"Broad Street exchange and curb brokers, New York City"
Ilargi: In the past few weeks, dysfunctional societies have become a very popular theme. So what makes them dysfunctional? Is it just about physical and mental suppression, or are economic factors just as important? How about Mubabrak's rumored $40 billion stash outside of Egypt? Or the $170 billion the US estimates Kadaffi and his family control in funds invested in foreign nations? In a Wikileaks cable on Saudi Arabia, a prince is quoted as saying "the revenues from 'one million barrels of oil per day' go entirely to 'five or six princes". At $95+ per barrel, you do that math.
And if we can agree that things like that are factors in destabilizing societies, how can we not also look at the fast increasing inequalites in western economies? Incomes, job security, health- and other benefits, pensions, average pay, and of course jobs themselves, everything is rapidly deteriorating. While at the same time bankers and politicians are siphoning off what they can get away with from the public funds that by right belong to the same people who lose their jobs, health care access, pensions and homes. And desperately need those funds.
Are we really to believe that the reaction in the western world to these financial atrocities will forever be different from what they are elsewhere today? How, exactly, then are Jamie Dimon and Lloyd Blankfein different from Mubarak and Ben Ali? Is it because what they do is legal? That would be too easy; they make the laws. What Mubarak did was perfectly legal in Egypt; he too made the laws. Is it because Lloyd and Jamie wear no crowns? Are we that easily fooled?
Here's Ashvin with the first part of this take on this.
Ashvin Pandurangi:
It's Not Rocket Science.
It's just basic arithmetic. 2+2 = 4 ...
Privately-owned central banks + discretionary monetary policy = systemic corruption/oppression.
If the Food & Drug Administration had 100% of its shares owned by private pharmaceutical companies, and, a few months after implementing some radical new regulatory directives, these companies began making record profits and their executives receiving record bonuses, then it wouldn't be too difficult to understand why.
Well, that's not necessarily a hypothetical as much as a sad representation of reality, but the connection is even more blatant in the case of the "Federal" Reserve. It's 100% owned by private financial institutions, which receive 6% annual dividends on their shares, and have enormous control over the selection of its Board of Governors, who in turn have enormous control over its Open Market Operations.
After the Fed launched its "QE1" and "QE2" programs in 2008 and 2010, the two most aggressive monetary directives ever undertaken in America (they will combine to total ~$2.5T in debt-asset purchases [1]), the banks have posted "their two best years in investment banking and trading".
For the five biggest institutions (Goldman Sachs, JP Morgan, Citigroup, Morgan Stanley, Bank of America), revenues generated in 2010 were only exceeded by those of one other year in history, 2009. [2]. These two years just happened to follow the onset of the worst economic depression the world has ever experienced, which is still right on track to surpass the global financial and social turmoil caused by the Great Depression. If you think that is an irresponsible exaggeration, then just stop and reflect on the fact that Germany and Japan did not have any access to nuclear or biological weapons of mass destruction back in the 1930s.
Moreover, the worst financial effects of the Great Depression were primarily limited to the Americas and Europe, while the latest credit bubble had stretched its tentacles to every single corner of the globe. North Africa and the Middle East have already descended into the belly of the financial beast, and it is highly likely that certain parts of Europe (i.e. Greece, Spain, Portugal, Italy) and Asia (i.e. Vietnam, Pakistan, Sri Lanka, etc.) will shortly (within the next year) follow their footsteps down the beaten path.
We must remember that the financial elites running the Fed and IMF are not only concerned with making vast sums of money, but also retaining and expanding their grip on the global levers of power. So is it a coincidence that many of these politically unstable countries had been targets of American imperialistic (financial) domination for years now, and that their sociopolitical deterioration presents glaring opportunities for outright regional intervention by the U.S. military-industrial complex?Perhaps not, since the U.S. has often used economic catastrophe to direct economic and political policy in other countries and concentrate ever-more financial wealth in the hands of a few global corporations. Naomi Klein briefly outlines the dynamics of this process in the Introduction of her acclaimed book, The Shock Doctrine, under the direction of its most notorious proponent, Milton Friedman:
"Friedman first learned how to exploit a shock or crisis in the mid-70s, when he advised the dictator General Augusto Pinochet. Not only were Chileans in a state of shock after Pinochet's violent coup, but the country was also traumatised by hyperinflation. Friedman advised Pinochet to impose a rapid-fire transformation of the economy - tax cuts, free trade, privatised services, cuts to social spending and deregulation.
It was the most extreme capitalist makeover ever attempted anywhere, and it became known as a "Chicago School" revolution, as so many of Pinochet's economists had studied under Friedman there. Friedman coined a phrase for this painful tactic: economic "shock treatment". In the decades since, whenever governments have imposed sweeping free-market programs, the all-at-once shock treatment, or "shock therapy", has been the method of choice."
The invasion of Iraq was a more recent and brutal deployment of "shock therapy", which was premised on the existential threat of Saddam Hussein in possession of imaginary WMD, and this time the U.S. military was directly involved (and still is). So there is no lack of credible evidence and common sense to suggest that such "shock" tactics are now being focused on both developed and developing economies in an attempt to create a new global, neo-liberal financial order. However, the scope, scale and specific consequences of the latest financial crisis are not things which can be easily controlled by a few powerful institutions such as the Fed, IMF, World Bank or even the Pentagon, if they can be controlled at all.
Many of the existing power structures in the oil-rich Middle East are clearly targets of destabilization by the financial empire, but it is unclear whether Egypt's revolution was a part of the plan, since Mubarak has always been a tried-and-true ally of the financial elite, and surely the same is true of the House of Saud.
Mubarak's departure may very well be a non-factor for the economic/political realities faced by the Egyptian people, but it can definitely be viewed as a deeply symbolic event. As I alluded to before, the once-propagandized threats of "WMD" and "terrorists" in the region appear to have manifested themselves as actual forces of disruption to be reckoned with. Libya's Qadaffi has always been a stubborn thorn in the empire's side, so he would not be missed, but if he were to actually blow up the country's oil pipelines on his way out [3], the elites would probably not be very happy about it.
Then again, such a catastrophe could provide just the economic shock needed to justify more forceful intervention in the region, if any such justification is even needed at this point. The problem is that, while the original arithmetic is simple enough to understand, complex systems of nature always have a way of introducing unexpected variables into the equation. Are we just following the simple logic which dictates that every economic policy is crafted for the benefit of financial elites, or are we manufacturing an elaborate narrative in which every single event is a stepping stone towards a final pre-conceived destination? One thing we can be certain of is the fact that no complex network can be maintained without some level of integrity in its central hubs, where most of the activity takes place.
The major financial executives may be raking in record stacks of stolen dough, but average American and European citizens are intensely watching their wealth evaporate into thin air as they become increasingly desperate with every passing day. The same could be said of China and India, where there are enormous credit bubbles just itching to pop, and combined comprise more than 11% of the world's GDP and almost 40% of the entire world's population. [4], [5].
It will be increasingly difficult for any group of human beings, no matter how powerful, to maintain a global financial order as the masses wake up from their fleeting dreams of unbridled prosperity. Seated comfortably at my computer, writing about global financial trends marked by increasing wealth inequality, I can confidently say that two plus two always equals four. Sitting atop the ivory towers of Washington and Wall Street, the math is perhaps a bit more difficult and a bit less certain.
*Part II in this series will discuss the deterioration of ecosytems underlying the industrial/financial global economy, and how this dynamic introduces even more uncertainty for the financial elites.
It's the Inequality, Stupid
by Dave Gilson and Carolyn Perot - Mother Jones
Eleven charts that explain everything that's wrong with America.How Rich Are the Superrich?
A huge share of the nation's economic growth over the past 30 years has gone to the top one-hundredth of one percent, who now make an average of $27 million per household. The average income for the bottom 90 percent of us? $31,244.
Note: The 2007 data (the most current) doesn't reflect the impact of the housing market crash. In 2007, the bottom 60% of Americans had 65% of their net worth tied up in their homes. The top 1%, in contrast, had just 10%. The housing crisis has no doubt further swelled the share of total net worth held by the superrich.
Winners Take All
The superrich have grabbed the bulk of the past three decades' gains.
Out of Balance
A Harvard business prof and a behavioral economist recently asked more than 5,000 Americans how they thought wealth is distributed in the United States. Most thought that it’s more balanced than it actually is. Asked to choose their ideal distribution of wealth, 92% picked one that was even more equitable.
Capitol Gain
Why Washington is closer to Wall Street than Main Street.Congressional data from 2009. Family net worth data from 2007. Sources: Center for Responsive Politics; US Census; Edward Wolff, Bard College.
Who's Winning?
For a healthy few, it's getting better all the time.
Your Loss,Their Gain
How much income have you given up for the top 1 percent?
Illustrations by Jason Schneider
Pension Funds Strained, States Look at 401(k) Plans
by Steven Greenhouse - New York Times
Lawmakers and governors in many states, faced with huge shortfalls in employee pension funds, are turning to a strategy that a lot of private companies adopted years ago: moving workers away from guaranteed pension plans and toward 401(k)-type retirement savings plans. The efforts come as the governors of Wisconsin and Ohio, citing dire budget problems, are engaged in bitter showdowns with public-employee unions over wages, pensions and collective bargaining rights.
The new plans allow states to set a firm, upfront limit on the amount they will contribute and leave it up to the employee and the financial markets to make the money grow. In a traditional pension system, the employer promises a certain benefit, then must find a way to pay for it. Like private employers, which in droves have terminated traditional pension plans, many government officials like the idea of shifting much of a pension plan’s risk to the worker. And some workers prefer a 401(k)-type system because it gives them more control over their retirement assets, including the ability to take the money with them when they change jobs.
Utah lawmakers voted last year to make a partial changeover to a 401(k)-type plan, following in the footsteps of Alaska, Colorado, Georgia, Michigan, Ohio and several other states, which offer at least some version of it. In February, Kentucky’s Senate approved a full switch to a 401(k)-type plan, although the bill faces uncertain prospects in the House. In Oklahoma and Kansas, legislative committees will be studying the issue intensively over the next few weeks. Gov. Sam Brownback of Kansas has made it clear he hopes the state Senate will embrace some form of a 401(k)-type plan. Texas is also considering a switch.
