credit for instance due so same, and yet that’s exactly what LBJ and the Dems and liberals did with Vietnam too thereby (IMO) leading to that 21% inflation we saw at the end of Carter’s term.
    So, essentially said my wisest Professors (or at least the ones I thought wisest), let’s keep things in perspective. Yes the more Righty-types did not like the message that you could take from Keynes in terms of welcoming government micro-management of the economy, but in the end they all agree that some management is necessary and works. Their more profound “disagreement” is with the idea of where it will eventually lead in the long term, and with Keynes famous mot about how in the long term “we’ll all be dead.”
    As to that in fact, same was responsible for probably the greatest quip against Keynes by I don’t recall who saying that he believed in a “childless future.” (Which was nasty allusion to Keynes’ homosexuality probably.) But I think that all but the most irresponsible Righties now agree that the gov’t shouldn’t have just sat on its hands in the middle of something like the Great Depression for the sake of “the sacred long term.” It’s only the polemicists such as the Limbaughs and Hannitys of the world who can spout such hit-and-run things because of course they then just refuse to ever enter into any considered debate about anything. (For the excellent reason that they are simply incapable of same.)

  29. Ingolf says:

    TomB, although I agree with many of your points, I think you’re making too little of the differences between the Austrians and Keynes. Take this Mises quote, for example (from Human Action, Chapter XXIX (1):
    “At the bottom of the interventionist argument there is always the idea that the government or the state is an entity outside and above the social process of production, that it owns something which is not derived from taxing its subjects, and that it can spend this mythical something for definite purposes. This is the Santa Claus fable raised by Lord Keynes to the dignity of an economic doctrine and enthusiastically endorsed by all those who expect personal advantage from government spending. As against these popular fallacies there is need to emphasize the truism that a government can spend or invest only what it takes away from its citizens and that its additional spending and investment curtails the citizens’ spending and investment to the full extent of its quantity.” (my emphasis)
    “While government has no power to make people more prosperous by interference with business, it certainly does have the power to make them less satisfied by restriction of production.”

  30. Thus he [Obama] either condemns his Presidency to being viewed as a Scrooge now and a real hero only to the future and putting things on the right path, or to just join in the game-playing and hope that things don’t crash until after he gets out…Interesting that he seems to like Paul Volcker, the absolute incarnation of a guy who (in my opinion at least) embodies that kind of heroism.
    Yes, the first few years of the Reagan years were really bad economically under Volcker, yet he won re-election easily.

  31. TomB says:

    A.) Remember, I was just parroting what I recall my Prof.s were saying so in keeping with the motto Bart Simpson stole from me I just want to say “I didn’t do it.”
    B.) In saying what they did I did indeed get the idea that they were trying to be very fair-minded to the Austrians and etc. by not caricaturizing their views, not picking out this or that old or sole statement or concentrating on any one person, accepting that they had either modified their views or even that they probably would have with the passage of time and the lessons of history and etc.
    They were all Keynesians themselves, and of the belief that the gov’t’s handling of the economy esp. in the early 1960’s showed beyond a doubt that smart Keynesian meddling by the gov’t was indisputably proved to work wonderfully. And so for instance in their attempts to be fair may have just assumed that nobody could really deny the fundamental kernal of Keynes’ idea and etc.
    (And if I recall correctly that’s exactly the point that they overwhelmingly focused on, saying that according to the classicists Keynes’ idea wasn’t just dangerous but indeed totally wrong and that gov’t could essentially have *no* effect on the economy. Therefore, believing that this had been absolutely proved wrong, they may have been overly generous to this or that Austrian or Chicago School person in saying that they had come a goodly way from that.
    C.) So I guess you got me as I myself really don’t know personally. I would say though that even if they did lean over a little too far in trying to be fair my sense is that they were still at least considerably right. E.g., not cherry-picking quotes or concentrating on this or that one individual as if that showed everyone’s views, giving the benefit of the doubt and etc. But even though well intentioned you might be right and they bent over too far in that direction. You got any more showing same? Is very interesting. The Austrian/Chicagoan people still around don’t really still believe that gov’t can’t effect things, do they? To the extent they don’t then I think they have gone at least some crucial way towards Lord K, but of course to be fair to them they may now just believe that such attempts invariably make things worse, I dunno. But I’d be interested to hear.
    (Even Milton F. agreed that gov’t could do good though, didn’t he? He just thought it was mostly via monetary policy, concentrating on the money supply rather than interest rates, right? At least that’s my recollection…)
    Looking forward to what you and Sidney and anyone else has on this. What the hell *are* the present day Austrians saying anyway?
    D.) Re Zoomie: To hail a thankfully non-dead horse again this country ought to get down on his hands and knees and kiss Paul Volcker’s ass for what he did. I rememember doing a visiting thing at my University back in the early ’80’s and seeing some demonstration against him (I think he was there giving a speech) and seeing a sign saying “Hang Volcker” or etc., etc. And of course that wasn’t all that much nastier a stance against him than was taken by all the other Right Thinking People in Manhattan and Cambridge and Ann Arbor and Madison and Berkeley and etc. too. But he never wavered and he never cared and boy does it make me feel good to see Obama seeming to value him so highly. People keep talking about wanting to have incorruptible, non-ideological people of conviction in government; well there was one and nobody even seems to know what he did.
    No wonder we don’t get many folks like that.

