mole in the ground

The Employment "Problem"

2012-01-27T11:51:00.003-05:00

(Sorry for posting so rarely lately. I've been distracted by some other projects, so post here only when I can't restrain myself.)

Just suppose that there has been a huge breakthrough in the art of robotics and suddenly robots are capable of just about any task. And let's suppose also that methods of producing robots very cheaply have been devised. So suddenly robots are cleaning houses, repairing automobiles, fixing the plumbing, designing bridges, designing buildings, building bridges, building buildings, etc., etc. Also let's suppose that education has also been automated, so classrooms are no longer necessary, classes are taught online via pre-packaged software, exams are graded automatically, etc.

Sounds great, right? But wait a minute! As this technology catches on there are gradually fewer and fewer jobs for housekeepers, mechanics, plumbers, engineers, architects, construction workers, even teachers (including professors). Ultimately, with so few working, there is no money to purchase any of these robots or online classes, no one in a position to buy a house or even rent an apartment, etc. The 99% are homeless and on the verge of starvation.

Thanks to modern technology, humanity has taken a great leap forward. But instead of this being a boon to humanity it turns out to be a disaster. Why?

The moral of the story is that we are already very close to being in more less this same position at the present time. And the answer to this dilemma lies in a well worn phrase that we very rarely hear anymore: "means of production." Capitalism is based on the notion that the means of production are controlled by a few "entrepreneurs," "innovators," "investors," etc. -- an arrangement that is supposed to benefit everyone. But when we take this arrangement to its absurd extreme, as in the situation I've just described, we see very clearly that it is not only unworkable, but self-defeating.

Why are enhancements in "productivity" taking away so many jobs? Because productivity is defined by the owners of the means of production (the 1%) as something that ultimately enhances their profits and, consequently, their power -- at the expense of workers. As now seems clear, however, enhancements in productivity are socially desirable only when they benefit everyone, not just the very few at the top of the social pyramid. And capitalism can work only when government intervenes to make sure that the benefits of technology are shared by all.

Thus, instead of taking jobs from workers, the technology should exist to make their lives better. In the form of: shorter working hours, higher pay, more pleasant and challenging types of work, more leisure time to be with family, pursue the arts, hobbies, do research, express oneself, etc. Is this a Utopian dream? Is it (God forbid!) socialism? At one time it might have seemed that way. But at this particular time in history it looks more and more like our only hope.

OWS: Do They Know Their Own Strength?

2011-10-18T12:19:00.001-04:00

Occupy Wall Street. What a great slogan! And now it's spreading throughout the world -- finally the long overdue uprising of the 99% over the tyranny of the 1% is beginning. And -- finally -- thanks to the drama of these potentially revolutionary events, the mainstream media has awakened, after a long slumber, to engage in meaningful discussion and debate over the pressing issue of inequality and its implications for the future of democracy. I haven't written about this striking development until now not because I don't think it important, but because I felt I had little of substance to add to what is already being written in so many venues everywhere one turns. At long last!

The reason I'm writing now is because an odd and troubling thought has occurred to me and I'm not sure what to make of it. The world is now wondering what the next step is going to be. Will the demonstrators finally be able to agree on a set of "demands"? Will they form a third party? Will they become a political pressure group along the lines of the Tea Party? Or will the whole thing simply evaporate once cold weather sets in?

And it's occurred to me that these demonstrators are right now in a unique position of strength that they may not recognize. They are, very surprisingly, in a position to do something truly revolutionary that would have an impact far beyond anything we've seen in Tunisia, Egypt or Libya. All over the world hordes of angry demonstrators are, literally, occupying important financial centers, hubs of power and influence that control the destiny of literally every person on Earth. Their presence in these particular locations has up to now been seen as largely symbolic. But it is also strategic. Because, thanks to the large numbers of participants, Occupy Wall Street could easily morph into SHUT DOWN Wall Street.

I hesitate to bring this up, because I have no idea what the consequences would be. But at the same time I feel it necessary to wake the protesters up to the real nature of their power, should they decide to wield it. If they choose to, these demonstrators could block entry to the doors of, for example, Chase Manhattan Bank, Bank of America, Citigroup, Goldman Sachs, even the stock exchange itself. Not to mention financial centers in every major city on Earth. And in so doing they have the potential to actually bring the financial system of the entire world to a grinding halt.

Think of it. The storming of the Bastille. The storming of the Winter Palace. An event of comparable if not greater magnitude lies within the realm of possibility. Yet, unlike these bloody events, the shutdown of the financial system need not be accompanied by violence. (Not, at least, on the part of the demonstrators. What the police might do is another matter.)

Am I advocating such a move? Not really. Though often I write as though I know-it-all, actually I don't know all that much. The results of such an action would be unpredictable and could be disastrous. On the other hand, it could lead to a revolution of exactly the sort the world desperately needs. And anything less than this might ultimately lead nowhere, with all the energy and all the righteous indignation fizzling out in the face of the enormous economic and political power of the elites, who will fight to the last soldier, policeman and politician to hang on to their money and power.

I really don't know where I stand on this matter. But I do think it important that the new and very hopeful Occupy Wall Street movement understand that it's in a stronger position than it might think, and holds a very powerful bargaining chip against those who might think they can easily intimidate and disperse it.

Plenty a gold so I been told

2011-09-03T22:56:00.005-04:00

Call me Ishmael. Some years ago -- never mind how long precisely -- having little or no money in my purse and nothing particular to interest me at home, I thought I would sail about a little in the realm of substitute teaching. It is a way I have of driving off the spleen and regulating the circulation.

One day two boys from a middle school social studies class come up to my desk wanting to know whether all I ever do is substitute teach. I tell them, no, I’m also a musician and an artist. And I write plays and books. “What kind of books?” they want to know. “Well I wrote a book about the wind and the grass.” “The wind and the grass?” “A battle between the wind and the grass.” “A battle between the wind and the grass?” I’ve got their attention. “Yes.” “What’s that?”

“You have to understand the grass I’m talking about is very long, not the sort of grass you see on your lawn. And one day, this boy, this ‘lazy farmer boy,’ utters a very deep, heartfelt sigh in the middle of his long, grassy field. And, due to the almost inexplicable, but very real, scientifically demonstrable, laws of chaos theory, this sigh manages to multiply its effects until pretty soon it becomes a fierce, howling wind. And the wind just whirls around and whirls around gaining strength and then, for no reason anyone’s ever been able to determine, takes off across the farmer’s field, bullying the delicate long grasses backwards practically till they can see their own roots.”

“Do they fight back?”

“Yes they do. Because the grasses are brave and also long and sharp and there are many rose bushes among them and other thorny plants, so as the wind rushes across the field, the grasses, bushes and thorny plants try hard to stand their ground and they tear at the wind and the wind begins to bleed. And the wind bleeds rain and so it rains and pretty soon it’s thundering and there is a terrible storm, with lightening too, and so the field catches fire.”

By this time the boys’ eyes are bugging out of their heads and they both take a step forward with looks that say: “We gotta talk some more.” And believe me I’d love to do just that. But these kids have an assignment and it’s my job to see they do it, so I have to tell them to back off for now and finish their work and then look for me at lunch time and maybe we can continue then. Only when lunch time comes they are nowhere to be seen, probably because this is first lunch and their lunch is second lunch. Or this is third lunch and their lunch is first lunch. Or maybe they just got distracted, because, after all, they were pretty young.

So I’m writing this in the hope these boys will some day read here the answer to the overwhelming question I could tell was on their minds, and that they desperately wanted to ask me, which was: what is poetry?

Well, one thing poetry is not it is not the poetry written by poets. I mean, yes, certain poets have it in them, no question. But usually not. For example when Shelley writes “O wild West Wind, thou breath of Autumn's being,/ Thou, from whose unseen presence the leaves dead/ Are driven, like ghosts from an enchanter fleeing,” no he doesn’t have it, that’s not poetry. Clever yes. And what’s with these “leaves dead”? Who talks like that? Now on the other hand, his pal Keats writes (and we need to wind down a bit before reading this -- take some deep breaths and then maybe five seconds of silence to slow the metabolism): “My heart aches, and a drowsy numbness pains/ My sense, as though of hemlock I had drunk,/ Or emptied some dull opiate to the drains/ One minute past, and Lethe-wards had sunk:” Oh yes, he has it, this is poetry. Four lines and we’re trembling in the grip of pallid death.

Because poetry is a lot like a joke. Except instead of laughing something else happens to you, something grabs you deep inside and tears you to pieces, like what the long grasses did to the wind. In my book, remember?

Or take John Clare, a farm boy really, not a poet: “The rolls and harrows lie at rest beside/ The battered road; and spreading far and wide/ Above the russet clods, the corn is seen/ Sprouting its spiry points of tender green,/ Where squats the hare, to terrors wide awake,/ Like some brown clod the harrows failed to break.” Wow. That’s it. That’s really it. The rest of the poem is also very fine, but that opening verse cuts really deep, don’t ask me why. (The question was “what,” not “why.”). You don’t even need to know what a “rolls and harrows” is. It’s a kind of old fashioned wagonny farm implement used to tear up soil. “The rolls and harrows lie at rest beside/ The battered road;” Yes. “and spreading far and wide/ Above the russet clods, the corn is seen/” Oh yes. Even just “The corn is seen.” Poetry. Even just that much, that one simple phrase.

T. S. Eliot once said the most beautiful word in the English language is “cellar door.” He actually said that, so I’ve heard, yes. Of course really it’s two words, not one. But think about it: “cellar door.”
In Neil Simon's play, The Sunshine Boys, one of the characters gives a lecture on what’s funny:

Fifty-seven years in this business, you learn a few things. You know what words are funny and which words are not funny. Alka Seltzer is funny. You say "Alka Seltzer" you get a laugh . . . Words with "k" in them are funny. Casey Stengel, that's a funny name. Robert Taylor is not funny. Cupcake is funny. 'L's are not funny. 'M's are not funny. Tomato is not funny. Lettuce is not funny. Cookie is funny. Cucumber is funny. Car keys. Cleveland . . . Cleveland is funny. Maryland is not funny. Then, there's chicken. Chicken is funny. Pickle is funny. Cockroach is funny -- not if you get 'em, only if you say 'em.

Poetry is not the same as humor. But not that different either.

Now Shakespeare, even he doesn’t always have it: “Let me not to the marriage of true minds/ admit impediments.”? Wah????? Sounds like a minister or a speech therapist. Or “To be or not to be, that is the question.”? What kind of a question is that? But the followup is terrific: “Whether ‘tis nobler in the mind to suffer/ the slings and arrows of outrageous fortune,/ Or to take arms against a sea of troubles and by opposing end them.” Yes. Almost as good as Brecht.

No, despite certain notable exceptions, which are, admittedly, quite good, real poetry cannot be found in the work of poets. And it’s definitely never “poetic.” Which reminds me of a story about one of my favorite poets, Charles Olson, returning to Wesleyan University, his alma mater, to recite in the “Honours College,” where sherry was always served either before or after, I forget which, and Piranesi prints lined the expensive walls. He starts off (I was there) with this poem about these bikers on a beach somewhere and how they took over the beach, looking almost like certain ancient gods, and it’s getting very interesting, because he really knows how to write poetry, and also how to read aloud -- but then he stops dead, sits down right there on the floor, and puts his head in his hands. “I can’t go on,” he says, “I can’t do this.” Moment of stunned silence. “Oy, this is such a poetic atmosphea.” He’s not even Jewish but he says “Oy” and yes the word “atsmosphere” comes out with a New Yawk accent and then he just sits there and will not be consoled.

“Oh they call me hangman Johnny/ Come away my Bonnie/ But I never hanged no body./ Oh hang boys hang.” Lots of these sea shanties are poetry. Or have poetry in them. Often they’re made up of disconnected or almost disconnected couplets or stanzas, framed by tiny refrains. Some of these stanzas, well, they’re not too great. But many are. “Oh hang boys hang.” Now that’s very special because it’s a punch line too and the whole stanza is basically a joke. Only to get the humor you need to know something about how the song was used. It’s a song for hanging sail. Get it? But it’s also a very efficient little machine, with a wind up spring that gets wound up very tight in those first three lines and you don’t really have to know what the song is used for to find yourself caught in the trap.

“We’re sailing down the river from Liverpool,/ Heave away, Santy Anno!/ Around Cape Horn to Frisco Bay,/ All on the plains of Mexico./ There’s plenty a gold so I been told,/ Heave away, Santy Anno!/ There’s plenty a gold so I been told,/ ‘Way out in Cal-i-for-ni-o./ So heave ‘er up and away we go,/ Heave away, Santy Anno!/ Heave ‘er up and away we go,/ We’re bound for Cal-i-for-ni-o.” You’ll find many versions of this shanty, but this is one of the best. Word has it “Santy Anno” is Santa Anna, the old Mexican general. But I prefer to think of it as another name for the wind, namely the “Santa Anna” winds, which rage along the coast of California. So that refrain then shouts defiance over and over in the teeth of some half forgotten storm. (Remember my story?) But what’s really important here is not what we interpret the words to mean, but the tremendous weight of each and every syllable, with no room for any half measure anywhere. Just listen, say it and listen and feel it on your tongue: “Around Cape Horn to Frisco Bay.” Say it, feel how it resonates through your soul, makes you more courageous, more foolhardy, more of a pirate.

It won't be over till the fat man sings

2011-08-26T10:17:00.002-04:00

As I write, it is 10:07 AM and the world is eagerly anticipating Ben Bernanke's latest aria. As one might expect, the markets are tanking (with the Dow currently down by over 200 points). That's what is known as a "signal." Or better, yet a "cue." The markets are the chorus in this bizarre opera, singing "Help us help us help us, or we will all slide into perdition." That's Big Ben's cue to sing, "No, I'll never never never allow that to happen. Let QE3 begin." At which time the markets will reverse course abruptly and the day will be saved.

Unfortunately for this melodrama, the villain, aka Governor of Texas and likely Republican candidate Rick Perry has threatened our hero with dire consequences if he dare mess with our economy again, and since everyone is now running scared of anyone with ultra conservative creds -- it's gonna be an interesting morning.

The question on my mind is what will happen to the markets if Bernanke's aria falls flat. Will they follow his lead and flatten out with him? After all what's the point of continuing to signal if the signal has been ignored. Or will it continue to tank, caught up in its own reckless momentum.

We'll see very shortly. Fun fun fun. And it won't be over till the fat man sings . . .

Another Country Part 2

2011-08-17T20:55:00.002-04:00

Tito's Yugoslavia developed under conditions far worse than anything that could possibly emerge today due to a financial collapse. We tend now to see it simply as a part of history, but World War II was the greatest calamity by far that ever befell the human race. It was truly an unimaginable disaster that no book or movie could ever begin to convey. Yugoslavia was unique in being the only country that liberated itself and as a result, Tito was able to remain independent from either the Western powers or the USSR. I won't claim he was an angel, but he was certainly an extremely capable leader and politician, who understood how to manage a country that began in total abjection and poverty, not to mention all the many political strains due to the fallout from the war -- which had pitted certain parts of the country against others.

He united the country to the point that, when I visited, it was truly a multicultural society. The family I lived with in Mostar were "Muslims," i.e., of Turkish background, though no longer practicing as Muslims, but they had close friends of Serbian and Croatian background and no one thought anything of it. Not then, anyhow. Yugoslavia was theoretically a "communist" country, but Tito's brand of communism was very different from that of Stalin. He initiated communal farms, but when that didn't work out, he backed off and allowed the small farmers to keep control of their land. I remember hearing church bells ringing out on Sundays, and once visited a small village during an all day Catholic festival (that was actually partly pagan, which is why I was there, because that interested me). Stalin persecuted Muslims and Christians alike, but not Tito, he tolerated them.

One day I took a hike through some mountainous terrain, feeling very proud of my strength and endurance -- until I encountered a family coming from the other direction, including a woman and her small children, a family of Gypsies migrating in their usual fashion, from one mountain to another. While Gypsies were either persecuted or forced to settle down in most other countries, they were allowed to live their traditional lifestyle in Tito's Yugoslavia.

Economically things were very interesting, because it really did seem to me that poverty had been eliminated. So had wealth. Everyone had a house to live in. Everyone had enough to eat. Everyone, so far as I could tell, had a job. No slums. No beggars. Nothing much extra, either. A typical birthday present was, for example, a pair of socks. Individual families were allowed considerable leeway when it came to doing a certain amount of business. The family I stayed with were able to regularly take in boarders and make a profit from that bit of "free enterprise." I saw no real signs of government interference in any aspect of daily life and as I said, no one seemed afraid to speak openly on any topic, including politics.

There was also an excellent health system, as far as I could tell. When I got sick (actually a bad case of constipation and nothing more, though I was sure it was appendicitis), my friends took me to the local health center, a modern, well equipped establishment, where I encountered the first female doctor I'd every seen. (This was back in the 60's remember.) She was young and seemed extremely competent. She examined me and decided I was constipated and prescribed some medication that would have cost a dime in US money -- only my girlfriend insisted on getting me the meds for free with her worker's card. If you had a worker's card, you paid nothing for your health care or medications. (She was a lawyer for a local factory, by the way, the first female lawyer I had ever met.)

The biggest problem, especially for educated people, was boredom -- a feeling of being shut off from all the interesting cultural developments taking place in the "developed" world around them. For this reason it was not a country I would have wanted to settle down in. But the people as a whole were far, far better off than in any capitalist country you could name. Better off not only for not living in poverty but also for not living in wealth either, which as I see it is also a problem. I wouldn't want to be poor but I also wouldn't want to be wealthy and, for example, be expected to have servants and need to worry about being robbed or kidnapped and having security people around me all the time, who I could never be sure whether or not to trust, etc.

Ultimately, after the death of the dictator (which Tito was, after all), the country collapsed into a horrible civil war and when I heard about that and had to read about what was going on during that period it broke my heart. But the war had nothing to do with economics, nothing to do with "communism" or "socialism" or "free" markets. It was due to tensions that had festered for many years, thanks to very deep divisions during WW II when certain regional ethnic groups sided with the Nazis and others had sided with the partisans. Not to mention much older divisions stemming from ethnic rivalries going very far back into European history. Tito was able to hold all these factions together, but he made the huge mistake of not allowing the country to develop into a true democracy, so after the "strong man's" death, all the old problems re-emerged.

The moral of my story is that a free and equable society, based on a reasonable, sane approach to politics and economics, CAN emerge, even out of the most disastrous imaginable conditions. It happened in Tito's Yugoslavia and it can happen here. Oh and by the way, Yugoslavia wasn't really a communist country. But it WAS a socialist country, for sure. Also a dictatorship. You can't have everything, I guess (though you can certainly TRY).

And For Our Next Trick . . .

2011-08-10T09:24:00.001-04:00

Yesterday's market antics were so extreme and so fascinating, I feel forced to drop everything else and make some comments. Here's what the Dow and Nasdaq looked like (click on image to enlarge):

As you can see, the Dow began with a rapid leap upward, by roughly 100 points, only to suddenly dip downward, by roughly 150 points, followed by a rapid surge upward once again, by over 200 points, all in the first half hour of trading (the market opens at 9:30). I've seen volatility like this before, but never by such huge amounts in such a short time. It then remains relatively steady, though still with large surges back and forth, until about 2:20, when there is a sudden, enormous dip of over 200 points, all in one gulp. Then, inexplicably, it surges upward again, just as rapidly, by about 150 points -- and then takes a huge, absolutely breathtaking plunge of almost 300 points, all in about 15 minutes.

This last activity is apparently a reaction to an announcement by the Federal Reserve indicating that no dramatic actions will be taken by them in the near future, coupled with an assurance that interest rates will be kept to a bare minimum for the next year or so. It looks at first as though the market was expecting some sort of dramatic announcement that never came, and in response threw a hissy fit, plunging off a cliff in a desperate bid for attention.

But then a strange thing happens, which for me is absolutely inexplicable. The sudden drop is followed by a steady upswing over the next hour or so, of a staggering 600 points!!!!

If you compare the Nasdaq with the Dow, you'll see that, aside from the first few minutes, both are moving practically in tandem, with a Rockettes-like precision, even during the wildest and most unpredictable swings.

It is now 9:19 AM, and the markets are due to open in about 10 minutes. I can't wait to see what these performing seals will come up with today, but given what we saw yesterday, it will no doubt be totally unpredictable, wild and scary. While many economists may be breathing a sigh of relief at the remarkable upswing, as far as I'm concerned, a surge of 600 points upward should be just as alarming as a similar surge downward. Because what yesterday's antics tell me is that the market has either gone completely bonkers, or -- more likely -- is being manipulated. In either case, this is no place for ordinary people to keep their money, because an "investment" in stocks can no longer be regarded as an investment, nor even a gamble (since when we gamble we at least know the odds), but a foolhardy act of total and complete recklessness.

Another Country

2011-08-09T15:37:00.000-04:00

I visited Yugoslavia way back in 1965. I hadn't taken a vacation since early 1963. I wanted to take some time out to work on a book project and write music. And, after making some inquiries and doing some basic math, I realized that, even factoring in the cost of transportation, I could live much more cheaply in Europe than in New York City -- and I could write music anywhere. My first stop, after an ocean voyage on the Rotterdam (cheaper than flying, believe it or not), was Paris, where a room at the Hotel des Grands Hommes, on the left bank, could be had for the equivalent of about $2.50 a night. (Yes, that's a decimal point between the 2 and the 5 -- the current rate starts at 280 Euros!) But that was still too much for my miserly budget, and anyhow, after a week or so, Paris began to bore me.

A friend had urged me to go to Yugoslavia, showing me a picture of a beautiful bridge in a town called Mostar, which she'd visited and loved. The exchange rate looked really good: 1,000 dinars to the dollar. Even better, I could make my way to Yugoslavia in style via the legendary Orient Express. To make a long story short I wound up spending about two months in Yugoslavia, staying for the most part in Mostar, with a family that charged me 1,000 dinars (that's one dollar) a night for a room. I also spent some time in Dubrovnik, Sarajevo, and Zagreb.

I didn't notice at first, but after a while it began to dawn on me that Yugoslavia was different from any other country I'd ever lived in. For one thing, there were no beggars! There was an old man who sold little packages of nuts in downtown Mostar. But he was more of a peddler than a beggar. And there was the little boy who approached me for what I thought was a handout. But when I offered him some money, he shook his head and pointed to a group of Gypsies encamped nearby. They had assembled some wood for a campfire. All they needed was a match. He needed a match. Which I didn't have, much to my regret.

Also, there were no homeless people (other than Gypsies, who were allowed to roam freely with no interference) -- and no slums. At least none that I ever noticed, and believe me, I got around. Since Yugoslavia was a "communist" country, I anticipated a certain amount of repression, and reluctance on the part of the people to talk with strangers. But I saw no sign of that. People were open and friendly. I became friends with the family I was staying with in Mostar, especially their beautiful daughter, and would spend a lot of time talking with her and her friends, all of whom were educated and articulate. I asked all sorts of questions about politics, economics, and the policies of President Tito, about whom I was very curious. They answered all my questions openly, with no hesitation and no sign of anxiety. For them Tito was a hero, and it was easy to understand why.

(to be continued . . . )

The Spectres, Part 2

2011-08-08T15:31:00.003-04:00

And so: what will happen after the monumentally destructive forces of "free-market" capitalism drive themselves into the ground, taking the rest of us with them? Truthfully, I don't know. Another great depression? A period of "social unrest"? A period of uncertainty? A period of post-apocalyptic chaos? A revival of Communism? Fascism? Nazism? (Glen Beck would make a marvelously paranoid fuhrer.) Possibly all of the above.

But what I'd like to think would ultimately happen would be a great awakening. A passing through the Gateless Gate. Money will return to being a harmless medium of exchange rather than a commodity in itself. Our leaders will be forced to find ways to fairly and equably produce and distribute resources through judicious planning. Instead of lending money to bankers who then lend money to other bankers who then lend money to other bankers who then lend money to businesses which then create products and jobs, governments will realize that the most efficient method of creating and distributing wealth is to eliminate all those parasitic middlemen and create products and jobs without them. If technology has provided us with the means to increase productivity then, once those middlemen have been eliminated (or more accurately eliminated themselves), technology can be put to use directly for the benefit of all, rather than the few.

This sounds like a Utopian dream and I suppose it is. But it is also possible. We can make it real. How do I know that it's possible and not a daydream? Because I saw it with my own eyes. When I visited a country that no longer exists, which is a terrible shame. A country without slums, without poverty, without beggars, without coercion and without fear. It was called: Yugoslavia.

The Spectres

2011-08-06T15:50:00.004-04:00

We've all read that famous line: "A spectre is haunting Europe — the spectre of communism."

The socioeconomic analysis offered by Marx and Engels in their "Communist Manifesto" was right on the mark. In essence: "The history of all hitherto existing society is the history of class struggles." Its object: universal human freedom in a classless society. The analysis was brilliant, the object admirable. Unfortunately, almost all subsequent experiments along Communist lines have turned out badly. Very badly.

Maybe it's time now for someone (not me) to write a "Capitalist Manifesto." It could open with a very similar statement: "A spectre is haunting the developed world -- the spectre of the free market." Its essence: "The history of all hitherto existing society is the triumph of naked self interest and greed." Its object: the uncontrolled free reign of financial markets and the class that controls them. Unfortunately, as we now know, our experiments with free market capitalism have also turned out badly. Perhaps not as badly as Communism, though it's still too early to say.

No one reading here could possibly assume I'm a capitalist. Some might assume I'm a Communist. But that would be equally untrue. As I see it, it's high time we put both these spectres to rest. Nevertheless, there is something to be learned from their failures, which can be seen in the light of an interesting dialectic:

Communism fails because it will never be possible to rid the world of naked self interest and greed, which will manifest even in the most rigorously "classless" society. Capitalism fails because it will never be possible to completely rid the world of class consciousness, which will always impel certain groups to resist exploitation by others.

Capitalism also fails for the reason given by Marx: it contains the seeds of its own destruction. But so also, in a way, does Communism. Both fail, ultimately, because they presume the existence of certain universals. And, as thinkers such as Derrida, Baudrillard, Lyotard, etc., have taught us, all "universals" are cultural constructs, not givens of either nature or human psychology.

So. What's the answer? Or, to paraphrase Lenin paraphrasing Tolstoy: what is to be done? And the good news, as I see it, is that there is no need anymore to do anything whatsoever. Unless being amused can be seen as doing something. Or, as in my case, writing compulsively about anything and everything that amuses me about our current socioeconomic situation.

Soviet Communism self destructed back in 1989. But it took another three years before the reality of that event sank in, and the Soviet Union was finally dissolved, in 1991, after a bloody coup.

In the aftermath, there was an attempt, led by the Russian President, Boris Yeltsin, to transform the country via free market "reforms." However,

the Yeltsin era was marked by widespread corruption, economic collapse, and enormous political and social problems in the wake of the disintegration of the Soviet Union into a group fledgling nation-states of which Russia was the largest.

Ongoing confrontations with the parliament climaxed in the October 1993 Russian constitutional crisis, a political standoff culminating dissolution, besieging, and later shelling of the Russian White House, killing hundreds, and injuring hundreds more. Yeltsin then scrapped the constitution under which the parliament had attempted to remove him from office, temporarily banned opposition parties and media, and deepened his economic experimentation. (Wikipedia)

The free-market "reforms" urged by the US and other Western powers were in many ways a disaster, but there seemed at the time no meaningful alternative, so the Russians plodded on, even in the wake of a major default (yes, Virginia, sovereign defaults can happen).

Free market capitalism in the West took a bit longer to self-destruct -- not until 2008. And as with the fall of the Soviet Union, the reality didn't completely sink in until some years later. I.e.: not until NOW!

So why do I find all this so amusing? Because time after time we see history repeating itself, and time after time the lesson is NEVER learned. So what's the point in trying to galvanize the public into taking action, when it's by now so very clear that whatever action is taken will be the wrong action. Better to just let history take its course. If monolithic institutions such as Communism and Capitalism contain the seeds of their own destruction, then, very simply, let them destroy themselves.

In our present situation, as I see it, the worst thing we can do is try to put the broken system together again, by instituting the sort of "reforms" that will enable the pretense to continue for a little while longer. What's the point? The bankers tell us they can't be regulated because tough regulations, of the sort that are "needed," will prevent them from earning the large amounts of money required for the entire US economy to remain on course, i.e., to produce the necessary jobs and consumer demand. And they are right. We're told, "get tough with the banks," but for the last, oh, 30 or 40 years, the shenanigans of these bankers have been by far the greatest source of national income. So. We can't live with them and we can't live without them. The good news is that they are monumentally self-destructive, so we don't really need to regulate them because their own frantic momentum will ultimately drive them into the ground.

(to be continued . . . )

The Burning

2011-08-04T05:52:00.000-04:00

The Professor looks down. “I am a prophet. Prophet. A prophet. I speak for the Ancestors. They are angry. Angry. Now I know why. Finally I figured it out. I understand. Seen the light light the light. Finally. Finally. Finally. They are angry.”

One of the spectators laughs derisively. “Ancestors? What ancestors? Whose ancestors?”

The Professor ignores him. “Years. Millions of years. All that residue of the most ancient forms of life. The most ancient residue of living matter. Where is it now? Where? Where is it? Slumbering deep deep down in the dirt, the earth, earth, hidden away very deep in the bowels of the earth undisturbed for billions of years in the dirt.”

He pauses to let his words sink in. “And then. One day. One cold day. Some human digs. And digs. And finds something. Something to burn. Burn. Some sort of handy substance you can burn. Limitless supplies, huge, huge, huge amounts of organic material buried deep, deep in the earth and under the sea, dead matter, residue, remnants. In fact, the remnants of our oldest ancestors, from the earliest beginnings of life on Earth, remnants we’re now dredging up from their ancient burial places – in the form of coal, oil, natural gas, what we call ‘fossil fuels.’ You think you can treat it with indifference, as though it were just nothing at all but something sitting there for you to use, for you to burn, burn, to burn. It keeps you warm. It powers your cars. It drives your turbines, produces your electric power, fuels your factories, your armies, makes everything possible -- for those who can control it.”

Another pause. “But reflect – REFLECT! Every living thing on Earth is descended from these ‘fossil fuels.’ They are a part of you – and you of them. Their primordial desires, desires desires, pri-mordial, are buried deep within you still, embedded in your very DNA. And now. They are burning. Your ancestors are burning. Burning. You have violated the earth and the sea to dig dig dig them from their ancient resting place. And you are burning them. Burning. Burning them up. This burning of the ancestors, it is what has made our modern world possible. And what is now choking it to death.”

The budget, the deficit, and the collapse

2011-08-03T00:57:00.006-04:00

OK, first of all the budget isn't really the problem. It's the deficit (i.e., the national debt) that's the problem. But this debt is the result of 1. the huge Bush era deficits, which were astronomical and have accumulated, with interest; 2. the effects of the economic collapse of 2008, which was beyond astronomical. Obama's budget can't possibly be the problem because he is far from being the big spender the Tea Partiers are painting him as -- in fact the discretionary items in his budget are modest.

The biggest items in the budget are those that are usually considered beyond his control, the so-called "entitlements," and the cost of funding outsized and out of control military operations in Iraq, Afghanistan and now Libya. As I see it, the entitlements are not really a problem, so long as we are willing to accept a fairer, more equable, and more effective system of funding them via progressive taxation. (See the three previous posts.) Military expenditures represent a much more challenging problem. We definitely need to wind down our military operations, as humiliating as that will be, because we can no longer afford them. The Republican call to reign in the budget will therefore be meaningful only if it is applied most strongly to the military budget, which is the last item the Republicans want to touch.