Utah decided to adopt a 401(k)-type plan after the stock market plunge in 2008 caused the shortfall in the state’s pension plan to balloon to $6.5 billion. "We said, ‘O.K., how do we prevent this from happening again?’ " said Dan Liljenquist, a state senator who pushed for the changes. "How do we eliminate the bankruptcy risk for our pension fund?" Under the new plan, Mr. Liljenquist said, the state’s retirement contributions for new workers will be roughly half that for current employees, potentially saving $5 million a year for every 1,000 new workers hired.
Still, these plans — similar to 401(k)’s, but named after other sections of the tax code — are not being embraced in states with the biggest pension problems like Illinois, California and New Jersey, which have shortfalls so immense that a switch would not solve their problem. Unlike private companies, most states are constitutionally or contractually barred from changing the pension plans of current employees without their consent. So the new rules are generally voluntary or apply only to new employees.
In fact, switching workers to 401(k)-type plans can make the underfunding problem even worse. As contributions move to individual investment accounts, less money goes into the traditional plan to help finance pensions promised to other workers. "There’s no free lunch here," said Alicia H. Munnell, director of the Center for Retirement Research at Boston College. "People say, ‘We can reduce our costs here if we have a defined-contribution system.’ Well, if you do this, you still haven’t done anything about your unfunded liabilities."
California’s problems are so acute that just last week a government-appointed commission of experts urged the state to consider at least a partial switch to 401(k) plans; six years ago, an effort by Arnold Schwarzenegger, then governor, to move new employees into such plans was blocked by local governments and public-employee unions. The long-term benefits of restructuring pension systems are alluring to many public officials. The new governors of Florida and Kansas, Rick Scott and Mr. Brownback, and lawmakers in North Dakota, Oklahoma, Virginia and several other states are seriously discussing adopting 401(k)-type plans for state employees.
"Every state has to solve this problem or else there’s going to be a very dire consequence," said Mike Mazzei, a Republican state senator in Oklahoma who heads the Senate select committee on pensions and is backing an overhaul of a system that faces $16 billion in unfunded obligations. The push to switch to 401(k)-type plans comes overwhelmingly from Republicans, who see them as more individualistic and free market. Democrats generally oppose the change, partly because their union allies are eager to keep traditional plans.
Utah chose to take a hybrid approach to limit taxpayers’ liability and keep money flowing into the old plan. Starting July 1, new state workers will be able to choose either a traditional pension plan or a 401(k)-type plan, with the state contributing 10 percent of an employee’s salary (12 percent for uniformed workers) to whichever plan a worker chooses. But there is an important twist: Utah will never pay more than 10 percent of a new employee’s salary to the pension plan. If the plan becomes too underfunded, employees who have joined the plan will have to pay a percentage of their paycheck to help eliminate the shortfall.
The Utah plan is meant to give workers a choice, said Mr. Liljenquist, who became such an expert on pension overhauls during Utah’s debate that lawmakers in other states have sought him out for advice. "Some state workers who will just work for the state a few years — take, say, bank examiners — I imagine 75 percent of them will choose defined-contribution plans," he said, referring to 401(k)-type plans. "And I think 90 percent of cops and firefighters and 75 percent of teachers will want a defined-benefit plan because they look at their government jobs as a single career."
Casey Parry, 32, a research consultant in the Utah human resources department, would prefer the 401(k) option. "It’s hard when you’re starting a job to make a decision whether to stay with an employer for 30 years," he said. "I prefer the security of having a defined-contribution plan that I know I can take with me. It’s under my control. I can plan for it." But Debra McBride, a Medicaid policy analyst who has worked for the state for 35 years, said she was happy with a traditional pension plan. "I imagine that anyone who went through the recession with a 401(k) and saw the stock market nosedive wished they had a pension plan instead of a 401(k)," she said.
Lawmakers considering changes are trying to balance competing needs. Georgia officials — fearing that many employees would retire with paltry amounts in their plans — stopped short of embracing a full-fledged 401(k) plan, setting up a hybrid plan different from Utah’s. New employees join both a traditional pension plan, with a far less generous formula than the old formula, and a 401(k). The state contributes an automatic 1 percent of salary into the 401(k)-type plan and matches half of the next 4 percent that employees contribute.
"Georgia realized that having people solely in a 401(k), they have sole control and they might lose a lot of money in it," said Pamela L. Pharris, executive director of the Employees’ Retirement System of Georgia, adding that such people eventually "might become dependent on the state."
The National Association of State Retirement Administrators has voiced support for traditional pension plans. "Defined-contribution plans are a very unreliable vehicle for promoting retirement security," said Keith Brainard, the association’s research director. "Many workers don’t know how to invest, many don’t contribute enough to their 401(k)s, and many cash out much of what’s in their 401(k) long before they retire, leaving them too little to live on when they retire."
Mr. Brainard said it would be wiser for states to ask employees to contribute more toward underfunded plans than to switch to 401(k)-type plans. And in fact, some states have shored up their pension plans by requiring employees to pitch in more of their salary.
Despite the cautions, Bette Grande, a Republican state representative in North Dakota, vowed to continue pushing for 401(k)-type plans. Ms. Grande sponsored a bill to switch new employees entirely to such plans, but it was blocked by the House on Feb. 18. "I think it’s condescending to say that workers aren’t wise enough to manage their own investments," said Ms. Grande, who said she would push to revive the bill. "I refuse to think I’m going to have a bunch of teachers on welfare."
US conflict with unions is about more than just money
by Clive Crook - Financial Times
It began to be obvious months ago, as the fiscal stress on US states and cities increased, that friction with public sector unions was inevitable. Still, the force of the assault on the unions and the energy of their resistance have come as a shock. A startled country is unsure whose side to take. It does not help the stakes have been misrepresented. Hostilities began in Wisconsin. Tens of thousands have protested on the streets of Madison against Republican governor Scott Walker’s bill to roll back collective-bargaining rights. Neither side looks ready to capitulate.
Now the conflict has spread. Republican governors and legislatures in Ohio and Indiana have also moved against their unions. Even states with Democratic governors or legislatures are seeking big concessions on pay and benefits. A moment of truth has arrived for organised labour in the US. Make that, organised labour in the US public sector. Unionism in the private sector is practically extinct. Just 7 per cent of private-sector workers are union members, down from 30 per cent in the 1960s. But in state and local government the average is 39 per cent, and in some states far higher: 73 per cent in New York, for example, 66 per cent in New Jersey, 58 per cent in California.
The persistence of public sector unionism is partly due to market forces. Private businesses, indeed whole industries, come and go quickly in the US, which makes organising unions a struggle. Public-sector jobs tend to last. Once you have a worker in your union, you have him until he retires. But state policies have helped too. Some give legal blessing to "union shops" (workers must join the union) or "agency shops" (they can choose not to join, but still have to pay dues).
Republicans attacking these rights say unions must be tamed to balance the states’ books. The unions say their pay is not out of line, and they have made concessions. This is partly true. Wisconsin’s unions have accepted cuts in pay and benefits. The fight in Madison is not about saving money in the current budget round. Whether union power distorts pay over the longer term is a different question, and harder to resolve. Studies point both ways.
Workers in state and local government get higher wages, but once you allow for their extra years of education, they look underpaid. Their perks are vastly better – generous defined-benefit pensions are the norm; in the private sector these have mostly gone – and hours of work are fewer. Some think this puts public employees ahead in total education-adjusted pay, others say it only narrows the gap. The picture is complicated. Unskilled workers do well in the public sector; workers with degrees do badly. The answer varies from job to job.
This argument cannot be settled yet, because it will turn on the value of those pensions. Many schemes are underfunded, to the tune of several trillion dollars, according to some estimates. State pensions are protected in bankruptcy: whatever happens, taxpayers are supposed to pay up. If that commitment holds, taxpayers will be hammered. If states renege on those promises, or if the underfunding proves to be less than feared, they will not.
The main thing, though, is that this is the wrong discussion. Total pay is not the anomaly. There is a labour market, after all. Pay and benefits cannot move too far out of line without shortages of workers or surpluses of applicants getting embarrassingly out of hand. The anomaly is not the fiscal cost of the settlement unions have won, but its form, seen in the broadest terms.
Pensions are only part of it, but they point to the real problem, which is one of management and accountability. Unions have traded lower wages for better benefits – including, in some cases, retirement on full pension in early middle age and tacit acceptance of abuses such as pension spiking (pay increases in the last year of employment, to pump up final salary benefits) and liberal recourse to pre-retirement "disability". Employers have gone along, disguising the true cost of state services and shifting some of it through underfunding to future taxpayers.
This is not the only bargain unions and politicians have struck. Unions also traded wages for control. In many US school systems, bargaining rights have expanded to the point where unions are in charge. They have their say not just on basic pay and benefits, but on seniority rules, hirings and firings, school hours, you name it. In many states, schools are run like the British printing industry before Rupert Murdoch, with similarly unimpressive results.
The quality of public services – and especially of taxpayer-financed education – is a bigger issue for the US than the pay gap, if any, between public and private sectors. Some of those who want to curb the unions’ power understand this. They chose to go to war on a different, partly false, prospectus, and if the public sides with the unions, that will prove to have been a big mistake.
New Jersey Pension Fund To Decline Even With Reforms -Moody's
by Romy Varghese - Dow Jones Newswires
New Jersey Gov. Chris Christie's proposed public pension reforms are a good start, but even if they are enacted, the pension system--already the 7th-lowest funded in the U.S.--will continue to deteriorate, Moody's Investors Service said in a note. The pension system, which has a $30.7 billion unfunded liability, won't return to its current funding levels for at least a decade, Moody's said. That's because the state won't make a full contribution to its pension system until 2018.
Not contributing to the pensions has helped create the state's sizable pension funding problems. "The funded ratio, at 62% in 2009, has declined sharply over recent years because annual pension contributions were cut to fractions of the annual required contribution or eliminated completely," Moody's said. Indeed, Christie skipped a $3 billion pension payment last year.
