#HARPER: THE ANGELIDES REPORT

 
On February 13, 2011, the Financial Crisis Inquiry Commission, known as the Angelides Commission, completed their one year mandate, and submitted a 500 page report to Congress.  That report is now a nationwide bestseller on both the New York Times and Washington Post list--and for good reason.  Don't be put off by the fact that this was a Congressionally-mandated investigation, or that a number of the Republican members of the commission issued dissenting reports.

For anyone interested in understanding the financial crisis of 2007-2008, and its ongoing manifestations, this is a worthwhile and highly intelligible document.  The essential conclusions of the Commission were that the crisis should have and could have been prevented; that there were many officials on Wall Street, in the Congress, and in the Federal regulatory agencies, including the Federal Reserve, who knew or should have known that the biggest financial bubble in modern history was about to blow.  The Commission's own published findings state the point in the most clear terms:   "The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done. If we accept this notion, it will happen again."

I would go one step further.  Not only will it happen again.  It is already happening again.  The actions taken by the Federal Reserve and Treasury Departments under successive administrations (G.W. Bush and Barack Obama) papered over the underlying causes of the financial meltdown of 2007-2008, made the "too big to fail" problem worse, and used taxpayers money to pour tens of trillions of dollars down a sink hole of non-performing leveraged debt, on the basis of an armageddon scare-story that the world would have come to an end if the big Wall Street banks and insurance companies were not bailed out at one hundred cents on the dollar.    

The Angelides Commission interviewed 700 people, during their yearlong investigation.  They held field hearings all across the United States.  They have now made much of that material available on their website (www.fcic.gov), and they have received a grant from Stanford University to conduct further research, albeit no longer under Congressional sponsorship. 

It is, in my humble opinion, impossible to comprehend the major developments taking place around the world at this moment, without a clear understanding of the root causes of the worst financial and economic crisis of our lifetimes.  The fact that at least $17 trillion has gone, so far, into the bailout of American, European and Japanese banks, and that Federal Reserve Chairman Ben Bernanke has kept the printing presses rolling non-stop (next month, Bernanke is likely to announce "QE3"--a Federal Reserve purchase of another $1 trillion in U.S. Treasuries from the Big Six Wall Street banks to keep them afloat), has caused a 40 percent devaluation of the U.S. Dollar, since the beginning of the crisis.  At least part of the reason for commodity inflation is this Dollar devaluation, since most commodities are pegged to the U.S. Dollar.

Angelides doesn't just take the problem back to the Summer of 2007, when the housing bubble burst.  He actually traces the entire history of the successive deregulations of the financial system, focusing particularly on the 1999 repeal of the Depression era Glass Steagall Act, which broke up the big Wall Street banks into separate commercial and brokerage operations, thus insulating taxpayers from bailing out purely speculative gambling losses by Wall Street biggies, and protecting commercial bank deposits, with the creation of the Federal Deposit Insurance Corporation (FDIC).  Glass Steagall was repealed in 1999.  President Clinton's then-Treasury Secretary Larry Summers and Alan Greenspan were two of the architects of the takedown of Glass Steagall.  Remember them?  There are many in Congress and even on Wall Street who believe that it is time to reinstate Glass Steagall and end the era of TBTF (too big to fail).

It is no surprise that questions have arisen since the events in Tunisia and Egypt, whether Bernanke's "quantitative easing" has contributed to the commodity inflation and to the unrest now sweeping the planet.  There is obviously no simple answer to that question, but the demeaning of the U.S. Dollar was certainly a factor.  The FCIC report does not try to water down or simplify the process, leading to the biggest financial fiasco in memory.  It spells out, step by step, all the errors, all the short-sighted greed-driven decisions, all the ways that bankers, rating agencies, hedge fund managers, real estate brokers, and elected officials ignored reality that was staring them in the face.  But it is remarkably well-written and gripping.  Not Tom Clancy, but you will not be bored.

