We have so far chosen to indebt our children for the sake of a system of faceless banks who we are too frightened to oppose.

yes, but as it turns out we didn’t indebt our children for “the sake of the banks” but indebted our children (quite reasonably in my view) by allowing government expenditure to rise during the recession the banks caused (higher welfare spending etc.) and allowing tax revenues to fall (linking taxes to income, profits) … where does your argument stand then?

If you really object so much to debt, you might some some friends at the Cato Institute. Although you could be arguing for much higher taxes across the board – that’s another way of “indebting our children”. In case you think we could fix things just by taxing the rich, read this

Another post from the Richard Murphy stable.

Exactly right, Luis.

The following statement is even more tendentious:
“Upon whose greatness we are told, our own shop soiled, moral mediocrity and guttering hopes depend.”

Who told us this and when?

“The first measures in people. It comes from an article in Stateline called “Food stamp rolls reach historic levels.””

You are aware that over the past decade there have been (at least) two expansions of eligibility for food stamps, yes?

Welfare benefit is extended to more people, more people claim welfare benefit is hardly news you know….

Well, yes Tim, but we don’t know how much the illustrated increase is due to that change and not other factors. If it illustrates an increase in people who would not be able to feed their families otherwise then surely there is a problem?

“but we don’t know how much the illustrated increase is due to that change and not other factors.”

Of course, so it’s incumbent upon those making the claim to go and find out.

Eyeballing that graph we’ve a 30 % increase in 08 to 10.

From a news piece almost at random:

“The state’s federally funded Food and Nutrition Services program, commonly called food stamps, is currently available to applicants whose gross income is less than 130 percent of the federal poverty level. It will change to gross income less than 200 percent of the poverty level for applications in July.

The change means the gross income limit will rise from $1,127 monthly for an individual to $1,805. For a family of four, it increases from $2,297 to $3,675.”

A 30-40 % increase in the income level at which you can claim food stamps.

Just at a first pass I’d go for an increase in eligibility as the major driving cause here.

“I believe we are coming to a moment when we must, each of us, decide and honestly admit which world view, which message, which graph, has the true measure of us. Which graph measures what really matters to us. We have to stand up for it. Because one of these graphs will shape what we are going to chose to cast aside, and for what, and who’s profit.”

Well, quite. More people are getting the welfare aid some think they should be getting more of.

Good, eh?

If this is right:

“The food stamp rules changed last year, allowing more people to receive them. As of November, applicants no longer had to declare their financial assets, such as a house, when applying. Now, income is the primary factor.

That rule change alone made about 70,000 more Minnesotans eligible, Sutton said. ”

Minnesota is 1/60 th of the US population. So those rule changes alone account for some 5 million (70,000x 60) of that 10 million rise. plus:

“Another rule change boosted participation. Before January 2009, said Sutton, adults without children were limited to three months of food stamps in any three-year period. That limit has since been removed. ”

Add the already mentioned rise in the percentage of the federal poverty line and I think we’ve explained pretty much all of it, don’t you think?

Luis: yes, but as it turns out we didn’t indebt our children for “the sake of the banks” but indebted our children (quite reasonably in my view) by allowing government expenditure to rise during the recession the banks caused

Given the fact that the banks haven’t learned, and ordinary people are picking up the tab for their stupidity – its arguable that the govt should have just let the banks collapse?

I was initially for bailing out the banks, but not if we go back to the status quo, which is what’s essentially happening.

Given the fact that the banks haven’t learned, and ordinary people are picking up the tab for their stupidity – its arguable that the govt should have just let the banks collapse?

I was initially for bailing out the banks, but not if we go back to the status quo, which is what’s essentially happening.

If you are worried about people “picking up the tab” for the bank’s stupidity, that suggests you would also be worried about people “picking up the tab” if we’d decided to let the banks go bust to teach them a lesson, with all the collateral damage to the real economy that would have done. We’ll never know what would have happened if the government had let RBS or HBOS go under, but my guess would be: much higher unemployment, a much larger deficit and a much longer recession. I think it would have looked like letting an economic nuclear bomb go off. I do not think it is “arguable that the govt should have just let the banks collapse”, especially if your concern is for the fate of ordinary people.

Everybody seems to be saying that reforms of the banking system won’t go far enough, although I am not sure what you base your opinion on that banks “haven’t learnt” or that we are “going back to the status quo”. Despite doing my best to keep up with developments – reading this kind of thing – I don’t feel like I know enough to say what banks have or haven’t learnt, or how different the system is going to look in the future.

What exactly haven’t banks learnt? Do you think they’re going to be stuffing their balance sheets with MBS again any time soon? Do you think we’re going to see the same shadow banking system emerge and the same reliance on short-term wholesale funding? Are we going to see leverage reach the same heights? Do you really feel you understand the determinants of systematic fragility well enough to understand how all the new regulations on their way are going to affect things? When you write what’s “essentially” happening is a return to the status quo, what is the essence you are talking about? Big bonuses?

I’d like to see more aggressive reform – hell, I’d like full blooded Limited Purpose Banking – I’m just making 2 points:

1. you’re being very hasty stating as fact the financial system is essentially unchanged
2. there’s no reason to ex-post regret bailing out the banks