yes and they say there are going to stop buying it send Odumba is inflating the currency like Bush
On Sun, Mar 22, 2009 at 8:23 AM, <[email protected]> wrote: > Did you know that china owns around 40% of US debt? That's huge! > > Sent from my Verizon Wireless BlackBerry > > ------------------------------ > *From*: bruce majors > *Date*: Sun, 22 Mar 2009 07:06:35 -0400 > *To*: <[email protected]>; <[email protected]>; < > [email protected]>; < > [email protected]>; < > [email protected]> > *Subject*: Lecture on Financial Crisis > > > > > Dear All, > > On Tuesday the 17th March 2009, Professor Kevin Dowd gave the Second > Chris R. Tame Memorial Lecture at the National Liberal Club in London. > His subject was "Lessons from the Financial Crisis: A Libertarian > Perspective". > > You can see the video of this lecture at: > http://video.google.co.uk/videoplay?docid=2495820480786986515 > > Here is an account of the lecture, written by Jonathan Pearce on the > Samizdata Blog: > > The Kevin Dowd lecture on free banking > > Johnathan Pearce (London) Globalization/economics > > "As promised, I have some thoughts following on from the talk given by > Kevin Dowd, a professor at the Nottingham University Business School and > a noted advocate of what is called “free banking”. He gave his talk at > the annual Chris R. Tame Memorial Lecture as hosted by the Libertarian > Alliance. (The LA was founded by Mr Tame, who died three years ago at a > distressingly young age after losing a battle against cancer.) > > "Professor Dowd covered some territory that is already pretty > well-trodden ground for Samizdata’s regular readers, so I will skim over > the part of the lecture that focused on the damage done by unwisely loose > monetary policy of state organisations such as central banks, or the > moral-hazard engines of tax bailouts for banks. > > "Instead, I want to focus on those aspects of Professor Dowd’s talk in > which he tried to sketch out what a laissez faire, free market banking > system would actually look like. This is essential; a great deal of > commentary so far – while it is very good – has mainly focused on how we > got into this fix and why the fixes being attempted by Western > governments are proving so stupid. As PJ Rourke said recently, the > attempt by the Obama administration to flood the market with cheap money > as a “solution” is a bit like the case of when your Dad has burned the > dinner, so you ask the dog to cook it instead. No, what Professor Dowd > did this week was lay out three broad areas for reform. > > "Firstly, he says we should remove many of the existing regulations, > government-mandated deposit protection schemes, bank capital adequacy > rules and other restrictions on what banks can do and how they work. For > example, government support for depositors – who are also effectively > creditors to their banks – means that there is a moral hazard problem; > the banks have less incentive than they would otherwise have to act > prudently if there is always the government, acting like a sort of 7th > Cavalry, able to ride to the rescue. That has to go. Professor Dowd also > wants to hack away at the morass of rules and regulations that violate > client/banker confidentiality, or those rules that force banks to lend to > people, as is the case in the US, where banks are forced to lend to > certain groups or else violate laws about racial discrimination, etc. > > "Secondly, Professor Dowd addresses the issue of letting banks fail. At > the present, policymakers adopt a sort of “too big to fail” doctrine; > this doctrine, while not explicitly laid down in any form of statute or > operating manual – as far as I know - is a rule that says that some > institutions are so large, and the attendant systemic risks posed by > their failure so catastrophic, that they should not be allowed to go out > of business. The problem of course is that this rule of thumb is often > arbitrary and subject to political horse-trading. To wit: the US > government’s decision to let Lehman Brothers go down last September, > followed shortly by the $85 billion bailout for AIG, showed a total lack > of clear message to the markets, and to bankers, one way or the other. > > "Professor Dowd believes that banks should be allowed to fail and > furthermore, if modern limited liability laws were weakened or abolished > completely, then such massive conglomerates would be economically and > legally unsustainable in the first place. > > "As a result, banks would probably be smaller, and there would be a lot > more of them, so the failure of any individual bank, while unpleasant for > some, would not wreck the system as could happen if a mega-bank goes > wrong. Also, instead of wide-ranging and hideously