What he said …
Posted: December 11, 2011 Filed under: #Occupy and We are the 99 percent!, Bailout Blues, Banksters, Economy, financial institutions, Global Financial Crisis 6 CommentsI keep talking about the utter audacity of the political class these days and how they completely ignore everything we know about economics and finance in pursuit of 
self-dealing and getting political donations from the FIRE industries. I particularly hate that we’ve got this complete twisted notion of “free” trade and “free” markets thanks to a bunch of really ignorant right wingers and mouthpieces like Rush Limbaugh, Fox News, Larry Kudlow, etc. etc. etc.. These folks are out to line their own pockets and they are pitching nonsense to low information zombies.
I also really hate to just wholesale copy and paste another blog–in this case Washington Blog at The Big Picture–but some times you just have to let the voice of the source speak for itself and hope it stands up to the ideals of fair use. Thanks go to Fiscal Liberal for pointing me to this list and its readable wonky links of proof. It’s called ‘The Financial Crisis was Entirely Foreseeable’ but it might as well be labelled ‘Idiots in the Beltway are spewing memes and setting us up for a big ol’ repeat of the global financial meltdown’. Idiots in Europe are doing likewise. Why are they all bailing ut gambling bankers over their households and real businesses? Where’s a politician that really knows his stuff when it comes to authentic finance and economics?
We’ve Known for Thousands of Years
We’ve known for literally thousands of years that debts need to be periodically written down, or the entire economy will collapse. And see this.
We’ve known for 1,900 years that that rampant inequality destroys societies.
We’ve known for thousands of years that debasing currencies leads to economic collapse.
We’ve known for hundreds of years that the failure to punish financial fraud destroys economies.
We’ve known for hundreds of years that monopolies and the political influence which accompanies too much power in too few hands is dangerous for free markets.
We’ve known for hundreds of years that trust is vital for a healthy economy.
We’ve known since the 1930s Great Depression that separating depository banking from speculative investment banking is key to economic stability. See this, this, this and this.
We’ve known since 1988 that quantitative easing doesn’t work to rescue an ailing economy.
We’ve known since 1993 that derivatives such as credit default swaps – if not reined in – could take down the economy. And see this.
We’ve known since 1998 that crony capitalism destroys even the strongest economies, and that economies that are capitalist in name only need major reforms to create accountability and competitive markets.
We’ve known since 2007 or earlier that lax oversight of hedge funds could blow up the economy.
And we knew before the 2008 financial crash and subsequent bailouts that:
- The easy credit policy of the Fed and other central banks, the failure to regulate the shadow banking system, and “the use of gimmicks and palliatives” by central banks hurt the economy
- Anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts “will only make things worse”
- Bailouts of big banks harm the economy
- The Fed and other central banks were simply transferring risk from private banks to governments, which could lead to a sovereign debt crisis
Given the insane levels of debt, rampant inequality, currency debasement, failure to punish financial fraud, growth of the too big to fails, repeal of Glass-Steagall, refusal to rein in derivatives, crony capitalism and other shenanigans … the financial crisis was entirely foreseeable.
Okay, so let’s just end that last part by taking out “the financial crisis was entirely foreseeable” and by replacing it with “the next big financial crisis is entirely foreseeable and getting more likely every day”. If you need any proof of further inevitability just listen to ANY Republican these days and most of the Democratic Caucus. They are resplendent with VooDoo Economics and Finance believers and enablers. It’s just like with climate science and evolution. An entire group of people who embrace ideology over reality just can’t seem to get out of the flat earth theories. Watching the Republican debates alone has been like watching the march of ignorance personified. I’m waiting for them to start announcing the earth is only a few thousand years old, gravity doesn’t exist or need to because god’s hand holds us in place, and 1 + 1 is really 3. If only the media would act like the set of fact checkers they could be instead of mouthpieces for corporate interests we might actually be able to get through to a few zombies and bring them back to life. Until then, get ready for the next big one.
What’s so hard to understand about the word Contractionary?
Posted: December 10, 2011 Filed under: Bailout Blues, Banksters, Economy, financial institutions | Tags: Eurozone, macroeocnomics, Paul Krugman 17 Comments
I just read an excellent article at VOXEU called “A summit to the Death” by Kevin O’Rourke. It’s full of common sense economic analysis about the state of the EU that reminds me of how rare common sense can be. While the analysis looks at he EU, it could well apply to the US as well. There seems to be some disease in political bodies these days that cannot grasp the concept of contractionary policy as contractionary.
