Nouriel Roubini's Global EconoMonitor

Roubini Interview on National Public Radio

From npr:

Economist Nouriel Roubini talks to host Guy Raz about the prospects for an economic recovery. Roubini, famously dubbed “Dr. Doom” for his pessimistic forecasts, says we may be on the upswing, but things could go south again. Roubini also praises Fed Chairman Ben Bernanke’s stewardship and has endorsed him for another term.


GUY RAZ, host:

This is ALL THINGS CONSIDERED from NPR News. I’m Guy Raz. Federal Reserve chairman Ben Bernanke says the economy appears to be leveling out. The news from Europe is even more promising. France and Germany announced this past week they were actually pulling out of the recession. But still, here in the U.S., consumer confidence fell, a sign, according to some economists, that our recovery might be weak.

To look ahead at our economic prospects and look back from where we’ve come, we’re joined now by Nouriel Roubini. He’s a professor of economics at NYU’s Stern School of Business. Professor Roubini, welcome to the show.

Professor NOURIEL ROUBINI (New York University’s Stern School of Business): Pleasure being with you today.

RAZ: You’re known as Dr. Doom. You famously predicted our current financial turmoil or the one that we might be coming out of. Is Chairman Ben Bernanke correct? Is our economy leveling out?

Prof. ROUBINI: It’s likely too optimistic, in my view. It’s true that the economy is not in the same free fall that it had in the fourth quarter of last year and the first quarter of this year, but an analysis of the microeconomic data from the labor market to consumers to the housing market suggested that we’re not yet at the end of this recession.

In my view, the recession’s going to be over at the end of the year rather than now, and the recovery’s going to be very anemic for a couple of years.

RAZ: But we are starting to pull out of it now.

Prof. ROUBINI: We are, in the sense that there is a light at the end of the tunnel, and this recession may be closer to the end by the end of the year than it is right now.

RAZ: Are you surprised at how quickly the recovery seems to have started? I mean, you were talking about a dire global economic pandemic, you know, lasting through 2009. That doesn’t seem likely anymore, right?

Prof. ROUBINI: Well, in my view, this recession is going to be the worst recession the U.S. has experienced in the last 60 years. Last year, the debate was among those in the consensus who said that this will be V-shaped, short contraction and rapid recovery lasting only eight months, and those like myself and others, who suggested it’ll be more like a U, long, deep and protracted and lasting 24 months.

Now, we’re already in the 20th month of this recession. Today there is an official data. It is the worst we have had by any standards already.

RAZ: Let’s stick with this letters theme for a moment, the U and the V. I’ve heard you talk about an L-shaped recovery. Can you explain what that means?

Prof. ROUBINI: Well, six months ago, things were so bad that there was a risk that the recovery would be very, very flat like the one of Japan that had practically no growth for a decade, like a new depression. That risk has been significantly reduced today, but my reading of the data is going to be slow growth for the next couple of years. And there is even a risk called a Double Dip Recession meaning something like a W. We’re going to recover, and then towards the end of next year, we will relapse again in another recession.

RAZ: Well, that’s my question. I mean, the government threw a lot of money into the economy with the stimulus package and the bank bailouts. That required printing a lot of money. So I mean, so aren’t there potential consequences here? I mean, in other words, could what looks like a recovery now just actually be a short-term thing?

Prof. ROUBINI: That’s one of the main risks we’re facing. On one side, we needed the monetary and fiscal stimulus to prevent a Great Depression 2.0, and we avoided that risk. On the other side, this stimulus was never a free lunch. Our public debt is going to double in the next few years. That’s another $9 trillion of public debt you are issuing, and now we are printing a lot of money to finance this deficit so that interest rates are not going to go even higher.

Now, that combination of large budget deficits and monetization of this deficit by the Fed could eventually, towards the end of next year, cause another recession. That’s the risk.

RAZ: So we could relapse.

Prof. ROUBINI: Yeah, we could absolutely relapse. That’s one of the big risks we’re facing right now.

RAZ: Professor Roubini, I want to get back to Federal Reserve chairman Ben Bernanke for a moment. You have been critical of him in the past, but in an op-ed in the New York Times last month, you said he should be reappointed when his term expires at the end of this year. Why do you feel that way?

Prof. ROUBINI: For a couple of reasons. First of all, in that op-ed, I recognized the many mistakes that Bernanke and the Fed did early on. They did not recognize the excesses in the bubble period, they reacted too slowly, and they didn’t realize how much this would become a global financial crisis.

However, there was a severe risk of a near depression, and somebody like Ben Bernanke, who has been a student of the Great Depression, realize that we needed to ease money, reduce interest rates and do unconventional policy actions to avoid that kind of a risk. That has been his major success, and that’s why I believe he should be reappointed, also the signal to the market be a signal of stability and continuity to have somebody who has been successful to be reappointed to the Fed.

RAZ: Now, you agree with 70 percent of economists on this issue of reappointing Ben Bernanke, according to the Wall Street Journal. Normally, you’re an outlier. You disagree with most other economists.

(Soundbite of laughter)

RAZ: Are you uncomfortable now that you and 70 percent of economists agree?

Prof. ROUBINI: Well, people usually call me Dr. Doom. I prefer to be called Dr. Realist. It’s important to be right. We are closer to the end of this severe financial crisis, but I also recognize that there are many risks ahead, and therefore, the exit strategy from this massive increase in the money supply is going to be very difficult.

If the Fed does it too soon, and if we take away the fiscal stimulus too soon, we end up into another recession. If, instead, the Fed waits, and the fiscal stimulus continues, large budget deficits and large printing money to finance them, eventually you are going to increase inflation. So there’s a very narrow path that can be taken right now. That’s why Bernanke’s going to have a very, very tough challenge ahead.

RAZ: Nouriel Roubini is a professor of economics at New York University’s Stern School of Business and a chairman of RGE Monitor, an economic consultancy firm.

Professor Roubini, thanks so much for joining us.

Prof. ROUBINI: Good talking with you today.

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426 Responses to “Roubini Interview on National Public Radio”

Just CougarAugust 20th, 2009 at 9:44 pm

Simple my dear. This case is under scrutiny by the superior tribunal of the Republic. You, and all the others, will know about the results.By now,”Thanks for your cooperation” <= classic missive from “The 5th Element”!… and, sure, “I’ll be back!”

Red CougarAugust 20th, 2009 at 9:56 pm

Problem, problem!The demand side analysis don’t consider the fact that the employment is the last variable to reignite in the recovery.Then, it’s possible thant the recovery starts well before the labour market.The recovery stars when the profit index for the hole capital is rejuvenated, and this occurs well before the labour market growth – the labour market growth is one of the results of the recovery, not the contrary!But, prof. Roubini, despite his keynesianism, is right in his previsions: a recovery will be possible only in an uncertain future, maybe after the end of 2009, but maybe – there are a lot of risks already in scene!Thanks for your cooperation!

SoftwarengineerAugust 21st, 2009 at 10:18 am

Tell that to the 600K that lost their jobs last month and add in the 125K uncontrolled growth from abroad added las month to compete [at lowering wage rates] to a horrifying shrinking job market with chronic unemployment.Its time to throw the Keys away and join Malthus. Even VP Biden agrees with me on no recovery without 1st job creation, not the current chronic loss with more added overpopulation lower wages.

SoftwarengineerAugust 19th, 2009 at 9:13 am

The Worse Recession in 60 YearsDr. Roubini is clearly sensitive to the chronic unemployment problem in America, albeit the overly optimistic “V” shaped recession MSM economists need a course in Malthus 101 IMO.As America’s population continuously increases and we become more densely packed, the per capita costs go way down, wages go concurrently down, unemployment goes way up [with poverty]; and it gets worse and worse with no end, as we pack them in tighter. Homelessness in America is now as bad as the Great Depression in numbers, albeit considering the food banks are marginally adequate with no dust bowl impact this time, we have unemployment extentions [that are running out for many Americans soon] and a FDIC [although only partially funded for the job at hand]: homelessness in America is actually far worse today, than the Great Depression, IMO.Asia/Mexico/Africa countries need a course in Condom 101.

FEDupAugust 19th, 2009 at 9:39 am

Saying the recession will be over by the end of the year is like saying a category 5 hurricane is over: cleaning up the mess may be much worse than the actual event and will take alot longer. GDP does not correlate with a worker’s standard of living, liabilities, assets or purchasing power. This reckless ponzi swindle by the elite has led America down a path of unsustainable debt and great financial hardship for many years.This recession may officially be called over in 2yrs but the recovery will be closer to 10 which in my book produces a Recession/recovery ratio (R/r of 2/10=1/5 or a recovery to pre-recession levels of 5x longer than the actual recession! Let’s see how un and under employed Americans feel about that one.

SoftwarengineerAugust 19th, 2009 at 12:41 pm

IMO the elite have tweaked what a good economy meansThere’s some that think all is well as long as half of America’s workers have somewhat good jobs, albeit the other half don’t matter at all and to quote Scrooge, “can just go to the poor houses”.Its similar to the globalist free trader type that abhores American pensions reducing corporate profits. It turns around and bites them in the rear when our retirees aren’t consuming adequately anymore, because their home values and NWO monthly interest incomes are like Great Depression pay. You don’t see Grandpa and Grandma buying new cars, fixing up their homes and traveling; anything like they did when we had decent retirement incomes a decade or two ago. And there’s 80,000,000 of these new Grandma and Grandpas entering the retiree consumer pool soon, the Baby Boomers.

economicminorAugust 19th, 2009 at 5:18 pm

First off, There may be 80 million boomers but the reality of economics 2010 will not allow most of them to retire. And with the dramatic drop in income tax and sales tax collections, there may be NO kitty for SS and Medicare pretty soon either.Second, GDP is a function of gross sales or transfers of money for all goods and services produced in the country in a year. There is NO way this is going up with growing unemployment. Not possible when the consumer spending is down and inflation (relating to the cost of things) is flat. What could possibly cause this to go up? Even Cash for Clunkers didn’t raise personal spending.You can’t sell more for more money when fewer and fewer are working and or buying as all the indicators have shown. YES less bad is better but it isn’t good. Good (by TPTB’s definition) is when we start seeing an increase in consumption.Does anyone really see an increase in consumption and thus an increase in production of goods and services by years end? Besides the Professor and the wholly owned media who shill for the big banks and institutions (not the Professor shilling > banks and institutions)? Exports haven’t even been robust… Nothing is robust except the verbage and the COE incomes.

GuestAugust 20th, 2009 at 7:13 am

“drop in income tax and sales tax collections”??? Trust me, Obama, Pelosi, and Geithner Co will find the TAX revenue from imposing higher TAX and more TAX on rest of hard working American people. And IRS will be sent to collect TAX or send people to prison or force to confiscate asset/property to pay for TAX.

MorbidAugust 19th, 2009 at 3:10 pm

Regarding a course in Condom 101 – I bring forward the healthcare business from the previous thread as it is connected to our coming doom.Re: Canadian Health Care System Hits Speed Bumps; From the previous threadThere has been for some time and will probably always exist, the wolves waiting in the wings, with a certain few complicit in government who scheme for the day they can dismantle the system and hand it over to the private sector. I do not believe that Canadians will accept this. These are tactics to generate discontent and pave the way for big business to become the same merchants of misery as you have in the states. I live in British Columbia and have already contacted my member of the legislative assembly as have most of my friends. Please, if you are satisfied with the state of health care where you live, then by all means that is your prerogative, however, it is not in the best interest of any community here to have big business profit from anyone’s misfortune or ill-health. I gather from previous posts of yours that nothing would please you more than to see a few of us mortals get knocked off, so I conclude that the Tami-flu article pleases you? In the meantime, I wish you continued good health and happiness.Hide reply Reply to this comment By Yve on 2009-08-18 23:12:17What I am saying is that we have become too civilized – we have lost touch with the dark side of the Force (Nature). The Tami-flu business is just another sign of how propped up we are in an attempt to outwit nature.Having said the above, yes, I am in favor of seeing the human population shrink – it is unsustainable. My point is that either we as humans attain the consciousness necessary to shrink our numbers or eventually Nature will do it for us.It is a moral problem. Our civilization has become an ethics by decree. This tells us that we must take responsibility for all peoples of the earth, and also allow them shelter and free provision in our countries. But there is no sustainability adaptation in this, it is a mere ethics of the intellect, wholly lacking in instinct. The intellectually moralistic aspiration that all suffering must be eradicated, is a form of inflation. It will have dire repercussions on society in the future. It is high time to change our moral outlook. We ought to look closer at the natural morality.Pursuing “problems which are not our own” are exactly what we are doing today, on a megalomaniacal scale. This will rebound and give rise to an evil on an equally grand scale.

…But such Themis (Themis means “law of nature” rather than human ordinance, literally “that which is put in place”) revengefulness in nature brings us to a very serious situation, one of the greatest present-day problems of our world: namely, that created by the great improvement in medicine due to the rational and technical development of the white man’s civilization. This is basically due to the domination of the white races. Pretty soon the world will be hopelessly overpopulated; in a couple of hundred years the situation will be absolutely hopeless, but the United Nations and other organizations continue to improve hygienic conditions in India and other Eastern countries and to help overpopulate the earth. Possibly nature will invent a new virus – and a virus is capable of fantastic mutations – or bring about such a state of irritation that Russia or the United States or some other country will use the atom bomb, because somehow humanity has to be reduced. The Feminine In Fairytales

YveAugust 19th, 2009 at 11:41 pm

Sigh…if you must…so here is what I had to say to that if anyone cares:I agree that there will be corrections where there are imbalances, and we as a species are sorely out of order. That is not to say that we have to abandon any shred of good faith that we have toward one another and become a “dog eat dog” world. That, in and of itself, it a fallacy as there is far more cooperation in nature than competition. I would rather cooperate with a neigbour than compete with one. As for spiraling health care costs, those could be taken care of overnight if we lived in a prevention focused society, one where health concerns were mitigated before they became a crisis. Unfortunately, in the midst of the most plenty mankind has ever seen, many choose to eat garbage food and indulge in the kind of sloth that would make my cat envious. Personal responsibility for your health should be paramount, especially in a public system. Me thinks the instant gratification babies amongst us are the most likely to be the heaviest users.By the way I take offense at the quote referring to the ills of the world being caused by the white races. It is a specious play, underhandedly poo-poohing the evil white race, while implicitly suggesting their intellectual superiority. All discovery and knowledge is based on human intellect, homo sapiens, a family to which we all belong.Anyway, we will outstrip our environment as have before and are well on our way to now, and be knocked back before long. We are short sighted creatures. Silly, funny, kind, vicious, greedy, giving, monstrous, loving hateful, wicked, caring & myopic. Does this sound like a recipe for success? Relax.

The AlarmistAugust 20th, 2009 at 2:55 am

Sigh … it won’t really matter whether or not we shephard our resources, because it is more likely that the Earth will be struck by a large asteroid that will wipe out humanity because we were so focused on “fixing our problems here on planet Earth” that we couldn’t afford to continue a space program that might give us a chance to get a little of our DNA out there to survive that calamity.

YveAugust 20th, 2009 at 3:06 pm

So rather than focusing on maximizing everyone’s potential and enjoyment of the life they have been given, we should be funneling scarce resources into creating a pod into which we can vainly inoculate the cosmos with our oh-sooo valuable DNA in the hopes that one day we will flourish elsewhere? The question here is relevance of the human species. Great calamities have struck earth a multitude of times bringing catastrophic change, for some reason we feel we should be exempt from what for billions of species has been life as normal. The excuse to do as one wishes, to treat fellow humans and the earth as your play-things “because we are just going to get annihilated” or “the sun is going to blow-up eventually someday”, or “the bible says God is just going to make us another one”, is the lazy apologist’s response for their crass carelessness & sloth.

Mother of GodAugust 20th, 2009 at 4:53 pm

me too! me too! thanks for these posts, Yve!(thanks you, too, Ungrateful Peon, for your contributions!)

The AlarmistAugust 21st, 2009 at 3:56 am

Yes. Don’t you know, we are but a carbon infestation on Mother Gaia, and our biological duty is to reproduce and spread at all costs.

P&LAugust 21st, 2009 at 9:32 pm

Geeze, don’t you think it’s a GOOD thing we’re restricted to home base? Imagine the suffering and destruction we could inflict on the universe if we were able to get loose before we’re smart enough to keep from ruining EVERYTHING???

JLarkinAugust 19th, 2009 at 9:50 am

I would say that the recovery to date is definitely V-shaped, but the recession was not short or shallow. We had a protracted, deep, V-shaped recession. If the relapse does not occur until the end of 2010 as Nouriel is saying, I would not call that a W either.

11B40August 19th, 2009 at 6:22 pm

Is The Worst Really Over?By, Simon MaierhoferAug 17, 2009Are you a glass half full or half empty kind of a person? More importantly, are you able to discern an empty glass? Wall Street views the stock market through “half-full goggles”, even though economic news continues to disappoint. Currently, 150 banks are at the brink of bankruptcy, the S&P’s P/E ratio is at 143, yet investors are enthusiastic. Is the worst really over?According to recent surveys, the majority of investors looking for light at the end of the tunnel are seeing a very bright glow. Is it really light pointing the way out, or the beacon of another collision bound train?Wall Street in general certainly believes to have seen the light. Goldman Sachs chief strategies Abby Joseph Cohen is convinced that a new bull market has begun. Nobel Prize-winning economist Paul Krugman says that the world has avoided a second recession.On July 23rd, the Wall Street Journal reported that “The economy has hit bottom.” Furthermore, 90% of economists, according to a survey by Blue Chip Economic Indicators, believe that the recession had ended last quarter (more about the significance of this in a moment)After-the-fact prophetsThe astute investor will wonder where Mrs. Cohen, Mr. Krugman, 90% of the economists, and all the other Wall Street gurus were in March when the alleged new bull market actually began. Shouldn’t it be possible to identify a bull market a bit earlier than a 50% rally and five months after the fact?The sobering reality is that around the March lows, Wall Street and all its followers were indulging themselves in self pity and doomsday behavior. On March 5th, the American Association of Individual Investors survey reported the most pessimistic sentiment reading in over 20 years. 70.27% of all investors were bearish, with only 18.92% being bullish.Is this rally out of sync with reality?While after-the-fact prophets have jumped on the rally bandwagon, the economy continues to lag.Retail sales numbers have dropped yet again, top line corporate revenue continues to fall which results in more jobs being eliminated. Home prices continue to fall and foreclosures are still on the rise. In fact, they are expected to triple by 2011.Bloomberg just reported that more than 150 publicly traded U. S. lenders own nonperforming loans that equal 5% or more of their holdings. This is a level that regulators say can wipe out a bank’s equity and threaten their survival.Furthermore, a separate Bloomberg article reveals that the loans of Regions Financial, as of June 30, were worth $22.8 billion less than what its balance sheet says. With Region’s shareholder equity at only $18.7 billion, the bank’s equity is less than zero. Yet, the bank is still classified as “well capitalized” by the government. Bank of America’s loans were worth $64.4 billion less than their balance sheet, and Wells Fargo’s loans were worth $34.3 billion less than stated in their balance sheet.According to recent stats, U. S. banks on average operate on a 45:1 leverage. 30 times leverage means that if a bank loses 3.3%, its equity will be wiped out. At 45 times leverage, a 2.2% loss would be enough to wipe out the entire bank. Combine this with the above Bloomberg reports (5% of nonperforming loans) and you have a recipe for disaster.Incidentally, regulators just shut down Colonial BancGroup (along with 76 other banks earlier in 2009), a big lender in real estate development. With about $25 billion in assets, it was the biggest bank to fail thus far in 2009.Excluding the 19 biggest banks that underwent the stress test, banks with nonperformers above 5% had combined deposits of $193 billion, according to Bloomberg data. That is almost 18 times the size of the FDIC’s deposit insurance fund at the end of the second quarter.Scary valuation metricsIn general, P/E ratios are based on forward-looking or projected earnings, which often reflects wishful thinking. The P/E ratio, based on recently reported earnings, available on Standard and Poor’s website, is a whopping 143.95. This is not a typo!The earnings for S&P 500 constituent companies have declined over 95%, since peaking in Q3 2007. If current estimates hold, Q3 2009 will see the first ever 12-month period during which S&P 500 earnings are negative.P/E ratios are one of the simplest yet most accurate valuation metrics around. A historic analysis of major market bottoms show that there has not been a single prior bear market that bottomed without P/E ratios (and dividend yields) reaching rock bottom levels. In fact, those levels can even be used to calculate a target range for the ultimate market bottom.Just as the human body is not healthy unless it runs at 98.6 degrees, the stock market is not healthy unless P/E ratios and dividend yields reach those trigger levels. Needless to say, a P/E ratio of 143.95 (even P/E of 15) is far removed from levels indicative of a bottom.The Great Depression all over?The economy and stock market are forming more and more parallels with the Great Depression. In fact, no other bear market, aside from the Great Depression, compares with the bull market of the late 2000s. Even the current 50% rally parallels the bear market rally from 1929/1930. This rally was followed by another 70%+ drop.In 1929, a few months before the meltdown started, the Harvard Economic Society turned from bearish to bullish. In 1930, right at the top of the first major counter trend rally which lifted the Dow by nearly 50%, the Society confirmed its bullish outlook. A few days later, the Great Depression reasserted itself. Today’s optimistic economists will soon learn the same lesson as their Great Depression predecessors; don’t get caught up by unfounded hype.Based on investors extreme optimism, the banks’ troubles, the economy’s problems, reliable fundamental indicators, parallels with the Great Depression, and many other facts and indicators, the light at the end of the tunnel will turn out to be a train, ready to steamroll your portfolio.Naïve investors during the Great Depression kept buying into decoy rallies, only to see more and more of their wealth evaporate.______________________________The “recovery to date” may look like a V right now. It might look much differnt in November, and much different still this time next year.Would someone please give me just one real catalyst, with a sonwball’s chance of succeeding, that could start this economy on a true path to recovery. All I see is a downward spiral while a bunch of mini-Wizzard’s of Oz huff & puff in a futile effort to save their way of life. Nevermind that they punt the problems down to our childrens as they piss away our future.Independent Contractor

V, U , W or UUAugust 20th, 2009 at 6:49 pm

First thing is to move away from the Alphabet Soup descriptions of economics. Maybe there is a Chinese character that may more accurately mimic the curve we are on – I am not yet fluent.

GuestAugust 19th, 2009 at 10:41 am

The UBS and Swiss banking laws on non-disclosure of clients are a shame. The fact that not only the US taxpayers, but corrupt officials from around the world can openly transfer a lot of their illegitimate income, because Switzerland’s law allows them, is absolutely disgusting. It is unbelievable that such an open fact can occur in front of the world, in a supposed Advanced economy, and be turned white collar. A lot of these corrupt people are also from the third world, and are rumored to have engaged in widespread corruption, extortion, violence, and so on. This is one thing for which the US goverment can be commended, and I’d personally like them to go far as to change the Swiss law or bring about a situation which makes it as such.

GuestAugust 19th, 2009 at 10:58 am

You may have faith that the Money Manipulators will punish their own. I do not. I need no more evidence that they won’t. It’s a ruse to find and punish their competition or to destroy their enemies or to scare off the little guy who wants to get out of here. It’s a gambit to further tighten their power. Else why not go after the tax-free buried hoards on the Cayman Islands? That’s where the real money is. No. They’re closing all exits out of the land of the free; the iron curtain descends again. I agree with George Harter’s comments from the previous thread:HEY, don’t worry! The trolls will re-appoint our funny financial CLOWN, Benny Bernanke!!! If you think the USA has been ripped off, just wait until he gets his fangs in deeply in the next few years!!! The future will likely resemble the wholesale looting ofZaire in Africa, people starving and our FRIEND Mobutu with billions in his Swiss account(at least he died painfully)!!!PS did you notice the IRS has almost TOTALLY backed off the millionaire tax frauds who bank at the UBS in Switzerland. Out of 52,000 US tax felons the Swiss MAY give America 5000 names. May! I can see the IRS dropping charges against all but 50 who would be theatrical in the courts. All the others will get off scott free.The new American morality, STEAL BIG ENOUGH, YOU ARE UNTOUCHABLE. TBTF or TBTT or just inclined to make the correct political contributions. Just don’t rat yourself out like Bernie did. Was that guilt???George HarterBaghdadontheHudson, USA

GuestAugust 19th, 2009 at 10:44 am

THE PANEL by Andrew KlavanWhat death by bureaucratic fiat might look like | Today’s WSJ Opinion JournalIt is very difficult to imagine the country making those decisions just through the normal political channels. And that’s part of why you have to have some independent group that can give you guidance.—President Barack Obama in a New York Times interview on how costly medical decisions should be made.The people behind the long table do not know what they’ve become. The drug of power has been sugared over in their mouths with a flavoring of righteousness. Someone has to make these decisions, they tell their friends at dinner parties. It’s all very difficult for us. But you can see it in their eyes: It isn’t really difficult at all. It feels good to them to be the ones who decide.”Well, we have your doctor’s recommendation,” says the chairwoman in a friendly tone. She peers over the top of her glasses as she pages through your file.You have to clear your throat before you can answer. “He says the operation is my only chance.””But not really very much of a chance, is it?” she says sympathetically. Over time, she’s become expert at sounding sympathetic.”Seventy percent!” you object.Seventy percent chance of survival for five years—five years at the outside—and even that only amounts to about 18 months in QALYs: quality-adjusted life years.””But without this procedure, I’ll be dead before Christmas.”You try to keep the anger out of your voice. The last thing you want to do is offend them. But the politicians promised you—they promised everyone—there would never be panels like this. They made fun of anyone who said there would. “What do they think we’re going to do? Pull the plug on grandma?” they chuckled. The media ran news stories calling all rumors of such things “false” or “misleading.” But of course by then the media had become apologists for the state rather than watchdogs for the people.In fact, the logic of this moment was inevitable. Once government got its fingers on the health-care system, it was only a matter of time before it took it over completely. Now there’s one limited pool of dollars while the costs are endless.”You have the luxury of thinking only of yourself, but we have to think about everyone,” says the professor of ethics. He’s a celebrity and waxes eloquent every Tuesday and Thursday on Bill Maher Tonight. “This isn’t the free market, after all. We can’t just leave fairness to chance. We have to use reason. Is it better for society as a whole that we allocate limited resources for your operation when we might use the same dollars to bring many more high quality years to someone, say, younger?””I’m only 62.”He smiles politely.”Look, it’s not just about me,” you argue desperately. “My daughter’s engaged to get married next year. She’ll be heartbroken if I’m not there for it.””Maybe you should have thought of that before you put on so much weight,” says the medical officer. “I mean, you people have been told time and again . . .”But the chairwoman is uncomfortable with his censorious tone and cuts him off, saying more gently, “Perhaps your daughter could move the wedding up a little.”The member in charge of “stakeholder” exceptions shakes her head sadly as she studies your file. “If only you could have checked off one of the boxes. It would be awful if you were penalized just because of a clerical oversight.”It begins to occur to you that this is how you are going to die: by the fiat of fatuous ideologues—that is to say, by the considered judgment of a government committee. They are going to snuff you out and never lose a minute’s sleep over it, because it’s only fair, after all.That logic is implacable too. Free people can treat each other justly, but they can’t make life fair. To get rid of the unfairness among individuals, you have to exercise power over them. The more fairness you want, the more power you need. Thus, all dreams of fairness become dreams of tyranny in the end.You know you should keep your mouth shut. Be humble—they like that. But you speak before you can stop yourself.”What you’re doing here is evil,” you cry out. “You’re trying to take the place of God!””Sir, this is a government building!” says the chairwoman, shocked. “There’s no God here.”Mr. Klavan is a contributing editor to City Journal. His latest novel is “Empire of Lies” (Harcourt, 2008).

GuestAugust 19th, 2009 at 2:51 pm

Socialized medicine is socializing medicine. Socialist are for socialist medicine, i.e., making medical decisions based on social aspects. That’s why this “crock of crap” bothers you, Jason B., you are a socialist. Not only are you opposed to the choice available to all in market health care, you don’t even want to hear about it. I fear you won’t understand what socialist medicine really is until it’s your turn to plead for your life, and be turned down.I know the current system needs correcting, badly. There are no curbs on current out-of-sight costs parlayed by healthcare monopolies in partnership with government. And I contend this is deliberate, i.e., the use of exorbitant costs to break the market in order to pave the path to rationed government care under socialism. I also know, Jason B, from the reading of your posts these past two years, that you are a compassionate man. Should not we both be very careful we don’t allow the government to throw out the baby with the bath water?

GuestAugust 19th, 2009 at 3:46 pm

And you are an uninformed apologist for a system of parasites that would have wellness and medical care be a profitable commodity. After witnessing the current financial crisis and the collapse of greedy corporate bureaucracies, I assert that the private sector is neither efficient or worthy of trust when it comes to my health.

11B40August 19th, 2009 at 5:58 pm

The WSJ could have published a very real story about someone of any age today facing a death sentence because they had no health insurance, and put off seeking treatment in hopes that things would get better.Or, a story of someone who had insurance, but still killed (murdered?) by a corporate bureaucrat denying procedures or claims.There are health care horror stories every single day in every city in America.The fact is, over half of all medical costs today are already paid by the government – socialized. It may well be that the best, most reliable kind of health care available today is Medicare.There are serious and valid arguments to be made both pro and con, but I would remind you that the highways are socialized, the police and fire departments are socialized, the sewer is socialized, and now, corporate profits of financial companies are socialized.The basic question is this: Is Health Care a fundamental right for Americans, or is it just one more service industry for corporate conglomerates to tee up and plunder?Independent Contractor

GuestAugust 19th, 2009 at 7:11 pm

Why don’t you write about someone who’s been denied healthcare, if you know of someone. Under Socialism Health Care, the denial of care is coming big time when the government controls it.The other name for government healthcare, in case you haven’t heard, is rationed care. The Government will make the “necessary” decisions to cut down on its healthcare expenses and it’s clear, in case you haven’t listened to Obama or read the legislation, that these death panels not only are possible, they are in the bill.Most all of the socialized systems you bring up are not working. Yes, a lot of these areas are socialized; that’s why the states are broke, that’s why their budgets are broke. The socialized police and firemen, the muny employees and teachers, the state bureaucrats and university professors and Fed bankers, all with their salaries and benefits and early retirements in excess of the private sector, all are holding the taxpayers hostage because they’re socialized.Social Security, Medicare, Medicaid, Freddie and Fannie, Congress, and whatever, each one is out of money. Spent. Broke. The Government has had 75 years to get SS right, and it still hasn’t done it! It spent the money we all put into our SS trusts, and gave us paper IOUs in return.So now Obama and the Democrats are going to give us Government healthcare and it’s going to pay for itself. Right? This is the one time that after their past failures, this one will work. Oh, sure.I’ll tell you how socialism works. FedEx and UPS are required by law to charge more than the U.S. Post Office. And the P.O.still can’t make it on its socialized mail delivery. Every time it comes back to the halls of Congress, it comes back for more money and less service. It’s broke and wants to reduce its service from six to five days. Now it’s removing its drop-off mailboxes everywhere, 200,000 so far, so its pony express riders won’t have to go by and pick up the mail. I heard today of one little town that had only one drop off box, and the P.O. just removed it, which means any time anyone in that little town wants to mail a letter he has to drive to the next town.Socialism always gets to the point the bureaucrats won’t do anything for you. Read Solzhenitzyn.Now, if you want this Government outfit to give you and your employees healthcare, to decide life and death matters for you and yours, why don’t you sign up for it and leave us along. As Willie Brown said, healthcare’s personal.

kilgoresAugust 20th, 2009 at 9:22 pm

Socialized medicine, by definition, requires that the government own the facilities that provide medical care and employ the doctors, nurses, and others who provide that care. The Veteran’s Administration is socialized medicine.Socialized medicine is NOT “making medical decisions based on social aspects,” which you apparently take to mean that some people will be denied care based on some bureaucrat’s determination as to what extent providing that care to an individual ultimately will benefit society at large. Nobody is proposing such a system, and nobody in their right mind would support it. I believe your concerns are entirely misplaced.SWK

Average JaneAugust 19th, 2009 at 7:21 pm

Agree, Jason.My gawd, folks. We currently have clerk typists at Behemoth Insurance Company denying claims, writing exclusions and denying applications as fast as they come in. Talk about rationing. It’s been here for 30 years.

GuestAugust 19th, 2009 at 1:34 pm

“I don’t care who’s behind them or who’s putting out the call to action—these protests over President Obama’s health care plan are real.“The people showing at these town hall meetings are real, too, and Democrats had better realize it before it is too late.“Rush Limbaugh and Sean Hannity may be sounding the charge, but people are genuinely concerned that someone in Washington is messing with their health care. And believe me, politics doesn’t get more personal than that.” Willie Brown, former Mayor of San Francisco, in “Willie’s World”

MedicAugust 20th, 2009 at 5:14 am

I think of them as uninformed, simple minded, unable to question, easily led, stupid people.Bottom line guys – it works everywhere else in the world but here. We spend more than anyone else and have worse outcomes. Ours is not a good system. But what could I know about that. I have toiled in that system for the last 16 years.

kilgoresAugust 20th, 2009 at 9:33 pm

Good on you, Medic. Well said, too. The WHO ranks France as having the number one health care system in the world. It provides universal access to health care with excellent outcomes for half the cost of health care per capita in the United States, which is ranked 37th. Most of the doctors are in private practice, and both public and private hospitals provide care, just as they do here in the U.S. now. Most of the French have a combination of publicly funded basic coverage and supplemental coverage — not much different than a Medicare recipient who goes to a private doctor and receives treatment at a private hospital, and can purchase supplemental health insurance through, say, AARP to cover anything not covered by Medicare.SWK

MedicAugust 21st, 2009 at 8:20 am

Chignos you must be one of those who stands to lose the most with an overhaul. So what’s your specialty? Surgeon? Anesthesia?I’m just guessing while sitting in my office swimming in my own hot air…….

wethepeeppeopleAugust 19th, 2009 at 10:52 am

Watching MSM is a joke. CNN ran the “Mermaid Story” out of Israel, followed by the “UFO Story” out of London. Mermaids and UFOs are news? I can only conclude that late stage planning is being completed for iminent action while the sheeple are distracted using mermaid, ufo and healthcare stories in the MSM. Watch out something is brewing.

GuestAugust 19th, 2009 at 11:55 am“Kill the Tax-Exempt Municipal Bond Market” == decimate muni bond market. which idiot will want to be in muni bond market that is non-tax-exempt? if muni bond market is non-tax-exempt, people will just chase non-tax-exempt bond. or yield on non-tax-exempt muni bond market will need to go higher by couple hundred basis point to compete with non-tax-exempt bond. only idiot will chase non-tax-exempt muni bond.

GuestAugust 19th, 2009 at 1:06 pm

QUOTES from Warren E. Buffett’s “The Greenback Effect” (previous thread) with comment…”The United States is spewing a potentially damaging substance into our economy — greenback emissions.”“To be sure, we’ve been doing this for a reason I resoundingly applaud.””How could it have been otherwise when supposedly indestructible pillars of our economic structure were tumbling all around them? A meltdown, though, was avoided, with a gusher of federal money playing an essential role in the rescue.””The United States economy is now out of the emergency room and appears to be on a slow path to recovery. But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects… their threat may be as ominous as that posed by the financial crisis itself.”COMMENT:The more you see of Buffett the worse he looks. He is a slippery crook as far as I’m concerned. He makes the Newton Boys look like pikers with his “we’ve got ours, too bad about you” strategies. This little felt-shoed double-crosser was all for using billion-dollar insider deals to revive a DOA Goldman Sachs, and he was all for bleeding taxpayers dry to transfuse $23.7 TRILLION into the bad boys’ coffers to replace their bad debts. And now he claims revival and wants to shut the emergency room door and leave a bled dry Joe Sixpack to clean up the bloody mess for the next decade or more.When Buffett says we’re now out of the emergency room, it hasn’t occurred to him that the people listening understand that he means only the financial sector is out of the emergency room. That’s the only thing he’s concerned with. Do we need continuing proof that he and others on the inside of policy decisions appraise developments and handouts only from the health and well being of the financial sector? Everybody knows that the economy is not only out of the emergency room, but it is still on the operating table. And with Obama healthcare, we may be talking terminal!

GuestAugust 19th, 2009 at 3:12 pm

Berkshire Hathaway is the only thing that guy cares about. Forbes’”richest man in the world” is a four flusher, the worst kind of guy, at least to me. But to Forbes and Wall Street, he’s “America’s most beloved investor!” Why doesn’t he just admit that he isn’t some sort of hero; why must he pretend he’s some kind of civic citizen, rather than a civet cat, a Lincoln, Nebraska, skunk? He’s so one of us, he’s so small town, that all he can think about is raising taxes for us, and free money for himself. He’s a predator. He has about as much empathy for us as a wolf has for a quail. He makes JD Rockefeller look like Mother Theresa. This guy is sickening.

Average JaneAugust 19th, 2009 at 7:23 pm

Oh, guest, I love it. I haven’t heard the term “four flusher” in years. Thanks for the laugh.

Average JaneAugust 20th, 2009 at 9:23 pm

PhilT, that was great. Denninger is hilarious.Medic, if you’re out there, you’ve gotta read this–a “femoral artery” analogy.Nice to see you posting again too, PhilT.

MedicAugust 21st, 2009 at 7:24 am

AJ -I’m back after a hiatus due to a new job. I finally burned out (crispy is the word that best described me at the end) in the ER and took a job with a cardiology practice. I am back in an office, in business attire instead of scrubs and have yet to be hit, kicked, or vomited on by a patient. It’s wonderful. Good schedule too – regular hours like normal people.The little one is headed to kindergarten in a week and my wife was offered “mommy’s hours” at her old hospital doing what she loves most.I so can’t complain – but you know me. I’ll find a way……..I will be emailing you soon – I have another blog post in the pipe.Have a great day.