So. As far as the budget is concerned, we need not cut back entitlements so long as we are willing to accept changes in the tax code; and military expenditures need not be a major problem so long as we are willing to pull out of Iraq and Afghanistan.

The national debt, however, is another matter entirely. It truly is out of control. It is in fact, essentially, the result of an ongoing Ponzi scheme, disguised by creative accounting methods worthy of Enron during its last, most desperate, phase. As I've argued in earlier posts, the world economy totally collapsed in 2008. Everything that's happened after that has just been smoke and mirrors to disguise this fact, in the hope that, if we kick the can far enough down the road, we'll be saved by a miracle.

While I have no respect whatsoever for the Tea Party and their mainstream Republican enablers, I do agree with the faction that opposed raising the debt limit. And I was, very frankly, hoping the failure of the two parties to reach a compromise would bring the crisis to a head by abruptly halting the US government's ability to borrow. Because the ability of the US to increase its debt in this manner is in fact equivalent to the ability of a con man like Bernie Madoff to suck more "investors" into his scheme. Nothing of value is being produced to warrant such an "investment." The only reason Treasuries are being purchased is because, as with Madoff's operation, they are deemed "safe." In fact, there is nothing really there to back them up. It's all a bluff.

If the debt limit could no longer be raised, and the US were forced into default, then the world would have no choice but, finally, to accept the bitter fact that there is no "there" there, that we can never return to the "free market" status quo. And we can finally begin the long process of constructing an alternative system, hopefully one that is fairer, more effective and more meaningful.

Significantly, just after the great compromise was reached, the Dow took a nosedive of almost 200 points. This after already having fallen by several hundred points in the previous week. Regardless, there was a great sigh of relief and everyone went back to their nice little pipedream in which at the very worst we have something called a "double dip" recession, which really doesn't sound all that bad, and at best we somehow manage to fully restore the status quo prior to 2008.

Like Wile E Coyote, in the cartoon I posted some time ago (see The Power of Magical Thinking) we are hovering over a vast expanse of nothing. But we won't actually take the fall until we become fully aware of our precarious condition. The collapse has already occurred, but it's going to take one more major event to shake us out of our complacency to the point that we are able to accept our fate -- and move on. The only alternative is a depressing and demoralizing process of gradual decay, leading to even more unfairness, inequality and cruel indifference.

What sort of event is looming? Well, we've all noticed how the too big to fail banks are once more taking outsized risks of exactly the same sort that caught up with them in 2008. If some of those events are repeated then, sorry Charlie, you may be too big to fail, but all the money in the world won't save you next time. You'll be going down -- and taking the rest of us with you. Another scenario, just as likely, would be the collapse of the Euro, precipitating a domino effect in which one bank after the other will collapse, and the world economy along with it.

As I see it, the sooner something like this happens (I like to call it the "Rapture") the better. Because, as I've argued many times, what we're talking about here is something that exists purely in the virtual world: money. It isn't really real, but somehow we've been hypnotized into thinking it is. When the financial system collapses, and only then, we will be freed from the spell. Looking around us, we'll see that everything of true value is still there. In the immortal words of John Cage: "nothing was lost when everything was given away."

Inequality

2011-08-01T10:41:00.002-04:00

To answer the question I posed yesterday: NO, taxation is NOT theft. The original Tea Party was a legitimate protest against taxation without representation, which IS a form of theft, yes. Ever since the American Revolution we've had taxation WITH representation, which is NOT a form of theft, but part of a social contract whereby a fraction of national wealth is pooled for the common good. In the past, the affluent recognized that they owed a large part of their success to opportunities made possible ONLY through policies instituted by the US government, a government strong enough to both encourage and protect individual initiatives, innovations and investment. (Compare, for example, with Mexico.) Today, many of our wealthiest citizens and corporations prefer to believe they did it all on their own, and owe nothing to anyone. Today's "Tea Party" is a self-serving attempt by such wealthy and powerful private interests to manipulate certain naive segments of the public, with the goal of weakening the only force strong enough to stand up to them: the federal government.

The real problem in this country is NOT government spending -- anemic in literally every area except defense -- but inequality. And not simply inequality, which has always been a given of life in the USA, but drastic inequality, not only of wealth but of political clout, which seriously threatens our democratic system. Too many in this country worry about money in the wrong way. Instead of worrying about government expenditures on "entitlements" and other beneficial projects, they should be worried about the kind of potentially destructive power that can be wielded by someone with a billion dollars to spend supporting his or her own selfish interests. It is not enough to force such individuals to pay their fair share in taxes. What is of greatest importance at this moment in history is to do everything possible to save democracy itself from their potentially destructive influence.

"Entitlements" part 2

2011-07-31T14:26:00.000-04:00

As should be clear from the previous post, if everyone in the USA currently earning $106,800 or more were to suddenly get a raise of $1,000,000 or even $100,000,000 per year, that wouldn't add one single dime to what any of them would pay toward Social Security. Oh and one more thing I forgot to mention. This is referred to as a "payroll" tax for a good reason. It is not imposed on investment income. So if you don't actually do any work, but simply collect millions (or billions) from your investments, you pay no Social Security tax at all.

Now let's take a closer look at the second part of the payroll tax: Medicare. As opposed to Social Security, which is usually taxed at 6.2% (actually 12.4% -- see previous post), Medicare will take "only" 1.45% out of your wages (actually 2.9%). Sounds like a bargain. Why so little? Because the Medicare portion, unlike that for Social Security, doesn't have that $106,800 limit. Since it's unlimited, it can be considerably less, because much higher incomes are also being taxed (though once again, investment income is immune). Which makes you kinda think: if Social Security were an unlimited tax, we wouldn't have to pay nearly as much for it, would we?

And speaking of that $106,800 limit, what's that all about? Where does that figure come from? Beats me. Maybe someone reading here can enlighten us. If it's an arbitrary number, which it certainly appears to be, then why not make it $206,800? Or $300,000? Or $1,000,000? Or $100,000,000. Or why not just remove the Soc. Sec. limit altogether, and tax it the way Medicare is taxed?

If in fact the limit were removed altogether, then this tax, which is such a huge burden for so many working people, could be lowered considerably. AND, with some astute actuarial assistance, a figure could be arrived at that not only lowered the percentage, but also made up for whatever shortfall now exists in the Social Security trust fund. End of crisis!

But why stop there? Social Security is, at present, what is called a regressive tax -- because the more money you earn over and above the limit, the less percentage of your total earned income you pay. If the limit were removed, it would be what is called a flat tax, with everyone (aside from those with unearned income) paying the same percentage. Many would consider that fair. But that has not been the policy in the USA with respect to income taxes, which have for a very long time now been progressive, with those in higher income brackets paying a greater percentage of total income than those in lower brackets (theoretically, since wealthier people typically find all sorts of convenient loopholes).

Once upon a time, during, say, the Nixon era, those in the highest income brackets paid a considerably higher percentage in income taxes (again, theoretically, since there were many loopholes for the wealthy), with the top bracket taxed at 70%. A few years ago, the top fell to 39.6% and with the Bush cuts (still in effect) that dropped even lower, to 35%. Nevertheless, federal income tax remains a progressive tax, with lower income people paying a lower percentage. Seems fair to me, since the higher your income, the less of it you actually need.

So why can't our payroll taxes, for both Social Security and Medicare, also be progressive? And if Medicare can be taxed on a progressive basis, then surely the actuaries can come up with a formula that would, miracle of miracles, actually put Medicare on a sound financial footing, thus eliminating that "crisis."

Gosh, what am I missing here? What is it I don't understand? Oh yeah. The wealthiest of the wealthy, our bankers, our financiers, our captains of industry, the ones whose reckless investment practices and selfish outsourcing and downsizing led to the collapse of our economy just three years ago, these people don't want to be taxed at all, period. On principle! After all, isn't taxation simply theft?

(to be continued . . . )

Them Danged "Entitlements"

2011-07-30T15:25:00.001-04:00

Gosh, if only we could take control of those darned "entitlements." Right! You hear it continually from Republicans, which should go without saying. But also from our President,and many other Democrats, which is a disgrace!

For one thing, "entitlements" is a misleading term. What it really means is money ordinary citizens are entitled to. Why? Because they paid for them. Yes, believe it or not, both Social Security AND Medicare are paid for by you, the citizens of the US. To hear Republicans talk about these programs, they're something ordinary folk THINK they are entitled to. "Well, what makes YOU think you are entitled to all these benefits, you lazy slacker?" "Uh, excuse me, but I PAID for them!"

Not only have we paid for them, but we've paid through the nose for them. Here's how our taxes for both Social Security and Medicare break down, according to this Wikipedia article:

Federal social insurance taxes are imposed equally on employersand employees, consisting of a tax of 6.2% of wages up to an annual wage maximum ($106,800 in 2010) plus a tax of 1.45% of total wages. For the year 2011, the employee's contribution has been temporarily reduced to 4.2%, while the employer's portion remained at 6.2%.

This is misleading. The taxes are NOT imposed equally on employers and employees. I know because I was once on the Board of Directors of an organization that was hiring, and the first thing we did in determining what wages we would offer was calculate what our Social Security obligation would be. This was then factored in to our wage offer. I'm sure all employers do the same math when hiring. So what that means is that the Soc. Sec. tax is in effect borne entirely by the worker, and it amounts to 2 * 6.2%, or 12.4% (prior to the temporary reduction, natch, which is due to expire). Moreover, if you happen to be self-employed, the owner of a small business, a consultant, or an "independent contractor" (a handy category used by employers who refuse to deal with Soc. Sec. at all) you pay the FULL amount without benefit of subterfuge.

Meaning that out of a modest salary of $30,000, you get to pay 30,000 * .124 = $3,720! (Not counting Medicare, natch.) And there's no getting around that. No deductions, no loopholes, no special consideration for working families with lots of kids, etc.

You might be curious to learn what someone earning $1,000,000 a year pays. Do the math. 1,000,000 * .124 comes to $124,000. Nice chunk of change. But wait! Think again. Because the "annual wage maximum" on Social Security is only $106,800. If you earn more than that, this additional income is TOTALLY free from Soc. Sec. taxes. So what you pay for Soc. Sec. if you earn $1,000,000 or $2,000,000 or $200,000,000 or $1,000,000,000 is exactly the same: $106,800 * .124 = $13,243 -- which amounts to 1.3243% of a million dollars -- and .013243% of a billion dollars. So while the great majority of us pay over 12%, the millionaires pay only a little over 1% -- and the billionaires pay only a minuscule fraction of what they take in. (I was going to write "earn," but nobody actually earns a billion dollars, do they?)

We're continually being reminded that Social Security is in trouble, that the reserve will run out in a few years, that thanks to the Baby Boom there are many more older people around now than ever before, etc., and that this amounts to a huge crisis unless the benefits are drastically reduced. But what we do NOT hear is that there are also far more millionaires and billionaires living in the USA than ever before.

We are constantly reminded that we are in over our heads financially and accumulating a huge national debt, but no one seems interested in the fact that the USA is by far the wealthiest country that ever existed in the history of the world. True, the national debt looks high: well over $14 trillion and climbing. But our total national household wealth is estimated at over $52 trillion. In other words, if we were to institute a one time only wealth tax of roughly 27% we would instantly eliminate our entire national debt! And when you consider that during the 1950's the tax rate on the highest incomes was over 90%, a 27% tax doesn't seem all that unreasonable. Don't get me wrong, I'm not advocating such a tax, only trying to put things into perspective.

So. Are we really in the midst of an entitlements crisis? Or does the real problem lie in another direction entirely?

(to be continued . . .)

Dems come "clean"

2011-07-28T11:31:00.001-04:00

Was it this obscure blog that made the difference?

House Democratic leaders on Wednesday called for a clean vote on raising the debt ceiling to prevent a government default.

House Minority Leader Nancy Pelosi (D-Calif.), Minority Whip Steny Hoyer (D-Md.), Assistant Leader James Clyburn (D-S.C.), Democratic Caucus Chairman John Larson (D-Conn.) and Rep. Xavier Becerra (D-Calif.), the caucus vice chairman, are all pushing legislation to increase the debt ceiling by $2.4 trillion — enough to see government spending through 2012.

The bill, sponsored by Rep. Peter Welch (D-Vt.), contains none of the deficit-reduction provisions Republicans are demanding as part of a larger debt-ceiling package. (from Dem leaders unite in call for clean debt-ceiling vote, Blog Briefing Room, July 27, 2011.)

I'd love to think my posts had something to do with this heartening development, but it so happens I'm not alone. After doing some Google searches yesterday, I discovered that others have also been calling for a clean bill over the last few weeks. E.g., here's what Matthew Yglesias had to say back on July 11:

Surveying the scene, perhaps everyone should take a deep breath and recall the traditional way the country has avoided default when the debt ceiling needs raising: Congress raises the debt ceiling.

It’s that simple. The same kind of “clean” debt ceiling increase that’s passed repeatedly over the past 100 years will allow the country to avoid default without tax increases, without defense cuts, and without slashing entitlement spending. . .

Right now . . . the only crisis we face is an entirely self-created one. House Republicans wanted to create a hostage situation to force President Obama to propose steep spending cuts. But when Obama came to the table with a proposal for steep cuts, it turned out that Republicans don’t actually want to sign a bipartisan deal. Which is fine. Don’t sign a deal! The absence of a deal in no way forces a crisis. Just raise the debt ceiling, fight the 2012 elections, and pick up the long-term budget issue then.

Here's what Elizabeth Drew wrote last Monday, in Politico:

With the leaders of both chambers still noodling around in a search for what to add to the bill to raise the debt ceiling, with Obama having a long series of high-level meetings at the White House, with the public growing tired of the spectacle and worried about jobs, and the bond market getting antsy, the stock market poised to take a deep dive, foreign investors who prop up our debt having second thoughts and the president looking increasingly like a wuss there’s a simple step that Obama could – no, should – take. . .

. . . he should demand that the Congress get a clean bill raising the debt limit to his desk by Thursday. Moreover, he should state that he will veto any bill encumbered by amendments, and emphasize that if the Congress does not comply he will take the issue to the American people.

This would be no small threat. If I were a betting person I would hazard a very large sum that if the president stands up and says, “ENOUGH” — that he has tried and tried and tried to work out a compromise acceptable to the two major parties, but he hasn’t been able to and neither have they, that he is now demanding what he should have received in the first place, a bill unencumbered with Republican economic policy — he will be cheered throughout the land. Of course, a segment of Republicans would object. But that would just play into the president’s strategy of isolating the Republicans, of showing that they are far from the mainstream, are obstructionists and unreasonable.

I'm pleased to learn I'm not the only one out here in blogland who can see the obvious. The Republicans are not simply demanding steep budget cuts with no new taxes, they've been doing that for years. What's new is that the Tea Party is holding a gun to the heads of the American people and threatening to shoot unless they get exactly what they want. A "clean" bill at this late date will make the nature of their little scheme abundantly clear to all. If they are unwilling to shoot, they will be forced to lower their weapon. And if they decide to shoot, everyone will feel it and everyone will know where the shot came from. There will be no alternative, no more smoke and mirrors to hide behind.

And now some of our Democratic leaders have also figured it out, apparently. So far I haven't seen any reference to this development in the mainstream press, but I have a feeling the movement will gather strength over the next few days, since the possibility of a negotiated "deal" seems increasingly hopeless.

The Clean Bill Option

2011-07-27T09:43:00.003-04:00

I predicted back in February that the Tea Party's days were numbered (see Reading the Tea Leaves) and my prediction is about to come true. Here's what I wrote back when:

if the national debt limit isn't raised, the USA will go into default and if the USA defaults, then a whole lot of very wealthy people will be in danger of losing a whole lot of their wealth. Think military-industrial complex, think Big Oil, think of all the Pharmaceutical companies tied to Medicare and Medicaid, think of all the fat cats playing it safe with huge investments in government bonds. Think also of what will happen to the almighty Dow -- a US default will shred investor confidence and the market will drop to the floor -- think financial China Syndrome. Think also of what will happen to the dollar when the Renminbi takes over as the international currency of choice. As the dollar tanks, so will the wealth of all those wealthy puppet masters.

It's taken a while, but the power brokers have finally figured it out. From the NY Times this morning:

The U.S. Chamber of Commerce, which spent millions of dollars last year helping elect Republicans to Congressional seats, is struggling to convince the House it helped to build that the debt ceiling must be increased. The chamber and other business groups have pressed with increasing urgency for Congress to raise the maximum amount that the government can borrow. They have cataloged the consequences of default at meetings, parties and dinners and over drinks. . .

“I think they’re very pleased with the antigovernment inclinations of the Tea Party Republicans when it comes to taxes and regulation,” said David Axelrod, one of the president’s chief political advisers. “But now we have a situation where the integrity of the economy and the U.S. financial system is at stake, and they’re being hoisted on their own petards.”

As I've said, it's the Democrats, NOT the Republicans, who are holding all the cards in this little game, only they don't get it. Like the bull in the bullfight, they've been distracted by the flashing red cape and lost track of the real target. Instead of offering more and more "compromises," they need to take advantage of the superior position they are actually in and force the hand of an opposition that is currently preoccupied with outsmarting itself. Which is why, as I see it, there is only one logical thing for the Democrats to do: offer a "clean" bill to the Senate, a simple yes or no choice on raising the debt limit; pass it in the Senate; and watch the House Republicans squirm. The Tea Party will cave, guaranteed. A vote against raising the limit at this late date would forever alienate them from their real power base, the ultra conservative oligarchs who have the most to lose from a "no" decision.

Then, and only then, will it be time for Obama and his constituents to draft sane legislation to deal with the deficit and other economic issues (such as jobs jobs jobs), but on their terms, free from Tea Party extortion. True, they don't control the House. But they won't need to control the House. If the Republicans want budget cuts, the Democrats will be only too happy to oblige, but the cuts will be based on a reasonable assessment of our situation and not right wing "big government" paranoia. And any cuts could be matched by reasonable tax increases for the wealthy, along with reasonable controls on their financial behavior. If the Republicans don't like it, they will be free to vote it down. But that would mean voting against the budget cuts they themselves have been demanding. In other words, the tables will be turned -- and the tail will no longer be wagging the dog.

What a Waste!

2011-07-26T11:14:00.000-04:00

The debt ceiling will be raised. There's no doubt about it. Like the TARP deal, however, it's going to take some major signs of collapse, such as a market nosedive, to get the players back to the table to hash out a "deal." Only there won't actually be a deal, because the Republican hard-liners realize they don't need to give our President a single thing. His idea of compromise is to offer more and more until the other side has exactly what it was demanding in the first place. And if they then hesitate (since by now they realize this guy is the perfect mark), he'll be happy to offer even more than what they originally wanted. His pathetic gaffe, "call my bluff," says it all. He thinks he's negotiating while it's obvious to everyone else that he's simply being had.

So yes the ceiling will be raised. And what then? After the dust clears we'll all look around us and wonder what the HELL has been accomplished after all these months of pointless and destructive dickering. For what? Why was it so important to raise the debt ceiling in the first place? So the Republicans could humiliate Obama and trash the social contract? And what did the rest of us get in return. What did the Democrats get? What did Obama get?

Lemme guess: preservation of the "status quo." It's a bit tarnished, you gotta admit. The Republicans will have taken huge chunks out of it. But after the dust settles the fundamental illusion will still be there, the fantasy of the "free market."

Wake up, folks. The "free market" collapsed back in 2008. Or, more accurately, it revealed itself as the delusion it always was. The notion that we can somehow reverse history and return to a "status quo" that was never anything more than a mirage is wishful thinking at its most destructive. So when the dust clears where will we be? Back where we started, with a series of intractable and seemingly insoluble problems, both economic and social. The only good thing about all the huge budget cuts emerging from this unholy "deal" in the making is that it will make things so much worse that it will no longer be possible for the majority of our citizens (I prefer this term to "taxpayers" or "consumers") to dream on as though nothing had really happened.

But failure to raise the debt limit would be infinitely better in this regard, a healthy bucket of ice cold water poured over the heads of a bunch of lazy dreamers: "do we really have to get up and go to school? Can't we just lie here all day?"

Why the Democrats have a good hand and the Republicans have nothing

2011-07-25T11:20:00.000-04:00

Readers of yesterday's post may be scratching their heads over my claim that the Republicans are bluffing from a lousy hand, because that is not how it may seem. So, for those of you who, like our President, are not poker players, an explanation may be in order.

I'll begin with some quotes from a previous post of mine, dating from last February: Reading the Tea Leaves.

[The Tea Partiers] have an Ace up their sleeve -- so they think. If the Democrats won't cooperate, they'll make sure the debt limit isn't raised, which [requires] Republican votes -- lots of them. And if the debt limit isn't raised, why, it will be the end of civilization as we know it. Which is fine with them. Also fine with me, by the way.

Unfortunately for our eager beaver Tea Partiers, it will NOT be fine with the oligarchs whose big money got them to Congress in the first place. Because if the national debt limit isn't raised, the USA will go into default and if the USA defaults, then a whole lot of very wealthy people will be in danger of losing a whole lot of their wealth. . .

So. No WAY are the puppet masters going to allow their puppets to force "big government" into a great big huge default. Their dirty little secret is that they need big government. But they need it to do THEIR bidding, not the bidding of US citizens. Which is why they invented the Tea Party in the first place.

Thus, as I see it, there is no way the Tea Party could maintain its grip on the Republican power structure if they were to vote down a simple yea or nay bill to raise the debt ceiling. Such a move would finish them -- and they know it. (At least most of them do. I don't doubt there are some "true believers" among them, who will sooner or later be in for a rude awakening.)

Which is why the Republican leadership decided to rig the game in such a way that a simple yea or nay vote would never come up. It was a huge con and it looks like it's going to pay off big time. Obama has been hypnotized into believing he has to offer the Republicans something to get their cooperation and Boehner and Co. have been playing that for all it's worth. There's no reason for them to agree to raise taxes (and offend their base) when Obama's been signaling from the start that a default would be unacceptable and he'd do literally anything to avoid it.

The Republicans now smell blood and realize that if they hold out and continue to offer nothing in return for the draconian cuts Obama has already agreed to, then they can't lose. The debt limit will be raised AND Obama and the Democrats will be humiliated and reviled for caving in to unreasonable demands. If they were to make the mistake of actually compromising and agreeing to some tax hikes, then it might look like Obama was the winner. Why would they want to do that?

For the Dems the solution is obvious, but it would take some guts. Offer a very simple bill limited ONLY to the raising of the debt limit. Pass it in the Senate. And force the Tea Partiers in the House to decide whether they really want to take the heat for destroying the US economy AND the wealth of their patrons. Since no tax increase would be on the table, they needn't worry about violating their silly pledge. So all they'd be left with would be the argument that forcing the US into default is preferable to not cutting trillions out of Social Security, Medicare, education and Mom's Apple Pie. Is that a poker hand? I don't think so.

Debt Ceiling Poker

2011-07-24T16:43:00.001-04:00

Once again I apologize for neglecting this blog. I was focused for some time on an ambitious project that's now, basically, complete.

Meanwhile I've been enjoying all the sturm und drang over raising the debt limit, which is playing out more or less as I'd predicted.

The Republicans finally caved as I knew they'd have to. Mitch McConnell, under extreme pressure, I'm sure, from his billionaire controllers, offered a plan that would have handed off the tough decision-making to Obama, correctly noting in a media interview that the Republicans have a lot more to lose over this battle than the Democrats. It's always been clear to me that the Dems are holding ALL the cards in this matter and the Republicans basically none. The only problem is: Obama can't play poker worth shit!

In a gaffe worthy of George Bush II, he even dared them to "call my bluff." Sorry, Barack, you call the other guy's bluff, you don't invite him to call yours. You want him to believe you are NOT bluffing. Sheesh, what a hopeless fool the President I voted for is turning out to be. Also, when the other player folds, you don't entice him to stay in the game by adding more money to the pot.

The game is up for the Republicans, but they know how to bluff and our President is clueless. Don't dare them to call YOUR bluff -- call THEIRS, you idiot!

At this point, the adults in the Democratic Party need to convince their boy wonder to go play a few rounds of golf and leave the Republican diehards to the hardened veterans. Surely someone in the Party (maybe Biden?) understands poker well enough to realize the other side has lost and all that's needed is a show of cards.

In short, what needs to be done is for the Democrats in the Senate to present a plain vanilla bill that simply raises the debt limit and NOTHING more. No more wheeling, no more dealing, no more offers hoping for counter-offers that are never ever offered. In other words all the Dems need do is invite their opponents to show their hand. Are they or are they not willing to raise the debt limit? That's ALL that's needed, just that one simple bill. It should have no trouble passing in the Senate, since the Dems have the majority and no Republican in his right mind would dare risk being held responsible for economic catastrophe by filibustering.

Once the bill is passed it's handed over to the House, which will be a moment of truth for the Tea Party. As I see it, there's no question as to the outcome. They will fold.

Wonderful, you say? Not really. Because the Democrats are in total disarray. It's unlikely any of them can see clearly enough to offer up the simplest and most effective solution. After all their failed attempts they will most likely go down to the wire with one lame offer after another, which is exactly what their opponents expect. Holding NO cards at all, the Republicans will continue to bluff, offering nothing in return ever. If the Democrats then hold out, and they might, the "disaster" will be upon us. Checks won't get mailed, the markets will tumble and -- just as with the TARP -- congress will have "second thoughts," the Democrats will act "responsibly" (what a laugh) and totally capitulate to all Republican demands. At that point, the debt limit will get raised. And that will be the death of the Democratic Party.

So long, suckers.

My Letter to the NY Times

2011-05-07T22:59:00.002-04:00

At this point I don't know what to think about the Bin Laden mystery. We're not hearing any denials from any of the witnesses. No one has come forward to dispute the identity of the wives or children who were present. They're showing videos of Bin Laden watching himself on TV. Al Qaeda has acknowledged his death, for whatever that's worth. (Normally any pronouncement from that quarter would be widely ridiculed but in this case everyone seems to be taking it at face value.)

I'm still puzzled as to why they felt they had to dispose of the body so quickly and I'm annoyed over Obama's unwillingness to release the photos, but on balance it looks like they actually did off the guy, and on balance I have to admit that it's OK with me. Only I wish they did it in a less cowardly and reprehensible way. I am moreover deeply distressed that they felt they had to kill others on the scene, who may or may not have shared his guilt to the same degree. Surely those people deserved a fair trial even if you want to agree that Bin Laden didn't. But most of all I am incensed that they lied about the incident, and lied in the most reprehensible possible way, by making cold blooded murder look like heroism.

Maureen Dowd has written a particularly disgusting editorial in the NY Times, entitled Killing Evil Doesn't Make Us Evil, and I felt obliged to respond. This is what I wrote:

Our soldiers killed an unarmed man in cold blood when they could just as easily have captured him. And by the way they also killed some other people, including a child. What was THAT for? Moreoever, our President lied about it, making it into some sort of heroic firefight when it was nothing of the sort. The was no "fog of war," so why was it so hard for those in charge to get the story straight? Looks to me as though the truth came out only after they reminded themselves that there were witnesses present. Guess they forgot to kill everyone on the premises, what an embarrassing oversight.

I'll never again believe another word this President or anyone in his administration says about anything. I voted for him once, but no more. And I have no use for you, either, Maureen. Killing evil may not be evil, but killing innocent bystanders for no reason is. And lying about it to make yourself look better is. Too bad you don't get it.

More reasons for doubting the official Bin Laden story

2011-05-04T16:19:00.001-04:00

But first, I just discovered the following very interesting items on the 'net. From the NY Times: Obama Says He Won't Release Photos of Bin Laden's Corpse. And from Citizens for Legitimate Government: CIA Denies Bin Laden Was Captured Before Killed. "The CIA categorically denies two stories coming out of Pakistan, sourced to bin Laden family members: 1) that Osama bin Laden was captured at the scene and then killed minutes afterward; this from his daughter. 2) that a second bin Laden son, Mohammed, was thrown on the chopper as it departed Abbottabad. "We categorically deny both of those," said a CIA spokesman."

Both stories, sadly, confirm my suspicions, as expressed in the previous post. And also my deepest fears, not only about what actually may have happened (which seems bad enough) but also regarding what all the conspiracy theorists are going to make of them and also what ordinary people all over the world are going to think. In short, this REALLY LOOKS BAD!!!!!

Here are my reasons for doubting the story they've put out:

First, we have to consider how unlikely it would have been for Bin Laden to choose that particular place to hang out. Even if he was under the "protection" of the Pakistani military, the man had a huge price on his head -- so why tempt some soldier who might spot him or get wind of his presence and decide to rat him out?

How could he possibly have entered that compound un-noticed? Did they find a tunnel? Not that I've heard. By helicopter? How many suspicions would that have raised? It's a military site and they have checkpoints everywhere. People have to present ID. We're talking about a 6'5" Arab whose age is known. How does he get past the guards? Even assuming they've been bribed, how do you risk even one of them deciding to blow the whistle and collect millions in reward money?

How could they be sure they weren't being deliberately set up? Suppose Bin Laden hatched a plot to make it look like he was there, complete with "wife" to rush to "his" defense and then ID "him." They said his "wife" called out his name. What would she have said? "Get out of here Osama Bin Laden, they're after you"? Isn't that a bit wordy? Did any of them speak Arabic? Could they even understand what she said? If it's a setup then it's a great one. Either the mission fails and they have to admit an embarrassing mistake. Or the mission "succeeds" and they manage to convince the world he's dead when he's not. Clearly a win win for Bin Laden and a disaster for the rest of us.

Also, how do you claim he was IDed by his wife? If you don't know the guy's identity then you don't know the "wife's" identity either. Who IDed the "wife"?

We learned recently from Panetta what I'd already suspected (see yesterday's post): they actually had no evidence whatsoever that Bin Laden was on the premises. They were operating on a hope and a prayer. Chances of failure were awfully high, as were chances of a major embarrassment. Somebody stuck his neck way out there and it looks like that somebody might well be trying really hard to cover his ass with a raft of lies.

So what if it's a "Muslim custom" to bury the dead within 24 hours. Show me a directive from any branch of the US military insisting that all Muslim combatants killed on the battlefield get buried within that time frame. Suddenly this is official US policy? If you want to convince us then prove it. Show us the directive.

If they were looking for OBL and he was unarmed, as they now admit, then the first concern would be to identify him, NOT shoot him in the head and blow half his brains out. So the story I've quoted above, which is apparently coming from his "daughter," rings true. If they actually found someone that resembled Bin Laden, they'd have photographed him and sent the photos off for identification. They'd have then taken a blood sample. And they would have held this person until they were sure it was actually him. Once he's been IDed, and if it actually was him (which I strongly doubt) then a decision would have to be made whether to hold him for trial or simply execute him on the spot. There's NO WAY they'd have decided to immediatly get him on board a boat and bury him at sea, that makes no sense at all. Unless it's not really him, in which case it does make some (twisted) sense, because if it's not him, you and your buddies are guilty of murdering those people on the first floor (remember them?). And if it IS him, then the first thing you want to do is make sure the rest of the world accepts that it's him by encouraging an independent autopsy and DNA testing by independent agencies. All we have at this point is the word of the (ever-(un)reliable) CIA. How convincing is that?