There’s also this scramble to save financial institutions at all costs while doing nothing to prevent recurrence of bad practices and solving the fall out anywhere outside a bank balance sheet. To a certain extent, the EU crisis comes from the inability of many countries to think of policy in terms of something other than currency devaluation as a way of making their workers and goods appear cheap to the rest of the world. In this scenario, a country can goose some of its business activities at the expense of some of its businesses and its citizens and not get caught by any one but those of us that watch those sort of things. That long run game of devaluing US workers has caught up with us here.
One lesson that the world has learned since the financial crisis of 2008 is that a contractionary fiscal policy means what it says: contraction. Since 2010, a Europe-wide experiment has conclusively falsified the idea that fiscal contractions are expansionary. August 2011 saw the largest monthly decrease in eurozone industrial production since September 2009, German exports fell sharply in October, and now-casting.com is predicting declines in eurozone GDP for late 2011 and early 2012.
A second, related lesson is that it is difficult to cut nominal wages, and that they are certainly not flexible enough to eliminate unemployment. That is true even in a country as flexible, small, and open as Ireland, where unemployment increased last month to 14.5%, emigration notwithstanding, and where tax revenues in November ran 1.6% below target as a result. If the nineteenth-century “internal devaluation” strategy to promote growth by cutting domestic wages and prices is proving so difficult in Ireland, how does the EU expect it to work across the entire eurozone periphery?
The world nowadays looks very much like the theoretical world that economists have traditionally used to examine the costs and benefits of monetary unions. The eurozone members’ loss of ability to devalue their exchange rates is a major cost. Governments’ efforts to promote wage cuts, or to engineer them by driving their countries into recession, cannot substitute for exchange-rate devaluation. Placing the entire burden of adjustment on deficit countries is a recipe for disaster.
In order to protect financial markets, countries like the UK and the US have been willing to prop up poorly performing financial institutions at an extremely high cost while further driving the nominal wages of their workers to lower and lower levels through currency debasement. Then, after slashing spending, they wonder why they’re economies don’t expand. It seems like some of the very easiest lessons of Macro 101 weren’t absorbed by a number of world leaders today. That vehicle of robbing Peter to prop up Paul and a few exporters isn’t available to countries in a currency union unless the Central Bank wants to do it for all.
O’Rourke’s analysis led Paul Krugman to rightly make this observation.
Maybe it was always thus, but the relentless wrong-headedness of the Europeans, their insistence on seeing their crisis as something it isn’t, and responding with actions that deepen the real crisis, has been a wonder to behold. In the 1930s policy makers had the excuse of ignorance; there was nobody to explain what was happening. Now, their actions amount to a willful disregard of Econ 101.
Let me provide an interesting bit of perspective. In 2007, Spain ran a budget surplus. That actually was its third budget surplus in row. At the time, its growth had been forecast to decline but ot was slammed by the global financial crisis. Spain is now on the list of problem countries–the S of the PIIGS–because it was trying to deal with 30 years of budget deficits to get in line with the EU Criteria. Balanced budgets are the proscribed way to handle an economy that is operating where it should be operating. Spain’s is having problems because financial institutions all over the world gambled and lost. Their economic activity declined, their tax receipts went down, and their obligations to the unemployed went up. So, as would be expected, their deficits widened. Now, the banks that caused the huge global crisis are getting full court sympathy and Spain is being blamed for threatening the status of the union.
Eyes in the Sky
Posted: December 10, 2011 Filed under: Breaking News, Civil Liberties, Drone Warfare, Injustice system, Patriot Act, We are so F'd | Tags: drones, police state, privacy 8 CommentsFor anyone who is not persuaded that this country has made a significant U-turn in terms of privacy, civil liberties and what we used to quaintly refer to as ‘freedom,’ this You Tube report is for you. Hat tip to Democratic Underground on this particular find.
Personally, these drones scare the bejesus out of me. But any public official saying that ‘nothing is ruled out’ when it comes to drone application in the domestic arena is even more frightening. It should also remind us that this is what perpetual war and disaster capitalism creates–a security industry for profit wrapped in secrecy and the American flag.
The Eyes in the Sky will be watching. All of us.
Saturday Morning Reads
Posted: December 10, 2011 Filed under: just because | Tags: Donald Trump, FBI, iran, kidnapping, Los Angeles, Newsmax Republican debate, random shootings, Robert Levinson, Ross Truett Ashley, Russion protests, Virginia Tech, Vladimir Putin 12 Comments
Good Morning!! On Tuesday I was complaining about our weather, but it has been sunny now for two days straight. Just a little sun does wonders for my mood. If only it didn’t get dark at 3:30PM. I might have to start setting my alarm for 5AM so I can get more sun exposure. Okay, enough about Boston weather. Let’s what’s in the news. We’ll start with the lightweight stuff.
