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Former Federal Reserve Chairman Paul Volcker yesterday (Sept. 23) ripped up the speech he was to deliver to the Chicago Fed, and blasted the financial system, as reported by the Wall Street Journal and Bloomberg. He said the financial system was "broken" and the mortgage system "absolutely broken." Investment banks have become "trading machines instead of investment banks," encroaching on territory of commercial banks, which then have reciprocated. The end result has been a system very hard to regulate. Central banks have become "maybe a little too infatuated with their skills and authority," said Volcker. He told Bloomberg, "It's going to take a long time to repair the basic disequilibrium of the economy."

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Comments

SurfPuppy619 Sept. 24, 2010 @ 1:46 p.m.

He's right, now what is the Congress going to do about it??

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Don Bauder Sept. 24, 2010 @ 4:30 p.m.

Response to post #1: Congress will do nothing. It's being paid by those who broke the system. Best, Don Bauder

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Visduh Sept. 24, 2010 @ 7:16 p.m.

Makes you feel really optimistic, doesn't it? The guy who built a solid foundation for economic growth, and who was running things during the much-maligned Reagan years, is telling us that the financial system is a mess. His successor, Greenapan, touted as an economic genius, stood aside while all these excesses ran rampant. Excuse me while I go slash my wrists. If he's right, we have little to look forward to.

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SurfPuppy619 Sept. 24, 2010 @ 8:18 p.m.

Congress will do nothing. It's being paid by those who broke the system.

A GOOD start would have been to let AIG, Goldman and the rest of the idiots that caused this meltdown to go BK-no bailout.

Same with GM and Chrysler.

Working middle class and the poor are being stuck with the socialized losses of these scammers.

A follow up would have been to throw the people who sold those F rated mortgage backed securities, CDO's and CDS's into the slammer for 20 years as a flaming sign post of what happens when you bring this country to it's knees with financial games.

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Don Bauder Sept. 25, 2010 @ 12:11 a.m.

Response to post #3: Volcker always believed in reasonable regulation. Achieving that today is much more difficult. He wants to go back to the years before financial deregulation. He's right. Back then, commercial banks were fiduciaries and investment banks speculated with their customers' money. Now moral hazard rears its ugly head all the time. Best, Don Bauder

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Don Bauder Sept. 25, 2010 @ 12:13 a.m.

Response to post#4: AIG should have been forced into BK, and some of its executives should have gone to the hoosegow. Best, Don Bauder

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WalshAURELIA Sept. 25, 2010 @ 1:55 a.m.

It's known that money can make us autonomous. But what to do when someone has no cash? The one way is to get the business loans or just auto loan.

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MURPHYJUNK Sept. 25, 2010 @ 8:44 a.m.

any one want to bet he was ripping up blank paper?

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Founder Sept. 25, 2010 @ 9:03 a.m.

The future holds even larger National debt, as our debt service will only continue to increase!

The only way out of our debt is to change the "game" by the overnight "sudden" invention a new currency that will make US dollars very cheap, we would then "pay off" our huge "US Dollar" debt with much less of the new money and again be "Free" to start all over again!

Think pennies on the US Dollar...

The way our Government keeps secrets, this has a very low probability of coming to fruition; but if it did, everyone in debt would win BIG and all those hoarding massive amounts of cash, would take it in the "Shorts"...

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Don Bauder Sept. 25, 2010 @ 10:08 a.m.

Response to post #7: I know what some people do when they have no cash: steal. I also know a lot who steal even though they may have billions in assets. Best, Don Bauder

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Don Bauder Sept. 25, 2010 @ 10:10 a.m.

Response to post #8: I'll take that bet. But I won't pay real money if I lose. Best, Don Bauder

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Don Bauder Sept. 25, 2010 @ 10:15 a.m.

Response to post #9: You're talking about a devaluation to combat inflation. Throughout history, that has been governments' escape route. Debtors win in inflation and savers lose. Best, Don Bauder

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Founder Sept. 25, 2010 @ 12:05 p.m.

Reply #12

I guess we could then say that "it" has begun; with the HUGE bailouts; those that gambled and lost, (BUT were well connected), came out better off, considering the rest of US now have much, much less...

I wonder what the new "money will look like, probably electronic digits, that way everything will be subject to Fed & State inspection/taxation except bartering...

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MsGrant Sept. 25, 2010 @ 2:11 p.m.

Looks like we need some make up sects.

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Founder Sept. 25, 2010 @ 3:21 p.m.

Reply #14 or friends in High places...

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Don Bauder Sept. 25, 2010 @ 6:05 p.m.

Response to post #13: I have no idea what the new money will look like. But I know there will be more of it. Best, Don Bauder

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Don Bauder Sept. 25, 2010 @ 6:07 p.m.

Response to post #14: It used to be more important to have sex in high places, not sects. Best, Don Bauder

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Don Bauder Sept. 25, 2010 @ 6:08 p.m.

Response to post #15: Yes, platonic relationships work, too. Best, Don Bauder

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Twister Sept. 27, 2010 @ 6:43 p.m.

Well, (as Ronnie would say), I don't know (truer words were never spoken) BUT while Don and SP are pretty much right, as a saver I'd rather have deflation--but MILD deflation. What scares me is that my SS will not keep up with inflation and my CONSERVATIVELY INVESTED deflated nest-egg (down 70% from the '08 high) will consign me to the streets, even though my shack is paid for ("they" will find some way to tax me out of it). Maybe I should invest in a bean field and Confederate dollars or Greenbacks so I can sell them to wealthy collectors. Oh, IRONY!

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Don Bauder Sept. 27, 2010 @ 11:41 p.m.

Response to post #19: Will they be called Greenspan Greenbacks? Best, Don Bauder

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Founder Sept. 28, 2010 @ 9:34 a.m.

Reply #19 I don't think traditional "safe" investments will weather this Fiscal storm; because we will not have the huge middle class to help out with the recovery as eager consumers!

Look toward investments like BEER as Bill Gates did when he bought a big position in Mexico's brewery and or rare earth metals, like China is doing, so they will control the World's supply which is used in high tech batteries...

I'm also looking for many people in "our" situation, to start "financial survival" communes where they "buy in" and then share housing, autos, gardens, skills and employment among themselves to make their Social Security & Savings money "go" farther; plus these may not even be located in the US because of the tax burden our government is about to levy upon US!

How to best position oneself for safely surviving the next 5 years will become the #1 topic of Public Discussions!

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Don Bauder Sept. 28, 2010 @ 2:37 p.m.

Response to post #21: Half of stock trading is computerized rapid-fire activity. Who needs the middle class? For that matter, who needs small investors? Best, Don Bauder

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