I don't expect that everyone will read the report, and I don't expect that everyone will agree with the Angelides findings.  Nevertheless, it is an historic document.  Under other circumstances, with less partisan warfare in Congress, a full public airing, as was done in 1933-34 with the Pecora Commission (public hearings of the Senate Banking Committee), would have perhaps been preferable to a yearlong probe, largely conducted behind closed doors, culminating with a 500 page document.  But all of those shortcomings aside, I am stunned by something on practically every page of this report.  I hope I have sparked a few interested parties to read the report.  You will not regret the experience. 

Harper

Comments

[William R. Cumming]

Whether the report lives up to the standards of the PECORA Investigation post WALL STREET meltdown leading to the Depression the report IMO does pinpoint a number of factors leading to the 2008 financial collapse. I think it will stand the test of time but in an unfortunate way. The FRANK/DODD legislation fails to address most of the causes of the collapse. And of course because of FEDERAL RESERVE secrecy few know exactly how much the FED laid out to save its constituents--specifically the BOND GHOULS and the FIRE sector generally. FIRE =Finance, Insurance, and Real Estate. We cannot survive as a Rentier nation.

[jon]

Thank you for that review and analysis, Harper. I would agree that the autopsy does identify the majority of the problems leading to the bubble and crash, and for the persistency of the underlying mechanisms of the crash seeming to gather strength to repeat the process once again.

But I disagree strenuously with your characterization of the bailout. Most of that money has been repaid with interest, some of it ahead of schedule. Without the bailout and stimulus projects we may easily have seen unemployment peak fifty percent higher than what occurred.

We can agree that much of the bailout funds were poorly applied in poorly conceived programs which provided the public with exceptional risk and limited public benefits. By contrast, many financial, insurance and rating firms were fully protected; those responsible for failures of oversight and strategy were retained and provided with lordly bonuses, rather than being summarily fired and sued for malfeasance; and investment houses were permitted to become banks and further consolidate and mix financial functions. No matter how much we may not like the particulars of the crisis and the bailout, steps had to be taken quickly and with large sums to avoid further calamity.

The dollar was somewhat overvalued before the crash, and it is probably a bit undervalued now. A correction in currencies was inevitable and continues to play out. However, the discounting of the dollar rightfully makes our imports more expensive and our exports more affordable, helping to bring balance of payments into line.

What is telling, after all of this bailout and support for the economy, is that interest and inflation rates remain so low - nearly historic lows. Also telling is that unemployment remains persistently high, well after every other contraction since the Great Depression had rduced unemployment and had seen economic productivity surpass pre-crash levels.

The galling failure of Obama and his economic team was to not have implemented a stimulus and investment plan early that should have been about three to four times the size of the finance and transportation package made. If that had been done, we might be looking at an unemployment rate closer to seven percent now, and with more funds circulating there would be more economic activity and more taxes being collected. Many of the austerity arguments we are now having would be unnecessary. Some public executions of bankers, bond rating executives, and hedge fund managers might also have set a properly corrective tone for rational financial practices.

[Jake]

America is Broke

http://usawatchdog.com/national-debt-america-is-broke/

America Needs to Stop The Lies and The Liars

http://www.senseoncents.com/2011/02/america-need-to-stop-the-lies-and-the-liars/

If we keep this crap up, we will not have much of a Republic left!

[ex-PFC Chuck]

I've come to regard Yves Smith, proprietor of the Naked Capitalism blog and author of Econned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism, as the most insightful observer of the financial scene out there. , especially, has been widely praised as the best explanation so far on the details and causes of the meltdown. She is not very impressed with the FCIC report:

In common with other accounts of the financial crisis, the Financial Crisis Inquiry Commission report notes that mortgage underwriting standards were abandoned, allowing many more loans to be made. It blames the regulators for not standing pat while this occurred. However, the report fails to ask, let alone answer, why standards were abandoned.