Average JaneAugust 21st, 2009 at 10:55 am

Good to hear from you, Medic. And good luck on the new job. I’ve been wondering why we haven’t seen a blog post from you at thelightofday.

PhilTAugust 21st, 2009 at 10:51 am

Glad you enjoyed it AJ ! Hope others have read it also.After reading this article, I think it might be appropriate to build on Guest’s reference to Buffett => 4 Flusher Gusher !Best

GuestAugust 19th, 2009 at 1:21 pm

Why Obama’s Ratings Are Sinking | WSJAmericans will put up with a lot. But not with someone who imperils their future.By Arthur C. Brooks…Gallup reports that disapproval of the president’s economic policies has grown to 49% in July from 30% in February. Even among the president’s core supporters, young people in the 18-29 age group, his overall approval has dropped 11 points since January.Dissatisfaction is spreading into open protest as members of Congress try to explain the president’s policies to the public. Angry voters have engaged in high-profile confrontations in town-hall meetings around the country over a proposed health-care overhaul that protesters complain is unaffordable, socialistic, incomprehensible, and which their representatives have not even read.Many on the left attribute the public’s growing disapproval to right-wing scheming. An op-ed in USA Today on Aug. 10 by House Speaker Nancy Pelosi and Majority Leader Steny Hoyer said the town-hall protests are part of an “ugly campaign” and are “un-American.” A few days earlier, Senate Majority Leader Harry Reid charged “sabotage.”Blaming a cabal of conspirators—a time-honored technique for leaders on the wrong side of public opinion—is paranoid and self-defeating. More importantly, it betrays a tin ear to the culture of most Americans—an independent, optimistic culture that is mistrustful of government nannying and intolerant of policies that mortgage our future.Consider the evidence. Despite the vote in November, it is clear that when Americans are not in an abject panic, we dislike government fiscal promiscuity. The president’s sinking approval ratings are due precisely to his administration’s free-spending ways. In a July 2009 Gallup poll, the No. 1 reason for disapproval of the president’s economic policies was, literally, “spending too much.” In second place was the worry that the president is “leading the nation toward socialism” through government takeovers and bailouts.What exactly is our problem with government spending? It is not just that we think it is wasteful and ineffective (although most recognize this to be true). Americans actually think the government makes it harder for people to get ahead in life.In January 2009, the Pew Research Center asked about 2,000 Americans, “Do you think the government does more to help or more to hurt people trying to move up the economic ladder?” Amid the most frightening economic crisis in decades, more Americans still said the government would hurt than the number who thought it would help (50% versus 39%). Independent surveys from roughly the same period found that only one in five Americans believed he or she could trust the government.Citizens will put up with a lot—but not with anyone who imperils our future. There is practically nothing that lowers American happiness more than taking away our faith in a better tomorrow. Data from the National Opinion Research Center’s General Social Survey in 2004 show that, even if two people have the same income, education, race, sex, family status and political views, a lack of optimism about the future lowers the likelihood by nearly 50% of one saying he or she is “very happy” about the present.Most Americans see their best future in the free enterprise system when (as a March 2009 Pew Research Center poll found) 70% of respondents agree that, “people are better off in a free market economy, even though there may be severe ups and downs from time to time.” There is no evidence that more than a minority of Americans accept the idea that a $17 trillion national debt, greater reliance on government for jobs and health, and hyper-progressive taxation offer the hope they deserve for themselves and their children.The administration and Congress can deny these truths with charges of un-Americanism and implausible conspiracy theories about the current citizen demonstrations. But opinion polls deliver an honest expression of unhappiness over the direction our nation is taking. Woe betide the leaders who ignore this fact.

CLSAugust 19th, 2009 at 8:43 pm

I could not get past the sub-headline, “Americans will put up with a lot. But not with someone who imperils their future.”Ever hear of George Bush?

GuestAugust 20th, 2009 at 8:16 am

It is dangerous to be labelled as “unamerican” in this country. It’s like to be called “the enemy of the people” under Stalin. So far it is not followed by a labor camp term or excecution, but this may well happen in the not so far away future when the bailout bubble bursts and the Greater Depression sets in. Fascism is ripe in this country, it’s on the radio waves 24/7 all across the American hearland. It will have the American face with TV evangelists proclaiming what is “American” and what is not, instead of German professors back in the 1930s. But it will be no less deadly for us and the entire world. Pelosi’s rhetoric of “unamerican” is an ominous sign of things to come.

gAntonAugust 19th, 2009 at 1:56 pm

In my opinion, the almighty dollar is presently in great jeopardy and will remain so indefinitly; the stock market is in an artificial state due to a horrendous influx of bogus dollars into the US marketplace and government manipulation of gold prices, results of government bond sales, employment statistics. paying people to buy new cars, increasing the federal payrole, etc. Also, the US government no longer has the ability to control the parameters of the global marketplace, and its future ability to dump more bogus dollars into the US marketplace and to buy its own bonds is marginal and substantially curtailed. I don’t think any US economic related statistics should be taken seriously until several months after the money pumps have been turned off.In short, the future of the US economy is directly and strongly linked to the future of the US dollar (and not to phony numbers that are given bizarre interpertations). If the dollar goes down the tubes, the US economy will go down the tubes right along side of it. If the dollar somehow miraculously rises from its death bed, the US economy will shine gloriously and all of America will be singing “happy times are here again”.

SoftwarengineerAugust 19th, 2009 at 2:06 pm

Yes gAntonThe same things’s happenning with China, their exports were going up about YOY +30; now they’re about -30% YOY…its like a 60% downward shift in their economy….yet, their GDP still goes up. Why?Their short-term flash pan stimulus money is replacing their long-term industrial base [sound familiar to America?] exporting base and the current GDP increases are not only phony, they’re short-term.

Mother of GodAugust 19th, 2009 at 3:51 pm

(oops. didn’t see the thread had changed and posted this in the previous just minutes ago, so am reposting)hey thanks, softwarengineer! for telling me how to post this link without messing up the pagewidth:, i hope that works when i hit submit!)I see you already found it, blindman, but i found a review to post and i’ll post it up anyway, because this book is such an extraordinary, eye-opening, well-researched cross-examination of fundamental misconceptions entire societies run on:No Contest: The Case Against Competitionby Alfie Kohnreviewed by George CatlinA discussion of Alfie Kohn’s book, in which research debunks the myths perpetuating the ‘sacred cow’ of competition.________________________________________”We need competition in order to survive.””Life is boring without competition.””It is competition that gives us meaning in life.”These words written by American college students capture a sentiment that runs through the heart of the USA and appears to be spreading throughout the world. To these students, competition is not simply something one does, it is the very essence of existence. When asked to imagine a world without competition, they can foresee only rising prices, declining productivity and a general collapse of the moral order. Some truly believe we would cease to exist were it not for competition.Alfie Kohn, author of No Contest: The Case Against Competition, disagrees completely. He argues that competition is essentially detrimental to every important aspect of human experience; our relationships, self-esteem, enjoyment of leisure, and even productivity would all be improved if we were to break out of the pattern of relentless competition. Far from being idealistic speculation, his position is anchored in hundreds of research studies and careful analysis of the primary domains of competitive interaction. For those who see themselves assisting in a transition to a less competitive world, Kohn’s book will be an invaluable resource.Beating othersKohn defines competition as any situation where one person’s success is dependent upon another’s failure. Put another way, in competition two or more parties are pursuing a goal that cannot be attained by all. He calls this ‘mutually exclusive goal attainment’ (MEGA).Kohn goes on to define two distinct types of competition. In ‘structural competition’ MEGA is an explicit, defining element in the nature of the interaction. For instance in a game of tennis there can be only one winner. The same is true of beauty contests, presidential elections, and wars. Everyone knows they are out to beat the others though the rules of engagement may vary considerably between events.Intentional competition’ is a state of mind, an individual’s competitiveness or his proclivity for besting others. Anyone can go to a party determined to establish him or herself as the most intelligent, the most attractive, etc. Similarly, in school, the work place, and on teams people can try to beat others whether or not anyone is formally keeping score and declaring winners and losers.One place where competition cannot exist, according to Kohn, is within oneself. Such striving to better one’s own standing is an individual, not interactive matter; it does not involve MEGA. Of course some people cannot imagine pushing themselves without the possibility of ‘winning’ or the threat of ‘losing’, but this by no means implies that all motivation is dependent upon competitive frameworks. Throughout history countless large and small accomplishments have been achieved simply out of an individual’s desire to do better without any thought of beating others. Such striving for mastery cannot be confused with competition.Four mythsKohn argues that the ‘sacred cow’ of competition stands on four mythological legs. The first of these is that competition is an innate fact of life. This myth has its basis in a fundamental misunderstanding of Darwin’s theory of natural selection. It is wrongly supposed that the phrase ‘survival of the fittest’ implies an eternal struggle among members of the species from which only the strongest (that is, most competitive) emerge victorious.Actually fitness in the biological sense refers only to the capacity to produce surviving offspring who in turn live to reproduce. When ‘survival of the fittest’ is understood in this light, it becomes clear that the tendency to cooperate contributes far more to fitness than any competitive inclination. Raising offspring for early animal-humanity was a difficult undertaking, and only those who could work effectively with others were likely to succeed. On the other hand, endangering one’s own life as well as the lives of one’s offspring through direct physical competition was a risky strategy at best, and those who were genetically predisposed in that direction are thought to have died off millions of years ago. Thus, if we have inherited any predisposition for intra-species behavior, it is toward cooperation. Indeed cooperation is the pervasive, if unnoticed, background of human affairs against which we see competition in such stark relief.If it is not our ‘nature’ to compete, then ‘nurture’, or our learning history, must be responsible for its pervasive presence. Here Kohn quotes the late anthropologist Jules Henry who tells a story of an episode repeated daily in classrooms throughout the world. Boris is unable to solve an arithmetic problem. The teacher asks him to think harder while the rest of the class responds with a forest of waving hands and much sighing. Finally Peggy is called upon and proudly delivers the correct solution. “Thus Boris’ failure has made it possible for Peggy to succeed; his depression is the price of her exhilaration; his misery the occasion of her rejoicing … To a Zuni, Hopi, or Dakota Indian, Peggy’s performance would seem cruel beyond belief.”This brief anecdote illustrates two important points. First, if such an event would not occur in all cultures, the human nature argument is considerably weakened. No behavior is understood to be innate or inevitable if some cultures simply do not perform it. Second, the story shows how within Western culture we teach children to compete without even trying. Peggy and Boris have both learned ‘the rules of the game’ in a way that far surpasses any lesson one could consciously create. No amount of instruction to ‘be nice’ will ever outweigh experiences such as this. The real lesson learned is to win in socially acceptable ways with minimal acknowledgement of the joy and pain involved. We teach this every day.To those who would argue that such lessons build character, Kohn replies that this is the second myth of competition: It makes us better people. Kohn’s thesis is that “we compete to overcome fundamental doubts about our capabilities and, finally, to compensate for low self-esteem.” We want to win because we fear we are ‘losers’. Eliminate this comparative, competitive framework of evaluation, and the need to compete (and win) disappears. As Kohn says: “The real alternative to being number one is not being number two but being psychologically free enough to dispense with rankings all together.”Research evidence nicely supports Kohn’s thesis that genuine self-esteem is best built outside of competitive frameworks. From a review of 17 separate studies, David and Roger Johnson conclude: “cooperative learning situations, compared to competitive and individualistic situations, promote higher levels of self-esteem and healthier processes for deriving conclusions about one’s self-worth.” The same essential finding has been replicated in studies of competitive versus non-competitive summer camps, competitive and non-competitive grading systems, and cross-cultural research.The reasons for such outcomes are none too mysterious. Most obviously, in most competitions most participants lose. But perhaps more importantly, in cooperative situations tremendous gain is derived from sharing one’s skills in a helpful way with others. Relationships of trust and appreciation surely do more for one’s sense of well-being than the constant struggle to beat others.Pleasure and productivityThe last two myths about the advantages of competition are perhaps the most dearly held. The first is that competition is fun, and the second is that competitive frameworks make for the highest levels of productivity. Once again Kohn attacks these popular beliefs with a combination of insight and research evidence.Kohn begins his examination of competitive games by defining ‘play’: something that is all about process, where outcomes matter not at all. “The master aphorist G.K. Chesterton perfectly captured the spirit of play when he said: ‘If a thing is worth doing at all, it is worth doing badly.’ “Obviously this notion of play is directly opposed to the spirit of sports today. We ‘play to win’ — without the slightest sense of the contradiction inherent in the phrase.The fixation of American children on winning, or at least preventing anyone else from winning, is demonstrated by cross-cultural research with a simple game. In the game two children sit on opposite sides of a checker board-like playing surface. A marker is placed on the middle square and the children are told that they will take turns moving the marker one square at a time for a total of 20 moves. If a child gets the marker to his side of the board, he will receive a prize. Then the game will be played again (four times total), and the other child will go first.Among four- and five-year-olds, Anglo-American and Mexican-American children almost universally help one another take turns in winning. That is, the child who goes second moves the marker in the direction of the other child’s goal. Virtually every game ends with one child getting a prize. However, among seven-to-nine-year-olds, the pattern changes completely. Both Anglo-American and Mexican-American children prevent anyone from winning 50 to 80 per cent of the time. Only Mexican seven-to-nine-year-olds with little or no contact with American culture manage to cooperate and earn prizes in a majority of the games.The obvious futility of wasting one’s energy preventing another from winning provides the starting point for Kohn’s critique of competition’s contribution to productivity. “Good competitors” don’t see themselves as wasting energy in thinking about another’s performance, but considerable research evidence suggests that they may be.In the late 1970s and early 1980s a team of researchers at the University of Texas set out to identify the personality characteristics that correlated with the highest levels of professional performance. They reasoned that striving for mastery, a positive attitude toward work, and competitiveness would all correlate positively with achievement. When the first study was run with Ph.D. scientists (achievement measured by how often their published papers were cited) the results were surprising. High levels of mastery and work orientation were found among the highest achievers, but these top achievers showed low levels of competitiveness. To test the result, many more studies were conducted, each time using a different sample of subjects (businessmen, college students, airline reservation agents, and grade school students), and each time the same result was found. Competitiveness consistently correlated negatively with achievement. That is, those high in achievement were low in competitiveness.But beyond the analysis of individual differences, a more important issue concerns whether competitive or cooperative structures draw out the best work from those within them. Here again the research evidence runs contrary to popular assumptions. Kohn cites one review of 122 studies on the question: “Sixty-five studies found that cooperation promotes higher achievement than competition, eight found the reverse, and 36 found no statistically significant difference.” Equally fascinating, in study after study of reward structures, it has been found that the best results are obtained when all team members are rewarded equally for their work.In sum, to change the competitive nature of society will require a major step in consciousness. It is one thing to say “I don’t like competition,” and it is quite another to root out its origins within the psyche and to change our structures of work and play. If these changes are to constitute the foundation of the new age, Kohn’s book could be a tremendously useful tool in the work ahead. It provides a clear mirror within which to see unchallenged popular assumptions about life. It invites the reader to build a new society in thought and deed.that was from the March 1998 issue of Share International humanity’s heroes – those who are actively waging the final battle to defeat once and for all the obsolete, predatory, conservative social darwinist cheap labor conservative worldview that drove us to disaster, this book is an arsenal of powerful knowlege you need to read and to have. It’s a life-changing book – seriously – a guide for seriously better quality of life on earth for everybody.

PhilTAugust 20th, 2009 at 12:49 pm

Thanks MOG for posting this review again. Is it relevant to define and discern positive competition from negative competition?Best …

Mother of GodAugust 20th, 2009 at 4:34 pm

Yiz are SO very welcome! (although, this is the FIRST time i’ve posted this review, which i just found yesterday. I HAVE mentioned the book before, in great hopes it will gain the much, much, much wider audience it deserves!)The research in Alfie’s book will convince you, PhilT, that ‘positive competition’ is an oxymoron.Alfie Kohn is a serious thinker, thinking seriously valuable outside the box thoughts – and he backs it all up with comprehensive research. I LOVE all his books, most especially No Contest and Unconditional Parenting (another spectacular life-and-perspective changer!)Yiz maybe let me know if you enjoy it, too, and find it as extraordinarily valuable as I do??

PhilTAugust 20th, 2009 at 6:21 pm

I’ll look forward to reading this book and to discovering how Alfie describes that greatest of human forces that that collectively employed results in the best outcomes for all.Be well MOG …

chignosAugust 21st, 2009 at 7:27 am

Kohn’s arguments are propaganda. His thesis is boring left wing demagoguery. His “research” is highly suspect…….but hey, if it fits your world view, no one is likely to shake you out of your tree.

GuestAugust 21st, 2009 at 10:42 am

Thank you Chignos ! I’ll take that as an endorsement of Kohn and this particular book. I was on the fence until I read your thoughts, now I am definitely going to find the book.

thimmaAugust 21st, 2009 at 9:28 am

Maybe people should Bhagvad Gita. While at it also understand the Jati(~caste) system whose central idea was reducing competition.

Mother of GodAugust 19th, 2009 at 3:54 pm

“Why is it that these town hall loons are being considered representative of the voice of the people, yet when ten times the amount of people protested against the Iraq War, the news barely reported on it, and acted as if their opinions were “fringe” opinions not worthy of consideration?” – A Reddit reader”By denying the poorest Americans affordable healthcare, the Republicans have become the death panel they vehemently admonish.” – A Reddit Reader

The AlarmistAugust 20th, 2009 at 3:06 am

A poor American can walk into a hospital or clinic, get the healthcare they need, and walk away without paying. The hospital or clinic might attempt to collect for the service, and they might even succeed in taking the person’s car or house if the courts let them get away with it (which in most cases they will not).To say that a lack of insurance is denying necessary care is non-sense and utterly unsupported by the facts. To say it makes it more difficult for a person to secure care at the expense of others is supported by facts, but hey, if you want to live on someone else’s dime, why should it be easy?

SoftawrengineerAugust 20th, 2009 at 10:16 am

Exactly AlarmistIf the LA Times actually interviewed hospital admistrators on the brink of bankruptcy in California, they’d quickly come to a clear scientific (not political at all) conclusion.Recent uncontrolled population growth is the root cause of the state’s health care demise. Yet, California politicians would be the last to admit it, ask Schwarznegger.My sister recently had cancer in Washington State a couple years ago, same conundrum….she was thrown out of her hospital room, yet could barely walk. They needed to make room for the next “efficiency” unit.Watering down the current horrifying health care system by incorporating “alleged unknown efficiencies” is pure hogwash and if you medical folks think wages won’t be collapsing some more with even more intensified socialized watering down, think again. It will get far worse for those who pay IMO and even those who used to use the emergency room only without paying will see degradation too, because now they can come more often for free and cause more fiscal pains.Its not politics or socialism, its common sense, whether we admit it or not.

GuestAugust 20th, 2009 at 10:20 am

The insured are currently being denied care and are left to die because of the market’s eagerness for profits, bonuses and higher returns on investments, and one way or another we’re paying for the uninsured. Do you not see a flaw in this model?The US is the only developed world nation without universal health care. As rational beings we have to ask ourselves why. Who gains and who loses?

The AlarmistAugust 21st, 2009 at 4:04 am

I have lived in a couple so-called “Universal Care” countries. I had the right to see the doctor, but on a few occasions I was denied referrals for additional treatment that was deemed by the financing arms that were implemented by government fiat to be the gatekeepers and allocators what was deemed to be appropriate care.I flew back to the mean, nasty, health-care deficient US where I was able to buy with cash that which I could not buy in my temporary home country because doing so was not permitted or even available in the local systems.Maybe France is the panacea (don’t know, haven’t experienced it), but I have found that expensive and available is better than affordable and out of reach.BTW, a lot of this nonsense is being propogated with the assumption that universal care will be free to most of the beneficiaries. I can tell you that my universal access costs me out of pocket roughly $400 per month after tax. Be careful what you wish for.

GuestAugust 21st, 2009 at 9:08 am

Please, no truth, no silver bullets, to pierce the hyperbole. How unfair of you. And worse–how unCARING!

SimpleIsBestAugust 21st, 2009 at 2:41 pm

The USA does have at least one universal healthcare offering and it is government run. In addition, it is single-payer and at this time a limited public option. It works well, very well, but does have problems that need to be identified and corrected. Why not just do that and expand the current offering to be a full public option available to all who want it. Yes, it is known as Medicare.

SoftwarengineerAugust 22nd, 2009 at 6:48 pm

Its simple why your suggestion is absurd. Retirees in America paid preminms for Medicare all their life to qualify and you want to add freeloaders? Keep the freeloaders in the emergency rooms or send them back to their motherlands, why should those that paid pay for those that didn’t? Also, Medicare will need budget cutbacks in the future, we need to keep it transparant with just paying customers, so we don’t mask the cutbacks with freeloaders, its that simple.Do you trust politicians to clarify budget cutbacks clearly otherwise…LOL

Mother of GodAugust 19th, 2009 at 4:09 pm

found at If Canada’s single-payer system is so god-awful, why have repeated Conservative governments at the provincial and national level in Canada never touched it? Canada is a democracy. If Canadians don’t like their health care system, why haven’t they gotten rid of it in 35 years? Since the system there is run by the separate provinces, many of which are very politically conservative, why has not one province ever tried to get rid of single-payer?2. Why is rationing by income, as we do it here, better than rationing by need, as they do it in Canada?3. Wouldn’t single-payer mean that companies could no longer threaten working people with the loss of their health insurance? Why is this a bad idea?4. The bigger the insurance pool, the better. So doesn’t having a national pool, as with single-payer, make the most sense?5. Why should we be allowing politicians who are taking money from the medical industry to write the new health care legislation?6. How can the Congress be developing a health system reform scheme and not even invite experts from Canada down to explain their successful system?7. If Medicare–a single-payer system here in America–is so popular with the elderly, how come it’s no good for the rest of us?8. Isn’t it true that Medicare currently finances the most costly patient group–the elderly and infirm–so that extending it to the rest of the population–most of whom are young and healthy–would be much cheaper, per person?9. The AMA, the Pharmaceutical Industry, and the Insurance Industry all bitterly opposed Medicare in 1964-5 when it was being debated in Congress and passed into law, with the right, led by Ronald Reagan, calling it creeping socialism. It became a life-saver for the elderly and didn’t turn the US into a soviet republic. Why should we give a tinker’s damn what those same three industry groups and the Republican right think of expanding single-payer now?10. The executives of Canadian subsidiaries of US companies all support Canada’s single-payer system, and even lobby collectively to have it expanded and better funded. Why does Congress listen to the executives of the parent companies here at home, and not invite those Canadian execs down to explain why they like single-payer?(I think it was originally from buzzflash. Good questions to ask at your local town hall meeting.)

GuestAugust 19th, 2009 at 7:32 pm

I might add, as well, MoG, to debunk the notion of our doctors fleeing the US of A once the communistic Congress passes any type of universal health care bill: how many Canadian docs have bolted across the border to practice “medicine” here since Canada went all socialist on the population’s a**? Don’t recall seeing a huge influx in the past few decades, do you?Nice to see you posting here again, MoG. I’m aware your personal circumstances have taken a turn for the worse. My personal best wishes to you and your family.

Mother of GodAugust 19th, 2009 at 8:29 pm

Your kindness is well-appreciated, Guest – and that’s a great question number 11 you’ve added, so thanks very much for that, too.

FEDupAugust 19th, 2009 at 8:59 pm

good points. I know of no one who is on Medicare who doesn’t think it is a good system (which can always be improved) and that everyone, regardless of age, should have the option of joining. Unfortunately, those with the power, money, influence and most to lose have done a great job of confusing and scaring the public away from Medicare. Are people so dense that they cannot ask one simple question to resolve this issue: If the private insurers are against Medicare choice (public option) for all, do you think it is to benefit their bottom line or to benefit working Americans? Take the opposite side of private insurers and the odds are great one will make the right choice. Again, have we learned nothing from allowing the elite to make the rules?

Average JaneAugust 19th, 2009 at 10:08 pm

Agreed, FEDup. I really enjoy your posts.I’ll mention again the three salient questions taught by Paul Wellstone back when he was a prof in Minnesota, and these are particularly germane to the current health care “debate”:1. Who decides?2. Who benefits?3. Who pays?

ChignosAugust 21st, 2009 at 7:36 am

You’ve all missed the point. The Canadian system is not better or worse than the US system. To be sure, it is different…..but not better.And quite obviously, MOG doesn’t know a thing about the Canadian system because its cost is directly proportional to your income. It’s financed through a graduated Canadian income tax. That’s the whole reason the Dems want it–they want access to the revenue stream the increase in graduated tax would allow. If you like the fiscal responsibility of Social Security and Medicare, you’ll love Obamacare.

GuestAugust 21st, 2009 at 9:38 am

The Canadian federal government also collects revenue for its UNIVERSAL healthcare through gas taxes. And I’ve never heard Canadians complain. On the contrary, and with the obvious exceptions, liberal or conservative there would be a public uprising if the program was attacked.There are ongoing efforts to privatize the industry, and save for those who stand to profit from privatization, those efforts are met with collective public resistance and outrage.I have lived in both Canada and Britain for lengthy periods of time and still have many relatives in both countries. Continuous efforts by the private sector to capitalize on other people’s misery are unremitting, but public vigilance and resistance is just as determined to protect national healthcare.For the most part, my foreign relatives are simply baffled by our American free market propensity of surrendering to unnecessary, parasitic private insurance behemoths who feed on something as essential as healthcare. I simply remind them that we are Americans … because, there is no rational explanation.

GuestAugust 22nd, 2009 at 3:58 pm

Yeah, those stupid socialistic Canadians! What do THEY know?Their stupid regulations, like the ones keeping their financial system from wiping out their economy, I mean, what a bunch of stupid socialists, they need to get state-of-thievery health care just like the smarter US citizens!

Hudson's biggest fanAugust 19th, 2009 at 4:33 pm

Professor Michael Hudson on what Iceland’s recent history portends for the global economyRecovering from Neoliberal DisasterWhy Iceland and Latvia Won’t (and Can’t) Pay the EU for the Kleptocrats’ Ripoffs(the article is too long to post in its entirety, but it’s an important, informative read.) this is just the ending:This episode’s legal twists probably will prompt the EU to clarify its financial laws. As for economic ideology, business cycle theory has not taken proper account of changes in government, nationalist backlashes or changes in the legal and political environment. So this would seem to be the year in which the world will break out of what was viewed merely as a “cycle” within a given system (that of the post-Bretton Woods transition era) to make the system itself the issue: how to treat countries with debts beyond their ability to pay.Icelanders for their part feel that the EU has treated them as a financial colony while backing a neoliberal kleptocracy preying on an increasingly indebted population. In many ways Iceland is the tip of the iceberg – the proverbial canary in the coalmine showing the need to better cope with over-indebted economies. The EU and IMF-style austerity programs to pay off foreign debts that corrupt insiders have run up is not what was promised in 1991 the post-Soviet economies or Third World debtors. It is not the promise of industrial capitalism. It is a financialized post-industrial dystopia, an imperial neofeudalism.Why Iceland’s move is so important for international financial restructuringFor the past decade Iceland has been a kind of controlled experiment, an extreme test case of neoliberal free-market ideology. What has been tested has been whether there is a limit to how far a population can be pushed into debt-dependency. Is there a limit, a point at which government will draw a line against by taking on public responsibility for private debts beyond any reasonable capacity to pay without drastically slashing public spending on education, health care and other basic services?At issue is the relationship between the financial sector and the “real” economy. From the perspective of the “real” economy, the proper role of credit – that is, debt – is to fund tangible capital investment and economic growth. The objective is to create a tax system and financial regulatory system to maximize the latter.After all, it is out of the economic surplus that interest is to be paid, if it is not to be extractive and outright predatory. But creditors have not shown much interest in economy-wide wellbeing. Bank managers and subprime mortgage brokers, corporate raiders and their bondholders, and especially the new breed of kleptocratic privatizers applauded so loudly by neoliberal economic ideologues simply (and crassly, I have found) ask how much of a surplus can be squeezed out and capitalized into debt service. From their perspective, an economy’s wealth is measured by the magnitude of debt obligations – mortgages, bonds and packaged bank loans – that capitalize income and even hoped-for capital gains at the going rate of interest.Iceland has decided that it was wrong to turn over its banking to a few domestic oligarchs without any real oversight or regulation, on the by-now discredited assumption that their self-dealing somehow will benefit the economy. From the vantage point of economic theory, was it not madness to imagine that Adam Smith’s quip about not relying on the benevolence of the butcher, brewer or baker for their products but on their self-interest is applicable to bankers. Their “product” is not a tangible consumption good, but debt – indeed, interest-bearing debt. And debts are a claim on output, revenue and wealth, not wealth itself.This is what pro-financial neoliberals fail to understand. For them, debt creation is “wealth creation” (Alan Greenspan’s favorite euphemism), because it is credit – that is, debt – that bids up prices for property, stocks and bonds and thus increases financial balance sheets. The mathematically convoluted “equilibrium theory” that underlies neoliberal orthodoxy treats asset prices (wealth in the financial sense of the term) as reflecting prospective income. But in today’s Bubble Economy, asset prices reflect whatever bankers will lend – and rather than being based on rational calculation their loans are based merely on what investment bankers are able to package and sell to gullible financial institutions trying to pay pensions out of the process of running economies into debt, or otherwise disposing of credit that banks freely create.There amount of debt that can be paid is limited by the size of the economic surplus – corporate profits and personal income for the private sector, and the net fiscal revenue paid to the tax collector for the public sector. But for the past generation neither financial theory nor global practice has recognized any capacity-to-pay constraint. So debt service has been permitted to eat into capital formation and reduce living standards.As an alternative is to such financial lawlessness, the Althing asserts the principle of sovereign debt at the outset in responding to British and Dutch demands for Iceland’s government to guarantee payment of the Icesave bailout:The preconditions for the extension of government guarantee according to this Act are:1. That …account shall be taken of the difficult and unprecedented circumstances with which Iceland is faced with and the necessity of deciding on measures which enable it to reconstruct its financial and economic system.This implies among other things that the contracting parties will agree to a reasoned and objective request by Iceland for a review of the agreements in accordance with their provisions.2. That Iceland’s position as a sovereign state precludes legal process against its assets which are necessary for it to discharge in an acceptable manner its functions as a sovereign state.Instead of imposing the kind of austerity programs that devastated Third World countries from the 1970s to the 1990s and led them to avoid the IMF like a plague, the Althing is changing the rules of the financial system. It is subordinating Iceland’s reimbursement of Britain and Holland to the ability of Iceland’s economy to pay:In evaluating the preconditions for a review of the agreements, account shall also be taken to the position of the national economy and government finances at any given time and the prospects in this respect, with special attention being given to foreign exchange issues, exchange rate developments and the balance on current account, economic growth and changes in gross domestic product as well as developments with respect to the size of the population and job market participation.This weekend’s pushback is a quantum leap that promises (or to creditors, threatens) to change the world’s financial environment. For the first time since the 1920s the capacity-to-pay principle is being made the explicit legal basis for international debt service. The amount to be paid is to be limited to a specific proportion of the growth in Iceland’s GDP (on the assumption that this can indeed be converted into export earnings). After Iceland recovers, the payment that the Treasury guarantees for Britain for the period 2017-2023 will be limited to no more than 4% of the growth of GDP since 2008, plus another 2% for the Dutch. If there is no growth in GDP, there will be no debt service. This means that if creditors take punitive actions whose effect is to strangle Iceland’s economy, they won’t get paid.The moral is that Newton’s Third Law of motion – that every action has an equal and opposite reaction – is applicable to politics and economics as well as to physics. As the most thoroughly neoliberalized disaster area, Iceland is understandably the first economy to push back. The past two years have seen its status plunge from having the West’s highest living standards (debt-financed, as matters turn out) to the most deeply debt-leveraged. In such circumstances it is natural for a population and its elected officials to experience a culture shock – in this case, an awareness of the destructive ideology of neoliberal “free market” euphemisms that led to privatization of the nation’s banks and the ensuing debt binge.Iceland promises to be merely the first sovereign nation to lead the pendulum swing away from an ostensibly “real economy” ideology of free markets to an awareness that in practice, this rhetoric turns out to be a junk economics favorable to banks and global creditors. Interest-bearing debt is the “product” that banks sell, after all. What seemed at first blush to be “wealth creation” was more accurately debt-creation, in which banks took no responsibility for the ability to pay. The resulting crash led the financial sector to suddenly believe that it did love centralized government control after all – to the extent of demanding public-sector bailouts that would reduce indebted economies to a generation of fiscal debt peonage and the resulting economic shrinkage.As far as I am aware, this agreement is the first since the Young Plan for Germany’s reparations debt to subordinate international debt obligations to the capacity-to-pay principle. The Althing’s proposal spells this out in clear legal terms as an alternative to the neoliberal idea that economies must pay willy-nilly (as Keynes would say), sacrificing their future and driving their population to emigrate in what turns out to be a vain attempt to pay debts that, in the end, can’t be paid but merely leave debtor economies hopelessly dependent on their creditors. In the end, democratic nations are not willing to relinquish political planning authority to an emerging financial oligarchy.No doubt the post-Soviet countries are watching, along with Latin American, African and other sovereign debtors whose growth has been stunted by the predatory austerity programs that IMF, World Bank and EU neoliberals imposed in recent decades. The post-Bretton Woods era is over. We should all celebrate.

Mother of GodAugust 20th, 2009 at 4:40 pm

You’re welcome, AverageJane. Hudson IS very knowlegeable, and he shares it very well. He totally rocks, in my book.

GuestAugust 21st, 2009 at 6:15 am

“Finland will declare their own version of a Jubilee”where did you get that from?At least it was not in the text above.

11b40August 21st, 2009 at 7:17 am

Sorry. My mistake. Moving too fast. I meant Iceland, of course. No offense meant to the natives of either ;~)Independent Contractor

GuestAugust 19th, 2009 at 4:44 pm

The bankers manipulate both the control of the currency and the policy moves of the Treasury and the Fed for their own benefit. Their economic bubbles are not an accident of the market. They are created crises sucking in investors and taxpayers so they can be fleeced. And fleeced they are.The bankers control the Fed and the Treasury 100 percent; you need only to look at cui bono, to whose benefit their actions extend. These are not market accidents that America has encountered– these disruptive mania ups and mania downs. They are purposely directed policy to take away the public’s money. The central bankers use the full power of the government to transfer other people’s wealth to themselves. They are not just lucky or smart; they are criminally responsible for these tragic oscillating booms and busts, these unchecked alternations of price levels. The tax code is manipulated for their benefit, the reduced tax rate on capital gains is configurated to their benefit, the system of off-shore accounting is designed for their advantage, the interest rate/ loan rate advantage is theirs, as is 24-hour access to the Fed and the U.S. Treasury and PPT activity—all of which are backed by the full military force of the Federal government.But if a taxpayer should speak against the IRS, TPTB can come and put him in jail. It’s fitting in the current financial climate, that the Number One criminal offense in America is for a man to counterfeit the currency.These days should have been America’s halcyon days of peace and plenty–following as they do the freedom-induced agricultural, industrial and technological revolutions that made the United States the most technologically powerful nation in the world. Instead, they are days of want and despair and unhappiness.The Federal Reserve, that proclaimed itself the banker’s bank, is in reality the Government’s government, run by international bankers. It’s private members, who hold no allegiance to America or to the Republic for which her flag stands, move in and out of the government at will. And, thus, Larry Summers, one of the primary beneficiaries of the off-shoring and crippling of America for the economic rise to power of China, can say:“The dramatic modernization of the Asian economies ranks alongside the Renaissance and the Industrial Revolution as one of the most important developments in economic history.”I fear he, as well as all free men, will live to rue the day when power moved from the land of the free to the land of the enslaved.