  32. Ingolf says:

    No, I certainly don’t think any Austrians believe that governments can’t affect things! To the contrary, they view them as tending to affect them all too much, and often in unintended ways.
    I think it’s more that Austrians constantly keep in mind the fact that in the real world capital goods are finite and can only be increased by foregoing consumption; in other words by saving. Government spending (whether on consumption or investment) doesn’t create fresh resources but instead diverts capital that would otherwise have been used in some other fashion. Whether this use might be “better” is a separate discussion although they would generally (and in my view reasonably) view that as unlikely.
    As you know, one of cornerstones of the Austrian approach is that credit expansions are inherently destructive. To quote Mises again: “The popularity of inflation and credit expansion, the ultimate source of the repeated attempts to render people prosperous by credit expansion, and thus the cause of the cyclical fluctuations of business, manifests itself clearly in the customary terminology. The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression. People rebel against the insight that the disturbing element is to be seen in the malinvestment and the overconsumption of the boom period and that such an artificially induced boom is doomed. They are looking for the philosophers’ stone to make it last.” (Human Action, Chapter XX (9))
    A bit later in the same section, he sums up what he sees as the hard reality of recovery from such booms:
    “Out of the collapse of the boom there is only one way back to a state of affairs in which progressive accumulation of capital safeguards a steady improvement of material well-being: new saving must accumulate the capital goods needed for a harmonious equipment of all branches of production with the capital required. One must provide the capital goods lacking in those branches which were unduly neglected in the boom. Wage rates must drop; people must restrict their consumption temporarily until the capital wasted by malinvestment is restored. Those who dislike these hardships of the readjustment period must abstain in time from credit expansion.
    There is no use in interfering by means of a new credit expansion with the process of readjustment. This would at best only interrupt, disturb, and prolong the curative process of the depression, if not bring about a new boom with all its inevitable consequences.
    The process of readjustment, even in the absence of any new credit expansion, is delayed by the psychological effects of disappointment and frustration. People are slow to free themselves from the self-deception of delusive prosperity. Businessmen try to continue unprofitable projects; they shut their eyes to an insight that hurts. The workers delay reducing their claims to the level required by the state of the market; they want, if possible, to avoid lowering their standard of living and changing their occupation and their dwelling place. People are the more discouraged the greater their optimism was in the days of the upswing. They have for the moment lost self-confidence and the spirit of enterprise to such an extent that they even fail to take advantage of good opportunities. But the worst is that people are incorrigible. After a few years they embark anew upon credit expansion, and the old story repeats itself.”
    At least as I see it, we’ve just finished with the mother of all credit induced booms and are now in the early stages of the aftermath. Unfortunately, this time (as in the 1920s but probably more so), the expansion was so great and so prolonged that once again the very system itself is under threat.

