Federal Reserve Chairman, Ben Bernanke, has sent the Congress a message. “We use our regulatory authority over banks to regulate the economy.” So hands off! (My words, not his, though that is what he is implying.) As Congress begins to take up financial reform, Senate Chairman Chris Dodd has back-peddle some over the past few months. The first draft for a reform bill back in November would have removed the Fed’s regulatory authority over banks. The current version now still allows the Fed some oversight over about 1,400 of the largest banks and holding companies. Apparently, that still is not good enough for Chairman Bernanke.

All this takes place as former Fed Chairman, Alan Greenspan, is testifying on Capitol Hill. He is still sticking to his story that nobody could have foreseen the financial crisis (although many did, read Michael Burry’s account). Greenspan is also warning that a future crisis is likely and will involve financial products “which no one has heard of before, and which no one can forecast today.” (source) He’s half right, another crisis in inevitable, but he’s dead wrong that nobody can forecast it.

Yesterday, I wrote about Matt Taibbi’s article on the financial crisis facing Jackson County, Alabama. The same story is being played out across America, and the world, for that matter! Detroit, Michigan is another classic example. I’ll spare the gory details that you may read in The Michigan Chronicle, but it is the same set-up. A community needs cash, borrows under dubious terms, gets their bond rating slashed, the lender exercises clauses for immediate payment, and then refinances under even more draconian terms.

So what to do about it? Who has the answers to solving the problem, who even knows what the next act in this horrid play will be? It’s not Alan Greenspan, that’s for sure! I can think of two people off-hand who know the problem and the solution, Max Keiser (my favorite rabble-rousing analyst) and Jeffrey Sachs, the infamous economist and proponent of ‘shock therapy’.

Keiser is so way-out there he is rarely invited to appear on American TV. But the rest of the world is falling in love with him! After an appearance on Greek TV, where he advocates arresting hedge fund managers and throwing the IMF and all Wall Street banksters out of Greece, an opinion poll shows some 90% of Greek citizens want Keiser to either be their new Prime Minister or at least, the country’s Financial Minister. Keiser, a ‘classic gold-bug’, accurately predicted every aspect of the current collapse, from Iceland to the mortgage bubble, at least 2-3 years ahead of time. His solution is simple, don’t pay the debts! Keiser contends that since all of the debts were based on fraudulent money, securities, and accounting practices, they’re all illegal and the victims (Greece, Detroit, Jackson Cnty, and the USofA) are under no obligation to pay them off.

Jeffrey Sachs is a bit more respected in most circles than Keiser is. But he, too, is very critical of the methods employed thus far in addressing the crisis. A year ago, Sachs wrote a scathing review of the Geithner-Summers Plan the Obama administration has signed off on. Sachs had no doubts then that the plan would fail to solve the fundamental problems. He even accurately predicted that ‘The Plan’ would only serve to enable the Wall Street banksters to profit from the crisis, with us taxpayers footing the bill. Which they have and we are, so far.

But one thing that Sachs also said was just how vulnerable the Wall Street banksters were. They may have bit off way more than they can chew this time. So long as the government aids and abets the Wall Street looters, they can get away with their schemes. How much longer that will relationship will continue? All it will take is just one entity, be it Greece or Detroit or Jackson County, to stand up and say, “No More!”. Then you may see an avalanche of “No’s”. Ben Bernanke better be careful how far he pushes. His threats to Congress, and us, are as flimsy as that paper currency print over there at the Federal Reserve. A lot of his pals aren’t going to be around after November.