GuestAugust 19th, 2009 at 5:48 pm

AMERICANS: SERFS RULED BY OLIGARCHS”In a little time [there will be] no middling sort. We shall have a few, and but a very few Lords, and all the rest beggars.”—R.L. Bushman”Rapidly you are dividing into two classes–extreme rich and extreme poor.”—”Brutus”By Paul Craig Roberts 08/18/09Americans think that they have “freedom and democracy” and that politicians are held accountable by elections. The fact of the matter is that the US is ruled by powerful interest groups who control politicians with campaign contributions. Our real rulers are an oligarchy of financial and military/security interests and AIPAC, which influences US foreign policy for the benefit of Israel.Have a look at economic policy. It is being run for the benefit of large financial concerns, such as Goldman Sachs.It was the banks, not the millions of Americans who have lost homes, jobs, health insurance, and pensions, that received $700 billion in TARP funds. The banks used this gift of capital to make more profits. In the middle of the worst economic downturn since the Great Depression, Goldman Sachs announced record second quarter profits and large six-figure bonuses for every employee.The Federal Reserve’s low interest rate policy is another gift to the banks. It lowers their cost of funds and increases their profits. With the repeal of the Glass-Steagall Act in 1999, banks became high-risk investment houses that trade financial instruments such as interest rate derivatives and mortgage backed securities. With abundant funds supplied virtually free by the Federal Reserve, banks are paying depositors virtually nothing on their savings.Despite the Federal Reserve’s low interest rate policy, beginning October 1 banks are raising the annual percentage rate (APR) on credit card purchases and cash advances and on balances that have a penalty rate because of late payment. Banks are also raising the late fee. In the midst of the worst economy since the 1930s, heavily indebted Americans, who are losing their jobs and their homes, are to be bled into bankruptcy by the very banks that are being subsidized with TARP funds and low interest rates.Moreover, it is the American public that is on the hook for the TARP money and the low interest rates. As the US government’s budget is 50% or more in the red, the TARP money has to be borrowed from abroad or monetized by the Fed. This means more pressure on the US dollar’s exchange value and a rise in import prices and also domestic inflation.Americans will thus pay for the TARP and low interest rate subsidies to their financial rulers with erosion in the purchasing power of the dollar. What we are experiencing is a massive redistribution of income from the American public to the financial sector.And this is occurring during a Democratic administration headed by America’s first black president, with a Democratic majority in the House and Senate.Is there a government anywhere that less represents its citizens than the US government?Consider America’s wars. As of the moment of writing, the out-of-pocket cost of America’s wars in Iraq and Afghanistan is $900,000,000,000. When you add in the already incurred future costs of veterans benefits, interest on the debt, the forgone use of the resources for productive purposes, and such other costs as computed by Nobel economist Joseph Stiglitz and Harvard University budget expert Linda Bilmes, “our” government has wasted $3,000,000,000,000–three thousand billion dollars–on two wars that have no benefit whatsoever for any American whose income does not derive from the military/security complex, about which five-star general President Eisenhower warned us.It is now a proven fact that the US invasion of Iraq was based on lies and deception of the American public. The only beneficiaries were the armaments industries, Blackwater, Halliburton, military officers who enjoy higher rates of promotion during war, and Muslim extremists whose case the US government proved by its unprovoked aggression against Muslims.No one else benefited. Iraq was a threat to no one, and finding Saddam Hussein and executing him after a kangaroo trial had no effect whatsoever on ending the war or preventing the start of others.The cost of America’s wars is a huge burden on a bankrupt country, but the cost incurred by veterans might be even higher. Homelessness is a prevalent condition of veterans, as is post-traumatic stress. American soldiers, who naively fought for the munitions industry’s wars, for high compensation for the munitions CEOs, and for dividends and capital gains for the munitions shareholders, paid not only with lives and lost limbs, but also with broken marriages, ruined careers, psychiatric disorders, and prison sentences for failing to make child support payments.What did Americans gain from an unaffordable war in Iraq that lasted far longer than World War II and that put into power Shi’ites allied with Iran?The answer is obvious: nothing whatsoever.What did the armaments industry gain? Billions of dollars in profits.What about President Obama? “A corporate marketing creation,” sums up the distinguished British journalist John Pilger.Obama is the presidential candidate who promised to end the war in Iraq. He hasn’t. But he has escalated the war in Afghanistan, started a new war in Pakistan, intends to repeat the Yugoslav scenario in the Caucasus, and appears determined to start a war in South America. In response to the acceptance by US puppet president of Columbia, Alvaro Uribe, of seven US military bases in Columbia, Venezuela warned South American countries that the “winds or war are beginning to blow.”Here we have the US government, totally dependent on the generosity of foreigners to finance its red ink, which extends in large quantities as far as the eye can see, completely under the thumb of the military/security complex, which will destroy us all in order to meet Wall Street share price expectations.Why does any American care who rules Afghanistan? The country has nothing to do with us.Did the armed services committees of the House and Senate calculate the risk of destabilizing nuclear armed Pakistan when they acquiesced to Obama’s new war there, a war that has already displaced two million Pakistanis?No, of course not. The whores took their orders from the same military/security oligarchy that instructed Obama.The great American superpower and its 300 million people are being driven straight into the ground by the narrow interest of the big banks and the munitions industry People, and not only Americans, are losing their sons, husbands, brothers, and fathers for no other reason than the profits of US armaments corporations, and the gullible American people seem proud of it. Those ribbon decals on their cars, SUVs and monster trucks proclaim their naive loyalty to the armaments industries and to the whores in Washington who promote wars.Will Americans, smashed and destroyed by “their” government’s policy, which always puts Americans last, ever understand who their real enemies are?Will Americans realize that they are not ruled by elected representatives but by an oligarchy that owns the Washington whorehouse?Will Americans ever understand that they are impotent serfs?

GuestAugust 19th, 2009 at 9:16 pm

An immoral minority will always try to rule a moral majority. Why are all our enlightened religious leaders not screaming “bloody murder”?!

ChignosAugust 19th, 2009 at 11:27 pm

The counter argument is that a Taliban-led Afghanistan destabilizes nuclear-armed Pakistan–something the left underestimates. This article is intellectually dishonest. Let’s have complete arguments from both sides.

GuestAugust 19th, 2009 at 6:11 pm

beware Obama, Pelosi, Geithner CO is sending out its Democratic TAX dogs to start higher tax + multiple tax revenue policy and its IRS dogs to collect tax money or put you in prison to finance Obama-Entitlement-Care

MorbidAugust 19th, 2009 at 7:37 pm

The ObamaNation of Desolation pursues the liberal agenda wet dream of Bamelot. This is a huge inflation – see my earlier post above on this crap of “saving the world” vote buying agenda of the scamalots.

Mother of GodAugust 19th, 2009 at 8:48 pm

You mean we should re-read, yet again, your twisted post that religiously ignores the true drivers of overpopulation (which are poverty, inequality, and the lack of education delivered courtesy of poverty and inequality) while it irrationally asserts that better medicines and better hygiene are killing us? LOL!

GuestAugust 19th, 2009 at 11:51 pm

AARP loses members over health care stance | USA TodayWASHINGTON (AP) — About 60,000 senior citizens have quit AARP since July 1 due to the group’s support for a health care overhaul, a spokesman for the organization said Monday.The membership loss suggests dissatisfaction on the part of AARP members at a time when many senior citizens are concerned about proposed cuts to Medicare providers to help pay for making health care available for all…AARP is strongly backing a health care overhaul, running ads to support it and hosting President Obama at an online forum recently to promote his agenda to AARP members…

GuestAugust 20th, 2009 at 5:57 am

haha, alots of people finally realized Obama-Entitlement-Care-For-All will hurt the existing people already with healthcare.

SoftwarengineerAugust 20th, 2009 at 1:09 pm

Similarly, AARP is for privatizing Social Security like Bush/Cheney/McCain wanted tooI throw their applications in the trash, especially when I heard that Health Reform was carving $500B inefficiencies [whatever the Hades that is] out of Medicare.I don’t mind if they transparently reduce Social Security and Medicaid supports with time, due to fiscal limitations, but not simultaneously letting freeloaders in to mask it.

GuestAugust 19th, 2009 at 9:41 pm

Thank goodness, I say let them raise taxes all they want for atleast that way someone will have a job, the free markets are certainly not willing to pay anyone a livable wage so why choke off the only institution who believes in actually paying people.

GuestAugust 20th, 2009 at 7:02 am

I agree, let ObamaNation raise tax on everyone and send IRS to collect them and penalize them if they evade paying tax. and for goodness, expand government payroll, so more people will be employed by ObamaNation and enjoy world class ObamaBenefits.

GuestAugust 19th, 2009 at 9:49 pm

Yea because poor people are poor because they deserve to be they just don’t work hard enough, I know you earn everything you have, you also every day get out your measuring stick to determine who’s working hard enough and who’s not, oh that’s right you don’t have to the amount of money a person has is a scientific indicator of how hard a person works it precisely measures worth. Moron!

GuestAugust 19th, 2009 at 10:08 pm

you are pathetic and you dont know what you talking about. check in with doctor to make sure you are emotionally stable. Instead of attacking middle-class people, please get some help.

GuestAugust 19th, 2009 at 10:11 pm

please dont dream up fantasy scenario by yourself and put it into other people’s mouth. check into emergency room and get some doctor to see if you are emotionally or mentally stable or healthy.

GuestAugust 19th, 2009 at 8:26 pm may appreciate this, and then again, you may not..either way, here it is. offered. related. re reaction, who gives a f…! it is for you..Tom Waits – Little Drop Of Poison Lyrics.I like my town with a little drop of poisonNobody knows they’re lining up to go insaneI’m all alone, I smoke my friends down to the filterBut I feel much cleaner after it rainsShe left in the fall, that’s her picture on the wallShe always had that little drop of poisonShe left in the fall, that’s her picture on the wallShe always had that little drop of poisonDid the devil make the world while god was sleepingSomeone said you’ll never get a wish from a boneAnother wrong good-bye and a hundred sailorsThat deep blue sky is my homeShe left in the fall, that’s her picture on the wallShe always had that little drop of poisonShe left in the fall, that’s her picture on the wallShe always had that little drop of poisonA rat always knows when he’s in with weaselsHere you lose a little every dayI remember when a million was a millionThey all have ways to make you payThey all have ways to make you pay.

blindmanAugust 19th, 2009 at 9:34 pm

n,you are what is wrong with the world. you donot care to exist, and that is the problem. you have no sense of connection or intimacy. you prey upon isolation and com-modification of chi cheese as a substitute for identity. as in…. what has foot ball paraphernalia to do with the decline of “civilization”. actually, everything, but need we broadcast and glorify it on our ignorant backs and asses? i ask you? but youdo not even exist! you are a digital phantom propagatedby a program designed at the expense of humanity.right.? you too will never think. you too do notexist. so i say …….. join the party. but youcannot as you are cyber. and we are cyber f..d.

The AlarmistAugust 20th, 2009 at 3:13 am

What I seem to have missed is the Good Doctor’s action plan on what should be done to avert the disaster he has foretold.What should Helicopter Ben do now that he has unleashed a tidal wave of money into the system?

AnonymousAugust 20th, 2009 at 11:54 am

Disasters are not “averted”–they are simply delayed and fed steriods. That’s why we are in the mess we’re in after several decades of “averting” disasters.The Good Doctor thinks that old Ben should be reappointed as a reward for shipwrecking the economy–I think he should be given 20 years.But Ben is cleaning up his act–he’s promised to put the helicopter in storage and deliver money to the worthy wealthy via UPS.

FEDupAugust 20th, 2009 at 12:35 pm

Add this one to the national debt:Ben may have put temporatily shelved his billion dollar money drops but Congress is in the process of offering a new program “cash for appliances” to supplement their “cash for clunkers program”: buy a new energy saving appliance and you’ll get a great discount. Maybe they finally realize it is easier and cheaper to bribe the public than the elites!

GuestAugust 20th, 2009 at 7:25 am

what is new? Democrats throwing money out everywhere like they are dealing with Zimbabwe currency -> Just print and throw more, get the drift?

Mother of GodAugust 20th, 2009 at 8:10 am

Here’s a thought. If 90% of our earnings were being constantly sucked up into outer space, we would instantly unite and do everything to try to stop it. But when 90% of our wealth is sucked up to 1% of people, we do nothing about it. We are unconcerned, unmoved, although the disaster is equal. Although we are concerned, moved and active in doing something about it in the sense that we enter into endless conflict to right the wrong, we are somehow simultaneously unconscious of the very existence of the disaster. Some people actually defend the super-overpaid. This is very, very strange. What theory can begin to explain such an amazing phenomenon? Where is the righteous indignation against someone getting over US$1 million an hour? Are we mad-as? Is our righteous, responsible, mature objection to such super-overpay and overpower effectively stifled by the false fear of being thought envious?There is a huge and important gap in our knowledge here, and we have not even seen the enormous gap, we have not even registered the mystery.I will offer some possible explanations, not because I believe any of them is certain, but to reinforce the sense that there is a mystery here and to further define and explain what I mean by the mystery.Is it a transference of the nature-given deference to alpha males? Has nature made 99% of us passive and submissive to 1%?Is it the feeling that as long as it is still within the tribe, it is still with us? That is, a hangover from the nature-given trust of the unity of the tribe, of the devotion of alpha beings to the tribe?Is it a transference from the infant’s trust of the parents, that is, the infant’s inability to suspect lack of goodwill in the parents? Which trust is of course supported by the almost universal goodwill of parents. Are we trustingly treating the super-overpaid as parents, thus leaving us vulnerable to leaders in whom the milk of human kindness is soured, dried up or poisoned, in whom the parental altruism towards offspring is absent?We hear about the will to grab power, but we don’t hear about the will to give away responsibility, which is far more common.Has nature given us a lack of a sense of the danger of avarice? Is avarice a post-nature, human-society phenomenon, so that we are unequipped with an instinctive sense of the possibility of the danger of avarice in our leaders? The natural animal tribe seems to lack avarice and seems to contain a vesting of most responsibility in the leaders.Again, if 100 million people a year were being killed, and something like 500 million a year were being seriously injured, by tsunamis or earthquakes, we would be striving hard to avoid this. But because 100 million people, 2% of humans, 1 in 50 people, are being killed each year, and something of the order of 500 million a year seriously injured, by the social system, we are, broadly speaking, unactivated.This shows at least that it is not lack of compassion, and that it is not love of murder, that controls us in this oblivious behaviour.Psychology has not even begun to ask the big important questions.

HubbsAugust 20th, 2009 at 8:57 am

I think if you look at current US standards compared with the standards endured by humanity over the ages, we still have it awfully (obscenely?) good, hence our seeming apathy against the money masters, who as Marc Faber recently politely described as “Useless.”As Steppenwolf wrote in their hit song Monster during the Vietnam Era:”The leaders were supposed to serve the country, but now they pay it no mind…”the people grew fat and got lazy, and now their vote is a meaningless joke”Come to think of it, I’m going to check out that song on youtube right now.

Ungrateful PeonAugust 20th, 2009 at 11:07 am

You make a valid point, and I suspect that that is the crux of our obvious docile complicity within an economic hierarchy that barely tolerates ungrateful peons. Unfortunately, I think that our usefulness as the unwashed masses has reach its expiry date and after completely sucking the wealth out of the nation, the global elite have moved on to capitalize on new ventures.Americans essentially gave them license to rape the nation by systematically allowing them to dismantle the democratic institutions originally designed to protect us from absolute pillage.I think that we’re in for a rude awakening.

FEDupAugust 20th, 2009 at 12:44 pm

intersting points; many of the people I have met who fall into this top 1% are extremely egotistical, self-absorbed, arrogant and short-sighted. It never occurs to them that there is not a level playing field, that some people have an advantage over others but most importantly, that the world would be a far better place if we all acted like “brothers and sisters” and helped each other. Do they not even consider the reduction in crime (and wars), health care costs, security costs and level of happiness that vast inequality breeds?!

GuestAugust 20th, 2009 at 3:14 pm

What aspiration can you leave a young man or woman if you won’t even tolerate a household income range of $250,000 or above? How sad that socialism is inspired by envy, the heart of the true socialist’s attitude. Why must some, through socialism, hope not to make everyone well off, but everyone equally miserable? How can you claim the right to dispose of the lives of others? Why must some resort to brute force to destroy the best?According to the U.S. Census Bureau, only 1.5% of households had incomes of $250,000 or more in 2005, representing 1,699,000 households. Is that so terrible? Surely, you don’t believe that if America embraces central banker socialism, under a corporate puppet such as Obama, that Warren Buffett and David Rockefeller would be put on a government salary, if that’s who you mean by the top 1%? Or that the 10 highest-paid CEOs for 2008 at Standard & Poor’s 500 companies based on calculations by The Associated Press would be subject to government rule; they are the government:1. Aubrey McClendon, Chesapeake Energy Corp., $112.5 million2. Sanjay Jha, Motorola Inc., $104.4 million3. Robert Iger, Walt Disney Co., $51.1 million4. Lloyd Blankfein, Goldman Sachs Group Inc., $42.9 million5. Kenneth Chenault, American Express Co., $42.9 million6. Vikram Pandit, Citigroup Inc., $38.2 million7. Steven Farris, Apache Corp., $37.2 million8. Louis Camilleri, Philip Morris International Inc., $36.9 million9. Kevin Johnson, Juniper Networks Inc., $36.1 million10. Jamie Dimon, JPMorgan Chase & Co., $35.7 million.Your president Obama didn’t even restrict their billion dollar bonuses, even after they collected taxpayer bailout funds. Yet he wants to tax a household making $200,000 or $250,000, before taxes. Because they’re wealthy.Speaking of the “Wealthy” and “Everyone Else,” the article “A Detailed Look at the Stratified U.S. Consumer” does point out that “the disposable income difference between the richest 10% and even the next richest decile is staggering: a 3x order of magnitude.”BUT, “a fact that Taleb fans would likely appreciate most, the pretax income difference between the median and mean for the top decile is shocking: $206,900 versus $397,700. This is skewed by a statistically low number of outliers earning an abnormally large amount of disposable income.” So be careful when you look at the propaganda charts: they may be quoting the mean (average) and not the median.It pays to remember that old saw: If Bill Gates walks into a bar, the “average” income of every person in the room immediately goes up 10,000 percent. But the “median” income hardly changes at all.If you’re interested in more detail on the U.S. consumer, here’s the link:

Mother of GodAugust 20th, 2009 at 4:04 pm

Your completely ignorant red-baiting comments about socialism aside, ahem,if a family with 2 working adults is getting $200,000 per year, they are not “rich” at all – they are getting fairpay. Fairpay = world average pay per hour working at average hardness of work = US $100,000 per year per working person, INCLUDING paying homemakers for 40 hours per week (even though they actually do work many more hours than this) and paying students for their work studying (successfully, things society wants studied).Yes, THAT much work is being done in this world and THAT much wealth is being produced in this world. Fairpay is right around 40 or 50 dollars per hour. [Imagine what your world would look like with every family on the globe getting $200,000 US per year! EVerybody would be “rich” just by working and saving!]People are unaware how much wealth is being hidden…and this is partly because the extreme wealth isn’t counted. (I’ll try to find that article…)The rich are those with more than several millions dollars US. They are NOT those families making 200 – 250 thousand per year.

GuestAugust 20th, 2009 at 9:15 pm

All this incivility and name-calling by socialists such as yourself on this blog are signs that your backs are against the wall. You are getting killed with your Obama healthcare. You are losing the Independents, the people who can think for themselves. Even the mainstream media is admitting that the majority of Americans side with the healthcare protesters. People act the way you people act when they don’t have an explanation for their viewpoint, except to yell, to scream pejoratives–moron, jerk, idiot, stupid, simple-minded, paranoid, self-centered, juvenile temper-tantrum blatherers… You people are like the guy who gives somebody the finger. That’s his intelligent response, as far as he can go. The interesting thing is that he thinks he’s said it all, that he’s won, and the other guy has lost the argument.That’s how smart you name callers are. (And since you people seem to want to get personal, I frankly find your chosen moniker insulting and offensive—a blatant in-your-face slap of all Christians—which, of course, you intended.)What socialists can’t seem to understand is there is no stronger, more ruthless, iron-fisted private control in existence than the use of government for private interests. That is the ultimate in privacy and secrecy. If it’s “red-baiting” to reveal the evils of a dehumanizing socialist State, so be it. To think that today’s public officials in Washington are what they say they are or that they are working for the benefit of America’s citizens is foolish and naive. Today’s politicians serve a private master—the people who control the nation for their own personal wealth and benefit—the central bankers. There is massive proof of it; no one save a few Ron Pauls can get elected to Washington without the money changers’ stamp of approval. At least lobbyists for the pharmaceuticals and the medical industry, et cetera, are pooling together to protect their interests, for the profit motive, competing for that magic pill or that DNA scanner, because there’s tremendous money in it for the developer. At least America—and the world–has had really good medical care for that simple reason—the profit motive.That’s not the same as the parasitic but powerful central bankers who are milking the entire system of 40% of its production and only Bernanke knows how much more for their own private wealth. It is the shadow banking system behind the secretive deals, it is they who have Congress in their hands, they who select the president and dangle him in front of the cameras to read their scripts. They will be your socialist healthcare masters. It is they who were the backers of Lenin and Trotsky and Stalin and Hitler and Mao…the socialists aka the communists.It’s the private controllers who want non-competitive health care for their profit and control. You already have a sample of their monopolistic “care”– Bush’s prescription drug care program. Prices of prescriptive drugs promptly increased, some doubling and tripling when the government’s plan was enacted (as resisting seniors knew they would). And America’s retirees were hit with a financial double whammy, the increased cost of their drugs (some up into the thousands of dollars) and the exorbitant monthly fees for their mandatory “insurance.” It was blackmail, of course…by your benevolent, caring government.

SoftwarengineerAugust 22nd, 2009 at 6:54 pm

Tell that to the average American household making about 40-50K per year.They’d tell you, “you’ve lost touch”.Then tell it to the other bottom half of American working poor, unemployed, homeless; and they’d tell you, “you’re out of your mind”.

Ungrateful PeonAugust 20th, 2009 at 4:08 pm

“How sad that socialism is inspired by envy, the heart of the true socialist’s attitude. Why must some, through socialism, hope not to make everyone well off, but everyone equally miserable?”Two words: NO JOBS!And contrary to popular libertarian twaddle, that ain’t ‘envy’, dude. It’s the natural consequence of unrelenting income inequality and the unrestrained looting of the real economy by oligarchs.

GuestAugust 21st, 2009 at 5:20 pm

What aspiration can you leave a young man or woman if you won’t even tolerate a household income range of $250,000 or above? How sad that socialism is inspired by envy, the heart of the true socialist’s attitude. Why must some, through socialism, hope not to make everyone well off, but everyone equally miserable? How can you claim the right to dispose of the lives of others? Why must some resort to brute force to destroy the best?>>How in the world can you what is in the heart of socialism if you were born, raised and brainwashed in the belly of the beast?

FEDupAugust 20th, 2009 at 10:40 pm

Correction and response to the “socialist fear mongers”.I must correct my comments to say: many of the people I have met who fall into this top 0.1% (making millions per year)….. and do they not even consider the tremendous increased costs to society from increases in crime, wars, health care and security coupled with a decrease in happiness that vast inequality breeds?! And to those who seem bent on labelling any measure that helps people as “the demon socialism”, perhaps a more mature and constructive dialogue could be achieved by addressing each point on it’s merit instead of “throwing the baby out with the bathwater”! And if you’re still confused then let me ask you a simple question: have you ever helped another human being in need for free without payment-does that make you socialist or a capitalist?

GuestAugust 21st, 2009 at 12:47 am

Well, I can’t say that helping “another human being in need for free without payment” makes you a socialist or a capitalist, but I can tell you it makes you a conservative, and probably religious. AARP reported in a poll about two years ago that conservatives were responsible for nearly 80 percent of all charitable giving.And ABC News reports that “…the single biggest predictor of whether someone will be charitable is their religious participation.“Religious people are more likely to give to charity, and when they give, they give more money: four times as much. And [says] Arthur Brooks… ‘The religious Americans are more likely to give to every kind of cause and charity, including explicitly non-religious charities.'”In regards to atheism and uncharitableness, charitable giving by atheists and agnostics in America is significantly less than by theists, according to a study by the Barna Group:“ The typical no-faith American donated just $200 in 2006, which is more than seven times less than the amount contributed by the prototypical active-faith adult ($1500)., the Center for Global Prosperity has found that the in the US (conservative when compared to Europe) people gave more. It found that “the $8.8 billion in giving from American religious institutions to developing countries was $1.5 billion more than the total giving from all private sources in 30 of the world’s major industrialized democratic countries combined.”The Daily Kos in “How Come Christian Conservatives Give More?” says “Mounting evidence shows that religious people give more dollars and volunteer hours to charity than do nonbelievers, and conservatives give more than liberals.”[T]he small 20 percent of Canadians who attend [church] weekly are the source of 53 per cent of Canada’s total charitable givings.If all Canadians gave as weekly attenders did, the total value of direct donations to the charitable and non-profit sector would double to over $10 billion. However, total donations would fall to $2.3 billion if all gave as non-attenders did. this fromStatistical Modeling, Causal Inference, and Social Science by Andrew Gelman on January 22, 2009Arthur Brooks writes:Over the past several years, studies have consistently shown that people on the political right outperform those on the left when it comes to charity. This pattern appears to have held — increased, even — in 2008.In May of last year, the Gallup polling organization asked 1,200 American adults about their giving patterns. People who called themselves “conservative” or “very conservative” made up 42% of the population surveyed, but gave 56% of the total charitable donations. In contrast, “liberal” or “very liberal” respondents were 29% of those polled but gave just 7% of donations.These disparities were not due to differences in income. People who said they were “very conservative” gave 4.5% of their income to charity, on average; “conservatives” gave 3.6%; “moderates” gave 3%; “liberals” gave 1.5%; and “very liberal” folks gave 1.2%.A common explanation for this pattern is that conservatives are more religious than liberals, and are simply giving to their churches…The 2008 data tell us that secular conservatives are now outperforming their secular liberal counterparts. Compare two people who attend religious services less than once per year (or never) and who are also identical in terms of income, education, sex, age and family status — but one is on the political right while the other is on the left. The secular liberal will give, on average, $1,100 less to charity per year than the secular conservative. The conservative charity edge cannot be explained away by gifts to churches.Brooks also discusses why the difference can’t simply be explained by differences in political contributions. But then he writes:Ironically, few environments are less tolerant of conservatives and their ideas than the nonprofit world. The Chronicle of Philanthropy reported in October of 2008 that employees of major charities favored Democrats over Republicans in their private political contributions by a margin of 82% to 18%. Among the employees of major foundations, the difference was an astounding 98% to 2%. last but not least for all those who’ve been so kind to the Palins on this blog, a couple that, incidentally, provides support for five children, there’s this:Palin’s Charitable Giving Shames Biden’sAlaska Gov. Sarah Palin made considerably less money than rival Sen. Joe Biden, but the Palin family gave more to charity in the last two years than Biden has in the last eight combined, according to Palin’s tax records released Friday afternoon.Palin, the running mate of presidential candidate Sen. John McCain (R-Ariz.), and her husband Todd reported meager earnings from 2006 and 2007, at least by presidential-politics standards.In 2006, the Palins paid $11,944 in taxes on $127,869 in income. In 2007, they paid $24,738 on $166,080.But in 2006, they donated $4,880 to charity, and in 2007, they donated $3,325.By contrast, Biden (D-Del.), Democratic presidential candidate Barack Obama’s running mate, has donated a total of $3,690 since 1998 despite his higher Senate salary, according to an analysis posted by National Review., hey. You got your man Biden in the White House to design your government healthcare plan for your basic needs. Let’s just hope he won’t be stingy.Gad, what a world.

GuestAugust 23rd, 2009 at 7:24 pm

I’m a humanist and not a right-winger (Nor a Democrat or Republican, or Libertarian), and I DO give money away with no expectations of return.

ChignosAugust 23rd, 2009 at 11:02 pm

Hey Fed up, where are you with “Guest on 08-2009-08-21 00:47:50″s response to your question? Are you stupefied?

MM CAAugust 20th, 2009 at 8:41 am

NO JOBS!Another weekly jobless claims number showing no signs of improvement. Fresh claims jumped 15,000 to 576,000 for the weekend ended August, 15. Analysts were looking for a small dip.

The AlarmistAugust 20th, 2009 at 10:00 am

No, the CFA tests are really hard and there three of them, so I wouldn’t characterise them as idiots.It would be more fair to say, “Analysts have their opinions, and you know what they say about that!”

SoftwarengineerAugust 20th, 2009 at 10:26 am

Not to Worry MM CAAs long as about half of America brings in $40K or more per household, while the other half can barely keep its head above water or is sitting unemployed/homeless: the recession has bottommed out and good times are here again.

GuestAugust 20th, 2009 at 10:41 am

@Medic: “I think of them [town meeting protesters] as uninformed, simple minded, unable to question, easily led, stupid people.”Bottom line guys – it [socialized healthcare] works everywhere else in the world but here. We spend more than anyone else and have worse outcomes. Ours is not a good system. But what could I know about that. I have toiled in that system for the last 16 years.”There are stories in San Francisco of homeless men who have visited hospital emergency departments 30 or 40 times or more, particularly when it is cold, and have never been turned away. America’s problem is homeless men, not healthcare, particularly homeless men who are mentally ill. But the liberals decided that mental hospitals should be closed a few decades back and mental institutions have steadily been closing since the 70s. It was a cruel thing to do, both to patients and families, and it ended with many former patients on the streets. One concerned man said to a female attorney in charge of a state closing, “But my brother is mentally ill, and he’ll be out on the streets.” And she replied, “That’s your problem.”But all is well. In a report published by the American Psychiatric Association, the authors said: “This three-year study examined the impact of closing a state psychiatric hospital in 1991 on service utilization patterns and related costs for clients with and without serious mental illness.” And concluded: “The project reduced reliance on state psychiatric hospitalization and demonstrated that persons with serious mental illness can be effectively treated and maintained in the community.” taking a “holier than thou” attitude toward Obama healthcare, deliberately ignoring the costs and the gritty details, the deals between big government and big pharma/medicine and insurance, hoping only to make someone else pay for his or his employees’ personal “care,” is literally jumping from the frying pan into the fire. In this world, nothing is free—particularly when your benefactor is Big Government.Five minutes of “research” revealed the following examples of the availability of healthcare to the homeless and/or indigent in America:SAN FRANCISCO GENERAL HOSPITAL is the Heart of San Francisco. We save lives. We are a Level 1 Trauma Center and the City’s safety net, serving anyone in need. Nestled at the foot of Potrero Hill in the city’s Mission District, the public hospital has been an essential part of San Francisco ‘s health care system since 1872. Considered one of the finest public hospitals in the US, the General, as many refer to it, offers humanistic, cost-effective and culturally competent care to an international community of patients regardless of their ability to pay. This history has had a strong impact on the hospital’s culture and creed.Payer MixSFGH’s inpatients payer mix includes those insured by Medi-Cal (45%), Medicare (23%), commercial insurance and other sources (11%). SFGH’s outpatients payer mix includes those insured by Medi-Cal (34%), Medicare (16%), commercial insurance and other sources (14%).UninsuredSFGH is the major health care provider for the estimated 150,000 people in San Francisco who are without health insurance coverage. Although about 8% of patients served at SFGH are homeless, a large number of these uninsured patients are working full time.PatientsSFGH serves a diverse patient population. Staff at SFGH provide services in more than 20 languages. Patients at SFGH are ethnically and racially diverse: 20% are African American, 20% are Asian/Pacific Islander, 25% are Caucasian, and 30% are Hispanic. The General serves about the same number of men as women (51% men, 49% women). About 43% of patients are under age 35, about 49% are between 35and 65 years old. Journal of Public HealthEmergency Department Use Among the Homeless and Marginally Housed: Results From a Community-Based StudyObjectives. This study examined factors associated with emergency department use among homeless and marginally housed persons.Methods. Interviews were conducted with 2578 homeless and marginally housed persons, and factors associated with different patterns of emergency department use were assessed in multivariate models.Results. Findings showed that 40.4% of respondents had 1 or more emergency department encounters in the previous year; 7.9% exhibited high rates of use (more than 3 visits) and accounted for 54.5% of all visits. Factors associated with high use rates included less stable housing, victimization, arrests, physical and mental illness, and substance abuse. Predisposing and need factors appeared to drive emergency department use…The sampling design, which was based on a design developed by Burnam and Koegel, involved a multistage cluster sample with stratification into shelters, free meal programs, and SRO hotels in San Francisco. The shelter sample was drawn from all overnight shelters that housed at least 50 adults per night. The meal program sample included participants in 5 of 6 midday free-meal programs that served a minimum of 100 adults at least 3 days per week. SRO (low-rent single room occupancy) hotels were sampled, at a probability rate proportionate to size, from 292 low-cost residential hotels in census tracts located in the center of the city. Hotels eligible for inclusion were those that, according to the city’s official list, had at least 20 “usually occupied” residential (nontourist) rooms licensed to rent for $400 per month or less.________________________________________Serial Inebriate Programs: What to do About Homeless Alcoholics in the Emergency DepartmentEvery inner-city emergency department (ED) has a core group of alcoholics—that sad collection of homeless addicts who come in seizing when they’ve run out of alcohol or comatose when they’ve had too much.They have either failed or refused treatment many times over, yet they occupy beds for hours on end and consume massive amounts of health care resources. Many approaches to control these costs and treat the recidivists have failed for one reason or another, but one innovative effort in San Diego, CA, is gaining national attention.After years of watching his ED’s resources taken up by the small group of intractable alcoholics, Dr. James Dunford, an emergency physician at University of California, San Diego Medical Center, decided to find out … for Emergency Department Care for Urban Homeless and Housed PoorDivision of General Medicine and the Center for Research on Health Care, University of Pittsburgh, Pittsburgh, PA | Society of General Internal MedicineABSTRACTObjectives: To describe the factors associated with selecting the emergency department (ED) as the site for usual care among an urban homeless and housed poor adult population.Design: In a cross-sectional survey at 24 community-based sites in Allegheny County, PA, face-to-face interviews assessed satisfaction with care received, preferred site of care and perceived need for health insurance for 6 health care scenarios, (i.e. physical exam and, acute care, chronic care, preventive care, psychiatric care, or substance abuse care), and site for usual care. Site-specific satisfaction with care received was assessed using a composite score (range 0 for worst to 100 for best) derived from 7 Likert scale questions. Logistic regression analysis was used to identify factors independently associated with selecting the ED as the site for usual care.Results: The 373 study participants were predominantly male (85.3%), African American (78.6%), young (median age 38.4), homeless ≤ 1 year (59.8%), and insured (69.9%). Overall, 54.0% felt health insurance was necessary to be seen in an ED compared with a private physicians’ office (76.2%), hospital-based clinic (69.2%), community clinic (32.3%) or shelter-based clinic (7.2%) (p<0.0001 for all pair-wise comparisons). Minor differences in satisfaction with care occurred among sites with the ED (72.6) rated lower than hospital-based clinics (75.3, p<0.001), shelter-based clinics (77.2, p<0.10), and community clinics/private physicians’ offices (74.4, p<0.10). While the majority selected traditional ambulatory care sites (hospital-based and community clinics, physicians’ offices) for all 6 health care scenarios (range: 59.2% for acute care to 60.4% for physical exams), a large proportion chose the ED for nonacute scenarios such as physical exams (26.0%), preventive care (23.6%), and chronic care (28.9%). Overall, 336 (90.1%) identified a site for usual care: 51.8% identified ambulatory care sites; 31.8% identified EDs; and 8.9% identified shelter-based clinics. Factors independently associated with identifying the ED were lack of health insurance (OR 3.4, 95% CI 1.9–5.9), homelessness ≤ 12 months (OR 2.2, 95% CI 1.1–4.4), and single marital status (OR 1.7, 95% CI 1.0–2.9). for Immigration Studies.Americans with insurance have to pay higher premiums as health care providers pass along some of the costs of treating the uninsured to paying costumers. Taxpayers, too, are affected as federal, state, and local governments struggle to provide care to the growing ranks of the uninsured. While no definitive estimate exists, it is likely that between $15 and $30 billion a year, not including the cost for Medicaid, is spent providing services to the uninsured by governments at all levels.The results in Figure 17 show that 64.4 percent of Mexican immigrants and their children either have no health coverage or have it provided to them at government expense.Even after they have lived in the country for many years, lack of health insurance remains a severe problem among Mexican immigrants. Figure 18 shows health insurance coverage among Mexicans based on years of residence in the United States. The figure shows that 62.9 percent of immigrants from Mexico who have lived in the United States for 10 years or less are uninsured. For those who have lived in the United States between 11 and 20 years, 47.5 percent are uninsured; among those who came to the country 21 to 30 years ago, 38.8 percent were without health insurance; and for those who arrived more than 30 years ago, 28 percent were still uninsured in 2000. Thus, while Mexican immigrants clearly make progress the longer they live in the United States, those who have lived in the country for many years are still more than twice as likely as natives to be without health insurance.Center for Immigraton StudiesFacts on Immigration and Health Insurance· There are 14.5 million immigrants and their U.S.-born children (under 18) who lack health insurance. They account for 31.9 percent of the entire uninsured population. Immigrants and their children are 16.8 percent of the nation’s total population. (Figure 1)· In 2007, 47.6 percent of immigrants and their U.S.-born children were either uninsured or· on Medicaid compared to 25 percent of natives and their children. (Figure 2)· Cultural factors may also contribute to the high rate of immigrant uninsurance. College-educated immigrants are twice as likely as college-educated natives to lack health insurance.· In an earlier study, the Center for Immigration Studies estimated that 64 percent of illegal immigrants were uninsured in 2006, accounting for one out of seven people without insurance. If the U.S.-born children (under 18) of illegal immigrants are included, they account for one out of six people without insurance.

