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Steve Forbes : 1933 is Coming Again
Forbes Magazine ^ | March 3,2009 | Steve Forbes

Posted on 03/03/2009 7:34:49 AM PST by SeekAndFind

The financial crisis is reaching a climax. Either Washington will let the banking system go into cardiac arrest, or it will take measures to bring it back to life so it can vigorously function again. The frightening severity of the crisis and the political imperative not to let banks collapse the way they almost did in 1933 will force the Obama Administration to take the necessary actions.

--Get rid of mark-to-market accounting rules, which are unnecessarily destroying the balance sheets of banks and other financial institutions. For regulators and auditors to force banks to repeatedly write down the value of their regulatory capital based on an impaired market is an astonishing absurdity. Selling anything in a distressed market always leads to artificially low prices. If mark-to-market accounting had been in effect in the early 1990s, when we last had a financial crisis, most of the major commercial banks would have gone under. We'd have had another Great Depression. To appease those who think there is use in this kind of pricing of assets, include it in a footnote.

--Bring back the uptick rule for short sales, and demand that the SEC enforce regulations against naked short-selling.

--Have the Federal Reserve aggressively buy mortgage-backed securities from banks. This would trigger a mass of refinancing at low, fixed rates of 4.5% to 5%. Housing prices would move up, and housing sales would revive.

Nationalize banks? A horror. You can bet that would truly paralyze the flow of credit: Does anyone believe Washington can manage banks?

Sadly, in human affairs it is sometimes necessary for a crisis to reach an acute, mortal stage before effective action is taken.

(Excerpt) Read more at forbes.com ...


TOPICS: Business/Economy; Culture/Society; Editorial; News/Current Events
KEYWORDS: 1933; bho2009; bhoeconomy; depression; economy; forbes
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To: Reagan Man
President Obama could steal the tax issue once and for all from the GOP if he took up the flat tax.
Steve, you're dreaming.

Think you right. I suspect that beside the Income Tax, we'll get hit with a Fed sales tax on goods AND services. Once the states see that, they'll do the same. We'll be lucky to have two coppers to rub together.

41 posted on 03/03/2009 8:47:15 AM PST by Oatka ("A society of sheep must in time beget a government of wolves." –Bertrand de Jouvenel)
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To: SeekAndFind

Duh...

Where you been Forbsey?

I saw this coming before the election. I just didn’t think he’d pull it off this fast.


42 posted on 03/03/2009 8:48:56 AM PST by <1/1,000,000th%
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To: ari-freedom
who will regulate short selling? Barney frank? That’s the problem

Pick your poison. I don't trust either the crooks on Wall Street or the crooks in congress.


43 posted on 03/03/2009 8:53:09 AM PST by ding_dong_daddy_from_dumas (I want to "Buy American" but the only things for sale made in the USA are politicians)
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To: Hildy; nopardons
I still shake my head everyday in amazement that we’re here...and we let it get here....so quickly, without challenging anything and the people primarily responsible are the people telling me I’ve got to pay..while they don’t pay...

Grover Cleveland famously said "Though the people support the government; the government should not support the people." Think about what that means for a moment.

For over 40 years, regardless of political party, it has been the policy of our government to regulate & direct the economy in order to achieve what are considered desirable, noble even, social outcomes. Chief amongst these is the so-called "ownership society" which was championed by the immediately preceding administrations.

In a certain way, you really have to hand to the Wall St bankers - in true capitalist fashion, they delivered what the customer wanted. The only problem was that in this case, the customers were comprised of DC idealists who were using OUR money to back their grandiose plans for social equity.

Proving once again that 'no good deed goes unpunished', those who lived within their means and otherwise exhibited traditional conservative behavior are now being targeted to pick up the tab for those who couldn't quite manage their personal lives & finances.

Well, it's time we wake and recognize that the fight that's been brewing for quite awhile cannot be put off any longer. And as luck would have it, all the advantages happen to be on our side. You see, the ability of the central government to bail out and protect their electoral supporters rests solely on their ability to leverage the wealth of those who save & invest.

In other words, it's not about confiscation, either outright via 401(k) plans or indirectly through taxes, it's all about the federal government's ability to borrow & service the debt (interest). Once you realize that the entire house of cards is a confidence game ultimately backed by YOU, the good faith & credit of the so-called "solid citizen", then you see just how vulnerable .gov really is.

44 posted on 03/03/2009 8:59:17 AM PST by semantic
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To: SeekAndFind
Housing prices would move up, and housing sales would revive

I have been a fan of Steve Forbes for years, but he veers into short-bus territory here.

There is NO reason to want to sustain housing prices at the 2003-2005 levels that were astronomically high compared to incomes.

45 posted on 03/03/2009 9:01:21 AM PST by Notary Sojac
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To: SeekAndFind

Sadly, I think Forbes is right.

Start stocking up.