New Jersey's unfunded pension liability is a significant factor in the decision not to buy state debt for Eaton Vance's tax-advantaged bond strategies group, said portfolio manager Evan Rourke. "Christie's taking steps in the right direction, but our feeling is this is an issue that needs further action before it can be fixed," Rourke said.
Christie's proposals, if enacted, are likely to face union lawsuits, Moody's added. Christie plans to roll back a 9% benefit increase granted in 2001, eliminate automatic cost of living adjustments for current and future retirees, raise the retirement age, and increase employee contributions. To address the growing unfunded liability for retiree health benefits--now at $56.8 billion-- Christie wants to hike employee contributions to 30% of the cost of benefits from 8% and increase co-pays and deductibles.
Municipal bonds: A balancing act
by Nicole Bullock and Aline van Duyn - Financial Times
It was October 1975 and New York City was about to run out of money. The city had to meet its payroll obligations for police, firefighters and other employees. Payments on the city’s bonds were due on the same day. There was not enough cash for both.Harrison "Jay" Goldin, who as the city’s comptroller was in charge of its finances, was summoned to a meeting with mayor Abraham Beame and a group of leading New York bankers and chief executives of companies including insurers and retailers.
"I was told the group had decided that I should meet the payroll the next day and not make the payments on the debt," Mr Goldin recalls, sitting in the offices of his financial advisory firm in Manhattan’s Empire State Building.
But the next day, he made the debt service payments. "The priority under the New York state constitution was to make payment on the debt first and the obligation to do so was my duty as comptroller," he says.
A commitment to repay debt, even in the face of severe financial problems, is the bedrock of the modern US municipal bond market, a $3,000bn part of the credit markets where states, cities and other public bodies borrow for roads, bridges, schools, hospitals and utilities that their regular tax revenues cannot fund.
The depth of the latest US recession and the ripple effects of the financial crisis have shaken that foundation. Since 2008, states have managed to close budget gaps of more than $400bn, according to the National Conference of State Legislatures, a bipartisan research group, by steep cuts in spending or rises in taxes and fees.
As lawmakers struggle to plug the latest deficits – most states are constitutionally required to balance budgets annually – investors have started to worry. Some states are still spending more than their revenues, which come mostly from taxes: receipts remain below pre-crisis levels. Their expenses could also rise in the coming years as they pay out pension and other benefits promised to public sector employees in better times. A public backlash has already begun to emerge as lawmakers push for deep cuts and concessions, particularly from trade unions.
Will states and cities slash spending and increase taxes, and continue to prioritise payments on debt? Or will some US states and cities try to restructure their debts, forcing bondholders to swallow losses alongside concessions from citizens and unions? Will the federal US government step in with a bail-out? Unlike local governments, the federal US government is allowed to operate at a deficit.
"With many states and local governments struggling to close large deficits, it is time to acknowledge that defaults could happen, even in large and systemically important municipal issuers," says Christian Stracke, head of credit research at Pimco, which runs the world’s biggest bond fund.
Concern has arisen about the implications. First of all, a continued squeeze on local spending could restrain the national recovery. The $800bn US economic stimulus introduced to stem a slide into another Depression included multifaceted aid for states and local governments both directly and through programmes such as subsidies for cheap debt. This federal support largely runs out this year. Economists at Goldman Sachs, for example, predict that local government spending cuts required as part of their belt tightening will snip half a percentage point off US gross domestic product this year. More drastic spending cuts could result in an even more significant drag.
Second, many Americans have some of their wealth tied up in muni debt. About two-thirds of the muni bond market is in the hands of individual investors. In many cases, local residents buy the bonds sold by states and cities because those provide tax-free interest income. This means that losses on such bonds would also hurt local residents, further hitting local economies, local banks and US economic growth.
Third, any bail-out could further strain the finances of the federal government, which is already raising eyebrows at home and around the world for its ballooning debt. Lawmakers, particularly Republicans, vehemently oppose local bail-outs, just as many on Capitol Hill are fighting against a rise in Washington’s debt ceiling.
Muni borrowing costs have risen from historic lows, as more investors recognise that the risks in the market have grown. For 10-year bonds, top-rated municipal borrowers pay about 3.1 per cent, up from 2.5 per cent just four months ago and a three-decade low of 2.17 per cent last summer, according to the benchmark index from Thomson Reuters MMD. For the more hamstrung borrowers, the rise is more pronounced.
. . .
Few municipal market experts agree with the predictions of Meredith Whitney, the analyst who foresaw trouble at large US banks ahead of the financial crisis. Ms Whitney caused a stir last year when she warned of 50-100 local muni defaults totalling "hundreds of billions of dollars". But many now doubt whether the rock-bottom default rates of recent memory can persist.
"The kernel of truth here is that in the case of six or seven states, their long-term financial condition is quite bad if they do not do anything," says Ken Buckfire, chief executive of Miller Buckfire, an investment bank. "But companies, and by extension states, only default on debt when they run out of cash, not because they have too much long-term debt."
Mr Buckfire cites Illinois, California, New Jersey, New York, Connecticut, Massachusetts, Ohio and Rhode Island as among the most troubled states. Cities and towns are seen as more vulnerable because they rely on aid from states, which states are cutting, and property taxes. With more than 50,000 diverse issuers in the muni bond market, it is hard to pinpoint the trouble spots.
States are generally expected to muddle through. Compared with cash-strapped eurozone countries such as Greece or Ireland, US states’ debt tends to be much lower relative to the size of their economies. There are also many liabilities that the US government absorbs, such as the cost of bank failures and a chunk of unemployment and healthcare benefits. Using Census Bureau data, Pimco reckons that the median state has debt of just 7.3 per cent of gross state product, the equivalent of GDP.
Unfunded pension liabilities, which are estimated to total between $700bn and $3,000bn, are a looming problem but states still largely have time to address it, though the battle will be tough. Future pensioners can expect to make bigger contributions to their retirements and perhaps enjoy less generous benefits. Existing pensions are difficult to touch, although some politicians may try.
Among the states, Illinois has stood out recently for its deeply underfunded pension pot and because it borrowed to pay its annual contribution. Illinois wants to borrow more to address a backlog of bills for goods and services depending on the state.
As more attention focuses on governments’ efforts to make ends meet, there is the potential for a crisis of confidence in the market that would dry up sources of funding. The millions of individuals who own munis bought the bonds on the assumption that they were safe and that they would always be repaid. Yet in recent months, the market’s turmoil has resulted in paper losses showing up on their account statements.
With so many different types of debt and of individual issuers, some problems may be hidden from view. Munis are not held to the same stringent disclosure requirements as, say, corporate bonds. As investors by and large hold munis for the long term, trading can be thin and prices therefore uncertain. "It is the ultimate shadow market. There are thousands of issuers, it is remarkably illiquid and there is a lack of disclosure," says Mr Buckfire.
Investors used to rely on bond insurance to protect themselves – but that industry collapsed after many insurers also guaranteed risky mortgage debt.
In response to the growing uncertainties, people have sold their bonds. Since November, retail investors have withdrawn more than $26bn from mutual funds that invest in munis, or about 7 per cent of assets, in the biggest selling rout ever. Roman Orenchuk, a 59-year-old from Sacramento, California, became one such seller in November. Like most investors, Mr Orenchuk, who owns a manufacturing business with his son, lost money when financial markets plummeted in 2008. "When the market starts to go sideways, rather than waiting like I used to, I pull the plug."
It is this type of behaviour that could turn jitters following one problem area into a more widespread retreat from the muni market. "Because market participants have generally viewed [municipal debt] as a risk-free area, [the question is] whether an individual credit problem can create a broader confidence problem," says Raymond McDaniel, chief executive of Moody’s, the credit rating agency. "That’s where the systemic implications come in and what we and others are trying to be alert to."
The potential for systemic risks beyond the municipal markets cannot be excluded, he adds. "We consider it very unlikely. We do not rule that out. There are many different types of credits in the municipal sector, with many different forms of support."
But municipal experts take comfort in that many bond payments rank high in the priority of bills that state and local governments pay, much like the payments did 35 years ago in New York City. In California, the largest state, these debt payments rank only after education. During its budget crisis two years ago, "California paid its vendors with vouchers instead of cash in part, so it could safeguard cash to pay its bonds", says Matt Fabian, managing director at Municipal Market Advisors, a research group.
Lawmakers also have believed that they need to protect access to the capital markets. "They aren’t paying us because they love us," says Joseph Pangallozzi, a credit research analyst at BlackRock, the money manager. "There is not another stream of capital" on which states and municipalities could draw instead.
. . .
Many believe that large US banks would step in, however, should the markets ever close for big states. JPMorgan Chase and others provided bridging loans to California during past budget crises. States and local governments also have the power to increase their revenues by raising taxes. Illinois recently boosted its taxes by an average of 67 per cent.
Analysts point out, however, that such moves may ultimately backfire, driving citizens and businesses to healthier parts of the US that impose lower levies. The political mood in many statehouses around the country is also vehemently anti-tax, they note.
At some point, it may become difficult for lawmakers to ask for deep sacrifices from labour unions and citizens without some backlash against bondholders. "The jury is out on whether there will be a spate of defaults and with that a collision of borrowed money and labour," says Bruce Bennett, a partner at Dewey & LeBoeuf and the lawyer who represented Orange County, California, in its 1994 bankruptcy (in which bondholders were paid in full).
A key factor in whether the municipal stress is contained will be the extent of the US economic recovery. Tax revenues have risen as growth has returned to parts of the US. Preliminary figures for October-December 2010 for 41 states show collections in the period were up 6.9 per cent from a year earlier, according to the Nelson A. Rockefeller Institute of Government. If confirmed in the full fourth-quarter data, the gain would represent the strongest growth in tax revenues since the second quarter of 2006, the research group says.
Political will, however, plays an enormous role in a state or local government’s success in dealing with adverse conditions and the unpopular choices that accompany them. But polarising political lines are now being drawn as states begin to take on unions in an effort to cut labour costs.
