Volcker warns “Prolonging trillion dollar deficits can’t be a reality”

May 10, 2011 by · Leave a Comment
Filed under: Opinion 

Volcker did a good thing taking a moment at this conference to be very clear is what he means.  It is not sustainable to run multi-trillion dollars deficits in a debt based monetary system.   The problem lies that as you create more debt, the interest payments (obligations) continue to eat up a larger portion of your GDP over time until you will literally you can not get out of unless you default debts or print money to cover your federal bond payments.

We are rapidly running head first into a glass wall that is going to be very painful when we hit it.  At the same time this is happening we are seeing record commodity prices and this is not a coincidence.  Holders of these commodities and the “smart money”, understands what is going on and they are require what they see as proper compensation for their assets or goods.

Volcker said another important point that people are not appreciating.   He said “tax reform” and “higher revenue”, that translate into “higher taxes” and that is for sure.  We not only need to cut the deficit to stop the bleeding. but then we need to raise taxes to cover our existing obligations (SSI, Medicare, New Health Care) AND somehow pay down our debt.   Pay attention, things are happening under our feet and most are not aware of it until it will be smack dab in your face.   .02

Reuters – Speaking before the World Affairs Council of Oregon, Volcker said that “prolonging trillion dollar deficits can’t be a reality” and that the United States is on course to have its public debt exceed the size of its gross domestic product.

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Volcker gives broad critique on financial and banking industry at Chicago Fed

September 24, 2010 by · Leave a Comment
Filed under: Opinion 

Looks like Ex-Fed Chairman Paul Volcker is finally fed up with the tippy-toeing around these serious flaws in our financial and economic system.  According to the WSJ, Mr. Volcker had a prepared speed at the Chicago Federal Reserve Bank and decided to not give that statement and go more into the meat of what he has been feeling these days.

Too bad we are into this supposed recovery so now no one will listen to this calling it reactionary.  We will have to wait yet again until the next crisis before we take any real action.   At least people are going on record like myself.

WSJ – Former Federal Reserve Chairman Paul Volcker scrapped a prepared speech he had planned to deliver at the Federal Reserve Bank of Chicago on Thursday, and instead delivered a blistering, off-the-cuff critique leveled at nearly every corner of the financial system.

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Ex-Fed Chairman Paul Volcker to urge curbing risky trading by commercial banks

February 2, 2010 by · Leave a Comment
Filed under: Policy News 

I fully support Mr. Volcker’s stance on this issue.  Even though it is extremely profitable for commercial deposit taking banks to do trading on their own books, they should either convert into a investment bank or stick to lending which is still very profitable if done properly.  As I have stated before on here, our commercial banks should be our most risk adverse institutions and that is why prudent regulations are needed and should be in place to limit this.

Investment banks are on the other hand, not regulated very much so they are allowed to make very risky trades and profit greatly.  Conversely, if they make bad choices they should be allowed to fail without the same assistance that our vital commercial banks get if we have a classic “run” on the bank.

Washington D.C., Reuters – White House economics adviser Paul Volcker will urge Congress on Tuesday to rein in risky investing by big banks to help prevent them becoming “too big to fail,” according to testimony obtained by Reuters.

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Ex-Federal Reserve chief Paul Volcker says U.S. now in recession

October 14, 2008 by · 1 Comment
Filed under: Opinion 

Ahh, my hero ex-chairman Mr. Volcker. If only others would have the discipline you displayed to contain inflation.  I think if you talked to the average business person that you would agree we are in recession.   In the article he talks about some of the same issues that have been discussed here daily. We are looking too short-term in our goals for this financial crisis.

Many times the short-term gains you have, may not be worth the lasting long-term effects you cast on an economy. At some point we will have to deal with this debt, trade imbalance, credit creation/inflation and destruction of the middle class in the U.S. and not amount of credit will fix those problems. We have a system and culture that is not sustainable and will fall apart at some point in the future. It is good to take some punches on lip so you know what it feels like. The goal of life, atleast in my book is not to achieve ultimate convenience but to affect change and leaving life better than it was left to me.

Press Release:

Former Federal Reserve Chairman Paul Volcker said on Tuesday the U.S. housing sector faced more losses and the economy was in recession even as authorities moved to stabilize the financial system.

Volcker said the priority for U.S. authorities in the credit crisis was to stabilize the financial system even though that meant heavy government intrusion.

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