I feel sure they have photos. Of some guy who maybe looks a bit like Bin Laden, but isn't him. The photos probably reveal no wound, because they would have been taken prior to executing the poor guy, for identification purposes. How do you identify a face with a huge hole in it? And why take a picture after you've done such an awful deed? As proof of your guilt?

I've been defending Obama up till now because I've always been convinced of his basic honesty. But now I have doubts, because by now he has to be extremely suspicious, and he has to have seen whatever photos were taken. But I suppose he sees that it's too late now to back down and confess that, "Hey folks, maybe we goofed. Maybe it wasn't Bin Laden after all."

And I'm sorry, but this is the 21st century folks, and we've been subject to all sorts of violent images for many years now. I remember seeing a horrible photo in the National Enquirer of Jayne Mansfield after her auto accident, with most of her brains hanging out. I remember seeing a large gathering of high school students, fascinated by the video of Daniel Pearl being beheaded, as transmitted via a school computer. I couldn't watch, but they did.

So when Obama tells us it would be "inappropriate" to make public the one piece of evidence that might be used to confirm the story he's putting out, I have to confess: I cringe.

Some Bin Laden Scenarios

2011-05-04T13:56:00.000-04:00

I've been trying very hard to find some way of making sense out of the Bin Laden stories emanating from the White House and sorry, but they don't make sense. I say this with a large measure of distress, because, first of all, I badly want to believe justice has been served and Bin Laden has been taken out. By whatever means, that's fine with me. Secondly, the last thing I want to do is encourage the usual conspiracy theorists, especially the wide-eyed and poorly informed "9/11 Truth" believers, whose ideas about the 9/11 attacks border on lunacy and are clearly the result of mass hysteria.

So let me make myself clear from the start. NO, I do not think this is a government conspiracy. NO, I do NOT think it has anything to do with 9/11. NO, I don't think the Jessica Lynch story of Bin Laden hiding behind his wife and firing on the Seals, who then heroically took him out in self defense, was concocted by Barack Obama as part of some effort to make the event seem more heroic or to help him get re-elected. My reason for rejecting that possibility is that Obama isn't stupid. Contradictory reports make the whole thing sound suspicious (which it certainly is) and thus have the potential to be a huge embarrassment for the administration, which is going to have a lot of explaining to do after all the celebrating has died down. After all he's been through with the "birther" nonsense, Obama has to have been extra concerned with fomenting yet more conspiracy theories, so conspiring to lie in such an obvious way would have been the last thing on his to-do list.

So NO, I do NOT think Obama is evil. NO I do not think he's duplicitous. However, YES, I DO think he's naive and easily manipulated. But you knew that already, if you've been paying attention to how easy it's been for the Republicans to play him since he took office.

I have no interest in producing yet another conspiracy theory, especially since I don't think there was a conspiracy, at least not a conspiracy of the usual sort. I see it as more of a fiasco, followed by some fumbling attempts to save face. However, I do NOT think we are getting the whole story and I DO think something went very wrong with what must have already been a pretty lame plan to begin with. Here are some scenarious that DO make sense, at least more sense than what the White House has been putting out:

1. The CIA get some information from the usual dubious sources and on the basis of totally circumstantial evidence (they admit this) decide there is a chance Bin Laden is living in a certain compound in Pakistan. With White House approval they send in the Seals, who engage in a firefight, then make their way to the third floor, where they encounter an unarmed male who might or might not be OBL. They take him into custody unharmed, take photos, electronically mail them to CIA headquarters, where it is determined that a. it IS Bin Laden or b. it is NOT Bin Laden. Assuming a. for the moment, they summarily execute him, presumably as ordered, and arrange for a rapid burial at sea, since an autopsy would reveal the manner in which he was killed. They concoct a story about him having a weapon and resisting, rather than having to admit he was executed.

2. Same as above, except it turns out NOT to be Bin Laden. In this case, a decision is made to execute him anyhow and tell the President and the world that it WAS Bin Laden, since telling the truth would be enormously embarrassing. He has to be buried at sea because otherwise their deception would be revealed. This would have to have been a CIA decision because it was the CIA that would have verified the phony DNA match.

In neither case would they be able to produce a photo of a man with a hole in his head, because it's very unlikely that an unarmed man would have been shot immediately, before his identity could be verified. That makes no sense, as I see it. And after they executed him there would have been no reason to take a picture. So if you see a picture of Bin Laden with a bullet in his head, you'll know I'm wrong. And I'll breathe a huge sigh of relief, because I really want to believe their story, whether it makes sense or not.

Botched Operation?

2011-05-02T18:53:00.000-04:00

You'd be hard put to find anyone anywhere in the world who's less of a conspiracy theorist than I am. Imo the "birthers" are complete idiots, and I've had very disturbing disputes with people whose opinions I thought I respected over the "911 Truth" movement, which is even more idiotic. I never took much interest in the JFK assassination theories, though I do think it possible that more than one person was involved. And I have no use whatsoever for those who so badly want to believe that "aliens from outer space" with flying saucers have somehow invaded Earth.

Nevertheless, there are some things that really bother me about the reports surrounding the Osama Bin Laden assassination. What bothers me most is the fact that his body was so quickly buried at sea. I also wonder at the practically instantaneous DNA results, which look extremely suspicious, because identifying DNA is a science and not a magic trick. And now, hearing the reports coming from PBS, I see NO indication that anyone had actually identified OBL prior to the attack.

Given the riskiness of this operation, and what was at stake were it to fail, one can't help but wonder whether those involved might have decided to make their mission more "successful" than it actually was by claiming just a bit more certainty than the evidence warranted. The great question for me is: was our President actually so stupid as to order such a rapid disposal of the body at sea? or was this a decision made on the spot by those claiming to have assassinated Public Enemy Number One?

Also suspicious is the report that he was shot in the head. Meaning that the photographic evidence, if it will ever be released, may well be far from definitive. Why shoot him in the head anyhow? Snipers are trained to aim for the center of the chest, the easiest target and also the most effective.

Sorry, but there is something about this incident that bothers me. As much as I hate the idea of encouraging conspiracy nuts, I'm afraid I have no choice. If Bin Laden was NOT where they thought he was, and some relatively innocent people had been killed, then there would have been a huge temptation on the part of the assassination party to play games with the evidence. If Obama insists the body was disposed of at his order, I'll back off, because I trust the guy to tell the truth. If otherwise, then I just don't know what to think . . .

Toasting the (Mad) Tea Party

2011-04-28T18:35:00.002-04:00

Sorry for neglecting this blog for sooooo long. But I've got an excuse, because I've been busy with more "pressing" commitments, as the saying goes. But what could be more pressing (or amusing) than the coming debate over the national debt ceiling? Way back in Feb. I wrote as follows:

The Tea Party is toast. That's my prediction. What a huge laugh. The oligarchs pulling their strings convinced them "big government" is the problem, so they bought that line and are now intent on bringing "big government" down. And they'll be given a great opportunity very soon, when it's necessary to raise the limit on the national debt.

Well that day (D day!) is well nigh upon us. And the hand wringing has begun in earnest. Witness former Clinton Treasury Secy. Robert Reich, whose blog I can't resist quoting. The blaring headline reads: Extortion Politics: Why Won’t American Business Stop the GOP From Threatening to Blow Up The Economy?

As the government approaches its borrowing limit of $14.3 trillion, Republicans are seeking political advantage over what conditions should be attached to raising that limit. This is a scandal — or should be. Raising the debt limit shouldn’t be subject to party politics. Economic extortion should be out of bounds.

Actually I shouldn't be mocking Reich, because I agree with him almost all the time, he's one of the good guys, I admire him and I'd probably vote for him, if he chose to run for something -- anything. But on this matter, he's being much too serious. He just doesn't get how funny it is.

Not only would the government be unable to issue Social Security or Medicare checks but the United States couldn’t pay interest on its current debt. We’d go into default. The full faith and credit of the United States would be in jeopardy. Treasury bonds would go into free fall. Interest rates would skyrocket. We, and most of the rest of the world, would fall into financial chaos.

Ta da ta da, blah blah. So WHAT????? First of all, financial chaos isn't the same as real chaos. Real chaos is what is now happening in Egypt, Libya, Tunisia, Yemen, Bahrain, Syria, and is on the verge of descending on the rest of the inegalitarian world like a plague. Maybe a good plague, let's hope -- but chaos nevertheless. On the other hand, financial chaos, can, like greed, be "a good thing," to quote the honorable Gordon Gekko.

I once devised a test to tell how "hip" somebody is. It's simple. You just ask them: "are you hip?" If they simply say "yes," or if they simply say "no," then they are definitely hip. Hand them a Tootsie Roll and move on. But if they start whining about "how do you really know what 'hip' means," or "how can you possibly say whether someone is 'hip' or not?" or "sorry but I refuse to participate in such a meaningless exercise," etc., then they are DEFINITELY not hip and you can forget about them, they are useless. Sorry, Robert, but you are not hip. Not even close. Maybe it doesn't really matter, but . . .

For one thing, what is at stake here is NOT the future of the United States or the World, or the welfare of ordinary people, or civilization as we know it, but the future of Capitalism, more specifically, so-called "free market Capitalism." If the debt limit weren't raised and the US Government actually went into default, then we'd be kissing free market Capitalism (with a capital capital) goodbye. Which is the great irony here, because the Tea Party sees itself as Capitalism with a capital capital for sure. And what they would be voting for would not be Capitalism (with a capital whatever) but: SOCIALISM. (With EVERY letter capitaled.) Because once the "public sector" goes under (which is what will happen) there will be no alternative but for "big governments" all over the world to nationalize everything and institute planned economies everywhere -- whether they want to or not!

I wouldn't be picking on Reich at all if it weren't for the following bit:

The biggest surprise is the silence of American business and Wall Street. They have as much if not more to lose as anyone if this game ends in tragedy. Yet the GOP — which big business and Wall Street fund — insists on playing it.

What's hugely funny here, and what will mark Reich forever in my mind as hopelessly UN-hip, is the hugely naive assumption that American business and Wall Street are remaining silent on this matter. I can guarantee this is NOT the case. By this time, I can assure you that every single Mad Hare and Hatter in the Mad Tea Party is getting an earful from the puppet masters who created them -- and would destroy them in a digital trader's micro-millesecond if they even considered letting the US govt. default on its precious debt. Let the games begin, sez I. And let's hope the Democrats don't cave, because if they are as thoroughly un-hip as Robert Reich, then Capitalism will not only be saved, but it will RULE. And the rest of us will be royally screwed.

Reading the Tea Leaves

2011-02-17T15:25:00.001-05:00

The Tea Party is toast. That's my prediction. What a huge laugh. The oligarchs pulling their strings convinced them "big government" is the problem, so they bought that line and are now intent on bringing "big government" down. And they'll be given a great opportunity very soon, when it's necessary to raise the limit on the national debt.

Right now the Republicans are engaged in a slash and burn attempt to drastically cut any program they can think of. To the bone. But they won't get very far, because any such cuts will be voted down in the Senate and, if necessary, vetoed by the President. But they have an Ace up their sleeve -- so they think. If the Democrats won't cooperate, they'll make sure the debt limit isn't raised, which does require Republican votes -- lots of them. And if the debt limit isn't raised, why, it will be the end of civilization as we know it. Which is fine with them. Also fine with me, by the way.

Unfortunately for our eager beaver Tea Partiers, it will NOT be fine with the oligarchs whose big money got them to Congress in the first place. Because if the natinal debt limit isn't raised, the USA will go into default and if the USA defaults, then a whole lot of very wealthy people will be in danger of losing a whole lot of their wealth. Think military-industrial complex, think Big Oil, think of all the Pharmaceutical companies tied to Medicare and Medicaid, think of all the fat cats playhing it safe with huge investments in government bonds. Think also of what will happen to the almighty Dow -- a US default will shred investor confidence and the market will drop to the floor -- think financial China Syndrome. Think also of what will happen to the dollar when the Renminbi takes over as the international currency of choice. As the dollar tanks, so will the wealth of all those wealthy puppet masters.

So. No WAY are the puppet masters going to allow their puppets to force "big government" into a great big huge default. Their dirty little secret is that they need big government. But they need it to do THEIR bidding, not the bidding of US citizens. Which is why they invented the Tea Party in the first place. But the Tea Partyers have gotten drunk on the illusion of power. They actually think THEY are running things -- but they are not. So there is no WAY the debt limit will not be raised.

Very very amusing, yes. Oh what fun. Only one thing I worry about, and that's not the Republicans, but the Democrats. Because these people have turned into such total wimps, what could happen is that they could let themselves be bluffed into going along with the Republican slash and burn fiasco, for fear the threats to force us into default are real. What Democrats need to understand, and what Obama needs to understand, is that this is a huge bluff -- a game of chicken. No WAY will the puppet masters allow their puppets to force us into default, and them along with us. If the Democrats hold firm, the Tea Party will be toast. And Obama will be a shoo-in for re-election, even if he is only able to raise a measly half billion.

The Revolution Will Be Televised

2011-02-10T20:49:00.000-05:00

Sorry to be away from this blog for so long, but in face of today's events I can't keep away any longer. I've been watching the events in Egypt via a live feed via Al Jazeera and I have to say that I'm impressed with what I see. Huge crowds of people massing together with great discipline and dignity. Surrounded by an armed force that has, so far, also behaved with great dignity and restraint. A peaceful revolution in the making! With the eyes of the world upon it. Thanks to Al Jazeera. Let us hope it can remain peaceful.

The question is: what are they rebelling against? Who is the real enemy? Mubarack? Well, for now he is the focus, yes. Everyone was hoping he'd step down today, but it's clear he has no intention of doing so. Will he or won't he? I have a feeling it doesn't matter. It seems inevitable that the army will, at least for now, side with the masses of protesters. The presidential palace will be stormed, and Mubarack will either be arrested or killed.

Then what? Is Mubarack really the problem? Will the problem vanish when he is gone? The real problem in Egypt, as all over the world is, very simply: inequality. The students of Egypt have been swindled. There are no jobs for them and no future. But students all over the world have been swindled. Certainly students here in the US who now owe tens of thousands of dollars with little or no prospect of any sort of job at all have been swindled. So have workers, so many of whom have lost their jobs. But so what, since the jobs they lost weren't worth much to begin with.

We are told there ARE no jobs. We can no longer compete with India or China. Automation has made humans obsolete in any case. This is the message we are hearing all over the world from our leaders. Even the leader in which we have invested so much hope, Barack Obama. No jobs, no prospects, no money, no nothing. We have no choice but to drive down that terrible deficit and hope that some miracle will rescue us.

Meanwhile, the wealthy and well connected, the ones who created the huge disaster that got us into the mess, continue to do all too well for themselves, living like kings at our expense.

Sorry. I was speaking about Egypt, but as I see it, Egypt is only the beginning, because this is a worldwide problem. The media keep talking about unrest in the Arab world, as though the Arab world was the only place where the wealthy are gorging themselve on the future of the people. When Mubarck is out, then the real test will come. Will the educated young people of Egypt recognize their real enemy? Will they demand an end to inequality? Will they create a government that has the balls to confiscate the absurdly inflated wealth of the elite? And if they do, then what country will be next in line?

We are continually being told there is no money for this or for that, while the world is reeling with the excesses of billionaires who literally don't know what to do with all their cash. We are told that automation has made so many jobs obsolete and isn't that a shame, as though anyone in his or her right mind would even want such a job. If computers can do what humans used to do, then as I see it those humans should now be free to do more interesting, challenging and creative things with their lives.

But the computers are working for the privileged elite, not for us. And why is that? Why is it that the elites are the ones who profit from cheap labor and automation -- at our expense? ONLY because we let them.

The Egyptians protestors strike me as highly educated and intelligent. I have a feeling they are going to figure this out. Egypt will never be the same. And neither will the rest of the world.

Eve of Destruction (er, Election)

2010-11-01T21:25:00.004-04:00

This is what I wrote on this blog, back in February of 2009:

When I saw President Obama's speech before congress last night I was reminded of this film. Everyone seemed to be having such a great time (except for the Republicans of course) and our president was literally beaming with confidence. However, as is becoming increasingly evident, the barrier confronting them is not one that can be climbed over, tunneled under or smashed through. Like the door of the dinner party or the Zen koan, it is a gateless gate. The wealthy, privileged and spoiled partyers of Bunuel's film start the evening happy and carefree, but as the film progresses, food and water become increasingly scarce and the social order disintegrates.

The film I was referring to was Luis Bunuel's The Exterminating Angel, one of the most powerful and disturbing films I've ever seen. It begins with a lavish dinner party. The host and guests indulge themselves with great relish, but when it's time to leave they can't. The door is unlocked but for some mysterious reason they are unable to pass through it. This is an example of the Mumonkan, or Gateless Gate, the name of a famous anthology of Zen koans. For me, the parallel between this party and the exuberance of the Democrats just after Obama's election was too good to resist. Because, after all, I am not only an "economist" but also: a poet.

And now, it seems, the prophecy is coming true. The party is over, there is no escape. But the denizens of this dinner party are not only the Democrats, but the Republicans -- and the Tea Partiers -- as well. There is no way out, because the economy has already collapsed, as I've been arguing all along. You'll read endlessly in article after article, book after book, about all the things that went wrong, but when you read about how to fix it, the remedies are unconvincing. There is no way out. The economy has already collapsed and we are now living in the interlude between the collapse and the acceptance of that collapse. Meanwhile, everyone is in a state of denial, proposing this remedy or that, austerity, deficit spending, quantitative easing, stronger currency, weaker currency, more inflation, less inflation, more lending, less lending, more regulation, more deregulation, more government intervention, less government intervention, no government at all, etc., etc.

If it weren't so terrible it would actually, like Bunuel's film, be very amusing. For example, the ultra-conservative "Tea Partiers" demanding an end to government control are actually advocating the most radical of all leftist positions: anarchism! Meanwhile, pseudo-leftist "Truthers" have become convinced that the 9-11 attacks were a plot engineered by Bush and Cheney, and the Twin Towers collapse was caused by a pre-planned implosion! (Yee Gods where do they get this stuff?) And pseudo-fascist pinheads like Limbaugh and Beck are screaming that Obama's pathetic efforts to preserve free market capitalism at all costs are examples of socialist extremism. You couldn't make this stuff up. What a laugh! In other words, the situation has become so dire that no one understands anymore how or what to think.

If the Democrats had refused to go along with the TARP bailout from the beginning, and simply allowed the financial system to collapse, then the power of the oligarchs now spending billions to defeat them would have been broken, and we might now be in a position to once again develop a truly democratic system of government. Instead, the oligarchs have recovered very nicely, thank you, and are ready to resume their efforts to completely take over our economy, our government, our country. They won't, however, because: there is NO way out. Sooner or later it will all come crashing down on their heads and we will, at last, be free.

Only don't hold your breath. VOTE DEMOCRAT!!!!!

Get Real Party Endorsements

2010-11-01T14:47:00.002-04:00

OK, I got a request from an admirer to post something today, so my many (????) fans will know how to vote tomorrow. Vote the straight Democratic Party ticket, folks. Because a vote for any Republican is a vote for disaster, well above and beyond what Bush brought us. My hope was that a complete breakdown of the financial system would force the world to reject the phoney "free market" system once and for all and finally accept that the "dog eat dog" so-called "enlightened self-interest" philosophy of Ayn Rand can't work, and we are all in this together and need to look after one another. Because as I see it, truly enlightened self-interest is exactly equivalent to the Golden Rule: do unto others as one would have others do unto you. A world in which I thrive at the expense of my fellow humans is NOT in my interest, since I prefer to live in a sane and caring rather than an insane and indifferent enviroment, ruled by avarice and arrogance.

What I didn't expect, however, was the resurgence of extreme right wing ideology, almost to the point of out and out fascism that has now been set in motion. The so-called "Tea Party" wouldn't be so bad if there weren't so many billionaires working so hard to co-opt it to serve their own selfish, greedy and power hungry interests. As a result there are some truly dangerous characters being heavily promoted as Republican candidates and whatever once existed in that party that might have been meaningful has been destroyed.

In short: Fight Fascism -- vote Democrat!

As far as the Get Real Party is concerned, I'm afraid the world is not quite ready, as yet, for a reality and sanity based party. So we'll need to settle for now on Obama and the Democrats, despite all their many failings.

Get Real

2010-05-17T12:02:00.005-04:00

It's been a long time since I've posted here. I'd said just about everything I wanted to say and then decided to settle down and see whether my predictions were going to come true. I guess the result at this point remains inconclusive. Things have certainly been going steadily downhill for most of us (NOT the bankers and big time investors, natch; after all, they are under the protection of the US Government) and now seem to be approaching a crisis, but my main prediction was wrong. The total collapse I predicted for last summer has been either averted or more likely delayed, due as it would seem to further inflation of the same Ponzi balloon that lead to the previous crisis. If you feel free to print money with no constraints, then you can keep a Ponzi scheme floating indefinitely, it would seem.

Meanwhile, however, the political situation has turned from embarrassing to disturbing to bizarre to even more embarrassing to downright scary. What particularly got me down was a recent TV ad by a candidate in a local congressional primary announcing to the world that he is both "pro-life and pro-gun." Which wouldn't be so strange except that this guy is running as a DEMOCRAT!!!!

That did it. I'm starting my own party. It's called the "Get Real" party and it has a platform guaranteed to alarm both wishy-washy liberals and know-nothing conservatives:

1. Big government has no right to tell any of us what to do with our own bodies and therefore big government should not be allowed to dictate to women whether or not they should have abortions. Neither should small government. A fetus is not a baby, a human fetus is not fundamentally different from an animal fetus so if we have no problem doing away with animals we should have no problem doing away with unwanted fetuses. I'm as pro-life as hell and would greatly prefer that no living thing ever have to be sacrificed. I'm also against the hunting of innocent animals and have serious reservations about their use in scientific experiments also. But if we recognize that there are times that innocent animals must be sacrificed then GET REAL -- there are also times when innocent fetuses must be sacrificed. Let's by all means work as hard as we can to minimize the tragic necessity for abortion, not only for the sake of the fetus, but the woman forced to make such a horrific choice. But we must also recognize that in some cases this is the only humane option available and it should therefore be both legal and covered by health insurance. And yes, being humane is a part of the "Get Real" platform, a very important part. That should go without saying, but to listen to just about everyone in the Republican party, being humane is tantamount to being "liberal," which is of course just about the deadliest sin imaginable. The only thing worse for Republicans, I'd imagine, is actually being Christian -- but hey, the Republicans have managed to co-op both Christianity and Christ himself to serve their own selfish, greedy ends. If they knew which way was up, maybe they'd have a better understanding of which direction they'll be headed on Judgement Day.

2. There is no part of the constitution that guarantees the unrestricted use of firearms, therefore GET REAL: firearms are dangerous and have in fact become a menace in the United States and should therefore be strictly controlled by the federal government. The "right to bear arms" is NOT the right to purchase any weapon one might choose, nor is it the right to carry any firearm anywhere one might want. Just as the right to free speech does NOT give you the right to cry "fire" in a crowded building or utter offensive racial slurs in public. GET REAL.

3. Global warming may be real (or maybe not), but hysterical attempts to reverse its effects by controlling the output of carbon, or institute the trading of "carbon credits," will without question lead to even worse consequences, exacerbating an already fragile economic situation, with devastating consequences for the vast majority of the world's people. All the evidence tells us this trend cannot be reversed or even meaningfully contained. So all the efforts to control it will do little more than make affluent liberals such as Al Gore feel better about themselves -- at the expense of the most vulnerable among us. So GET REAL: if global warming will lead to higher ocean levels, there is no way we'll be able to stop that trend, just as there is no way we'll be able to replace those melted glaciers. But if we act quickly enough, we just might be able to stave off the rising seas by building dikes. If that seems like an impractical option, take a look at what the Dutch were able to do, with relatively primitive technology, hundreds of years ago. If certain parts of the world will become uninhabitable due to changes in climate patterns, other parts of the world will become open to habitation, including vast regions of Russia, Canada and Alaska. The answer to global warming is not to turn back the clock -- that's no longer an option -- but to do what countless generations before us have done when faced with climate change: GET REAL, i.e., adapt.

4. The current oil spill in the gulf is going to be highly destructive for sure, but if the lesson we learn is to halt or restrict offshore drilling then we have learned the wrong lesson. For one thing, crude oil is as organic as alfalfa sprouts and wheat germ. All it is, really, is fossilized organic matter, the remains of our pre-human, pre-animal ancestors, in fact. It happens to be a natural part of the ocean environment, where deep fissures at the bottom of the sea, many of which have been regularly opened by earthquakes over thousands and in fact millions of years, permit subterranean oil deposits to spill into the ocean, which is certainly nothing new and can happen at any time in any part of the ocean due to natural causes. The real lesson of this latest spill is that "fail-safe" technologies are not necessarily foolproof and when they fail that can indeed have dire consequences. If a "fail-safe" device on an oil rig fails, that can have serious consequences for sure, and every effort should be made to improve these technologies. Imagine, however, what the failure of a "fail-safe" device in a nuclear power plant would mean. If we restrict access to fossil fuels, and less dangerous methods such as solar energy and wind power are not yet ready, then our only alternative will be the wide, unrestricted use of nuclear power, a far worse alternative, believe me. So GET REAL: The oil now spilling into the gulf will eventually sink to the bottom, taking its place among the innumerable tons of organic remains already sitting there, waiting to become part of the food chain. But the effects of a nuclear disaster could mean the destruction of many thousands or even millions of lives and the irreparable destruction of vast areas, including whole cities, with no hope of restoration for thousands of years.

5. There's a good reason why conservatives and their proto-fascist allies, the so-called "Libertarians," carry on continually about the evils of "Big Government." In the United States, big government is what we, the people, have put in place to ensure democracy, and protect us from the overstuffed oligarchs and plutocrats who are pulling the strings of equally overstuffed puppets such as Rush Limbaugh, Glen Beck and their disgusting and offensive ilk. GET REAL! Without big government, i.e., our democratically elected representatives, we would be completely at the mercy of "conservatives" whose notion of "enlightened self-interest" is to promote their own selfish interests at the expense of everyone else. They have heaps of money to spend and have used it to literally create the so-called "conservative" and "libertarian" movements out of whole cloth. If you look under the hood you'll see that there is nothing of substance actually there. "Conservatives" aren't really conservative. If they were, they'd be fighting FOR and not AGAINST the time-honored American ideals of honesty, equal opportunity and fair play. And "Libertarians" are not interested in any sort of liberty aside from their own freedom to do whatever they like regardless of the consequences for anyone else. The fat cats who once upon a time were millionaires and multimillionaires are now billionaires and multi-billionaires. If you think for a moment of all the destructive things someone can do with a billion dollars, someone crazy enough, Ego-driven enough and ruthless enough (and there is no shortage of people in these categories), then you'd stop complaining about "Big Government" and start working to make our federal government, our government "Of the People, By the People and For the People," even more powerful, in order to protect our freedoms from those whose money and power have driven them mad with greed. While it's true that many in government have in fact been corrupted by the billionaires, they can always be voted out of office by an enlightened electorate. The oligarchs and plutocrats, on the other hand, are with us to stay. All we have on our side is the counterweight of a democratically elected President, Congress and Senate.

6. What any fair minded person would refer to as the bare necessities of a civilized society have come to be known as "entitlement" programs. And to the lasting shame of our so-called "liberals," hardly anyone has come forth to challenge this term. No one in a democracy should have to be seen as "entitled" to basic necessities such as food, shelter, health care and an education for his or her children, as though providing them with such "entitlements" was something the more affluent among us do out of the goodness of our hearts. It is in NO ONE's interest to deny such necessities to our citizens on any basis whatsoever. What we are all "entitled" to is to live in a society characterized by decency, civility, fairness and compassion. Because the alternative is: India, where only the affluent are "entitled" to anything at all. If you think there's a problem with all these "entitlements" then imagine yourself living in a community where beggars with bleeding sores and children with burned out eyes and lopped off limbs are continually holding their hands out for a crumb of food and people are dying in the streets around you.

We are continually being reminded that we "cannot afford" all these "entitlements." Well, the truth is that the United States is a nation of vast wealth, vaster by far now, even after the economic "collapse," than ever before in history. The Wikipedia lists a total of 403 billionaires in the United States alone. The list would undoubtedly be significantly larger if it weren't for the additional billions socked away in secret bank accounts overseas. Bill Gates alone has $53 billion, Warren Buffet $47 billion, Lawrence Ellison $28 billion, Christy Walton $22.5 billion and Jim Walton $20.7 billion. There is in fact more than enough money in this country to fund any "entitlement" program you might care to think of. What we lack is not the money, but the will to stand up to the billionaires and insist that they pay their fair share of federal, state and local taxes.

(to be continued)

Signing the Dow

2009-08-23T13:43:00.003-04:00

Ok Ok, settle down guys, it's just a cartoon. I happen to think it's pretty funny, though I'm embarrassed at my drawing skills, which are obviously severely limited. Don't sue me, OK? :-)

However, it's occurred to me that some of you guys over at Goldman Sachs probably are geniuses, just like everybody says. And, assuming you finally got your High-Frequency Trading software back, which enables you to do so many thousands or millions (whatever) trades a second, and assuming you're too arrogant (why shouldn't you be, you're geniuses, right?) to care what everyone's saying about this type of software making it possible to manipulate the market "in unfair ways," then I have a proposition for you. Because after all, becoming world famous is probably even more of an incentive than making lots of money, and by doing what I'm suggesting you do, you will definitely become world famous, so . . .

Here's the challenge. Take a good look at my cartoon. Do a bit of genius type thinking. And figure out a way to use your really amazing software to do something even more amazing than has ever been done in history. Use every bit of programming skill you can muster and actually do in real life what I've only dreamt of in my cartoon: sign your name to the Goddamned Dow by manipulating the Hell out of it, microsecond by microsecond, just make it dance to your tune all the way from the opening bell to the closing bell -- and listen for the huge round of applause you'll get at the end of that trading day.

Don't worry. You won't get arrested. Because signing the Dow is not, last time I checked, against the law. And if you get fired, so what? The genius that can do this trick can do anything with the market, so you'll be getting plenty of offers.

Hey, if a group of Japanese chemists can manipulate bacteria to draw a picture like this,

then a red blooded, blood sucking, shameless and greedy American trader ought to be able to do something even more spectacular -- and egotistical -- with the Dow.

Go for it guys. Let's see who can get there first.

Is the Market Being Manipulated?

2009-08-21T13:47:00.004-04:00

I wonder . . .

Re-Born Again

2009-08-21T11:21:00.003-04:00

I was SO proud of myself. I thought I'd really invented a great new line. (Actually a variation on an old one.) Get this: A Sucker Is Reborn Every Minute.

But just to be sure, I did an internet search. And there it was, multiplied five times, on five different websites. My favorite is this photo someone put on Flickr:

Just made me think about all the other "bright ideas" I've had over the years, back in the days before the Internet. Sigh . . . Guess I'm not as original as I thought I was.

Nevertheless, there is a great truth hidden in my minor embarrassment. A sucker really is reborn every minute. Because all the old misconceptions, miscalculations, fantasies, illusions and delusions -- they're a'comin back, big time.

One of the biggest suckers of them all, Ben Bernanke has certainly been reborn, with wings a'flappin'. Here's the NY Times headline: Fed Chairman Says American Economy Is Poised to Grow. Read all about it:

Ben S. Bernanke, the chairman of the Federal Reserve, offered his most hopeful assessment in more than a year on Friday, asserting that “the prospects for a return to growth in the near term appear good.”
In a much-awaited speech here to central bankers and economists from around the world, Mr. Bernanke went beyond the Fed’s most recent assessment that the nation’s economy was “leveling out” and that the recession was ending.
Noting that short-term lending markets are functioning “more normally,” that corporate bond issuance is strong and that other “previously moribund” securitization markets are reviving, Mr. Bernanke said that both the United States and other major countries were poised for growth.