Back in 1975, New York successfully negotiated for one of its pensions to lend it money through the purchase of bonds, because the financial markets had shut to the city. So it was able to make both payments by midnight on that day in October. In the year that followed many sacrifices were made. Those included cuts in the municipal workforce, the introduction of tuition fees at city universities for the first time, sharp rises in public transport fares and more borrowing.
"You need political will and the will to sit everyone down at the same table," says Felix Rohatyn, the Lazard banker who advised New York City at the time. "Now, the lack of relationships between the people making the decisions is part of the problem."
..........................................................
Wisconsin’s budget battle
‘What will this do to my high school, and to the college I want to go to?’
Jonah Walker has never been involved in politics. But last week the 17-year-old travelled from the small town of Viroqua to Madison, Wisconsin’s capital, to join protests against the state’s proposal to end collective bargaining for its employees, writes Hal Weitzman.
A student with a greasy fringe and an earnest air, Mr Walker says he fears the plan’s effect on his father, a state employee, and on his own education. "What will this do to my high school?" he asks. "What will it mean for the college I want to go to?"
Such unease has fuelled protests for the past 13 days at the state Capitol building against Governor Scott Walker’s "budget repair bill", which has turned Wisconsin into a battleground between union activism and small-government conservatism.
Mr Walker, a Republican elected in November, says the state must restrict bargaining rights to tackle a $137m budget shortfall, projected to hit $3.6bn within two years. Public-sector unions say they will concede cuts but refuse to budge on bargaining. Indeed, critics accuse the governor of turning the debate into an attempt to weaken the unions, big donors to Democratic party campaign funds. They note that he need not scrap collective bargaining to balance the budget in the short term.
The issue has split the state. While polls suggest most Wisconsinites think unionised state employees enjoy generous pensions and low healthcare costs at taxpayers’ expense, there is little support for ending collective bargaining. Nonetheless, both sides depict the fight as one of national importance, a test of the power of unions relative to states with new Republican majorities seeking to address unsustainable finances.
The bill has been stalled since the week before last, after Democrats in the state senate fled to neighbouring Illinois to deny the Republicans a quorum. Mr Walker warned last week of "dire consequences", with up to 13,500 state job losses, if they did not return and allow his bill to pass.
The struggle is spreading. Indiana Democrats seeking to block "right-to-work" legislation, which would outlaw making union membership a condition of employment, also fled to Illinois last week, while thousands protested outside the Ohio Capitol against a proposal to limit collective bargaining for state employees.
BofA Mortgage-Bond Investors Hold $84 Billion Connected to Buyback Dispute
by Jody Shenn - Bloomberg
A bondholder group seeking reimbursements from Bank of America Corp. over soured home-loan securities said the amount of debt it holds grew to $84 billion after more investors joined the dispute. The number climbed from about $46 billion in October, according to the group’s lawyer.
The investors have had “enough progress” in negotiations with Bank of America and Bank of New York Mellon Corp., which acts as trustee of the debt, to warrant continued talks, Kathy Patrick, a partner at Houston-based Gibbs & Bruns LLP, said today in a telephone interview. Bank of America said Feb. 25 there were 225 mortgage deals in dispute, up from 115 in October. It didn’t provide a dollar value for the securities. Investors challenging the bank include Pacific Investment Management Co., BlackRock Inc. and the Federal Reserve Bank of New York, people familiar with the matter said in October.
The bank is seeking to limit losses on mortgages originated by Countrywide Financial Corp., which the Charlotte, North Carolina-based lender purchased in 2008. So-called mortgage putbacks may cost banks and lenders as much as $90 billion, JPMorgan Chase & Co. bond analysts said in an October report. The “careful approach” of Patrick’s investor group doesn’t mean it will accept less than it’s entitled to, she said, dismissing the idea that her clients will limit their settlement goals because of their other business dealings with Bank of America.
Mortgage Trust’s Role
Growing membership is a “vote of confidence” in the group’s seriousness, she said. The investors have only considered a settlement that pays through the mortgage trust, a channel that would serve even the bondholders Patrick doesn’t represent, she said. Bill Frey, head of Greenwich, Connecticut-based Greenwich Financial Services LLC, which also advises mortgage bondholders seeking buybacks, said many investors he has spoken to “are not expecting a terribly aggressive settlement,” from Patrick’s clients. “Our clients will let any results they achieve speak for themselves,” Patrick said.
In October, Bank of America said the dispute with Patrick’s clients covered bonds with a face value of about $46 billion and original balances of $105 billion. The original balance of the securities now involved totals $182 billion and the group has grown from eight to more than 20 institutions, Patrick said. New members include insurers, investment managers and banks, she said.
BofA Questions Validity
“The amount of unpaid principal balance doesn’t reflect what ultimately might be paid if, in fact, there were valid claims,” said Jerry Dubrowski, a Bank of America spokesman. “At this point we have a number of questions about the validity of the assertions, including whether the investors are qualified to bring claims.” David Grais, a New York-based lawyer, on Feb. 23 sued Bank of America on behalf of investors holding more than $700 million of mortgage securities. BNY Mellon, the debt’s trustee, refused to sue Bank of America after the lender declined to buy back loans the investors deemed faulty, according to the complaint.
“This is the strategy for investors who are serious,” Grais said Feb. 24 in a telephone interview. “This is the best strategy for investors who actually want teeth in their dogs.” The plaintiffs in his case are a group of limited liability companies with variations of the name Walnut Place. Grais declined to identify the investors behind the companies. BNY Mellon, which was named as a nominal defendant in that case, has “a limited role that is distinct from the seller and the servicer and contractually limited by the pooling and servicing agreements,” Heine said. “We have been fulfilling our obligations under these agreements,” he said.
Corporate Profits Soaring Thanks to Record Unemployment
by Mark Provost - Economic Populist
In a January 2009 ABC interview with George Stephanopoulos, then President-elect Barack Obama said fixing the economy required shared sacrifice, "Everybody’s going to have to give. Everybody’s going to have to have some skin in the game." (1)
For the past two years, American workers submitted to the President’s appeal—taking steep pay cuts despite hectic productivity growth. By contrast, corporate executives have extracted record profits by sabotaging the recovery on every front—eliminating employees, repressing wages, withholding investment, and shirking federal taxes.The global recession increased unemployment in every country, but the American experience is unparalleled. According to a July OECD report, the U.S. accounted for half of all job losses among the 31 richest countries from 2007 to mid-2010. (2) The rise of U.S. unemployment greatly exceeded the fall in economic output. Aside from Canada, U.S. GDP actually declined less than any other rich country, from mid-2008 to mid 2010. (3)
Washington’s embrace of labor market flexibility ensured companies encountered little resistance when they launched their brutal recovery plans. Leading into the recession, the US had the weakest worker protections against individual and collective dismissals in the world, according to a 2008 OECD study. (4) Blackrock’s Robert Doll explains, "When the markets faltered in 2008 and revenue growth stalled, U.S. companies moved decisively to cut costs—unlike their European and Japanese counterparts." (5) The U.S. now has the highest unemployment rate among the ten major developed countries. (6).
The private sector has not only been the chief source of massive dislocation in the labor market, but it is also a beneficiary. Over the past two years, productivity has soared while unit labor costs have plummeted. By imposing layoffs and wage concessions, U.S. companies are supplying their own demand for a tractable labor market. Private sector union membership is the lowest on record. (7) Deutsche Bank Chief Economist Joseph LaVorgna notes that profits-per-employee are the highest on record, adding, "I think what investors are missing - and even the Federal Reserve - is the phenomenal health of the corporate sector." (8)
Due to falling tax revenues, state and local government layoffs are accelerating. By contrast, U.S. companies increased their headcount in November at the fastest pace in three years, marking the tenth consecutive month of private sector job creation. The headline numbers conceal a dismal reality; after a lost decade of employment growth, the private sector cannot keep pace with new entrants into the workforce.
The few new jobs are unlikely to satisfy Americans who lost careers. In November, temporary labor represented an astonishing 80% of private sector job growth. Companies are transforming temporary labor into a permanent feature of the American workforce. UPI reports, "This year, 26.2 percent of new private sector jobs are temporary, compared to 10.9 percent in the recovery after the 1990s recession and 7.1 percent in previous recoveries." (9) The remainder of 2010 private sector job growth has consisted mainly of low-wage, scant-benefit service sector jobs, especially bars and restaurants, which added 143,000 jobs, growing at four times the rate of the rest of the economy. (10)
Aside from job fairs, large corporations have been conspicuously absent from the tepid jobs recovery. But they are leading the profit recovery. Part of the reason is the expansion of overseas sales, but the profit recovery is primarily coming off the backs of American workers. After decades of globalization, U.S. multinationals still employ two-thirds of their global workforce from the U.S. (21.1 million out of 31.2 million). (11) Corporate executives are hammering American workers precisely because they are so dependent on them.