In our view, blaming the regulators is a weak argument.

A much more sensible explanation can be found by asking: what were the financial incentives for such poorly underwritten loans? Why would “the market” want bad loans?

. . .

The obvious answer is that good loans did not generate hugely excessive bonuses, but bad loans did.

What happened is that the benefits for originating bad loans exceeded the cost of these negative consequences – someone was paying enough more for bad loans to overwhelm the normal economic incentives to resist such bad underwriting. [emphasis in original]

Yves offers more specifics in her post.

[ex-PFC Chuck]

Last sentence of the first paragraph the above comment should begin:

Econned, especially, has been widely praised . . .

[William R. Cumming]

Never confuse the TARP with FED operations. They were and are separate. And by the way the FED has never understood either the HOUSING SECTOR of the economy or the ENERGY sector.
The exclusion of food and energy from the core CPI is also misfeasance by the US government.

[HJFJR]

Pat,

Based on your recommendation I will endeavor to read the report. A couple of observations about the financial crisis.

First, back in the 1970's I was having a conversation with my great Uncle George, who was a conservative midwestern republican (of the old school) who was the President of a small town bank in Ohio for fifty years. In that capacity he lived through at least two depressions and a number of recessions. I asked him in his opinion what was the cause of the Great Depression. His answer surprised me, but after the events of the last couple years I think it is spot on. His response was "that on the whole bankers are stupid."

The second point I would make, is the repeal of the Glass-Steagall Act was a major cause of the problems, for it broke down the wall of separation between equity banking such as Goldman-Sachs and Commercial Banking such as Bank of America. Carter Glass, who was the major author of that legislation was suspicious of equity banks. He was also a leading force in the passing of the Federal Reserve Act. While he would be described as a Jeffersonian small "d" democrat he believed that one of the proper functions of the Federal Government was the regulation and oversight over the banking industry. He had personally witnesses the results of unregulated banking and the lack of separation between equity and commercial banking in his years as the Editor of the Lynchburg News and Advance. Glass realized that without someone watching the bastards they would steal their customers blind.

Deregulation sounds good, but in some areas it is best not to trust human nature.

[different clue]

(I still haven't solved a lot of my computer access problems. Someone more diligent than I would have done so by now. So my comment will be lunch-break short).

ex-PFC Chuck and William R. Cumming both beat me to a couple of things. One is that Yves Smith at Naked Capitalism has been writing very detailed material on the financial events. She has especially been looking very hard and with fine detail on the emerging story
of outright fraudulent loans
and outright lawless handling of loan documents and their chains-of-custody leading to the waves of outlaw fraudulent foreclosures today. Some of her commenters have been sending in material as detailed on that subject as what David Habbakuk writes on his subjects. Photostatted raw legal documents are included where relevant. Yves Smith feels that if enough homeowers and State Attorneys General bring enough cases against the relevant black hat players up and down the fraudloan fraudclosure chain, that will be a slow motion drip drip drip Pecora Hearings type of event. Also, the TARP lendings and the Fed Window and other orifice lendings were/are two different programs. (Also, the forced march bankruptcy of GM and Chrysler was different than the strings-free 100 per cent bailout of the black hat megabanks, even within the TARP sphere).

For several years a financial analyst named Doug Noland who claims some Austrian School affinities has been writing articles about the rolling credit-fueled asset and market bubbles called Credit Bubble Bulletin. These articles were archived at Prudent Bear until Prudent Bear stopped maintaining its archives over a few months old.
http://www.prudentbear.com/index.php/commentary/creditbubblebulletin

Another very intriguing article was written in March of 2009 by a blogger named Engineer-Poet whose major concern is energy efficiency engineering. But the financial meltdown caught his attention so he wrote a post called Washington Bunraku Theater. First of all, with all the people describing things as "kabuki theater", he is the only writer anywhere whom I have seen referrence "bunraku theater". Second, he raises some very intriguing questions about where the money went, who got it, who has it, and why the government has been working so very hard with such overzealous fanatic intent to destroy the footprints and the evidence in order to protect the current holders of the money. He also suggests a way to get the money back, if the government can be tortured into making the effort. Here is the link.
http://ergosphere.blogspot.com/2009/03/washington-bunraku-theater.html