  33. Sidney O. Smith III says:

    Hi TomB
    Keeping in mind that I am no economist and, furthermore, that I agree with much of what you write, I never have associated Keynesian economics with any kind of Marxist dialectic. Instead, I always believed that Keynesian economics offered a justification for large scale government intervention in the marketplace plus, ultimately, a validation of the use of a fiat currency. Such of course increases central economic planning by government bureaucrats, which, according to Hayek devotees, evolves (or devolves, depending on one’s point of view) into socialism. Or worded differently, Hayek infers that the endpoint of Keynesian economics, which finds much support on the left, is the rise of a type of national socialism.
    You mention Rush L, but I find it almost laughable that he would employ Austrian economics to support his political views and then go on to call Keynesian economics Marxist. Best I can tell, the Austrian school represents the very antithesis of everything Rush stands for, particularly his foreign policy ideas. And it seems to me that some of the first to recognize the true intent of the neoconservatives — and I throw Rush L in with that crowd — were those who rely on assumptions that arise out of the Austrian school. War Eagle Raimondo comes to mind as but one example but there are a legion of others.
    As a bit of irony, again only from what I can tell, a few advocates of an extreme type of Austrian economics actually employ a Marxist dialectic; it is simply one turned against the State. Murray Rothbard’s descriptions of “anarcho-capitalism” does just that. But, again, while I strongly reject anarcho-capitalism (it comes across as an inverted form of neoconservatism to me), I don’t think anyone can just dismiss Rothbard’s theories out of hand. His work on the causes of the Great Depression is simply brilliant, although some may argue that his work is brilliantly wrong. But, just as the Colonel has stressed, it is necessary to separate the information from the source of the information. And, at this time in history, Rothbardians do keep people honest, particularly those economists who headline the mainstream media and who work for the USG.
    And again, I am not saying I know the answers. I don’t. And, as I said, I grew up in a tradition (and educational system) that greatly admired FDR. And, to take it even further and as others have noted, perhaps Keynesian economics would indeed have worked if those in the USG over the past 60 years had followed FDR’s desire to stay within budget. And perhaps the Keynesian school indeed would have survived the test of time if an amendment required balanced federal budgets and/or some type of commodity to back up all those dollars being printed 24/7.
    But such safeguards do not exist and, at least from what I have read, in all of recorded history, fiat currency accompanied by debt will fail and lead to the ruin of a civilization. It is just a matter of time. So to deny this historical fact constitutes hubris, in my view. (Actually it constitutes imperial hubris, because, let’s face it, a government that prints money 24/7 and justifies endless debt also tends to embark on wars of choice.)
    So I do believe a public debate on the role of government in the marketplace is paramount. On the national level, Ron Paul appears the best representative of an Austrian school that stresses a limited government (as opposed to the anarcho-capitalism of Lew Rockwell?). And, it just seems to me that Ron Paul and the traditional Keynesians don’t agree on much. In fact, on the big issues — meaning the idea of a fiat currency, central banking, gold standard — I don’t seem ‘em agreeing on a single thing.
    Fox News (another alert to the idea of separating the information from the source of such) has interviewed Ron Paul several times, much to its credit. I’ll link the latest because, after viewing it, I saw little to support the idea that we are all Keynesians. If you see anything that suggests otherwise, please let me know.
    And I do note that Raimondo has just written a very incisive essay about the dawning of a new age in America – the one of plutocratic socialism. And, at least from my vantage point, all the assumptions upon which Raimondo relies reject those assumptions that have given us Keynesian economics and a 10 trillion dollar national debt. (And Raimondo appears very credible to me because he was miles ahead of establishment Democrats when he presaged the disasters of our US foreign policy in the Middle East — policies that originated with those former Scoop Jackson Democrats called neoconservatives.)
    And, heck, while we are at it, I cannot help but refer to three chapters of Hayek’s book, The Road to Serfdom, because the titles themselves seem relevant, if not prophetic One chapter, “The Socialist Roots of Nazism” certainly suggests that the left can lead a nation off the edge and into fascism. And that idea segues nicely to the next chapter, “The Totalitarians in Our Midst”. Are there totalitarians in our midst? Methinks so, on the left and the right. And then the final chapter, “The Prospects of International Order”. Seems to me a de facto world central bank has now arisen, for better or for worse.