SoftwarengineerAugust 20th, 2009 at 1:16 pm

Even Pelosi won’t touch letting illegal aliens on Health Reform and denies it would happen….trouble is, there’s no way to E-verify it won’t happen anyway…good weasle wording on the draft bill, if you’re an illegal alien…LOL

kilgoresAugust 20th, 2009 at 9:14 pm

Well said, Medic. In particular, I appreciated your remarks about the mentally ill. I am keenly aware of the persistent failure of our society to ensure that these folks, who in the main have no political or economic influence, receive adequate treatment.I represented many indigents in Baker Act involuntary commitment proceedings in Florida, and saw on a first-hand basis how they became caught in a revolving door of being treated at state facilities, only to be released onto the street 60 days later without medication to decompensate within two or three days and be placed again in protective custody. I represented indigents on death row in Florida, the vast majority of whom had documented organic brain damage which rendered them incapable of conforming their actions to the requirements of the law.The quality of a civilization is measured by its sense of mercy and compassion and justice for its least powerful members: its children, its elderly, its poor, its disabled. Without meaningful reform that makes access to health care universal, American society will be destined to fade into history as just another culture ultimately consumed by the decadence and selfishness of its privileged classes.SWK

kilgoresAugust 20th, 2009 at 9:45 pm

Errata:The foregoing remark was not directed to Medic — sorry for the confusion. I was intending to comment on the remark by Guest above that “…mental institutions have steadily been closing since the 70s. It was a cruel thing to do, both to patients and families, and it ended with many former patients on the streets. One concerned man said to a female attorney in charge of a state closing, “But my brother is mentally ill, and he’ll be out on the streets.” And she replied, “That’s your problem.”I disagree with the proposition that indigents not being turned away from emergency rooms is somehow equivalent to universal care. It is certainly not an efficient use of resources.SWK

ChignosAugust 21st, 2009 at 7:59 am

“The quality of a civilization is measured by its sense of mercy and compassion and justice for its least powerful members…….”I’ve heard this repeated over and over by attorneys who want it believed throughout society so that they can be paid a lot–mostly by public defender types.The only problem with this proposition is that it cannot be proved, and it flies in the face of common sense. But hey, if your bleeding heart (or, should I say your bank account) feels better believing this pap, vote for Goldman-Sachs’ Obama.

kilgoresAugust 22nd, 2009 at 5:01 pm

The statement you attack is not a proposition to be proved, but an axiom accepted as true throughout the developed world.Second, every public defender I have ever known — and I have known scores of them — has understood fully that they are making a sacrifice of potential income in the private sector to help indigent fellow citizens and to ensure that our criminal justice system works the way it is supposed to work. Perhaps the notion of public service is simply too old-fashioned for you to acknowledge or accept.I have a question for you, Chingos. Why do you insist on denigrating fellow posters (e.g., engaging in attorney-bashing, knowing full well that I am an attorney, and employing hot-button slurs such as “bleeding heart” to characterize my views) instead of addressing the substance of their posts? How do YOU measure the quality of a civilization? Why don’t you explain to us the reasons YOU believe the statement your deride here is false and contrary to “common sense?” How do YOU define “common sense?”Among the clients I have represented I count large companies listed on the stock exchanges, universities, and yes, well-heeled surgeons. I certainly don’t need to believe in mercy and compassion and justice for society’s least powerful members, since I already represent many powerful individuals and entities who “pay a lot” to me for my expertise. Notwithstanding the foregoing, I have devoted many years of my life to public service and foregone substantial income while working as a public defender and as an attorney for local governments, and I continue to provide services without charge to individuals who need legal services but are without the means to pay for them.By definition, the term ‘bleeding heart’ refers to a person who shows extravagant sympathy, especially for an object of alleged persecution. A plain desire for universal justice does not fit this definition. The United States presumably was founded on the notion that “all men are created equal,” and if justice doesn’t apply to all of us, then this precept is a sham, and genuine patriotism is dead.Seems to me you could benefit from remedial studies in history, law, civics and logic. Oh, and a course in proper etiquette wouldn’t hurt, either.Forgive me if I decline to respond in future to the majority of your vapid and mean-spirited posts, which I have concluded don’t merit anyone’s attention or consideration, least of all mine.SWK

ChignosAugust 23rd, 2009 at 10:28 pm

An axiom accepted throughout the developed world is, “First, let’s kill all the lawyers……” (I think it was Mercutio, Shakespeare, but leave that aside).What do you call 600 lawyers at the bottom of the ocean? A start.The point is: we’re in a big mess therefore it’s a good idea to question the “axiom[s] accepted.”You take it as denigration that I question your sacred cow assumptions.Not only that, I question your ability with the English language. You way overuse words like “vapid,” when, if you had better word skills, you’d use “insipid,” or even a simple word that everyone could understand, like “boring.”But when you state that you’ll “decline to respond” to my posts, your dear reader doesn’t buy it. That would give me the last word, a sorry state to leave you in, would’nt it?Well, have it your way, then. The last word is:You can’t judge a civilization by by its sense of mercy and compassion and justice for its least powerful members because no one will fight or vote for that. You judge a civilization by its ability to provide the most opportunity for the most of its members. People will vote (and fight) for that.We will fight for a system that provides for the less fortunate–as a compassionate byproduct. Provide opportunity for the vast majority. If you don’t focus on that, you’ll never have a wealth-production machine to provide for less fortunates.

kilgoresAugust 24th, 2009 at 12:03 am

Chingos:How trite are your continued attacks on the legal profession, and how utterly mindless and just plain wrong:From A Man For All Seasons:William Roper: So, now you give the Devil the benefit of law!Sir Thomas More: Yes! What would you do? Cut a great road through the law to get after the Devil?William Roper: Yes, I’d cut down every law in England to do that!Sir Thomas More: Oh? And when the last law was down, and the Devil turned ’round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man’s laws, not God’s! And if you cut them down, and you’re just the man to do it, do you really think you could stand upright in the winds that would blow then? Yes, I’d give the Devil benefit of law, for my own safety’s sake!___If you disagree with my statement as to the proper measure of a civilization, so be it; however, I find your callous attitude appalling, as I imagine many other readers of this blog will, too.You employ the use of grammatically fractured English (e.g., “You way overuse words…”), yet you “question” my command of the language. As a former teacher of English, I find that amusing. I will leave it to others to consider whether your comment regarding my alleged “overuse” of certain words serves any purpose other than to satisfy a puerile need to vent against someone who challenges your opinions.Your concept of “providing opportunity for the vast majority” so as to provide for the less fortunate “as a compassionate byproduct” is the just more of the same old sort of pablum as the idea of “trickle down economics.” The opportunities and freedom afforded the average inner city child will never be commensurate with the opportunities enjoyed by a trust fund baby. Mercy and compassion and justice will not be achieved if they are not at the forefront of public policy. That you apparently care so little about those in this country who are economically, socially, and politically disenfranchised that you favor addressing their needs only as a potential side benefit of enhancing “opportunities for the vast majority” — which in reality translates to little more than engineering the protection by the government of the interests of private fortunes in a “winner take all” game that commences from an inherently unlevel playing field — suggests to me that you lack a well-functioning moral compass. I find it astounding that you claim to be a Christian with such a contemptuous attitude towards the poor, and I pity you and others like you who concern themselves principally with their own welfare or advantage in hard-hearted disregard of the needs of others less fortunate than they.SWK

GuestAugust 20th, 2009 at 12:31 pm

Nathan’s Economic Edge is where it’s at these days, along with Zero Hedge. Here’s just one morsel from Nathan’s take today on Bloomberg’s report that “the index of leading economic indicators rose in July for a fourth consecutive month, another sign the worst recession in seven decades is almost over”:Is the stock market really a leading indicator, or is that just another MYTH? I SAY MYTH. Did the stock market predict the current economic malaise? NO? Myth busted.While I’m at it, I want to point out the MYTH that stocks have returned on average 7 to 8% annual returns over the “long haul.” BS! Here’s the truth, and it is heresy to all the people who make their living from Wall Street—ALMOST ALL STOCKS EVENTUALLY GO TO ZERO in the long haul. The only think that does go up in the long haul are the manipulated stock indices which replace failed companies with new ones. For example, the DOW Industrials has 30 companies—the only one still in existence is GE, a company that has made itself functionally insolvent due to its involvement with fiancé and derivatives. That’s called substitution bias, and that’s the truth about stocks—in the long haul.How about interest rates being a leading indicator? Perhaps, when the FREE MARKET is setting rates…But that’s NOT what’s happening now. On the contrary, the FFR is now ZERO and has been for quite some time. Treasury and other market rates ae being MANIPULATED via the Fed’s “quantitative easing” and other manipulations via the Primary Dealers, such as making false bids to create the appearance of strength in the debt markets. MANIPULATION does not make a leading indicator, it makes a contrary indicator.Now, the next most influential indicator within this “leading” indicator is the jobs data! We have highly manipulated numbers there and we have tons of people falling off the rolls as their benefits run out….The other considerations of this index are mostly negative, the most important one being consumer credit which is a true leading indicator. And from my position, once a society is saturated with debt, the one and only TRUE LEADING ECONOMIC INDICATOR is the ratio of DEBT TO INCOME. Incomes are falling, debt is rising, and that spells trouble for the future.

aleister perduraboAugust 20th, 2009 at 1:26 pm

American International Group was sued on Wednesday by two California residents who said their homeowner insurance policies entitled them to coverage on losses from Bernard Madoff’s Ponzi scheme.Bernard L. MadoffCNBC.comBernard L. MadoffThe federal lawsuit was filed in Manhattan by Robert and Harlene Horowitz, who said they lost $8.5 million in the Madoff scandal, and seeks class-action status on behalf of potentially thousands of policyholders.

ToothFairyAugust 20th, 2009 at 6:30 pm

…and this cancerous mindset keeps evolving … oh, the poor Horowitz’s, victims of what I wonder? – their own greed perhaps??Aren’t Madoff’s investors just as guilty as Madoff ???

GuestAugust 20th, 2009 at 3:12 pm

From Steve Keen:It’s Hard Being a Bear (Part One)I’m happy to admit that it’s very hard to hold a bear perspective, when all about there appear to be “green shoots”, yet according to my body clock it’s still hibernation time.There are, however, four factors that keep me in my lair:Good History;Bad Economic Theory;Good Economic History; andGood Economic TheoryI’ll cover the last three in subsequent posts; here I rely on Mark Twain’s brilliant observation that “history doesn’t repeat, but it sure does rhyme”. A US blogger is giving us very good evidence of that with the blog News From 1930, in which every day he summarises the news from the same day of the year in 1930. As Alan Kohler also remarked recently, “one thing that comes through loud and clear is that they didn’t know they were having a Depression” (to which I would add the word “either”).The entry for this day in 1930 (August 19th—a Tuesday as it happens) certainly make that obvious. Change the company names (and those of politicians and market pundits) to their modern equivalents, and you’d be hard pressed to decide whether you were reading a paper from 1930, or 2009.Some excerpts:“Seasoned common stocks” are now selling to yield about 1.5% above commercial paper rate (3%). In 33 year history of the Dow Jones averages, stocks without exception have been profitable long-term investments when average yield was 1% or more above the commercial paper rate.R. Babson (the economist who predicted the 1929 stock market crash, and inspired Irving Fisher to make his “bull”statement that “Stock prices have reached what looks like a permanently high plateau” days before Black Monday wiped 13% off the market) … notes commodity production has declined about 30% vs. 10% decline in consumption; predicts shortages soon, restarting of production to supply demand. Doesn’t yet recommend buying stocks, but feels “time is approaching when buying opportunities may appear.”Harvey Firestone, Pres. Firestone Tire & Rubber, states America is on eve of greater prosperity than past 10 years. Expresses belief in Ford’s statement there will soon be work for everybody. Says company has met depression by cutting overhead and lowering prices; plant now running night and day, 6 days a week.Economic news and individual company reports:Fed. Reserve member banks report “all other” (commercial) loans up $9M to $8.481B in week ended Aug. 13; loans on securities down $58M to $8.376M.S.W. Straus report of building permits issued for July in 589 leading cities and towns finds volume of planned construction was $187.6M vs. $184.7M in June; reverse of usual seasonal decline, but down 36% from 1929.Labor Dept. reports retail food prices down 2.5% in month ended July 15, and 9% in year.Coca Cola seen taking advantage of low sugar prices by buying a year’s supply in advance. Has enjoyed increased sales every year since 1922.R.J. Reynolds selling about 49, earned $3.22/share in 1929, expected to earn more in 1930, yield 6.1% based on $3 annual div.Several cigar stocks selling at yields over 9%, including General Cigar (9.3%), Congress Cigar (16%), Consolidated Cigar (13.8%).Companies reporting decent earnings: Drug Inc., General American Tank Car, Fox Film, Fifth Avenue Bus Corp, International Salt.”The general tenor of reports for August 1930 has “recovery” written all over it—though there is “bad”, or at least puzzling news amidst the good, such as the fall in prices.It appears that, rather like an alcoholic who is an alcoholic long before she takes the pledge at an AA meeting, the public and commentators in 1930 didn’t realise that a Depression has started.I feel the same way now—and the economic historians Barry Eichengreen and Kevin O’Rourke provide empirical support for this in their “Tale of Two Depressions”.

CLSAugust 20th, 2009 at 3:29 pm

My take away: it’s all inconclusive. We won’t know until we know and then the pundits who were correct, bull or bear, will be out in force saying it was this or that that indicated it was the same as/different from before. I’m happy to sit on the sidelines.

GuestAugust 20th, 2009 at 5:44 pm

That’s freakin’ brilliant. I’m going to that blog every day, and watching how this whoe thing unwinds. At the very least, it provides an interesting contrast between how the policies of that time worked versus how the policies of this time will work.

Harley QuinnAugust 20th, 2009 at 3:57 pm

Poor Bernie. Is there no limit to the amount of salt he can expect to be rubbed in his wounds? Is there no insult too grievious to be added to his injury? When poor Bernie was ssent to the big house, his girlfriend felt he deserted her and left her without any visable means of support. She was getting too long in the tooth to peddle her charms elsewhere so she made the best of the hand she was dealt. She sallied forth on the attack.And what did she attack, you ask? Poor Bernie’s teeny weeny! Can you imagine the despair in Bernie’s heart as the dimensions of his ardor are laid bare for all to read about. Hell hath no fury like a woman scorned with no income. To be fair, she did say that Bernie satisfied her in spite of his shortcomings. I guess she’ll sell more books that way than to say she faked it most of the time. Her publicist says she will make an announcement next week. Everyone is speculating that she will announce that a percentage of her book’s profits will go to Bernie’s victims.

ArmchairAugust 20th, 2009 at 11:04 pm

WwwWFinally, I have it. I have the simplistic letter construction that gets to the heart of my question.Even a lone W assumes a return to a pre-existing place. I keep wondering how to exist/prepare/lead/plan in a society where there is not a precise return to where we once were. Economics charts show Ww and wW patterns all of the time, yet you rarely hear an economist say that the overall economy can trend down with ups indefinitely, hence the Ww. It is simply taboo, but it is almost definitely a harmful taboo if it is going to the reality of the next 5-10 years.

GuestAugust 21st, 2009 at 12:50 am

Treasury Insanity In Support Of Grift | Karl Denninger 08/20/09*U.S. TREASURY TO AUCTION $27 BILLION IN 52-WEEK BILLS*U.S. TREASURY TO AUCTION $42 BILLION IN TWO-YEAR NOTES*U.S. TREASURY TO AUCTION $31 BILLION IN THREE-MONTH BILLS*U.S. TREASURY TO AUCTION $28 BILLION IN SEVEN-YEAR NOTES*U.S. TREASURY TO AUCTION $30 BILLION IN SIX-MONTH BILLS*U.S. TREASURY TO AUCTION $39 BILLION IN FIVE-YEAR NOTESThis is the price of supporting the grift and fraud in our banking system.I count $207 billion, coming two weeks after a $250 billion dollar week.Let’s annualize – that would be about $5 trillion a year in annualized issuance. My-oh-my how long can this continue?Who knows. What I do know is that this is absolutely unsustainable, it is approaching 40% of GDP annually, and yet this is what is required to keep all the balls and plates in the air as a direct consequence of our government’s decision to sponsor and permit massive financial system fraud to continue.The world’s tolerance for this will eventually end and before it does our government had better have changed their tune and cleaned up the mess, because if that has not taken place first the economic consequences will be catastrophic.Wake up America (and Mr. President); your choice is to heed the alarm clock or you will still be asleep when the ceiling comes crashing down on your head.

Little SaverAugust 21st, 2009 at 4:58 am

And all that to cover this:Bankers Craving Bonuses Fudge Loan-Loss RealityAs the 1991 GAO report declared, “The key to successful bank regulation is knowing what banks are really worth.”ès moi, le déluge. Remark attributed to Louis XV of France, and more recently to several unidentified but whealthy bank kings.

GuestAugust 21st, 2009 at 6:50 am

no, you got it wrong. “$250 billion dollar week” Treasury Auctions are done to keep Obama gov spending going. These money goes to Obama spending budget. Obama and Democrats are looting money in the capital hill to finance their spending and luxury life style.

The AlarmistAugust 21st, 2009 at 8:53 am

Does the size of Treasury auctions really matter when the Fed stands ready to “buy” it all up? The question for me is what in essence will be the rug being pulled out from underneath it all?

The AlarmistAugust 24th, 2009 at 3:41 am

But does it gap down one day to something like $1.55 per Euro and 86 Yen , or do we wake up in October 2010 and find it has slowly bled to 2.00 to the Euro and 60 Yen?

ChignosAugust 24th, 2009 at 1:15 pm

It’s a guess, but I think a very large change will come suddenly, perhaps overnight. I say that because I don’t think helicopter Ben knows what he’s doing, nor does Obama, Geithner, Paulson, McCain, Bush, Summers, and on and on.

The AlarmistAugust 21st, 2009 at 4:38 am

As if we don’t have enough to worry about, the Washington Times gives us the following alert that Big Candle has it in for us …Study: Candle-lit dinners add to pollutionBy Jennifer Harper (Contact)Originally published 02:27 p.m., August 19, 2009, updated 04:33 p.m., August 19, 2009Holy smokes. Grab the fire hose. Somebody notify Al Gore and maybe Ralph Nader. Candle-lit dinners — with the flickering flames, those delicate glows — are an unrecognized source of indoor air pollution. Really. The American Chemical Society announced Wednesday that “emission products of petroleum-based candles in nonventilated enclosed areas” are potential health hazards. Paraffin wax candles produce evocative ambience — and known human carcinogens, too.”An occasional paraffin candle and its emissions will not likely affect you. But lighting many paraffin candles every day for years or lighting them frequently in an un-ventilated bathroom around a tub, for example, may cause problems,” said Ruhullah Massoudi, a chemistry professor at South Carolina State University who analyzed the airborne byproducts of burning candles.He also suggested that some people who suffer from an indoor allergies or respiratory irritations might in fact be reacting to air pollutants from burning candles. Candles made from beeswax or soy, though more pricey, are “apparently are healthier,” Mr. Massoudi adds. He presented his findings during the society’s annual meeting in Washington.The eco-minded now have a new source of guilt. The green police have a new target, and hypochondriacs might balk at romantic suppers. The study also could have profound repercussions, perhaps, on politicians with romantic trysts on their minds, or journalists intent on wooing sources.Or not.”Well, this is interesting. But I counter that science with more science. Candles also produce negative ions, and negative ions are associated with a sense of well-being and happiness. Negative ions, positive vibes,” said Philip Gates, general manager of Charlie Palmer Steak, a lush and sophisticated eatery within a block of the U.S. Capitol.The candles at Charlie Palmer are low on the tables, snug in spring-loaded stainless-steel holders with steel mesh tops.”They’re not going anywhere. And you can’t really see the actual candles anyway,” Mr. Gates says.————————–What I really like is the way Big Eco manages to get its plug in there for Beeswax candles.Now, as long as I am going to fund your health-care, in addition to no longer drinking or smoking, I expect you to cut out that romantic candle-burning stuff as well. And no more sex. We can’t afford the babies, don’t you know?

MedicAugust 21st, 2009 at 8:52 am

If they ever do ban the release of noxious gases, then the Washington Times (and Fox News) is in deep trouble.

MedicAugust 21st, 2009 at 11:03 am

Hey this morning I was awash in “hot air”, and now I’m relegated to “noxious gasses” – boy Chignos, you are a hard person to please.How is life out on that right wing these days? Feeling lonely or is Marc Foley still keeping you company?

MedicAugust 21st, 2009 at 1:02 pm

Violated and Marc Foley in the same discussion with Chignos…….it just seems fitting (pun intended).

blindman tooAugust 21st, 2009 at 2:31 pm

u.p. et al..what troubles me is that law is a constructionwithin a framework that prohibits and perscribesinfrastructure. it dictates as rule and demandscompliance at the threat of conviction and lossof personal property, etc..the only reason “people” respect it is to the degreethat it is rational. makes sense to them.when law is written that obviously benefits , notthe “people”, but special interest’s you have enteredthe rat hole. call it whatever, it is a rat people will be driven to revolution by law. theywill not devolve to rodent status. my belief.and.. i have suspected for quite some time that here inthis country the business community has recognized thedesperate need to push legal boundaries in their financialoperations, not to get rich, but to survive. somehave done so to get rich. there is a difference and distinction and this is part of the problem as the “law”,increasingly is criminalizing financial survival. this,me thinks, has a grave impact on the civic environmentand it’s capacity to become a significant force in correcting the dire imbalances we see today.thought.

ChignosAugust 23rd, 2009 at 11:13 pm

I’m pretty sure Marc Foley isn’t lonely these days, judging from the general political correctness out there (not to mention his Congressional pension oooo la la!), but………..I wouldn’t know. Altogether which is better than I can say for you medic, or you ingrate. You two seem to have special knowledge……….or……….maybe it’s just that you’re special…….

The AlarmistAugust 21st, 2009 at 6:53 am

And this, from Bloomberg, about the average Russian venturing into day-trading is surely the sign of a coming apocalypse.‘Dummy’ Day-Traders Whipsawing Russia Signals Buy to BlackRock By Yuriy Humber and Laura CochraneAug. 21 (Bloomberg) — After a Swiss fund manager lost most of Larisa Dolgikh’s savings last year, she began buying and selling stocks from her Moscow home. Now “there are days when I don’t get up from the computer,” she said.Dolgikh, 41, an interior designer who also mediates family disputes for extra income, is part of a growing number of novice day-traders who are helping make Russian shares the world’s most volatile. This year’s six-fold surge in non-institutional trading helped push swings on the Micex to twice the level of Brazil’s Bovespa, data compiled by Bloomberg show.That’s a buy signal to BlackRock Inc., Templeton Asset Management and F&C Asset Management. More buyers and sellers makes it easier to profit at a time when shares on the benchmark Micex Index are the cheapest among emerging stock markets valued above $20 billion, fund managers said. Shares of OAO Sberbank, Russia’s biggest lender and Dolgikh’s first buy, change hands every 10 days on average versus 77 days for HSBC Holdings Plc, Europe’s largest bank, Troika Dialog and Bloomberg data show.“We like volatility because it gives us opportunity,” said Sam Vecht, an emerging-market equities fund manager in London for BlackRock, which oversees $1.4 trillion. “We recognize the markets we invest in can be volatile. We just have to time our entry and exit points.”Rising VolumesEnticed by the market’s steepest seven-month rise since 2006, almost 630,000 individuals had trading accounts as of July. They generated $1.3 billion in average daily volume in June, or 27 percent of the total for Russian shares across all exchanges, up from $220 million, or 15 percent, in January, data from Micex and Troika, Russia’s oldest investment bank, show.The change has caught the attention of Russian regulators, who attempted to reduce volatility last September by banning short selling for eight months after the market fell 47 percent in four months and lost more than $500 billion.“The increased number of retail investors on the market calls for certain changes in regulating speculative trades, spot, marginal, and short sales, as well as greater efforts to raise general financial literacy,” said Vladimir Milovidov, the head of the Federal Service for Financial Markets, in an e-mail response to questions. The agency “is actively pursuing” such proposals, he said.Internet BubbleRegulators also plan to more than triple to 35 million rubles ($1.1 million) how much capital brokerages must have on hand, a move aimed at wiping out “dubious fly-by-night” operations, Milovidov said on state television Aug. 14. Day trading in the U.S. helped create the Internet-stocks bubble that sent the Nasdaq Composite Index down 78 percent from March 10, 2000 through Oct. 9, 2002.The trend also concerns Sberbank’s brokerage, which boosted accounts by 12 percent this year and allowed online trading in July, said Andrey Golikov, who runs the service from Moscow. The firm doesn’t lend money to clients to invest.“We perfectly understand how volatile the Russian market is today and what risks this carries,” Golikov said. “Unfortunately, a large number of our population which is not well educated in financial matters will make losses.”Yulia Kotlyarova, 29, started trading in June 2008, investing 300,000 rubles while on maternity leave from her job as a financial director for a beauty salon and dentistry chain outside Moscow. Her plan was to make money “over a month or two” and then cash out.Georgia WarIt didn’t work out that way. The Micex tumbled 65 percent in the second half of 2008, nearly double the fall of the MSCI World Index of developed market stocks. Russia’s five-day war in August with Georgia and oil’s plunge from a record $145 a barrel to $34 triggered what BNP Paribas SA data show was a $300 billion August-to-March cash exodus from the world’s biggest energy-exporting nation.This year, the Micex has rallied 71 percent, the second- steepest gain among benchmark indexes for the world’s 30 biggest markets, posting its largest monthly increase in nine years in May. The measure remains 24 percent lower than a year ago.By increasing volatility, the influx of day traders creates more opportunities for more experienced investors to profit, said Mark Mobius, executive chairman for Templeton in Singapore, in an e-mail.Over the past 60 days, the Micex has been the most volatile of 71 benchmark stock indexes worldwide, as measured by the relative rate at which the price of a security moves up and down, Bloomberg data show. The measure of 60-day volatility climbed to a reading of more than 52 this week from last year’s low of 18, and has averaged 30 in the five years ending with 2007. The same measure for Brazil’s Bovespa index dropped to a two-year low of 25 on Aug. 14. Since its inception in 1997, the Micex has been more volatile than the MSCI Emerging Markets Index of stocks in 22 nations for all but five months ending January 2008.Low PricesVolatility “enables us to buy at unusually low prices and sell at unusually high prices,” said Mobius, who oversees $25 billion at Templeton. The firm had 6.8 percent of its investments in Russian stocks in June, up from January’s 5.9 percent, he said.The increase in individual speculators is a reason to be wary of Russian stocks, said James Beadle, chief investment strategist at Pilgrim Asset Management in Moscow. Day traders “appear to provide liquidity, but not sustainable liquidity,” he said.Russia’s economy provides another reason: It’s struggling to recover with oil prices at less than half their 2008 peak and a surge in non-performing loans to more than 5 percent of total in June from 2.8 percent in January. The economy shrank a record 10.9 percent in the second quarter. It may contract 5 percent this year and grow 6 percent next year, Troika forecast July 2.‘Opportunistic Trade’“Russia has become a low-conviction, opportunistic trade for many investors, leading to big swings on the upside and downside,” said Curtis Butler, chief investment officer for $400 million in emerging-market equities at Lombard Odier & Cie., in a phone interview from New York. Butler has converted Lombard Odier’s Russia and Eastern Europe fund to a Europe, Middle East and Africa fund in May and cut Russian holdings to 25 percent, below the 30 percent weighting of the fund’s benchmark index.Shares on the Micex trade at about 8 times profits, up from 3.7 at the start of year and less than the MSCI Emerging Markets index’s 18, Bloomberg data show. Benchmark indexes in China, Brazil and India trade near 32, 24 and 18 times earnings, respectively.‘Liquidity’“We like the valuations” in Russia, said Jeff Chowdhry, who oversees $1.8 billion as London-based head of emerging- market equities at F&C Asset Management and has been “overweight” the country’s stocks for six months. “We like Sberbank because there is liquidity in the system,” along with consumer stocks, he said.By focusing on day traders, privately-held ZAO Finam has become the biggest broker by trading volume on the Micex exchange. It aimed at individuals after Russia’s 1998 default because “there was virtually no one covering retail,” said Victor Remsha, who founded Finam in 1994 when he was 24 and is its chairman. Now Russia’s largest banks, including Sberbank, are ramping-up retail brokering businesses.Finam hosts seminars, some free, on stock investing in 86 Russian cities, Kazakhstan and Germany, attracting 25,000 people last year, double 2007’s attendance.‘Headless Speculators’Elena Belyaeva, 45, taught one of the Finam classes in central Moscow this month. She said she started looking at the U.S. market as a hobby around the time communism collapsed in the late 1980s after watching “Wall Street,” starring Michael Douglas.“Most students think the market owes them something,” Belyaeva said. “Our task is to make them aware of the risks and turn them from headless speculators to investors.”Artur Kroitor, 42, attended the class. He quit his job as vice president at a food trading and industrial company in April to become a trader. He got the investing bug after converting his former employer’s rubles into dollars “on a hunch” last August, just before Russia’s currency started a 33 percent tumble, making the company 7 million rubles.He hasn’t bought shares yet because “I want to learn how to drive first before I hit the highway,” Kroitor said. “The family doesn’t understand what I’m doing. They think I’ll just play around, get it out of my system, and then get a real job.”Dolgikh, the interior designer, said she started trading because she no longer trusted financial firms to safeguard her money and Finam offered the lowest trading fees. Since her first trade in March, she has increased her investments to 1.2 billion rubles from 150,000, posting a profit of about 110,000 rubles.“I’m new to this; I’m a dummy,” said Dolgikh. “I’m not really a financier or a businesswoman through and through, but I’m curious how money works.”Price fluctuations don’t scare her. “When world markets are volatile, that’s when you can make money,” she said.——————–Did you catch that??? She has 110k ruble profit on an exposure of 150b, and they almost make it sound like it might be impressive.This is the kind of crap this is going to drag the world down once again.

The AlarmistAugust 21st, 2009 at 8:45 am

Typo … 1.2b of exposure, not 150b.I hope that 1.2b is also a typo by Bloomberg, and that it is really only 1.2m of total investments … the overnight rate of roughly 7.25% on 1.2b would yield 238k roubles per day, dwarfing the 110k of “profit” from her diligent trading efforts.

MorbidAugust 21st, 2009 at 4:32 pm

This is not about investing in the future of an economy – it is pure and simple gambling. Why not go to Vegas?This is why I don’t understand why anyone would put their money into this Ponzi scheme called a market. It is nothing but legalized gambling on a worldwide scale. And some people are chronic gamblers just as there are chronic addictions of other sorts.This is a morally bankrupt system – there is no other term for it for when commodities get bid up that hurts real people everywhere. How do you people sleep at night? You are thieves! You are holocaust makers!

Ungrateful PeonAugust 21st, 2009 at 6:20 pm

If the ‘Invisible Hand’ says it’s okay, then it isn’t immoral. Our values are somehow determined by an abstract notion of an all-knowing and all-loving market – the ultimate authority of merit and goodness. It weeds-out the undeserving and rewards the worthy. Those who get hurt deserve to get hurt. The Market knows best.It’s sick, I know, but that’s Economics 101, according to free-marketeers.Religion mixed with capitalism makes for a mad brew of insanity. No doubt it eases the conscience those ‘liberty loving individualists’ who use this twisted ideology to justify their absolute disregard for others.’Holocaust’ isn’t too far off the mark, I suspect.

MichelleAugust 21st, 2009 at 9:07 pm

If you had made a fortune with your money in the past few months, would your tune change? Why is it gambling to buy cheap, distressed stocks? There’s a lot of risk involved buying stocks of nearly bankrupt companies, I know, I bought 2 companies’ stocks that were nearly worthless (pennies) on the verge of bankruptcy due to being overleveraged, but I understood the market dynamics and bought like mad. I felt like Warren Buffett must’ve felt back in the 1960’s.Do most people have the courage to buy when there’s blood in the streets? Obviously not, or these stocks wouldn’t have hit $0.23 and $0.02. Surely you can figure out how many shares one can buy when prices are this low.I said I wasn’t going to post again until January, but I couldn’t resist.

Ungrateful PeonAugust 22nd, 2009 at 12:04 am

“Do most people have the courage to buy when there’s blood in the streets?”Is that courage?I’m on a macro-economic blog for a reason.

MichelleAugust 22nd, 2009 at 8:43 am

Ungrateful Peon said:Wall Street pimp. Kool … it is what it is.Nope. Just an average Josie that is optimistic enough to look for opportunities, and they always exist, somewhere. I didn’t have to hurt anyone in the process, either.Most everyone here complains about the Wall Street banksters and their crooked ways, I just took advantage of the opportunity that they themselves created. I agree, they are crooked and now we all will pay for it, now and later.If you had read my posts over the past year, I think you will see that all I have ever done is share information with everyone here by identifying opportunities, and it’s up to each individual to take that information and do something with it. I can lead a horse to water but I can’t make them drink.

MichelleAugust 22nd, 2009 at 11:44 am

If this is any consolation, my ultra wealthy entrepreneurial brother, who can weave straw into gold, somehow missed this opportunity, too. I suppose he was too busy with his other ventures to see what was happening.

GuestAugust 21st, 2009 at 5:34 pm

“Most students think the market owes them something,” Belyaeva said. “Our task is to make them aware of the risks and turn them from headless speculators to investors.”Belyaeva is just a common fascizoid type for post-Soviet Russia who was rased on the unhealthy portions of the Voice of America and the homespun PR for “free-market economy” produced by communist apparatchiks. This tribe has the fanny idea that human beings are some sort of appendages to a metaphysical deity called “marketplace” which rewards “good investors” and punishes “bad” ones. At least the Nazis demanded human sacrifice for the idol of the nation. The “democratic” totem of the marketplace is delinked from anything human.

ChignosAugust 21st, 2009 at 7:24 am

Kohn’s arguments are propaganda. His thesis is boring left wing demagoguery. His “research” is highly suspect…….but hey, if it fits your world view, no one is likely to shake you out of your tree.

GuestAugust 21st, 2009 at 9:29 am

It would be deceptive, dishonest, and disingenuous to make summary comments on a book you haven’t read, and I’m sure you wouldn’t do that, Chignos, so would you please clarify your review? Out of the wealth of studies sited in Kohn’s book, which research did you find highly suspect, and why so? And, could you provide one example of each of what you find to be propaganda and left wing demagoguery?Or do you just recommend we all read the book for ourselves?

GuestAugust 21st, 2009 at 12:25 pm

It’s a joke I never hear liberals using demagoguery and if they do it’s moderate at best, however conservative talk radio uses demagoguery exclusively, you can forget about having any kind of scientific or factual discussion with these people and their followers – you’re simply not a good American if you disagree with them.

MorbidAugust 21st, 2009 at 4:42 pm

Chignos,I agree with you about Kohn’s arguments. They war against instinct. Any idiot can clearly see that this world is all about “Who Eats Whom!” We have become so civilized that we think we can think our way out of dealing with the opposites! What a psychological disaster. Yet all the MOG’s of the world – those endlessly hopelessly nurturing types only want to have endless unfunded Bamelot “rights”… – no matter what the costs. In nature if you don’t work to garner food you don’t eat. Why do we carry all this dead weight on the back of society. It will all fail – if not by an act of Nature, such as a terrible Swine flu pandemic then from the sheer weight of it all.

Ungrateful PeonAugust 21st, 2009 at 8:18 pm

“Why do we carry all this dead weight on the back of society.”Cry me a river.Guess who’s going to be eating WHO real soon? Wealthy parasites and their political enablers – THE 1% – are a MINORITY, lest you forgot.Nature will indeed kick into gear and correct the blatant injustices that have been imposed on the hard working, productive MAJORITY who’ve kept this financial house of cards afloat for decades.

GuestAugust 22nd, 2009 at 7:49 am

So, Morbid, YOU have read the book? Really? Please, Sir; if honesty matters, it is now incumbent upon you, since the book is filled with careful research and sound reasoning that thoroughly debunks the idea that competition is human nature, and you reject what is said in the book, to provide a simple yes or no answer: HAVE you actually READ it? IF you HAVE read it, and contemplated it, and separated the chaff from the wheat, then you can point out for us what is chaff and what is wheat. If you HAVEN’T actually read the book, then your comments can be nothing but a knee-jerk reaction based on your own personal biases – you see that as simply logical, right?

MorbidAugust 23rd, 2009 at 5:58 pm

I have read enough of this man’s book to draw my conclusions about it. The basic premise is flawed. I don’t care at all that he can point to successes in following his model. It is fundamentally flawed.The book suggests that teaching, living etc. can be done without competition (without the opposites in other words; where failure and success; winner and loser are replaced by cooperation). A kind of ant colony approach to human living where reward is based on collective performance – a form of State run socialism like the Marxist tried and failed at in Russia with their collective farms and no profit from producing food, etc. It reminded me of the purpose of what used to be the sacred Olympic games – where one learns how to integrate the opposites through the experience of victory and defeat. To always succeed is a bad recipe for integrating the opposites and thus for living life on battlefield earth.How old are you anyway that you can’t remember the failed attempts to get around suffering and poverty? Too many people smoking HOPIUM these days for my tastes.

The AlarmistAugust 24th, 2009 at 3:46 am

Cooperation exists and is in fact a bed-rock principle of capitalism when it is actioned through a free and fair exchange of goods or services between willing parties. The problem with the left’s idea of cooperation is that it is rarely free, hardly fair, and at least one of the parties is only willing at the business end of a weapon brandished by the state in the name of social justice.So if I am not willing to cooperate for the price you are offering me and yet you insist on compelling my cooperation through the apparatus of the state, it is hardly a free market or capitalist exercise.We call it like we see it.

MM CAAugust 21st, 2009 at 8:24 am

Something i stated back last December…Prime Mortgage Foreclosures Outpacing Subprime!by John CarneyIn the second quarter of this year, the largest share of foreclosures didn’t came from a type of loan that bankers and investors once believed was safe but turned out to be far riskier than anyone expected. The particular class of mortgages we’re talking aaccounted for 58% of foreclosure starts, passing the much derided subprime, adjustable rate mortgages.Since 2007, this has been a familiar story. Once safe lending practices now seem foolishly risky. Banks that thought they were engaged in conservative lending practices, discovered that default levels were higher than anyone could have imagined. Borrowers who bought homes they believed they could afford with mortgages they thought they understood, stop paying for one reason or another. The worst of the fearmongers–once deemed irresponsible and panicked by much of the markets–have been proved to have not been fearful enough.Except this time the toxic mortgages aren’t fancy at all. They’re regular old prime mortgages. That’s right. Last quarter, prime mortgages accounted for 58% of foreclosures. And among theose prime mortgages in foreclosure, the largest segment–32%–was composed of fixed-rate mortgages.As the chart below from the Wall Street Journal shows, this puts fixed-rate, prime mortgages close to where subprime adjustable rate mortgages were a year ago. Of course, the overall level of prime mortgage foreclosures is still far lower than subprime foreclosures. Just 9% of prime loans are in foreclosure, versus 39.5% of subprime loans. Both rates are still climbing.To put this slightly differently, the serious deliquencies on prime mortgages now stand where subprime were back in the third quarter of 2007. By that point we were well into what was then quaintly known as the “subprime crisis.” So it’s fair to say we’re now experiencing a prime crisis.

The AlarmistAugust 21st, 2009 at 8:49 am

How much of that spike in the prime-default’s share over all defaults is attributable to the number of sub-prime defaults drying up as the number of remaining sub-primes shrinks to nothing? Did they give an absolute change in the number of prime delinquencies?

GuestAugust 21st, 2009 at 12:19 pm

Being just an average guy living in Michigan I can tell you all of my friends and everyday acquaintances routinely discuss walking from their homes, it’s barber shop/water fountain talk and there’s very little embarrassment, shame, or guilt associated with the discussions. Most of my friends and acquaintances are my age 40 and married with kids, they’re salaries have been cut back a minimum of 20% and or they’re slated to lose jobs or have already lost their job so the conversation of walking on the home is routine. They’re all college grad 750 to 800 credit score (very credit worthy) kind of people. The you know what is about to hit the fan big time.