Finally, we might begin thinking about the difference between "money" and wealth. I often buy lots of canned food for "money" when it comes on sale. Then I eat it down over time. I have noticed that Wall Street, for all its power, has not been able to suck a single one of my sardines out through the side of a single one of my cans. Perhaps there is a lesson in that.

[Jackie]

HJFJR,
I think your great Uncle was on to something. I read a book about the depression and the dust bowl. The bankers, at the time, were busy using the depositors money for speculation on Wall Street. There was no FDIC or Glass-Stegall act. The bankers were just speculating on their depositors money. The story didn't turn out well for all involved.

[William R. Cumming]

I am sure that all this blog's readers have heard the term "asset stripper" referring to corporate raiders that buy healthy corporations and break them up for sale and then of course go on to the next victim. Various famous ones have existed over time. Carl Ichan e.g. and many others. It was one of the reasons the so-called Golden Parachute was invented. What you really have going on is that the long-term assets and fundamental strength of the USA is being stripped for short term gain and the profits often going off-shore where they will not be taxed and will not be reinvested in the nation's needs. This has been going on since about 1981. Draw your own conclusions.
And what I should have made clear is that the Financial Crisis Inquiry Committee has not and did not and will not address issues of the Federal Reserves activities. Do you know who actually owns the FED? Have you heard the phrase the Shearing of the Sheeple?

Can government by the people, for the people long endure?

[confusedponderer]

HJFJR

Deregulation sounds good, but in some areas it is best not to trust human nature.

I agree with that.

The problem in real life is that economic neo-Liberal and Republican ideologues alike have adopted as a self serving article of faith that the Efficient Market exists in a dimension of its own, decoupled from human nature, and that with its invisible hand it self-regulates without outside intervention. Nonsense of course, but there we are.

I think Bruce Scott has it right when he says that Capitalism isn't just the free market but a system of governance that necessarily includes someone being the referee in the the great economic match - i.e. Capitalism is a system where the government exercises oversight, enforces market rules and imposes sanctions for misconduct.

There have not been any meaningful sanctions for the miscreants who concocted the current economic crisis. Instead, they have been richly rewarded.

In that regard politicians championing the 'Holy Harket über alles' are asleep at the wheel.

[rjj]

@Mr. ponderer: "Market exists in a dimension of its own, decoupled from human nature, and that with its invisible hand it self-regulates without outside intervention."

Too bad The Western [movie] went out of fashion just as market anarchy was being promoted as a great good.

[Harper]

I greatly appreciate the comments posted so far re. the Angelides Commission report and broader insights into the general economic and financial malaise. Clearly there is a broad consensus among almost all those who have posted so far that excessive deregulation was a big mistake. I, too, frequently read Yves Smith's commentaries, and I must say, in this case, that she may not have read the full FCIC report, because the document holds Greenspan and Bernanke--and the Fed--heavily responsible for the fiasco. The Commission was explicitly NOT mandated to make recommendations, so all they do is provide a summary Conclusions section, before the entire indepth 500+ page report. Their website is now up, and has posted the MP3s of 700 interviews.