An annual study by USA Today found that private sector paychecks as a share of Americans’ total income fell to 41.9 percent earlier this year, a record low. (12) Conservative analysts seized on the report as proof of President Obama’s agenda to redistribute wealth from, in their words, those ‘pulling the cart’ to those ‘simply riding in it’. Their accusation withstands the evidence—only it’s corporate executives and wealthy investors enjoying the free ride. Corporate executives have found a simple formula: the less they contribute to the economy, the more they keep for themselves and shareholders. The Fed’s Flow of Funds reveals corporate profits represented a near record 11.2% of national income in the second quarter. (13)
Non-financial companies have amassed nearly two-trillion in cash, representing 11% of total assets, a sixty year high. Companies have not deployed the cash on hiring as weak demand and excess capacity plague most industries. Companies have found better use for the cash, as Robert Doll explains, "high cash levels are already generating dividend increases, share buybacks, capital investments and M&A activity—all extremely shareholder friendly." (5)Companies invested roughly $262 billion in equipment and software investment in the third quarter. (14) That compares with nearly $80 billion in share buybacks. (15) The paradox of substantial liquid assets accompanying a shortfall in investment validates Keynes’ idea that slumps are caused by excess savings. Three decades of lopsided expansions has hampered demand by clotting the circulation of national income in corporate balance sheets. An article in the July issue of The Economist observes: "business investment is as low as it has ever been as a share of GDP." (16)
The decades-long shift in the tax burden from corporations to working Americans has accelerated under President Obama. For the past two years, executives have reported record profits to their shareholders partially because they are paying a pittance in federal taxes. Corporate taxes as a percentage of GDP in 2009 and 2010 are the lowest on record, just above 1%. (17)
Corporate executives complain that the U.S. has the highest corporate tax rate in the world, but there’s a considerable difference between the statutory 35% rate and what companies actually pay (the effective rate). Here again, large corporations lead the charge in tax arbitrage. U.S. tax law allows multinationals to indefinitely defer their tax obligations on foreign earned profits until they ‘repatriate’ (send back) the profits to the U.S. U.S. corporations have increased their overseas stash by 70% in four years, now over $1 trillion—largely by dodging U.S taxes through a practice known as "transfer pricing". (18)Transfer pricing allows companies to allocate costs in countries with high tax rates and book profits in low-tax jurisdictions and tax havens—regardless of the origin of sale. U.S. companies are using transfer pricing to avoid U.S. tax obligations to the tune of $60 billion dollars annually, according to a study by Kimberly A. Clausing, an economics professor at Reed College in Portland, Oregon. (18)
The corporate cash glut has become a point of recurrent contention between the Obama administration and corporate executives. In mid December, a group of 20 corporate executives met with the Obama administration and pleaded for a tax holiday on the $1 trillion stashed overseas, claiming the money will spur jobs and investment. In 2004, corporate executives convinced President Bush and Congress to include a similar amnesty provision in the American Jobs Creation Act; 842 companies participated in the program, repatriating $312 billion back to the U.S. at 5.25% rather than 35%. (19) In 2009, the Congressional Research Service concluded that most of the money went to stock buybacks and dividends—in direct violation of the Act. (20)
The Obama administration and corporate executives saved American capitalism. The U.S. economy may never recover.
A U.S. Recovery Built on Low-Paying Jobs
by Joshua Zumbrun and Shobhana Chandra - BusinessWeeek
Before she lost her job last November as a full-time health department caseworker in Aurora, Ill., Amy Valle was making $23 an hour. Now she's paid $10 an hour as a part-time assistant coordinator in an after-school program. "From here on out, it will be a struggle," says Valle, 32, whose husband lost his $50,000 government job and still is out of work after a year. "I don't feel like there's any place we can go to get what we were getting paid."
While the unemployment rate dropped to 9 percent in January, from a two-decade peak of 10.1 percent in October 2009, many of the jobs people are now taking don't match the pay, the hours, or the benefits of the 8.75 million positions that vanished in the recession, according to Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.
This may restrain wage and salary growth, limiting gains in consumer spending, which accounts for 70 percent of the U.S. economy. The good jobs that would trigger a solid boost in spending just don't seem to be there. "In the last recovery we were adding management jobs at this point, and this time it's disappointing," says Ashworth, who published a report on Jan. 27 about pre- and post-slump employment based on U.S. Labor Dept. data. "The very best jobs, we're still losing those."
Projections from the Bureau of Labor Statistics reinforce his pessimism. While the number of openings for food preparation and serving workers will grow by 394,000 in the decade ending in 2018, the average wage is only $16,430 including tips, based on 2008 data. Meanwhile, the number of posts for financial examiners, who work at financial-services firms to ensure regulatory compliance, will expand by just 11,100. The average pay for examiners is $70,930.
Lowe's, the second-largest U.S. home improvement retailer, typifies the reshuffling of the U.S. workforce. The chain, based in Mooresville, N.C., said on Jan. 25 it is eliminating 1,700 managers responsible for store operations, sales, and administration as profit growth trails that of the larger Home Depot chain. Meanwhile, Lowe's said it will add 8,000 to 10,000 weekend sales positions and is creating a new assistant store manager position.
The trend is troubling for the country's long-term prospects, says Edmund Phelps, who won the Nobel Prize for economics in 2006 and directs the Center on Capitalism and Society at Columbia University in New York. Businesses aren't innovating as much, so companies "just don't seem to require all those relatively high-paid workers they once did," he says.
The health-care industry is one example, the BLS said in a December report on the occupational outlook. As costs continue to rise, "tasks that were previously performed by doctors, nurses, dentists, or other health-care professionals increasingly are being performed by physician assistants, medical assistants, dental hygienists, and physical therapist aides."
Michael Greenstone, a former staff member for the White House Council of Economic Advisers, says it's "premature to make too much of where the particular job creation is occurring," because the "immediate issue is that there are too many people" out of work. "I'm not in favor of ditch-digging, but the first thing is to get more people employed," says Greenstone, an economics professor at the Massachusetts Institute of Technology. "Unemployment is a scourge of society right now, and it has to be the front-and-center issue."
Job hunters are adapting, with 60 percent prepared to settle for a full-time position they don't really want or one they're not qualified for, says Dennis Jacobe, chief economist for Washington-based Gallup, based on a survey he conducted last month.
Ken Niswonger, 51, a machine builder by training, spent five months looking for work after losing his job in October 2009. Unable to find anything in his field, he enrolled in a college computer security program to learn new skills. "I'm hoping I can find something entry-level," he says, adding that he'll have to begin his search for an information technology job before he finishes his program. "I'm well aware I might not get what I used to make," he says. "Who knows? Might get a job at $12 to $14 an hour. That's not even $30,000 a year."
Behind a Rise in Auto Sales, Easier Credit
by Eric Dash - New York Times
Detroit is crowing that the auto industry is back, but so far, at least, it is a success story built as much on a revival in lending as on the development of desirable cars. Sales of new cars rose 11 percent, to around 11.4 million, in 2010 and are off to an even stronger start this year, according to Autodata, an industry research service. Sales of used cars have been similarly robust.
After radically scaling back auto lending during the financial crisis, banks and the lending arms of the automakers have started to issue loans more aggressively. Borrowers of all types are now finding it much easier to obtain a loan compared with a few months ago. Even car buyers with tarnished credit histories are getting financing, in some cases without making a down payment. More than 859,000 new cars were sold to consumers with a so-called subprime credit rating in 2010, a nearly 60 percent increase from the year before, according to CNW Marketing Research.
The revival of auto lending is emblematic of an increased appetite for risk in the American economy. Consumers, showing renewed confidence in the recovery, are opening their wallets again after putting off car purchases during the recession. Banks, flush with deposits to lend out, have eased their standards for extending credit. And investors, who fled from the bond market during the throes of the crisis, are starting to snap up higher-risk debt as they seek higher yields.
Wall Street’s loan packaging business has once again become a crucial engine for supplying money to auto and credit card lenders — and it is happening much faster than most economists had predicted. Nobody is suggesting an imminent return to the heady, reckless days of the housing boom, and any one of a number of factors — like the recent surge in oil and commodities prices — could set the recovery off track. But the gradual expansion of credit in virtually every area except real estate is an important sign that the American economy is returning to health.
The rebound in auto lending has been especially pronounced. Michael E. Maroone, the president of AutoNation, which has a coast-to-coast network of more than 200 dealerships, called it the single biggest factor spurring the sharp increase in car sales last year. "We had people coming to our showrooms that wanted to buy, but we couldn’t get them financed," Mr. Maroone said in an interview. "We are now getting them the financing."
Kevin Lauterbach, 29, an operations manager from Coral Springs, Fla., said he was surprised that so many lenders were willing to give him a loan when he went shopping for a new car in December. Although he had worked hard to repair a mildly damaged credit score, several major lenders rejected his application for a new credit card a few months earlier. But five banks offered to help him finance a car, all with no money down.
Mr. Lauterbach eventually locked in a 4.75 percent rate on a $19,000 loan from City County Credit Union of Fort Lauderdale to cover the cost of a 2008 Jeep Liberty. The 72-month loan requires payments of $150 every two weeks. "My credit wasn’t great, and what I had been hearing is that credit is tight right now," he said. "But it wasn’t really as difficult as I was anticipating."
For the auto industry, the surge in sales represents a remarkable reversal. Only two years ago, Detroit’s Big Three automakers were in such dire condition that they took more than $87 billion in federal aid; Chrysler and General Motors required Chapter 11 bankruptcy protection to turn themselves around, with the government’s help. The Obama administration provided other forms of assistance as well. It engineered the rescues of the CIT Group, a major lender to auto dealerships and parts suppliers, and also bailed out the troubled auto finance companies Chrysler Financial and GMAC, now known as Ally Financial.
Just as crucial, economists say, was the administration’s effort to lure private investors back into what was once a $100 billion-a-year bond market for auto finance companies, according to Deutsche Bank Securities. That market had all but dried up by the end of 2008. The federal program provided more than $11.7 billion in below-market financing to dozens of private investors — a group that included hedge funds like FrontPoint Partners, money managers like BlackRock and Pimco, and even a retirement fund operated by the City of Bristol, Conn. — to encourage them to resume buying bonds backed by auto loans.
Although the amount of government financing was relatively small, it accomplished its goal: to revive the market for packaged consumer loans and get credit flowing again, especially to weaker borrowers. That market stood at $36 billion in 2008, during the throes of the crisis, but by 2010 it had bounced back to almost $58 billion. Bankers and analysts project that could rise by as much as 15 percent in 2011. "To me, it feels like it’s returning to normal," said Ted Yarbrough, Citigroup’s head of global securitized products.
Several factors contributed to the quick recovery of auto lending. Both banks and auto lenders can reap large profits on new loans, since interest rates near zero have kept the cost of their funds extremely low. Auto lending was also largely unaffected by the Dodd-Frank Act and other regulations, which reduced the fees that banks could charge for services like credit cards and overdraft protection.