Average JaneAugust 21st, 2009 at 1:57 pm

Thank you for this post, Guest. I find it most helpful to receive “man on the street” information like this.

GuestAugust 21st, 2009 at 4:10 pm

IMO, things are about to break. Marcus, a blogger on Sudden Debt, said yesterday: “Just dealing with a temp employment agent today, he said his volume was down 40%.” Bad. Companies aren’t hiring.

MorbidAugust 21st, 2009 at 4:57 pm

MM CA,Lest we forget, there has been a Jubilee of sorts granted to the criminal banksters – it is known as suspending the Mark-to-Market rule. Thus all this toxic waste can be “safely” carried on the books for centuries if need be. This is BAMELOT stuff in the making and it is all done on clouds of thin air. No ground underneath anything. No opposites need arise – it is all about “up, up, up we go” for there is no “below”. As a poster noted recently (can’t find it) this is the path Summers & company have decided to follow, i.e., the Japanese lost decade(s) approach to “balancing” the books. It is all smoke and mirrors and guess what – the world goes on without a whimper. Well, those that go under whimper but who hears their cries? SCAMOLET RULES! Can you say, “Yes we can!”

ChignosAugust 23rd, 2009 at 11:34 pm

Well, isn’t there a ratio between the cost of the home you want to retire to and the amount of money it takes to retire in that home that’s viable………and one that is not?Look at it this way. If the home (and therefore the lifestyle) you want to retire to is so expensive that you go so far in debt for it……… that you can never get out of that debt………..then……………you can never save for retirement (to cover your living expenses in that home………..a new car every few years……..eating out, etc., etc.)………….. Well, at that point we’re looking at your default.If enough American baby boomers have this unrealistic expectation, and go this far into debt………you have the $USD imploding.Does this sound familiar?

GuestAugust 21st, 2009 at 8:54 am

Op-Ed ColumnistObama’s Trust ProblemPAUL KRUGMANPublished: August 20, 2009According to news reports, the Obama administration — which seemed, over the weekend, to be backing away from the “public option” for health insurance — is shocked and surprised at the furious reaction from progressives.Well, I’m shocked and surprised at their shock and surprise.A backlash in the progressive base — which pushed President Obama over the top in the Democratic primary and played a major role in his general election victory — has been building for months. The fight over the public option involves real policy substance, but it’s also a proxy for broader questions about the president’s priorities and overall approach.The idea of letting individuals buy insurance from a government-run plan was introduced in 2007 by Jacob Hacker of Yale, was picked up by John Edwards during the Democratic primary, and became part of the original Obama health care plan.One purpose of the public option is to save money. Experience with Medicare suggests that a government-run plan would have lower costs than private insurers; in addition, it would introduce more competition and keep premiums down.And let’s be clear: the supposed alternative, nonprofit co-ops, is a sham. That’s not just my opinion; it’s what the market says: stocks of health insurance companies soared on news that the Gang of Six senators trying to negotiate a bipartisan approach to health reform were dropping the public plan. Clearly, investors believe that co-ops would offer little real competition to private insurers.Also, and importantly, the public option offered a way to reconcile differing views among Democrats. Until the idea of the public option came along, a significant faction within the party rejected anything short of true single-payer, Medicare-for-all reform, viewing anything less as perpetuating the flaws of our current system. The public option, which would force insurance companies to prove their usefulness or fade away, settled some of those qualms.That said, it’s possible to have universal coverage without a public option — several European nations do it — and some who want a public option might be willing to forgo it if they had confidence in the overall health care strategy. Unfortunately, the president’s behavior in office has undermined that confidence.On the issue of health care itself, the inspiring figure progressives thought they had elected comes across, far too often, as a dry technocrat who talks of “bending the curve” but has only recently begun to make the moral case for reform. Mr. Obama’s explanations of his plan have gotten clearer, but he still seems unable to settle on a simple, pithy formula; his speeches and op-eds still read as if they were written by a committee.Meanwhile, on such fraught questions as torture and indefinite detention, the president has dismayed progressives with his reluctance to challenge or change Bush administration policy.And then there’s the matter of the banks.I don’t know if administration officials realize just how much damage they’ve done themselves with their kid-gloves treatment of the financial industry, just how badly the spectacle of government supported institutions paying giant bonuses is playing. But I’ve had many conversations with people who voted for Mr. Obama, yet dismiss the stimulus as a total waste of money. When I press them, it turns out that they’re really angry about the bailouts rather than the stimulus — but that’s a distinction lost on most voters.So there’s a growing sense among progressives that they have, as my colleague Frank Rich suggests, been punked. And that’s why the mixed signals on the public option created such an uproar.Now, politics is the art of the possible. Mr. Obama was never going to get everything his supporters wanted.But there’s a point at which realism shades over into weakness, and progressives increasingly feel that the administration is on the wrong side of that line. It seems as if there is nothing Republicans can do that will draw an administration rebuke: Senator Charles E. Grassley feeds the death panel smear, warning that reform will “pull the plug on grandma,” and two days later the White House declares that it’s still committed to working with him.It’s hard to avoid the sense that Mr. Obama has wasted months trying to appease people who can’t be appeased, and who take every concession as a sign that he can be rolled.Indeed, no sooner were there reports that the administration might accept co-ops as an alternative to the public option than G.O.P. leaders announced that co-ops, too, were unacceptable.So progressives are now in revolt. Mr. Obama took their trust for granted, and in the process lost it. And now he needs to win it back.

ChignosAugust 23rd, 2009 at 8:56 pm

Call out the National Guard, “the progressives are in revolt!” Obama isn’t the Messiah after all!(what a revolting development)

GuestAugust 21st, 2009 at 9:00 am

Green Shoots? This is magic accounting as if they were all Houdini… NO JOBS! Housing Crashing, Insolvent Banks! on and on….The Consumer Has Dug in His HeelsBy Bill Bonner08/14/09How do you like this recovery? Pretty good, huh?Except for the jobs, of course.And except for the retail sales.And except for the foreclosures…and house prices. And incomes. And consumer prices. And business profits.It’s like a female impersonator…just like a real woman in every way, except for the essential ones.At least stocks are doing well. The Dow rose another 36 points yesterday. In terms of time, it’s already beat the bounce of ’30…it’s in its sixth month. In terms of stock prices, it’s still a laggard, however. US stocks are up about 45% from their low of 6,547 on the Dow. By that measure, the current reading of 9,398 falls a little short of the 50% increase registered five months after the ’29 low.Yesterday’s news was a big disappointment for mainstream economists. It’s ‘back to the drawing board,’ says The Wall Street Journal.The dumbbells were already celebrating the end of the recession. Just yesterday, we reported on a survey of 53 of them. They figured the stimulus was working and the recession was coming to an end.Even the Fed seemed to think so. The Washington Post headline: “Fed views recession as near end.”But here at The Daily Reckoning summer headquarters we were doing some more painting yesterday……which means, we were doing more reckoning…We don’t know when the recession will end…but we’re dead sure that those 53 economists interviewed by Bloomberg…and those at the Fed too…don’t know either. Few of them seem to have any idea what is really going on.And now comes news that the economy is not recovering as planned.“Even with Cash for Clunkers retail sales fall,” reports The New York Times. Retail sales were expected to go up in July. Instead, they went down.Bummer.Economists also expected unemployment numbers to go down. Instead, they went up in July…and last week, 558,000 people filed for unemployment benefits – up from the week before. That brings the total to 6.7 million jobs lost since the downturn began in December ’07.Oh…and what’s this? Foreclosures hit another record high in July…making the third new record in the last five months.This is a “recovery that only a statistician could love,” says another Washington Post headline.You can prove anything if you torture the numbers enough. But if you need a job…or need to sell your house…or refinance your mortgage – good luck to you!And here…in the spirit of summer…of warmth and camaraderie…we would like to offer the above-mentioned economists a little help: Pssst….it ain’t a recession; it’s a depression.Since 1945, the US economy – and much of the rest of the world economy – has been carried on the backs of American consumers. First, they spent money they earned during the war years. Then, they spent money they earned in the big boom of the ’50s and ’60s. And then they spent money they hadn’t earned at all. They borrowed from future earnings…increasing total US debt from just 120% of GDP in the ’70s…to 370% of GDP in 2007.In the last 15 years of that period, especially, each time the consumer showed a reluctance to continue spending, the feds rushed to give him more credit. And during the final five years – the Bubble Epoque – debt doubled.Now, the consumer has dug in his heels. He’s not going a step further until he unloads his excess baggage of debt.Once again, the feds are trying to stimulate him. The Fed’s key interest rate is practically at zero. The feds are pumping money into the economy as fast as they can. And they’ll give a fellow up to $4,500 if he’ll agree to kill his old car. The Cash for Clunkers programs seem cruel to us auto enthusiasts, but they have been popular, all over the world (more below.) But what good do they do?Even with the stimulus spending…and the stimulating low interest rates…he’s still not willing to add debt. Of course, this is just what happened in Japan. The public sector spent; the private sector saved. Net result: an on-again, off-again recession that has lasted almost 20 years.That’s a depression. It’s a point where the model no longer works. Look, how could the US economy recover? It’s a consumer-led economy, so the consumer would have to spend more money. But he’s not earning more money. He has no prospects of earning more – not with 10% unemployment and a punky economy. So, the only way he can spend more is by borrowing. Ergo, the only way the consumer economy can grow is by adding more consumer debt. Is that possible? Could the ratio of debt-to-GDP go to 400%…500%…to the moon?Well, we’ve weren’t born yesterday. We’ve been around long enough to know that almost anything is possible.This morning’s news tells us that the federal deficit through July comes to $1.27 trillion. We didn’t think that was possible. And despite this inferno of new debt…the 10-year Treasury bond yields barely 3.6%. We never thought that was possible either.So, anything could happen. But generally, government stimulus only works when it is not needed. That is, it only works when it goes in the same direction as the underlying trend…not against it. Just like you can make a sailboat go faster by unfurling the sails, you can speed up an expansion by offering more and easier credit.But now, the underlying trend has reversed. It’s no longer a credit expansion; it’s a credit contraction. The consumer has had his fill of debt. He’s cutting back on his spending and paying off debt. That’s what the July figures show. That’s been the history of entire downturn. That’s why it’s a depression, not a recession. It’s a major change of direction that will take years to accomplish. Now, stimulus is not only useless – since it is against the major trend – its counterproductive. It delays and contradicts the adjustments that need to be made.But wait. We know what you’re thinking – that the Cash for Clunkers program is a success, because it encourages consumers to buy. See. Sometimes central planning really works, right? Yes, and if you look no further than the auto sales figures for proof, who can argue? Alas, a centrally planned economy is a perverse thing…where every positive statistic has the crumpled up bodies of tortured numbers buried beneath it. Take away the ‘free money’ from the feds and there’s nothing left. No real increase in demand…just a temporary demand based on a temporary and unsustainable stimulus.Encouraging people to buy too much was what caused the problem in the first place. Encouraging them to buy more now is not a solution; it’s just a continuation of the same flawed policy of stimulating consumer demand…a policy that has been in place for decades.But now the wind is blowing in the other direction. The government may not like it, but they can’t stop it.

GuestAugust 21st, 2009 at 9:08 am

Retail sales will be better than expected in Q3 in my opinion. Last weekend, my local mall was packed, and people were buying. Back-to-school sales will show a rebound, and will be yet another green shoot.

SoftwarengineerAugust 21st, 2009 at 12:26 pm

Retail Sales Down in July

GuestAugust 21st, 2009 at 11:13 pm

Shares Plunge on Weak EarningsHOFFMAN ESTATES, Ill. (Aug. 20) – Sears Holdings Corp. said Thursday that it lost money in its second quarter, dragged down by store closings, severance and pension plan costs and lower sales. The retailer that owns Sears and Kmart stores lost $94 million…

GuestAugust 21st, 2009 at 9:47 am

Global Trade Collapsing, China Now Japan’s Top Trade Partner Zero Hedge 08/20/2009The Japan External Trade Organization has released its latest trade figures, which paint a grim picture for foreign trade by the world’s second largest economy. Year to date imports have dropped by 31.9% to $252.9 billion, while exports have plunged 36.8% to $252.2 billion. Most stunning is the disclosure on trade flows with the United States: exports to the US have dropped by 43.5% to $40.5 billion, resulting in Japan’s largest positive trade balance. Another development is that China has now replaced USA as Japan’s primary trade destination. However that is not saying much: trade with China has declined for the 8th consecutive month. The last fact is among the primary reasons why the Chinese Central Bank has blown a credit bubble of epic proportions in order to mitigate the unprecedented collapse in Chinese trade with its traditional trade partners.

GuestAugust 21st, 2009 at 10:07 am

“stagnation”…”the long emergency…”Wisdom From The Geese | Sudden Debt 08/20/09I was at the beach yesterday, watching a large flight (gaggle?) of geese aloft a perfectly blue sky circling and weaving, forming and breaking up, apparently preparing for their long trip south. So soon? Is the summer already over? I puzzled. But of course it is, came the answer embroidered in beautiful sky-swirls, at least if you are a cautious migratory bird.And thus came the thought that, after a spring of economic thaw and a summer full of green shoots and blooms, there may come an autumn chill and a winter of discontent. Why do I think so? In a word, because of “crisis”.Crisis here, crisis there, crises everywhere. The world is awash in “Crisis”, the word liberally slathered onto every news item and analysis. In my discussions with shopkeepers and small business owners (I always talk to them to get a sense of the real economy) it invariably pops up: “…it’s the crisis, you know..”, and they shake their heads. But they always go on to say that they expect things will get back to “normal” next year, next season, next whatever cycle they operate on. When I ask them why, their answer is based on only two items: (a) hope and (b) the recent performance of financial markets, a.k.a. the Dow Jones Industrial Average. (Ain’t propaganda grand, in all its modern ticker-tape manifestations?)Well, I think it is entirely misleading to describe the current state of affairs as a “crisis”. The term denotes a sharp, but short-lived condition leaving behind an aural after-taste that everything will be OK pretty soon. Particularly, when combined with talk about massive doses of monetary and fiscal sauce being poured over the cooked goose of the economy.Instead, we should be using a terms like Stagnation or “The Long Emergency” (note: I am NOT fond of Mr. Kunstler’s tirades and expletive-laden tent-revival style. But this book is not half bad).Let me give you reality from the trenches – well, the sand dunes…· At the same beach I met a regional sales manager for a huge global telecoms equipment manufacturer. Sales in his region are down a whopping 75% from last year and he sees signs of only a very modest uptick in 2010, say 5-10%.· Two weeks ago I was at a very popular vacation spot and shopkeepers and restaurant owners told me that while visitors were down only about 10%, their sales collapsed a whopping 35-45%. People are still going on vacation for the most part but they are cutting down very sharply on extras like souvenirs, impulse purchases and fancier meals.Yet, financial markets are basking in the sun and blue skies of summer…And that’s precisely the contrarian wisdom of the geese: if you know that winter is to come start your trip south when the weather is good, not when the storms are already upon you. Otherwise you are very likely to end up on a rocky coast as a pile of smashed feathers and bone.

GuestAugust 21st, 2009 at 11:58 am

All solutions have been to preserve creditors and increase debt loads, you would have to be a complete fool to believe we’re not heading for a much bigger collapse than we’ve already experienced I just hope it’s about a year away so I can prepare as much as possible.

The AlarmistAugust 23rd, 2009 at 1:24 pm

Wrong. The solution has been to make the financial intermediaries bullet-proof from any responsibility for the losses they have passed on to the real creditors. Very few, if any, bonuses have been clawed back to compensate for the fraud that was perpetrated, and in fact it looks like they are doubling down based on the good results they’ve had this year.Funny how the top banks are showing “profits” that by and large are less than the amounts of the losses they would have had vis a vis AIG if it had not been stuffed with cash, and now they crow as if those marvelous gains are the result of their financial genius rather than sheer luck that they found an even bigger patsy the second time around.

MorbidAugust 21st, 2009 at 5:08 pm

I find it true about people still going on vacation – but they are cutting out the extras. I am on the Oregon coast and you see it here. Several restaurants have gone out of business because of a lack of traffic! Overall the servers say business is down 60% from last year.

GuestAugust 22nd, 2009 at 12:19 am

I know this isn’t fully rational, but when I am on vacation, I won’t buy any souveniers or other stuff, because I don’t want to be dinged for an airline bag fee. The airline bag fee infuriates me, but rather than complain I simply don’t buy any extras while I am traveling.

MorbidAugust 21st, 2009 at 5:22 pm

Medic,Good luck with your “plan.” Nobody in power will listen – thus welcome to taxation without representation.Here is a good example of a little community trying to do non-profit health care.Yachats Clinic To Close Oct. 1

The Yachats Community Health Clinic will close on Oct.1 after eight years of providing service to south county residents and visitors.Board President Bonnie Derrick issued a statement on Thursday that the “closure is due to the difficulties in obtaining payments from Medicare, Medicaid and other insurance companies in a timely fashion.”Derrick also said that this was a very difficult decision for the board. “We regret that we are unable to continue as a non-profit facility,” Derrick said.The Yachats Community Health Clinic was founded by Yachats residents who wanted a non-profit organization to provide quality, affordable, non-discriminatory health care.

Average JaneAugust 21st, 2009 at 6:58 pm

A lovely, keep-it-simple idea. And one, I might add, that was working way back when I was 19 and got my first job. That was 30 years ago. Companies could “afford” to pay 100% premiums for their employees, defined benefit pension plans were still around, and I never worried about what someone else was doing or not doing to take care of themselves. Back then a lot of the health insurance companies were not-for-profit.Now twenty to thirty percent of our health care insurance premiums go to administrative costs, people. That means bonuses for the execs and dollars for the big investors. It is, ipso facto, a private tax on all of us. So these private insurance companies are taxing We The People out of existence but nobody talks about that.I’ve heard people tell me many times that they don’t want to go to the doctor for a checkup for fear of the doc finding “something else wrong with them.” Meaning costly office visits and useless tests. I just went to the eye doc a couple of weeks ago and it cost $384 for a five-minute pressure test.Something has got to give, and soon.

GuestAugust 21st, 2009 at 8:11 pm

So when providers cannot get paid from the new (gov’t)public option, many specialists and hospitals will go out of business. Except the gov’t will dictate who will stay open and who will close.

MedicAugust 22nd, 2009 at 5:44 pm

Guest -We already don’t get paid. The Medicare system in my state owes my hospiatal (and all others in the state) for 3-4 years in the rears.Until someone steps up and says, “we need everyone to contribute”, the system won’t work and will be underfunded. It’s not the bureaucracy that kills these programs, it;s the lack of funding because the whole burden is placed upon the working class.Medicare and social security caps need to be removed so that people who make more than $100K / yr will continue to contribute. And if we do implement universal health, it will need to be funded by taxing (that’s right, I said it) something that everyone uses so that we all pay into the system, not just those who work.Right now, there are all kinds of health care facilities (especially mental health facilities) that are closing because funding has dried up.See, it’s not because of a poorly run, bureaucratic system – it’s because of an underfunded one.

MedicAugust 22nd, 2009 at 5:47 pm

Wow. I need to type slower….The state medicaid system is the one I was talking about, not Medicare.Mea Culpa,Medic

GuestAugust 23rd, 2009 at 9:20 am

Cut out the bureaucratic system and it won’t be underfunded. The gov’t wants to get control of the system to redistribute away from providers who in many cases have spent significant time and money learning their profession and create additional bureaucracy to suck up any savings that may come from the new program. At the end of the day, those that cannot afford to pay(including illegals) will still get healthcare on the back of the middle class.

The AlarmistAugust 23rd, 2009 at 1:28 pm

Actually, things might be better if your hospital could turn away anybody for fear of non-payment, but that is too much for even me. And so we socialise the costs.

ChignosAugust 23rd, 2009 at 9:05 pm

Get the lawyers to quit trying to practice medicine (tort reform). That’s the first step. Absent that, all “reforms” are bankrupt.

MedicAugust 24th, 2009 at 7:55 am

Chignos -Like the spaghetti sauce commercial – IT’S IN THERE!!You can’t have realistic reimbursement and treatment when patients have unreasonable expectations. Legal reforms should be put into place to protect providers from frivolous lawsuits.

GuestAugust 21st, 2009 at 10:51 am

Bernanke: We saved world

wethepeepleAugust 21st, 2009 at 11:02 am

You created the disaster! Arsonist puts out fire! Let someone else give out the accolades. We should be very suspicious of anyone handing out gold medals to themselves.

GuestAugust 21st, 2009 at 11:27 am

“We need not feel the truth that law is but usurpation; it was introduced without reason, it has become reasonable; it is necessary to cause it to be regarded as authentic, eternal, and to conceal the beginning of it if we do not wish it to come soon to an end.” PASCAL, Pensees (Havet ed., 1897) I, 39.What creature is this Federal Reserve System that birthed upon the shores of Jekyll Island in 1913? Who bade this creature to stalk the land? It is not federal. There are no reserves. The Federal Reserve Banks are not banks. Are we, who declared our Independence with our blood, forever to be its pawns, to fear its power, to feed its greed, to pay with our failed businesses, our unemployment, the wholesale foreclosures of our homes– this power that shows no mercy, that profits without responsibility, without production? That consumes our land?“Forbid it, Almighty God!”“The Creature has grown large and powerful since its inception on Jekyll Island. It now roams across every continent and compels the masses to serve it, feed it, obey it, worship it. If it is not slain, it will become our eternal lord and master.“Can it be slain? Yes it can.“How will it be slain? By piercing it with a million lances of truth.“Who will slay it? A million crusaders with determination and courage.“The crusade has already begun.” G. EDWARD GRIFFIN, The Creature from Jekyll Island: A Second Look at the Federal Reserve, 1994, p.588.

GuestAugust 21st, 2009 at 11:35 am

this is just because of those processes that support the survival of the structure (e.g. the company) at the cost of its ‘disposable components’ (the individual)

blindmanAugust 21st, 2009 at 2:10 pm

g,(not gigolo) but guest.the term “get away” comes to mind. but be awarethat the technique and plan for “getting away” isdependent on the nature of the violation and theexisting environment extant at the time of said”get away”. i say that to say… sometimes a “get away”could be termed a conversion or epiphany if, say,the world collapses on you and reality is revealedand recognized. good fortune indeed, and high daughter says i’m post modern, she hates that, but i don’t know what that means.? i’ll google it later along with the question concerning hollow bird bones and blood production andthe 11 year cycle of the expanding and contracting solardiameter as this may shed some light on the contrary orcontradictory nature of our evolution in that the sameprocesses that cause life to exist in the first place alsowill destroy it in short measure. funny, or tragic orboth.

GuestAugust 21st, 2009 at 11:43 am

Read Nat Hentoff—your life may depend on it.Jewish World Review August 19, 2009I AM FINALLY SCARED OF A WHITE HOUSE ADMINISTRATION by Nat Hentoff | I was not intimidated during J. Edgar Hoover’s FBI hunt for reporters like me who criticized him. I railed against the Bush-Cheney war on the Bill of Rights without blinking. But now I am finally scared of a White House administration. President Obama’s desired health care reform intends that a federal board (similar to the British model) — as in the Center for Health Outcomes Research and Evaluation in a current Democratic bill — decides whether your quality of life, regardless of your political party, merits government-controlled funds to keep you alive. Watch for that life-decider in the final bill. It’s already in the stimulus bill signed into law.The members of that ultimate federal board will themselves not have examined or seen the patient in question. For another example of the growing, tumultuous resistance to “Dr. Obama,” particularly among seniors, there is a July 29 Washington Times editorial citing a line from a report written by a key adviser to Obama on cost-efficient health care, prominent bioethicist Dr. Ezekiel Emanuel (brother of White House Chief of Staff Rahm Emanuel).Emanuel writes about rationing health care for older Americans that “allocation (of medical care) by age is not invidious discrimination.” (The Lancet, January 2009) He calls this form of rationing — which is fundamental to Obamacare goals — “the complete lives system.” You see, at 65 or older, you’ve had more life years than a 25-year-old. As such, the latter can be more deserving of cost-efficient health care than older folks.No matter what Congress does when it returns from its recess, rationing is a basic part of Obama’s eventual master health care plan. Here is what Obama said in an April 28 New York Times interview (quoted in Washington Times July 9 editorial) in which he describes a government end-of-life services guide for the citizenry as we get to a certain age, or are in a certain grave condition. Our government will undertake, he says, a “very difficult democratic conversation” about how “the chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care” costs.This end-of-life consultation has been stripped from the Senate Finance Committee bill because of democracy-in-action town-hall outcries but remains in three House bills.A specific end-of-life proposal is in draft Section 1233 of H.R. 3200, a House Democratic health care bill that is echoed in two others that also call for versions of “advance care planning consultation” every five years — or sooner if the patient is diagnosed with a progressive or terminal illness.As the Washington Post’s Charles Lane penetratingly explains (Undue influence,” Aug. 8): the government would pay doctors to discuss with Medicare patients explanations of “living wills and durable powers of attorney … and (provide) a list of national and state-specific resources to assist consumers and their families” on making advance-care planning (read end-of-life) decisions.Significantly, Lane adds that, “The doctor ‘shall’ (that’s an order) explain that Medicare pays for hospice care (hint, hint).”But the Obama administration claims these fateful consultations are “purely voluntary.” In response, Lane — who learned a lot about reading between the lines while the Washington Post’s Supreme Court reporter — advises us:”To me, ‘purely voluntary’ means ‘not unless the patient requests one.'”But Obamas’ doctors will initiate these chats. “Patients,” notes Lane, “may refuse without penalty, but many will bow to white-coated authority.”And who will these doctors be? What criteria will such Obama advisers as Dr. Ezekiel Emanuel set for conductors of end-of-life services?I was alerted to Lanes’ crucial cautionary advice — for those of use who may be influenced to attend the Obamacare twilight consultations — by Wesley J. Smith, a continually invaluable reporter and analyst of, as he calls his most recent book, the “Culture of Death: The Assault on Medical Ethics in America” (Encounter Books).As more Americans became increasingly troubled by this and other fearful elements of Dr. Obama’s cost-efficient health care regimen, Smith adds this vital advice, no matter what legislation Obama finally signs into law:”Remember that legislation itself is only half the problem with Obamacare. Whatever bill passes, hundreds of bureaucrats in the federal agencies will have years to promulgate scores of regulations to govern the details of the law.”This is where the real mischief could be done because most regulatory actions are effectuated beneath the public radar. It is thus essential, as just one example, that any end-of-life counseling provision in the final bill be specified to be purely voluntary … and that the counseling be required by law to be neutral as to outcome. Otherwise, even if the legislation doesn’t push in a specific direction — for instance, THE GOVERNMENT REFUSING TREATMENT — the regulations could.” (Emphasis added.)Who’ll let us know what’s really being decided about our lives — and what is set into law? To begin with, Charles Lane, Wesley Smith and others whom I’ll cite and add to as this chilling climax of the Obama presidency comes closer.Condemning the furor at town-hall meetings around the country as “un-American,” Harry Reid and Nancy Pelosi are blind to truly participatory democracy — as many individual Americans believe they are fighting, quite literally, for their lives.I wonder whether Obama would be so willing to promote such health care initiatives if, say, it were 60 years from now, when his children will — as some of the current bills seem to imply — have lived their fill of life years, and the health care resources will then be going to the younger Americans?

MorbidAugust 21st, 2009 at 5:46 pm

Rationing is the only sane way forward – like it or not.If you have the means to go beyond the “ration care” model – you will live a few more years.In the end we all die – let’s pass on the baton to a healthy group of youngsters – whose health is not encumbered the sucking sound of costly and endless life prolonging procedures for the elderly.It is a rare moment when I agree with Obi – but here is one of them.

Average JaneAugust 21st, 2009 at 7:16 pm

Frankly, Morbid, I’d like to see you support the idea of euthanasia for those of us who’d rather go out peacefully instead of needlessly suffering the machinations of the religious health care system to keep us alive. I personally witnessed the most awful measures employed by the Catholic hospital where my Mom suffered for two solid weeks in massive pain because the religious health care providers in her rural town (by the way, that’s the only hospital in that area, so no “choice” for her) just couldn’t get past the idea that they couldn’t relieve her pain because “God would take her when he’s ready.” It would have been a blessing for our family to have had the option to give her some kind of drug cocktail that would have relieved her suffering, but no. It was unconscionable. We treat our domesticated pets better than our suffering elders. I never ever want to go through the experience of sitting next to my Mom for days and days, completely powerless to do anything because the nurses refused to administer morphine, while she literally moaned every time they moved her, without her being able to speak, eat or drink.Get out there and get fight for legislation to make euthanasia legal, Morbid. That’ll solve that pesky problem of elder health care.

GuestAugust 21st, 2009 at 8:17 pm

Perhaps we can start with the 75 year olds and tweek the age lower as more savings and efficiency are needed. As Obama once said “I don’t believe we can take into account a persons spirit”. Make it an arbitrary # starting with members of gov’t and expand to the general population as needed. Perhaps lawyers next.

GuestAugust 21st, 2009 at 10:23 pm

Let’s think about what’s really happening to our elders. They become aged and unable to care for themselves, so the family places them in a nursing home or assisted living facility. Once there, this continuous care helps ensure a prolonged life, whether the patient wants it or not.Decisions that were once made by the elder and his/her family are now “transferred” to the “institution’s” staff, and the elder gets sucked into the “system”. Forget about allowing our loved ones to die with dignity as personal choices become fewer and more complicated as the “system” now is Big Brother.I am faced with the decision of placing my mother in a nursing home or hiring an aide to come into her home each day as she has Alzheimer’s and multiple health issues and having a harder time functioning day by day. If she stays at home, she can make the decision to live out her last days at home, knowing that someone won’t always be there to “save” her. On the other hand, if she’s institutionalized, she risks living a longer and increasingly less productive and satisfying life, of which she would never want.As children, we want the best for our parents and loved ones, and often when faced with these difficult choices we don’t always see the big picture. We almost always will chose life for our parents, even though they may not even remember our names and can’t feed or bathe themselves. These heart-wrenching discussions seldom, if ever, take place with our families, and we fail to see how easily it has become for the elderly to live well beyond their natural life once they get into the “system”.

GuestAugust 21st, 2009 at 11:05 pm

About 7.4% of Americans aged 75 and older lived in nursing homes in 2006; fewer than 16% of the 85-plus population were in such facilities in 2006. Baby boomers take care of their own at home.But, of course, now that the oldest of the 79 million baby boomers turned 63 this year, the number of people over the age of 65 will nearly double by 2030 to about 71 million, and it’s really time to start bumping them off. After all, just because they paid into Medicare and Social Security all their working lives is no reason they should collect it.I just can’t wait for my Obamacare, can you?It’s time to bear arms, old folks. You’ve still got ‘em outnumbered!I know one thing about you socialists who want “the best” for your loved ones. You sure are killing off Roubini’s readers.

GuestAugust 23rd, 2009 at 9:26 am

Guests are an under represented minority on this board and I think we need to band together to stop SWK from prosecuting us.

MorbidAugust 23rd, 2009 at 5:35 pm

This process of “keep reducing the age to balance the books” is exactly what the Social Security process is now doing. They keep raising the age for maximum starting benefits in order to reduce the outflow. It is anticipated that the balance point will be about 85 years old, i.e., by the time most people have died – then the inflow will match the outflow.How hard is it for all you compassion card carrying members of the liberal agenda to realize that there is no free ride. Sure, you can screw with the system and create temporary advantage with your vote buying agenda targeted towards the poor but ultimately all suffer a horrible consequence. We are approaching that mounting ObamaNation of Desolation moment. 9 Trillion more and counting. When does the world say “Banko” and give the USA a resounding the middle finger.

kilgoresAugust 23rd, 2009 at 11:01 pm

Morbid:Liberalism is about compassion, but not on the basis of some misapprehension of the need to appropriate funds to pay for that compassion. The government of this country is about more than simply enforcing contract and property rights. It is about promoting the general welfare of all its citizens, not merely maximizing the profits of private concerns. Liberals believe in appropriation of funds through progressive tax policies that require the wealthiest among us to pay for a greater share towards the realization of the public good, and not in mindless deficit spending in furtherance of hopeless and impractical pipe dreams to actualize their compassionate idealism.By contrast, the extremism that has come to dominate so-called “conservative” thought in the past 30 to 40 years not only reflects a selfish lack of compassion based some misguided notion that there are no disparities in liberty due to differing socio-economic standing among citizens, but also postulates that the only legitimate function of government is to enable to the fortunate few to aggrandize and consolidate their wealth and political power at the expense of the greater public good. The pseudo-conservative representative doesn’t think twice about irresponsibly pandering to voters by cutting taxes while at the same time approving government expenditures at the behest of lobbyists to benefit only the wealthiest individuals and entities in this country, as long as these self-serving politicians will be assured the financial support required to hold onto their office and the prestige and power that comes with it. Compassion for the average American is not, for them, a matter of substantive principle to be put into actual practice, but merely of cynical manipulation of public opinion through hot-button sound bites and outright disinformation to ensure their own re-election.Comments of some posters in previous threads on this blog have rejected the role of democratic principles in the formation of our government, and instead have sought to re-write American history by postulating that the Founding Fathers favored, and sought to implement, an anti-democratic republican model of government in which only the privileged should have a right to rule. It is, in essence, an disingenuous attempt to justify a return to a form of feudalism in which the only legitimate purpose of government is to protect the disparate concentration of economic and political power in the wealthy from the legitimate demands of the lower and middle classes to share in the nation’s prosperity and to participate meaningfully in its governance. This preposterous “conservative” idea is utterly repulsive and repugnant to everything America is about, and should never be left unchallenged by anyone who believes in fundamental fairness and justice.SWK

MorbidAugust 23rd, 2009 at 5:49 pm

AJ,I hear you about the end-of-life business. Join the Hemlock society. When YOU sense it is time to pull the plug – have at it. They give you a little vial – a sip and soon you are gone. Check it out.At this point in my life I have no intention of being a part of the problem that sucks up huge $ to keep me going a few more years. I’ll pull my own plug.

GuestAugust 22nd, 2009 at 8:50 am

“I know one thing about you socialists who want “the best” for your loved ones. You sure are killing off Roubini’s readers.”Maybe the readers aren’t here because:1) It’s summertime, read: vacations2) The negativity on this board has it’sopportunity costs3) Maybe they’ve stopped using their previous identity and started posting as “Guest” to avoid attacks.

GuestAugust 22nd, 2009 at 10:23 pm

And maybe it’s because the right-wing BS has infiltrated this blog?It’s the right-wing, after all, that has the money to pay for their minions (faking grassroots organizations etc.). Clearly, however, they are hell-bent on keeping all the rope for themselves, and may they put it to use for only their selves!

ChignosAugust 23rd, 2009 at 11:47 pm

Hey SWK, don’t you think the founding fathers recognized a need for a balance of power between those who would have a pure one-man-one vote democracy and those who would have an oligarchy of the rich ruling the poor?It’s called a republic. It’s not a democracy. Do you believe in it? Can you keep it?

kilgoresAugust 24th, 2009 at 12:12 am

I never have described the United States government as a democracy. I have said it is a republic based on democratic principles. Those who are afraid to place governance in the hands of the whole of the people are those who are fearful of the establishment of laws, institutions such as public education, and other innovations that inhibit the dominance of and abuses by the economic elite. A republic without democratic principles is simply a vehicle for tyranny.SWK

GuestAugust 21st, 2009 at 11:49 am

hmmm…according to the news the recession seems to be over for France and Germany.Except that it surely is not because of some “cash for clunkers” style programs as claimed in some news articles. But it is of course always easy to feed what-ever to people who live 1000’s of miles from these countries.Anyway…made me wonder if these news about those two countries are the reason why also USA is now saying something like:Bernanke: U.S. Economy Near Recovery then I would like to see if the eurozonians will start increasing the interest rates, would USA try that also?And would the UK economists scream madness to try to influence eurozone to not do that?

GuestAugust 21st, 2009 at 4:00 pm

What Happens when the Hot Money Ends? | Nathan’s Economic Edge | August 21, 2009Wondering where the fuel for the recent rocket shot is coming from? Well, as Point put it, “The New York Federal Reserve bought a record $5.6 billion in agency debt today. There’s your fueld for the equity fire today.”Fed buys record $5.6 billion in agency debtNEW YORK (MarketWatch) — The Federal Reserve Bank of New York bought $5.605 billion in housing-agency debt on Friday, the biggest purchase since it began buying debt in the sector in December in the hopes of capping mortgage rates. It bought about half of the $11.209 billion offered to it by bond dealers, which analysts noted was rather high. The large purchase is a big switch from recent operations, which have slowly gotten smaller. Analysts hypothesized the central bank may have been trying to stretch out its purchases over a longer timeframe to improve the effect. “The size of today’s purchase will lead many to pay greater attention to the next pass to see if the Fed is increasing the speed at which it purchases Agencies…”

GuestAugust 21st, 2009 at 5:21 pm

More Green Shoots!Deficit Projections Upped By $1.9 TrillionJoe Weisenthal|Aug. 21, 2009, 4:02 PM|19Earlier this week it came out that this year’s deficit numbers would be reduced by about $262 billion. But bad news long term. The Obama administration is upping its 10-year deficit forecast to $9 trillion from $7.9 trillion over the next two years.And of course they waited until end-of-market on Friday to do it, though we can’t blame them for that.

Winston SmithAugust 21st, 2009 at 8:01 pm

“I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country; corporations have been enthroned, an era of corruption in High Places will follow, and the Money Power of the Country will endeavor to prolong its reign by working upon the prejudices of the People, until the wealth is aggregated in a few hands, and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war.”-Abraham LincolnFrom, “The Continued Fleecing of America

GuestAugust 21st, 2009 at 9:58 pm

In my opinion there is going to a somewhat of recovery in quarter 4 2009 and quarter 1 2010, though retailers wouldn’t necessarily cherish this recovery. The reason being the quarter-over-quarter from previous year is likely to improve, in the sense that the economy really took a plunge last-year-last-quarter and that plunge would be hard to beat this 4th quarter, thus making the economy grow again. Similarly would be the case in q1 2010, after which the growth will become flat or negative again, as consumer spending remains subded for a long, long while (maybe a year, 2 year, or 5, 10 years). The most important thing we must look forward to my friends are, the month-over-month consumer spending figures: If they are largely flat, or negative, it could mean we’re going Japanese, and the subdued may be a reflection of that. So, in essence, the demand will be weak, but because it was so depressed 14 2008, it will show that it has grown from that period.

