WASHINGTON, Sept. 17, 2008
Bloomberg Warns Of "Next Wave" Crisis
More Financial Pain Possible If Foreign Entities Stop Buying U.S. Debt, Says NYC Mayor
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Mayor Michael Bloomberg speaks about the New York City economy in light of the Lehman Brother's bankruptcy filing and other financial turmoil during a press conference in New York, Sept. 15, 2008. (AP Photo/Seth Wenig)
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The billionaire mayor spoke before an audience at Georgetown University, telling them it's not clear who is going to continue buying U.S. debt as financial firms try to cope with a crisis of confidence on Wall Street.
The financial markets have undergone a tumultuous last week: Investment bank Lehman Brothers filed for bankruptcy and later sold off its North American trading division to British bank Barclays PLC; Insurance giant AIG needed an $85 billion bailout from the U.S. government in order to stay afloat; and investment firm Merrill Lynch sold itself to Bank of America.
The mayor is scheduled to meet Thursday morning with Treasury Secretary Hank Paulson and Securities and Exchange Commission Chairman Chris Cox.
Before becoming mayor, Bloomberg made a fortune by launching a financial information company that bears his name, and he has more credibility than most politicians on economic matters.
Bloomberg said he was concerned that the credit crisis in the United States may scare off foreign investors that, until now, have been willing to buy debt that the U.S. uses to maintain a deficit.
"It's not clear who's going to be buying our debt," said Bloomberg. "It may very well be that the next wave is going to come back and bite us."
The mayor, a Democrat-turned-Republican-turned independent, regularly criticizes both parties, the Congress, and the White House for what he says is their lack of foresight. He said the current economic crisis is the latest example of the same problem.
"We have on both sides of the aisle, on both ends of Pennsylvania Avenue, thrown caution to the wind. We pay lip service to responsibility," he said, as he sat onstage in an armchair, fielding questions from Georgetown President Jack DeGioia.
Bloomberg had originally planned to give a speech about the economy, but amid the fast-moving events on Wall Street, he scrapped the speech and went with a question-and-answer session instead.
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"The systemic problem is we've all gotten into a situation where we want it now, there's no pain ... We keep saying we want to have it, we don't want to pay for it. You can't go on forever not addressing the key issues in this country," like health care and immigration, he said.We have on both sides of the aisle, on both ends of Pennsylvania Avenue, thrown caution to the wind. We pay lip service to responsibility.
New York City Mayor Michael BloombergAsked about government regulation of the U.S. economy, he said that while some complain it is excessive, the United States has a competitive advantage because in many other countries "you would think that most (corporate financial statements) are just made up."
In fact, just last year the mayor and New York Senator Charles Schumer issued a lengthy report decrying what they saw as overreaching and overly demanding regulation of business.
Back then, Bloomberg and Schumer wrote that enforcement of a 2002 law toughening business reporting requirements "produced far heavier costs than expected (and) has only aggravated the situation," putting the U.S. at a competitive disadvantage with other financial centers like London.
Fast forward to 2008 - and the meltdown of confidence in U.S. financial markets - and Bloomberg had many nice things to say about regulation, including the Depression-era Glass-Steagall Act that separated commercial and investment banking, and was scrapped in 1999. As the modern financial sector has struggled, many Wall Street watchers have suggested resuscitating the old law.
Bloomberg did, though, continue to argue for a reordering of the current regulatory thicket.
"The real world has changed," he said, and old government agencies no longer are equipped to monitor companies that offer a combination of services, like insurance and investments and banking.
"All of these industries, the participants all do the same thing so there's a mishmash and there's too many places for things to slip through the cracks. I don't know that the regulators are asleep at the switch. The structure is not suitable for the real world."
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Let''s all write in Michael Bloomberg, Rudy Giuliani as VP. That would be my ideal ticket . . .
The author of this piece is equating volume of regulation with efficacy.
Something like only 1% of the world''s IPO''s are issued in the States now, even if the company''s domestic. Clearly that''s an overregulation.
All the aggressive investing in mortgate-backed securities by investment houses that are also banks that have led to this credit crisis IF it could have been prevented with a better regulatory framework would tend to point to underregulation.
The goal is regulate with precision to weed out the bad and give freedom to the good, is it not?
http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html
Posted by SamTheTVCat at 12:10 AM : Sep 18, 2008
Regulate "with precision"?
That presumes you can predict the "bad" before they do something "bad", and further that you can predict that a particular industry will NEVER do anything "bad".
The "reality" is that Bloomberg is doing just what all the mega-rich business people are doing:
Switching from "Any regulation is too much!" to "I have always said that regulation is a necessity!".
