chakravyuha

• less refined carbohydrates
• lenty of live fermented food,
• substantial quantities of fats and organ meats
• as many different colored fruits as possible

In California 10% farms are producing 60% of all the food. A lot of small farms produce very little of the total food. I big chain like Whole Foods, which is supposedly sustainable, buys from a few big Organic vendors.

My list of the reasons for the financial crisis is as follows:

1. The Global Pool of Money – There was a global savings glut and the money was seeking the best returns to be found.
2. Investment Banks
3. Commercial Banks
4. Glass-Steagall Act (and it’s Repeal)
5. Community Re-Investment Act
6. Greenspan’s Put
7. The Housing Bubble and the Politics of Housing
8. Monetary Policy and Interest rates
9. The (Neo)liberalism ideology
10. Debt(Credit?) Instruments (and associated leveraging)
11. CDS
12. CDO
13. Hedge Funds
14. Compensation
15. Greed
16. Hubris
17. Tail Events
18. Regulation
19. Easy Credit (NINA/NINJA loans)
20. Changing nature from Private Partnership to Public Companies – Playing with other people’s money encourages more risk taking.
21. Fat tail events were not factored in.
22. The great moderation was not – it seems business cycles were never really tamed.

Barry Ritzholtz’s list from Bailout Nation (Chapter 19) goes something like this:

1. Federal Reserve Chairman Alan Greenspan
2. The Federal Reserve (in its role of setting monetary policy)
3. Senator Phil Gramm
4. Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings (rating agencies)
5. The Securities and Exchange Commission (SEC)
6. Mortgage originators and lending banks
7. Congress
8. The Federal Reserve again (in its role as bank regulator)
9. Borrowers and home buyers
10. The five biggest Wall Street firms (Bear Stearns, Lehman Brothers, Merrill Lynch,Morgan Stanley, and Goldman Sachs) and their CEOs
11. President George W. Bush
12. President Bill Clinton
13. President Ronald Reagan
14. Treasury Secretary Henry Paulson
15. Treasury Secretaries Robert Rubin and Lawrence Summers
16. FOMC Chief Ben Bernanke
17. Mortgage brokers
18. Appraisers (the dishonest ones)
19. Collateralized debt obligation (CDO) managers (who produced the junk)
20. Institutional investors (pensions, insurance firms, banks, etc.) for buying the junk
21. Office of the Comptroller of the Currency (OCC); Office of Thrift Supervision (OTS)
22. State regulatory agencies
23. Structured investment vehicles (SIVs)/hedge funds for buying the junk

• The great moderation – It has been wrongly assumed that aggregate volatility declined in the US economy and other developed economics in the OECD and business cycles were conquered.
• Economics started believing that we mastered the crafts of monetary policy or new tech changed the way firms respond to demand changes or supply or production opportunity.
• Note quite a softening of creative destruction. Finance if more available and economy is more dynamic ans so resources go more easily from firms with less opp to ones with more opp.
• Financial sector is better able to diversity idiosyncratic risks. Firms can better exploit their comparative advantage quite quickly.
• Labor and capital markets are so dynamic.
• WalMart epitomizes very effective use of technology. so it’s able to respond to shocks much better. They are respond to able to low/high demands in areas quick, flexible supplu chain, inventory control.
• beneficial role of technology.
• Monetary policy has become much wiser so it softens the impact of a variety of shocks.
• BUT, decline in aggregate demand.
• Nothing in social life is independent of human agency.
• Financial innovations leads to diversification benefits and reduction of idiosyncratic risks.
• Web of counter-party relations risks was not appreciated. Financial system of IOUs . If one set of IOUs failed the next set was also bought in trouble.
• We have diversified a lot of regular risks but system is fragile to real tail-event.
• Russ Roberts believes that the 25 years monetary policy success principles were left by Alan Greenspan.