The Times reporter isn't quite buying it, though:

In emphasizing not just the imminent end of the recession — the worst since at least the early 1980s if not since the Great Depression — but also the “good” chances of actual growth, Mr. Bernanke’s assessment was in some ways surprising.
Despite encouraging signs on many fronts, American retailers have reported unexpectedly weak sales in the last week — a sign that that consumer spending could drag down economic growth in the months ahead. And on Thursday, the Labor Department reported that new unemployment claims jumped again.

Not to mention all those hundreds of billions in "toxic assets" still lingering unsold in the banking system. Nor the ongoing meltdown in commercial real estate. Nor the millions of impending mortgage foreclosures. Nor the inconvenient truth that this country no longer has anything much to sell in the world marketplace, meaning that unemployment will remain high for the indefinite future, so where is all the consumption the economy needs in order to recover. Not to mention the question of why anyone in his right mind would want the old economy to recover, which would only mean the re-inflation of all the old bubbles.

Maybe Bernanke is playing us for suckers.

Interlude

2009-07-27T12:00:00.003-04:00

The Hammer Without a Master

(Economics with a hammer)

(and a grateful nod to the New York Times Editorial Page)

Sure enough, last week Morgan Stanley
explained its quarterly loss by saying
that some of its traders were still “gun shy”
after last year’s near-death experience in the financial markets,

Sure enough, last week Morgan Stanley
explained its quarterly loss by saying
that some of its traders were still “gun shy”
after last year’s near-death experience in the financial markets,

Sure enough, last week Morgan Stanley
explained its quarterly loss by saying
that some of its traders were still “gun shy”
after last year’s near-death experience in the financial markets,

that some of its traders were still “gun shy”
after last year’s near-death experience in the financial markets,

still “gun shy” after

“gun shy” after

“gun shy” after

after last year’s near-death experience in the financial markets,

after last year’s near-death experience in the financial markets,

last year’s near-death

last year’s near-death

last year’s near-death

experience

year’s near-death experience in the

year’s near-death experience in the

year’s near-death experience in the

financial markets.

but

that the firm now planned to increase its risk taking.

that the firm now planned to increase its risk taking.

that the firm now planned to increase its risk taking.

that the firm now planned to increase its risk taking.

firm now planned

to increase its risk taking.

increase its

risk taking.

To try to stay competitive with Goldman and other banks,

Morgan Stanley has also allocated a big chunk of its net revenue for compensation.

a big chunk of its net revenue for compensation.

a big chunk of its net revenue for compensation.

of its net revenue

for compensation.

Great Time for Bankers

2009-07-16T21:52:00.002-04:00

This is a comment I just sent in response to the article, A Great Time to be a Banker, by NY Times columnist, Floyd Norris. Can't quite figure out if the title is meant ironically or he's actually being sincere. Maybe a little of both. I decided my comment is too good to bury there among all the other comments, so I've decided to bring it over here as well:

These bankers are like drug addicts or chronic gamblers. Surely they are intelligent enough to realize their day is done, that the "profits" they are now realizing are as much an illusion as they were before the last meltdown. They must also realize that, unless they are willing to totally insulate themselves, their wives and their children, from the rest of the world, they'll soon be enduring hateful stares, hurtful remarks, threats, veiled and otherwise, or worse. Their millions won't be worth it, but, like the addicts they are, they won't care.

Sadly, for us and also for them, they have become hooked on "the action" and can't help themselves. And since they have become too powerful and connected to be stopped, their path to total self-destruction, both moral and financial, is now insured. Truly, this is a morality tale writ large, for all the world to witness, and it's fascinating to see it being played out in the media and the Internet in such exquisite detail.

It should be clear to anyone following the events of the last two years that they are literally living in a bubble, the bubble created by the highly questionable, but possibly "necessary" decisions of both the Bush and the Obama administrations, to keep them in business at all costs. And since the only business they know is gaming the financial system, and since that system has been force-fed to the point that it can still be gamed no matter what, they are going to continue to play and play and play no matter what, with all the "skill" at their disposal, until the bubble finally bursts, totally and completely, beyond the power of any individual or any government to patch. And when that time comes, then we -- and they -- will finally and for all time be free of the drug called: money.

Interlude

2009-07-16T06:51:00.003-04:00

Vom armen B. B. -- On the Poor B.B.

German poem by Bertolt Brecht, interleaved with English translation by DocG, and paraphrase by DocG

Ich, Bertolt Brecht, bin aus den schwarzen Waeldern.
Meine Mutter trug mich in die Staedte hinein
Als ich in ihrem Leibe lag. Und die Kaelte der Waelder
Wird in mir bis zu meinem Absterben sein.

I, Bertolt Brecht, am of the dark forests.
My mother bore me from there to the cities
As I lay in her womb. And the cold of the forests
Will be with me to my death.

I, DocG, am of the white river.
My parents once took me to New York City
On a boat. And the winds of that voyage
Will blow through me all my life.

In der Asphaltstadt bin ich daheim. Von allem Anfang
Versehen mit jedem Sterbsakrament:
Mit Zeitungen. Und Tabak. Und Branntwein.
Misstrauisch und faul und zufrieden am End.

In the asphalt city I feel at home. Right from the start
With every last sacrament supplied:
With newspapers. And tobacco. And brandy.
Mistrustful and lazy and, in the end, self-satisfied.

In New York City was I at home. Until the very end
Supplied with every last sacrament:
The Village Voice. And Schimmelpfennig cigars. And Jack Daniels "Sippin" Whiskey.
Cynical and lazy and far too self-confident.

Ich bin zu den Leuten freundlich. Ich setze
Einen steifen Hut auf nach ihrem Brauch.
Ich sage: es sind ganz besonders riechende Tiere
Und ich sage: es macht nichts, ich bin es auch.

I'm a friendly sort. I set
A Bowler on my head as people do.
I say: They’re animals with a very peculiar odor.
And I add: it doesn't matter, I smell too.

I set myself apart from the others. I wear
A floppy hat so I’ll stand out.
I say: people are very very strange
And I ask: isn’t that what it’s all about?

In meine leeren Schaukelstuehle vormittags
Setze ich mir mitunter ein paar Frauen
Und ich betrachte sie sorglos und sage ihnen:
In mir habt ihr einen, auf den koennt ihr nicht bauen.

Mornings, in my empty rocking chairs,
I bring some ladies nigh,
Study them casually and say:
I’m one on whom you can't rely.

Mornings I fantasize about finding a lady
To rock in my all too empty chair.
She’ll study me casually, and say:
Why don’t you come over here?

Gegen abends versammle ich um mich Maenner
Wir reden uns da mit "Gentlemen" an
Sie haben ihre Fuesse auf meinen Tischen
Und sagen: es wird besser mit uns. Und ich frage nicht: wann.

Toward evening I gather some men around me.
We address one another as "Meine Herren."
They place their feet up on my table
And say: our time will come. I don't ask: when.

From time to time I get together with a friend or two.
We address one another as "Monsieur."
They plant their muddy feet on my brand new rug.
One says: I've got a promising interview coming up next week. And I say: Oh, sure.

Gegen Morgen in der grauen Fruehe pissen die Tannen
Und ihr Ungeziefer, die Voegel, faengt an zu schrein.
Um die Stunde trink ich mein Glas in der Stadt aus und schmeisse
Den Tabakstummel weg und schlafe beunruhigt ein.

Toward morning in the grey dawn the fir trees piss
And their vermin, the birds, begin to cheep.
At that hour, in the city, I drain my glass, stub out
My cigar and drift into troubled sleep.

Toward morning in the gray dawn the Hudson River belches
And its victims the fish begin to weep.
At that hour, in the city, I rise to take a piss, then flush
The toilet and return to fitful sleep.

Wir sind gesessen ein leichtes Geschlechte
In Hausern, die fur unzerstoerbare galten
(So haben wir gebaut die langen Gehause des Eilands Manhattan
Und die dunnen Antennen, die das Atlantische Meer unterhalten).

We, a heedless generation, have made ourselves at home
In buildings we thought immune to destruction
(Thus we erected the skyscrapers of Manhattan
And the thin antennae which bemuse the Atlantic Ocean).

My generation has made itself homeless
In mad pursuit of some vague ideal
(Thus we dabbled in drugs and religion,
Trod the thin red line between the real and the unreal).

Von diesen Staedten wird bleiben: der durch sie hindurchging, der Wind!
Froehlich machet das Haus den Esser: er leert es.
Wir wissen, dass wir Vorlaeufige sind
Und nach uns wird kommen: nichts Nennenswertes.

Of these cities will remain: that which passed through them — the Wind!
The house makes the diner merry: he wolfs it down.
We know we’re not here for long
And after us will come: nothing of much renown.

Of our dreams will remain: that which fueled them — hot air!
The balloon will lift slightly, then falter and sag.
We know we’ve been here much too long
And hardly have much cause to brag.

Bei den Erdbeben, die kommen werden, werde ich hoffentlich
Meine Virginia nicht ausgehen lassen durch Bitterkeit
Ich, Bertolt Brecht, in die Asphaltstaedte verschlagen
Aus den schwartzen Waeldern in meiner Mutter in frueher Zeit.

In the earthquakes to come, I hope I won’t
Let bitterness dim my cigar’s red glow
I, Bertolt Brecht, smuggled to the asphalt city
From the dark forests in my mother long ago.

In the disillusionment to come, I hope I won’t
Start smoking again in desperation
I, DocG, sold down the river
To New York City by the older generation.

Interlude

2009-07-14T17:00:00.003-04:00

Illness is a kind of intoxication
In which you drink pure pain
Like a freezing glass of pure grain
Alcohol. All your senses strain
Against a kind of ontological membrane --

If it breaks you die.

Slowly that psychological feeling like sky
Infuses the room where you lie
And your inmost you, letting go,
Presses itself against the dirty window
Where the dirt seems to form a kind of rainbow.

So few and so slow
Are the things you remember to know
As you fall behind
With lazy motions of the mind

And really begin to unwind.

An Economist Gets It Right!

2009-07-11T22:10:00.003-04:00

I was about to give up on them. I was saying things like "the economy is too important to be left to the economists." If you go to just about any professional economist's blog these days you'll often get more thoughtful, logical, probing and realistic analysis in the comments section. For example, here is one of my favorites, Paul Krugman, in a recent column titled The Stimulus Trap: " . . . policy makers should stay calm in the face of disappointing early results, recognizing that the plan will take time to deliver its full benefit. But they should also be prepared to add to the stimulus now that it’s clear that the first round wasn’t big enough." Not particularly edifying -- and almost certainly wrong. But check out the following response from a reader named David, from San Francisco:

If the credit driven excesses of the past, like the dotcom and the housing bubbles, could simply be cured by even more borrowing and essentially creating money out of thin air, then it follows that there are no consequences to economic malfeasance and crimes.

The implicit premise in your insistence for massive additional stimulus is that we can somehow get back to the "good old days", or somewhere close.

What if we have so abused our economy, our dominant economic position in the world, and the reserve currency status of the US Dollar, that the whole system is trying to reset at a new, rational, and lower equilibrium? It is foolheardy to fight an avalanche. Our standard of living is going to go down regardless of what you advocate or what Obama does. The only question is if we are going to gracefully accept this new paradigm.

Thank you, David! And that was only the second comment on the list. I don't have time to sift through all 380, but I'm sure there are many other laymen like David, with meaningful things to say.

And, to my surprise and delight, I just now found a real live economist with something meaningful to say. Robert Reich! You remember him, he was Secretary of Labor during the Clinton administration, when he also had meaningful things to say. Maybe it's his tendency to speak meaningfully -- and honestly -- that got him into trouble with Obama, who seems to have fallen in love with just about everyone else from the Clinton crowd.

Anyhow, Reich just came up with an amazing article, just now published at the AlterNet blog, entitled: When Will the Recovery Begin? Never. This is very good stuff, especially since it echoes things I've been saying for months now. But who pays attention to little me? Maybe now these ideas will get some serious attention, because, and I'm sure I'm being just a bit egotistical when I say this, but: I know I'm right. And if I'm right, Reich must be right too. Say that 25 times in a row. Only Reich will be taken seriously. Why? Because he is an economist. And I am . . . . not (not really, no). Here are a few gems from Reich's great piece:

The so-called "green shoots" of recovery are turning brown in the scorching summer sun. In fact, the whole debate about when and how a recovery will begin is wrongly framed. . .

In a recession this deep, recovery doesn't depend on investors. It depends on consumers who, after all, are 70 percent of the U.S. economy. And this time consumers got really whacked. Until consumers start spending again, you can forget any recovery, V or U shaped.Problem is, consumers won't start spending until they have money in their pockets and feel reasonably secure. But they don't have the money, and it's hard to see where it will come from. . .

Eventually consumers will replace cars and appliances and other stuff that wears out, but a recovery can't be built on replacements. Don't expect businesses to invest much more without lots of consumers hankering after lots of new stuff. And don't rely on exports. The global economy is contracting.

This economy can't get back on track because the track we were on for years -- featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere -- simply cannot be sustained.
The X marks a brand new track -- a new economy. What will it look like? Nobody knows. All we know is the current economy can't "recover" because it can't go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin. More on this to come.

Yes, Robert, please. More! This is one economist I'm happy to listen to.

Moment of Truth

2009-07-09T23:24:00.004-04:00

A moment of truth has arrived for President Obama and the Democratic party. According to the NY Times, in order to pay for meaningful health care reform, Democrats in the House are proposing an income tax surcharge on the wealthiest Americans: a piddling 2% for those earning more than $250,000, somewhat more for those earning $500,000 and still more for those earning $1,000,000 or over. Considering the extreme inequalities of compensation that have been the norm in this country for many years now, this is the sort of legislation that is long overdue. However, according to the Times, it's "an idea that Senate negotiators have all but dismissed as unworkable."

We keep hearing complaints about the cost of "entitlements" (fat-cat-speak for the social safety nets that keep our country from descending into barbarism), but when even the most modest tax increases on the most entitled among us are proposed, all we hear is that such measures are "unrealistic," politically out of the question, "unworkable."

Interesting. Especially in the light of the latest news regarding the Swiss bank UBS, where reportedly as many as 52,000 of the wealthiest Americans, hiding billions from the IRS, will most likely remain safely anonymous, protected by the "honor" of the Swiss government as part of a shameful "deal" with the Obama administration.

If every single Democrat in the House and Senate does not actively support this long overdue tax surcharge on the wealthy, then the name of each and every one opposing it should be posted on every blog on the Internet -- and every store front on "Main Street."

Curioser and curioser

2009-07-06T23:26:00.003-04:00

How many of you knew Goldman Sachs was using proprietary computer software designed for "low latency (microseconds) event-driven market data processing, strategy, and order submissions"? What does that mean???? Good question. Anyhow, a story is now breaking via Reuters that a former G. S. employee named Sergey Aleynikov made off with the the secret code referred to above, code that G. S apparently uses routinely to do something called "programmed trading," aka market manipulation. The story, as Reuters is reporting it, is one of business espionage and theft. But over at a much more interesting Internet venue called Zero Hedge, a guy named Tyler Durden is seeing through the smoke and mirrors and telling it like it is. According to someone who is apparently a G. S. lawyer, “The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways.” Durden definitely has this guy's number:

At least it is refreshing that none other than Goldman's own de facto attorney admits that the firm has created a piece of code that permits "market manipulation." When Goldman is the perpetrator, the manipulation is conveyed via "fair ways." And when the manipulator is someone else, the ways become "unfair."

Faithful readers of this blog may recall two posts entitled Reading the Entrails and Reading the Entrails -- Part 2, in which I wrote (in part 2):

By all means, correct me if I'm wrong, but it looks to me like these markets are being manipulated, possibly according to a scheme similar to the one I presented in my last post, where bets are made based on the relation between the principal index and the VMA (voume moving average). If this is the case, then what does it mean when, at the end of the day, the "market" is up or down by this or that number? As far as I can tell, all it means is that this is where things stood at the time the betting window slammed shut.

Here's the scheme I was referring to, as posted on How to Read the Dow Jones Industrials Indicator:

I'm sure the Goldman Sachs software is far more sophisticated than what we see above, but this will give you some idea of the potential for "programmed trading," i.e., market manipulation. This is legal, supposedly. When used by Goldman Sachs. In the hands of a "rogue trader," I suppose it becomes illegal -- but only because it's stolen. NOT because it makes investing in the stock market a total crap shoot for everyone other than those doing the manipulating.

Meanwhile, for your amusement, here's the latest Youtube sensation, a video of Aleynikov and his wife in a dance competition. Don't forget, you saw it first on this blog:

What's next, I wonder, for the magical US economy?

The Madoff Enigma

2009-06-30T12:58:00.004-04:00

His story is yet to be told. Madoff himself has said hardly anything publicly, and I have a feeling he hasn't said much privately either. No one really knows whether he had accomplices, though my gut feeling is that just about all the big financial firms funneling money to him were accomplices, in the sense that they had to know something was fishy -- but so long as the profits were rolling in, they chose to look the other way.

What interests me more is Madoff himself, why he did what he did, what motivated him through all those years when he was getting away with what has to have been the greatest scam of all time. Sorry, but the guy doesn't look like a con artist. I know, I know, the most successful cons are the types that don't come across as crooks, the ones that inspire trust. But still, in just about every case I've ever seen, there's a certain unmistakeable sleaze factor that can be spotted a mile off. Sure, in principle a con has to be able to convince you he's on the level. But in fact your typical con comes across like a con anyhow, a bit too smooth, a bit too slick, probably because most suckers either deep down want to be conned, or else they're conned into thinking they're being let in on something just a wee bit illegal. Madoff just doesn't come across as the type.

His lawyer said it best yesterday, in a remarkably astute observation predictably ignored by the media: if he were a real crook, then he'd have been in the airport with a ticket to some exotic island instead of confessing that he'd been conducting a Ponzi scheme -- and then sticking around to face the consequences. The guy had access to billions. As soon as the financial system began to collapse last summer, he would have realized it was just a matter of time before the game was up. Time to pay off the appropriate officials, arrange for the hideaway, pay a visit to the Swiss banks, reserve the hotel rooms, book the airline tickets, etc. Instead, he meets with his sons, tells them what he's been up to and patiently waits in his apartment for the FBI to show up. As I see it, this part of the story is every bit as fantastic as all the rest.

Here's what I think happened. I think Madoff must have started out perfectly legit, doing what your typical novice financier in the making does, enticing relatives and friends to invest with him in some deal that would have looked like a sure thing. And I think at a certain point something must have gone very wrong. A big, heavily leveraged investment must have gone sour. Put yourself in his place. You've managed to convince your closest relatives and dearest friends to place their life savings in your care, you feel confident you are investing all this money wisely -- and then suddenly the bottom falls out. You are ruined! But more important, your relatives and friends have lost everything. How do you tell them? What do you say?

I really don't think Bernie Madoff was ever a con man, a swindler, a ruthless manipulator, not at least in the sense of someone who starts out with such intentions. I think he's someone who got caught up in something beyond his control. Not out of greed, but, like so many of the "smart operators" who got us into our current mess, simple naivete, lack of imagination, a sappy uncritical faith in what was once known as "The American Dream." Like any true believer in the essential benificence of the "free market," he must have gotten carried away by his own ambitions without seriously considering the consequences -- until it was too late. Faced with two really bad options, either confessing to friends and family that, thanks to him, all their savings were gone -- or sucking other investors in as a way to cover their losses -- I think he chose what, for him, would have been the lesser of two evils. As he might well have seen it (and of course I am totally speculating at this point), the only truly compassionate thing to do was to find some way, any way, to avert disaster for himself and those closest to him.

This story might or might not have some grain of truth, as far as Bernie Madoff is concerned. But there is a larger lesson to be learned, nevertheless. Because the "Great American Dream" that is "free market" capitalism is far too vulnerable to exactly this sort of dilemma. When things go well with the market, then all is well and everyone is happy, but when something goes wrong, it's not always that easy to accept. And all too easy to caste about for some way, any way, of averting the inevitable disaster. This may be the answer to the enigma of Bernie Madoff, I'm not sure. But there's no doubt it explains what's happened just now to the world economy as a whole. Very sadly, it's what is still happening, as the powers that be float more Ponzi schemes on top of the old ones, in a futile effort to get us all out from under the latest, greatest, disaster. Purely out of compassion, of course.

The Dow of Bernie Madoff

2009-06-29T22:38:00.003-04:00

The Dow that can be explained with words is not the Dow.

Beyond the gate of experience flows the Dow,
Which is ever greater and more subtle than the world.

Those who know do not speak, those who speak, do not know.

The sage manages affairs without doing anything, and conveys his instructions without the use of speech.

The sage experiences without abstraction,
And accomplishes without action;
He accepts the ebb and flow of things,
Nurtures them, but does not own them,
And lives, but does not dwell.

The thirty spokes unite in the one center; but it is on the empty space for the axle that the use of the wheel depends. Clay is fashioned into vessels; but it is on their empty hollowness that their use depends. The door and windows are cut out from the walls to form an apartment; but it is on the empty space that its use depends. Therefore, whatever has being is profitable, but what does not have being can be put to use.

The Dow is a limitless vessel;
Used by the self, it is not filled by the world;
It cannot be cut, knotted, dimmed or stilled;
Its depths are hidden, ubiquitous and (seemingly) eternal.

The Dow is not kind;
It treats all things impartially.
The Sage is not kind,
And treats all people impartially.

The Dow is like a bellows,
Empty, yet never ceasing its supply.
The more it moves, the more it yields.

The sage places himself after and finds himself before,
Ignores his desire and finds himself content.
He is complete because he does not serve himself.

In its rising there is no light,
In its falling there is no darkness,
A continuous thread beyond description,

The Dow flows and ebbs, creating and destroying,
Implementing all the world, attending to the tiniest details,
Claiming nothing in return.

It nurtures all things,
Though it does not control them;
It has no intention,
So it seems inconsequential.

When the best swindlers achieve their purpose
Their marks claim the achievement as their own.

Who accepts Wall Street's flow becomes all-cherishing;
Being all-cherishing he becomes impartial;
Being impartial he becomes magnanimous;
Being magnanimous he becomes natural;
Being natural he becomes one with the Dow;
Being one with the Dow he becomes immortal:
Though his body will decay, the Dow will not.

Fate does not attack, yet all things are conquered by it;
It does not ask, yet all things answer to it;
It does not call, yet all things meet it;
It does not plan, yet all things are determined by it.

Fate's net is vast and its mesh is coarse,
Yet none escape it.

The Rapture

2009-06-29T10:04:00.005-04:00

For yourselves know perfectly that the day of the Lord so cometh as a thief in the night. For when they shall say, Peace and safety; then sudden destruction cometh upon them, as travail upon a woman with child; and they shall not escape.

St. Paul, Thessalonians I, 5:2-11

As you may have guessed from reading this Blog, I am patiently awaiting "The Rapture": the day the whole impossibly complicated, convoluted, contrived and corrupted apparatus known as "The Financial System" definitively and for all time collapses into dust. However, the degree of denial, obfuscation, explication and out and out lying has become so enormous it might seem well nigh impossible to say with any degree of certainty exactly when that momentous moment of truth has actually arrived. Fear not. Because the great Gods of finance have in fact provided us with a totally reliable indicator of economic truth: the Tao. Usually spelled: Dow. (Pronounced the same.)

When the Tao goes up everyone is happy. When the Tao goes down everyone is sad. What a simple world we live in, no? But what if one day the Tao were to go down down down down down down down? That will be the sign. By that we will know: The Rapture is at hand.

It could happen today. It could happen tomorrow. Or next week. Or next month. It could come, like a thief in the night, at any time and without any warning. The market could be in the middle of a downswing or an upswing, there will be NO way to tell. But verily, my Brethren, I assure you: sometime soon, that day will come. And on that day, the market will fall so drastically, by thousands of points, that Wall St. will literally be forced to close down. And once it closes, that will be that. It will not open again. Ever. This will, indeed, be the financial End of Days.

It shall come as destruction from the almighty... cruel both with wrath and fierce anger, to lay the land desolate: and he shall destroy the sinners thereof out of it...And I will punish the world for their evil, and the wicked for their iniquity; and I will cause the arrogance of the proud to cease, and will lay low the haughtiness of the terrible. Isaiah 13: 5-11

Interlude

2009-06-21T08:17:00.001-04:00

Cygnus -- At Bay

A swan in flight has been arrested
Her bright wings splayed upon the Northern Cross.
Impaled, she there from high where high on high she’s nested,
Looks down through diamonds on this world of dross.

The wind abruptly shifts then calmly stands
And the slant rain freezes all its glitter drops
To cop a sheet of brilliant mirror strands.
Even the beaded Gypsy stops.

I spot a Mobile station round the bend
Slow down a bit then brake to brush the guards
Skidding skiddy skidmarks where the milky Thruway ends
To signal where the end of time begins.

"Fixing" the System

2009-06-17T08:01:00.003-04:00

When a Ponzi scheme becomes too big to fail (see previous post), there is, very simply: no fix. The "free market" fundamentalist solution is: let it fail. This is essentially the "solution" endorsed by the hapless, clueless, Republicans. "Let 'market forces' do their thing," say the Republicans, because for the Republicans "the market" is, like Mother Nature herself, a self-regulating force. However, if the market were truly self regulating then our financial system, guided for many years now by massive deregulation of that market, would not have experienced the huge meltdown we are now seeing. It would have righted itself long before things came to such a dire pass. Market forces got us into the mess we are now in. It's absurd to assume that they will automatically get us out if only we allow them, once again, to do their thing, unimpeded.

Allowing our too-big-to-fail financial system to fail anyhow would mean wiping out so much wealth at one fell swoop that the world economy would be forced to a sudden, and potentially disastrous, halt. The stock markets of the world would crash to the very bottom, trillions would be lost instantaneously, the fortunes of the rich and famous would be wiped out, but so would the pensions, 401(k)s, and other nest eggs of ordinary people everywhere. Every bank would fail, every mortgage would be foreclosed, every insurance policy suddenly be rendered worthless, as a wave of bankruptcies swept the world. Unemployment would become almost universal as business after business failed. "Market forces" could not come into play because the private sector driving such forces would, very simply, have ceased to exist.

The Ponzi scheme that is the world financial system is indeed too big to fail. Bernie Madoff's system, as outrageously inflated as it became, could be allowed to fail. The world financial system, very clearly, cannot.

If it cannot be allowed to fail, then what means do we have at our disposal to fix it? As with any Ponzi scheme, there are really only two alternatives: allow it to fail, as in the Madoff case, or find some way to perpetuate it. The latter "solution" is, as I argued in my last post, the one chosen, albeit indirectly (i.e., deceptively), by the Obama administration. However, perpetuating a Ponzi scheme can never be a fix -- unless we find some magical way of perpetuating it unto perpetuity, i.e., keeping it afloat forever -- possible only if one has unlimited monetary resources, or is in a position to print ever increasing quantities of money forever. This latter option is indeed being attempted at the present time, under the absurd rubric "quantitative easing" -- and maybe we can pull it off for a while. But sooner or later, the amounts of virtual cash needed to keep the game going will reach truly absurd levels -- and the classic "Emperor's New Clothes" syndrome will inevitably take effect. At some point, confidence in the system will totally collapse, taking the system with it. (See, for example, the recent blog post at The New Republic: Is the Dollar Doomed to Crash? by Zubin Jelveh.) And returning us to our first alternative: allowing the system to fail after all. But the system cannot be allowed to fail. And so on and so forth, ad infinitum.

This is what was called, by the ancient Greeks, an aporia -- literally "without a path" or "impasse."

"Nan-in, a Japanese master during the Meiji era (1868-1912), received a university professor who came to inquire about Zen. Nan-in served tea. He poured his visitor's cup full, and then kept on pouring.
-------------------------------------------------------------------

When the nun Chiyono studied Zen under Bukko of Engaku she was unable to attain the fruits of meditation for a long time.

At last one moonlit night she was carrying water in an old pail bound with bamboo. The bamboo broke and the bottom fell out of the pail, and at that moment Chiyono was set free!

In commemoration, she wrote a poem:

In this way and that I tried to save the old pail
Since the bamboo strip was weakening and about
to break
Until at last the bottom fell out.
No more water in the pail!
No more moon in the water!

Ponzi Economics

2009-06-15T08:51:00.004-04:00

It's being called by many names, all perfectly reasonable sounding: troubled assets relief, public-private investment, liquidity enhancement, the stimulation of aggregate demand, the minimizing of rollover risk, the normalization of credit markets, financial stabilization, quantitative easing, Keynesian economics, etc. When we look at the fundamentals, however, we see a much simpler, far more troubling picture.

Back in January, in some of my earliest blog posts, I was already referring to our entire financial system as "a huge Ponzi scheme":

Now, over and over again, we hear that the real problem facing us is the need to restore "confidence." But confidence in what? If a Ponzi scheme is a confidence racket, and if, as many are now beginning to realize, our whole financial system for a great many years now, has been little more than a huge Ponzi scheme, then the restoration of confidence can have only one purpose: the perpetuation of the bubble for as long as possible into the future. Which is in fact what the current "experts" seem to be telling us needs to be done -- only this time by the government, operating as a kind of legal surrogate for all the Bernie Madoffs who no longer have the funds to perpetuate their own versions of the scheme.

I was not alone. Here is economist Peter Schiff, as quoted in a Fortune article, also from last January:

"We have an economy that's based on the same principles as Bernie Madoff's investments," he says. "It's a Ponzi economy. It's not real. We don't save and we don't produce anything anymore. We simply borrow from the rest of the world, and then we spend it. We've had a giant party. We bought all these plasma TVs and iPods. We remodeled our houses and took vacations. But you know what? The bills are coming in."

In case you don't know who Schiff is, I suggest you take a look at this youtube video, a collection of his market predictions between 2006 and 2007, in which he stands alone among smirking, laughing, supremely overconfident Wall St. pundits, in predicting, with striking accuracy, the disaster that was to befall us in the Autumn of 2008.

I've been criticized for occasionally quoting with approval economists holding strongly conservative views, and Schiff, a Libertarian follower of Ron Paul, is no exception. However, while I definitely do not endorse either Paul or the Libertarian philosophy, this does not mean I can feel free to ignore such people when, on occasion, they get things right. In my view, the conservative position generally is, for the most part, simply laughable. But that doesn't prevent me, along with a great many liberal leaning economists, from agreeing with most Republicans regarding the futile and ultimately destructive nature of the Obama-Geithner-Bernanke "recovery" plan.

While I can agree wholeheartedly with Schiff's analysis of what went wrong, I cannot agree at all with his prescription for the cure: "Shrink the government radically, cancel all bailouts immediately, take plenty of tough medicine, and let the free market do its job - however harsh it may be for, say, autoworkers in the meantime." Schiff should know better, but is blinded by his ideology. It was the free-market, laissez faire, economics of the conservative/ libertarian ideologues that fueled the Ponzi scheme in the first place.

Regardless of what any of us might think regarding a possible cure (in my view NO cure is possible), it is important for all of us to take some time to think a bit about what Ponzi economics is and how it works. Once such a scheme gets started, there is only one way to perpetuate it: pulling in yet more money from yet more investors (aka "suckers"). New money from new investments is used to maintain the appearance of legitimacy by paying off on the old investments. When the returns are substantial, as they must be for the scheme to succeed, then everyone is happy and all progresses smoothly. It's only when it is no longer possible to raise new investment capital that the scheme collapses.