In addition, auto lenders, unlike home lenders, have long issued loans expecting that the vehicle will start to lose value as soon as it is driven off the lot. That helped them avoid the costly mistakes of mortgage lenders, who underwrote loans during the boom on the belief that prices would keep going up. In fact, auto loans fared better than almost any other loan category during the crisis. There were other reasons, too. Car dealers, unlike mortgage brokers, tend to have closer relationships with their lenders, so that a dealership that passes along a lot of bad loans might quickly find it hard to secure loans for other customers.
Meanwhile, used cars began drawing higher prices, a result of sagging new vehicle sales over the last few years. That encouraged banks to take bigger risks since they would assume ownership of a more valuable car if a borrower defaulted. As the economic recovery gathered steam, domestic auto lenders like GMAC and Chrysler Financial flooded back into the business in the fall. That lured traditional banks like Bank of America, Banco Santander, Capital One, JPMorgan Chase, TD Bank and Wells Fargo back in a bigger way, and helped prop up lending for used vehicles.
Dealers say the frenzied competition has made it possible for weaker borrowers — those denied credit even six months earlier — to finally obtain loans. AutoNation, for example, said that approvals for subprime customers reached 38 percent in the fourth quarter of 2010, compared with 18 percent a year earlier, amid only a modest increase in applications. Over all, lending to subprime borrowers has risen to about 38 percent of the auto finance market, although it is still well below its precrisis highs when it made up nearly half of all loans, according to credit bureau data from Experian.
"The biggest improvement started in December," said Rick Flick, who runs Ford and Chevrolet dealerships in the New Orleans area. "The banks are getting aggressive again. They are calling us and asking why aren’t we sending them more business." Still, lenders are typically demanding more stringent terms, including higher down payments compared with those required in the boom years. But, as Mr. Lauterbach’s experience suggests, even those are starting to ease.
Meanwhile, the automakers have come up with innovations to help. One program that is currently popular: down payment assistance.
U.S. cables detail Saudi royal welfare program
by Simon Robinson - Reuters
When Saudi King Abdullah arrived home last week, he came bearing gifts: handouts worth $37 billion, apparently intended to placate Saudis of modest means and insulate the world's biggest oil exporter from the wave of protest sweeping the Arab world. But some of the biggest handouts over the past two decades have gone to his own extended family, according to unpublished American diplomatic cables dating back to 1996.
The cables, obtained by WikiLeaks and reviewed by Reuters, provide remarkable insight into how much the vast royal welfare program has cost the country -- not just financially but in terms of undermining social cohesion.
Besides the huge monthly stipends that every Saudi royal receives, the cables detail various money-making schemes some royals have used to finance their lavish lifestyles over the years. Among them: siphoning off money from "off-budget" programs controlled by senior princes, sponsoring expatriate workers who then pay a small monthly fee to their royal patron and, simply, "borrowing from the banks, and not paying them back."
As long ago as 1996, U.S. officials noted that such unrestrained behavior could fuel a backlash against the Saudi elite. In the assessment of the U.S. embassy in Riyadh in a cable from that year, "of the priority issues the country faces, getting a grip on royal family excesses is at the top." A 2007 cable showed that King Abdullah has made changes since taking the throne six years ago, but recent turmoil in the Middle East underlines the deep-seated resentment about economic disparities and corruption in the region.
Monthly Cheques
The November 1996 cable -- entitled "Saudi Royal Wealth: Where do they get all that money?" -- provides an extraordinarily detailed picture of how the royal patronage system works. It's the sort of overview that would have been useful required reading for years in the U.S. State department. It begins with a line that could come from a fairytale: "Saudi princes and princesses, of whom there are thousands, are known for the stories of their fabulous wealth -- and tendency to squander it."
The most common mechanism for distributing Saudi Arabia's wealth to the royal family is the formal, budgeted system of monthly stipends that members of the Al Saud family receive, according to the cable. Managed by the Ministry of Finance's "Office of Decisions and Rules," which acts like a kind of welfare office for Saudi royalty, the royal stipends in the mid-1990s ran from about $800 a month for "the lowliest member of the most remote branch of the family" to $200,000-$270,000 a month for one of the surviving sons of Abdul-Aziz Ibn Saud, the founder of modern Saudi Arabia.
Grandchildren received around $27,000 a month, "according to one contact familiar with the stipends" system, the cable says. Great-grandchildren received about $13,000 and great-great- grandchildren $8,000 a month. "Bonus payments are available for marriage and palace building," according to the cable, which estimates that the system cost the country, which had an annual budget of $40 billion at the time, some $2 billion a year. "The stipends also provide a substantial incentive for royals to procreate since the stipends begin at birth."
After a visit to the Office of Decisions and Rules, which was in an old building in Riyadh's banking district, the U.S. embassy's economics officer described a place "bustling with servants picking up cash for their masters." The office distributed the monthly stipends -- not just to royals but to "other families and individuals granted monthly stipends in perpetuity." It also fulfilled "financial promises made by senior princes."
The head of the office at the time, Abdul-Aziz al-Shubayli, told the economics officer that an important part of his job "at least in today's more fiscally disciplined environment, is to play the role of bad cop." He "rudely grilled a nearly blind old man about why an eye operation promised by a prince and confirmed by royal Diwan note had to be conducted overseas and not for free in one of the first-class eye hospitals in the kingdom." After finally signing off on a trip, Shubayli noted that he himself had been in the United States twice for medical treatment, once for a chronic ulcer and once for carpal tunnel syndrome. "He chuckled, suggesting that both were probably job-induced."
Following The Money
But the stipend system was clearly not enough for many royals, who used a range of other ways to make money, "not counting business activities."
"By far the largest is likely royal skimming from the approximately $10 billion in annual off-budget spending controlled by a few key princes," the 1996 cable states. Two of those projects -- the Two Holy Mosques Project and the Ministry of Defense's Strategic Storage Project -- are "highly secretive, subject to no Ministry of Finance oversight or controls, transacted through the National Commercial Bank, and widely believed to be a source of substantial revenues" for the then-King and a few of his full brothers, according to the authors of the cable.
In a meeting with the U.S. ambassador at the time, one Saudi prince, alluding to the off-budget programs, "lamented the travesty that revenues from 'one million barrels of oil per day' go entirely to 'five or six princes,'" according to the cable, which quoted the prince. Then there was the apparently common practice for royals to borrow money from commercial banks and simply not repay their loans. As a result, the 12 commercial banks in the country were "generally leary of lending to royals."
The managing director of another bank in the kingdom told the ambassador that he divided royals into four tiers, according to the cable. The top tier was the most senior princes who, perhaps because they were so wealthy, never asked for loans. The second tier included senior princes who regularly asked for loans. "The bank insists that such loans be 100 percent collateralized by deposits in other accounts at the bank," the cable reports. The third tier included thousands of princes the bank refused to lend to. The fourth tier, "not really royals, are what this banker calls the 'hangers on'."
Another popular money-making scheme saw some "greedy princes" expropriate land from commoners. "Generally, the intent is to resell quickly at huge markup to the government for an upcoming project." By the mid-1990s, a government program to grant land to commoners had dwindled. "Against this backdrop, royal land scams increasingly have become a point of public contention."
The cable cites a banker who claimed to have a copy of "written instructions" from one powerful royal that ordered local authorities in the Mecca area to transfer to his name a "Waqf" -- religious endowment -- of a small parcel of land that had been in the hands of one family for centuries. "The banker noted that it was the brazenness of the letter ... that was particularly egregious." Another senior royal was famous for "throwing fences up around vast stretches of government land."
The confiscation of land extends to businesses as well, the cable notes. A prominent and wealthy Saudi businessman told the embassy that one reason rich Saudis keep so much money outside the country was to lessen the risk of 'royal expropriation.'" Finally, royals kept the money flowing by sponsoring the residence permits of foreign workers and then requiring them to pay a monthly "fee" of between $30 and $150. "It is common for a prince to sponsor a hundred or more foreigners," the 1996 cable says.
Big Spenders
The U.S. diplomats behind the cable note wryly that despite all the money that has been given to Saudi royals over the years there is not "a significant number of super-rich princes ... In the end," the cable states, Saudi's "royals still seem more adept at squandering than accumulating wealth."
But the authors of the cable also warned that all that money and excess was undermining the legitimacy of the ruling family. By 1996, there was "broad sentiment that royal greed has gone beyond the bounds of reason". Still, as long as the "royal family views this country as 'Al Saud Inc.' ever increasing numbers of princes and princesses will see it as their birthright to receive lavish dividend payments, and dip into the till from time to time, by sheer virtue of company ownership."
In the years that followed that remarkable assessment of Saudi royalty, there were some official efforts toward reform -- driven in the late 1990s and early 2000s in particular by an oil price between $10-20 a barrel. But the real push for reform began in 2005, when King Abdullah succeeded to the throne, and even then change came slowly.
By February 2007, according to a second cable entitled "Crown Prince Sultan backs the King in family disputes", the reforms were beginning to bite. "By far the most widespread source of discontent in the ruling family is the King's curtailment of their privileges," the cable says. "King Abdullah has reportedly told his brothers that he is over 80 years old and does not wish to approach his judgment day with the 'burden of corruption on my shoulder.'"
The King, the cable states, had disconnected the cellphone service for "thousands of princes and princesses." Year-round government-paid hotel suites in Jeddah had been canceled, as was the right of royals to request unlimited free tickets from the state airline. "We have a first-hand account that a wife of Interior minister Prince Naif attempted to board a Saudia flight with 12 companions, all expecting to travel for free," the authors of the cables write, only to be told "to her outrage" that the new rules meant she could only take two free guests.
Others were also angered by the rules. Prince Mishal bin Majid bin Abdulaziz had taken to driving between Jeddah and Riyadh "to show his annoyance" at the reforms, according to the cable. Abdullah had also reigned in the practice of issuing "block visas" to foreign workers "and thus cut the income of many junior princes" as well as dramatically reducing "the practice of transferring public lands to favored individuals."
The U.S. cable reports that all those reforms had fueled tensions within the ruling family to the point where Interior Minister Prince Naif and Riyadh Governor Prince Salman had "sought to openly confront the King over reducing royal entitlements."