I agree with Jon that something had to be done, back in 2007 and 2008 when the entire system was on the brink of meltdown. I just happen to believe that the measures taken were ill-conceived, especially TARP and the other bailouts. Re. the separation of TARP from the Fed actions cited by William Cummings, I can only cite the Senate testimony last summer by Neil Barofsky, the SIG TARP (Special Inspector General of the TARP program). When asked to summarize the status of the $700 billion bailout, Barofsky replied that he has oversight over $23.7 trillion in bailout, not just the $700 billion authorized by the Congress under TARP. He produced a list of various Fed and Treasury special windows, and other Congressionally enacted bailout funds, which all totaled $23.7 trillion. True, banks are making record-breaking profits again and have paid back much of the TARP. But back in 2007, I would have preferred immediate action, as FDR took in his first days in office in March 1933, to audit the banks (not the coverup "stress tests") and separate out the legitimate commercial debts from the strictly leveraged gambling debts. Remember, staff economists at the Fed opposed the $186 billion bailout of AIG, arguing that it did not pose systemic risk. So there was even a dispute over that action. Had there been an immediate move, in September 2007, to reinstate Glass Steagall and apply those standards to the banking system, we would have separated out legitimate banking debts from the leveraged speculation. On the stimulus, I agree wholeheartedly that it was too small, and that again, an FDR approach of massive capital investment in job-creating infrastructure projects (God knows we need them) would have nipped the unemployment crisis in the bud, and produced an expanding, rather than contracting revenue stream, to finance a far more manageable Federal debt situation. I submit that there are many valuable lessons to be learned from past successes in dealing with similar crises, brought on by deregulation and excessive speculation. Both FDR and Eisenhower did some amazing things with properly targeted Federal investment, from TVA, to the National Defense Highway Act.

[GulfCoastLaddie]

I haven't read the report yet but I'm somewhat amused at all the criticism of Bernanke. It seems to me he is in a difficult spot and is doing what he can in the face of policy makers making the same mistakes they have in the past.

1. With oil being priced in dollars the dollar is the defacto reserve currency. Were this not the case the dollar would have depreciated long ago. If it takes a QE2, QE3 or more to have the dollar drop to the proper level why is this considered bad by so many?

2. If it is politically impossible to raise tariffs against slave wage nations (let's face it, those nations have a comparative advantage in nothing but low wages) then it will be impossible to ever bring any manufacturing back to this country without a drop in the value of the dollar.

3. With no manufacturing how does anyone propose we put all these people back to work? Is a drop in the dollar worse than an extended level of unemployment/underemployment at the 20% level? How long could the country maintain this level of capacity underutilization before the top blows?

4. Although some inflation is the result of quantitive easing it's clearly the case that the Fed is attempting to keep asset prices from further devaluations. Is some level of inflation preferable to the government having to come in and take over all the banks when they all fail due to loan asset values on their books that are much, much higher than the value of the assets themselves?

5. Bernanke essentially warned the electorate before the election that if they engaged in further efforts to reduce aggregate demand by electing budget cutters and tea party types to office that he would have no choice but to engage in further easing. Should the electorate have taken his warnings more seriously and given that they didn't doesn't he have a responsibilty to attempt to alleviate further asset price deflation by further declines in aggregate demand?

It seems to me there are a lot more actors in this drama who are acting in far more irresponsible ways than Bernanke.

[William R. Cumming]

Thanks Harper and defer to your analysis. One point however is not sure what you point to that SIGTARP did with respect to at least $17 trillion being furnished by the FED to even now continue to bail out US, EU and Japanese banks? Can you point to some specific discussion or analyis that is useful for interested persons?

[vermogensbeheerder]

It was such an astonishing article. An alteration in legal tender was predictable and prolongs to play out. Still, the reduction of the dollar lawfully makes our trade in more luxurious and our exports more reasonable, helping to convey stability of expenditure into line.

[Norman Rogers]

America is not broke. America is suffering the effects of a deep recession. Put people back to work and watch the economy grow itself out of whatever sort of "crisis" we are in.

I hate to break it to you, but all of this talk of "austerity" is useless in the face of economic reality. It's like the story of the man who has a booming hot dog stand. Someone walks up and says, 'did you hear? No one is going to buy hot dogs because the plant might shut down.' So, the man panics and sets his hot dog stand on fire to collect the insurance so he can leave town. The owner of the plant looks out and sees no more hot dog stand. He thinks, 'maybe there's a recession coming on.' So, he calls corporate and says, 'is there a recession?' and someone at corporate says, 'I don't know. Maybe. Should we plan for one?' And so they decide to shut down the plant just in case there's a recession.