Plainly, it is a calculated move to avoid being tarred with the same brush their peers earn time after time after time.
Posted by ibsteve2u
So how does that advance your argument for regulations which have had the effect of compelling corporations to set up shop anywhere but here?
Your logic seems to be that if we have no corporations then we''ll have none that''ll collapse.
I think you forgot to factor in that we only have the power to regulate our own laws and that we''re only one country in the world. Meaning that countries have alternatives - you just priced yourself out of the market.
I think what I wanted to say was that you seem to be acting on the assumption that there''s no such thing as having too much regulation, the more the better.
I''d analogize that to getting tough on crime because regular garden variety crime and the stuff Wall St. sometimes gets away with isn''t that much of a stretch. Everybody likes the idea of sentence enhancements for repeat offenders and like criminalization of dead-beat dads and stuff. Until the tab for incarcerating everybody started to skyrocket.
When you keep the people in charge of creating money and jobs in the economy on too tight a leash, they might never fail but then they aren''t going to succeed much either. And everybody pays the price.
The assumption going around is that everybody''s bad, but the Wall St. crooks also do some good. Without them a lot of people wouldn''t be able to buy their own homes and they''d always be beholden to their landlords getting rich off their backs via their rent. Without them a lot of people wouldn''t be able to start small businesses and reap profits for themselves and would always be beholden to their employers who are getting rich off their backs.
Shrub underregulated, but there IS a real danger of overregulating too.
You know what we need to watch out for though is that Medvedev today said something about looking to lay claim to the Arctic because their gas is running dry.
How easy would it be for them to actually follow through with that? How immediate a threat is it? Because right now we''re all tied up in Iraq and Afghanistan, and we''re preoccupied with the election . . .
Or are they going to wait until they''ve bought up all our debt and use the threat of them flooding the market with our debt to ruin our economy to keep us from fighting back?
That''s supposed to be their thing - using the global economy as a weapon :(
http://tinyurl.com/3oezmw
Global credit system suffers cardiac arrest on US crash
http://tinyurl.com/48f84a
Revealing the motivation behind a new round of Bush-deficit-stoking tax cuts for the rich-- some $500 billion worth-- Cheney added, "We won the mid-terms. This is our due."
But while Cheney made political payoffs for the donors and lobbies behind the Bush campaign, and passed their tax burdens on to the American middle class, it is now clear in 2008 that neither Cheney nor Bush really matter.
Bush and Cheney are two null entities who set in motion political and economic chaos they do not understnnd, much less control.
Now, they are buying up AIG, many other banks....
Evil abounds!
Have you cleaned your heart with the Lord?
Why should they buy the debt to render the US helpless? If no one buys the debt, the US dollar will collapse, they will see a totally helpless US, unable to stop our own domestic anarchy, much less project military power, and they won''t have to spend a cent, this is the "nightmare scenario" that Bloomberg is talking about.
What Bloomberg fails to see is that there is a way out, but he is so conditioned to think in terms of "trickle down" economic fascism that he cannot see it.
To America
Re: overdue payment
Dear America,
It has come to our attention that your mortgage payment is 36 years past due. Our repeated attempts to contact you to make arrangements for payment have been unsuccessful.
Please make the necessary arrangements for immediate payment, or we will take action to recover our assets through bankruptcy proceedings.
Have a nice day.
______________
Reality
Your assumptions about the economy are as incorrect as your assumptions about me.
You know full well that the wealthy are only so because they have stolen from us. "Trickle down" was Reagan''s term for the codification of economic fascism. You say "That''s the way economy works", well son, guess what? Look out your window, it ain''t workin''.
Steal from the wealthy? That is a joke, the failing banks, insurance firms, and mega-corporations with their cooked books, have been stealing from you, but you are too ignorant to see it, either that, or you are one of the thieves. Obviously you are also unable to comprehend the way out.
Here is a clue, the poor did not force these companies to hide their bad decisions until they were so bad that the companies imploded.
Just for the record, I own my own business, and operate in Asia, my money is in Euros, and I have never taken a penny from the US government, I have not even cashed my income tax returns, because I don''t bank in the US anymore, and it isn''t worth going there just for a couple thousand bucks, my plane fare would cost that much.
In fact, I don''t even accept US dollars as payment for my services, as they are too unstable for me to guarantee completion of my contracts, and I haven''t taken US dollars for some years now. I ignored the "stimulus checks" as I spend that much taking clients to lunch, again not worth taking.