This is what happened to Bernie Madoff last Fall. And it is also what happened to the world financial system over the last several months. Money was being made simply on the basis of new money being invested, and when the source of such investments dried up, i.e., when the banks could no longer raise additional leverage, over and above the huge amounts they'd already raised, the resulting "credit crunch" brought down the entire system. There were no longer any new sources of cash to pay off on all the outstanding investments, loans and collateralized debt obligations (aka "toxic assets").

What the Obama administration wants to see is a financial system that got temporarily out of hand and overextended itself, which under ordinary circumstances would require a certain amount of government intervention to provide temporary liquidity until the imbalances in the system could be corrected. What I see is a Ponzi scheme that, at one point last summer seemed on the verge of total collapse until congress decided to pony up hundreds of billions to keep the thing afloat. Because by then it had become "too big to fail." Since then literally trillions more have been committed to the same effort, either through the sale of treasury bonds, the forced merger of failing institutions with (relatively) healthy ones, huge loan guarantees from the Fed, the totally irresponsible printing of dollars out of thin air, or the easing of accounting rules to give the false impression that failed institutions are actually solvent.

Call it what you will, "quantitative easing," "liquidity enhancement," "financial stabilization," whatever -- when new money, regardless of the source, continues to be fed into any Ponzi scheme, that scheme can be made to look very good indeed. What has been optimistically described as a turning of the corner, the beginnings of a full recovery, based on the appearance of various "green shoots," etc. is, to my eyes, simply the predictable effects of a Ponzi scheme enormously extended, and overextended, through the infusion of huge amounts of highly dubious cash.

At some point, however, the limit will be reached, the source of new funds and/or leverage will evaporate. And when that point comes, then, finally, the hour of full -- and final -- reckoning will be upon us.

Belling the Cat

2009-06-11T19:43:00.008-04:00

Here's how Aesop tells it:

Long ago, the mice had a general council to consider what measures they could take to outwit their common enemy, the Cat. Some said this, and some said that; but at last a young mouse got up and said he had a proposal to make, which he thought would meet the case. "You will all agree," said he, "that our chief danger consists in the sly and treacherous manner in which the enemy approaches us. Now, if we could receive some signal of her approach, we could easily escape from her. I venture, therefore, to propose that a small bell be procured, and attached by a ribbon round the neck of the Cat. By this means we should always know when she was about, and could easily retire while she was in the neighborhood."
This proposal met with general applause, until an old mouse got up and said: "That is all very well, but who is to bell the Cat?" The mice looked at one another and nobody spoke.

The moral: It is easy to propose impossible remedies.

In the present case, "the cat," as I'm sure we're all aware, is not simply one cat, but several. All FAT. The FAT cats who, as we've recently been made aware, but should have known all along, are running this country -- and by extension, the world. Their secret is now out. We know they are running things. And we know, in at least some cases, who they are and even where they live. We are the mice. And the Congressional Democrats, along with our newly elected President, can be understood as the council, brought together to see what measures can be taken to control the anti-social behavior of these FAT CATS before they devour us all. And a solution has been proposed, a solution suspiciously like the solution arrived at by Aesop's mice: "Why don't we hang some regulations on the behavior of these fat cats?" says our young President. And everyone says, "Yes, that sounds like a great idea." Only a wizened old mouse (docG, natch) rolls his eyes and declares: "That is all very well, but who is to regulate the Fat Cats? And how is this to be done?"

Yes, indeed, there's been all sorts of discussion of this matter of regulation and all sorts of things have been proposed. But when the all important question arises of who is going to do the regulating and how the regulating is going to be done, there has been an ominous silence.

So, it should come as no real surprise that the council convened to deal with the problem of controlling the problem posed by the Fat Cats is now declaring for the world to hear that there isn't really a problem at all, it was simply a big mistake. After all, what's good for the Fat Cats is good for the rest of us, right? Didn't we always know that?

Many of the ironies characterizing The Situation In Which We Now Find Ourselves (TSIWWNFO) emerge in a recent New York Times Op-Ed piece, by Wall Street cognoscenti Sandy B. Lewis and William D. Cohan, who insist that, all indications to the contrary, The Economy is Still at the Brink. Here are some highlights:

WHETHER at a fund-raising dinner for wealthy supporters in Beverly Hills, or at an Air Force base in Nevada, or at Charlie Rose’s table in New York City, President Obama is conducting an all-out campaign to try to make us feel a whole lot better about the economy as quickly as possible. “It’s safe to say we have stepped back from the brink, that there is some calm that didn’t exist before,” he told donors at the Beverly Hilton Hotel late last month. Mr. Obama thinks that the way to revive the economy is to restore confidence in it. If the mood is right, the capital will flow. But this belief is dangerously misguided. We are sympathetic to the extraordinary challenge the president faces, but if we’ve learned anything at all two years into the worst financial crisis of our lifetimes, it is that a capital-markets system this dependent on public confidence is a shockingly inadequate foundation upon which to rest our economy. . .

The storm is not over, not by a long shot. Huge structural flaws remain in the architecture of our financial system, and many of the fixes that the Obama administration has proposed will do little to address them and may make them worse. . .

Lewis and Cohan then propose a series of especially tough questions for our new President. For example:

Six months ago, nobody believed that our banking system was well designed, functioning smoothly or properly regulated — so why then are we so desperately anxious to restore that model as the status quo? Nearly every new program emanating these days from the Treasury Department — the Term Asset-Backed Securities Loan Facility, the Public Private Investment Program, the “stress tests” of major banks — appears to have been designed to either paper over or to prop up a system that has clearly failed. . .
Why is so much effort being put into propping up those at the top of the economic pyramid — the money-center banks, the insurance companies, the hedge funds and so forth — when during a period of deflation like the one we are in, any recovery will come only by restoring the confidence of the people down at the bottom of the pyramid?
Confidence will return only when jobs can be found and mortgage payments are made. Even if Mr. Obama’s claim is true that his $780 billion stimulus package “saved or created” some 150,000 jobs, we seem a long way away from the point where those struggling to get by will feel like spending again. What happens when people buy a car once every 10 years instead of once every two or three, especially now that we taxpayers own such a big percentage of the American auto industry?

Why isn’t the Obama administration working night and day to give the public a vastly increased amount of detailed information about what happens in financial markets? . . .

Why is the government still complicit in making the system ever less transparent, even when it comes to what should clearly be considered public information? For instance, it took more than a year for the Federal Reserve to disclose that it had agreed to pay BlackRock — the huge money manager that is 45 percent owned by Bank of America — and others $71 million in a no-bid contract to manage the $30 billion of toxic assets that JPMorgan did not want when it bought Bear Stearns in March 2008. And that is only one of the five contracts BlackRock has with the government as a result of this crisis — the nature of the other contracts remains secret. . .
Why hasn’t President Obama insisted on public hearings over what happened during this financial crisis?
Not a single top executive of a Wall Street securities firm responsible for causing the financial crisis has had the courage or the decency to step forward in front of the cameras and explain to the American people in his own words exactly how and why he allowed his firm to cause the crisis. Both Mr. Fuld and Alan Schwartz, the chief executive of Bear Stearns at the end, in their Congressional testimony blamed the proverbial once-in-a-century financial tsunami. Do they or any of their peers really think this is true?

Not that Lewis or Cohan have a much better handle on the fundamental problem than Mssrs. Bernanke, Geithner and Obama. They pride themselves in being Wall St. insiders, and what really gets their goat is the presence of "academics" like Bernanke and Geithner at the helm:

Why has Mr. Obama surrounded himself largely with economic advisers who are theoreticians and academics — distinguished though they may be — but not those who have sat on a trading desk, made a market, managed a portfolio or set a spread?
In our view, one of the ways out of this economic conundrum is to have experienced traders — not hothouse flowers — design incentives that will encourage the market to have buyers and sellers meet anew around the proper valuations of assets, not some artificial construct of a market propped up by a pliant Financial Accounting Standards Board or government-sponsored programs that appear to be virtually giving money away to hedge funds and private-equity firms so that they will buy assets they would not ordinarily buy. We’re not talking about putting the fox in charge of the henhouse, just putting people who know how markets function in the real world into the important seats in Washington.

The bit about "putting the fox in charge of the henhouse" says it all, as far as I am concerned. Bernanke and Geithner may well be clueless academics, but shrewd Wall Street "foxes" like these guys we need like a hole in the head.

Meanwhile, back at the henhouse, it seems as though things are really not so bad, so maybe the old cat (aka fox) might not need a bell after all. Here's what Philip Stephens of the Financial Times has to say, in an article called Crisis? What Crisis? The Market Confounds the Left:

Surely it was only yesterday that the west was engulfed by the crisis of capitalism? Markets buckled under the strains of the credit crunch. Portraits of Adam Smith made way for freshly-burnished busts of John Maynard Keynes. Popular rage against greedy bankers promised to restore politics to parties of the left.
Pace the doomsayers who predicted imminent Armageddon, liberal market capitalism has survived: somewhat humbled and, in the case of the financial services industry under much tighter official supervision, but recognisably much as it was. Governments have stepped in to prop up markets rather than to dismantle them. Nationalising the banks has been a means to an end rather than an end in itself. . .
. . . [P]redictions of a return to the 1930s have proved as misjudged as the reckless complacency of policymakers and economists during the boom years. This week banks started paying back some of the money they borrowed from taxpayers.

Yes, indeed, those banks that took billions from the US Treasury are now eager to pay it all back. And, yes, it seems as though they might actually be able to raise at least some of that money on their own. Whoda thunk it? Never mind that their lobbyists succeeded in getting new accounting rules put into place, rules that have enabled them to claim their "toxic assets" are actually worth just about whatever they want to say they're worth. And never mind that other sources of government largess, including billions in loan guarantees, plus a commitment from the Treasury and the Fed that they will not be permitted to go under regardless of the circumstances, i.e., regardless of how recklessly they continue to play their same old same old market games.

And if that weren't outrageous enough, here's another huge "revelation" regarding these same incredibly resilient institutions: the vaunted Public-Private Investment Program (PPIP), instituted by the government to take the burden of all those toxic "assets" off the books of the failing banks, is -- we are now being told -- not really necessary. The banks would rather not sell them after all. No need. Again, thanks to the same new bookkeeping rules. Since they need not be valued on a mark to market basis, they can be valued on a mark to madness basis -- which suits the bankers fine, since they are the ones who invented that same madness in the first place.

Just how mad that madness can get is neatly summarized in an article by Felix Salmon, of Reuters, Why the failed PPIP should prevent TARP repayments:

When the PPIP was introduced, everybody was scared about the amount of toxic assets on banks’ balance sheets. Don’t worry, said Tim Geithner: between the stress tests and the PPIP, we’re going to be able to put a price on all those toxic assets, work out what the banks’ losses are, and ensure that the banks have enough capital to absorb those losses.

The market loved this idea, and started going up rather than down, to the point at which people weren’t scared any more about the amount of toxic assets on banks’ balance sheets. And so it didn’t matter that the adverse scenario in the stress tests is looking positively sunny these days. And it didn’t matter that PPIP disappeared with a whimper, the toxic assets no more priced now than they were six months ago. So long as the stock markets are happy, what’s to worry about?

In other words, the market went up because investors were reassured that the PPIP plan was going to deal effectively with the problem posed by all those toxic assets. But since the market went up, boosting the value of the bank stocks, the bankers have decided they don't really need PPIP after all. And the investors no longer care, because, as the man says: "So long as the stock markets are happy, what’s to worry about?" Talk about a shell game!

What's important to the US economy, in other words, is not that we ever become truly solvent or that our economy ever really recovers or that we emerge from this catastrophe with any semblance of a social safety net, or decent employment opportunities, or a market for our goods, etc., etc., but that the compensation packages of the bankers and other masters of the financial universe be maintained at full value or better, no matter what. It is easy to propose impossible remedies. That's for sure. And when it comes to belling these particular Fat Cats, the remedy may well be just that: impossible.

A Socialist's Guide to the Future of Capitalism -- Part 2: the Need for Hyperdeflation

2009-06-02T11:26:00.002-04:00

I've already written, in an earlier post, about the importance of deflation, and the insane efforts of our financial leaders to force our economy to move in the opposite, inflationary, direction:

Sure, prices went down during the depression, but that is NOT what caused it. The last depression was caused by the same greed, manipulation, deception and dishonesty that caused this one. If anything made the last depression tolerable and, no doubt, saved millions from the streets or worse, it was deflation, i.e. lower prices. And if there is anything that could make our present situation truly impossible, for everyone concerned (aside from the bankers and their sycophants), it would be what the geniuses in Washington seem bound and determined to produce: inflation, aka higher prices.

To my immense gratification, I recently found an article, written in 2003, by a leading economist, Llewellyn H. Rockwell, Jr., of the Ludwig von Mises Institute, that expresses essentially the same view. It's called, appropriately enough, The Blessings of Deflation. Here's some of what Professor Rockwell has to say:

Now we get to the crux of the matter: the Great Depression. The assumption is that falling prices somehow caused the economy to crumble. In fact, it was the after-effects of the boom combined with massive government intervention that caused the depression. The only silver lining in the entire period of the 1930s was precisely the falling prices that made the dollar count for more. Falling prices (a falling cost of living) are what Murray Rothbard has described as the "great advantage" of recessions. If you can imagine the Great Depression without falling prices, you have conjured up an image that is far worse than the reality.

Ask yourself whether during economic downturns, you want your money to grow or shrink in value? If your future job security is in doubt, do you want to pay more or less for goods? If your savings are meager, do you want them to have more or less purchasing power in the future? If you answer these questions rationally, you can see that deflation is wonderful for everyone, and the saving grace of a period of economic contraction. Throughout the 19^th century, prices fell in periods of economic growth, which is precisely what one might expect. This is all to the good.

So, first of all, it's important to remember that the "deflationary spiral" held up as a kind of economic bogeyman by the bankers and their government enablers is in fact, as far as the great majority is concerned, the best possible response to the financial collapse we are now experiencing. But, second of all, and this is my real point here, it looks to be the only means of getting our economy back on track, now that the "free market" investment mirage has been dispelled and it's increasingly clear that we must actually earn our way to economic health from now on.

What's needed, however, goes far beyond anything that happened in the Great Depression. We don't just need deflation, we need a veritable Tsunami of deflation, a deflationary spiral that will take our economy on a truly frightening, but absolutely necessary, ride, all the way to the abyss. But please: do not panic. Before everyone reading here has an absolute fit, it's important for all of us to remember that what we are talking about here is money. Only money. The deflationary spiral of which I speak will effect the value of pieces of paper -- and their virtual counterparts in the world of electronic banking. No resources will be destroyed, no jobs (necessarily) lost. No living creatures, human or otherwise, will (necessarily) be harmed by what I am proposing.

I've added those parenthetic "necessarily"s because everything depends on how our deflationary Tsumani develops. If it occurs in an orderly, controlled manner, then no harm will be done. If it occurs in a lopsided, uncontrolled manner, in which the natural forces impelling us toward deflation are continually undermined by artificial attempts to reverse the trend, through additional government borrowing, or the frantic printing of endless amounts of money (so-called "quantitative easing") as is now being attempted, then some very serious distortions will develop, which could be devastating.

Why do we need this? The reason can be found in my previous post. We presently cannot compete with third world industries and labor, because we have literally priced ourselves out of the world markets. Our role as the world's most extravagant consumer culture ended rather abruptly when all our credit dried up. Not enough of us are now making enough income to actually purchase all the stuff we used to put on the credit card tab, which means that, as far as the world economy is concerned, we have made ourselves irrelevant. Third world producers are still in shock over this turn of events, since we (or rather the con men who kept lending us other people's money) were their best customers.

They will adapt, however, to the new situation, also via a drastic process of deflation, but of a somewhat different kind -- a price deflation that will ultimately place their goods within reach of the workers who manufacture them, whose incomes will be steadily rising as part of the same process. If our own economy deflates sufficiently, then we will finally be able to legitimately compete in this market. And if all goes reasonably smoothly (let us pray), it will be a tremendous market that could have the potential to revolutionize the world economy as has nothing else since the industrial revolution.

What difference does it make if I earn $80,000 a year, $8,000 a year or $800 a year, so long as my living expenses, and the cost of consumer items I might desire, have been adjusted accordingly? During the Great Depression, my father, a highly skilled tailor and sewing machine operator, was always able to find a job. But his income was often meager, sometimes as low as $15 a week. However, as he explained to me, his rent was less than $10 a month, and he could buy a very satisfactory restaurant meal for around 25 cents! He was able to live adequately on what he earned, put something away toward the car he eventually bought, and have enough left over to participate with his brothers and sister in the support of their mother.

I'm not advocating the impoverishment of the American working class. That is something that's already happening, as we know very well, especially from the events of this week, with the bankruptcy of General Motors and the consequent loss of what will amount to tens of millions of jobs. What I'm contemplating is very different: the adjustment of the US economy as a whole to the realities of the new global economy, the real one, not the phony one promoted by the "masters of the universe." In order to adjust meaningfully, we have to give up all the phony pipe-dreams and find a way for American industry to once again compete.

A Socialist's Guide to the Future of Capitalism

2009-06-01T21:28:00.002-04:00

OK, OK, finally I'm finally getting around to what I promised, the answer to the question posed at the end of the last post. For those of you too lazy to go back and check, I'll repeat it here:

Let's face it, the real engine of growth in this country over the last 25 years -- or more -- has been the financial industry, which has accounted for a whopping percentage of the GNP. And if it gets cut down to size, as MUST happen, then what will become the basis for the American economy during the "recovery"? Where will the jobs be?

My own personal preference is for a managed economy, where jobs and resources are allocated on the basis of ability and need. You know the drill: "from each according to his ability, to each according to his need." Karl Marx -- via Jesus Christ. (If you can't find it in the New Testament, it's because you don't know how to read between the lines.)

Since hardly anyone in this country really cares much for the gospel according to either Marx or Christ, there's no point in going on forever along such lines. In my opinion, we'll eventually get a managed economy whether we want one or not, but meanwhile, for the benefit of those bound and determined to fight socialism, in any way shape manner and form, to the bitter end, it might be fun to contemplate what sort of future capitalism might have as the current financial crisis inevitably morphs into an economic crisis of unprecedented depth and breadth. So here goes:

The really really deep -- deep deep deep -- fundamental beyond all other fundamentals -- reason for the situation in which we now find ourselves (SIWWNFO), is not really the greed, mismanagement and outright corruption of the knaves and fools who've been driving the financial markets, though that's certainly been a hugely contributory factor. No, the most fundamental reason is a very gradual, but probably inevitable, rise in awareness and aspiration, also education and ability, on the part of the hundreds of millions of third world citizens who have for much too long been willing to labor continually, day and night, week after week, month after month, without complaint, in order to simply subsist on the margins, regardless of the debilitating work, the grinding poverty and the endless cruelty and exploitation they've been forced to endure. Over a considerable length of time, this group has gradually made itself aware, or been made aware (probably a little of both) of its economic power. Which is not to say that it isn't still being exploited, because the exploitation has probably, in most cases, gotten even worse. No, what is different is that this group has now made its appearance on the radar of the world economy and is now becoming a force to be reckoned with on the global labor markets.

But you already knew that, didn't you? Only you were content to think of it merely as "outsourcing." And you've been conditioned to believe that many of our problems will be over once we force our manufacturers, service providers, information processors, etc., to end this practice so we can have all our wonderful jobs back. Dream on. Capitalism is based not only on greed and manipulation of financial markets, but also, and fundamentally, on competition. So if you are really truly devoted to the principles of "free market" capitilalism, you are going, at some point, to be forced to admit that we, in the good old US of A, are no longer in a position to compete on the world market.

Our labor force can no longer compete. Because we both expect and need far more income than our competitors, who can now do the same jobs just as well, but for a fraction of the cost. And our products can no longer compete, because the costs of producing such products in the USA are far greater than they are when produced abroad.

Don't give up hope, however, because, as I promised, there is an answer. You might not want to hear it, but I swear that for now at least I will have nothing whatever to say about the joys of socialism. My answer lies totally and completely within the realm of capitalism. Within this realm, we have one hope and one hope only: deflation.

(to be continued)

The Future of the American Economy

2009-05-24T06:08:00.004-04:00

I've been reading lately about the "future of the financial industry" and I must say I'm both amused and alarmed. The Wall St. Journal had some sort of forum on this topic, but all the noted financiers and economists could think to talk about was regulation. The gist of it was that we had to regulate the industry in a meaningful manner -- but if we did, then the industry would no longer be in a position to make any real money. Which got me to thinking: how on Earth are any businesses of any size and scope in the USA going to make any sort of money in the coming months -- and years?

The backbone of our financial industry for the last 25 years has been all the uncontrolled trading. Money has been made, gobs of it, specifically because highly risky, highly questionable, but also high profitable (because the risk could be deferred almost endlessly) trades were not only permitted but encouraged. All the Wall St. "talent" the banks are now afraid of losing (unless obscene bonuses can continue to be awarded) were seen as talented only because they had mastered this highly dubious -- and dangerous -- system. If the system is going to be sensibly regulated from now on, that game will be over. So what are they going to be doing with themselves from now on? No wonder the bankers are lobbying like crazy against meaningful reform. With no possibility of gaming the market, there will be no "interesting" money to be made, the traders will get bored and the entire financial industry will be cut down to size. WAY down. Nevertheless, without such reform, the same gamers will be back in business and we'll soon be forced into yet another round of bluster cum bailouts. That can NOT be allowed to happen.

So forget the bankers for a minute and let's concentrate on some other businesses and where they might be after the eagerly awaited recovery? What businesses, exactly? you well may ask. The major US production industry has been the auto industry, which will never be the same and will for a very long time operate on a very limited basis. The computer industry? That's been outsourced for years. Other service industries? Also for the most part outsourced. The health industry? That's due for a very large haircut in the near future if our President has anything to say about it -- and he has.

Let's face it, the real engine of growth in this country over the last 25 years -- or more -- has been the financial industry, which has accounted for a whopping percentage of the GNP. And if it gets cut down to size, as MUST happen, then what will become the basis for the American economy during the "recovery"? Where will the jobs be? Any thoughts? Anyone at all?

I have an answer in mind, by the way. I always do. But I'm wondering if anyone else has any ideas on this topic.

The Guantanamo Flap

2009-05-20T19:19:00.003-04:00

Guantanamo should be returned to Cuba. The base there serves no purpose and never did serve a purpose -- other than military intimidation, bullying and posturing. But the prison at Guantanamo does serve a purpose. Obama's decision to close it is one of the dumbest things he's ever done. Return the base and make a deal with Cuba to lease the prison.

Back in January, I kept this issue within parenthesis, planning to return to it at some later date: "President Obama has already decided to eliminate the prison. (Whether this is a wise decision is open to debate, but I'll leave that issue for a future post.)" Well, the time has come to discuss it here -- I should have discussed it sooner. I never thought closing the terrorist prison at Guantanamo was a wise decision. And the matter is no longer open to debate. Even the Democrats now see that. Obama is due to give a speech tomorrow and hopefully he'll back down. If he doesn't he's a fool. (This is a Democrat talking, by the way, in case you're new to this blog.)

The problem Obama and the Democrats rightfully seek to address has nothing to do with the facility at Guantanamo, which is simply a prison, neither more nor less. It also happens to be a very convenient prison, because it's located many miles off the shores of the USA, an ideal spot for the incarceration of those who might want to do us harm. The Senators who expressed skepticism regarding the closing of this facility were absolutely right, and the Democrats among them should be commended, because this country should never be run on the basis of empty ideology, but on the basis of sound, critical thinking. In opposing Obama, they are making an all too rare show of responsibility and guts.

If there is a problem with the legal status of the prisoners, that has nothing to do with Guantanamo. Their status is a completely different issue from the issue of where they are to be held. Guantanamo has a purely symbolic significance, of course. Certain highly questionable practices took place there. So end those practices, fine. As far as I'm concerned, water boarding definitely looks like torture. Sleep deprivation doesn't. (Been there done that -- insomnia can be pretty awful, but it's something millions of people endure and if innocent people can endure it, terrorists can endure it.) But the larger point is that these practices have been examined and meaningful decisions are being made regarding them. Fine.

As far as the question of whether or not they are to be treated as prisoners of war, as I see it they are most certainly not prisoners of war. Nor are they common criminals. We need to face the fact that their status is unique and we need to treat them in a unique manner. War in the 21st Century is going to be very different from the way it was in the 20th, just as war in the 20th Century was very different from the 19th. The role of terrorism is going to be increasingly important, which means that protecting our borders is going to be increasingly important -- along with many other things, such as the growing importance of intelligence -- both kinds of intelligence, the spying kind but also the intelligent kind, aka simply being smarter, better informed, and also, when necessary, even more deceptive than your enemy.

Planes, ships, missiles, high tech weaponry, etc. are going to be increasingly unimportant. The ability to outsmart your opponent is going to be increasingly important. Torture is reprehensible for many reasons, and it is also ineffective. So why bother with it? If you have someone in custody who might have important information don't bother torturing him, first because it's wrong, but also because it won't do you any good. Lie to him! Manipulate him. Fool him. Hire a magician to make him think he's in the presence of Allah almighty. Be smart, not dumb.

Closing Guantanamo purely because it's taken on some sort of symbolic significance that makes it politically incorrect, is not smart. Transferring possibly dangerous individuals to the US mainland because it makes you feel better about yourself is not smart. I hate to say it but imo the ACLU has outlived its usefulness. Listening to anyone from this organization is a waste of time, i.e., also not smart. The facility at Guantanamo has never been the problem. Our failure to get beyond the political correctness thing, our failure to think more critically, deeply, logically and dispassionately about the world we now live in -- that's the problem. I like my fellow Democrats, I'm proud to be one of them. I admire my president. However: can we drop all the kid stuff and finally: GROW UP??????????

Climate Change -- Some Inconvenient Truths

2009-05-15T08:54:00.003-04:00

One of my favorite columnists, Paul Krugman, has a piece in today's New York Times, entitled Empire of Carbon, that I have some serious problems with. Focussing on China, a favorite target of NY Times China-bashers for a great many years, he writes:

The scientific consensus on prospects for global warming has become much more pessimistic over the last few years. Indeed, the latest projections from reputable climate scientists border on the apocalyptic. Why? Because the rate at which greenhouse gas emissions are rising is matching or exceeding the worst-case scenarios.

And the growth of emissions from China — already the world’s largest producer of carbon dioxide — is one main reason for this new pessimism.

I felt impelled to respond with the following comment:

I am alarmed and disheartened by the persistent manifestations of naivete, hysteria, and yes, neo-colonialist arrogance, on the part of intelligent, well meaning individuals, many of whom, as is certainly the case with Dr. Krugman, should know better. Yes, global warming is undoubtedly a reality. Yes, in all likelihood it is caused, or at least hastened, by human activity. And yes, it is likely to present the human race with some serious challenges over the next 50 to 100 years. Nevertheless, there are some other truths, no less apparent, compelling and “inconvenient,” that must also be taken into consideration when evaluating this situation.

For examples of what I am talking about, I directed his readers to this blog. Here are some of the "inconvenient truths" I have in mind:

1. The Earth has undergone many cycles of climate change in the 150 to 200 thousand years we Homo Sapiens have roamed the planet. In every case, humans have found ways to adapt.

2. While persistent droughts in parts of Africa have been attributed to global warming, “a new study of lake sediments in Ghana suggests that severe droughts lasting several decades, even centuries, were the norm in West Africa over the past 3,000 years. The earlier dry spells dwarfed the well-documented drought that plagued West Africa in the late-20th century . . .” While drought is naturally of great concern in Africa, as elsewhere, global warming due to industrial activity is clearly only one, relatively small, part of the problem.

3. Many sources of greenhouse gas have nothing to do with industrial activity: “By burping, belching and excreting copious amounts of methane — a greenhouse gas that traps 20 times more heat than carbon dioxide — India's livestock of roughly 485 million (including sheep and goats) contributes more to global warming than the vehicles the animals obstruct”; recent studies of “black carbon” emissions (aka “soot”) from the inefficient stoves of hundreds of millions of third world households have shown that they, too, have a significant role to play in global warming: “ ‘It’s hard to believe that this is what’s melting the glaciers,’ said Dr. Veerabhadran Ramanathan, one of the world’s leading climate scientists, as he weaved through a warren of mud brick huts, each containing a mud cookstove pouring soot into the atmosphere.”

4. Any attempt to slow global warming by imposing economic restrictions is sure to have devastating effects, not only on the economies of emerging industrial nations such as China and India, but the poorest of the poor in every part of the world. And in the face of the worst economic downturn since the Great Depression, the effects on many working and middle class families may also be dire. If global warming can be characterized as a man-made disaster, ill informed and panicky attempts to reverse it can be seen as part of the same depressing trend, founded in human arrogance, hubris and sheer pig-headed ignorance. If nothing else, the recent ethanol farce should give us pause before we embark on yet another, possibly far more costly, folly.

5. A recent study suggests that global warming has already reached a point of no return, where the worst of its effects may well be irreversible, no matter what we do: “The damage will persist even when, and if, emissions are brought under control, says study author Susan Solomon, who is among the world's top climate scientists."

6. Global warming is a potentially disastrous, but also slowly developing, trend that we will have ample time to prepare for. The key to dealing with it clearly does not lie in desperate, hasty, attempts to reverse the irreversible, but in the sort of long-term planning that would help us adapt. Not emission control, but population control, thus emerges as a key factor in facing the coming challenge. Since China has been a leader in dealing, however clumsily, with this absolutely fundamental problem, the many criticisms that have been directed at this country with regard to climate change are both ironic and disturbing in the extreme.

Sign of the Times, from The Times

2009-05-14T13:16:00.002-04:00

Hot off the presses, here's the headline, and subscript, from today's NY Times:
Jump in Food Costs Drives Up Prices -- "Wholesale prices rose slightly in the U.S. in April, the government reported, blunting fears of deflation."

Wholesale prices in the United States rose slightly in April, the government reported on Thursday, as falling oil and gasoline prices leveled off and food prices rose the most in a year. The Labor Department reported that prices received by producers of finished goods rose 0.3 percent last month, further discounting the prospect that the economy was veering into a vicious cycle of lower prices and lower wages known as deflation.

So rising food prices, at a time of high unemployment and low wages, is good news. Well Halleluyah! That should make you feel a whole lot better as you decide what you can afford to feed your kids tonight. In the interests of journalistic balance, the Times does present another viewpoint, though it seems a bit half-hearted:

But for some economists, the prospect of rising energy and food prices at a time of deep unemployment and shrinking wages raised concerns that strapped consumers could see their cost of living rise even as the job market continued to get worse. . . “There’s this squeeze going on,” John E. Silvia, chief economist at Wachovia Corporation, said. “We still have job losses. We still have a lot of pressure. And now you’re going to tell me that a lot of these basic commodities are rising? People’s real income is going to get squeezed.”

Exactly! The "squeeze" referred to is part and parcel of the more fundamental aporia I've alluded to in some earlier posts. At every level of the economy we literally do not know which way to go. Do we allow the banks to fail, which could destroy the world economy, or do we prop them up with trillions in bailouts, which could destroy the world monetary system? Do we nationalize the banks, which could lead to socialism, or do we try to restore the status quo, which could re-inflate the old bubble, leading to an even greater disaster? Do we encourage prices to rise, which would lead to serious hardship, not to mention the very real possibility of runaway inflation, or do we allow them to fall, which could lead to that dreaded "deflationary spiral" so many economists are now so worried about.