But according to "well established sources with first hand access to this information," Crown Prince Sultan stood by Abdullah and told his brothers "that challenging the King was a 'red line' that he would not cross." Sultan, the cable says, has also followed the King's lead and turned down requests for land transfers. The cable comments that Sultan, longtime defense minister and now also Crown Prince, seemed to value family unity and stability above all.
Executives Behind Financial Crisis at Little Risk of Jail Time
by Joe Nocera - New York Times
So much for Angelo Mozilo taking the fall for the financial crisis.
Late last week, word leaked out that Mr. Mozilo, who had co-founded Countrywide Financial in 1969 — and, for nearly 40 years, presided over its astonishing rise and its equally astonishing fall — would not be prosecuted by the Justice Department. Not for insider trading. Not for failing to disclose to investors his private worries about subprime loans. Not for helping to create a culture at Countrywide in which mortgage originators were rewarded for pushing fraudulent loans on borrowers.
In its article about the Justice Department’s decision, The Los Angeles Times said prosecutors had concluded that Mr. Mozilo’s actions "did not amount to criminal wrongdoing." Just months earlier, the Justice Department concluded that Joe Cassano shouldn’t take the fall for the financial crisis either. Mr. Cassano, you’ll recall, is the former head of the financial products unit of the American International Group, a man whose enthusiasm for credit-default swaps led, pretty directly, to the need for a huge government bailout of A.I.G. There was a time when it appeared that there was no way the government would let Mr. Cassano walk. But it did.
And then there’s Richard Fuld, the man who presided over Lehman Brothers’ demise. Though he was the subject of an investigation shortly after the Lehman bankruptcy, it appears that prosecutors are moving on. Most of the other Wall Street bigwigs whose firms took unconscionable risks — risks that nearly brought the global financial system to its knees — aren’t even on Justice’s radar screen. Nor has there been a single indictment against any top executive at a subprime lender.
The only two people on Wall Street to have been prosecuted for their roles in the crisis are a pair of minor Bear Stearns executives, Ralph Cioffi and Matthew Tannin, whose internal hedge fund, stuffed with triple-A mortgage-backed paper, collapsed in the summer of 2007, an event that anticipated the crisis. A jury acquitted them.
Two and a half years after the world’s financial system nearly collapsed, you’re entitled to wonder whether any of the highly paid executives who helped kindle the disaster will ever see jail time — like Michael Milken in the 1980s, or Jeffrey Skilling after the Enron disaster. Increasingly, the answer appears to be no. The harder question, though, is whether anybody should.
Aficionados of financial crises like to point to the savings-and-loan debacle of the 1980s as perhaps the high-water mark in prosecuting executives after a broad financial scandal. When the government loosened the rules for owning a thrift, the industry was taken over by aggressive entrepreneurs, far too many of whom made self-dealing loans using savings-and-loan deposits as their own personal piggy banks.
In time, nearly 1,000 savings and loans — a third of the industry — collapsed, costing the government billions. According to William K. Black, a former regulator who teaches law at the University of Missouri, Kansas City, "There were over 1,000 felony convictions in major cases" involving executives of the thrifts. Solomon L. Wisenberg, a lawyer who writes for a blog on white collar crime, said, "The prosecutions were hugely successful."
That is partly because the federal government threw enormous resources at those investigations. There were a dozen or more Justice Department task forces. Over 1,000 F.B.I. agents were involved. The government attitude was that it would do whatever it took to bring crooked bank executives to justice.
The executives howled that they were being unfairly persecuted, but the cases against them were often rooted in a simple concept: theft. And as prosecutors racked up victories in court, they became confident in their trial approach, and didn’t back away from taking on even the most well-connected thrift executives, like Charles Keating, who owned Lincoln Savings — and who eventually went to prison.
Today, Mr. Black says, the government doesn’t have nearly as many resources to pursue such cases. With the F.B.I. understandably focused on terrorism, there isn’t a lot of manpower left to dig into potential crimes that may have taken place during the financial crisis. Fewer than 150 of the bureau’s agents are assigned to mortgage fraud, for instance. Several lawyers who represent white collar defendants told me that outside of New York, there aren’t nearly enough prosecutors who understand the intricacies of financial crime and know how to prosecute it. It is a lot easier to prosecute people for old-fashioned crimes — robbery, assault, murder — than for financial crimes.
Which leads to another point: as Sheldon T. Zenner, a white collar criminal lawyer in Chicago, puts it, "These kinds of cases are extraordinarily difficult to make. They require lots of time and resources. You have some of the best, highest-paid and most sophisticated lawyers on the other side fighting you at every turn. You are climbing a really high mountain when you try to do one of these cases."
Take, again, the one big case that prosecutors have brought, against Mr. Cioffi and Mr. Tannin. The Bear Stearns executives had written numerous e-mails expressing their fears and anxieties as the fund began to sink. Prosecutors viewed those e-mails as smoking guns, proof that the men had withheld important information from their investors. Thanks largely to those e-mails, prosecutors saw the case as a slam dunk.
But it wasn’t. For every e-mail the executives wrote predicting the worst, they would write another expressing their belief that everything would be O.K. Besides, expressing such fears publicly would have doomed the fund, because liquidity would have instantly vanished. Instead of viewing Mr. Cioffi and Mr. Tannin as crooks, the jury saw them as two men struggling to make the best of a difficult situation. By the time the trial was over, the e-mails, in their totality, made the defendants seem sympathetic rather than criminal.
It seems safe to say that the government’s failure to convict those two Bear Stearns executives has caused prosecutors to shy away from bringing other cases. After all, the case against Mr. Cioffi and Mr. Tannin was supposed to be the easy one. By contrast, a case against Angelo Mozilo would have been, from the start, a much harder one to win.
Although the Justice Department never filed charges against Mr. Mozilo, one can assume that its case would have been similar to the civil case brought earlier by the Securities and Exchange Commission. (On the eve of the trial date last fall, the S.E.C. blinked and settled with Mr. Mozilo.) One of the S.E.C.’s charges was insider trading — that Mr. Mozilo sold nearly $140 million worth of stock after he knew the company was in trouble. But the defense countered by pointing out that Mr. Mozilo was selling his stock under an automatic selling program that top corporate executives often use — thus mooting the insider trading accusation.
Like the Bear Stearns executives, Mr. Mozilo had written his share of e-mails expressing worries about some of Countrywide’s loan practices. He called one of Countrywide’s subprime products "the most dangerous product in existence, and there can be nothing more toxic." The government argued that Mr. Mozilo had a legal obligation to share that information with investors.
But this case, too, would have been awfully difficult to make. Countrywide’s descent into subprime madness was hardly a secret. It made all sorts of crazy adjustable rate mortgages that required no documentation of income; its array of products was also well known and disclosed to investors. Indeed, Mr. Mozilo was quite vocal and public in saying that the housing market was due to fall, and fall hard. But he always assumed that whatever its losses, Countrywide was so strong that it would be one of the survivors and would feast on the carcasses of its former competitors. No internal e-mail he wrote contradicted that belief.
Was there outright fraud at Countrywide? Of course there was. That is a large part of the reason that Bank of America, which bought Countrywide in early 2008, has struggled so mightily with the legacy of all the Countrywide loans now on its books. But most of the fraudulent actions at Countrywide took place at the bottom of the food chain, at the mortgage origination level. It has been well-documented that mortgage brokers induced borrowers to take loans that they never understood, and often persuaded them to lie on their loan applications.
That kind of predatory lending is against the law — and it should be prosecuted. But going after small-time mortgage brokers isn’t nearly as satisfying as putting the big guy in jail, especially a big guy like Mr. Mozilo, who symbolizes to many Americans the excesses and wrongdoing embodied in the subprime lending mess. The problem is that Mr. Mozilo, though he helped create the culture that made such predatory lending acceptable, never made the fraudulent loans himself. Legally, if not morally, he’s off the hook.
A few days ago, I listened to a recording of a lengthy interview with Mr. Mozilo conducted by investigators working for the Financial Crisis Inquiry Commission and posted recently on the commission’s Web site. It was a remarkable performance; Mr. Mozilo expressed no regrets and no remorse. He extolled subprime loans as a way to allow lower-income Americans to get a piece of the American dream and "really build wealth" — just like people used to do during the housing bubble. He bragged that Countrywide, unlike the too-big-to-fail banks, never took a penny of government money. He said that Countrywide had helped put 25 million Americans in homes.
His voice rising passionately, he said finally, "Countrywide was one of the greatest companies in the history of this country." Which is a final reason Mr. Mozilo would have been difficult to prosecute. Delusion is an iron-clad defense.
Will banksters get away with it?
by Danny Schechter - AlJazeera.net
Hats off to Matt Taibbi for staying on the Wall Street crime beat, asking in his most recent report in Rolling Stone: "Why Isn't Wall Street in Jail?""Financial crooks," he argues, "brought down the world's economy — but the feds are doing more to protect them than to prosecute them."
True enough, but that’s only part of the story. The Daily Kos called his investigation a "depressing read" perhaps because it suggests that the Obama Administration is not doing what it should to reign in financial crime. Many of the lawyers he calls on to act come from big corporate law firms and buy into their worldview.
Kos should be more depressed by the failure of the progressive community to focus on these issues, and not pressing the government to do the right thing.
There is much more to this story. It's also more about institutions than individuals, more about a captured system that enables and covers up crime and, then, deflects attention away from the deeper problem.
Ten problems
You could see that when television host Bill Mahrer pressed Taibbi to name the biggest Wall Street crooks, on his weekly political comedy show, he didn't fully understand what we are really up against.
Here are ten of well-planned but flawed factors that help explain the procrastination and rationalisation for inaction. The government is not just to blame either. Several industries working together, through their firms associations, and well-paid operatives, collaborated over years to financialise the economy to their own benefit.
Personalising bad guys makes for good TV without offering a real explanation.
When financial institutions and services became the dominant economic sector, they, effectively, took over the political system to fortify their power. It was a done incrementally, over years, with savvy, foresight and malice.
First, many of those who might be charged with financial crimes and fraud invested in lobbying and political donations to insure that tough regulations and enforcement were neutered before the housing bubble they promoted took off.