Another interesting bit of irony, I built my business from the ground up, and in an ironic thanks to the racism of US venture capitalists and banks, I did it without using credit, to date I still don''t, even though now it is offered to me. I am totally debt free, and living the life that people like yourself only dream about. I live in Bali, use Singapore for business transactions, I travel the world, and get paid good money to do so, how about you?
Judging by your post, it is you who hasn''t actually earned any money, preferring instead to soak up the benefits of corporate welfare, which unfortunately for you, are about to run dry.
Posted by singinrich
That has to be a record of some kind for the fastest flip-flop by a candidate in the history of campaigning.
You have succeeded in self.
I will hold my standing ground here in the U.s.A.
I wish you wisdom. Great-Grandfather.
The ship has not begun to hit the sand. This will prove to be the greatest financial/social fiasco since 1929, brought to you by Cheney-Rove & Co. (Bush has never really been our President... that wire-in-the-debates-wearing-court-packing-2-time-election-stealing-in-his brother''s-state-of-florida-WMD-farce/lie-about-it-pretend-to-be-Christian-mongrel). And Amerika fairly dances with Death himself in the form of McMain-Palin and loves every minute of it while laughing at Tina Fey doing a S.P. imitation.
----
Just keep blaming president Bush for this. Even after reading that the root of this mess is the 1999 legislation referenced in this article (that would be at Clinton''s feet) and seeing nothing out of congress for the last two years (that would be when the Democrats took over).
Keep blaming president Bush.
Keep wasting time.
Keep ignoring that the root problem is an MIA government consisting of Republicans and Democrats that are both funded by special interests while the endless taxpayer piggy bank is left to pick up the pieces.
As long as you, the voting public, act like your party''s puppet blaming and hating the other side they''ll keep on spending your future while they live in mansions.
You think because you don''t own any stocks that you are immune to this mess (and shame on you if you are rooting for it). Everyone is affected by this.
Gramm-Leach-Bliley Financial Services Modernization Act, Pub. L. No. 106-102, 113 Stat. 1338 (November 12, 1999), is an Act of the United States Congress which repealed part of the Glass-Steagall Act, opening up competition among banks, securities companies and insurance companies. The Glass-Steagall
Act prohibited a bank from offering investment, commercial banking, and insurance services."
"The bills were introduced in the Senate by Phil Gramm (R-TX) and in the House of Representatives by James Leach (R-IA). The bills were passed by a 54-44 vote along party lines with Republican support in
the Senate and by a 343-86 vote in the House of Representatives.
Nov 4, 1999: After passing both the Senate and House the bill was moved to a conference committee to work out the differences between the Senate and House versions. The final bill resolving the differences was passed in the Senate 90-8-1 and in the House: 362-57-15. This veto proof legislation was signed into
law by President Bill Clinton on November 12, 1999."
I say Obama/Biden are right -- make the wealthy pay their fair share in taxes. Anyone over $250,000 should pay THEIR share instead of the working middle class paying their share and THEN some. It''s only fair. I wouldn''t say patriotic, but it is fair to have the wealthy politicians pay some of this back - after all, they started this mess. Give the working people a tax credit so we can get back on our feet after all this stock mess. My mutual funds will probably never recover. I don''t even want to look at my 401-K account. Ugh.
I think both parties have been on a deregulation of buisness binge for the last 15 years, and this is the fallout. Further, as Bloomberg states, part of the problem is that many of the gov''t regulatory agencies are not properly directed or funded to deal with modern commerce. While they made a horrible mistake taking out Glass-Steagal (I noticed you avoided naming Phil Gramms role in that), part of this may be just ''growing pains'' in dealing with a rapidly internationalizing economy.
However, just because commerce is globalizing, doesn''t let America off the hook for paying her debts. Our $10 trillion Reagan/Bush debt is 100% the fault of Republicans. You really can''t put any of that debt on Democrats, and is the primary reason I vote Democrat. The debt hobbles America''s role in international commerce and threatens to destroy it completely. THANKS Republicans!
With Bailouts, one postpone the 4th Great Depression for around the year 2018.
Advice to read "The Great Depression of 1990" by Ravi Batra.
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by wl7bzh
September 18, 2008 7:49 PM PDT
- You think because you don''''t own any stocks that you are immune to this mess (and shame on you if you are rooting for it). Everyone is affected by this.
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Reply to this comment
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See all 35 CommentsPosted by payasyougo at 09:26 AM : Sep 18, 2008
Maybe he''s not rooting for this so much as America regaining the character of self-denial instead of being self centered.
Decadent lifestyle has acquired minority status-anybody criticizing greed and immorality is accused of bigotry and hate mongering.
You want to live like animals guided by your base instincts and impulses? Then have the class to deal with the consequence without crying "Ima victim"