I looks very much as there is no way out, one way or another we are going down the tubes. There is another alternative, however, a very logical and sensible alternative, which I've been writing about here, a fresh approach to the economy that could certainly work. But it would require a major paradigm shift that few in this country are in a position to accept. Until we do, be prepared for a continual roil of the economy, as it lurches from one extreme to the other, from recapitalization to nationalization, from endless bank failures to endless bailouts, from price increases to price decreases, from runaway deflation to runaway inflation and back. If you really like roller coasters you might enjoy the future, but be careful, because too much of this sort of thing could make you very, very sick.

Stress Tests, Regulatory Capture, and the Fatal Flaw of Capitalism

2009-05-12T20:58:00.001-04:00

Let's deal with the last-named item first. The fatal flaw of capitalism is that it is fundamentally beyond regulation. Advocates of laissez faire have always recognized this, arguing that in order for capitalism to work it must be allowed to proceed free from external constraints. The theory has always been that "the market," driven by "enlightened self-interest" (aka "greed is good"), will naturally regulate itself, because self-regulation is in the interest of all market players. External regulation, so the argument goes, will only introduce distortions that interfere with the natural balance of an inherently self-regulating system. As has long been known, however, laissez faire capitalism works only for the benefit of the few, with maybe some degree of trickle-down to the rest of us, if we're really lucky. And as we've only recently learned, laissez faire capitalism, when carried to an extreme, can be so self-destructive as to put everyone at risk.

So if capitalism cannot be relied on to regulate itself, then government needs to step in and regulate it, right? Wrong. The "free market liberals" were in fact correct in arguing that external regulation won't work -- though probably for the wrong reasons. Which brings me to the second topic in my title: regulatory capture.

Regulatory capture refers to a situation in which a regulator becomes so entangled in the mechanisms he is attempting to regulate that he can no longer perform his duties effectively. The assumption is that such a person can become co-opted in one way or another, to the point that he develops a conflict of interest. This is what happened to the institutions, such as Standard & Poor, Moody's, etc. that gave so many of our failing banks triple A ratings. In this instance the evaluators became dependent on the good-will of the bankers, who were, after all, paying their salaries.

In theory, a completely independent regulator ought not be vulnerable to co-option and ought not, therefore, develop conflicts of interest. A government regulator would be paid by the government, not the banks or investment houses, and would thus, in theory, be in a position to offer a completely independent, unbiased and honest assessment. The setting up of such an independent regulatory system is, of course, an essential part of the Obama-Geithner-Bernanke-Summers plan.

Which brings me to the first element in my title: the stress tests (forgive me folks, I seem to be going bass-ackwards here). Here's what one of our most knowledgeable and widely quoted bloggers, Yves Smith, had to say, in a piece pointedly invoking one of my favorite heroes, The Banks and Orwell:

I'd prefer an open sales effort to this mingling of hucksterism with supposed regulatory policy. And they have clearly been intermingled. Note how the prime objective of the stress tests has been above all to restore confidence. Huh? The most important aim should be to assess their condition so as to determine what if anything needs to be done. To subordinate proper regulatory action to reassuring "the markets" is backwards. If the public had faith in the integrity of the process, the need for a confidence exercise would vanish.

Herein lies the crux of the problem, because the stress tests have two contradictory goals: first, to objectively assess the condition of the banks; but second, as Obama and Geithner have repeatedly insisted, to restore public confidence in the banking system. As everyone knows, most if not all of these banks would have failed had there been no bailout. What would have been expected from an honest stress test would, therefore, have been a dire assessment indeed. But that would hardly have restored confidence in the system. Consequently, the stress tests were compromised, serious problems were papered over, and a truly Orwellian process of doublethink came into play. Think two contrary thoughts at the same time, first the unpalatable truth that our financial system has been ruined; second the necessary lie that everything is really OK, that with a little tweaking the system is going to recover quite nicely. Because the primary goal of the exercise was not proper regulation of the banking industry, but the restoration of confidence.

While so many economists are expressing irritation and disdain, few seem to realize that the fundamental flaw at the heart of the tests cuts also to the heart of any hope for regulatory reform. Over and over again the pattern repeats itself. Some institution becomes hopelessly overextended, for whatever reason, legal or illegal, by choice or by chance. Everyone at the top sees what is going on, knows very well exactly how terrible things are -- and yet, the whistle never gets blown. I'm thinking, for example, of that famous speech by Enron CEO Ken Lay, declaring Enron was doing great at a moment when he knew full well it was on the rocks, that all was lost. Why would he make such a speech at such a time? Well, what other choice did he have? If he had told the truth, the company would have tanked then and there. And he'd have been blamed. Lay was in a classic lose-lose situation. If he told the truth, his words would have precipitated a run for the exits and he'd have been blamed for Enron's fall; by forcing a smile and insisting all was well (as he did), he bought himself some time -- knowing in his heart that it was just a matter of time before his lies would be exposed.

I think it highly significant that no one with any real influence blew the whistle on Bernie Madoff, despite all the many alarm signals going off for so many years. It's hard to believe that no one, none of the experienced traders he did business with, none of his alleged victims, not even anyone at the SEC, was aware that he was perpetrating an outrageous scam. Regardless, he was simply too hot to handle, the consequences of exposing him would have been too disastrous, not only for his associates and those invested with him, but even the functionairies at the SEC, who would certainly have been blamed for the billions in losses.

Something similar must have been at work with the agencies rating the banks, as they began to realize how serious a situation their clients were in. When things reach a certain pass it's not so much a feeling of loyalty or obligation to the guys who write your checks, as a feeling of responsibility for the entire financial edifice, which could collapse to the ground if you said the wrong thing at the wrong time. What sort of courage would it have taken for some functionary at Moodys or S&P to get up one fine morning and announce to the world that Lehman Brothers must be downgraded from AAA to ZZZ? If that had happened and Lehman had gone bust, guess who would have been blamed? When one gets into a situation of this sort, ones mind must definitely incline toward magical thinking. Because being realistic and hard nosed is going to get you exactly nowhere. Let someone else take the hit when all goes bust.

Obama, Geithner and Bernanke are in essentially the same untenable situation. And in fact any regulator or regulatory agency would inevitably be placed in the same untenable situation. So long as all goes well and there is nothing to regulate, then you can do your job of regulation really well. As soon as something goes wrong, however, then, simply by exercising your regulatory responsibilities, you run the horrible risk of precipitating the calamity you were hired to avert.

And hence: the fatal flaw of capitalism is that it is fundamentally beyond regulation. QED.

(Of course, for some, that is its supreme strength.)

Hunky Dory?

2009-04-30T05:47:00.002-04:00

Is everything now hunky-dory? The stock markets are up, the pundits (some of them) are saying, or implying, that we've turned the corner -- and the Banksters are saying they don't really need taxpayer bailouts after all -- especially if it means cutting back on those all important bonuses.

What's not being mentioned, at least in the mainstream media, is that the mark-to-market rules were changed to suit the Banksters, so they can now claim that they are not in trouble after all, it was just an accounting glitch. In other words, the old magical thinking that did Enron in is back in force on Wall St. -- assets can be valued according to fantasies about what they might be worth two or three years down the line rather than what they are actually worth in the real world market of today. Reality finally caught up with Enron and it will catch up with the Banksters as well -- only this time we are all at risk.

I'll be away from my desk for a long weekend trip, and will probably not be posting here until the middle of next week.

"Miss me, miss me, miss me/ Miss me darlin' when I'm gone/ Miss me darlin when I'm gone." (from Payday as performed by Pete Steele.)

:-)

Shifting the Paradigm

2009-04-27T09:30:00.002-04:00

The notion of a fundamental "paradigm shift" came to wide public attention through an extremely influential book, The Structure of Scientific Revolutions (1962), by Thomas Kuhn. In his book, Kuhn argued that scientific revolutions are not produced simply by original ideas, tested through careful methodology, but by fundamental shifts in the way people think. So ingrained are the "paradigms," i.e. models, or mental fields, that control our thinking, that for the great majority, even scientists, it is all but impossible to see the world any other way. As Kuhn demonstrated, new scientific ideas, based on radically different paradigms, usually become accepted only when the older generation dies out, to be replaced by a younger generation whose thinking is less controlled by traditional mental constructs.

There has been much criticism of the President's economic policies, guided largely by an old guard whose ideas have also been fatally constricted, in a very similar way. While Timothy Geithner and the President himself represent a younger generation, they too have, at least so far, acted as though hopelessly in thrall to an outdated, indeed demonstrably flawed, paradigm.

As I've argued in some earlier posts, the difficulties of overcoming ingrained mental constructs should never be underestimated. In today's New York Times, we find an article implying that Geithner's ties to the Wall St. "old guard" have compromised his ability to adequately represent the interests of the US taxpayer. While there may certainly be some truth in this, the Times article distracts us from the principal problem facing both Geithner and his many critics alike. The frustrating but also fascinating fact is that none of the old paradigms, including the "lessons" apparently learned from Great Depression no. 1, can begin to prepare us for the radical nature of the new situation facing us today. It is therefore unfair to single out either Geithner or Obama for criticism when the vast majority of their critics remain in thrall to exactly the same paradigm.

What is this old paradigm? And what is the new paradigm that could deliver us from the ruins of the old one? In my view, the answer is relatively simple. It's also quite logical, if not perfectly obvious. But the problem with paradigm shifts has nothing to do with logic. And if it were a matter of what is obvious, then the old story of the Emperor's New Clothes would have little meaning for us.

Obviously, we have an intractable problem centered on the status of money, specifically money that has been loaned and cannot possibly be repaid. Obviously the solution is simply to cancel all the outstanding debts and start over. However, there is no way to do this without placing the entire monetary system of the entire world in jeopardy. What the old paradigm tells us is that the world's monetary system must at all costs be preserved, because, according to the old paradigm, the world's "economy" is based on that system. What any child can clearly see, however, ala the Emperor's New Clothes, is that money is not really a commodity, we can't eat it and it can't be used to make anything useful. If all the money in the world suddenly vanished, both on paper and electronically, every single thing we need to survive and even prosper would still be there. So the real problem before us is not the preservation of an outmoded and indeed harmful, if not perverse, system based on the virtual exchange of virtual units, a system so complex that only a few people with inside information can consistently profit from it, but the management of resources, commodities such as fuel, food, housing, communications systems, etc., in such a way that their production is not seriously interrupted and their distribution is fair and equable. While in the past the problems involved in managing a system of such enormous complexity might have seemed hopelessly impractical, the extraordinary development of computer-based technologies has completely changed that picture. It will be child's play for our high-tech wizards to reprogram their computers from the thankless, boring and pointless task of juggling virtual credit and debit accounts to the challenging, enormously meaningful, task of allocating the actual production and distribution of actual resources.

Will such a radical shift in the way things are done be likely to happen anytime soon? Sadly, this is highly unlikely. Because the paradigm shift entailed would be far too radical to gain anything like the broad acceptance that would be needed. The very real technical and planning problems would be overwhelmed by the far greater political problem entailed by a paradigm shift of such enormous magnitude. On the other hand, the events now dominating the financial world are in themselves so radical, that the system so many are now trying so hard to preserve may of its own self destructive momentum precipitate the new paradigm even before we are mentally and emotionally ready to either understand or accept it. Ultimately, we may have no choice.

Interlude

2009-04-26T23:36:00.002-04:00

Day (After Rimbaud)

Day.

Day on fire invisible | water | day on ice.

Partly cloudy water to drink.

The well is dry.

Dry.

Sun.

The day on fire.

The day visible.

| Cascading | sun | water heavy laden green-blue

Trees are bent all in the same direction,

| Immobile | blue-grey stone.

They are as quiet as a stone.

Stone.

Cloud.

The day on fire silent | North |

Of where we are

White sky | sea | gone

One cloud heavy laden | green-white cascade.

Cascade.

Bird.

The day is on fire

Of fire.

It’s a fine day clear cool

One pellet of fire drop of visible fire

| Descending | we ascending

As though we were ascending

Countless bead steam.

Bead.

Steam.

Day fire | open | flame tree upright shimmering

Substance is melting itself

Is burning like an unburning tree in full leaf

Each leaf a flame dropping and suspended in the tree spider web dew

Night, no, day, ice, no, fire

Articulate loud web and stem.

Stem.

Summer.

Summer day of fire on fire

Electric webs

There’s a feeling of intense heat coming from the webs

From the stems, the trees,

| Sky lit | descending

Consuming

Visibility.

Consuming visibility itself.

A bird in free fall | flame |

Ice refracting ice | water | blue, green, yellow, pale yellow

Pink, white, absence of white

Pure light, pure seeing, not seeing anything

Driving, stop sign, casual glance right left

The day | still | on fire sign.

Night (After Blake)

Night.

The forests invisible / plain air burning.

Give me air to breathe.

The bell rings bright.

Bright.

Burns bright in the

What you say.

Wolf wolf / ring the bell

To the greenwood gone

To the greenwood

To the

Side.

Of

Forests of / not forest

Of the night burning

We turn as one

Turn as one

Bright burning

Bright.

In the forests of the

Recreation area

By the greenwood / side

Wolf in the wood

Not woods

Burn trash

Not.

Permitted.

Night

The night

Of the night

It burns

Wolf / wolf

By the greenwood side

Over by the old mill

In the jungle of cities

And a thousand birds

It burns / as I burned

I burned

I

Saw

Bright

Burning bright

Tyger burning bright

Over by where we were yesterday

A feeling of intense heat

Did he / did

He / did he

And a thousand birds

In a fine formation

Turn to the East as one

One / cloud

Of night

Over by the old mill

In the forests of the night

It burns.

And a thousand birds

In a fine formation

Swerve as one

As one

One

One eye

Burning bright

I burn

As she goes

The tyger paces back and forth

It burns

In the night

The night

Night

Night eye

You must burn Garcia

Bright burn bright

In the forest

By the old mill where we were

Cut Us a Break!

2009-04-20T21:04:00.005-04:00

Year after year, interest rates kept going down down down. This was supposed to be a good thing. Why? Ask the economists. As far as I can see, all it meant was that those of us who saw through the Wall St. scams were being discouraged from saving our money -- and encouraged to invest invest invest, despite all the many signs the Wall St. bubble was about to burst. Every time the Fed lowered the prime rate, the market took the hint and soared. Interest rates on savings were already low and kept getting lower. So what was the point of saving? Why not keep investing, to insure that some day we'd have enough socked away so we could live out our Golden Years on the income from all that accumulated equity? Wasn't Wall St. where all the smart money was? If the prime were allowed to rise, why the suckers might decide to save after all, despite all the great advice we were getting about "diversification" and that magical "long term." We might even (gulp) pull our money out of Wall St. and put it in the bank. By assuring that interest rates kept dropping, the geniuses at the Fed were insuring that more and more money would continue to be pumped into those 401 k's -- to keep the Ponzi scheme going, natch.

Now that the rate has fallen to zero, you'd think the Fed had done about all it could on behalf of the oligarchs pulling all the strings. But no, they've found another way to keep all their magical balls in the air: pour more money into the system, billions, trillions, a ploy that has the same effect as lowering interest rates. How? Ask the economists, I don't have a clue. All I know is that the little guy keeps getting shafted, all in the name of saving our wonderful "financial system" -- at ALL cost.

Raising interest rates would have cut us a break, would have given us an incentive to do the truly smart thing and put our money somewhere safe, where the slick operators couldn't get at it. But no. The prime rate is down all the way to zero. Putting your money in the bank will earn you a piddling 1 or maybe 2 percent. So don't even think about pulling whatever you might have left in that 401 k out and putting it where it might be safe, in an FDIC insured savings account. It's just not worth it.

And the trillions now being poured into the system are having yet another devastating affect on us ordinary citizens, though it isn't apparent yet. Once again the powers that be are Hell bent on saving us from ourselves. Because if anything is worse to them than allowing us to earn some meaningful interest on our savings, it's allowing us to benefit from the one piece of good news coming out of the meltdown: lower prices -- aka "deflation." The sweaty hands of the oligarchs and their minions are already wringing over that possibility, which, of course, must be countered, at all costs, and with drastic measures.

It's already happening in Spain. And, of course, the hand wringing has begun. Dig this headline, from the NY Times: As Prices Fall, the Specter of Deflation Rises Over Spain. Here's the scoop:

Faced with plunging orders, merchants across this recession-wracked country are starting to do something that many of them have never done: cut retail prices. . .
With the toxic combination of rising unemployment and falling prices, economists fear Spain may be in the early grips of deflation, a hallmark of both the Great Depression and Japan’s lost decade of the 1990s, and a major concern since the financial crisis went global last year.
Deflation can result in a downward spiral that can be difficult to reverse. As unemployment rises sharply and consumers cut spending, companies cut prices. But if sales do not pick up, then revenue can decline further, forcing more cuts in workers or wages. . .

The American economy is less vulnerable to deflation, in part because of the Federal Reserve’s decision to cut interest rates to near zero and increase lending by $2 trillion. The European Central Bank has also cut rates, though more slowly, and it has resisted the lending measures adopted by the Fed and the Bank of England to prop up spending.

Excuse me, but with unemployment rising sharply and consumers cutting spending, doesn't it make sense to lower prices? Isn't that a natural response to the economic reality? And won't lower prices make it easier for laid off workers and retirees who've lost most of their savings to survive? Sure, lower prices will also mean lower wages, but I've got news for you: wages are already near rock bottom. And jobs are already nonexistent. I'm not an economist, but I do have some scientific training, and there is one thing I know very well: a correlation does NOT necessarily imply a cause and effect relationship. Sure, prices went down during the depression, but that is NOT what caused it. The last depression was caused by the same greed, manipulation, deception and dishonesty that caused this one. If anything made the last depression tolerable and, no doubt, saved millions from the streets or worse, it was deflation, i.e. lower prices. And if there is anything that could make our present situation truly impossible, for everyone concerned (aside from the bankers and their sycophants), it would be what the geniuses in Washington seem bound and determined to produce: inflation, aka higher prices. Possibly much higher. Possibly sky high. For the good of the "system," natch.

But just think about what inflation would do to the unemployed; the underemployed; all those whose 401 k's and other investments have been decimated; not to mention the out and out poor, who depend on handouts to survive. Lose your job, lose your shirt in the market, lose your home -- and go to the supermarket only to find that food prices have doubled, tripled, quadrupeled -- or worse. This is what Geithner, Bernanke and company would like to see, and what they are now striving for. To save the system. Natch!

Cut us a break, folks. Let deflation take its course. Give us an honest shot at survival, OK? Coming out of the supermarket with a receipt for $30 instead of $75 sounds awfully good to me. Pruning that monthly gas and electric bill down to size would also do nicely, thank you. And $2.00 a gallon for gas, instead of $4.00, makes a lot of sense to me. I like that feeling. So if prices want to fall, why not just let them.

I'll say it one more time, with feeling: cut us a break!!!!

Republicans Behaving Badly

2009-04-16T16:37:00.010-04:00

As dutifully reported in the New York Times, etc., and loudly trumpeted over conservative talk radio, the Republicans staged a nationwide media event Wednesday, modeled on the Boston Tea Party. Except the Boston Tea Party was about taxation without representation, which was never the issue in this case. And the Boston Tea Party was a rebellion against tyranny, while this one was a rebellion in favor of same. And the Boston Tea Party was a meaningful historical event, while this one was a cynical, vacuous and irresponsible attempt by Republican diehards to salvage some measure of public respect in the face of devastating losses at the polls.

Here are some choice excerpts from the NY Times report:

Although organizers insisted they had created a nonpartisan grass-roots movement, others argued that these parties were more of the Astroturf variety: an occasion largely created by the clamor of cable news and fueled by the financial and political support of current and former Republican leaders.
Fox News covered the events all day with reporters and hosts at the scenes. Neil Cavuto, a Fox host, and Michelle Malkin, a conservative contributor, headlined the protests in Sacramento while Sean Hannity broadcast his show from the protests in Atlanta.
The Web site TaxDayTeaParty.com listed its sponsors, including FreedomWorks, a group founded by Dick Armey, the former House majority leader; Top Conservatives on Twitter; and RFCRadio.com.
The idea for the demonstrations grew in part out of a blast from Rick Santelli, a CNBC commentator who on Feb. 19 at the Chicago Mercantile Exchange said that the Obama administration was promoting “bad behavior” in helping people who were at risk of losing their homes and that Americans should protest with a tea party in Chicago.

Amazing that the Republicans would have the chutzpah to stage a "populist revolt" so blatantly out of touch as to focus on the same old same old conservative agenda items we've been hearing about for years: those "tax and spend" Democrats (yawn), "big government" (double yawn), and how we just gotta protect the "free market" from the "socialist agenda" of Barack Obama and the Congressional Democrats. While knowledgeable economists are expressing legitimate concern over the Obama administration's giveaway of trillions in taxpayer money to the same Wall St. insiders whose greed and stupidity got us into this mess, all the Republicans can see is "creeping socialism." Ye Gods! Obama and Geithner are bending over backwards to avoid even the appearance of nationalization, but in Republican eyes their all-out effort to save the capitalist system from itself translates into a socialist agenda.

Even if the age old diatribes against "tax and spend" Democrats and "big government" had some validity (they don't), you'd think at least some in the Republican leadership would have the sense to realize that there is something profoundly different about the present situation than anything we've encountered before. Obama's desperate efforts to revive the economy are not attempts to broaden the scope and power of government -- they simply reflect the realization, shared by most economists, that the federal government is the institution of last resort when all else fails. While his program involves the spending of astronomical sums, relatively little of that will be due to tax increases, and the increases he is recommending will affect only a small minority of the wealthiest and most privileged among us. While I disagree with Obama's futile attempts to shore up a failed "free market" system, it's clear that something has to be done -- and short of initiating a program based on multiple nationalizations of certain failed institutions, a program favored by economists of both the left and right, it's hard to imagine much in the way of an alternative -- aside from the socialist-oriented planned economy conservatives profess to fear the most, which Obama clearly opposes.

Sure, Obama's stimulus package includes various items he sees as important, why wouldn't it? He was elected, McCain wasn't. The Democrats are the majority party, the Republicans aren't. So what planet do you have to live on to see traditionally Democratic values expressed in a Democratic program? The majority of the voters obviously endorsed those values or they wouldn't have voted for them, so Obama's program is clearly an expression of the popular will -- and he is still, despite all the doubters, commanding tremendous support in the polls.

As for the avatars of conservative talk radio who've been loudly trumpeting this event, I'm reminded of an ancient limerick found inscribed on a hardened paleopolitical turd during the Age of Socio-Illogical Innocence:

There once was a ninny named Hannity
Whose verbiage verged on inanity.
The rant of this fool,
Was pure bull stool,
With the stench of a flatulent manatee.

Obama Responds

2009-04-14T14:58:00.003-04:00

I've been giving President Obama and his team a hard time on this blog and I'm certainly not alone. To give the guy credit where credit is due, however, I must acknowledge his recent speech explaining the origins of the crisis and the efforts now being made to deal with it. In my opinion, this is an articulate, intelligent, thorough and honest presentation, the sort of thing we rarely get from politicians anymore. For an excellent assessment, interleaved with the original speech, I'll direct you to an article published yesterday at the Clusterstock blog, by Henry Blodget. Some excerpts from both the speech and Blodget's interleaved commentary (which appears in brackets):

Now, I don’t agree with some of the ways the TARP program was managed, but I do agree with the broader rationale that we must provide banks with the capital and the confidence necessary to start lending again. That is the purpose of the stress tests that will soon tell us how much additional capital will be needed to support lending at our largest banks [NO, THEY WON'T. WHY NOT? BECAUSE THE STRESS TESTS AREN'T STRESSFUL ENOUGH. THE UNEMPLOYMENT RATE IS ALREADY HIGHER THAN THE PEAK RATE ASSUMED IN THE STRESS TEST BASELINE SCENARIO]. Ideally, these needs will be met by private investors. But where this is not possible, and banks require substantial additional resources from the government, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.

Of course, there are some who argue that the government should stand back and simply let these banks fail – especially since in many cases it was their bad decisions that helped create the crisis in the first place. But whether we like it or not, history has repeatedly shown that when nations do not take early and aggressive action to get credit flowing again, they have crises that last years and years instead of months and months – years of low growth, low job creation, and low investment that cost those nations far more than a course of bold, upfront action. And although there are a lot of Americans who understandably think that government money would be better spent going directly to families and businesses instead of banks – “where’s our bailout?,” they ask – the truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth. [NO ONE IS ARGUING THAT THE GOVT SHOULD JUST "STAND BACK AND SIMPLY LET THE BANKS FAIL"--LIKE LEHMAN. WHAT THE NATIONALIZATION CROWD WANTS IS CONTROLLED RESTRUCTURING AND REPRIVATIZATION.]

I'll interject a comment of my own here, because it's not clear at all to me that "a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses." I'm pleased to see Obama offer an explanation that accounts for his strategy, something we've all been awaiting for some time. However, as I understand it, that dollar from the bank can be stretched to eight or ten only because 1. the bank is able to obtain low interest loans stemming ultimately from the Federal Reserve; and 2. if the borrower defaults, the Federal Reserve and the government generally are there to back up the bank with taxpayer money. In other words, it's only due to a system designed to provide maximum leverage to the banks, the investors, the speculators, and the gamblers, at taxpayer expense, that the capitalist "free market" system can operate at all. And when we recall that it was excess leverage that produced both the first great depression and this one, then we cannot but question the wisdom behind the plan to rescue this old, antiquated and extremely dangerous system, a system that ultimately, when all the smoke and mirrors are removed, amounts to nothing less than socialized capitalism for the benefit of a small group of privileged insiders. Here's a bit more:

So let me be clear – the reason we have not taken this step [nationalization] has nothing to do with any ideological or political judgment we’ve made about government involvement in banks, and it’s certainly not because of any concern we have for the management and shareholders whose actions have helped cause this mess. [YES, SHAREHOLDERS HAVE PAID A PRICE, BUT NOT BONDHOLDERS. THEY'VE BEEN 100% PROTECTED] Rather, it is because we believe that preemptive government takeovers are likely to end up costing taxpayers even more in the end, and because it is more likely to undermine than to create confidence. [STRONGLY DISAGREE WITH BOTH ARGUMENTS. FORCING BANKS TO WRITE DOWN THE BAD ASSETS AND THEN RESTRUCTURING THEM WOULD DEAL WITH THE PROBLEM QUICKLY AND FOR ALL TIME...AS OPPOSED TO THE CURRENT SOLUTION, WHICH DRAGS IT OUT. IF THE GOVT WOULD CONSIDER MAKING BONDHOLDERS PAY FOR THE WRITE-DOWNS, MEANWHILE, THE TAXPAYER WOULDN'T LOSE MUCH OF ANYTHING.]

On this issue I disagree with both Obama and Blodget, because as I see it each is seeing only one part of the elephant, neither is seeing the crisis as a whole. The reality is that the current meltdown is far deeper and more disastrous than anything we've encountered in the past, to the point that neither Obama's plan to shore up the banks nor the alternative of nationalization and restructuring can possibly work. Nevertheless, we must give Obama credit for bravely attempting to come to terms with the problem in a proactive manner. I think it may be too much to expect him to move in the direction I personally would like to see, because what I see looming, for better or worse, is a planned economy based on distribution of resources rather than the reorgainization of a bankrupt financial system. And since a planned economy would 1. have to be run by "big government" and 2. be tantamount to socialism, or at least one type of socialism, it would be political suicide for him to advocate it at this time. It's only after his efforts to prop up the old system have tumbled down to the ground utterly, completely and unquestionably will it be possible to consider what I regard as the only workable alternative.
One last quote from Obama's remarkable speech:

We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock. We must lay a new foundation for growth and prosperity – a foundation that will move us from an era of borrow and spend to one where we save and invest; where we consume less at home and send more exports abroad.
It’s a foundation built upon five pillars that will grow our economy and make this new century another American century: new rules for Wall Street that will reward drive and innovation; new investments in education that will make our workforce more skilled and competitive; new investments in renewable energy and technology that will create new jobs and industries; new investments in health care that will cut costs for families and businesses; and new savings in our federal budget that will bring down the debt for future generations. That is the new foundation we must build. That must be our future – and my Administration’s policies are designed to achieve that future.

Obama's vision is so carefully thought through and so admirable that I must admit I'd really like to see it work, for him, for the country, and for the world. Maybe I'm wrong, hopefully he's right. Let's leave it at that, for now.

Free at Last!

2009-04-13T22:27:00.008-04:00

Hot off the presses, from the New York Times, Goldman Posts Profit and Will Raise $5 Billion:

Six months after accepting a financial lifeline from Washington, a newly profitable Goldman Sachs is pushing to return the billions of taxpayer dollars that it received in an effort to extricate itself from heightened government control.

Goldman, which rode out the final, tumultuous months of 2008 with the help of a federal rescue, reported strong quarterly profits on Monday and said that it would seek to raise money in the capital markets to repay the government.

If successful, Goldman would become the first major bank to return funds received under the Troubled Asset Relief Program, or TARP. Such a step would probably enable Goldman — long one of the most lucrative places to work on Wall Street — to free itself from government-imposed restrictions on compensation.

Of course, the Times article fails to mention the $12 billion recently transferred to Goldman Sachs as a payout on credit default swaps owed it by AIG, money originating in yet another government bailout. Goldman Sachs would not be required to return that amount.

Here's the same story from a somewhat less respectful viewpoint, by Heidi N. Moore, Goldman Sachs: Profits Up. Salaries Also Up. Take That, Treasury!

Goldman Sachs posted a $1.7 billion profit today — and with it, Goldman set aside $4.7 billion for salaries and bonuses. That $4.7 billion is 50% of Goldman’s revenues for the quarter, a jump up from the same time last year, when salary and bonuses accounted for 48% of Goldman’s revenues. In essence, things are still ugly in the market — but even so, Goldman actually said it would reserve more money for staff salaries in the first quarter than it did last year. Goldman doesn’t actually have to pay those dollars until the fourth quarter, but the expenses estimate how much Goldman expects to pay.

Goldman’s boost to compensation costs comes even as the firm employs fewer people, having cut its headcount by 7% since the end of last year. . .

On Friday, Deal Journal wrote about how other investment banks were not pleased that Goldman CEO Lloyd Blankfein called their bonuses excessive, “greedy and self-serving.” Some rivals didn’t believe that Goldman deserved the moral high ground, particularly given that Blankfein had made $68.5 million and was the highest-paid bank CEO at the height of the market.

Meanwhile, Goldman Sachs is trying to shut down a blog that's been sharply critical of their corporate culture and undue government involvement and influence. From Ars Technica:

Goldman Sachs has bigger things to worry about in this economy than a conspiracy theory-filled gripe site, but that's what it has focused its efforts on in an attempt to bully Goldmansachs666.com into shutting down. The investment bank has sent a cease and desist letter to Goldmansachs666 blogger Mike Morgan, claiming that his site has violated Goldman Sachs' intellectual property and trademarks, provides unfair competition, and could confuse consumers.

George Grosz: Eclipse of the Sun, 1926

Matters of Fact

2009-04-11T15:50:00.007-04:00

Mowing

There was never a sound beside the wood but one,
And that was my long scythe whispering to the ground.
What was it it whispered? I knew not well myself;
Perhaps it was something about the heat of the sun,
Something, perhaps, about the lack of sound—
And that was why it whispered and did not speak.