It was rumored yesterday afternoon that Donald Trump was going to cancel his debate, which is sponsored by Newsmax.
With the wheels coming off the GOP debate he is supposed to host, Donald Trump admitted Friday that he’s looking into canceling the sparsely-attended forum.
But Trump, in a typical display of chutzpah, said there’s another reason why he might pull the plug – he still may run for President.
“If the Republican, in my opinion, is not the right candidate [to defeat President Obama\],” Trump declared, “I am unwilling to give up my right to run as an independent candidate.”
But as of late last night, “organizers” claimed the debate was “still on,” according to the LA Times.
There may only be two candidates, but plans for a debate moderated by Donald Trump are “moving full steam ahead,” the organizers said Friday.
Only Newt Gingrich and Rick Santorum accepted the invitation from conservative media group Newsmax to attend the Dec. 27 forum in Iowa, broadcast on Ion Television.
Ion Television normally shows reruns of Criminal Minds, Ghost Whisperer, and other TV dramas, along with old movies on weekends. It seems appropriate that the Republican Candidates might appear in the Criminal Minds slot.
Steve Coz, Newsmax’s editorial director, said in an interview that the hosts were “absolutely not” considering dropping Trump from the event.
“We just had a full production meeting this morning. We’re moving full steam ahead,” he said.
Coz said he was “disappointed” that other candidates backed out.
“It’s because they’re afraid of Trump because he’s so tough and so smart,” he said, admitting he is not a “typical moderator.” “The fact that they’re so fearful of Donald Trump that they don’t come is ludicrous. How can you be running for president and afraid of Donald Trump?”
Donald Trump “smart?” Now I’ve heard everything. But I agree that if these candidates are afraid of an old windbag like Trump, they’re in the wrong business.
A video has been released of Robert Levinson, a former FBI agenct who disappeared five years ago at age 59.
The mystery surrounding the disappearance nearly five years ago of a former Federal Bureau of Investigation agent in Iran was rekindled Friday with the release of a hostage videotape showing him alive as of a year ago. In the video, the former agent, Robert A. Levinson, is shown in a makeshift cell looking gaunt and wearing a threadbare shirt.
Mr. Levinson, who worked as a private investigator after retiring from the F.B.I., disappeared in March 2007 while on Kish Island, a resort in the Persian Gulf. In the tape, which was received by Mr. Levinson’s family last November, he says that he has been held in captivity for three and a half years but does not identify his captors.
The tape was the first sign he was still alive. “I need the help of the United States government to answer the requests of the group that has held me,” he said on the tape as faint music played on a soundtrack. “Please help me get home. Thirty-three years of service to the United States deserves something.”
I don’t recall hearing about this before, does anyone else? Levinson’s family members have a web site where they have posted videos and appeals to his captors. The FBI is aware of the situation and there have been meetings between U.S. and Iranian officials. The Iranian government claims they had nothing to do with Levinson’s kidnapping, but are willing to help find him. According to the NYT article, Secretary of State Clinton indicated earlier this year that she believes Levinson is still alive.
The suspect in the Virgina Tech shooting has been identified as Ross Truett Ashley.
A 22-year-old Virginia man stole a Mercedes SUV at gunpoint the day before he shot dead a Virginia Tech police officer and then took his own life, police said Friday.
Virginia State Police on Friday identified Ross Truett Ashley, 22, as the man who killed Virginia Tech Police Officer Deriek Crouse and then himself about 30 minutes later.
A part-time student at Radford University, 15 miles southwest of Blacksburg, Ashley had no connection to or contact with Crouse before Thursday’s shooting, according to a news release from state police.
“State police investigators are continuing their work to establish a motive in the killing and to re-create Ashley’s movements in the days and hours leading up to the murder-suicide,” police said.
A little more on Ashley from the NYT:
Little was known about Mr. Ashley. He lived on East Main Street in Radford. He did not appear on Facebook or MySpace and had no criminal history. The only photograph the police could find was from the Department of Motor Vehicles.
On Wednesday, however, Mr. Ashley walked into a real estate office in Radford, pulled a gun and demanded the keys to an employee’s car, a white 2011 Mercedes-Benz S.U.V., the police said. The car was found Thursday on the Virginia Tech campus.