Economic downturns are the product, more or less, of weak-willed men who panic in the face of adversity. If you make up your mind that you will persevere and make hay out of everyone else's bad luck, you'll never go out of business (unless what you make is crap).

Follow the German method--never, ever make crap.

[Charles I]

Norman Rogers, China is this very moment flooding Africa with cheap electronic crap, and consumer knockoffs that are aimed at the equivalent of an emerging middle class - of impoverished day workers who live in megaslums - with satellites.

They represent a tremendous opportunity perhaps more felicitously cultivated by the more affordable and hence more amenable to the local economic standard Chinese Method.

I was at my buddy the dentists today, flipping thru his audiophile porno, there were stereo cables there, $8,000.00 a pair, couldn't beleive it. Never mind he said, there's $80,000.00 cables.

Bet they sell a lot of those.

On the other hand, The Dollar Store just floated an IPO on the TSX. Raised $300 million for the concept of those caverns of, er, Chinese junk.

Exactly what is America going to manufacture and sell abroad out of your ratio of perseverance and bad luck?, a zero sum game paradigm I think, and the game is afoot.

[Norman Rogers]

Charles I:

China is this very moment flooding Africa with cheap electronic crap, and consumer knockoffs that are aimed at the equivalent of an emerging middle class - of impoverished day workers who live in megaslums - with satellites.

You have excellent points and I will respond as respectfully as possible. You're equating real economic power with making crap? How does China take over the world's economy by making crap? The VSAT is ubiquitous. The VSAT is a solution for poor infrastructure. It doesn't really mean much beyond that.

They represent a tremendous opportunity perhaps more felicitously cultivated by the more affordable and hence more amenable to the local economic standard Chinese Method.

Do you see much evidence where people in India, Africa, Central America, et al, have abandoned their own culture and are now living like Chinese slum peasants?

I was at my buddy the dentists today, flipping thru his audiophile porno, there were stereo cables there, $8,000.00 a pair, couldn't beleive it. Never mind he said, there's $80,000.00 cables.

Bet they sell a lot of those.

Well, come to Germany, my friend. I'll take you to my Audi dealership and you can have a look at the R8 Spyder, which starts at 175,000 euros. And, yes. They do sell a lot of those. If you have the money, you buy what you like. What does that have to do with the price of tea in China?

On the other hand, The Dollar Store just floated an IPO on the TSX. Raised $300 million for the concept of those caverns of, er, Chinese junk.

The Dollar Store is a unique phenomenon. It is a retail establishment that fills a minor need for a consumer. It does not replace the grocery store, the electronics store, the clothing store, etc., but it does strip away some of the low income spending that might have gone for products at those establishments. Who is getting rich from their Dollar Store franchise? Sales might be good, but everything you're selling is, of course, crap. What's the long term view of that?

Exactly what is America going to manufacture and sell abroad out of your ratio of perseverance and bad luck?, a zero sum game paradigm I think, and the game is afoot.

Again, here in Germany, Fords are plentiful. In the land of the Mercedes, the BMW, the Audi, the Opel, and the Volkswagen, there are numerous Fords on the road. Sprinkled in there are the Chevys, the Jeeps, the Toyotas. Oh, and then the cars made by the Austrians, Italians and French. Oddly enough, not many Hondas. Beyond cars, there are numerous products that demonstrate the reach of American business (American-created video games, Apple products, HP has a huge presence here, and the ever-present creep of English into German culture. Clearly, someone wants an American product. Americans can sell themselves, easily, overseas. American soft power, i.e., the culture at large, is still king. What Americans need to do is, they need to quit whining, quit eating crap, and start making things that people want to buy. Cut regulations for new small business manufacturing start ups and give those businesses tax incentives and cut-rate health insurance.