It was no dream of the gift of idle hours,
Or easy gold at the hand of fay or elf:
Anything more than the truth would have seemed too weak
To the earnest love that laid the swale in rows,
Not without feeble-pointed spikes of flowers
(Pale orchises), and scared a bright green snake.

The fact is the sweetest dream that labor knows.
My long scythe whispered and left the hay to make.

Robert Frost

"I'm struggling with a canvas I started a few days before my illness -- a reaper. The study is all yellow, extremely thickly painted, but the subject was beautiful and simple. For I see in this reaper -- a vague figure toiling away for all he's worth in the midst of the heat to finish his task -- I see in him the image of death, in the sense that humanity might be the wheat he is reaping. So it is, if you like, the opposite of the sower which I tried to do before. But there's no sadness in this death, this one takes place in broad daylight with a sun flooding everything with light of pure gold." Vincent Van Gogh, from letter to Theo Van Gogh, Saint-Rémy 5 or 6 September 1889.

THE MALDIVE SHARK

Herman Melville

About the Shark, phlegmatical one,
Pale sot of the Maldive sea,
The sleek little pilot-fish, azure and slim,
How alert in attendance be.
From his saw-pit of mouth, from his charnel of maw,
They have nothing of harm to dread,
But liquidly glide on his ghastly flank
Or before his Gorgonian head;
Or lurk in the port of serrated teeth
In white triple tiers of glittering gates,
And there find a haven when peril's abroad,
An asylum in jaws of the Fates!
They are friends; and friendly they guide him to prey,
Yet never partake of the treat--
Eyes and brains to the dotard lethargic and dull,
Pale ravener of horrible meat.

Big Fish Eat Little Fish -- Pieter Breughel the Elder

"A true account of the actual is the rarest poetry, for common sense always takes a hasty and superficial view." Henry David Thoreau

Take Back the Land!

2009-04-09T22:35:00.005-04:00

Interesting things are happening. Meaningful things. Hopeful things. People are catching on. Just now found this newly minted article in the NY Times, More Squatters Are Calling Foreclosures Home. Here's how it starts:

When the woman who calls herself Queen Omega moved into a three-bedroom house here last December, she introduced herself to the neighbors, signed contracts for electricity and water and ordered an Internet connection. What she did not tell anyone was that she had no legal right to be in the home.
Ms. Omega, 48, is one of the beneficiaries of the foreclosure crisis. Through a small advocacy group of local volunteers called Take Back the Land, she moved from a friend’s couch into a newly empty house that sold just a few years ago for more than $400,000.
Michael Stoops, executive director of the National Coalition for the Homeless, said about a dozen advocacy groups around the country were actively moving homeless people into vacant homes — some working in secret, others, like Take Back the Land, operating openly.
In addition to squatting, some advocacy groups have organized civil disobedience actions in which borrowers or renters refuse to leave homes after foreclosure.
The groups say that they have sometimes received support from neighbors and that beleaguered police departments have not aggressively gone after squatters.

This is truly heartening news. The fact is that no one wants most of the abandoned homes. The banks threaten people with eviction, but after the former owners move out, they are often reluctant to take formal possession, because that would mean 1. paying property taxes; 2. trying to sell a house in a dead market; 3. maintaining the house or 4. paying the cost of tearing it down after it's been condemned. So the houses just sit in place and rot away.

I've already written about this absurd situation, where people are now living on the streets or in tent cities while perfectly good houses are sitting empty. Now, finally, we learn that something is being done. Good people are finding ways to work together and make things happen -- without benefit of money.

Let me look it up, this organization called Take Back the Land. Hang on just a second, I'm gonna go to the website . . .

OK, I'm back. Very very interesting site with some really informative videos. I'm gonna see if I can pick one up for us, over at youtube . . . . . .

OK, good, got it:

What a great interview! This guy is saying exactly what needs to be said, with a minimum of bluster, no fuss, but real eloquence. God bless him! But he's not taking it far enough. Because this is really what it should all be about. And by "all," I mean the economy as a whole. You have people with needs. You have resources lying idle. People need homes. Put them in the idle homes. People need jobs. Take over the abandoned shops, stores, factories, warehouses, restaurants, and put people back to work.

However . . .
Local vigilante groups are great for now but they can never be an adequate answer for the nation -- and the world -- as a whole. Government must take the lead. BIG government, yes. The bigger the better. Really really big. Every abandoned house, failed business, failed bank must be nationalized -- and put to work for the people as part of a BIG GOVERNMENT PROGRAM.

Oops, sorry Rush. Isn't there a pill you can take for apoplexy?

The Junkman's Obbligato

2009-04-09T14:22:00.002-04:00

From A Coney Island of the Mind, by Lawrence Ferlinghetti:

Let’s go
Come on
Let’s go
Empty our pockets
And disappear.
Missing all our appointments
And turning up unshaven
Years later
Old cigarette papers
stuck to our pants
leaves in our hair.
Let us not
worry about the payments
anymore.
Let them come
and take it away
whatever it was
we were paying for.
And us with it.
Let us arise and go now
to where dogs do it
Over the Hill
where they keep the earthquakes
behind the city dumps
lost among gasmains and garbage.
Let us see the City Dumps
for what they are.
My country tears of thee.
Let us disappear
in automobile graveyards
and reappear years later
picking rags and newspapers
drying our drawers
on garbage fires
patches on our ass.
Do not bother
to say goodbye
to anyone.
Your missus will not miss us.
Let’s go
smelling of sterno
where the benches are filled
with discarded Bowling Green statues
in the interior dark night
of the flower bowery
our eyes watery
with the contemplation
of empty bottles of muscatel.
Let us recite from broken bibles
on streetcorners
Follow dogs on docks
Speak wild songs
Throw stones
Say anything
Blink at the sun and scratch
and stumble into silence
Diddle in doorways
Know whores thirdhand
after everyone else is finished
Stagger befuddled into East River sunsets
Sleep in phone booths
Puke in pawnshops
wailing for a winter overcoat.
Let us arise and go now
under the city
where ashcans roll
and reappear in putrid clothes
as the uncrowned underground kings
of subway men’s rooms.
Let us feed the pigeons
at the City Hall
urging them to do their duty
in the Mayor’s office.
Hurry up please it’s time.
The end is coming.
Flash floods
Disasters in the sun
Dogs unleashed
Sister in the street
her brassiere backwards.
Let us arise and go now
into the interior dark night
of the soul’s still bowery
and find ourselves anew
where subways stall and wait
under the River.
Cross over
into full puzzlement.
South Ferry will not run forever.
They are cutting out the Bay ferries
but it is still not too late
to get lost in Oakland.
Washington has not yet toppled
from his horse.
There is still time to goose him
and go
leaving our income tax form behind
and our waterproof wristwatch with it
staggering blind after alleycats
under Brooklyn’s Bridge
blown statues in baggy pants
our tincan cries and garbage voices
trailing.
Junk for sale!
Let’s cut it out let’s go
into the real interior of the country
where hockshops reign
mere unblind anarchy upon us.
The end is here
but golf goes on at Burning Tree.
It’s raining it’s pouring
The Ole Man is snoring.
Another flood is coming
though not the kind you think.
There is still time to sink
and think.
I wish to descend in society.
I wish to make like free.
Swing low sweet chariot.
Let us not wait for the cadillacs
to carry us triumphant
into the interior
waving at the natives
like roman senators in the provinces
wearing poet’s laurels
on lighted brows.
Let us not wait for the write-up
on page one
of the New York Times Book review
images of insane success
smiling from the photo.
By the time they print your picture
in Life Magazine
you will have become a negative anyway
a print with a glossy finish.
They will have come and gotten you
to be famous
and you still will not be free.
Goodbye I’m going.
I’m selling everything
and giving away the rest
to the Good Will Industries.
It will be dark out there
with the Salvation Army Band.
And the mind its own illumination.
Goodbye I’m walking out on the whole scene.
Close down the joint.
The system is all loused up.
Rome was never like this.
I’m tired of waiting for Godot.
I am going where turtles win
I am going
where conmen puke and die
Down the sad esplanades
of the official world.
Junk for sale!
My country tears of thee.
Let us go then you and I
leaving our neckties behind on lampposts
Take up the full beard
of walking anarchy
looking like Walt Whitman
a homemade bomb in the pocket.
I wish to descend in the social scale.
High society is low society.
I am a social climber
climbing downward
And the descent is difficult.
The Upper Middle Class Ideal
is for the birds
but the birds have no use for it
having their own kind of pecking order
based upon birdsong.
Pigeons on the grass alas.
Let us arise and go now
to the Isle of Manisfree.
Let loose the hogs of peace.
Hurry up please it’s time.
Let us arise and go now
into the interior
of Foster’s Cafeteria.
So long Emily Post.
So long
Lowell Thomas.
Goodbye Broadway.
Goodbye Herald Square.
Turn it off.
Confound the system.
Cancel our leases.
Lose the War
without killing anybody.
Let horses scream
and ladies run
to flushless powderrooms.
The end has just begun.
I want to announce it.
Run don’t walk
to the nearest exit.
The real earthquake is coming.
I can feel the building shake.
I am the refined type.
I cannot stand it.
I am going
where asses lie down
with customs collectors who call themselves
literary critics.
My tool is dusty.
My body is hung up too long
in strange suspenders.
Get me a bright bandana
for a jockstrap.
Turn loose and we’ll be off
where sports cars collapse
and the world begins again.
Hurry up please it’s time.
It’s time and a half
and there’s the rub.
The thinkpad makes homeboys of us all.
Let us cut out
into stray eternity.
Somewhere the fields are full of larks.
Somewhere the land is swinging.
My country ‘tis of thee
I’m singing.
Let us arise and go now
to the Isle of Manisfree
and live the true blue simple life
of wisdom and wonderment
where all things grow
straight up
aslant and singing
in the yellow sun
poppies out of cowpods
thinking angels out of turds.
I must arise and go now
to the Isle of Manisfree
way up behind the broken words
and woods of Arcady.

Another Bad Idea

2009-04-08T23:12:00.003-04:00

Here's what just came up as a headline on the NY Times website: U.S. Imagines the Bailout as an Investment Tool. The bailout as an investment tool? Here's the idea:

As part of its sweeping plan to purge banks of troublesome assets, the Obama administration is encouraging several large investment companies to create the financial-crisis equivalent of war bonds: bailout funds.

The idea is that these investments, akin to mutual funds that buy stocks and bonds, would give ordinary Americans a chance to profit from the bailouts that are being financed by their tax dollars. But there is another, deeply political motivation as well: to quiet accusations that all of these giant bailouts will benefit only Wall Street plutocrats.

Why did a huge shudder suddenly go up and down my spine? The only thing I can compare this one with is the Bush administration's idea to hire a public relations firm to sell the Iraqi people on how great everything will be if only they can learn to love Big Brother and his sidekick, Dick Cheney.

How out of touch can an administration be?

The article continues:

The embrace of smaller investors underscores the concern in Washington and on Wall Street that Americans’ anger could imperil further efforts to stimulate the economy with vast amounts of government spending. Many Americans say they believe the bailout programs — and the potentially rich profits they could yield — will benefit only a golden few, including some of the institutions that helped push the economy to the brink.

“This is an opportunity to forge an alliance between Main Street, Wall Street and K Street,” said Steven A. Baffico, an executive at BlackRock, referring to the Washington address of many lobbying firms. BlackRock, a giant money management firm, is playing a central role in the government’s efforts and is considering creating a bailout fund. “It’s giving the guy on Main Street an equal seat at the table next to the big guys,” he said.

So, just like all that sub-prime mortgage debt was sliced and diced and sold off to any and every sucker they could find, the US government is going to start slicing and dicing and selling off its bailout debt? To "Main Street"?????????? Hey, that's where I live, and I'll tell you right now: ain't nobody on my block who's gonna fall for that one.

Gee, I wonder if the Obama administration is going to hire the same P/R firm to sell this bright idea.

The Moral of the Story

2009-04-07T22:35:00.004-04:00

(Continued from the previous post)

The moral of the story is very simple. Rational decisions regarding money can no longer be made by either businessmen or government officials. Bankers and traders can certainly continue to game the system. It's still possible to make money, lots of it. Also to lose it. But when it comes to things like the pricing of consumer goods, deciding how much tuition to charge, making certain industries cost-effective, determining tax rates, and, above all, deciding how much money can safely be pumped into failing financial institutions, auto companies, stimulus packages, etc., without destroying the economy, we have reached a unique point in history: we no longer understand where we are going or why.

Charge more for your product and you lose your customers, charge less, or the same amount, and you can't pay your debts. Why pour money into a failing auto industry if no one can afford to buy the products? Why allow that auto industry to fail if failure will lead to huge job losses in every corner of the country? Etc. (see previous post).

But wait. There has to be a way out. After all, money is just paper, right? Actually most of it, nowadays, is really nothing more than electronic impulses, magnetically stored. Just imagine if a huge sunspot were to form and set off a huge magnetic shock wave headed for Earth, one that wiped out all the hard drives on all the world's computers, what then? Would we all just sit down and die? Or would we try to find some other way to live, free of investments, pensions, savings, credit cards, mortgages, budgets, deficits, national debts, etc. -- free of money?

So the real moral of the story must be rewritten, more or less as follows: Since rational decisions regarding money can no longer be made by either businessmen or government officials, some other solution not involving money must be found.

Whichaway -- Part 2

2009-04-06T09:56:00.006-04:00

The most fundamental dilemma, the intractable aporia confronting our political and economic leaders: do we allow the largest banking and investment institutions to fail, precipitating a complete breakdown of the world's financial systems? or do we prop them up with endless trillions in loans and freshly minted electronic (aka "paper") money, leaching all value and meaning from the US dollar, leading inevitably to the complete collapse of the world monetary system? Which way to go, which way to go? Our leaders have chosen the latter path, but what they are not telling us is that whichever path we choose to take will be our road to perdition.

Even before we reach the point of total "disaster," there are other, less fundamental, but more urgent and immediate choices confronting us, impossible choices that nevertheless must be made.

For example, how is it possible to determine what price to ask for any given commodity or service? If we were simply in a deflationary phase, as many economists seem to think, prices would continually be falling, along with wages. This would actually be a good thing for retirees and others on a fixed income, or those who invested wisely enough to still have some real money safely stashed away. Those savings along with the steady Social Security income would definitely go farther if, in fact, we were in a period of true deflation. However, the overhead costs of many companies have not in fact gone down, so for them lowering prices isn't really a viable option. They're convinced that, to survive, they must, on the contrary, raise their prices -- and that's exactly what many are now doing, despite all the hand-wringing over a looming "deflationary spiral." But how can you raise prices in an economy where job losses are steadily mounting, incomes are decreasing, investments have tanked, housing prices are in free fall, and retirement accounts have lost anywhere from 30% to 50% of their value? Which way to go, which way to go? Logically, prices should be steadily going down, but I'm wondering whether anyone has actually noticed that. Aside from gasoline prices, now going up and down unpredictably, and housing prices, which have obviously taken a nosedive, I myself see only prices that either remain steady, or, as in the case of food, are steadily, and alarmingly, rising. If food prices come down, more of us will be eating better, but more supermarket chains will be going out of business. Looks like they'll be going out of business no matter what.

An issue that never ceases to fascinate me is the cost of tuition. For years it's been heading increasingly into the stratosphere, for no good reason that anyone can see -- except for the availability of all that oh so easy credit. But credit is now, supposedly, tight. You'd think in the wake of all those job losses, investment nightmares, and credit crunches, that colleges and universities would be drastically lowering tuition. But I've seen no sign of that either. How can they lower tuition when their endowments have lost so much, due to all that misguided, irresponsible investing? In their eyes, tuition can only continue to go up, up, up and away. But how can they continue to pull off that particular scam when easy credit ain't so easy anymore, and so many families are now faced with unemployment, if not imminent eviction? They "can't possibly" lower tuition, because they need the money. But if they don't lower their tuition, or stubbornly continue to raise it, which many seem bent on doing, new enrollments will wither and already enrolled students will start dropping out in droves.

We have a similar aporia regarding the auto industry. If we bail out General Motors, we'll be saving jobs. But in order for the company to be viable, jobs must be cut. How can we justify forcing such a huge company to cut jobs when so much money is now being spent on a stimulus designed to create jobs? Whichaway, whichaway?

And how about taxes, what's to be done on that front? To preserve some semblance of fiscal responsibility taxes must be raised. But to stimulate the economy taxes must be lowered. We can, of course, raise taxes on the wealthy, something long overdue in my book. But so many millionaires and billionaires have lost so much in the past year, that most will probably wind up paying no taxes at all! And you can't tax anyone on the basis of all those multi-million dollar bonuses, because the taxes on most of that accumulated loot have already been paid. Again, whichever way we choose to go it apparently makes no difference. All paths lead to the same hard, stone wall of utter futility.

Now for the moral of our story. Which I'll save for my next post.
(to be continued . . . )

Whichaway

2009-04-05T22:33:00.003-04:00

Whichaway, whichaway, does that
Blood red river run?

From my back window,
Straight to the rising sun?

The opening lines of Rising Sun Blues, as sung by Sonny Terry and Brownie McGhee -- imo one of the greatest couplets in all of poetry. What I picture is a cabin by a great river at sunrise, with someone inside looking out the back window. What he sees is not just the river, but the blood red band of sunlight, sparkling and streaming over the surface, pointing directly from the sun to him. Or from him to the sun. We've all seen it -- how the stream of dancing lights always points straight at us, no matter where we are. I used to look for that stream whenever I took the train to or from New York City, choosing my seat so I'd always be on the Hudson River side. I think also about how the sun is the original source of all life on this planet. So the "blood red river," is also, in my mind, the river of blood flowing through -- and uniting -- all living things.

But which way does it flow? From the sun to us? Or from us to the sun?

Whichaway, whichaway, that's always the question, isn't it? In another version of this song we find the line: "My baby's left me and I don't know which way to go." I suppose that's really what the song is all about, isn't it? Just another love song, after all.

I've been thinking about that song lately, because it reminds me of the SIWWNFO (Situation In Which We Now Find Ourselves). It's not so much that we're faced with a dilemma, which we are, or a catastrophe, as seems almost inevitable, but that we're torn between completely contradictory and irreconcilable poles. We have to make some very tough decisions, but "we don't know which way to go."

Sun rise in the East, people it goes down in the West,
Hard to tell now, which one will suit you the best.

(to be continued)

A Suggestion for Detroit

2009-04-05T16:37:00.002-04:00

Just a thought. I'm not at all sure if it's practical but, what the heck, I'll toss it out there anyhow:

One type of vehicle for the automakers to consider manufacturing might be minibuses. Not for the normal consumer market, but in anticipation of a new type of transportation business, made possible by the proliferation of cell phones and internet connections. These would be a bit like combination buses and taxicabs. They could cruise the city streets, soliciting business from people at bus stops. And they could have built-in wi-fi internet connections as well as cell phones. If you needed a ride and were on a computer, you could go to the company website, which would have a map of where each of these minibuses were located. You could then contact the dispatcher, either via the internet or phone, tell him where you are and where you're going, and he'd use specialized computer software to calculate which minibus was best positioned to accomodate you. The software would be designed to maximize the number of passengers at all times. Such vehicles could be a lot more efficient than taxis and open up significant new markets in many cities, like my own, where cab service is difficult to get and often unreliable. They'd also be a lot better at maneuvering through traffic and cause far fewer tie-ups than buses. AND, since they'd be designed for localized travel only, they could be fully electric powered.

I dunno. They say they need some fresh ideas, so how about considering this one? The minibuses would be more efficient, tie up less traffic, create new businesses, create new jobs, provide a badly needed service, and encourage people to leave their cars in the garage, which would mean significant fuel savings AND a smaller carbon footprint.

Crossroads

2009-04-03T23:20:00.005-04:00

I went to the crossroads, fell down on my knees
I went to the crossroads, fell down on my knees
Asked the Lord above, have mercy now, save poor Bob if you please

Standin' at the crossroads, tried to flag a ride
Whee-hee, I tried to flag a ride
Didn't nobody seem to know me, everybody pass me by

Standin' at the crossroads, risin' sun goin' down
Standin' at the crossroads baby, the risin' sun goin' down
I believe to my soul now, po' Bob is sinkin' down

You can run, you can run, tell my friend Willie Brown
You can run, you can run, tell my friend Willie Brown
That I got the crossroad blues this mornin', Lord, baby I'm sinkin' down

I went to the crossroad, mama, I looked east and west
I went to the crossroad, babe, I looked east and west
Lord, I didn't have no sweet woman, ooh well, babe, in my distress

[Bone]
Bone Bone Bone Bone.. Bone.. Bone.. Bone.. Bone.. Bone
Now tell me whatcha gonna do
when there ain't no where to run (tell me what)
(When judgment comes for you, when judgment comes for you)
And whatcha gonna do
when there ain't no where to hide (tell me what)
When judgment comes for you (Cause it's gonna come for you)

[Bizzy]
Head south let's all bring it in for Wally, Eazy sees uncle Charlie
Little Boo, but God's got him and I'm gonna miss everybody
I only rolled and blows my gauge looked at him while he lay
When playing with destiny, plays too deep for me to say
Lil' Layzie came to me, told me if he should decease well then please
Bury me by my grand-grand and when you can, come follow me

[Layzie]
God bless you working on a plan to Heaven
Follow the Lord all 24/7 days, GOD is who we praise
even though the devil's all up in my face
But he keeping me safe and in my place, say grace
For the case to race with a chance to face the judge
And I betcha my soul won't budge
Grudge because there's no mercy for thugs
Oh what can I do it's all about our family and how we roll
Can I get a witness let it unfold
We living our lives to eternal our soul aye-oh-aye-oh

[Krayzie]
Prayyyyyyy, and we pray and we pray, and we pray, and we pray
Everyday, everyday, everyday, everyday
and we pray, and we pray, and we pray, and we pray
Still we laced, now follow me roll stroll
Whether is tell of his Heaven
Come let's go take a visit of people that's long gone
Darris, Wally, Eazy, Terry, Boo
It's steadily creeping up on the family
Exactly how many days we got lasting
While you laughing we're passing, passing away
So y'all go rest y'all souls
Cause I know I'ma meet you up at the crossroads
Y'all know y'all forever got love from them Bone Thugs baby

[Wi$h]
Lil Eazy's long gone
Really wish he would come home
But when it's time to die
Gotta go bye bye
All a lil thug could do is cry, cry
Why they kill my dog and man
I miss my uncle Charles y'all
and he shoudn't be gone, in front of his home
What they did to Boo was wrong
Oh so wrong, oh so wrong
Gotta hold on gotta stay strong
When the day comes
Better believe Bone got a shoulder you can lean on (lean on)

Hey and we pray, and we pray, and we pray, and we pray
everyday, everyday, everyday, everyday
and we pray, and we pray, and we pray, and we pray
everyday, everyday, everyday, everyday

[Chorus - Layzie and Krayzie]
See you at the crossroads, crossroads, crossroads
So you won't be lonely
See you at the crossroads, crossroads, crossroads
So you won't be lonely
See you at the crossroads, crossroads
So you won't be lonely
See you at the crossroads, crossroads

[Bizzy]
And I'm gonna miss everybody
And I'm gonna miss everybody when I'm gone
And I'm gonna miss everybody
And I'm gonna miss everybody
And I'm gonna miss everybody

[Layzie]
Living in a hateful world sending me straight to Heaven
That's how we roll
Living in a hateful world sending me straight to Heaven
That's how we roll
Living in a hateful world sending me straight to Heaven
That's how we roll
And I'm asking the good LORD "Why?" and sigh
It's I he told me we live to die

[Krayzie]
What's up with murder y'all, see my little cousin was hung
Somebody was really wrong, everybody want to test us dawg
Then Miss Sleazy set up Eazy to fall, you know why we sinning
And Krayzie intended on ending it when it ends
Wanna come again, again and again
Now tell me whatcha gonna do

[Wi$h]
Can somebody anybody tell me why?
Hey, can somebody anybody tell me why we die, we die?
I don't wanna die

Ohhh so wrong
Ohhhhh wrong
Ohhh so wrong
Ohhhhh wrong

[Chorus - Layzie and Krayzie]
See you at the crossroads, crossroads, crossroads
So you won't be lonely
See you at the crossroads, crossroads, crossroads
So you won't be lonely
See you at the crossroads, crossroads
So you won't be lonely
See you at the crossroads, crossroads

The wind is howlin
the rain pours down
eyes are blood-shot
heartbeat pounds.
Lights go out
the whole world's in darkness
the ground is tremblin'
dogs are barkless.
In the sky there
appears a great light
burnin' all the
flesh off the
creatures of the
night.
AAAHHHH! Cryin' in a
childless (?) tone
terrified of dyin' a
painful death alone.
Don't smile
lest a innocent (?) chile
The power of god is
gonna get to be your
tal (?).
Throw like a hit from the best
take it in a slump
ha ha
feel it in your chest.
Conquerin the world with the words
leadin the children like herds.
I can feel it buildin
I'm about to explode
I'm walkin on the crossroad

[REFRAIN x2]
People livin in a shack -
at the crossroads
Little kids sellin crack -
at the crossroads
(?) stab you in the back -
at the crossroads
Everybodies gettin jacked
at the crossroads

Violins and trumpets play
25 thousand people in
a golden sleigh
on there way to the promise land.
Deliverance
but yet some don't understand.
Rough on a late night thrill
after midnight
kill or be killed.
Soldiers, warriors
(?) at each other
on the combat zone.
Supreme power on the throne.
Lighting strikes in every home.
Terrified men run down the street.
So many dead bodies
it's hard to eat.
Come, we gotta rise
above the wall.
To see what no man has seen before.
Blindin' light
that got you through the night.
God is on your side
to guide the fight.

[REFRAIN]

Homicide
suicide
death.
BOOM!
Ain't nobody left.
Ohhhh! It's startin to take affect.
Your on your knees
you scared to death.
Tornados with a thousand
people spinnin.
One fight at the cross
and now god is winin.
The whole Earth cracks in half.
The sea turns red from
the blood bath.
Abandoned buildings burned
and two remain (?).
Terrified
you feel the fire blaze.
The ground can't hold your weight.
You reach out to grab
the pearly gates.
Who clocked this f***
not from space.
Never again
will you see the human race.
19 angels leadin the devil
straight to hell!
Torment!
Pain!
What you're seein here
you can't explain.
All your life
some men
we played the game.
Never realize that there's a flame.

Meanwhile, at the corner of Bartholomew and Threadneedle:

Comment for Krugman

2009-03-31T12:13:00.003-04:00

Here's what I've just posted as a comment on Paul Krugman's blog, Conscience of a Liberal:

You are absolutely right. Not only is the cheerleading misplaced, but, as you argued in your recent editorial, the system itself is fundamentally flawed. However, it is not at all clear how that system can be restructured without falling back into the same traps as before. The system as it now exists is far too big and complex for any government to regulate. And since the only ones qualified to regulate it would be the same people who ran it into the ground previously, how could we assume they’d be trustworthy and not subject to bribery, intimidation or simply a reluctance to go against the flow? Sorry, I know that neither Obama nor you nor hardly anyone else in the USA wants to hear this, but as I see it, the only recourse is some sort of planned economy, where all the large banking and investment firms are allowed to fail, then nationalized, then gradually wound down, to be replaced by a system closer to socialism than most Americans are — apparently — comfortable with. As the system collapses and increasing numbers of ordinary people experience real pain, I think the paranoia regarding socialism will die away in favor of a more realistic approach to our economic dilemma. What’s important to remember is that we are still a nation of abundance with respect to resources, people, skills and knowledge. Once the money mirage is dispelled, there’s no reason we can’t once again prosper.

Wouldn't it be great if he posted a comment here, in response? I'd love to know whether he's even considered a socialist option. Sometimes he sounds that way. But most of the time he appears to want to see capitalism survive, albeit in an altered form. What exactly would that mean, Paul?

Memories of the Russian Revolution

2009-03-29T15:59:00.003-04:00

No, not my memories. I'm not that old. Yet.

Actually what I'm doing is remembering what I've read about the Russian Revolution. And thinking about certain similarities with the Situation In Which We Now Find Ourselves (SIWWNFO). In a nutshell, Obama reminds me of Kerensky.
From Wikipedia:

When the February Revolution broke out in 1917, [Alexander] Kerensky was one of its most prominent leaders, and was elected vice-chairman of the Petrograd Soviet. He simultaneously became the first Minister of Justice in the newly-formed Provisional Government. When the Soviet passed a resolution prohibiting its leaders from joining the government, Kerensky delivered a stirring speech at a Soviet meeting. Although the decision was never formalized, he was granted a de facto exemption and continued acting in both capacities. The New York banker Jacob Schiff made large loans to Kerensky's government.

After the first government crisis over Pavel Milyukov's secret note re-committing Russia to its original war aims on May 2-4, Kerensky became the Minister of War and the dominant figure in the newly formed socialist-liberal coalition government. Under Allied pressure to continue the war, he launched what became known as the Kerensky Offensive against the Austro-Hungarian/German South Army on June 17, Old Style. At first successful, the offensive was soon stopped and then thrown back by a strong counter-attack. The Russian Army suffered heavy losses and it was clear - from many incidents of desertion, sabotage, and mutiny - that the Russian Army was no longer willing to attack.

What I'm getting at here, is that when Kerensky came to power, after the initial revolution, in February, he vowed to continue the Russian war effort against Germany, despite the unpopularity of that war and the huge losses the army was taking on the German front.

Kerensky was heavily criticised by the military for his liberal policies, which included stripping officers of their mandate (handing overriding control to revolutionary inclined "soldier committees" instead), the abolition of the death penalty, and the presence of various revolutionary agitators at the front. Many officers jokingly referred to commander in chief Kerensky as "persuader in chief".

Like Obama, Kerensky used his powers of gentle persuasion to effect liberal reforms. But, also like Obama, he was determined to maintain what he saw as iron clad commitments carried over from the previous regime. In Kerensky's case these commitments took the form of military treaties, while for Obama they take the form of financial obligations based on a respect for the laws protecting bonuses and private property, in the form of investment obligations on the part of the world's largest banking and investment companies. Timothy Geithner insisted today, in a televised interview, that these obligations must be respected regardless of the cost to US taxpayers.

Kerensky's major challenge was that Russia was exhausted after three years of war, while the provisional government did not offer much motivation for a victory outside of continuing Russia's obligations towards its allies. Furthermore, Lenin and his Bolshevik party were promising "peace, land, and bread" under a communist system. The army was disintegrating due to a lack of discipline, which fostered desertion in large numbers.

Kerensky and the other political leaders continued their obligation to Russia's allies by continuing involvement in World War I - fearing that the economy, already under huge stress from the war effort, might become increasingly unstable if vital supplies from France and the United Kingdom were to be cut off. Some also feared that Germany would demand enormous territorial concessions as the price for peace (which indeed happened in the Treaty of Brest-Litovsk). The dilemma of whether to withdraw was a great one, and Kerensky's inconsistent and impractical policies further destabilized the army and the country at large.

During the October Revolution, the famed "Ten Days that Shook the World," the Bolsheviks, led by Lenin, defeated the forces of Kerensky's provisional government and established a Communist state, leading to a prolonged and extremely violent civil war. A significant factor in the Bolshevik success was its commitment to ending the war and bringing the demoralized and exhausted troops home.

