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Volcker: American ‘Lack of Urgency’ Will Cripple Us

Posted by Larry Doyle on May 19, 2010 11:30 AM |

Paul Volcker

We’re different, right? The economic problems in Greece and other nations within the EU are their problems and not ours. Really? In my opinion, Americans are far too complacent regarding our economic problems. We shouldn’t be.

Will the economic, political, and civil waves of unrest rolling across Europe come ashore here in America? It is only a matter of time unless those in Washington charged with addressing the underlying issues take swift action. I have seen zero inclination and political will to do just that. Our Washington elite are so used to feeding at the trough that they would not know how to pull themselves away. How is America responding to these fat pigs?

Last night’s elections in PA, AK, and KY are further evidence of the anti-incumbent, pro-Tea Party political wave sweeping our country.

Will Washington incumbents ever listen? They have no choice, as they will continue to be thrown out on their ass or preemptively leave of their own accord having stuffed their coffers with campaign funds and lobbying dollars. True public service and public servants have been corrupted by the political process. Where are our true statesmen?

I regard Paul Volcker as one of the few true statesmen in our country today. Volcker is sending a strong warning signal to our nation. Will we listen? What is Volcker saying? Bloomberg highlights Volcker’s warnings in reporting, Volcker Says Time Is Running Out for U.S. to Tackle Fiscal Woes:

Former Federal Reserve Chairman Paul Volcker, a top outside adviser to President Barack Obama, said time is “growing short” for the U.S. to address problems ranging from its budget deficit to Social Security obligations.

“We better get started,” the 82-year-old former central banker said in a speech yesterday in Stanford, California. “Today’s concerns may soon become tomorrow’s existential crises.”

In today’s economy and today’s markets, years go by like weeks so tomorrow will be here all too soon.

“Little has happened to allay my concerns” raised five years ago that “dangerous and intractable” problems were rising in the U.S., said Volcker, chairman of the president’s Economic Recovery Advisory Board.

“Intractable not just because of the combination of complicated issues, but because there seemed to be so little willingness or capacity to do much about it,” he said during a dinner at the Stanford Institute for Economic Policy Research.

That willingness and capacity is a direct shot at the incestuous and corrupting nature of our political-economic system. The civil unrest in Greece is directed at that same dynamic. Don’t think it can’t happen here. The Tea Party movement is a direct result of the American public’s anxiety on this front. While the media and political elites from both sides of the aisle would like to marginalize the Tea Party, they miss the big picture and what Americans are saying.

Volcker said in an interview yesterday it will take “years” to restore economic balance in Europe following the debt crisis. European Central Bank President Jean-Claude Trichet has been “particularly effective in maintaining the credibility of the euro,” he told Tom Keene on Bloomberg Radio.

Years? As in the Japanese style approach to dealing with excessive debt? Yes, exactly that.

“In the United States, we don’t seem to me to share the same sense of urgency” as countries such as Ireland, Volcker said in his speech. “The time we have is growing short” and “there are serious questions, most immediately about the sustainability of our commitment to growing entitlement programs.”

Americans lulled into a false sense of security by a market inflated by borrowed funds provided by Uncle Sam should be exceptionally careful. They should also wake up to the underlying issues as highlighted by Volcker.

Any thoughts that participants in the financial community might have had that conditions were returning to normal should by now be shattered,” he said. “We are left with some very large questions: questions of understanding what happened, questions of what to do about it, and ultimately questions of political possibilities.”

I see little inclination by those in Washington or on Wall Street to truly address these questions with the needed degree of seriousness and urgency.

As a result, the future pain will be that much worse.

LD

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  • phil trupp

    Are Americans truly lulled into a false sense of security? Or are they like deer caught in the headlights? Given the political and economic chaos, beamed at citizens 24/7, I’m finding a third option: confusion and fear.

