The more things change...

Let's review. Not sure much has changed, at least not for the better. IMO, this guys analysis of the situation was spot on back in 2009.

Quote of the Day:

"We have failed bankers giving advice to failed regulators on how to deal with failed assets. How can it result in anything but failure?" -- William K. Black

Quote of the Day - Second Place

"If cheaters prosper, cheaters will dominate. It's like Gresham's law: Bad money drives out the good. Well, bad behavior drives out good behavior, without good enforcement." -- William Black

From Barrons.com

The Lessons of the Savings-and-Loan Crisis
William Black, Associate Professor, Economics and Law, University of Missouri, Kansas City
By JACK WILLOUGHBY |
MONDAY, APRIL 13, 2009


http://online.barrons.com/article/SB123940701204709985.html#articleTabs_panel_article%3D1

Barron's: Just how serious is this credit crisis? What is at stake here for the American taxpayer?

Black: Mopping up the savings-and-loan crisis cost $150 billion; this current crisis will probably cost a multiple of that. The scale of fraud is immense. This whole bank scandal makes Teapot Dome [of the 1920s] look like some kid's doll set. Unless the current administration changes course pretty drastically, the scandal will destroy Barack Obama's presidency. The Bush administration was even worse. But they are out of town. This will destroy Obama's administration, both economically and in terms of integrity.

So you are saying Democrats as well as Republicans share the blame? No one can claim the high ground?

We have failed bankers giving advice to failed regulators on how to deal with failed assets. How can it result in anything but failure? If they are going to get any truthful investigation, the Democrats picked the wrong financial team. Tim Geithner, the current Secretary of the Treasury, and Larry Summers, chairman of the National Economic Council, were important architects of the problems. Geithner especially represents a failed regulator, having presided over the bailouts of major New York banks.

So you aren't a fan of the recently announced plan for the government to back private purchases of the toxic assets?

It is worse than a lie. Geithner has appropriated the language of his critics and of the forthright to support dishonesty. That is what's so appalling -- numbering himself among those who convey tough medicine when he is really pandering to the interests of a select group of banks who are on a first-name basis with Washington politicians.

The current law mandates prompt corrective action, which means speedy resolution of insolvencies. He is flouting the law, in naked violation, in order to pursue the kind of favoritism that the law was designed to prevent. He has introduced the concept of capital insurance, essentially turning the U.S. taxpayer into the sucker who is going to pay for everything. He chose this path because he knew Congress would never authorize a bailout based on crony capitalism.

Geithner is mistaken when he talks about making deeply unpopular moves. Such stiff resolve to put the major banks in receivership would be appreciated in every state but Connecticut and New York. His use of language like "legacy assets" -- and channeling the worst aspects of Milton Friedman -- is positively Orwellian. Extreme conservatives wrongly assume that the government can't do anything right. And they wrongly assume that the market will ultimately lead to correct actions. If cheaters prosper, cheaters will dominate. It is like Gresham's law: Bad money drives out the good. Well, bad behavior drives out good behavior, without good enforcement.

More recent analysis from David Stockman. This guys just absolutely nails it right here. So of course, he will be marginalized in some fashion by the MSM and TPTB. Just another kook, I guess.

The Case for the Gold Standard

by David Stockman
This talk was delivered at the New York Historical Society on May 8, 2011.

http://www.lewrockwell.com/orig11/stockman7.1.1.html

It took 200 years to build and perfect the classic gold standard system; then it was destroyed in about seven weeks when the Guns of August 1914 thundered across Europe;.....Fortunately, Churchill’s defense of democracy also applies to the daunting task at hand: To wit, the classic gold standard is the worst possible monetary system – except for all of the alternative inflation-generating, savings-destroying, debt-breeding, bubble-emitting and boom and bust-prone systems which have been tried in the 100 years since its demise. Hence, we offer six present day monetary vices which are curable by gold:.......the gold standard wouldn’t have allowed the US to incur nearly 40 straight years of massive current account deficits and to live high on the hog for decades by running a $7 trillion tab against its neighbors..........The gold standard tamed the demon of debt by delegating the pricing of money to the marketplace of savers and borrowers, not to an administrative board of interest rate riggers and manipulators......The gold standard was an honest regulator of Wall Street greed. Under gold, we did not seek Bernanke-style faux prosperity by levitating the Russell 2000; nor did we crucify Main Street on a cross of obscurantist theory like the Taylor Rule whereby the Fed naively gifts Wall Street with limitless zero-cost funding for leveraged speculations in commodities, currencies, derivatives and equities; nor did we punish people who invest in savings accounts out of an abundance of caution while placing a central bank "put" under those who speculate with reckless abandon........The gold standard made the world safe for fractional reserve banking. To be sure, banking – which is to say, scalping a profit from the interest spread between loans and deposits – is the world’s second oldest profession......The gold standard made the world safe for fiscal democracy because chronic budget deficits generated immediate pain. If financed from savings, deficits caused higher interest rates and squeezed-out private investment; and if financed by central bank credit, they caused a deflationary drain on gold. Nowadays, however, central banks have become monetary roach motels – places where treasury bonds go in but never come out....

Crony Capitalism Strikes Again
How the Federal Reserve is juicing speculators... again
by David Stockman
March 24,2011

http://www.lewrockwell.com/orig11/stockman6.1.1.html