The parallel I see is between Kerensky's insistence on honoring Russia's treaties, to the point of maintaining a disastrous war, and Obama's insistence on honoring legal obligations protecting the fortunes of the wealthy in the face of a disastrous economic meltdown. Ultimately the Russian people sided with the Bolsheviks who insisted on cutting the ties to their allies and bringing the war to an end. At some point, Americans will demand that our government, in a similar spirit, cut its ties to the oligarchs whose greed and corruption are having similarly disastrous effects in our own time.

Krugman Gets It, Greider Gets It, Soros Gets It . . .

2009-03-28T14:05:00.004-04:00

DocG got it some time ago. So why can't Obama get it?

What is this "it" I'm talking about? Check out my January 26th posting here on the blog:

I can’t believe anyone in his right mind is still thinking in terms of “recovery.” Recovery of what? What is it we think we can recover? And why is it we think we need to recover? The last thing the world needs is a return to the status quo ante, which would simply be a re-inflation of the same old bubble and the perpetuation of the same old Ponzi economics.

I admit I've been a bit worried about Paul Krugman's take on all this. He's been persistently advocating for huge deficits as a way of containing the crisis and sometimes it seemed as though he too, like Obama, was hoping the old system could somehow be revived. Last Thursday, however, he finally made his position crystal clear, in a great Op-Ed piece called The Market Mystique:

Quite a few economists have reconsidered their favorable opinion of capital markets and asset trading in the light of the current crisis. But it has become increasingly clear over the past few days that top officials in the Obama administration are still in the grip of the market mystique. They still believe in the magic of the financial marketplace and in the prowess of the wizards who perform that magic. . .
Much discussion of the toxic-asset plan has focused on the details and the arithmetic, and rightly so. Beyond that, however, what’s striking is the vision expressed both in the content of the financial plan and in statements by administration officials. In essence, the administration seems to believe that once investors calm down, securitization — and the business of finance — can resume where it left off a year or two ago.
To be fair, officials are calling for more regulation. Indeed, on Thursday Tim Geithner, the Treasury secretary, laid out plans for enhanced regulation that would have been considered radical not long ago.
But the underlying vision remains that of a financial system more or less the same as it was two years ago, albeit somewhat tamed by new rules.
As you can guess, I don’t share that vision. I don’t think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good. I don’t think the Obama administration can bring securitization back to life, and I don’t believe it should try.

I've already referred to last night's Bill Moyers show, where he interviewed James Thindwa and discussed the Republic Windows and Doors rebellion. But the second segment was possibly of even greater importance. Veteran political reporter, William Greider appeared and what was his message? More or less the same as Krugman and good old DocG:

BILL MOYERS: We saw Secretary Geithner on Monday. We saw President Obama on Tuesday night. We saw Secretary Geithner again on Thursday. And the storyline seems to be, we're going to get tough on the financial industry. Your old newspaper, "The Washington Post," says, calls it, "A sweeping expansion of Federal authority of the financial system. A rebuke of raw capitalism, and a reassertion that regulation is critical to the healthy function of financial markets." That's the storyline as I read the week, but if you read between the lines, what's missing?
WILLIAM GREIDER: Well, among other things that are missing from that story is that we had the rules and regulations, the agencies created some 80 years ago and afterwards to prevent this sort of catastrophe. And these same political players, Republicans and Democrats holding hands, stripped them away, eviscerated them. The same agencies these reformers want to put in power to prevent this from happening again. Starting with the Federal Reserve, the Securities Exchange Commission, other regulators, utterly failed in their duty to do that. Now, we're going to give them new power.
I'm offering a breath of skepticism toward this grand transformation of government. I don't want to be a cynic, but it feels more to me like trying to restore the old order that failed. And I mean by that these big mega banks that had been liberated by deregulation to do as they pleased and the other rules that were undermined. I think this President, and I'm a big fan of this President, but I think his first priority seems to be to recreate those institutions which, some of which are now insolvent, as healthy again.
And actually it's quite scary, because unless they set about to make much more fundamental changes, I fear we will, sure enough, get this back again.

Finally, here's what George Soros had to say recently, quoted in an article in the London Times, George Soros, the man who broke the Bank, sees a global meltdown. And by the way I have to give him special credit here, because he's been saying this sort of thing for a long time and no one was listening:

The urgent task now, he says, is to realise that the system that collapsed was flawed. “Therefore you can’t restore it. You have to reform it.” He worries that politicians have not yet accepted the need for fundamental change and that “a lot of bankers have their head in the sand”.

My own take on all this is that ultimately it may not matter what Geithner, Bernanke, Obama and congress do or don't do, the result will be the same: total collapse beyond any hope of restoration. However, if they finally "get it" as so many others are now getting it, and decide to work toward fundamental change instead of restoration of the old oligarchic order, the ride to the bottom of the money barrel will be a whole lot smoother -- and safer -- for all concerned.

Republic Windows and Doors

2009-03-27T21:15:00.002-04:00

Here's a story you probably didn't hear about, unless you're from Chicago. I learned about it from Bill Moyers just now, watching his great PBS show. It's the story of the workers at Republic Windows and Doors, and how they stood up to both the company and Bank of America. It was part of his interview with another great American, the labor organizer James Thindwa:

BILL MOYERS: He was in the thick of things recently when local factory workers stood up to a deadbeat employer. The company they worked for, Republic Windows and Doors, suddenly announced it was closing up shop and leaving town. By law, Republic's unionized employees were entitled to 60 days notice and some parting benefits. Instead, the owners gave them three days notice and cut off their health insurance. The angry workers took over their factory. Backed by their union, the United Electrical, Radio and Machine workers of America or U.E., they called it a "peaceful occupation" and announced they wouldn't budge until the company did right by them.
REPORTER #1: Developing right now, laid-off workers occupying a Chicago factory-
REPORTER #2: Hundreds of workers are barricaded in a business on Chicago's-
BILL MOYERS: The story caught the nation's attention...
REPUBLIC WINDOWS AND DOORS EMPLOYEE: We've been here since yesterday and we aren't going anywhere. We are committed to this!
CROWD: Yeah!
BILL MOYERS: As workers stood firm inside the factory, James Thindwa helped rally supporters to raise a ruckus outside.
CROWD: The workers united will never be defeated!
JAMES THINDWA: We were going to use Republic Windows as an example. That if you're thinking about walking away from workers, you know, walking away from your obligation to pay workers wages and their benefits, and that you're going to have a fight on your hands. That we're going to bring the entire community- the wrath of the community was going to come and express itself. Chicago is a union town. And we like to say that here. And so we drew a line in the sand and said- it was snowing outside, we drew a line in the snow, and said that you can't do this in Chicago.
BILL MOYERS: Factory owners blamed the closure on declining home construction. They said they couldn't meet the payroll or pay their bills, because Bank of America had canceled the company's line of credit.
CROWD: Se, se puede!
BILL MOYERS: So organizers took on the bank. It had just received 25 billion dollars in federal bailout money- money meant to help banks do the very kind of lending companies like Republic Windows and Doors needed.
. . . .
JAMES THINDWA: And so this became a very, very powerful campaign, politically, emotionally. And I think Bank of America wisely decided that this was not a fight that they were going to win.
CROWD: Yes, we did! Yes, we did!
BILL MOYERS: After five days of public pressure, Bank of America caved. It came up with a cash loan to pay the workers what they were owed.

It's a great story. You can find the entire transcript here.

Arrest Us -- Please!

2009-03-25T10:28:00.003-04:00

I heard a story recently about a Japanese woman who stabbed someone and, when asked why she did it, said it was because she was homeless and starving and being in jail would provide her with a place to live and some food. Which got me to thinking. Maybe if all the homeless in this country demanded to be arrested -- or else -- the message would get through to Washington.

"Arrest us. Or else we'll do something illegal and you'll have to arrest us anyhow. Then find the jails to put us in. And if there's no room, then why not simply put back in our old homes, under 'house arrest,' like Bernie Madoff, for example. If we're prisoners you'll have to find someplace reasonably clean to keep us in, with a sink and toilet that work, you'll have to feed us and you'll have to provide us with medical care. Best of all, you'll have to find work for us."

Prisoners don't need money. They don't need credit. They are provided with what is necessary for survival. But don't go out and stab anyone, please. Civil disobedience should do just fine.

The Big Plan

2009-03-24T15:17:00.003-04:00

Geithner's new, revised version of his original poem has been getting mixed reviews, but for most economists I've been following on the 'net, it still has neither rhyme nor reason. Paul Krugman has been especially eloquent on the failings of the plan as well as the deceptions behind it. Here's a link to the Charlie Rose show from last night, I believe, where he, along with Joe Nocera and Andrew Ross Sorkin, all from the NY Times, participated in a particularly depressing panel discussion. For Krugman the new plan is simply a warmed over version of Paulson's original plan, what he calls a "zombie" plan, that keeps on being killed yet never dies. It's basically, as he sees it, a government bailout with taxpayer money, made over to look like a partnership with "the private sector" solely to avoid the taint of nationalization. Since most private sector risk has been minimalized, private sector involvement is essentially a sham. In fact Krugman goes so far as to describe the scheme as a bribe to private investors. That's how it looks to me as well, but Krugman actually knows enough to give you the reasons and do the math. Here's some more math, from Zero Hedge's Tyler Durden, who calls the plan "The greatest bait and switch of this generation . . ."

1. First the hedge fund buys an asset with a face value of $100 for $80. The hedge fund puts up $2.40, while the Fed contributes the rest, $77.60. Huge leverage.
2. The next day, the hedge fund re-runs the model and realizes that they overpaid the bank. Turns out, it was only worth $20 -- which was where the market had been, sans-government leverage.
3. The hedge fund loses it entire $2.40, and the taxpayer loses its entire $77.60.
4. BUT! The bank buys the asset back from the hedge fund at $20, while paying it a $5 million fee for its trouble.
5. The upshot: The banks sells high, buys low. The hedge fund collects a fee for holding the asset. And the taxpayer is screwed.

An even more devastating assessment appears in an interview with noted economist James Galbraith, who finds the plan "extremely dangerous":

Why? In short, because the plan is yet another massive, ineffective gift to banks and Wall Street. Taxpayers, of course, will take the hit Why does Tim Geithner keep repackaging the same trash-asset-removal plan that he has been trying to get approved since last fall?
In our opinion, because Tim Geithner formed his view of this crisis last fall, while sitting across the table from his constituents at the New York Fed: The CEOs of the big Wall Street firms. He views the crisis the same way Wall Street does--as a temporary liquidity problem--and his plans to fix it are designed with the best interests of Wall Street in mind.

If Geithner's plan to fix the banks would also fix the economy, this would be tolerable. But no smart economist we know of thinks that it will.

We think Geithner is suffering from five fundamental misconceptions about what is wrong with the economy. Here they are:

The trouble with the economy is that the banks aren't lending. The reality: The economy is in trouble because American consumers and businesses took on way too much debt and are now collapsing under the weight of it. As consumers retrench, companies that sell to them are retrenching, thus exacerbating the problem. The banks, meanwhile, are lending. They just aren't lending as much as they used to. Also the shadow banking system (securitization markets), which actually provided more funding to the economy than the banks, has collapsed.

The banks aren't lending because their balance sheets are loaded with "bad assets" that the market has temporarily mispriced. The reality: The banks aren't lending (much) because they have decided to stop making loans to people and companies who can't pay them back. And because the banks are scared that future writedowns on their old loans will lead to future losses that will wipe out their equity.

Bad assets are "bad" because the market doesn't understand how much they are really worth. The reality: The bad assets are bad because they are worth less than the banks say they are. House prices have dropped by nearly 30% nationwide. That has created something in the neighborhood of $5+ trillion of losses in residential real estate alone (off a peak market value of housing about $20+ trillion). The banks don't want to take their share of those losses because doing so will wipe them out. So they, and Geithner, are doing everything they can to pawn the losses off on the taxpayer.

Once we get the "bad assets" off bank balance sheets, the banks will start lending again. The reality: The banks will remain cautious about lending, because the housing market and economy are still deteriorating. So they'll sit there and say they are lending while waiting for the economy to bottom.

Once the banks start lending, the economy will recover. The reality: American consumers still have debt coming out of their ears, and they'll be working it off for years. House prices are still falling. Retirement savings have been crushed. Americans need to increase their savings rate from today's 5% (a vast improvement from the 0% rate of two years ago) to the 10% long-term average. Consumers don't have room to take on more debt, even if the banks are willing to give it to them.

What no one seems ready to discuss at this point is where they think all this poorly conceived planning will wind up. I hear talk about prolonged recession, but what does that really mean? With millions of Americans losing their homes and jobs, out on the street, begging for food, how long a "recession" can be tolerated?

Especially disturbing is that all our high hopes for the newly minted Obama administration seem about to be dashed. His plan is almost sure to fail and the Republicans will certainly be there, ready to pounce when that happens. What we need at this point is exactly what we do not have: a viable party of the left, socialist, liberal, whatever, with no ties to big money and a credible leadership. If some sort of meaningful political alternative doesn't emerge soon, we may all be screwed, and for a long time to come.

Interim Measures

2009-03-22T14:12:00.004-04:00

I've been predicting that the value of money will eventually go to zero and that all the nations of the world will ultimately have to implement some type of planned economy more or less along socialist lines, and in close cooperation with one another. Why? Because with the monetary system gone there will no longer be a "private sector," and consequently all major institutions will have to be nationalized, there will be no other option. For some of us, like myself, this would be a very positive outcome indeed, almost a kind of Utopia -- if it could be made to actually work.

However, as my friend Maju reminds us in a recent comment:

Well, don't know. I could go for longer but what I really feel is that there is no push yet, nor a project to replace the moribund Capitalism (with a handful of very tentative neo-commy exceptions, mostly in Latin America). And that it won't be as easy as to just see the system collapse and then the new ideal society flourish automatically.

It will need a huge effort and a most creative reinvention of nearly all.

He is absolutely right. We can't afford to simply wait for the monetary system to collapse, especially because there are very powerful forces now being marshaled to prevent that from happening. Even after the collapse there could be a long period of chaos, where almost anything can happen. Maju fears the rise of fascism once again, and that is certainly a possibility.

What is needed now, therefore, are interim measures that could ease the transition from a private to a public sector economy. In my most positive, hopeful moments I believe the political climate is such that the proper interim measures will be taken as a matter of course, at least in the USA, as the need for them becomes increasingly clear. We do live in a democracy, liberal democrats are in control of congress and we have a potentially very powerful president, known for his humanity, in Barack Obama. In my more pessimistic moments, however, I fear we might have to fight for such measures, not through violent means, hopefully, but via the resurgence of various citizens interest groups, community organizers, labor unions, charities, even religious groups.

What interim measures am I thinking of?

1. First and foremost, we must find a way to get people back into their homes. The easiest way to do that would be by nationalizing the banks completely. That way, the delinquent mortgages would be owned by the government. The government could then set up a mortgage resolution system by which people could either renegotiate their mortgages at a rate they can afford, or give the house to the government outright in return for an affordable rental lease. Those who have already lost their homes could be assigned houses already standing empty. The government would hire carpenters, plumbers, etc. to restore the houses, which would also put many construction workers back to work.

2. Second of all, we could extend the food stamp system, which is already computerized (using cards very similar to credit cards) to many more people and many other commodities, such as clothing, shoes, inexpensive toys, even heating fuel and gasoline, as well as necessary services, such as a plumber, electrician, etc. These could be called "Resource Cards." Anyone without a job or earning less than the amount needed to maintain a reasonably adequate life style would be entitled to such cards. Since the food stamp system is already in place, such a program should not require a large increase in the federal bureaucracy. Though even if it did, that would be a good thing since we need to create more jobs anyhow. Anyone using a Resource Card who is offered a job commensurate with his or her training and skills would have to take that job or lose their card. Such a system would make our current unemployment insurance system unnecessary, so that would be discontinued.

3. The government would need to initiate a massive job creation program -- and to make it maximally efficient, there should be no middlemen, as there are now. In other words, the government itself should create specific entities that would perform needed services and hire the people to perform them, without benefit of the "private sector," aka the oligarchs. This would be very similar to the Works Project program initiated by Roosevelt in the 30's, and should include writers, which would mean I could be included as well if need be. :-)

4. The Medicaid system offering free health care to very low income people, should be extended to the same people eligible for Resource Cards.

What have I left out? Any other suggestions? Anyone see problems with such a plan?
Please comment.

Conversation with the Angel of Death

2009-03-21T22:41:00.004-04:00

BB: "Brilliant with stars, the night will shake them
While music plays, in gentle ease
And wind will fill their sails and take them
To other undiscovered seas." [from Bertolt Brecht, "Ballad of the Pirates"]

TITUS LUCRETIUS CARUS: "The winds infuriate lash our face and frame,
Unseen, and swamp huge ships and rend the clouds,
Or, eddying wildly down, bestrew the plains
With mighty trees, or scour the mountain tops
With forest-crackling blasts. Thus on they rave
With uproar shrill and ominous moan."

BB: "And, at the last, a strange impression
While rigging screams and storm winds howl
Of voices hurtling to perdition." ["Ballad of the Pirates"]

Angel of Death: "Violence of the law before the law and before meaning, violence that interrupts time, disarticulates it, dislodges it, displaces it out of its natural lodging: 'out of joint.' . . . In the incoercible differance the here-now unfurls." [Jacques Derrida, Specters of Marx]
. . .
Angel of Death: "This barricade was furious . . . It was huge and living and, as from the back of an electric beast, there came from it a crackling of thunders. The spirit of revolution covered with its cloud that summit whereon growled this voice of the people which is like the voice of God; a strange majesty emanated from that titanic hodful of refuse. It was a garbage heap and it was Sinai. . . . [from Victor Hugo, Les Miserables, as quoted in Derrida, Specters of Marx]

VG: [picking up up a copy of the New York Times and reading] "Loosened by a week of monsoon rains, the huge garbage mountain here -- the symbol of the nation's poverty -- had collapsed and smothered hundreds of squatters who made their livings picking through it with metal hooks for scraps of refuse. . . 'The Promised Land' is a real mountain, 50 feet high and covering 74 acres, the main dump for 10,000 tons of garbage produced in Manila every day. . . . 'There's always smoke, there's always fire, even when it rains,' said Paz Calopez, who lives at the edge of the mountain. 'The garbage is always glowing, even at night, and you hear popping sounds. We think it's batteries exploding. It smells worse than a bathroom, especially when the bulldozers come through. Then you really smell the smoke. You cannot breathe. Your eyes water.' And as the new mountain grew, a whole economy developed around it, with middlemen buying and reselling the salvaged scraps and shanty shops springing up to sell soap and shoes and bicycle parts and school supplies and ice cream. 'It's raw capitalism working here,' Father Bernardo said. 'And it really generates money. Millions of pesos revolve through here every day.' [NY Times, July 18, 2000]

BB: "Capitalism, with its anarchic system of production, only becomes aware of its own laws of motion in a crisis: as Marx said, it is the roof falling in on its head that gives it its first introduction to the laws of gravity." [from Brecht on Theater]

VG: [still reading] "Mrs. Ochondra said she could not stop worrying about her lost children. 'I know my sons miss me,' she said. 'They can't really sleep well at night unless they're beside me.' Looking back now, she said, her life seemed to be filled with premonitions of tragedy. She would wake at night and gaze at the faces of her children and smooth their pillows. 'At night during the summer, the mountain of garbage would just light up, and I would say to my husband: 'Look, it's like candles are burning,'' she said. ''It's like we are living in a cemetery.'" [NY Times, July 18, 2000]

Angel of Death: "[F]rom all lips arose a strangely satisfied and terrible cry, funereal in meaning and triumphant in tone: 'Long live death!'" [from Victor Hugo, Les Miserables, as quoted in Derrida, Specters of Marx]

Chuang Tzu: "Men say there is no death -- to what avail? The body decomposes, and the mind goes with it. Is this not a great cause for sorrow? Can the world be so dull as not to see this? Or is it I alone who am dull, and others not so?" [Chuang Tzu, trans. Lin Yutang]

BB: "And I saw that nothing was ever completely dead, not even what had died. The dead stones breathe. They modify each other and cause modifications. Even the allegedly dead moon is in movement. It casts light -- however strange -- upon the earth and determines the trajectory of falling bodies and causes the ebb and flow of the sea waters." [from Becht's Me-Ti, quoted in Frederic Jameson, Brecht and Method]

Lucretius:

Because the fastenings of primordial parts
Are put together diversely and stuff
Is everlasting, things abide the same
Unhurt and sure, until some power comes on
Strong to destroy the warp and woof of each:
Nothing returns to naught; but all return
At their collapse to primal forms of stuff.

Cutting the Gordian Knot -- Part 2

2009-03-21T15:19:00.003-04:00

How can we in the modern world get along without money? This is, I think, the essence of Maju's question. And maybe the simplest answer is: well, we're going to find out. Real soon now. Whether we like it or not. Because the meaning, and value, of our money is dissolving before our eyes. It could take the form of runaway inflation but there are other forces that could also come into play that would do the trick -- such as a complete and total meltdown of the stock market.

Regardless, there's no question that we can survive in an economy without money, at least without money as we now know it. What's important even in our present situation is not really the shuffling around of money (as in the shell game run for so long by our beloved plutocrats) but the production and allocation of resources. One way to think about it is to think about what happens when someone with health insurance goes to the doctor. Money need not change hands (though in some cases there might be a small co-pay). You show someone your membership card, they sweep it through a little box and you're good.

But what about the doctor, won't he insist on being paid with money? Only if he's a fool. Because in the economy we are now headed for, he'll have no way of knowing what his money is worth, and its value will certainly deteriorate over time. Much better to be presented with a piece of paper telling him that he now has the right to continue living in his home without having to worry anymore about a mortgage; that he can forget about his car payments because the car he's been paying on is now available for his use whenever he needs it; and he can get all the gas he needs simply by presenting a ration card at the gas station.

Etc.

Of course, such a system will require a huge bureaucracy to run it and there is always the danger of inefficiency, unfairness and corruption. Just as there is now, and always has been, regardless of whether we are living in a "free market" system (in which every large business has a bureaucracy of its own) or a socialist system. There is one very real rub, however. Because it's going to take time to set up such a system and make it work. Which is why it's important to start planning it now.

Is this an idealistic way of thinking? I've been accused of being an idealist. But I'm not. It's a realistic way of thinking. Unless anyone has a better idea of how to deal with our present, ever expanding, catastrophe. If so, please by all means comment below.

Cutting the Gordian Knot

2009-03-21T13:52:00.002-04:00

In a comment to my post of March 15, The Rain in Spain, Maju asked a simple question, which I promised to answer in a future post:

You say abolish money... but how? It needs more than just supressing money: it needs real nationalization or collectivization of all. Today's ecnomy is not anymore a farm economy of self-sufficiency: every single productive process is interdependent with too many others. I think that more important than abolishing money is to make corporate decissions democratic and accountable to the workers and the public in general. The primary goal is to abolish any kind of organization that doesn't work by the principle: one person, one vote. Including corporations and religious sects.

Actually what I'd written was

We’ve woven a Gordian knot out of all these trillions of dollars worth of MONEY and are now desperately looking for some magic formula that will untangle it for us. So why not, simply, take up the sword of Alexander, who was not called “Great” for nothing, and cut the knot? Kill the money. Let all the leaders of the most heavily invested, and therefor most at-risk, nations meet and agree to simply do away with money. Or, at least, money as we now know it.

Cutting the Gordian Knot of our monetary system is actually even simpler than what Alexander did, because this system has already self-destructed. So in this respect what it would mean to cut the Gordian Knot would be to simply acknowledge that fact. Stop trying to revive a paper corpse and start concentrating on the real problems of real people. The alternative now being pursued by the US government in its efforts to shore things up will take longer, but will ultimately be even more effective because it will demonstrate in no uncertain terms that the old monetary system can no longer work. The more money that's printed, the less money is going to matter. This is not simply a question of generating runaway inflation, because inflation per se is not really what's most important. What's most important is meaning.

The electronic printing of trillions of dollars by the flick of a switch is in itself a demonstration that money no longer has any meaning, regardless of whether or not "inflationary forces" are at work. Because money cannot be separated from value and real value cannot be generated out of thin air. As this "money" comes increasingly into play in the world economy, its dubious meaning will undermine everyone's confidence, not only in the value of the new money, but the value of money in general -- because there will be no way to tell the difference. No one will any longer want to accept dollars, of course, but it will go much farther, because the value of all the world's currencies are tied to the dollar. This is why a UN panel recently suggested that the world should ditch the dollar. Ditching the dollar as the universal reserve currency would already be one way of cutting the Gordian Knot. But it will not solve the problem so long as the powers that be insist on reviving the old monetary system, a process that will still require the extravagant printing of currency of some kind, dollars or no.

So the first thing to be understood about the question of abolishing money is that this is already what is happening, the Gordian Knot is being cut as we speak -- by the very people hoping to gradually and carefully unwind it. But it's a slow process that has the potential to be extremely destructive. Why? Because every government is now concentrating on reviving its economic corpses and not paying enough attention to certain very serious social and human problems to be found among real, living people.

What I recommend, therefore, is to really then just cut that knot, as quickly and suddenly as possible. A meeting of the General Assembly of the UN could be called and there could then be a general agreement to abolish money as we know it. And with the money, all the accumulated debts that are at the heart of our current dilemma. In the past such agreement would have been almost impossible to achieve, because there would be certain nations that owed more debt than others, and the ones holding such debts would feel cheated if all such debts were canceled. But in the current climate every nation's economy is so closely bound up with every others that such a decision should come as a great relief to all -- once they are mentally and emotionally able to deal with the enormous paradigm shift, aka "gateless gate," that they would have to pass through. Perhaps a two week retreat in a Zen ashram would be a good idea for all the delegates before they vote on such a measure.

"Does a dog have the Buddha mind?" NO! Now rephrase the question: "Does this dog have the Buddha mind?" Again, NO. At this moment the dog (i.e., you yourself) will have attained the Buddha mind -- and there will no longer be any need to ask the question.

To be continued . . .

Is Anybody Listening?

2009-03-20T22:23:00.006-04:00

This is the video you've heard about, by the students of Academy High School in Pomona, California. President Obama mentioned them in his speech on education, and later visited Pomona to meet with them. (I could say something cynical about his visit, but I won't.) The stories they tell will soon be the stories many young people all over the country -- and all over the world -- will also be living, as this so-called "recession" wreaks havoc everywhere.

Obama's stimulus package may help some, at least for a time, though from the sound of their stories it looks as though the money trickling down to their families will amount to too little and come too late.

I'm still thinking about that 1.2 trillion dollars Ben Bernanke managed to conjure out of nothing and I'm thinking about how far that amount of money could go if it weren't already committed to the fool's task of "reviving the economy." If our leaders had the guts to defy people like Rush Limbaugh, Sean Hannity, and a host of other conservative hypocrites, seeking to profit from Obama's impossible situation by crying "socialism" (as if they had any idea of what socialism actually is), then every failing business in this country could be nationalized, at least temporarily, and revived, putting people back to work, so they could afford to renegotiate their mortgages and get back into their homes. If certain businesses were no longer viable then the money could be used to start up new businesses aimed at what is needed now, such as, for example, home restoration businesses, plumbing and heating businesses, auto, truck, bus and rail maintenance businesses. If there weren't enough trained workers to man these businesses, on the job training programs could be implemented. A great deal could be done with money now being used basically to protect the fortunes of millionaires and billionaires who gambled their fortunes and lost. It's essential to remember that those fortunes have already been lost. But these people are too "important" to fail, so trillions of US dollars are basically being handed over to them for no good reason beyond the fact that they are and always have been the ones running the country all along: the oligarch/plutocrats. The "plutigarchs."

Aside from Bill Moyers, God bless him, no one in the media is daring to talk about class in any meaningful way, about the class warfare the moneyed elite has been waging against middle class, working class and just plain poor people for so many years, and how their efforts have been sanctioned by a government bought and sold by them through every form of corruption one can think of, from outsized campaign contributions to gifts and perks, lobbying efforts, job offers, and in some cases, no doubt, outright bribes. The Democrats as well as the Republicans have been tainted (I hesitate to say "corrupted") by the same process, which is undoubtedly why the same old Henry Paulson-type financial "experts" are still runnng the Washington show. Moyers interviewed a real live "socialist" this evening, a guy named Mike Davis, who had a lot of very interesting and illuminating things to say about the history of this country -- and its future. If there is any hope for the world, it's with people like Moyers and Davis.

It is the way of the Tao to act without acting, to conduct affairs without trouble, to taste without discerning flavor, to consider what is small to be great, and to consider a few as many, and to recompense injury with kindness.
The master of the Tao anticipates things that are difficult while they are easy, and does things that would become great while they are small. All difficult things in the world are sure to arise from a previous state in which they were easy, and all great things from one in which they were small. Therefore, the sage, while he never does what is great, is able on that account to accomplish the greatest things. . . .

Lao Tsu

Questions for Chairman Bernanke

2009-03-19T17:45:00.002-04:00

It's all over the news and the blogs today. From the New York Times, we have this:

The Federal Reserve’s decision to fire up the printing presses to the tune of $1 trillion continued to wash over world financial markets on Thursday, pushing the price of government bonds higher and dragging down the value of the dollar.

Actually, it's more like 1.2 trillion.

This is Yves Smith's version, entitled, appropriately enough, On the Fed's 'Shock and Awe', from the blog Naked Capitalism:

When some deemed the Fed's move today to expand its balance sheet by as much as a trillion dollars plus as "shock and awe", I recalled that when that term was first used, at the beginning of the US invasion of Iraq. The notion was a display of superior force would lead to quick capitulation.

We know how well that theory worked. And I suspect the unintended Iraq-Fed analogy is apt.

Let me focus on the Treasury part of the equation, but with a recap first. The Fed announced today that it would buy up to $750 billion in Agency MBS this year (in addition to an earlier commitment of $500 billion) and up its purchases of Agency bonds from $100 billion to as much as $200 billion. It also said it would purchase up to $300 billion of longer dated Treasuries over the next six months.

Hardly any of the professional economists seem very happy about this. But I'm not an economist, only a bewildered -- and bemused -- poet. So I have some very simple and unsophisticated questions for our respected Federal Reserve Chairman:

1. Since it is possible for the United States to settle $1.2 trillion worth of debt by "printing money," then why is it that the US government still feels the need to tax its citizens? Why can't all the monies needed by our government simply be printed?

2. Why can't a single -payer, government funded, health care system be implemented in the US on the basis of "printed" money? Why hasn't this already been done, since the lack of a viable health care system in the US has for years been regarded as an emergency. Isn't the physical and mental health of our citizens at least as important as the financial health of the banks?

3. How is such a policy different from a Ponzi scheme of the sort perpetrated by Bernie Madoff? Don't all such schemes involve adding ever greater sums to the pool, either by sucking in new investors or borrowing money, rather than actually investing money in some productive enterprise?

4. Finally, what, exactly, is your intention? Last fall we were told there was a one-time emergency, that billions needed to be pumped into the financial system immediately to stave off a complete collapse of that system. We were also told that once the system was stabilized we could then work on developing more carefully thought through programs to repair it, so we would never have this problem again. Are we still living in the same, original state of emergency? Is the current "shock and awe" an extension of what was done last fall? And if so, how will we know when the ongoing emergency is over, so we can finally begin to plan rationally again? And if not, then what exactly is the logic behind the new plan, how is it going to repair our economy and ensure that it remains stable in future years and for future generations?