  34. zanzibar says:

    What most media and economists and of course all the politicians never discuss are the unintended consequences of government interventions and “bailouts”.
    An unintended consequence of bailing out AIG is that they are now writing new business at rates substantially below their competitors who don’t have the advantage of unlimited “free” taxpayer capital. As a result prudent insurance companies’ profitability are being driven down. What we have is the weak making the strong weak instead of the strong gaining share over the weak and getting stronger.
    The bailout of AIG has also proven to be a farce or scam depending on your point of view. The original plan was for the taxpayer to own 80% of the company for $85 billion. Now over $150 billion has been provided but the taxpayer has got no additional benefit except that they may very likely have to throw even more good money after the bad.
    Now we have the Big 3 claiming we will have Great Depression II with millions of jobs lost if they don’t get a taxpayer bailout. We just heard that same line from Paulson for helping his buddies on Wall Street. Chrysler was bailed out in the 70s and now they need another one. British Leyland got many taxpayer handouts yet did not survive. In retrospect was all that allocation of taxpayer funds the best use of tax receipts.
    With the Feds acronym soup of funding vehicles and the Treasury programs the amount that has been transferred to few private corporations and some foreign central banks is in the trillions. Money that taxpayers really don’t have but their future income streams will be garnished.
    Between the Democrats and Republicans they believe the well is infinite. That unlimited quantities of funds can be borrowed to provide handouts to the politically well connected and powerful.
    We are heading towards a rude awakening. Transferring private bad debt to the taxpayer balance sheet is no solution. The debt has to be restructured at some point. The fraud committed by the Republican administration will now be committed by the Democrats. Easy money and sham accounting that created the problem cannot solve the problem.
    Will Obama heed Volcker or just use him as a prop?

  35. Will says:

    The New Yorker magazine has a good article reviewing recent books about the financial crisis.
    Derivatives are often alluded to, b/ never fully explained. They originated in the commodities market, farmers hedging to protect their future crops- cattle, soybeans, bacon, orangejuice- classic commodity trading. Expansion to other kind of products took off with when Black and Scholes published their paper in 1973 w/ the Black-Scholes partial differential equation PDE with which all kinds of other future trades could be valued.
    Read the wikipedia article for Black-Scholes for the derivation of the equation. It is akin to equations for Brownian motion and such- not easy. I can see why brokerage firms hired phd physicists for a while. I quess once the computer programs were written, then a monkey could run them.
    But the combination of mortgage securities and derivatives is what did us all in.

  36. Will says:

    pbs nova online
    the formula that shook the world (remarkably similar to a heat transfer equation)
    stockmarket/formula.html ”
    “Let’s not kid ourselves: The Black-Scholes option-pricing formula is a difficult concept to grasp. To begin to understand the explanation of the formula below, you might want to first review the section on call options. Then click on the formula itself for definitions of its various elements. Finally, have a look below at the theory behind the formula. For a more comprehensive explanation of the formula, we recommend Chapter 20 of Investments, by Zvi Bodie, Alex Kane, and Alan Marcus (Irwin Press, 1996), and Finance, by Zvi Bodie and Robert Merton (Prentice Hall, 2000), the primary sources for this article. ”