GuestAugust 21st, 2009 at 10:04 pm

Besides the GDP for the third quarter was revised for 2008. It can be a very calculated move on part of the govt, in the sense that, that the contraction then can imply growth now, when it could have been a contraction now if that number wasn’t revised. How in the hell did such a large correction come about so suddenly…all this could mean that growth resumed in q3 2009, and probably there is going to be more growth for the next two quarters, after which the economy flattens out by q2 2010, and turns slightly negative by q3 2010, and remains at those levels for years to come….

GuestAugust 21st, 2009 at 10:14 pm

Professor RoubiniYou are syaing that the recession will last the year, which means GDP q4 2009 is going to be worse than q4 2008, which at the present time seems unlikely. What you seem to have discounted , an L-shape might very much be a reality, but it won’t precisely be a L, it will go upwards and flatten out, like a square root, and remain that way for years. The fact that the consumer is subdued, and so is the CPI, is the greatets indicator of that. Govt will think that it can spend its way out of this, but the underlying consumer behavior is not going to be all the hush-hush that the govt says, it is going to depend on what he feels in his life, whether he could get that loan, whether his assets are worth very low, and so on….so the goverment can reorganize demand, say take it away from other carmakers and give it to GM, but it is hard to think of how it can increase it…

GuestAugust 22nd, 2009 at 12:13 am

I guess how the consumer “feels” is an apropos measure, as in how the caged animal “feels.” The debt cage doesn’t appear to be lifting any time soon; I suspect that it’ll be at least one generation before people become accepting of the new caged realities. But, there will be no more of yesterday. Another massive brainwashing by TPTB will be undertaken…

Wild BillAugust 22nd, 2009 at 4:31 am

How about a cap and trade system for health care. Every citizen receives a fixed dollar amount which they can use or sell as needed. Prices would be determined by the market through a regulated exchange. Whaddaya think?

GuestAugust 22nd, 2009 at 7:04 am

How about a system where healthcare is provided for everyone for an affordable reasonable flat fee, but where no discussion exists about whether everyone is or should be entitled to healthcare. In other words a system where this is provided, not because it has been deemed a right of some sort, but simply because that is just how it is done.

GuestAugust 22nd, 2009 at 7:06 am

…it is actually not that different from current U.S. military spending. How much “discussion” is there actually on whether the military is entitled to all that money?

GuestAugust 22nd, 2009 at 7:07 am

…or how much discussion was there on whether the financial institutions were entitled to the government help…

GuestAugust 22nd, 2009 at 11:36 am

You always here stories about the American traveling abroad. The American experiences a nasty fall or has the onset of some health problem. The American receives free or very cheap medical care in this foreign land.American traveling abroad should be denied health care in foreign lands unless they pay exorbinant fees. What is good for the goose is good for the gander. You can bet that a conservative would be enraged by an American hospital providing care to a foreigner.

GuestAugust 22nd, 2009 at 3:49 pm

And I’d add that they should also be faced with filling out a ton of paperwork that the insurance companies just love (yeah, right, the government is king when it comes to paperwork, not always!).

The AlarmistAugust 24th, 2009 at 8:59 am

Actually, I have a European friend who had shortness of breath while in Telluride, and one night in the local hospital and $8,000 she was deemed to be fine, though the MRI they did (which she had never had in Europe) found a small defect in one of the heart valves. Oh that dreadful US medical system strikes again.

Mother of GodAugust 22nd, 2009 at 8:11 am

There aren’t any Socialists posting on this board.You all know that I have no money – not one thin dime to waste, but even so, I’m willing to bet 5 precious bucks that there isn’t a single Socialist posting on this board.Speak up, all you Socialists out there: prove me wrong and win 5 easy bucks!(for obvious reasons, this offer can’t and doesn’t apply to persons who respond as ‘Guest’ or ‘anonymous’, and only goes for people who have been posting up to now.)

GuestAugust 22nd, 2009 at 8:32 am

For you non Socialists out there; get your comments in early and often, because in the future disent will not be tolerated

.you too smart, generous and compassionate to be broke. one time offer..act now while supplies lastAugust 22nd, 2009 at 10:08 am interpretations”It was seen as an allegory of the cold war”[64] or of French resistance to the Germans. Graham Hassell writes, “[T]he intrusion of Pozzo and Lucky […] seems like nothing more than a metaphor for Ireland’s view of mainland Britain, where society has ever been blighted by a greedy ruling élite keeping the working classes passive and ignorant by whatever means.”.ps. give me an address and i’ll send you 50 bucks, who everyou might be as i have enjoyed your posts and merely postedrelated “post modern” threads of notions in return.pss. we are all post modern socialists but it is all semantics.cultural power is power by means of superior accomplishment,specifically, the capacity to overrun the language and terminologythat would be used by any group attempting to coherently resist.orwellian double speak makes for scattered comprehension regardsthe capacities of the masses. so it is not about words. itis about reality but we live in word based reality? waiting forprinciples to emerge from stark reality. very dangerousnonsense i say. we are playing in someone else’s mud at this point and we don’t see it. i guess that is “life” / post modern.?signing off,grateful for the clarityand inspiration, all around..

I hope I'll have time someday to say why i am not taking you up on your kind and generous offerAugust 22nd, 2009 at 10:24 am

And then…right smack dab in the middle of a world poised to eat us all alive…there is…You.You…make me want to wear dresses.

.you too smart, generous and compassionate to be broke. one time offer..act now while supplies lastAugust 22nd, 2009 at 10:49 am

i,i thought you wouldn’t and the locals might likethe dresses, but only you would have any reliableimpressions.peas.

kigoresAugust 22nd, 2009 at 12:09 pm

I’ve said I’m not a socialist repeatedly, but that doesn’t preclude others from calling me one. This doesn’t mean I don’t support social safety net programs such as Social Security, Medicare, Medicaid, and other government expenditures deemed to be in the public interest, nor do I believe that the government should never become involved in the operation of commercial enterprises. Sometimes, e.g. when the FDIC takes over failed banks temporarily before selling them back to the private sector, government ownership and control of commercial enterprise is a necessary and good thing. By definition, a socialist believes that the government should own all means of production in every industry at all times, and I don’t embrace that view.SWK

The AlarmistAugust 24th, 2009 at 3:56 am

When you see the system tilting to the statists and your own grip weakening, even if only slightly, then the rational move is to join the Party. Doesn’t matter whether or not I would personally advocate it, only that it is inevitable and who am I to stand in the way of Progress?We are either Socialists or fodder. I choose therefore to be a socialist.Like it or not, give me your 5 bucks so I can put it to good use for the benefit of society in ways that only we in the Party are worthy of determining.

kilgoresAugust 24th, 2009 at 7:13 pm

You forgot the liar part. So you’re not a socialist. A National Socialist, perhaps, but not a socialist.SWK

.August 22nd, 2009 at 9:24 am

All pairs in the play show a lack of compassion — sometimes brutally, as when the main characters, always looking at the advantage to themselves, seek to kick, instead of help, Pozzo, who is calling out piteously for help over and over again. Is the island, with its single tree, a place of purgatory in which the pairs eternally await an expression of compassion for their fellow, as one evildoer expresses towards the Christ on the Cross? Is Godot in fact not a man but a personification of compassion that only arrives when created in the breast of man himself?The boy comes to say that Godot is not coming just after Didi and Gogo in focus have behaved with particular selfishness and callosity. The boy (or pair of boys) may be seen to represent meekness and hope before compassion is consciously excluded by an evolving personality and character, and may be the youthful Pozzo and Lucky; in which case, Lucky would be the brother allegedly beaten by Godot.[dubious – discuss] That would make Pozzo Godot, but, since both of the main characters also beat Lucky, they, too, are Godot.[dubious – discuss]Thus Godot is compassion and fails to arrive every day, as he says he will. No-one is concerned that a boy is beaten.[83] In this interpretation, there is the irony that only by changing their hearts to be compassionate can the characters fixed to the tree move on and cease to have to wait for Godot.The leaves on the tree may signify decades or even centuries of circumlocution, like a prisoner counting off days of imprisonment. The men, like the pair crucified with “the saviour” (id est, Jesus Christ), find themselves fixed to a tree and faced with the certainty of death and the uncertainty of life. If one was compassionate, his destiny would be different to the other, for he would await the “saviour” for life;[dubious – discuss] the other would await the opportunity for exercising compassion, which is the purpose of human existence.[dubious – discuss]Finally, it has been seen to explain the famous plot in which nothing happens: nothing is lack of compassion and empathy for one’s fellow on earth — a failure to love, which makes life pointless, whatever is pursued and however long one lives. This nothing, to the pair, seems infernally eternal. At many points in the play, there are opportunities for compassion to be shown, as in leading the blind Pozzo, which would have spirited the tortured souls away from the tree no longer as two but as four.[dubious – discuss] The repeated answer that they cannot leave because they are waiting for Godot would not apply because they would recognise that he is already there and has eternally ended his hold on them. If there is a message in this play, under this interpretation it could be the uncomplicated one that loving others is the purpose of each day of life, and the alternative is to await the next day to avoid a futile existence.

Mother of GodAugust 22nd, 2009 at 10:08 am

There are moments in life that are so beautiful they bring loveleaks to my eyes. This is one of them…

Mother of GodAugust 22nd, 2009 at 10:34 am

Did I hear Adam Smith’s invisible hand mentioned? Would you like to read what has always been left out of that conversation?a draft of Chapter 5, a joint venture of my teacher and myself:Reviewing the main point. Money ceaselessly, automatically, unjustly drifts from all to ever fewer, from earners to non-earners. This causes the global catastrophe of war, crime and violence, crescendo-ing soon in the grand symphonic climax of global extinction, pan-species suicide and murder, eternal oblivion, perpetual planet snowstorm with frozen bodies under snow and ice and cloud.Money is the opposite of water. Rough water levels if left alone. Smooth, level money gets ever-rougher if left alone. Money, like fire, is a good servant and a perfectly vicious, brutal, sadistic master. And money is still our master. Our present and past situation with money is comparable to a state in which humans can make fire but cannot prevent every fire turning into an all-consuming conflagration.And worse than such a situation, humans are unable, in the case of the conflagration of money, thanks to the pleasure principle, even to see the conflagration and its cause. Like the people who throw cigarette butts or have beach fires and then read in the paper of a forest fire and never connect the two events. This ceaseless, automatic drift is caused by legal and illegal theft.Legal theft is invisible to people because of myopic, false optimism of seeing, and exaggerating, the little upside and not seeing, or minimizing, the far greater – and soon total – downside. Most of the illegal theft is caused by the automatic conflagration of money, by legal theft, into the very hot fires of fighting over giant money heaps and the very black landscape of extreme underpay.Extreme underpay is a very powerful stimulus to crime. The Mafias and Triads are born from poverty. Those who are not crushed by extreme underpay, those most energetic and ruthless, rise from the bottom to the very top of the social pyramid or tack or bonfire. Those who are tough enough to rise from the bottom have less and less trouble rising through the softer, easier, higher levels of the social heap of inequality. From the bottom of Sicily to the top of American society in a few generations. When they reach the top, they start to soften over a few generations, and then start to fall in front of the new toughest, ever-rising from the toughest bottom. Thus the unequal society is highly unstable, excessively dynamic, anarchic, perpetually convulsed, almost made of crisis. The same thing happened in Russia and in France. The Monarchy got soft, and the next toughest mobsters took over. The loving communists were swept aside. In America, the noble founding fathers were replaced.Everyone is forced to oppose the rise of those lower, lest they take our place, and everyone is crushed and robbed by the power of those above. The higher in the heap, the more intense and desperate the fight. The lower in the heap, the greater the crushing weight. Those at the top have the greatest opportunity and drive to legalize thefts, so there are many legal thefts in the unequal and inhuman human society. The laws are in the hands of the most vigorous thieves. The true governing is held up by the intense, ceaseless fighting for the extreme overwealth and power at the top. Hard to be patting the people on the head when you are constantly engaged in a swordfight with six opponents. History shows that leaders have squeezed the weakest to finance their wars at the top. The ones at the top are very few, the opponents rising from the vast sea of underpaid are very many, so fighting concentrates at the top, and the falls from the top are a constant stream through history. The costs of defending overpay are always going to be greater than the overpay, because the attacks on overpay go on until the overpay is gone.Contrast with this, the just society with justly limited fortunes, where no one is being oppressed from above and no one is being attacked from below. This is the simple, simple lesson of history we have not yet learned. There is hope in the fact that the lesson is so simple. The lesson is so easy to learn, we may learn it any day.There is also the opposite of hope in the fact that the lesson is so simple. If we can’t learn such a simple lesson after thousands of years of historical examples are shouted at us, what chance is there of us learning it today?But, again, there is hope in the fact that this present time is the first time in which mass education has been allowed by those controlling human fate. Today literacy, tomorrow economic savvy. This may simply be the very time in which mass realisation of the lesson of history naturally occurs. It has to come some time. Thousands of years of history drilling into the human mind may break through any time. We must not assume we know how much sense and grit there is out there in humans. We must always hope that there is enough, or that one day there will be enough.This is also the first time in history that we have been able to compile good broad data. Rulers good and bad have been working in the dark, without good data. This is the first time that we have had the information to enable us to discover that we have pay, increase of fortune, from US$1 to US$1 billion for a fortnight’s work, from 1000th to a million times the world average pay.Human happiness will always be proportional to the number of people who have a grasp of the important realities. Nothing else will make a difference. If it takes us 1000 years, if it takes us a million years, that is better than the alternative, which is going on forever, or until extinction, in this catastrophic history of unnecessary suffering. We must simply strive to get a correct understanding of the vital points in our happiness as soon as possible. If we have any love for ourselves and any others.There was a time in history or prehistory when people got mass realisation of the benefits of a law against murder, and that law has added its measure of happiness to human life ever since, and there is no one who is campaigning for the removal of the law against murder. No doubt the idea of having a law against murder grew from a centre or centres, and spread by word of mouth.It is wrong to believe that humans can never agree about anything. All our customs and laws imply a general agreement regarding them.There will be a time in history, if we have enough time before the escalation of tension releases enough smoke to block out the sun, that people will generally realize the far, far greater benefits of justly limited fortunes for the individual’s limited contribution…there will be a time in history when people realize that unlimited reward for what is necessarily limited contribution is gross theft of money from 99% and gross theft of happiness from 100%. Legal murder killed thousands, legal theft kills millions and injures billions. Therefore the human will to outlaw legal theft will be thousands of times stronger than the human will to outlaw murder, when we become conscious of legal theft.Imagine a swimming pool of strange water, which has the unusual habit of leaping up into ever-greater crests, causing troughs, and imagine that it reaches the point where the crests are a million times the height of the level water, and the troughs are a 1000th of the height of the level water, and 90% of the water is in the crests, 90% of the water is above the level height of the water, 99% of the pool is below the level height of the water, and 90% of the pool is between a 10th and a 1000th of the level height of the water. Extreme discomfort for all, extreme difficulty of enjoying a swim. This is an accurate portrait of our present fiscal ocean. The only reason we haven’t seen it before is our evolutionary tunnel vision, looking at life through a straw, thinking we see when we see only a part.If a steel plate is brought down on this mess, this far worse than a perfect storm, the water is forced to be far more level. No crests crashing to troughs, no troughs rising to crests, no ever-worse seasick surface. Water deep enough to swim in for all. Instead of the water jumping up out of the pool, the would-be crests are forced to go sideways, and to fill in troughs. No people falling to their deaths from crests, no people languishing in too-shallow water.Two more examples of legal theft, of this strange fiscal water leaping up and up ever-higher. Inflation and scarcity.Inflation caused by increase of the money supply relative to the size of the social pool of products of work devalues the rest of the money. The same amount of workproducts, with a larger amount of money, means the money is spread thinner over more goods. Each dollar buys less. It is a sneaky tax. Lord Keynes states this without making it clear that it is legal theft, the mother of global catastrophe. An inflation caused by increase of the ratio of money supply to the pool of wealth impoverishes the people, forcing them to borrow from the banks, who are given the money created by the inflation. So the governments, or the governments’ puppeteers, steal from the people and then lend it back to them at interest.There seems to have been no economists who have been willing or able to make this crystal clear. Economists tend to be establishment. And the economists who are pampered by the ruling classes, given greater status by the ruling class, and who are therefore over-trustingly most respected by the people, are of course those who soft-pedal the thefts against the people. Henry George and Frederic Bastiat are the main examples of journalist-economists who are impartial and just. And they are sidelined by the establishment economists. The war between the overpaid and underpaid is in words first, is in swords only when words fail to deceive. ‘Swords’ are more expensive and involve a backlash. Words can defeat the people without the people knowing, which saves the backlash costs.Keynes was truthteller enough to point it out, but too establishment to draw attention to its great importance, its injustice and violence to society.Scarcity. There are those who argue that the market is the best mechanism for justice. And they are right that the invisible hand of the free market is a very useful, automatic tool for the adjustment of supply and demand. If the ratio of supply to demand goes up, prices fall, and supply drops. If the ratio of supply to demand falls, by increase of demand or decrease of supply, prices rise, ideally drawing in more suppliers seeking the greater profits, and the ratio returns to moderation. This is the invisible hand, the automatic adjustment of supply and demand. And it is superior, more efficient and cheaper, than state control of supply and demand.But economics has been reluctant to admit and describe its failures. It has been supported by those wishing a free hand to make unlimited profits. The overpaid and overpowerful have invoked the freedom of the market, the value of the invisible hand, to inhibit the intervention of government in the failures of the invisible hand to provide justice. The governments have been in the hands of the overpaid, and the governments have therefore generally failed fully and adequately to prevent the gross injustices of the free market, although the purpose of government is justice, since the very existence, and the life quality, of everyone in the state depend entirely on it. The powerful have had a free hand to subvert the working of the invisible hand, and to profit from those cases where the invisible hand fails to work for justice, and from those cases where the invisible hand can be manipulated to work for injustice.Thus, in the beginning of the industrial revolution, when cheap labour was desirable, the rural life of the people was strangled by the grabbing-up of rural land by the land-rich and power-rich, forcing people into the cities and factories in such oversupply that labour was dirt-cheap, and children were working 10 hour days in evil conditions, and profits were enormous. The invisible hand would have operated to reduce the labour supply and raise wages, but the rural alternative was closed to the people. The people were enslaved, herded into the cities. Protesters were massacred. Inequality of money breeds inequality of money. Inequality always grows. Money is power, power is money. Britons, singing ‘Britons never will be slaves’, were enslaved even more. This forced the people in self-defense to organise, form trade unions, and struggle for many decades for an enlargement of their far-too-small share. Then the unions became powerful enough to get into bed with the ruling classes, including the Mafias, and start robbing the workers.In the 19th and 20th centuries, the lower classes gained back some of their rights by organising. The same pattern is seen and will be seen in the relation of the first world and the third world. The third world countries will increasingly organise amongst themselves and thus gain ground against the ruling countries. We can already see this in the oil-producing countries, and to a smaller extent, in the coffee producers and banana producers. The Latin American left is organizing, unifying. In Honduras today, while the world’s attention is focusing on the circus-clown coup desperately clinging to power at the top, the well-organized people are bringing it down. Continuing rough seas for all.Again, in the beginning of the 19th century, the ruling classes created scarcity by preventing grain imports in times of low supply of grain, in order to profit from high prices.Today, the ruling classes promote large farms, which are far less productive than small farms, and promote government subsidies not to grow food, in order to profit from the manipulation of the market to inhibit the free working of the invisible hand in adjusting supply and demand for foods. Higher profits and more starvation. Small-farm Sudan and China are 30 times as productive per acre as the big-farm USA. (See World Book of Rankings.) In the Philippines, for one example, small farmers are being coerced off the land to make big farms, which will increase scarcity of food, and thus increase profits and starvation. Again, these farmers have nowhere to go but the cities, and make labour starvingly cheap. The poor are ever being forced to pay unnaturally high prices for food, keeping them poor and enslaved. The ruling class has ensured that the invisible hand works for them. Scarcity has been created because the law of supply and demand means that a small ratio of supply to demand means high prices, big profits, big legal theft, big violence, anarchy. Anarchy is best taken to mean extreme range of political power. We thus have anarchy, the decline and fall stage of the human empire.When the social system of extreme overpay and underpay has crumbled society, we have order, egalitarianism, the absence of tyranny and slavery, but historians call it anarchy, dark ages. The fall of extreme rich-poor society is the rise of egalitarian order, as we can see from the fact that the so-called dark ages were the mother of the social order of the later times. In the so-called Dark Ages, the Irish had their egalitarian golden age, when the boast was that a princess could walk the length of Ireland wearing all her jewels and not be robbed or molested. Social organisation was able to rise again out of the dark ages, when the fall of the rich-poor society had led to egalitarianism, the soil of re-growth. Every empire has been strong and grown, though small, in its egalitarian beginnings, and has been weak, and fallen, though large, in its tyranny-slavery end. The state built on injustice cannot stand. To have a sustainable human empire, to avoid the endless cycle of growth and bust of all empires so far, with vast unnecessary suffering and violence, we have to bow to the good sense of equality, justice, control of legal theft. We can smooth out the murderous rollercoaster of history by recognizing the simple sense of maximum fortune, which puts a totally effective limit to all forms of theft, legal and illegal, which puts a limit to the growth of tyranny and slavery, of violence and endless escalation of violence.Economics has recognised and admitted the invisible hand, without recognising and admitting and studying its failures and manipulations by ruling classes. In the occasional absence of monopoly, the invisible hand tends to reduce prices where there are big profits by drawing in other profitseekers, willing to get a share of the market by lowering prices. But economics has never focused on the limitations of the efficiency of the invisible hand. It has never for instance explored the implications of the time interval for the invisible hand to operate. In the time period between the emergence of a new high-profit product, and the slow reduction of prices by competition, there is a time period of decades in which high profits are being made, in which legal theft is operating.And economics has never recognised or admitted that the invisible hand brings prices towards justice without ever arriving. The closer the prices get to justice, the more slowly prices move towards justice. As the difference between price and total costs becomes smaller, there is less incentive for competing sellers to lower prices to get a larger market share. Several competitors may coast along forever getting prices still above total costs.The fact of legal theft should not be in dispute. It is obvious from the fact that some are increasing ‘their’ fortunes by up to US$100 million per day. The description here of the mechanisms of legal theft is only to reinforce the point which should have been obvious to all and should have been opposed by all.New technology always offers golden opportunities for legal theft and acceleration of violence. New technology is necessarily a situation of small supply and high demand. Everyone wants the new product, whether machine-made clothing, electricity, cars, or computers. And the supply is limited as long as the industry is setting up and growing towards meeting demand.And, especially with new technology, people have no idea of the costs of providing the product.And people are excited by the novelty, and are therefore careless of cost.And the patents associated with new technology are monopolistic. Japan has a two-year limit on patents, whereas the rest of the world has had 70-year limits on patents. A patent that may have cost the person 10 years of work to create is a license to legally steal from the social pool of wealth for decades. The developers of the Tetrapak carton are richer than the British queen. Entrepreneurs and inventors who would have returned to work on new ideas are lost to production for 70 years of overpay. The sacrifice in producing ideas is only the time spent by the individual. The sacrifice, and therefore the just reward, is not properly measured by the size of the impact on society. The sacrifice is justly measured by the worktime. Market forces greatly overpay and underpay for invention, which net impairs invention, greatly. Besides, size of impact on society cannot be measured. Therefore size of impact cannot be used to justify egregious overpayment, with its consequent accelerating violence.Monopoly of course means freedom to get high prices. Depressions are caused by monopoly extracting overprices till the people are poor, causing boom and bust. The stockmarket booms with the monopolistic high prices, and then busts when the nation has exhausted its money, and monopolistic profits can no longer be taken.The depression is a mini-parallel with the rise and fall of empires. Concentration of wealth. Extreme wealth and poverty. The free play of legal theft. Legal theft makes many poor, driving them to borrow, which means they give aid to the lenders in the form of the excess of the sum of the repayments over the loan. In the unlimited-fortunes society, poverty makes poverty as surely as money makes money. In the 1930s depression, there were many rich, spending up large, because they happened to get out of the stockmarket before the bust, and could then buy things at the deflated prices.Even governments have been wise and impartial enough to see the legal theft in monopoly, and to take partially effective steps against it. But even governments, who have been clear that monopoly is wrong, have been unable to root out every element of monopoly from society. They are lucky if they are powerful enough to inhibit the grossest appearances of monopoly, despite the political muscle of the biggest monopolists. But what of the subtler and smaller degrees of monopoly? There is a limit to which a government can economically search out all the price cartels and monopolies. And what of implicit price cartels, where the competitors, without formal agreement among themselves, decide to prefer to share the market rather than grab a bigger market share by lowering prices closer to fair return? The costs of government investigating all businesses for too great a gap between company income and outgo are prohibitive, and are politically uphill in unlimited-fortunes systems. But setting the just maximum fortune prevents with one swipe all forms of legal theft, all the products of thieving ingenuity, past, present and future, from getting out of hand.Again, in new technology, the advantage of the headstart of the first in the field means that they have financial power to buy out competitors, to undersell them into bankruptcy or cheap sale, and so on.The market, with unlimited fortunes, can never claim to serve justice, and thus to serve the survival of states and the welfare of humans. Largely because of payment for scarcity, which is clearly not payment for contribution to society by work. Scarcity is not work. It takes only an annual average profit rate of 36% a year to turn 5 million into 50 billion in 30 years. It is the scarcity of PCs that has enabled the Bill Gates super-overfortune, not his work or talents, real or assumed.It takes only a 7.2% interest rate, and 100 years, to multiply money 1000-fold. Without self-work. With others’ work.One need only create or obtain a unique and desirable item, in order to get a license to take from the social pool of wealth without putting in by work. A highly desirable work of art, a rare stamp, or a desirable license plate, and the person has a license to eat without working. Forcing many others to work without eating. Forcing everyone to be embroiled in violence, war and crime. Forcing everyone to finance the ever-greater cost of invention of ever-greater weaponry, and to finance the repair of all the destruction.People are not prone to giving money to strangers in return for nothing. Therefore it takes only people seeing that they are giving billions to strangers in return for nothing, for them to stop.Giving money to the underpaid is not giving money in return for nothing, it is giving money for sacrifice made, it is increasing justice and decreasing violence, increasing quality of life.It is only confused ideas that stand between people and peace and happiness. Why is it that it has occurred to so few that they are working fulltime, and billionaires are working fulltime, so there has to be gross legal theft? One of the many ways that people have been bamboozled and confused into accepting wealth and poverty are the various excuses for higher-than-average hourly pay: responsibility, business risk, experience, skill, merit, talent, brains, brawn, beauty, ‘hard work’, etc.In the next chapter we will look closely at this aspect of the matter.We need only a broad social grasp and acceptance of the reality of legal theft to reap an almost infinite harvest of human happiness. Our happiness must increase by as much as the happiness would increase if a government stopped stealing most earnings off most people and giving it all to 1%. Because the global unlimited-fortunes system is stealing most earnings off most people and giving it all to 1%.It is an example of our psychological bias to seeing little things and overlooking big things, seeing branches not the tree, that we can see the Great Train Robbery and not see the annual theft of US$70 trillion. If we can learn to see the annual theft of US$70 trillion, every family can get on average US$70,000 a year more of their earnings, and 100-fold happiness.The increase of happiness we can have is proportional to the injustice we have. We have super-giga-astronomical injustice.

Ungrateful PeonAugust 22nd, 2009 at 12:04 pm

Thank-you MOG. It’s generous of you to share. What would be the market price of this wisdom, I wonder?Priceless.

GuestAugust 22nd, 2009 at 12:30 pm

OMG MOG!Nobody is stealing anything, we give it to them willingly. People need to start standing up and fighting back.

MichelleAugust 22nd, 2009 at 1:23 pm

What a bunch of nonsense regarding small farms being more productive than large farms. Do you know what the yield per acre is here in the USA? Do you? I do. Do you know how efficient some of these commercial growers are and how many mouths they feed? I know, I’m from a family of commercial growers, huge by the way. Absolutely HUGE! Food prices would be astronomical if the yields weren’t as high as they are here. Give me a freaking break and do some real research.

GuestAugust 22nd, 2009 at 3:44 pm

Let’s revisit this when petrochemicals become scarcer (and as time goes forward and such operations’ lands have become even more depleted). It’s about sustainability, and the big corporate farms have only been around for about 50 – 60 years (most are products of the old weapons manufacturers- outlets for their ammonium nitrate).Folks at Weston Price and USA Acres, and many others, would disagree with you Michelle. They HAVE proven greater efficiency/output on smaller farms: intense, organic, growing. And then there’s Joe Salatin, who has one of the best models approaching sustainability that exists.”[…] control food and you control the people.” – Henry Kissinger

MichelleAugust 22nd, 2009 at 5:00 pm

Yield per acre, in a monoculture farming system which the large farms employ, is much higher than a smaller, diverse crop farm. Total output, which is a different measure than yield per acre, is many times greater on a small farm, which makes perfect sense. If I’m farming only 5 acres, I’ll be sure not to waste a single yard of planting space and even home gardeners know how to effectively optimize limited space.Crop rotation is still a must, as is developing new fertile virgin ground, greatly improving yields and decreasing fertilizer costs. New varieties are also tested and grown on these larger farms (and not necessarily the genetically-engineered varieties) resulting in potentially higher yields. Organic crops can easily be grown by these large operations as they can obtain large swaths of land in remote locations, produce large quantities, and further drive down organic food prices.One key point to consider is vertical integration, and commercial growers’ operations have evolved over the years where processing and distribution is handled by these same growers, thereby decreasing overall food costs.Both small and large farms are necessary but it really comes down to what the farmer desires – a lifestyle or a business operation. Small farmers can go large if that’s what they desire, and the barriers to entry are few. I come from a long history of farmers, large and small, and there’s room for both to make a decent living.

Mother of GodAugust 22nd, 2009 at 5:41 pm

Oddly (and fun?) enough, I am harvesting, sorting, washing, blanching, peeling, chopping, cooking, sealing …and literally filling the freezer with – produce (and spicy zuccini soup, and stuffed peppers, and zuccini bread with walnuts)…so all can say for right now is this:check me out

MichelleAugust 22nd, 2009 at 6:15 pm

And good for you! They say eating processed food is bad for your health. Shopping in a supermarket can be dangerous with all the evil food staring at us down every aisle.Quit the job, buy a farm, grow and raise your own food, cook from scratch, slaughter your own steers, hogs, and chickens, learn taxidermy, food canning, and spinning your own cotton, and maybe we can put these darn commercial farmers out of business and we can all go back to the “good ol’ days.”

Mom ofAugust 22nd, 2009 at 7:49 pm

Please, oh please, that’s so unfair – please don’t don’t try to put words in my mouth. I would be the last person on earth to suggest what you said there. I was ONLY explaining I can’t type now because I really truly am VERY busy and working my buns off while the produce is fresh.

GuestAugust 23rd, 2009 at 4:33 pm

Of course he/she doesn’t know the answer to your questions. What MOG writes is a bunch of ill-informed nonsense.

Mother of God says good morningAugust 23rd, 2009 at 7:35 am

I collapsed into sleep late last night after another day of full-on, non-stop food preparation and preservation, and I dreamt that green peppers learned to type. One of them got on the internet and outed me for whacking apart vegetables of all kinds…

GuestAugust 22nd, 2009 at 11:29 am

So what. A secret plan to get everyone covered, and to release employers from the burden of paying healthcare cost for their employers. Does that frighten you?

kilgoresAugust 22nd, 2009 at 11:51 am

The underlying assumption of your comment is that governmental involvement in commercial activity necessarily crowds out 100% of the private sector. This is not true. For years, there have been publicly funded or subsidized hospitals sharing the market with private hospitals. The establishment of a ubiquitous public education system has not kept private schools from being created and flourishing. The delivery of parcels by the United States Postal Service has not kept Federal Express or UPS out of business.Another inaccurate suggestion in your post is that a public option would lead to “free” health care for all. Everyone would pay for available basic health care benefits under a public option through a progressive system of taxation. Only the poorest Americans and those with substantial disabilities would receive “free” care, and they should.SWKSWK

GuestAugust 22nd, 2009 at 12:32 pm

There will still be great private schools and great private healthcare. But will be less accessable to the poor. The rich will say you have an option, so stop trying to access my exclusivity. Upward mobility will be far more difficult. (Unless you want to work for the gov’t)

GuestAugust 22nd, 2009 at 12:44 pm

Your post makes more sense in the present tense, so here is the rewrite:There are great private schools and great private healthcare. But it is less accessable to the poor. The rich say you have an option, so stop trying to access my exclusivity. Upward mobility is very difficult. (Unless you want to work for the gov’t)

GuestAugust 22nd, 2009 at 10:52 pm

by your argument, poorest American should receive “free” public options on higher education (college degree), housing, utility, food, clothes, everything, and “they should”? you are a lunatic.

Mother of God loves living in a world that has kilgores in itAugust 23rd, 2009 at 7:59 am

…and in my dream, green peppers learned to type words like ‘lunatic’, but they never even began to grok what that teacher in Logic 101 was on about…

GuestAugust 23rd, 2009 at 9:35 am

First you need to be deemed a minority.Then get aid as a foreign student.Denounce the very system that allowed you gain such advantages.Then spend 900k+ on sealing your records.Don’t be one of the “poorest Americans” be one of the poorest non-Americans, works for many in the USA.

GuestAugust 23rd, 2009 at 7:58 pm

Hey, I know, what about I take all your wealth from you and then we say that we’re starting from scratch?And after about 150 years I’ll then say that you can have some “assistance”!Head starts make quite a difference. But the rich never want to admit that they had that head start (the oligarchy in the US is as entrenched as any group in history). If I start a business that doesn’t have any competition and I am able to operate for 150 years, yeah, I’d like that!

GuestAugust 24th, 2009 at 4:22 pm

You sound bitter. When I had less and wanted more, I did more. Stop complaining and compete. Or should we give you 4 strikes instead of 3? Why?You could try to take my wealth but I won’t give it up.

blindmanAugust 22nd, 2009 at 12:58 pm a secondAn international row is brewing over the Greenwich Meridian line. The Americans want to change the whole way the earth’s time is managed…Scientists at the Royal Observatory in Greenwich say an American idea of changing the way we manage time, would mean the Meridian line would no longer be the basis for international time keeping.They also worry that the earth’s time could drift out of sync with solar time and that would affect astronomers and satellite operators.Hull-based astronomer Tony Scaife says, historically, rows over ‘lost time’ have been the cause of major upsets. “A new calendar was constructed, new clocks and new standards were set and ten days were removed from the calendar.Could this be bad news for Cleethorpes?”This applied to different countries at different times. In Britain it was 1752. This had actually caused riots on the streets back then because people thought they had ten days removed from their lives, which of course wasn’t true. It’s just simply a measure of time.”Time passes whether we measure it or not, but we like to know precisely where we are in our orbit at any one time.” added Mr Scaife.The Americans want to get rid of leap seconds but it is claimed that this would create chaos for astronomers and satellite operators…………repeat…”This had actually caused riots on the streets back then because people thought they had ten days removed from their lives,”..if this is true and it seems possible, it just makes mewonder. wtf?but, maybe they were correct to protest and riot? could it bethat by controlling the calendar and time one could removedays from others lives? wtf?i’ll stay tuned for further developments!.pps. and i’m gonna keep my eye on this guy!. ??? financial transactions to satellite navigation, we rely on everyone on the planet agreeing on a unique, precise timestamp. Get the time wrong and money and lives could be lost. The responsibility for ensuring we all keep the right time rests with Dr Dennis McCarthy, the world’s director of time.More than anyone, Dr McCarthy appreciates the need for the world’s population to be synchronised. But for those who don’t spend their working day checking atomic clocks, why is knowing the time so important? Think for a moment about how the GPS satellite navigation system comment: “is time money or not”? etc…

GuestAugust 22nd, 2009 at 3:53 pm

Actually, shortening up the calendar DOES have an affect on the little guy by reducing the various warranty coverages: it’s like auto manufacturers who calibrate their odometers to read high, which, when done across millions of vehicles, ends up saving them quite a bit.

blindman tooAugust 22nd, 2009 at 7:21 pm

g,have you entered the absurd zone with me or areyou just flirting with the threshold? it is lonelyout here. i would like, need is a strong word, to know.not to mention the humorous recollections available topersons so deviated from the mainstream. take for examplemy dear mother, not literally as we would both be absurdist in her own way i am sure.and wouldn’t you know some one else, a perfect strangerreally, wrote a song that described her and me actuallymore perfectly than it could have been factually depicted.speaking of absurd. perhaps this will have you reflectingabout your own…. first kiss..TOM WAITS lyrics – First Kiss.She drove a big ol’ Lincoln with suicide doorsAnd a sewing machine in the backAnd a light bulb that looked like an alligator eggWas mounted up front on the hoodAnd she had an Easter bonnet that had been signed by Tennessee Ernie FordAnd she always had saw dust in her hairAnd she cut two holes in the back of her dressand she had these scapular wingsThat were covered with feathers and electrical tapeAnd when she got good and drunkShe would sing about Elkheart, IndianaWhere the wind is strong and folks mind their own businessAnd she had at least a hundred old baseballs that she’d taken from kidsAnd she collected bones of all kindsAnd she lived in a trailer under a bridgeAnd she made her own whiskey and gave cigarettes to kidsAnd she’d been struck by lightning seven or eight timesAnd she hated the mention of rainAnd she made up her own languageAnd she wore rubber bootsAnd she could fix anything with stringAnd her lips were like cherriesAnd she was stronger than any manAnd she smelled like gasoline and Rootbeer FizzAnd she put mud on a bee sting I got at the creekAnd she gave me my very first kissAnd she gave me my very first kiss.( note: this next part does not exist on my copy? forsome absurd reason it it is here? maybe i just block itout for some freudian reason? )Talking ’bout my little KathleenShe’s just a fine young thingSomeday she’ll wear my ringMy little the bankers and defense dept. stole all the money, that’s what happened to our retirement, health care and home values.i guess “stole” is the wrong word as the law and its trusteesseem to have no objections or curiosity concerning the shallwe say “credit affair”? but i digress.what can you do? now it’s all about denial, deny yourself,denied coverage, denied associations, denied influence etc.we’ll see.pps. i just saw that movie “blindness”, 2009 production. there is a creepy depiction of what can happen to people when there is no ……vision..ppppps . i don’t get the odometer thing? and how did theylose all that, alleged, ill gotten “money”? must have beenbad investments. and how come nobody complains when insurancecompanies deny your claim the first time to give them 60 extradays of investing, losing, your money. i want to know that too.