46 posted on 03/03/2009 9:04:28 AM PST by Salvation ( †With God all things are possible.†)
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To: VeniVidiVici
Sadly, in human affairs it is sometimes necessary for a crisis to reach an acute, mortal stage before effective action is taken.

Steve is mistakenly thinking that those in charge are mostly typical Americans who will do the right thing in the end. Sadly, this is not the case. What is happening now is exactly what they want to happen. They are devious. Lest you doubt this, take a look at who Obama chose as his Chief of Staff - one of the most childish, partisan hacks in D.C. This is going to get uglier.

47 posted on 03/03/2009 9:04:31 AM PST by Major Matt Mason (The Kenyan Keynesian will bankrupt this nation.)
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To: Dustbunny

It is a manufactured money crisis with nefarious motives...much akin to the manipulated food crises that the Sovit Union imposed on nations it wished to destroy and subjugate.

Wake up, America!


48 posted on 03/03/2009 9:05:43 AM PST by Palladin ("...the one with the big ears--he AIN'T my President!"...Etta James)
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To: ding_dong_daddy_from_dumas

trust yourself. if you can’t trust yourself then don’t get yourself in the market.


49 posted on 03/03/2009 9:06:33 AM PST by ari-freedom (Hail to the Dork!)
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To: Wyatt's Torch
the housing market will not begin to recover until 2011

Housing prices will bottom out when the last wave of ARM resets have worked their way through the system, I think you are right about that date.

But we will not see 2005 bubble prices again for another 20 years, unless America goes the Zimbabwe route.

50 posted on 03/03/2009 9:08:37 AM PST by Notary Sojac
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To: Reagan Man

“Steve, you’re dreaming. “

yes but it’s a way of saying “Republicans: Obama is passing up this opportunity. Take it!”


51 posted on 03/03/2009 9:11:07 AM PST by ari-freedom (Hail to the Dork!)
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To: ari-freedom
if you can’t trust yourself then don’t get yourself in the market.

Staying out of the market can also be a result of trusting oneself.

I trust myself so much that I took my money completely out of stocks 4 years ago.

52 posted on 03/03/2009 9:22:14 AM PST by ding_dong_daddy_from_dumas (I want to "Buy American" but the only things for sale made in the USA are politicians)
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To: ding_dong_daddy_from_dumas

oh I meant trusting your ability to handle the market.


53 posted on 03/03/2009 9:25:12 AM PST by ari-freedom (Hail to the Dork!)
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To: ari-freedom
oh I meant trusting your ability to handle the market.

I did "handle" the market by getting out and not losing half of that money. Warren Buffet's firm lost about 60%.

54 posted on 03/03/2009 9:34:26 AM PST by ding_dong_daddy_from_dumas (I want to "Buy American" but the only things for sale made in the USA are politicians)
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To: SeekAndFind

Do not restore the uptick rule. Investors have a right to profit in a down market as well as an up market.


55 posted on 03/03/2009 9:40:12 AM PST by upcountryhorseman (An old fashioned conservative)
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To: andy58-in-nh
Got enough food in the pantry? Bottled water? How about ammo? Not near enough to last us 4 years.
56 posted on 03/03/2009 9:57:36 AM PST by Dustbunny (Remember - Amer-ican still ends in - ican.)
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To: Palladin

Yep !!


57 posted on 03/03/2009 9:59:41 AM PST by Dustbunny (Remember - Amer-ican still ends in - ican.)
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To: ari-freedom

Not that I wouldn’t like to see it happen, but the idea of a flat tax is far-fetched. Some form of a progressive tax structure is here to stay for the foreseeable future. I think the best fiscal conservatives can hope for is that Obama keeps taxing us more and more. Such policy can only lead to a turnaround similar to the Reagan tax reductions/reforms of the 1980`s.


58 posted on 03/03/2009 10:06:03 AM PST by Reagan Man ("In this present crisis, government is not the solution to our problem; government is the problem.")
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To: throwback
I like Mr. Forbes, but I think he still is operating under the mistaken impression that Obama sees prosperity as a desirable goal. If Obama does, it's way down on the priority list. Rack and ruin are a small price to pay for one party permanent rule.

Obama got in with the backing of Wall Street. If he really wants "rack and ruin" to secure permanent one party rule, he's going to lose that backing and the next election.

59 posted on 03/03/2009 4:33:37 PM PST by x
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To: andy58-in-nh

“Consider for a moment that they’re not dumb, but have a purpose. It’s called “power”....”

Post.Of.The.Day .....

These folks waited...and yes they “waited” until The Patriot Act was firmly in place....they waited until they could “pull the plug” on the producers....they waited until they could judge a world ready leave Mugabe in power in Zimbabwe...might allow a fascimile in the USA...they aren’t leaving until a mess of us are ready, eager, and willing to drag them out.


60 posted on 03/03/2009 6:00:45 PM PST by mo
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