Adam Tooze: Central bankers' hands were forced in 2010, the poor dears, they aren't the lords of easy money, no, they're its slaves, just like us

 Here, for The New York Times:

If you are worried about wealth inequality in the United States, then the solution is not to tighten monetary policy but to make structural changes to the country’s financial system, starting with the undergrowth of shadow banking. Serious taxation of wealth and capital gains would also push in the right direction.

It would no doubt help if onetime central bankers, rather than cycling in and out of private finance, spoke out seriously in favor of reform. They would be doing the public a service if they spelled out the way that their hands were forced by the current incestuous intertwining of public debt markets with hedge funds and the like. Ultimately, however, it is politics that must grasp the nettle of change.

In the current dispensation, it may be flattering for central bankers to be cast as maestros, but in practice they are less the lords of easy money than its functionaries.     

 

 

Central bankers cycle in and out of private finance raking in millions, Adam.

 

If anyone were serious about restructuring the country's financial system, the place to start would be by restoring the key missing feature of capitalism without which it doesn't really exist. It's called bankruptcy. 

Oliver Bullough for The Grauniad blames all the wealth inequality today on an invention of a Jewish banker

Siegmund George Warburg, here, whose invention destroyed the Bretton Woods system.

Except Bullough never mentions he's the descendant of a long line of Jewish bankers who originated in Venice:

One banker in particular was not prepared to tolerate this: Siegmund Warburg. Warburg was an outsider in the cosy world of the City. For one thing, he was German. For another, he hadn’t given up on the idea that a City banker’s job was to hustle for business. In 1962, Warburg learned from a friend at the World Bank that some $3bn was circulating outside the US – sloshing around and ready to be put to use. Warburg had been a banker in Germany in the 1920s and remembered arranging bond deals in foreign currencies. Why couldn’t his bankers do something similar again?

Robert Shiller blames housing bubbles on get rich quick flipper narratives, still completely misses the tax angle

Here, in The New York Times:

There is still no consensus on why the last housing boom and bust happened. That is troubling, because that violent housing cycle helped to produce the Great Recession and financial crisis of 2007 to 2009. We need to understand it all if we are going to be able to avoid ordeals like that in the future.

Ordinary Americans were suddenly able to make a lot of money by flipping their homes because of the tax law changes of 1997. Capital that was previously locked-up in housing by the rules of the New Deal until 1997 was suddenly unleashed to slosh around in the economy when lawmakers gave homeowners the right to avoid most capital gains on the sale of their homes as long as they lived in them only two years. Until 1997, if you didn't buy a more expensive home after you sold yours, you were exposed to a tax hit, unless you took the option of a once in a lifetime exclusion on the gain. The old arrangement had insured, along with the 30-year mortgage, that housing capital built up over a long period of time, creating forced savings for the middle class which could be safely liquidated in retirement without adversely affecting the housing market.

The Republican and Democrat geniuses who ran our government in 1997 changed all that, and within ten years the dang thing blew up. Yeah, I'm talking about you, Bill Clinton, and you, Newt Gingrich.

Too bad Robert Shiller still doesn't get it.

It would probably be unwise to turn back the tax clock now that the damage has been done, but the reinflation of the housing bubble after the crisis wasn't inevitable. The Fed's unprecedented zero interest rate policy has been responsible for that.

When the next housing crash comes, we'll probably not understand it either.

Meanwhile, the median sales price of homes in the aggregate has never been higher, or more unaffordable, and remains the primary driver of wealth inequality in America. 

Libertarian John Tamny displays the anti-intellectualism characteristic of the breed

Here in "The Beatles And Wealth Inequality: A Reminder That Education Is Irrelevant To Success".

It's a veritable cornucopia of wrong, sentimental tosh in pursuit of a thesis.

It ignores the fact that George Harrison went to a pretty good school in Liverpool. It doesn't understand that Ringo was prevented from making academic progress as a child by recurring severe illnesses. It is unaware that Ringo actually was punching a time clock at a day job when he became interested in the drums, and that though it was his life's work he didn't play when the band wasn't recording.

Tamny also makes a mountain out of the molehill of Ringo Starr's two-week hiatus from the Beatles in 1968, which supposedly showed the rest of the Beatles how much they needed him. They didn't. Ringo spent much of his time in studio playing cards while the others whacked out their tracks as the group headed for a breakup.

Tamny would have made a better case using Rush Limbaugh as his example. The man's made piles and piles of dough but routinely slaughters math, attacks college education and has a lazy mind.