    The political parties have moved to the extremes. The economy seems to be a tug of war between Wall Street and Washington, and those caught in the middle are angry– rightly so. Americans look to political leaders for guidance. In return they are fed hollow party talking points, left and right. We look to Wall Street for integrity and solidity, for true capitalism, and to our dismay we are force-fed greed, stupidity, monopoly and crime.

    Volker makes good points. But what about a few cogent answers? He certainly has a few. I met Volker years ago, when he was still fully active in government. He was impressive; forthright> Most of all, he was courageous. He had runaway inflation to deal with, and he made tough, proper decisions.

    He still makes pragmatic sense, especially when it comes to reviving Glass-Steagall. But with so much societal churning, so much raucous politicking in Washington and ruthless criminality infecting the economic scene, Volker appears a bit helpless and a little lost.

    How many of today’s politicians and money boys take Volker seriously? After all, the President of the United States lauds him in public and shamefully dismisses his wisdom in private. Volker should know today’s White House is not a friendly place for his brand of pragmatism.

    America certainly could use the steady hand of Paul Volker. But first we need to cut through the noise and confusion and fear. Until we steady ourselves and return to a common decency, we will (unfortunately) remain passengers on a ship of fools. And Paul Volker knows better than to be its captain.

    • LD

      Phil,

      GREAT points. Thanks for your wisdom and sage advice!!

  • Mike

    If anyone cares to Wikipedia “Lost Decade (Japan)” you will see that it is just like reading about what’s going on now. In fact it’s a bit scary how similar they are and still not much is being done to prevent it.

    Pretty much every developed nation is in debt now, is there any real solution? I think the ‘reset’ button is going to be hit eventually, and likely within the next 5 years. To what result? Lord knows, but may he see us through it.

  • coe

    LD – When I was younger and my clunker car didn’t start, I recall one of my more brilliant moments was to go back in the house, read the paper, grab a glass of juice, then come out and try it again, and presume my denial would prove the cure – only to find that my battery had been stolen! I think Phil’s read is pretty accurate and scary – but I don’t happen to think the public as a whole is really filled with confusion and fear…I think we are at the same time woefully unable to grasp the incredible complexities of political and economic global crosscurrents, and most importantly, we are in not-so-benign denial, and really believe that some invisible hand will bring back the good old days because, after all, we are America. Talk about lack of urgency! Our very own post-WWII generation has benefited, on balance, from a lengthy era of peace and prosperity, better educations, and viable, no extraordinary job and career opportunities – i.e. a higher standard of living than that of our parents…somewhere in this process over the past 50-60 years (and probably within the past two decades), value systems, ethics, and dare I say morality have moved in dangerous directions, sense of self entitlement trumped that of community, and in numbers and ways that are costing us dearly, responsible leadership definitely fled the scene of the crime. Pick a topic – financial or social – and we find ourselves at each others’ throats – taxes, immigration, education, global warming, natural disasters, the Euro-zone, municipal debt, housing policy, regulation, internet networking, politics, war, terrorism, religion, social security, healthcare – and each topic is more complex and global and intertwined than ever before.

    I also recall hearing mayor Michael Bloomberg once say on a radio program that in a city the size of New York, there are over 1500 documented moments of crises every day – and those are only the ones that flare up visibly and/or are reported. His point was that if he could direct the various city departments to tackle just a couple of dozen, then that was a pretty good day! The place is fundamentally ungovernable, the numbers too large, the problems both simple, complex, and, ultimately quite intractable. Take this analogy up several notches for America as a whole, and even moreso when extended to Europe, Africa, the Middle East, Asia, and Central and South America (no disrespect to Australia or the Poles intended!).

    So where does this stream of consciousness lead me. People need to draw from within and act responsibly and even courageously as individuals. We desperately need good leadership, and we will follow that leadership into a field of fire. We need to circle the wagons, acknowledge the obvious, avoid the seduction of denial, and start to address these issues toot sweet…Volcker is simply keeping it real…we should listen to him and get busy…

    • LD

      Well said!! I concur.

      Grab the gear, down the pole, onto the truck and away we go!!






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