GuestAugust 22nd, 2009 at 8:01 pm

We’re confusing money with wealth. The “money” was over-promised credit (debt for the peons). It never will come back because it never really existed (capacity to service the debt could never be realized).

GuestAugust 22nd, 2009 at 7:41 pm

How we gonna get these people outta our pockets?Why “Recovery” Calls Are Doomed: The Bezzle | Karl Denninger 08/21/09The pumping is getting disgusting.I want to put forward something objective and impossible to argue with: MATH.Let’s go back to this chart:$2.5 trillion in consumer credit outstanding.Now let’s focus on the underlying fundamental reality of consumer-generated GDP and economic activity in general, and the impact of what I call the rate spread on that activity.Back in 2007 before the mess got out of hand you could get a 5% 1 year CD. That’s the savings rate, or what you were paid to save money.In addition prime credit on revolving accounts was typically handed out (like candy) at 9.9% or less. I had credit cards with offered rates under 10% and so did a lot of other people. “Higher risk” but still “standard” rates were in the mid-teens (13-14%), with only penalty rates exceeding 20%. Nearly everyone could avoid a penalty rate by refinancing their house and paying off their credit card with the HELOC if required.Ok.Now we have this “crisis” but due to the lack of will in Congress, regulators and The Fed they fail to force the bad assets out into the open where they are marked to the market and the people who have those bad assets go under. Doing so would result in a lot of bank bankruptcies. This is thought of as “bad”, but in fact it is only bad for the banks that have lied – the good banks (and there are some) and credit unions would win huge from such an event, as they’d not only get your deposits but also your loan business.Nonetheless most if not all of the “big banks” are the ones who have Congress in their pocket and they’re on the bad list.So in response to this fees and interest rates have gone to the moon. I run no balance on my plastic and have a near-perfect FICO (being “dinged” only because I don’t carry balances), charging and paying off every month, generating a very nice “discount” income for any card issuer that gives me credit. Nonetheless I have seen interest rates repriced “for market reasons” up to 13, 14 and in one case to 17.9%.In addition the interest rate available on a 1 year CD has gone down from 5% to 1%.What this does to the “spread” and thus private consumer activity is tremendous. Revolving credit is instantly repriced on the outstanding balance at the new interest rate, as are the CDs when they roll over, typically after a year.For the “typical Grandmother” who was making 5% on her CD and paying 9.9% on her plastic, the spread was 4.9%. That is, 4.9% was the “real cost of credit” to her annualized.Reasonable.Now the credit card is 18.9% and her CD earns 1%. The spread is now 17.9%, or nearly 18%, an increase of 12.8%.For the “subprime” borrower its awful as well. He has no savings, so the CD rate means nothing. But his credit card went from 20% to 36% due to missing one payment. He’s seen a spread increase of sixteen percent.Why does this matter?It matters tremendously!Remember, from the above there is $2.5 trillion outstanding in consumer credit. An increase of just ten percent in the spread cost for money means that $250 billion dollars each and every year does not get spent on consumption (and employment of those who make what was consumed), it instead goes to the banks to paper over their fraudulently-marked paper!How big of a deal is this?Our economy (at present) is around $13 trillion dollars (was closer to $14, but heh, ’tis a recession, right?)This is thus a real and permanent 1.92% decrease in private-activity GDP each and every year and it will NEVER GO AWAY so long as “The Bezzle” mandates that the spread be used to cover up the fraudulent accounting at the banks and other financial institutions!Nor does it stop with consumers. Corporations are also paying outrageous spreads over comparable Treasuries to borrow money compared to just a couple of years ago, and that interest once again is going to the banks and other institutions that buy their paper and use the excess spread to paper over THEIR losses on mismarked paper.As such the $250 billion number is almost certainly greatly understating the true amount of the damage.Folks, if you think that this sort of game-playing is somehow “beneficial” to the economy or it is “no big deal” this ought to disabuse you of that notion RIGHT NOW.There is no possible way to generate a durable trend-growth economic recovery ever in the future until this game-playing stops. This is the fundamental reason that Japan never turned the corner and had a durable recovery and it is why we won’t either.It simply can’t happen. The mathematics make it impossible, as that excess spread comes off GDP each and every year until the bad paper is either removed from the system or amortized and the excess spread disappears. Since most of this paper (especially that related to houses!) has amortization schedules measured in decades and an underwater homeowner cannot refinance, this drain on our economy is going to remain for years, not months.There is only one way to stop it: FORCE all of the bad paper into the open immediately, close all the defunct institutions that this uncovers, and remove the excess liquidity so that the rate spread contracts back to a reasonable level. This means that I will once again be able to get a 5% CD and I will once again see “good credit risks” offered revolving credit at under 10%.While this would trash a bunch of banks (and it should) it would free upwards of $250 billion dollars a year in consumer spending!Our regulators and government officials are both protecting crooked dealing and destroying our economic recovery prospects.Wake up America.

PeteCAAugust 22nd, 2009 at 8:10 pm

Actually a good article by Karl Denninger. And if you take a look at the post immiediately below by another guest – the answer is that YES our country is now run by a ruling class of bankers who are above the law. That is one of the most important insights that has come out of the financial downturn in America.PeteCA

GuestAugust 22nd, 2009 at 10:27 pm

Pete, you’re back. You’ve come BACK! I’ve been looking for you all over the Internet. Where have you BEEN? We must kill the fatted calf in welcome! I know. Summer’s gone and school’s comin’ on…? And, now, if we can just locate the other Peter, Peter JB, from the outback… Anyway, don’t go off again like that without saying anything.Which reminds me of the little seven-year-old boy who had never spoken a word. And then one morning while sitting with his family around the breakfast table, he slammed his spoon down on the table and said, “This oatmeal is awful.”“Sammy, Sammy,” his mother cried. “You can talk! My Son! My Son! Why have you never said anything before?”Said Sammy, “Everything was all right, up ‘til now.”

GuestAugust 22nd, 2009 at 11:30 pm

These comments from a Zero Hedge blogger which I saved are apropos of the discussion, I dcbon Sat, 08/22/2009 – 02:56#44642well folks, today was interesting considering what I wrote yesterday. You can’t see it, but the S&P was up against long term trend line resistance from the market peak following down until now and it had never broken this resistance line. so if you were going to short the market yesterday was the perfect entry time, and looking at the signals the bond market was giving the market was due for a nice fall. But, with all the enhanced liquidity provided by Ben and his buying back treasuries, and buying banks toxic assets, and unlimited funds at the discount window he orchestrated a classic short squeeze by speaking to the public about how great things are. Of course he had a bit of help with his friends at Goldman. While things are getting better he keeps extending all of these crazy programs for a few more months. can somebody explain this double talk? Yes folks he’s keeping all the things that help wall street, hedge funds heads, private equity, etc and ofcourse hurting your savings and putting the feds a balance sheet at risk. Of course the markets love him. wouldn’t you love a guy who is willing to destroy his own country to ensure you get your bonus!!!!FYI-Goldman Sachs gave Obama 4x McCain in 2008. About 1 mill. Goldman was the 2nd highest contributor to Obama. ‘Nuff— On Thu, 8/20/09, wrote:> > Date: Thursday, August 20, 2009, 5:23 PM> Well folks, big ben is at it again.> he sold treasuries last week and is now buying them back> driving down yeilds and ensuring banks make a profit at your> tax payer expense. these are being put into the market and> the dollar is down. when playing with the market this is> what you have to keep in mind. as I say future inflation.> under normal circumstances these would not happen at all.> they are totally oppostite to the usual patterns. yield go> down with risk aversion, but the markets are going up and> dollar down. It can only be fed manipulation once more. yes ben> continues to be your friend (not). If there aren’t> manipulations the treasurues signal a big drop in the> market. the level of interst rates on the 20 years is below> when the market was at 880. You figure things out because I> can’t.

GuestAugust 22nd, 2009 at 7:56 pm

Sunday, August 23, 2009Common Sense 2009The American government — which we once called our government — has been taken over by Wall Street, the mega-corporations and the super-rich. They are the ones who decide our fate. It is this group of powerful elites, the people President Franklin D. Roosevelt called “economic royalists,” who choose our elected officials — indeed, our very form of government. Both Democrats and Republicans dance to the tune of their corporate masters. In America, corporations do not control the government. In America, corporations are the government.This was never more obvious than with the Wall Street bailout, whereby the very corporations that caused the collapse of our economy were rewarded with taxpayer dollars. So arrogant, so smug were they that, without a moment’s hesitation, they took our money — yours and mine — to pay their executives multimillion-dollar bonuses, something they continue doing to this very day. They have no shame. They don’t care what you and I think about them. Henry Kissinger refers to us as “useless eaters.”But, you say, we have elected a candidate of change. To which I respond: Do these words of President Obama sound like change?”A culture of irresponsibility took root, from Wall Street to Washington to Main Street.”There it is. Right there. We are Main Street. We must, according to our president, share the blame. He went on to say: “And a regulatory regime basically crafted in the wake of a 20th-century economic crisis — the Great Depression — was overwhelmed by the speed, scope and sophistication of a 21st-century global economy.”This is nonsense.The reason Wall Street was able to game the system the way it did — knowing that they would become rich at the expense of the American people (oh, yes, they most certainly knew that) — was because the financial elite had bribed our legislators to roll back the protections enacted after the Stock Market Crash of 1929.Congress gutted the Glass-Steagall Act, which separated commercial lending banks from investment banks, and passed the Commodity Futures Modernization Act, which allowed for self-regulation with no oversight. The Securities and Exchange Commission subsequently revised its rules to allow for even less oversight — and we’ve all seen how well that worked out. To date, no serious legislation has been offered by the Obama administration to correct these problems.Instead, Obama wants to increase the oversight power of the Federal Reserve. Never mind that it already had significant oversight power before our most recent economic meltdown, yet failed to take action. Never mind that the Fed is not a government agency but a cartel of private bankers that cannot be held accountable by Washington. Whatever the Fed does with these supposed new oversight powers will be behind closed doors.Obama’s failure to act sends one message loud and clear: He cannot stand up to the powerful Wall Street interests that supplied the bulk of his campaign money for the 2008 election. Nor, for that matter, can Congress, for much the same reason.Consider what multibillionaire banker David Rockefeller wrote in his 2002 memoirs:”Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure — one world, if you will. If that’s the charge, I stand guilty, and I am proud of it.”Read Rockefeller’s words again. He actually admits to working against the “best interests of the United States.”Need more? Here’s what Rockefeller said in 1994 at a U.N. dinner: “We are on the verge of a global transformation. All we need is the right major crisis, and the nations will accept the New World Order.” They’re gaming us. Our country has been stolen from us.Journalist Matt Taibbi, writing in Rolling Stone, notes that esteemed economist John Kenneth Galbraith laid the 1929 crash at the feet of banking giant Goldman Sachs. Taibbi goes on to say that Goldman Sachs has been behind every other economic downturn as well, including the most recent one. As if that wasn’t enough, Goldman Sachs even had a hand in pushing gas prices up to $4 a gallon.The problem with bankers is longstanding. Here’s what one of our Founding Fathers, Thomas Jefferson, had to say about them:”If the American people ever allow private banks to control the issuance of their currency, first by inflation, and then by deflation, the banks and the corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their father’s conquered.”We all know that the first American Revolution officially began in 1776, with the Declaration of Independence. Less well known is that the single strongest motivating factor for revolution was the colonists’ attempt to free themselves from the Bank of England. But how many of you know about the second revolution, referred to by historians as Shays’ Rebellion? It took place in 1786-87, and once again the banks were the cause. This time they were putting the screws to America’s farmers.Daniel Shays was a farmer in western Massachusetts. Like many other farmers of the day, he was being driven into bankruptcy by the banks’ predatory lending practices. (Sound familiar?) Rallying other farmers to his side, Shays led his rebels in an attack on the courts and the local armory. The rebellion itself failed, but a message had been sent: The bankers (and the politicians who supported them) ultimately backed off. As Thomas Jefferson famously quipped in regard to the insurrection: “A little rebellion now and then is a good thing. The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.”Perhaps it’s time to consider that option once again.I’m calling for a national strike, one designed to close the country down for a day. The intent? Real campaign-finance reform and strong restrictions on lobbying. Because nothing will change until we take corporate money out of politics. Nothing will improve until our politicians are once again answerable to their constituents, not the rich and powerful.Let’s set a date. No one goes to work. No one buys anything. And if that isn’t effective — if the politicians ignore us — we do it again. And again. And again.The real war is not between the left and the right. It is between the average American and the ruling class. If we come together on this single issue, everything else will resolve itself. It’s time we took back our government from those who would make us their slaves.

GuestAugust 22nd, 2009 at 8:14 pm

The Jefferson quote has been identified as being highly suspect (from

Attributed to Thomas Jefferson, letter to then Secretary of the Treasury, Albert Gallatin, 1802. The book Respectfully Quoted says this is “obviously spurious”, noting that the OED’s earliest citation for the word “deflation” is from 1920. The earliest known appearance of this quote is from 1935 (Testimony of Charles C. Mayer, Hearings Before the Committee on Banking and Currency, House of Representatives, Seventy-fourth Congress, First Session, on H.R. 5357, p. 799)

Nonetheless, I’m sure that Jefferson would agree with it.

kilgoresAugust 23rd, 2009 at 4:32 pm

The words of Thomas Jefferson, as with those of many of the Founding Fathers, can be used like statistics to lend support to the truth of the untrue. I’m not so sure he would have agreed with this statement at all.SWK

GuestAugust 23rd, 2009 at 8:02 pm

Jefferson’s vision was for an independent agrarian country, not one of a strong centralized (Hamiltonian) government. As such, I still stand by my statement that he’d more likely side with such a statement than being opposed to it.

GuestAugust 22nd, 2009 at 8:40 pm

I think a general strike is a good idea. It hits the banks. When people see it can be effective, it would grow into a wide general strike. I think the time is coming near when that might happen.

ChignosAugust 23rd, 2009 at 9:41 pm

A general strike is about the most pie in the sky idea I’ve read here today. Stick with Marie Callendar’s pies from now on.

Octavio RichettaAugust 22nd, 2009 at 8:03 pm

When at turning points, IMHO, the most reliable source for economic forecasting is the folks at ECRI. According to them the recovery will be stronger than most anticipate. Who cares about a possible double dip over one year from now? Analysts Clash, Firm U.S. Recovery at HandReutersAugust 21, 2009(Reuters) – A gauge of future economic growth made steady gains in the latest week, sending its yearly growth rate to a fresh 26-year high and suggesting a strong recovery is already in motion, a research group said on Friday.The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to nearly a year-high of 125.0 in the week to Aug. 14 from an upwardly revised 124.4 the prior week, which ECRI originally reported at 123.9.The index’s annualized growth rate ticked up to 17.5 percent after hitting a 26-year high of 14.3 percent last week, which was also revised higher from 13.4 percent.It was the highest yearly growth rate the index has seen since the week to July 29, 1983, when it was 17.8 percent.”It is high time to break from the herd of pessimistic analysts, who will continue to bemoan economic weakness long after the Great Recession is history,” said Lakshman Achuthan, Managing Director at ECRI.Achuthan told Reuters last week that he expects the recovery to take hold at a stronger pace than any the U.S. has seen since the early 1980s.

GuestAugust 22nd, 2009 at 9:59 pm

Could be, OR. But, then, there’s that P/E ratio of 129. I do know Peter Schiff said the global recession was not as bad as touted. But he also said as the dollar continues to make new lows, as bond prices fall further and interest rates spike, the stock market will head down. He said the bear has been around since 2000, with a counter bull rally from 2003-07, and expects the bear to be around for the next 5 years. He predicted a considerable loss in equities but that the dollar will lose more than stocks. In the next two or three years, Schiff said, we could see inflation in the double digits but no hyperinflation until say five years, depending on how the government reacts to inflation.Schiff said that if the government/Fed doesn’t alter the course that got us into the mess, the future is bleak. According to Schiff the recent bull drove up stocks because they had dropped below their valuation and could be bought in March at fire sale prices. Cash was king in 2008, he said, but cash is trash in 2009 and as inflationary fears rise investors will be moving out of cash and bonds and into equities, particularly foreign equities.As for the economic intelligence of the Fed and the government, Schiff doesn’t put much faith in the Chris Dodds of Washington, who’ve been “corrupted by the system” and live “a privileged existence” (Dodd has been in Washington since he was 30 years old and has never worked or had to live within the regulations he writes). Cash for Clunkers, Schiff said, is just more of the same that created the problem, another indication Washington doesn’t understand what’s happening, always doing the wrong thing at the wrong time. They do the opposite of what they should do, Schiff said, spending money to destroy an asset that works so that government and society can go deeper in debt when they’re already deeply in debt.The right approach, he said, would have been to drive the old cars and use the capital to rebuild the economy. “You don’t get rich destroying things just to rebuild them.” It’s a case, he said, of government financing its own subsidiaries, GM and Chrysler.The government, Schiff said, shouldn’t be bailing out anybody. It’s punishing the successful to bail out the failed. It’s immoral. Many of those getting the bailouts are the rich; the government is taxing middle class Americans earning $40,000 and $50,000 to bail out people making millions.This is our third stimulus, he said. The first was in 2001-02 when the Fed slashed the interest rate to stimulate recovery and stimulated us into depression.“If they keep stimulating us,” Schiff said, “they will kill us.” A recession is necessary to correct the problem. Killing the stimuli is the only way to restore the economy. You have to let nonviable companies go out of business to free up capital for the healthy.That’s it, just my memory from hearing the Schiff interview with Dan Mangru of–a really good one, including comments on healthcare. But, checking for the link, I now see you can get the straight scoop by going direct to the interview and a written summary at:, all this just to say, on what does ECRI base its call? I am not privy to their information. And here’s the P/E link:S&P 500 PE ratio sits at 129Since March when the S&P 500 touched the 666 mark, the rally has boosted the index by 54 percent. Was this caused by stunning second quarter earnings? Absolutely not. With nearly 97 percent of all companies now reporting earnings for the second quarter, the S&P 500 PE ratio sits at 129. This is by far the most over hyped rally in the world.Posted by The Blackbook of Real Estate Secrets at Good to hear from you again.

GuestAugust 22nd, 2009 at 10:36 pm

“You don’t get rich destroying things just to rebuild them.”Shh! Don’t tell this to the defense contractors and their mop-up counterparts (Haliburton)!

JasaAugust 22nd, 2009 at 10:15 pm

Octavio,I’m so glad you are back. I have just a couple of observations on the WLI (weekly leading index) from ECRI. First, one question: are you familiar with the components of the index? How much is stock prices and short-long term yields get into that number? We know that both stock prices and treasuries are in this moment manipulated from the FED, for the exact reason that they can work as “leading” indicators. Are they still useful in the current financial mess?I’m studying the historical data of WLI and the comments on the economic outlook from Auchian from 2007, as reported from their web site, which I’m going to verify comparing to articles on other sites. I’m not posting this as they are proprietary. As I think this could be useful for most of the bloggers, does anyone knows how to go around this so that I can post their data and the comments, week by week from the onset of the crisis?A couple of things I’ve noticed: the comments were positively biased until well into 2008, when the recession had already started, except that it was not officially declared, and most of the bloggers here were already prepared for the mess to come.Now they predict the most robust recovery, BUT, the index is still at 125. It is still below 130 where it stayed for most of 2008 (almost flat from Jan to Jul 08) with the recession in full blow. How do they get their bullish sentiment? Doesn’t 125 still represents the fine line between recovery and further slowdown?Do they use the official data on job creation, with the incredible statistical correction that have in it? I mean: have we reached the point were the official economic data are so manipulated that even a probably serious work from ECRI can get it wrong?

GuestAugust 22nd, 2009 at 10:39 pm

Did you check out the link that I posted above? Might give you a clue as to the credibility. Nothing stays clean forever…

GuestAugust 22nd, 2009 at 10:49 pm

I don’t know how you can post their data per se, but brief summaries with a few quotes from your knowledge garnered from their site should be proprietary to you I should think since you paid for it. At least that’s my take. If no one knows here, try your post on Zero Hedge–someone there will know. Anyway, I hope you find an answer because I am one of those bloggers who would find the info very useful. Thanks! I appreciate your observations! I have similar questions, yet I also know that Octavio, as he points out, has long found ECRI a valuable source. But I share your caution posting proprietary information, particulary since the chilling ruling this week by a judge in Canada who says Google must reveal the name of a blogger to an actress he called a “hag” so she can sue him. Sounds a little like China, doesn’t it? 🙂

JasaAugust 23rd, 2009 at 7:57 am

Thanks for the comment. Anyway I haven’t paid, as their historical data on WLI and other indeces are on their website available for free. I think the only difference with paying subscriber is that they are released with a delay. can download the data yourself, as I did.

GuestAugust 23rd, 2009 at 10:51 pm

One link to the story regarding the ruling is below, and is from Business News Around the World, but I apologize, the judge is from Manhattan, the actress is Canadian-born. Incidentally, isn’t it interesting that as the White House moves into the Internet monitoring business and this case involves “talent,” that Rahm Emanuel’s brother, Ari, is a Hollywood superagent who was instrumental in getting Obama materials on television free via his contacts with network executives using his influence as the brother of Rahm, and isn’t it interesting that one of those contacts is Jeffrey Immelt, CEO of GE that owns NBC and MSNBC and NBC Universal, Inc., a media and entertainment company?As to Ari, the, in a highly complimentary article on the Emanuel family, wrote: Ariel, or Ari, the youngest at 47, has held up his end. He broke off from International Creative Management to start the Endeavor Agency in Beverly Hills and has turned it into one of Hollywood’s most successful talent agencies. Ari’s clients include Larry David, Aaron Sorkin, Sacha Baron Cohen, and Martin Scorsese. He called on Hollywood to blacklist Mel Gibson after the actor’s drunken, anti-Semitic tirade in 2006. He denounced Disney chief Michael Eisner after the mogul tried to prevent distribution of Fahrenheit 9/11, made by Ari’s client Michael Moore.“It’s not what you’re supposed to do as an agent,” says Rahm, suggesting that his brother has more soul than the TV character based on him.In the family room of the middle-class suburban home where the boys grew up and where their parents still live is a wall of black-and-white photos of relatives, most of whom never made it to America. One of the photos is of their father’s brother, Emanuel, who was killed in the 1936 Arab insurrection in Palestine. Benjamin’s parents changed the family’s last name from Auerbach to Emanuel in their son’s honor. In the middle of the wall, in a frame, is a crocheted money belt that the boys’ great-grandmother wore when she emigrated from Russia…Their father, a pediatrician who moved to the States from Israel in 1959, devoted himself to public-health matters in Chicago, helping to get lead paint removed from houses, treating poor immigrants for free. As a young doctor trying to build a practice, he quit the American Medical Association over its position on national healthcare… (Rahm’s brother, Dr. Ezekiel Emanuel, is chair of the department of bioethics at the National Institutes of Health Clinical Center and has been influential in Obama healthcare.)Their mother was a civil-rights activist in the early 1960s. She ran the north-side branch office of CORE, the Congress of Racial Equality, and occasionally, if she didn’t expect violence, took the boys to civil-rights marches with her…, again, here’s a B.N.A.W. story I found that supports the snippet I originally saw in some round up of news briefs (incidentally, i don’t know the meaning of “skanks” and didn’t look it up):3 Signs the Internet is Becoming Less Free par Drea Mercredi 19 Août 2009 :: Business Pundit :: RSSIs the Internet becoming less like the Wild West? The three pieces of news below describe government action being taken on Internet activity. Are these isolated cases, or signs of a bigger trend to clamp down on Internet activity? You decide:1. The White House wants to monitor your every clickIf you can, forget healthcare for a minute. There’s something a little sneakier passing under the radar. President Obama wants to “reverse a longtime federal policy banning the use of web technologies to track and compile personal information that can easily be utilized to invade privacy,” according to Judicial Watch. Ironically enough, it was the pro-Obama ACLU that pointed out this creepy federal move:A 9-year-old policy forbids the U.S. government from implementing methods on federal internet sites that track an internet user’s every click, often identify the person and even build a database of each user’s viewing habits. This poses a serious threat to Americans’ personal information, according to the…American Civil Liberties Union (ACLU).The…“major shift in policy”…(was) covertly introduced in a vague, single-page announcement in the federal register. The group points out that Americans rely on the data posted on federal websites to research politics, medical issues and legal requirements and no American should have to sacrifice privacy or risk surveillance in order to access free government information.However, with the snap of a finger the White House Office of Management and Budget (OMB) can reverse the longtime privacy rule if it determines that there is a “compelling need.” Since the OMB answers to the president and he clearly believes there is a compelling need, Americans should consider it a done deal.2. A judge forced Google to reveal the identity of a bloggerMashable has the scoop:Liskula Cohen is a Canadian-born model, best known for her appearances in fashion magazines such as Vogue, Elle, and Cleo. When she discovered that a blog called Skanks in NYC, hosted on Google’s Blogger, had been referring to her as “skank” and “old hag,” she decided to press Google (Google) to reveal the identity of the blogger through court, and the court has now decided in her favor.Manhattan Supreme Court Justice Joan Madden decided that “the thrust of the blog is that [Cohen] is a sexually promiscuous woman,” and that Cohen is entitled to sue the blogger for defamation.This also means that Google will have to reveal the identity of the blogger in question; an important move that will set a precedent for future cases such as this one. The blogger in question has, without a doubt, been very offensive towards Cohen, as can be seen in the above quote. However, as we all know, the internet is full of offensive comments and broad negative statements of all kinds.Internet legal policies are a work in progress. The blogger case, as Mashable pointed out, sets a precedent for upcoming cases. In a few years, talking smack online may become a rare privilege.3. A leaked music track has lead to an international manhuntX Factor winner Leona Lewis was planning to release her new single, Don’t Let Me Down (featuring Justin Timberlake), sometime within the next few months. But hackers beat her to the punch. They recently leaked the track online by invading Syco’s (part of Sony BMG) computer systems.Simon Cowell, who helped with the new album, called the police after discovering the leak. The Times Online writes:The International Federation of the Phonographic Industry (IFPI) said it was the highest-profile hacking case the music industry had ever seen.Jeremy Banks, the head of the organisation’s internet anti-piracy unit said: “IFPI is working with Syco and law enforcement agencies in the US and Europe to trace the individuals who stole the Leona Lewis/Justin Timberlake track.”The police are understood to have been tracking the hackers for several weeks and are close to closing the case.In other words: Simon Cowell calls the cops over a piece of leaked music. The cops stage an international manhunt as a result. Though this kind of international collaboration isn’t unprecedented–Pirate Bay comes to mind–it does highlight how responsive global law enforcement agencies have become to hacking attacks, not to mention record companies.

GuestAugust 24th, 2009 at 9:28 am

Speaking of the Emanuels, Alexander Cockburn said in his “Hail to the Chief of Staff,” that Rahm Emanuel is “a super-Likudnik hawk, whose father was in the fascist Irgun in the late Forties, responsible for cold-blooded massacres of Palestinians.”Said Cockburn: “Dad’s unreconstructed ethnic outlook has been memorably embodied in his recent remark to the “Ma’ariv” newspaper that ‘Obviously he [Rahm] will influence the president to be pro-Israel… Why wouldn’t he be [influential]? What is he, an Arab? He’s not going to clean the floors of the White House.’”In that Arabs are Semites, (i.e., descendants of Abraham and Hagar’s son, Ishmael), Dad’s remark, it seems fair to say, can be classified “anti-Semitic.” Rahm’s post as White House chief of staff has often been referred to as “gate keeper” and past holders of the post have even prohibited cabinet secretaries from having access to the president.The chief of staff is the primary point man on legislation and can be responsible for all hiring and firing for White House staff. Looks like Rahm is busy hiring his relatives. Rahm holds joint U.S. Israeli citizenship. The thread linking Obama to Rahm Emanuel is David Axelrod, Obama’s campaign manager and top strategist, and a close friend of fellow Chicagoan Emanuel. Axelrod, also Jewish, is a signer of the ketubah (Jewish marriage contract) at Emanuel’s wedding, and has the powerful position of Senior Adviser in the Obama White House.

GuestAugust 22nd, 2009 at 11:19 pm

Isn’t it nice to be an insider and know everything ahead of everyone else, just because you’ve been good, and so the toothfairy government brings you a million dollars for every tooth and a taxable nickel to the rest of us, even for a molar? Certainly better than being an outsider, standing homeless knee deep in the swirling snow at Christmas time peering through Bloomberg’s window at the cheerful fire and festive goings on as you freeze to death.For instance Bloomberg condescends to inform us that the full report that will be released on August 25 (to us, not to Bloomberg who already has it) will demonstrate that the budget deficit for the next ten years will be worse… by $2 trillion dollars. So nice of them to let us know, after the markets are closed. From Bloomberg:White House budget review set for release Aug. 25 will show cumulative deficits over the next decade amounting to $9 trillion, up from $7.1 trillion that the administration predicted in May, the official said on condition of anonymity because the figures have not been made public.

GuestAugust 23rd, 2009 at 1:08 am

If you’ve ever wondered why some bloggers want to remain anonymous, read this (Zero Hedge does not identify its nearly 40 contributors or staff members and, because of its rocket rise to success, is being vilified by the MSM and others).ZH Vs. All Comers | Bruce Krasting on 08/22/2009Readers of the blogs know that ZH is in the middle of another brouhaha with the rest of the press. This time from Reuters, NY Post, Naked Capitalism and Across the curve.I made the following comment on NC. I stick with it.”Eight months ago I started writing financial blogs. I am happy to say that some have appeared on NC and some at ZH.I put my own name on this from the start. Big mistake. I wish I knew what I know now. The stuff that comes to me off the grid is scary. (I don’t care what the comments are). I have written about some personal stuff and that has come to haunt me too. I have problems as a result of some of the stuff I wrote re: Swiss banks.I thought that I had a fairly good level of contact with the significant (and not so significant) writers in the straight press. Since I started contributing to ZH they don’t return my emails.So I have paid a price for being out there. If I had to do it over again, I would be Anon.”Across the Curve does a fantastic job of reporting the bond market story. But that is all it does. Just the numbers. AC does not pose questions. It does not question policy.Naked Capitalism does. Every day NC bangs away on the critical issues. They pose tough questions and challenge policy choices in every country. But Yves Smith is just a made up name. So I am not clear why they have taken the position they have.ZH goes deeper than any other media outlet. Does anyone believe that Chuck Schumer or Mary Schapiro would be talking about HFT if it were not for ZH? Not a chance.The flap about the FED/POMO and the dealers is misplaced. The Fed is buying 1.5 Trillion of paper from the dealers. They will do that in less than 9 months. This is the biggest transaction in recorded history. The dealers are getting rich off this business. There is no doubt about that is there? Does anyone think they are taking losses doing the Fed buy backs? Don’t be silly. ZH did not call this a conspiracy. But if one watches the timing of these POMO buys it is very hard to avoid the conclusion that the Fed and the dealers are on the same page. This might not be a conspiracy, but the relationship of the PDs to the Open Market Desk should make everyone nervous.If GS is in the sights of ZH’s gun it is because GS is too powerful and needs to be brought down a few notches. They have no competition. LEH, BST are gone. Merrill is nothing compared to what they once were. Citi has been gutted and Morgan Stanley has admitted it is “no longer taking risks”. So GS is running the risk world of finance. And the only significant voice out there that is raising a stink on a regular basis is ZH. We owe them for that.We will all be worse off if ZH changes what it has been doing. This flap convinces me that they are correct. Stay behind the curtain, but make one hell of a racket. Please.

GuestAugust 23rd, 2009 at 5:32 am

If Asset Prices Are Dropping, Why Are Banks Rising?August 21st, 2009By David Goldman My favorite indicator of bank portfolio quality, the traded price of riskier assets (in this case securities backed by subprime mortgages issued in the middle of 2007), has taken a big dip during the past couple of weeks:That should be a surprise given 1) rising default rates, 2) poorer consumer performance and 3) more loan modifications with uncertain implications for bond holders. I’ve been calling attention to the cognitive dissonance between the jump in asset prices (mainly due to so-called Public-Private Investment Partnerships funded by the government with cheap leverage and an asset price put) and the underlying deterioration of asset quality.There was something of a mini-bubble in distressed asset prices driven by PPIP demand that seems to be abating. But what of bank stocks? WSJ this morning cites the failure of numerous regional banks who hold these securities.U.S. banks have been dying at the fastest rate since 1992, mainly because of bad loans they made. Now the banking crisis is entering a new stage, as lenders succumb to large amounts of toxic loans and securities they bought from other banks.Federal officials on Thursday were poised to seize Guaranty Financial Group Inc., in what would be the 10th-largest bank failure in U.S. history, and broker a sale of the Texas bank to Banco Bilbao Vizcaya Argentaria SA of Spain. Guaranty’s woes were caused by its investment portfolio, stuffed with deteriorating securities created from pools of mortgages originated by some of the nation’s worst lenders.The large banks own the same toxic waste. I have argued all year that they can squeeze out enough cash flow to keep one nostril above water, and that Citi (for example) should trade around $4 a share just in terms of option value on a possible future recovery. But options can go wrong as well: we simply don’t know how bad things are in the Citi portfolio.Bank stocks have rallied well past the level at which I am comfortable. I took profits too early, but there is a big enough risk of a relapse to keep me on the sidelines

GuestAugust 23rd, 2009 at 5:37 am

The chart below(at the link posted at bottom) shows the SPX (vertical scale) vs the dollar bullish ETF UUP (horizontal scale) for the year to date:Fully 80% of the movement in the S&P can be explained by the movement in the dollar index.Statistical analysis confirms the visual impression that the two variables are moving in lockstep. In the chart below we see the rolling three-month correlation between daily returns to SPX and the dollar bullish ETF UUP, which mimics the dollar index DXY.omething ominous is at work here. Typically, a stronger dollar goes together with a stronger stock market. That is what we observe prior to the bank bailout last fall. Starting in the third quarter of 2008 and going to the present, the correlation turns sharply and persistently negative. A cheaper dollar means higher stock prices, as US assets are marked down for global investors.What we have is not a stock market rally but an adjustment to global market prices. Fully 80% of the movement in the S&P can be explained by the movement in the dollar index.That is a profile well known to emerging market investors. Whenever the Brazilians would pull another currency devaluation, stock prices rose to compensate, as tradeable assets floated up to world market prices. The bank bailout has made Americans poorer relative to the rest of the world and created the illusion of a stock market recovery.That does not necessarily mean that inflation will return to the US, as some analysts believe. Foreign investors are not likely to buy homes in Cleveland (although the dollar devaluation certainly should help real estate prices in New York or San Francisco). And the combination of high unemployment and deferred retirement (greeter jobs at Wal-Mart will be in great demand) will keep wages down. The price of international tradeables, though, will affect US inflation, which is why I continue to recommend classic commodity hedges (including gold and oil) rather than TIPS.

Octavio RichettaAugust 23rd, 2009 at 7:24 am

I am still on the road so my posts will continue to be short. The WLI index from ECRI is proprietary (i.e., a black box) but it has a proven track record of working better than the LEI; which was developed by the guy who founded ECRI while at USCD.” Weekly Leading IndexThis high-frequency leading index of U.S. economic growth is available very promptly. The Weekly Leading Index (WLI) directly addresses concerns about the freshness of data that forecasters have with existing leading indicators, including the well-known monthly Index of Leading Economic Indicators (LEI), originally developed by ECRI’s founder, Geoffrey H. Moore, for the U.S. Commerce Department.The WLI resolves these issues by being available promptly and frequently. Specifically, each Friday the WLI is updated with data through the previous week. This is extremely prompt and represents a significant leap forward in the monitoring of economic conditions. In contrast, the LEI is far less prompt. Moore, who developed the original LEI in the 1960s, also oversaw the development of the WLI, which represents the latest in a long series of advances made since the introduction of the original LEI. Key improvements include:Frequency – the WLI is available every week, rather than monthly, allowing for closer monitoring of the U.S. economic cycle.Promptness – the WLI is extremely prompt. Each Friday the WLI is updated through the previous Friday, i.e., there is only a one-week publication lag.New composite index method – an improved method of composite index construction is used (Geoffrey Moore and Julius Shiskin developed the original LEI method). The result is a more clearly cyclical index with increased sensitivity at economic cycle turning points.Revisions – only one component (money supply) out of seven is subject to significant revision.Leads – the WLI has an average lead of 10 months at business cycle peaks and three months at business cycle troughs, which amounts to a longer overall lead than the LEI. Given its prompt availability, the WLI has an even longer effective lead at business cycle turning points, and would have historically signaled a typical recession about three months ahead of the LEI. In fact, the WLI has a longer effective lead than the LEI at 83% of business cycle peaks and 60% of business cycle troughs.In terms of the long term “big picture” I have no doubt that the Professor et al. (Shilling, Shift, Faber, Hussman, PIMCO etc.) will be right. There are structural problems not fixable by easy money. The bottom line is that to be able to consume you have to produce (i.e., add value) and it has been a long time the average US citizen stopped doing that.Getting back to ECRI and GDP for the next few quarters, IMO, they have a higher probability of being right in the short term than other forecasters. And we all know that is all the stock market cares about (i.e., the next six months).This does not mean I am about to rush into equities. I do feel sorry I sold my SP500 750 and 850 call LEAP positions in April [and blew away 2% in June SP500 950 puts in May] as otherwise my YTD return would be a lot higher that the 7.2% I am clocking as of Friday. But that was the right decision at the time. I try not to cry about not having tomorrow’s paper today:-)

GuestAugust 23rd, 2009 at 9:35 am

Need some input from our Middle Eastern readers.Is there any truth to the reports that there was both an attempted coup in Qatar and Saudi Arabia at the beggining of August and Prince Bandar is under house arrest. There seems to have been a military cooperation agreement signed by Putin and the Saudi(Bandar is pictured shaking Putin’s hand)July 15,2009. There seem to be reports of a Joint Russian and Iranian Military Exercise. There have been reports that Russia will cooperate in the construction of the nuclear reactor that was in limbo, and the S300 missiles may ship from Russiato Iran. Obviously these rumours if real would haveinvestment consequences. I am not smart enough to know if this is real or smoke. Can I get some feedback?