Mr. Ashley appeared to have considered his moves carefully. He had a change of clothes and a backpack, the police said. He drove to the campus in the stolen vehicle. But the police said they were still trying to establish why he walked up to Officer Crouse during a routine traffic stop and shot him dead….
After shooting Officer Crouse, Mr. Ashley fled to an area near the campus greenhouses. There he changed some of his clothes, leaving a wool hat and a pullover in his backpack, as well as an ID card, Ms. Geller said.
I guess we’ll have to wait for more answers. Apparently Ashley’s family hasn’t been interviewed by the media yet.
There was another mysterious random shooter in LA yesterday.
Los Angeles police detectives spread out to several parts of Southern California on Friday investigating addresses connect to a gunman who randomly opened fire on drivers and pedestrians in Hollywood before being fatally shot by Los Angeles Police Department officers.
Police have so far found no motive in the shooting and don’t believe the gunman knew his targets.
Law enforcement sources said detectives have checked on several addresses — including at least one in the San Gabriel Valley — to seek more information about the gunman, who has not been identified.
There is video of the shootings. A student, William Wiles heard shots outside his apartment and filmed the scene on his iPhone.
A brief video, which he provided to The Times, shows a man in the intersection firing a shot at a pickup truck.
The gunman was “being crazy and spastic,” Wiles said, adding that he heard the man yelling.
The gunman started shooting with no apparent motive. He was killed on Vine Street by Los Angeles police officers Friday morning.
A man in a silver Mercedes Benz who was shot in the jaw is in critical condition, police said. The 40-year-old victim was rushed to Cedars-Sinai Medical Center.
Other witnesses said the man was standing in the middle of the intersection, apparently “shooting randomly at cars and in the air,” said witness Gregory Bojorquez, who was on the way to the Bank of America.
“At first it seemed like a movie but then you could hear the shots hitting metal,” Bojorquez said.
I didn’t watch the video, because I’d rather not have that image in my mind right now.
Are we going to see a “Russian Spring?” From the Guardian UK:
Vladimir Putin is set to face the biggest show of opposition yet to his strongman rule with tens of thousands of Russians promising to take to the streets on Saturday in a popular wave of discontent unseen since he came to power 12 years ago.
The opposition coalesced around a set of concrete demands, including the annulment of a parliamentary vote marred by fraud and the holding of new elections.
“We expect the biggest political demonstration of the last 10 years,” said Ilya Ponomaryov, a Duma deputy with the Just Russia party and a protest organiser. “What will happen tomorrow is an important step in the development of our democracy.”
More than 35,000 people indicated via Facebook that they planned to join the protest in Moscow. After a day of intense negotiations, protest organisers agreed to demands by the city government to move from Revolution Square to Bolotnaya (Swamp) Square, away from the Kremlin. Some protesters expressed concern that the site, on an island accessible by bridges, could be cut off by police.
It really is looking like 2012 could resemble 1968.
Occupy Boston planned to hold a general assembly last night, one day after Mayor Menino had ordered them to leave Dewey Park. From the conservative Boston Herald
The refuse-to-die Boston Occupy movement is holding its general assembly tonight where they are bracing for police to sweep them out sometime after midnight, according to an alert the group sent out.
The warning comes as occupiers hold a general assembly at the Dewey Square encampment — defying Mayor Thomas M. Menino’s call for them to leave.
A new sign is also being showed off: “You Can’t Evict An Idea.” The rally has turned bitter as members take turns lashing out at the mayor’s eviction order.
According to The Boston Globe: Some Occupy Boston protesters said they plan to stay until they are forced to go.
With determination in his voice and a hammer in hand, Occupy Boston protester Harry said today he is willing to risk arrest in order to continue living at the Dewey Square encampment.
One day after Mayor Menino ordered an end to the tent village, the Dorchester man hammered a wooden stake into the ground to support the tent he intends to live in – until he is forcibly removed by Boston police.
“There is a good amount of hope and possibility left at this camp,’’ he said.
Asked what he will do if Boston police change tactics and arrest him as part of the effort to permanently close the encampment, Harry was resigned to being taken into custody.
“Oh, well,’’ he said. “What’s the worse thing they could do? Arrest us for a peaceful protest? Oh, well.’’
I just hope they’re discussing their next moves, because the occupation of parks seems to be played out, especially up here where the weather will be getting colder and messier soon.
Those are my Saturday offerings. What are you reading and blogging about today?
peej
Carissa
bostonboomer
dakinikat
ecocatwoman
mablue2
Mama Lopez
peggysue22
quixote
skydancingguestblogger
Mona (aka Wonk the Vote)
Sky Dancing 
Recent Comments