  37. Will says:

    more from the nova online article and a question
    “Theory behind the formula
    Derived by economists Myron Scholes, Robert Merton, and the late Fischer Black, the Black-Scholes Formula is a way to determine how much a call option is worth at any given time. The economist Zvi Bodie likens the impact of its discovery, which earned Scholes and Merton the 1997 Nobel Prize in Economics, to that of the discovery of the structure of DNA. Both gave birth to new fields of immense practical importance: genetic engineering on the one hand and, on the other, financial engineering. The latter relies on risk-management strategies, such as the use of the Black-Scholes formula, to reduce our vulnerability to the financial insecurity generated by a rapidly changing global economy. ”
    Discovered in 1973, Nobel Prize in 1997, gave birth to financial engineering, HEDGE FUNDS.
    So what happened to the “reduce our vulnerability to the financial insecurity generated by a rapidly changing global economy?”
    Paulson says it’s one in a century or once in a 50 year event!

  38. Sidney O. Smith III says:

    A redux.
    Call it a coincidence ( are if you are Jungian, call it “synchronicity”) but Ron Paul offered the following before the House of Representatives on November 20. It is titled “The Austrians were Right” and it seems to draw a deep distinction been Austrian analysis and the Keynesian school. I see no indication that Paul is arguing that we are all Keynesian.
    Again, I don’t know which school is right, or at least comes closer to the “truth”, but surely the Austrians should have “standing” to make their case, if for no other reason than they were some of the first to warn us against disastrous US foreign and economic policies.

  39. zanzibar says:

    Unfortunately the response to our current problems as we have seen is even more government intervention and more easy money.
    Wall Street and our corporate class epitomized our capitalists. However, what they want is privatization of profits and socialization of losses.
    With the seeming appointment of Tim Geithner as Obama’s Treasury Secretary we have an architect of the current monetization regime in place to continue with even more easy money policies.
    The markets have already wrung out much of the excesses. Banking reserves have exploded. There are many companies trading below their net cash and there are many debt securities that provide compelling value. At some point the markets would have discounted this recession and will rebound. The massive growth in the Fed balance sheet will get out into the economy as confidence improves. And we will start the next inflationary cycle as money velocity accelerates.
    The problem as I see it is that everyone will claim that it was the massive government intervention and unprecedented Fed lending on dubious collateral that caused the revival. I am afraid we will not learn the real lesson that sound money should be the basis of a sound economy. That capital formation from savings to increase our productive capacity is the yeast for sustainable growth. We are destined to repeat this cycle again.

  40. Sidney O. Smith III says:

    Hi Zanzibar
    Several months ago — and before the economic meltdown — you made one of the more prescient comments I have read at sst. In your comment, you predicted a continuing trend towards socializing losses and privatizing profits. It was the first time I was introduced to this concept and since then, I have tried to read all your posts. At least to me, you come across as someone extremely knowledgeable about the world of economics and you express your insights in a manner that folks like me can follow. Extremely well written. So thanks for the sharing your thoughts. Just out of curiosity, do you favor the work of Ludwig Von Mises and F.A. Hayek?

  41. zanzibar says:

    The works of Mises and Hayek are classics. In my opinion they should be a required element of every economics curricula. Hayek’s Road to Serfdom is a must read for every American who deeply believes in our constitutional republic. In addition I believe the works of Joseph Schumpeter should also be part of the reading of anyone interested in economic thought.
    I think its important however not to be too dogmatic but to lean on the philosophy of these great thinkers. We all have our philosophical biases – mine is classical liberalism so I lean towards entrepreneurial capitalism as the economic basis for a free society as envisioned by our founders. But that does not mean we should have no regulatory framework – an even playing field is what makes the game from getting out of hand. Imagine a football game with no rules and no referees.
    Although I was educated as an engineer I spent my career as a technology investment banker, high-tech entrepreneur, venture capitalist and most recently managed a private fund. A few years ago – mostly in disgust with our prevailing leadership and the state of our financial system I closed the fund and distributed all assets and now lead a quiet and simple life as a gentleman farmer. I have watched with much disappointment as our bedrock principles have devolved over the past 50 years.

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