expensive bailouts, > Professor Dowd favours putting banks into administration, writing down, > in full, the value of their loan books, and getting depositors to > exchange their status as creditors for that of an equity holder. > > "This “debt for equity swap” arrangement, while it would anger depositors > who lose money, would come with the promise, and hopefully the reality, > of a rise in the capital value of their equity stake in a bank if > confidence returns to a more robust banking sector, as the debt/equity > swap recapitalisation is designed to achieve. And of course banks are > entirely free, as are their clients, to take out deposit insurance in a > commercial market. > > "The third leg of his solution is broader, and more long-term, although > there are some immediate measures that could be taken. Professor Dowd is > against fiat money – money not backed by actual commodities or real > assets of any kind – and in moving to a commodity-based/asset-based > system. He is not, by the way, necessarily arguing for the gold standard > or some gold-based system, although he points out that in the 200 years > up to the First World War, the UK enjoyed a remarkable period of stable > prices, with the odd blip. What he is arguing, however, is that the > message on a banknote that says “I promise to pay the bearer on demand > the sum of X” should be an enforceable legal contract, not what amounts > to the jeering joke that it now is. > > "In the subsequent Q&A session afterwards, one person made the excellent > point that a simple reform would be to ban legal tender laws. Such laws > currently require a person to accept as legal tender a currency that the > state has mandated for a particular region. Instead, if a person wants to > refuse to accept sterling and only wants to accept dollars, euros or > Swiss francs instead, he can do so. He can also choose to trade in > whatever medium of exchange he wants, and with whoever wants to accept it. > > "Inevitable questions arise. First of all, in thinking about free > banking, private monetary systems and the like, the first objection will > be is that this will be very messy; there has been no real experience of > such monetary systems in the past, etc. > > "But this is incorrect. Free banking, as defined by Professor Dowd, in > fact operated in Scotland, for example, up until legal changes in 1845. > South of the River Tweed, the English system had operated under what > amounted to state-controlled banking under the Bank of England, set up in > 1692. In the 18th and 19th centuries, England saw a number of booms and > recessions, such as the 1840s railway boom and the downturn of 1870s. One > should remember that the BoE was established by the-then post-Glorious > Revolution government as a way to raise money for wars without having to > keep asking a fractious public for taxes, and without having to borrow at > expensive rates in the money markets. N.A.M. Roger has explained this > issue of financing for naval warfare brilliantly. Indeed, it reminds us > that state monopoly money systems typically arose in order to finance > wars, while the welfarist aspects came later. > > "There are also current, not just old, examples of banks that operate > with unlimited liability partnership structures – Pictet, the Swiss bank, > and Lombard Odier, are just two examples. There are dozens of such banks > using these structures in Switzerland and by no coincidence; they have > avoided the worst of the credit crunch. These banks are typically for the > rich but it seems to me that there is no logical reason why such an > approach could not be used more widely. So there are different ways of > doing banking right now. And do not forget the humble UK mutual building > society: they have their limitations, but as a business model they had a > lot to recommend them. > > "Another objection might be that the debt-for-equity swap way of > restructuring failed banks under bankruptcy protection laws would be > politically unfeasible, since depositors would be hit. I understand that, > but Professor Dowd is not trying to imagine what sort of reforms would > appeal to David Cameron, say, but what sort of reforms would be workable. > That is a rather massive difference, as I am sure readers will agree. > > "Another objection is that “real money”, as opposed to the state-arranged > fiction that we have now, cannot work for as long as governments take > such a large slice of GDP. That is probably correct. One of the reasons > why so many advocates of Big Government regard “gold bugs” or free > bankers as dangerous nutters is that they realise their welfare states > would be unworkable under such monetary arrangements. The Ponzi schemes > of most welfare