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Obama advisor Volcker on the crisis

Sat, 10/11/2008 - 8:52am — lambert

No doubt we're getting the word from the Village on future policy here, via Volcker on Charlie Rose -- but if so, I don't know what the word is, though I'm listening to it now, it's an hour long. [Actually, Volcker stops 36:07 in.] Of course, we are all going to "come together to protect our [sic] big banks."

UPDATE Volcker doesn't have an objection to bailing out individual homeowners, but thinks the courts should do it in onesies and twosies. (Now we know where Obama's coming from on this.) The technical challenge is the packaged securities, not the individual mortgages.

UPDATE "What we need is fewer financial engineers and more electrical engineers...."

UPDATE Rose and Volcker on FDR's fireside chats -- "most convincing." Well, I guess we know how Obama's 10/29 speech will be framed... "I can have confidence in my bank again because President Roosevelt said so." So, the bottom is scheduled for roughly two weeks from today. Shows what recommended Obama to Our Betters, as well: They wanted a candidate with persuasive powers pre-positioned. Still creating reality...

NOTE Via CR.

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It sounds like Volker/Obama want people having mortgage troubles

By jawbone on Sat, 10/11/2008 - 6:10pm

to file for bankruptcy and then, and only then, will a judge (differing standards? regional reactions? how will people get equal treatment?) be able to address the mortgage problems.

Am I wrong? I was going from room to room when Volker was on Charlie Rose--and I wasn't sure what he was really getting at.

Volker, iirc, used maximum pain to fight inflation and caused very high unemployment. From Wiki:

Chairman of the Federal Reserve
Paul Volcker, a Democrat[3], was appointed Chairman of the Federal Reserve in August 1979 by President Jimmy Carter and reappointed in 1983 by President Ronald Reagan.[4] Volcker's Fed is widely credited with ending the United States' stagflation crisis of the 1970s by limiting the growth of the money supply, abandoning the previous policy of targeting interest rates. Inflation, which peaked at 13.5% in 1981, was successfully lowered to 3.2% by 1983. [1]

However, the change in policy contributed to the significant recession the U.S. economy experienced in the early 1980s, which included the highest unemployment levels since the Great Depression, and Volcker's Fed also elicited the strongest political attacks and most wide-spread protests in the history of the Federal Reserve (unlike any protests experienced since 1922), due to the effects of the high interest rates on the construction and farming sectors, culminating in indebted farmers driving their tractors onto C Street NW and blockading the Eccles Building.[5]

I recall that when a new hotel was going to open in Milwaukee's downtown, the lines of people applying for jobs stretched forever out of a building at the State Fair grounds. Overhead helicopter shots captured the incredibly long lines--very scary.

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