Whenever I hear people say that America is broke, I say, "what about small businesses?" We need policies that unleash small business growth. What will follow a boom in that sector is real economic growth. And, with growth, comes more revenue for the cash-strapped state and local governments.

[William R. Cumming]

Charles I! Be careful. The border between CANADA and US is still largely open.
My dad was born in Lethbridge Alberta while my grand dad was chief engineer for Canadian Bell! Maybe I can get instant citizenship.

But of course any invasion of Canada should have as one of its objectives to set Quebec free so that at least N.American has some civilization, great places to eat, beautiful ones parading the streets of its cities and great recreation.

Being facetious of course, or am I?

[Harper]

SIG TARP has filed quarterly reports since the outset, and they are posted on the website and well worth reading. Barofsky is an honest guy, and has been warning that the bailout has failed to solve the too big to fail problem and has, in fact, made it worse, saddling taxpayers with impossible debts, that have in turn created the mandate for austerity as the only solution. Between the bailout and the Iraq and Afghan wars, the U.S. Federal debt has doubled. And now the mantra is that taxpayers have to belt tighten. Remember that Bush cut taxes during two wars, an unprecedented act of stupidity that contribued greatly to the current mess. And with Summers and Geithner, Obama has done nothing really to change course. Barofsky's mandate is limited as an IG, but he has been a good sounding board, and his actions have been now mirrored in the Angelides report. I believe Barofsky was interviewed by the FCIC and the MP3 is now posted on the FCIC website. Barofsky is resigning from SIG TARP in March, and I hope he will be a loud voice for a policy change. I would also suggest following the recent statements by Thomas Hoenig, the President of the Kansas City Federal Reserve Bank, the loudest dissident against Bernanke's printing press operations. He was recently profiled in TIME magazine. There is now a faction inside the Fed that is pushing back against Bernanke, which includes Hoenig (mandatory retirement in October), Richard Fisher of the Dallas Fed, and four or five other regional presidents. Hope this is helpful response to William R. Cummings posting.

[Fred]

The Dollar Store is simply a replay of Walmart. Outsource the manufacture of low end retail items to China and sell in low end stip malls with low overhead. The only thing missing is the expensive waving of the American flag and glossy ad campaigns.

"We need policies that unleash small business growth."

Really? I've been hearing this since before Reagan. How does this replace the middle class in the US? How many thousands of small businesses are needed to replace one GM?

What is the multiplier effect of a small business wage? How does that compare to the manufacturing wages that were lost over the last decade of tax cut stimualted growth?

[Charles I]

Norman, how much of that stuff is manufactured in the United States, how much of that pie do American workers get,and how much profit is taxed or repatriated to the U.S.?

[Norman Rogers]

Fred,

"Really? I've been hearing this since before Reagan. How does this replace the middle class in the US? How many thousands of small businesses are needed to replace one GM?

"What is the multiplier effect of a small business wage? How does that compare to the manufacturing wages that were lost over the last decade of tax cut stimualted growth?"

Why would you "replace" GM when there are already a vast number of small businesses that work as vendors, suppliers and in conjunction with GM? How'd you like to be the guy who has an idea as to how to make a better rear view mirror for GM? Start your business, make your product, and then get in there and fight for your share of the market. This is where innovation and growth happens.

Small businesses pay excellent wages if they're allowed to compete. What's killing them are the draconian prices on health care. HCR should have focused on making health insurance affordable for small businesses.

Small businesses, by the way, that enter the manufacturing sector, should be given tax incentives to expand and grow. If they can then, in turn, pay decent wages, all the better.

I preach no panacea or utopia. I just wish there was more focus on improving the chances for small businesses in this country.

[William R. Cumming]

Thanks Harper and will be interesting to see what Barofsky's next job is in fact.