states would not be able to function. Even so, as long as > governments retain the ability to tax, they have the ability to raise > debt in the financial markets in the knowledge that their collateral can > be collected at the point of a gun. But a real-money system still hampers > such activity considerably. > > "In the longest run, the best hope of avoiding such financial disasters > in the future is to wean the public and policymakers off the seductive > delusion that one can create wealth by turning on a printing press. > Sooner or later, if you try to fake reality, it bites you hard in the > arse. Of course, it is a mark of the kind of man Professor Dowd is that > he is too polite to put it as bluntly as that. > > "I await comments!" > > -- > Sean Gabb > Director, The Libertarian Alliance > [email protected] <sean%40libertarian.co.uk> > Tel: 07956 472 199 > Skype Username: seangabb > > http://www.libertarian.co.uk > http://www.seangabb.co.uk > http://www.hampdenpress.co.uk > http://libertarianalliance.wordpress.com > > Linkedin Details: http://www.linkedin.com/in/seangabb > Wikipedia Entry: http://tinyurl.com/23jvoz > > FREE download of my book - "Cultural Revolution, Culture War: How > Conservatives Lost England, and How to Get It Back" - > http://tinyurl.com/34e2o3 > __._,_.___ > Messages in this topic > <http://groups.yahoo.com/group/libertarian-alliance-forum/message/86299;_ylc=X3oDMTM2OWtqcTlsBF9TAzk3MzU5NzE0BGdycElkAzIyMzcxMjgEZ3Jwc3BJZAMxNzA1MDYwMTY5BG1zZ0lkAzg2Mjk5BHNlYwNmdHIEc2xrA3Z0cGMEc3RpbWUDMTIzNzU4NDU5OQR0cGNJZAM4NjI5OQ-->( > 1) Reply (via web post) > <http://groups.yahoo.com/group/libertarian-alliance-forum/post;_ylc=X3oDMTJxZW9kbHZrBF9TAzk3MzU5NzE0BGdycElkAzIyMzcxMjgEZ3Jwc3BJZAMxNzA1MDYwMTY5BG1zZ0lkAzg2Mjk5BHNlYwNmdHIEc2xrA3JwbHkEc3RpbWUDMTIzNzU4NDU5OQ--?act=reply&messageNum=86299>| > Start > a new topic > <http://groups.yahoo.com/group/libertarian-alliance-forum/post;_ylc=X3oDMTJlbWxuYjI5BF9TAzk3MzU5NzE0BGdycElkAzIyMzcxMjgEZ3Jwc3BJZAMxNzA1MDYwMTY5BHNlYwNmdHIEc2xrA250cGMEc3RpbWUDMTIzNzU4NDU5OQ--> > > Messages<http://groups.yahoo.com/group/libertarian-alliance-forum/messages;_ylc=X3oDMTJldHU3ZmlqBF9TAzk3MzU5NzE0BGdycElkAzIyMzcxMjgEZ3Jwc3BJZAMxNzA1MDYwMTY5BHNlYwNmdHIEc2xrA21zZ3MEc3RpbWUDMTIzNzU4NDU5OA--> > Subscribe: [email protected] > Unsubscribe: [email protected] > > NB - The Libertarian Alliance does not necessarily approve of the above > message. > [image: Yahoo! > Groups]<http://groups.yahoo.com/;_ylc=X3oDMTJkbmx1NWJ0BF9TAzk3MzU5NzE0BGdycElkAzIyMzcxMjgEZ3Jwc3BJZAMxNzA1MDYwMTY5BHNlYwNmdHIEc2xrA2dmcARzdGltZQMxMjM3NTg0NTk5> > Change settings via the > Web<http://groups.yahoo.com/group/libertarian-alliance-forum/join;_ylc=X3oDMTJmNWxpY21zBF9TAzk3MzU5NzE0BGdycElkAzIyMzcxMjgEZ3Jwc3BJZAMxNzA1MDYwMTY5BHNlYwNmdHIEc2xrA3N0bmdzBHN0aW1lAzEyMzc1ODQ1OTk->(Yahoo! > ID required) > Change settings via email: Switch delivery to Daily > Digest<[email protected]?subject=email+delivery:+Digest>| > Switch > format to > Traditional<[email protected]?subject=change+delivery+format:+Traditional> > Visit Your Group > <http://groups.yahoo.com/group/libertarian-alliance-forum;_ylc=X3oDMTJkaWZtdDNzBF9TAzk3MzU5NzE0BGdycElkAzIyMzcxMjgEZ3Jwc3BJZAMxNzA1MDYwMTY5BHNlYwNmdHIEc2xrA2hwZgRzdGltZQMxMjM3NTg0NTk5>| > Yahoo! > Groups Terms of Use <http://docs.yahoo.com/info/terms/> | Unsubscribe > <[email protected]?subject=> > Recent Activity > > - 1 > New > Members<http://groups.yahoo.com/group/libertarian-alliance-forum/members;_ylc=X3oDMTJmMDF1dHBuBF9TAzk3MzU5NzE0BGdycElkAzIyMzcxMjgEZ3Jwc3BJZAMxNzA1MDYwMTY5BHNlYwN2dGwEc2xrA3ZtYnJzBHN0aW1lAzEyMzc1ODQ1OTg-> > > Visit Your Group > <http://groups.yahoo.com/group/libertarian-alliance-forum;_ylc=X3oDMTJlZ2kyNjh2BF9TAzk3MzU5NzE0BGdycElkAzIyMzcxMjgEZ3Jwc3BJZAMxNzA1MDYwMTY5BHNlYwN2dGwEc2xrA3ZnaHAEc3RpbWUDMTIzNzU4NDU5OA--> > Give Back > > Yahoo! for > Good<http://us.lrd.yahoo.com/_ylc=X3oDMTJtNXU3ODRsBF9TAzk3MzU5NzE0BF9wAzEEZ3JwSWQDMjIzNzEyOARncnBzcElkAzE3MDUwNjAxNjkEc2VjA25jbW9kBHNsawNicmFuZARzdGltZQMxMjM3NTg0NTk4;_ylg=1/SIG=11314uv3k/**http%3A//brand.yahoo.com/forgood> > > Get inspired > > by a good cause. > Y! Toolbar > > Get it > Free!<http://us.lrd.yahoo.com/_ylc=X3oDMTJvMm1sZG92BF9TAzk3MzU5NzE0BF9wAzIEZ3JwSWQDMjIzNzEyOARncnBzcElkAzE3MDUwNjAxNjkEc2VjA25jbW9kBHNsawN0b29sYmFyBHN0aW1lAzEyMzc1ODQ1OTg-;_ylg=1/SIG=11c6dvmk9/**http%3A//toolbar.yahoo.com/%3F.cpdl=ygrps> > > easy 1-click access > > to your groups. > Yahoo! Groups > > Start a > group<http://groups.yahoo.com/start;_ylc=X3oDMTJvdWtjdDNyBF9TAzk3MzU5NzE0BF9wAzMEZ3JwSWQDMjIzNzEyOARncnBzcElkAzE3MDUwNjAxNjkEc2VjA25jbW9kBHNsawNncm91cHMyBHN0aW1lAzEyMzc1ODQ1OTg-> > > in 3 easy steps. > > Connect with others. > . > > __,_._,___ > > > > > > > --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