GuestAugust 23rd, 2009 at 11:52 am

This will certainly stimulate the economy!!Millions face shrinking Social Security paymentsBy STEPHEN OHLEMACHER (AP) – 3 hours agoWASHINGTON — Millions of older people face shrinking Social Security checks next year, the first time in a generation that payments would not rise.The trustees who oversee Social Security are projecting there won’t be a cost of living adjustment (COLA) for the next two years. That hasn’t happened since automatic increases were adopted in 1975.By law, Social Security benefits cannot go down. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up slightly.”I will promise you, they count on that COLA,” said Barbara Kennelly, a former Democratic congresswoman from Connecticut who now heads the National Committee to Preserve Social Security and Medicare. “To some people, it might not be a big deal. But to seniors, especially with their health care costs, it is a big deal.”

The AlarmistAugust 23rd, 2009 at 1:19 pm

Mark Steyn has a good take on the Green Shoots we may or may not be seeing in the US …That’s why the “stimulus” flopped. It didn’t just fail to stimulate, it actively deterred stimulation, because it was the first explicit signal to America and the world that the Democrats’ political priorities overrode everything else. If you’re a business owner, why take on extra employees when cap’n’trade is promising increased regulatory costs and health “reform” wants to stick you with an 8 percent tax for not having a company insurance plan? Obama’s leviathan sends a consistent message to business and consumers alike: When he’s spending this crazy, maybe the smart thing for you to do is hunker down until the dust’s settled and you get a better sense of just how broke he’s going to make you. For this level of “community organization,” there aren’t enough of “the rich” to pay for it. That leaves you.For Obama, government health care is the fastest way to a permanent left-of-center political culture in which all elections and most public discourse will be conducted on Democratic terms. It’s no surprise that the president can’t make a coherent economic or medical argument for Obamacare, because that’s not what it’s about — and for all his cool, he can’t quite disguise that. Apropos a new poll, the Associated Press reports that Americans “are losing faith in Barack Obama.”“Losing faith”? Oh, no! Fall on your knees and beseech the One: “Give me a sign, O Lord!”But he has. They’re all along empty highways across rural New Hampshire: “This Massive Expansion of Wasteful Statism Brought to You by Obama Marketing, Inc.”

GuestAugust 23rd, 2009 at 5:36 pm

Meanwhile the free-market ideologues who call themselves conservatives but who are really corporate fascists have deregulated everything and won the hearts and minds of Americans through talk radio demagoguery and have thereby brought this country to it’s knees through wage exploitation and outsourcing of all the jobs in the country. The hilarious part is since the government has had to pick up the slack by doing all the hiring the past 10 years now pseudo conservatives use the growing government as a scapegoat for the cause of the collapse when it was really their pillaging of our country via greed and lack of regulation. Socialism is at our door step not because of governments incessant need for power as you believe but because the rampant unabated greed of capitalists have left government as an only option to care for the people. It’s happening exactly as Karl Marx predicted, no one I know wants socialism or even a bigger government, it’s happening because of people like Alarmist who believe unabated greed can somehow care for itself and the people. Your free for all experiment has failed us miserably Alarmists and now can you do us all a favor by going away with your lies and faulty logic. Let the people with brains step forward quit trying to deceptively revise history to fit your failed ideals.

GuestAugust 23rd, 2009 at 8:20 pm

You mean the anti-pollution left helps the growth industry jobs that still exist such as manufacturing that is being done in China and India? Do we have free trade? Sounds like “people with brains” are code words for Socialists. You have been brain-washed by your professors who would rather lecture to a bunch of spoiled kids than get out and compete in the real world.

GuestAugust 24th, 2009 at 11:57 am

Go get a pair of sandals and a smock from the Chinese and Indoneisians because they don’t want to where them anymore.

GuestAugust 23rd, 2009 at 4:10 pm

‘Bank of Canada governor Mark Carney wants an expanded mandate to prevent future financial meltdowns, and not just continue to act as the country’s inflation cop, he hinted on Saturday.In comments to a symposium in Jackson Hole, Wyo., the G7’s youngest central banker warned that the bank’s mandate of strictly targeting inflation, while useful, may not be enough to prevent future meltdowns.”Price stability should be retained as the central objective of monetary policy, although its definition may have to change,” he said in the prepared text of his remarks released by the Bank of Canada to the media.Central bankers may have done too good a job of keeping inflation in check for too long, giving some Wall Street traders the false sense of security to take disastrous risks, he said.”As we have all just been reminded at great cost, low, stable and predictable inflation and low variability in activity — can breed complacency among financial market participants as risk-taking adapts to the perceived new equilibrium.”To prevent such abuses in the future, Carney said central bankers should be allowed to rein in financial markets as well as inflation by using monetary policy tools. Currently, the Bank of Canada’s agreement with the government restricts it to controlling inflation.’New role for central bank?The first line of defence against a repeat of the global economic disruption that began with a subprime mortgage crash in the United States, he said, is better regulation of financial markets.But he added central banks should also take on responsibility to ensure financial markets don’t get out of hand again, and not simply by issuing warnings.They could use monetary policy — hiking interest rates — to cool off a financial markets bubble even if the measure causes the bank to miss its inflation target.Essentially, the idea would be “to generate price instability to prevent financial instability,” he explained.In Canada, the bank’s current agreement with the federal government on maintaining a strict two per cent inflation target expires at the end of 2011.Carney’s remarks suggest he favours a change to the bank’s mandate that would permit it to implement flexible inflation targets after 2011. He said the bank is considering price-level targeting, which would allow it to miss the target one year if it made up for it in the future.There are dangers to moving off a strict adherence to inflation targeting, Carney admits, not the least of which is loss of credibility if the bank gets it wrong.”If the central bank were to lean for financial stability reasons and miss its inflation target as a consequence, its accountability could be diminished, its credibility reduced, and potentially, inflation expectations themselves could become unanchored,” he admitted.

HubbsAugust 23rd, 2009 at 4:21 pm

Central Banks as tool to promote monetary stability?Quite contradictory. Like using a roulette wheel as a calculator.Mr Carney, start at the beginning.

GuestAugust 23rd, 2009 at 5:42 pm

There is no easy way out for central banksBy Wolfgang MünchauPublished: July 26 2009 19:12Ben Bernanke was elegant, concise, and yet he missed the point. Last week, in his testimony to congress, the chairman of the Federal Reserve presented his “exit strategy” – a toolkit of policies to prevent an increase in inflation once the economy starts to recover. The policies are the best modern central banking has to offer.But simply possessing such tools does not make an exit strategy. For that, Mr Bernanke would, at the very least, need to define the circumstances that would trigger the use of such tools. I doubt very much that either Mr Bernanke, or his counterparts in Europe, are in a position to provide a credible definition at this point.Before 2007, independent central banks would have had no problem presenting credible exit strategies. They would have pointed to their inflation target, and how they would use their medium-term inflation forecast or some other analytical framework to ensure that the price level would remain on a stable trajectory. The financial markets would have mostly agreed with the central bank’s decision on interest rates, give or take a quarter point.That is simply not the case any longer. There are two big problems that need to be considered. One is the commercial banking system. This is more of an issue for the Europeans than the Americans, given the European governments’ inability to resolve the difficulty of continued bad debts. If the European Central Bank, for example, decided to exit tomorrow by raising interest rates, the likely consequence would be a banking meltdown. A credible monetary exit strategy, in Europe at least, would read like a suicide note.The other problem, which is more troublesome for the US than the eurozone, is fiscal policy. As James Hamilton, professor of economics at the University of California, San Diego, pointed out in a recent analysis*, the direction of US debt, combined with the intermingling of monetary and fiscal policy, is inconsistent with the goal of long-term price stability.It is important to remember that this debate is about the future. Nobody in their right mind would want to implement an exit strategy any time soon despite sightings of mythical green shoots. At this point, the threat of a W-shaped recession is higher than that of an overheating recovery. But eventually this crisis will end, and it is then that the exit strategy becomes relevant.We are not talking about exiting this year and probably not even next year, but perhaps sometime in 2011. If you take into account the lags through which monetary policy works, you could easily see how the Obama administration might get nervous in terms of the electoral timetable. Given the intermingling of monetary and fiscal policy, a rise in the Fed’s funds rate and the use of the exit tools described by Mr Bernanke would constitute a significant and simultaneous fiscal and monetary tightening.Mr Hamilton makes another point, namely that US policy is premised on a belief that it can fund any government deficits without any damage to the currency. That belief was justified in the past, but there are doubts whether this is still true now. Should there ever be a funding crisis, it is not clear how the Fed could easily raise interest rates under such circumstances without causing a political and economic bloodbath.The intermingling of fiscal and monetary policy is the result of the central banks’ policies. Take, for example, the ECB’s recent extraordinary €442bn ($630bn, £380bn) injection of one-year liquidity at an interest rate of 1 per cent. This is a win-win game for the banks, especially since they were able to post collateral consisting of less than perfect securities, to put it mildly – those with a rating of BBB- or higher.This repo auction was at least as much a fiscal as a monetary policy operation. It is part of an unpleasant strategy that consists of avoiding the political drawbacks of using taxpayers’ money to recapitalise banks, while abusing the central banking system by forcing it to undertake a quasi-fiscal rescue operation. The broad idea is to help the banks rebuild their depleted capital through helping them to notch up a few years of large risk-free profits. It would take a very long time to resolve a banking crisis that way, but eventually it would succeed, at a crippling cost to the economy.As central banks take on these additional roles, their core function is bound to change. I cannot see how either the Fed or the ECB can pursue pure price stability policies under these circumstances. Such policies would be so damaging that no one in their right mind would want to advocate them.That is why it is impossible to formulate ex-ante exit strategies in the current situation. The problem is not that central bankers are blind to the risks. The ones I know in Europe and the US are all inflation-averse and would not voluntarily advocate an extended period of price instability. Of course, they differ in their analytical frameworks and their views of how the channels of monetary policy work. But they would not readily adopt policies that they know would lead to excessive inflation later on.The point is that they may have no choice.www.econbrowser.communchau@eurointelligence.comMore columns at The Financial Times Limited 2009

CLSAugust 23rd, 2009 at 7:38 pm

The question I have, if there is a double dip, and it almost sounds like a foregone conclusion with damned-if-you-do, damned-if-you-don’t choices, how bad will it be?

HubbsAugust 23rd, 2009 at 7:32 pm

How can Fed ever raise interest rates without drastically increasing it’s debt payments-which itself would be inflationary? It can’t, therefore impossible for FED to have controlled exit strategy through raising interest rates to prevent future inflation.S&P rally off low of 666 March 6, 2009 due to inflation/printing of money with 0% interest rates- i.e. FED injecting money through it’s agents. The S&P in a way is being “monetized”1.) Forces people to speculate in stock market because yields on Bonds, cash, essentially zero (but for how long?-ans: as long as Fed can simultaneously keep printing money and yet set interest rates at near zero.) Essentially, it looks like traders who have inside information and/or are very nimble and/or lucky will have done very well to have gone all-in March 6 and gotten out between now and….when? Octavio and Michelle, what do you think?Conversely, we chumps who have been in equities “for the long term” have had dead money essentially for the last ten years, yet may get zilch for another ten. (Apologies to John Bogle)2.) Keeps Pension funds capitalized through stock market inflation, sparing additional gov bailout through Pension Guarantee Corp.3.) Many of John Q Public still invested in equities, and positive wealth effect leads to complacency.4.) what is going on in China? Maybe not as well as one would be led to believe?It would seem to me that the economy and monetary system has become even more unstable and more capable of dramatic and swift upheaval due to fact that not only do we have toxic assets that have not been addressed, but now a toxic currency. Bernanke and the chief economist for IMF would have you believe otherwise.

PhilTAugust 24th, 2009 at 10:52 am

How toxic finance created an unstable worldBy Wolfgang MünchauPublished: August 23 2009 18:46Two years on, what do we know about the global financial crisis? We still lack a conclusive theory, but we know a lot more than we did in August 2007. We know, for example, that simple monocausal explanations are at best insufficient and most likely paranoid and lazy. If you still blame Alan Greenspan, former chairman of the Federal Reserve, or central bankers in general, you have not got it.Nor can you explain it by “soft” factors such as greed and bonus payments. These played a role but none can serve as an adequate explanation of why the crisis broke out when it did, since they had been present for many years.My own gut feeling: this has been a crisis of economic policy first and foremost. The financial crisis was necessary for the economic crisis to occur but it was not sufficient on its own. Each depended on the other.The best description I have found of how economics and finance interacted is by Anton Brender and Florence Pisani*. The two French economists describe in great detail how money from European and Asian exporters ended up in US consumer or mortgage debt and how risk was transformed in the process. The main point is that global imbalances would not have become so extreme if global finance had not provided exotic new instruments.

Entire Article => How toxic finance created an unstable world

blindmanAugust 23rd, 2009 at 8:51 pm

the Military-Industrial Complexestablished Tuesday, January 17, 1961″We must never let the weight of this combinationendanger our liberties or democratic processes”.[ Value of ALL Contracts Since Tracking Beganon October 30, 2006 ]$785,494,887,277[ Value of Contracts In 2009 ]$166,350,145,364SO FAR since 10/30/ has recorded a total of 9,499 publicly-reported defense contracts. To date, that is an average of $2,558 for each member of the US citizenry (307,058,118 – – 08/01/09).RECENT updated M-F after 5PM ETThere were 29 publicly-reported Defense Contracts listed [ TODAY ] totaling $2,196,109,955. Up 424% from Yesterday.DAY PRIORThere were 11 publicly-reported Defense Contract listed [ YESTERDAY ] totaling $418,676,910.THIS WEEK79 publicly-reported Defense Contracts are listed This Week totaling $4,024,176,978. Up 35% from Last Week.

GuestAugust 23rd, 2009 at 9:09 pm

Why spend any energy fighting this? Just step away and let it kill itself. It’s the way that the rich become, so paranoid that they lock themselves in tighter and tighter, spending ever increasing amounts of money (that they steal from actual workers) battling -to borrow a word from H.L. Mencken- hobgoblins!Ha! And these anal retentive idiots thought that the hippies were paranoid!

gAntonAugust 23rd, 2009 at 9:12 pm

Last, last, I’m last! (At least right now!)Every now and then I run into a piece of wisdom that says better in a few words what would take me several pages to say the same thing, but not nearly as well. I recently had this experience, and I would like to share the quote with Dr. Rubina and his fan club””The idea that a devalued currency can bring prosperity is sheer madness”– Phill Tomlinson.(You don’t know who Phill Tomlinson is? I don’t either, but he’s surely nobody’s dumb bell.)

London BankerAugust 23rd, 2009 at 10:28 pm

I was just reflecting on another short quote I read here some time back about the deflation of the Great Depression: “There was plenty of everything for sale, but nobody had any money.”Economists can write lenthy analyses stuffed with graphs, but sometimes a few words does the job just as well.

AnonymousAugust 24th, 2009 at 4:06 am

haah some of the Ole Gang (PeteCA, LB , OR , MOrbid,) are backis it time to feast now??Heliben still got bullets??Feel lucky PUnk??(sorry Morbid, im using your analogy)

The AlarmistAugust 24th, 2009 at 4:11 am

People had money, but were reluctant to spend for a host of reasons. When we cleaned out my Grandmother’s house, I was not surprised by the gold pieces or diamonds that she had on hand as portable wealth, but rather by the fact that her Great Depression stash included banknotes from the 1930’s that she had taped under carpets and sewn into curtains and seemingly must have forgotten as they then devalued during the so-called post-war boom years. She was not alone, as I have heard plenty of stories of people who held onto their cash because despite the best efforts of their government they had no idea how long the GD was going to last. Sound eerily familiar?

GuestAugust 24th, 2009 at 10:43 am

As for ECRI’s Lakshman Achuthan and the Street’s cheerleaders hip hip hoorahing that pent-up demand will drive the strongest recovery since the early 1980s, I say, who’s going to buy?America’s pent-up demand is for recovery of opportunity. And if the parasitic bankers continue to hold down opportunity, pent-up demand’s going to smack them and kill them. They are damaging the host. America doesn’t need these people. They are unnecessary. Pent-up demand is for freedom, for opportunity to invest, to find a job, to create a business, to build a better mouse trap Parasitic central bankers have taken away opportunity—in the land of opportunity! That’s a signal that Washington has painted a huge target on it’s back.As explained by Nathan Martin of Nathan’s Economic Edge, “It takes INCOME to service debt. When the income no longer grows, if debt saturation has occurred, then debt must fall as the ability to pay it back falls with income.What is income doing? “Personal Income is FALLING. Consumer Credit is FALLING.”Says Nate, “Consumer who have less credit available spend less money. International trade falls. Corporate profits, those at least marked to reality, fall… [A]s interest rates declined to zero, debt and incomes grew until incomes could no longer support further growth in debt…”With interest rates at zero, says Nate, “There are only two possible paths of motion, sideways or up—OR self destruction.. [Z]ero is NOT any more normal than 20%.“We are at the end of an era, the era of leverage. We are now staring down the end of a loaded gun with our finger on the trigger. We can choose to normalize interest rates and suck up the fact that debts don’t grow forever, OR we can pull the trigger and continue to print and to run up debts that we cannot service; the latter is fiscal and governmental suicide. The latter will lead to a loss of confidence in government and the demise of the dollar. That is NOT INFLATION!! That is a LOSS OF CONFIDENCE in a fiat money system.“And thus CHANGE is COMING. You and I both hope that our leaders do not pull the trigger and commit suicide—so far they are doing exactly that…” Here’s Nate’s link:

Little SaverAugust 24th, 2009 at 2:20 am

Why Bernanke, Geithner, Paulson (deliberately?) made such a huge “honest mistake”:>Ben Bernanke (like Tim Geithner and his predecessor Hank Paulson), shows no hesitation in diverting the real resources of the American public to defend and compensate the bondholders of mismanaged financial companies who made reckless loans and who should have (and equally important, could have) been expected to write down principal or swap debt for equity as an alternative to receivership. This is not decisiveness. It is timidity and poor stewardship. Worse, the underlying problems are not healed – only band-aided temporarily by a flood of public money.Unfortunately, the resources used in the recent bailout were not just free money tossed out of a helicopter. Only a partial-equilibrium economist thinks that way. No, this was an allocation of trillions of dollars of real resources that could be spent improving access of poor families to health care, finding cures for life-changing diseases, providing better education, and reversing the crowding-out of productive private investment. A public servant willing to act this carelessly with the resources entrusted to him, and so strongly in defense of fellow bankers, frankly does not deserve the job. Most likely, we will face the same credit issues a few quarters from now, given that the lull in the adjustable-rate reset schedule is near its end. We continue to expect a fresh acceleration of credit losses as we enter 2010. It would be best if we faced these challenges with more thoughtful leadership. <Forget about thoughtful leadership that is able or allowed to think outside the banker’s tunnel vision of directing money to themselves.

Average JaneAugust 24th, 2009 at 2:12 pm

Hussman is absolutely a voice of reason. He has been very, very cautious during this recent runup. I have a great deal of respect for his analyses and he occasionally goes out on a limb with a tongue-lashing or two. He’s been particularly incensed by the bank bailouts. His webpage is one that I read regularly–he posts once a week either late Sunday night or early Monday morning.I like your posts too, Little Saver–thank you for participating in this blog.

Little SaverAugust 24th, 2009 at 2:35 am

GM Advisers Said to Suggest Keeping Opel for European PresenceThe advisers suggest that GM seek aid from other European governments to retain ownership of Opel as an alternative to surrendering control to a group led by Canada’s Magna International Inc. or to Brussels-based RHJ, the Americans not only go for American state support, no. They also want German taxpayer money. When will all this looting be stopped?

Guest88August 24th, 2009 at 4:16 am

When they’ve taken all your wealth, you silly person. The country that deigned to export capitalism all those years has a lot of catching up to do in its revitalisation of Soviet hegemony.

MorbidAugust 24th, 2009 at 5:19 am

Some points from Marc Faber’s Audio

USA Deficit in 2010 to hit $2.5 TrillionNo increase in interest rate in USA – Fed can’t allow itMust Control USA SpendingGet rid of lobbiesGet rid of 50% of all government jobsGet rid of 50% of all members of congressBush I thought was bad but now you have a president who thinks he knows everythingFuture:Total collapse of World Wide Financial system is ahead of usCould happen in a year, 5 years or 10 years – but it will happenWill lead to the end of the capitalistic system.Will lead to war as nations try to distract populations.

PeteCAAugust 24th, 2009 at 11:14 am

I seem to recall that some Russian economists (financial doom predicters) were speculating on a collapse of the US system sometime around 2010-2011. Still looks like their estimate could be right … especially since you have to give them a little “wiggle room” with their predictions (which were made several years ago). The new rapidly expanding estimates for deficits in the Obama years (in future) certainly imply an implosion at some point.PeteCA

GuestAugust 24th, 2009 at 9:22 am

MEDICAL MALPRACTICE CASES ADD LESS THAN ONE PERCENT TO HEALTH COSTSCommon Dreams – In an astonishing refutation of insurance company claims that medical malpractice verdicts are “exploding” and forcing dramatic rates increases, a new analysis shows that insurance companies are paying victims of medical negligence on average only $42,607.03. This is only slightly more than the average payout was a decade earlier — $39,093.31. Moreover, medical malpractice costs, as a percentage of national health care expenditures, are at an all time low, 0.55 percent. The analysis, conducted for the Center for Justice & Democracy by actuary J. Robert Hunter, Director of Insurance for the Consumer Federation of America, examined year 2000 insurance data. . . He concludes, “Medical malpractice insurance is amazing value, considering that it covers all medical injuries for about one-half of one percent of health system costs.”

The AlarmistAugust 24th, 2009 at 1:01 pm

Well, we bitter clingers have to cling to something other than our guns and religion, and the trial lawyers make a great target.

GuestAugust 24th, 2009 at 1:42 pm

misleading – what is happening is doctors are ordering 5x as many tests to cover their a^% from malpractice lawsuit… these extra orders do not get tallied…

PeteCAAugust 24th, 2009 at 11:10 am

Follow-up to item above on medical costs. Just talked to a friend who had a 2-day surgery procedure in a US hospital. The hospital billed for $50,000 in costs. The insurance company settled at $15,000 and everybody was happy with that.Are you kidding … $50,000 in costs??? Just how many bandages and scalpels can you use? Obviously the hosptials are padding added costs into their estimates in a major way – maybe to stay profitable. Clearly everybody knows this, which is why the insurance company settled for 30% of what the hospital actually billed. But the whole system has completely lost any common sense at this stage. It’s hard to see how we can get on top of the whole mess … without tearing everything down and starting from scratch.PeteCA

GuestAugust 24th, 2009 at 12:20 pm

We need to once again let the market decide health care costs. Nor must we let the government do the rationing. Let the market do the rationing. If I want to mortgage my house, sell everything I’ve got to keep my mother alive, let me decide, not the government. With the government’s record of increased costs and reduced service, it will first target 75-year-olds for euthanasia, then it will be 70-year-olds, then anybody over 55. When the government decides, eventually it lines you up against the wall and shoots you. Mao is the government, Pol Pot is the government, Trotsky is the government, Mugabe is the government.. To these people, if you’re going to make the government work, you’ve got to kill people. That’s rationing, that’s why they’re calling rationing socialism. Obama is a Statist, he wants the government to make the decisions: Obama is not a care giver, he is the shooter.Obama healthcare, says Peter Schiff, is the government continuing to do the wrong thing at the wrong time—like when they’re broke. It shows how clueless they are. The reason health care costs are so out of control now, he says, is because of too much government, too much insurance.To prove his point, Schiff says that the rate of increased costs for insured procedures is three times faster than for uninsured procedures. For the latter, such as breast implants where the cost is falling, competitive cost pressures keep costs down and quality up. Doctors want your business and compete for it. It’s the opposite with insurance—no one asks what the procedures cost.We don’t need maintenance insurance, says Schiff, we need real market force insurance for catastrophic occurrences, for those cases that would break you financially. You don’t insure your toilet against leaks, says Schiff, you insure your house against fire. Insurance causes costs to go ballistic.The same can be said of college tuition, Schiff said. It’s up because of government interference–subsidies, grants, loans–that have saddled young people with $100,000 debt. Tuition costs would collapse without government.

MedicAugust 24th, 2009 at 1:14 pm

Pete -The inflated costs are not reflective of what the hospital wants (or needs) for reimbursement. It is a reflection of the hospitals having to (increasingly) write off free care for the uninsured and the underinsured.Since ER’s cannot turn anyone away, they end up giving away lots of free care, and not just emergency care. They have become the catch basin for anyone without insurance, and as such, they now provide routine care as well as emergent and non-emergent care for too many citizens.Medicare sets their own reimbursement rates, so if they have budget issues, hospitals and providers take the hit. Insurance companies are increasingly getting harder and harder to deal with as they try and limit reimbursements to as little as possible, often refusing to pay for services already performed.For those who argue loudest about rationing, I can assure you that currently care is only rationed right now by insurers and the ones who suffer due to rationing today are all insured. But it’s not really rationed care, it’s rationed reimbursement.At any rate, when you add in all the write offs and lower reimbursements, the hospitals start to charge more. If they have a deal with insurers to reimburse at %70 for certain procedures, then if they need to make up for lost revenue, the hospital will increase the price. That’s why if a patient is willing to make arangements for payment, the hospital will always take much less.The best answer lies in increasing the numbered of insured people (thus eliminating free care absorbed by providers and hospitals) and in adequetely funding the public option so that realistic costs will be reimbursed.

PeteCAAugust 24th, 2009 at 1:36 pm

Medic … good comments. I don’t work within the system myself and so I don’t know the specifics of how hospitals bill their care. But I am aware that some places, like Los Angeles, have been losing ER’s. They are literally going out of business. Yet the irony is that the ER is the frontline of the medical system – it’s where everybody must go if they need urgent medical care. So I tend to see the “ER Problem” as a barometer for US health care issues … and the signs it is giving are not good.I am afraid that the USA is going to somehow try to address the health care problem by applying bandaids. Maybe super-sized bandaids, but quick fixes nevertheless. I don’t think this is going to work – or at least be a long-lasting solution. But our political system in the US is not willing to go through the enormous pain and effort that would be required to tear up the existing healthcare apparatus – and re-build a better one.PeteCA

GuestAugust 24th, 2009 at 11:12 am

Breaking: White House Confirms It Used US Taxpayer Dollars to Sell Obamacare! 08/22/09YOUR TAX DOLLARS AT WORK– PAYING FOR OBAMACARE EMAIL SPAM!Was this one of those shovel ready projects Obama was talking about?The White House confirmed that it used US taxpayer dollars to push Obamacare!The Obama Administration hired a private communications company to push their socialist health care agenda using taxpayer money!These are the same emails that the White House originally said they knew nothing about!White House Spokesman Robert Gibbs denied knowledge of this operation when questioned about it on August 13th. [VIDEO]Hat Tip NC CopYet, the White House had hired a company using taxpayer money to send out the spam emails.FOX News reported:The White House hired a private communications company based in Minnesota to distribute mass e-mails, helping to shed light on how some recipients received e-mails in support of President Obama’s health care plan without signing up for them, FOX News has learned.The company, Govdelivery, describes itself as the world’s leading provider of government-to-citizen communication solutions and says its e-mail service provides a fully-automated on-demand public communication system.It is still unknown how much taxpayer money the White House provides to Govdelivery for its services.The revelation comes after the White House acknowledged this week that people were receiving unsolicited e-mails from the administration about health care reform and suggested the problem was with third-party groups that placed the recipients’ names on the distribution list…Several FOX News viewers complained they received these e-mails even though they had never requested any communication from the White House.On Monday, the White House implemented several new changes to its Web site, apparently aimed at reducing the number of people who receive unsolicited e-mails and at fighting charges that it’s collecting personal information on critics. (end)AllahPundit at HotAir adds:We can trust small-potatoes stuff like health care to the government, but when it comes to something as precious as spamming Americans with Obama propaganda, only an efficient market solution will do.

The AlarmistAugust 24th, 2009 at 1:05 pm

Utterly subversive.If was still in action, you can bet this would be there a few times over.Remember the old saying, “You wouldn’t being doing this if Nixon were in the Whitehouse!” ??? I tell you, it’s the 1970’s all over again.

GuestAugust 24th, 2009 at 11:31 am

Look at Fannie (up 45%) and Freddie (up 28%) go. So much better than playing around with gold. Real Estate numbers should be good this week.hlowe

MAAugust 24th, 2009 at 11:35 am

Can somebody/anybody find a link or more information about JPM Chase withdrawing their own money from Madoff four months prior to the Ponzi scheme being unearthed??? (which sped up the ponzi scheme’s unraveling)Apart from the multiple trading/reporting violations (not reporting the fraud to the SEC, FINRA, etc…) by taking their own money out and not their client’s money, they failed in their fiduciary responsibility to act in their client’s best interest.Apparently, JPM Chase did this with insider knowledge that they gained from taking over Bear Stearns… (JPM Chase was the cash custodian for Madoff. When they took over Bear Stearns, they gained access to the trading side of Madoff’s operation (which cleared through Bear Stearns) JPM Chase was able to see that not only was the cash side empty, but the broker side was not capable of operating either, and did not have the ability to make the trades they were making nor did they gel with the “profits”.)I’ve been on vacation for the past couple of weeks and missed this story and haven’t seen it anywhere???? …and I’m kinda shocked I don’t see anything about it here???If true, this is potentially the biggest insider trading scheme ever done!!! ….and there should be people lining the streets right now! Heads should roll! If Madoff created the largest Ponzi scheme, I’m sure Madoff’s cash custodial bank pulling their own funds (with inside information) would clearly put this at the top of the: “worst cases of insider trading” list.All the best,Miss America

HangemHighAugust 24th, 2009 at 12:24 pm

Not difficult to believe, but likely surpressed and will partially surface in the future, well after the fact, as to continue to avoid indictment.Welcome back – it was lovely that you were able to take several of vacation.

GuestAugust 24th, 2009 at 1:11 pm

The upshot here: after buying Bear Stearns in March of ’08 (where Madoff had a long trading relationship), JP Morgan (nyse: JPM) execs smelled a rat and pulled all their funds from Madoff accounts. However, they allegedly failed to tell any of their clients to pull their funds, and these were clients who had invested with Madoff at JPM’s recommendation. Not to mention that they didn’t contact the SEC to report their suspicions. That’s disgusting behavior. Now, several clients are suing.

PeteCAAugust 24th, 2009 at 1:39 pm

Hey MA … this is a great story! You need to follow up this one, and try to get all the details out. Is this what it takes today for investors to be protected – insider information on cash flows and trading operations?!!PeteCA

GuestAugust 24th, 2009 at 11:53 am

Financial Crisis Called OffBy James Howard Kunstleron August 24, 2009 7:49 AMWhew, what a relief! Everybody from Ben Bernanke and a Who’s Who of banking poobahs schmoozing it up in the heady vapors of Jackson Hole, Wyoming, to the dull scribes at The New York Times, toiling in their MC Escher hall of mirrors, to poor dim James Surowiecki over at The New Yorker, to – wonder of wonders! – the Green Shoots claque at the cable networks, to the assorted quants, grinds, nerds, pimps, factotums, catamites, and cretins in every office from the Bureau of Labor Statistics to the International Monetary Fund – every man-Jack and woman-Jill around the levers of power and opinion weighed in last week with glad tidings that the world’s capital finance system survived what turned out to be a mere protracted bout of heartburn and has been reborn as the Miracle Bull economy. Our worries over. If you believe their bullshit. Which I don’t.All this goes to show is how completely the people in charge of things in the USA have lost their minds. They seem to think this mass exercise in pretend will resurrect the great march to the WalMarts, to the new car showrooms, and the cul-de-sac model houses, reignite another round of furious sprawl-building, salad-shooter importing, and no-doc liar-lending, not to mention the pawning off of innovative, securitized stinking-carp debt paper onto credulous pension funds in foreign lands where due diligence has never been heard of, renew the leveraged buying-out of zippy-looking businesses by smoothies who have no idea how to run them (and no real intention of doing it, anyway), resuscitate the construction of additional strip malls, new office park “capacity” and Big Box “power centers,” restart the trade in granite countertops and home theaters, and pack the turnstiles of Walt Disney world – all this while turning Afghanistan into a neighborhood that Beaver Cleaver would be proud to call home.By the way – and please pardon the rather sharp digression – but does anybody know if they buried Michael Jackson yet? It’s only been a couple of months. And, if not, is that the stench now wafting across the purple mountains’ majesty from sea-to-shining sea? Isn’t it a little indecent to keep the poor fellow waiting? Or is a really surprising comeback secretly planned, with product tie-ins and all?America loves the word “recovery” as only a catastrophically sick society can. “In recovery” is the new universal mantra of loser individuals and loser nations. Everybody in the USA is in recovery. Even Michael Jackson (he may have given up on somatic activity but, on the plus side, as the Rotarians love to say, he’s quit using drugs for once and for all, and the magazines have stopped publishing photos of him taken after 1990, when he turned himself into something out of the Hammer Films catalog).To sum it all up, the US economy is in recovery. Paul Krugman says that we’ll soon realize that Gross Domestic Product (GDP) is growing. He actually said that on the Sunday TV chat circuit. Not to put too fine a point on it, but I would really like to know what you mean by that Paul, you fatuous wanker. Do you mean that the Atlanta homebuilders are going to open up a new suburban frontier down in Twiggs County so that commuters can enjoy driving Chrysler Crossfires a hundred and sixty miles a day to new jobs as flash traders in the Peachtree Plaza? Do you mean that the Home Equity Fairy is going to wade into the sea of foreclosure and save twenty million mortgage holders currently sojourning in the fathomless depths with the anglerfish? Do you mean that all the bales of deliquescing, toxic “assets” hidden in the vaults of Citibank, JP Morgan, Bank of America, et al, (not to mention on the books of every pension fund in the USA, and not a few elsewhere) will magically turn into Little Debbie Snack Cakes on Labor Day weekend? Do you mean that American Express and Master Card are about to declare a Jubilee on accounts in default everywhere? Do you mean that General Motors will produce a car that a.) anyone really wants to buy and b.) that the company can sell at a profit? Are you saying we get a do-over, going back to, say, 1981? Did we win some cosmic lottery that hasn’t been announced yet? What’s growing in this country besides unemployment, bankruptcy, repossession, liquidation, gun ownership, and suicidal despair? In short, are you out of your mind, Paul Krugman?The key to the current madness, of course, is this expectation, this wish, really, that all the rackets, games, dodges, scams, and workarounds that American banking, business, and government devised over the past thirty years – to cover up the dismal fact that we produce so little of real value­ these days – will just magically return to full throttle, like a machine that has spent a few weeks in the repair shop. This is not going to happen, of course. It is permanently and irredeemably broken – this Rube Goldberg contraption of swindles all based on the idea that it’s possible to get something for nothing. And more to the point, we’re really doing nothing to reconstruct our economy along lines that are consistent with the realities of energy, geopolitics, or resource scarcity. So far, our notions about a “green” economy amount to little more than blowing green smoke up our collective ass. We think we’re going to build “green” skyscrapers! We’re too dumb to see what a contradiction in terms this is. The architects are completely uninterested in the one thing that really is “green” – traditional urban design – and most particularly the walkable neighborhood. That’s just too conventional, not special enough, lacking in star power, not enough of a statement, boring, tedious, so not cutting edge! We blather about high speed rail, but you can’t even get from Cleveland to Cincinnati on a regular train – and what’s more amazing, nobody is really interested in making this happen. All we really care about is finding some miracle method to keep all the cars running.What we’ve been seeing is nothing more than a massive pump-and-dump operation in the stock markets, most of it executed by programmed robot traders, with the trading nut provided by taxpayers current and future. These shenanigans add up to new risks and fragilities so extreme that the next time a grain of sand catches in the exquisite machinery they will sink the USA as a viable enterprise. We will end up discrediting not just capitalism, but also the idea of capital per se, that is, of deployable acquired wealth. As this occurs, of course, events on-the-ground will give new meaning to the term “reality television.”

The AlarmistAugust 24th, 2009 at 1:08 pm

Did Krugman actually say GDP is growing, or is it that the second derivative of GDP growth has turned positive.

PeteCAAugust 24th, 2009 at 1:44 pm

I think Jim Kunstler and Ambrose Pritchard Evans have got it right. The western financial system is headed into a long period of rot and decay. Looking at the first paragraph of the aticle above … the word “pimp” should be emphasized. There are way too many people pimping the system at present.PeteCA