After hundreds of bankers were jailed in the wake of the Savings and Loan crisis, financial fraudsters pushed for weakened regulations, guaranteeing that their colleagues wouldn't be jailed in when the next crisis hit.
In effect, their deregulation strategy also deliberately "decriminalised" the environment to make sure that practices that led to high profits and low accountability would be permissible and permitted. What was once illegal soon became "legal".
No enforcement
The cops and watchdogs were taken off the beat. Anticipating and then dissolving restraints, they engineered a low-risk crime scene in the way the Pentagon systematically prepares its battlefields. This permitted illicit practices, to be encouraged by CEOs in a variety of control frauds to keep profits up so that the executives could extract more revenue.
Today’s proposed Republican cutbacks of the funding of regulatory bodies aims to undercut recently passed financial reforms. One Commissioner of the Commodity Futures Trading Commission said if the budget is slashed, "there would essentially be no cop on the beat...we could once again risk another calamitous disintegration." He added, according to a New York Times report, "the process will mean nothing, squat, diddley … if we get cut we're going to be in a world of hurt."
Second, the industry invented, advertised and rationalised exotic financial instruments as forward looking "innovation" and "modernisation" to disguise their intent while enhancing their field to maneuver.
This was part of creating a shadow banking system operating below the radar of effective monitoring and regulation. Where is the focus on controlling the out of control power of the leverage-hungry gamblers at unregulated hedge funds?
Third, the industry promulgated economic theories and ideologies that won the backing of the economics profession which largely did not see the crisis coming, making those who favored a crackdown on fraud appear unfashionable and out of date.
As economist James Galbraith testified to Congress: "…the study of financial fraud received little attention. Practically no research institutes exist; collaboration between economists and criminologists is rare; in the leading departments there are few specialists and very few students. Economists have soft-pedaled the role of fraud in every crisis they examined, including the Savings & Loan debacle, the Russian transition, the Asian meltdown and the dot.com bubble. They continue to do so now."
Fourth, prominent members of the financial services industry were appointed to top positions in the government agencies that should have cracked down on financial crime, but instead looked the other way. The foxes were indeed guarding the chicken coop guiding institutions that tolerated if not enabled an environment of criminality.
Alan Greenspan and Ben Bernanke were repeatedly warned by underlings at the Federal Reserve Bank about pervasive predatory practices in the mortgage and Subprime markets and they chose to do nothing. Now Greenspan acknowledges pervasive fraud but decries the lack of enforcement while Bernanke wants to run a Consumer Protection Agency after ignoring consumer complaints for years. Even as the FBI denounced "an epidemic of mortgage fraud" in 2004, their white-collar crime units were downsized.
Fifth, the media has been complicit, seduced, bought off and compromised. The housing bubble mushroomed in the very period that the media was forced to downsize. Dodgy lenders and credit card companies pumped billions into advertising in radio, television and the internet almost insuring that there would no undue media investigations.
Financial journalists increasingly embedded themselves in the culture and narrative of Wall Street by hyping stocks and CEOs. The "guests" routinely chosen by media outlets to explain the crisis were often part of it.
Foxes guarding the chicken coop
"Many of the ‘experts' whom I read or see on TV seem clueless, [and] full of hot air. Many of their predictions turn out wrong even when they seem so self-assured and well-informed in making them," writes Jim Hightower,
His advice: "Don’t be deterred by the finance industry’s jargon (which is intended to numb your brain and keep regular folks from even trying to figure out what’s going on)."
Sixth, politicians and corporate lawyers fashioned settlements of abuses that were exposed rather than prosecutions. The government benefited by getting large fines while businessmen avoided jail.
Financial executives were often rewarded with bonuses and huge compensation for practices that skirted or crossed the line of criminality.
Intentional violations of the spirit and letter of laws were justified because "everyone does it" by high priced legal firms that often doubled as lobbyists. Conflicts of interest were sneered at. Judges, dependent on industry donations for reelection looked the other way.
Seventh, as the economy changed and industries that were once separated began working together, laws were not updates. Financial institutions worked closely with Insurance companies and real estate firms. Yet law enforcement did not recognised this new reality.
Financial crime was still seen almost entirely under the framework of securities laws that are designed to protect investors, not workers or homeowners who suffered far more in the collapse. Cases are framed against individuals with a high standard of proving intent, not under other kinds of laws used to prosecute organised crime and conspiracies.
By defining crimes narrowly, prosecutions became few and far between.
"Cases against Wall Street executives can be difficult to prove to the satisfaction of a jury because of the mind-numbing volume of emails, prospectuses, and memos involved in documenting a case," Reuters news agency reported.
Criminal minds
Convicted financial criminal Sam Antar who appears in my film Plunder is contemptuous of how government tends to proceed in these cases, in part because they don’t seem to understand how calculated these crimes and their cover-ups are. "Our laws—innocent until proven guilty, the codes of ethics that journalists like you abide by limit your behavior and give the white-collar criminal freedom to commit their crimes, and also to cover up their crimes," he said.
"We have no respect for the laws. We consider your codes of ethics, and your laws, weaknesses to be exploited in the execution of our crimes. So the prosecutors, hopefully most prosecutors, are honest if they're playing by the set of the rules; they're hampered by the illegal constraints. The white-collar criminal has no legal constraints. You subpoena documents, we destroy documents; you subpoena witnesses, we lie. So you are at a disadvantage when it comes to the white-collared criminal. In effect, we're economic predators. We're serial economic predators; we impose a collective harm on society, time is always on our side, not on, not on the side of justice, unfortunately."
Eighth, even as the economy globalises, and US financial firms spread their footprint worldwide, there was little internationalisation of financial rules and regulations.
Today, even as the French and the Germans propose such rules, Washington still opposes a tough global regime of codes of conduct.
Overseas, in Greece and England, and other parts of Europe, there has been an indictment of American corporate predators, especially Goldman Sachs. They are being denounced as "financial terrorists" and discussed in terms of their links to various elite business formations like the Bilderberg Group.
Ninth, With the exception of softball inquiries by a financial crisis inquiry commission, there has been no intensive investigations in the United States even like the tepid 9/11 Commission.
While Senator Carl Levin of Michigan did spend a day aggressively grilling Goldman Sachs on one deceptive practice, their defense was more telling about the real nature of the problem: "everyone did it".
The case for criminality has still not achieved critical mass as an issue to become a dominant explanation for why the economy collapsed. In fact, it is still being sneered at or ignored.
Finally, tenth, a big problem in my countdown, are the progressive critics of the crisis who also largely ignore criminality as a key factor and possible focus for an organizing effort.
They treat the crisis as if they are at a financial seminar at Harvard, focusing on the complexities of derivatives, credit default swaps and structured financial products in language that ordinary people rarely can penetrate. They argue that banks should not be too big to fail, but rarely they are not too big to jail.
Few progressive activist groups stress the immorality of these practices, much less their criminality after all these years! There is little active solidarity even in the progressive community with the newly homeless or jobless.
Where is the active empathy, compassion and the caring for the victims of the financial crimes?
A populist response to the crisis has been muted. There is little pressure from below on the Administration and Justice Department—which has now created a financial crimes task force—to take real action. It is as if this crime crisis within the financial crisis does not exist.
Curiously, as they refuse to discuss the pervasive fraud that did occur, the Obama administration is considering a "global settlement" of all housing fraud to get the issue off the table. They a proposing a $20bn dollar deal to bury the problem.
By all means, workers should rally to protect their jobs and pensions as they have in Wisconsin, but they should realise that it is the banks who are ultimately to blame for the financial pressures behind the attack on them. Pension funds have lost billions because of Wall Street scams. State governments have taken a big hit.
Why have the unions and leftist groups been mostly silent on these issues?
Even after the markets melted down, even after Wall Street bonus scandals and bailout disgraces, Wall Street has hardly been humbled. It is still spending a fortune on PR and political gun slinging with 25 lobbyists shadowing every member of Congress to scuttle real reform.
Its arrogance is evident in an email the Financial Times reported was "pinging around" trading desks. It reads in part:
“We are Wall Street: It’s our job to make money. Whether it’s a commodity, stock, bond, or some hypothetical piece of fake paper, it doesn’t matter. We would trade baseball cards if it were profitable… Go ahead and continue to take us down, but you’re only going to hurt yourselves. What’s going to happen when we can’t find jobs on the Street anymore? Guess what: We’re going to take yours... We aren’t dinosaurs. We are smarter and more vicious than that, and we are going to survive."Perhaps it’s not surprising, that in an act of preemptive anticipation, some years ago, Wall Street firms began financing the construction and administration of privatised jails. They know how to profit from incarceration too.
When will we call a crime a crime? When will we demand a jail-out, not just more bail-outs. Unless we do, and until we do, the people who created the worst crisis in our time will, in effect, get away with the biggest rip-off in history.
Wall Street Bets on Debt That Doesn't Exist
by Matt Wirz and Katy Burne - Wall Street Journal
Fresh from Wall Street's alchemy labs: Credit derivatives tied to General Motors Co. debt. The rub is, no such debt exists. Banks and hedge funds are trading credit-default swaps, which make payments to holders of General Motors bonds in the event of a default. But GM canceled $40 billion of debt in bankruptcy and has pledged to cut its remaining $4.6 billion bank loan to the bone this year. That is merely a technicality for the banks and hedge funds that have been actively trading the CDS.
Banks, some of which have made loans to the car maker, have been buying the CDS even though it is unclear whether the contracts would cover their debts, according to people familiar with the matter. Hedge funds have been happy to sell the protection, which allows them to make bullish, or "long," bets on the auto maker. For proponents, the existence of the GM swaps is a sign of a market at work. It also is a reminder of how credit-default swaps can be used as a way to speculate on a company's creditworthiness, rather than purely as a hedge against exposure to its bonds.Lawmakers and regulators have blamed credit derivatives for exacerbating the financial crisis and helping bring down companies like American International Group Inc. and Lehman Brothers Holdings Inc. Investors who bought "naked CDS" to bet on the likelihood of default, rather than to hedge risk from other investments, are credited with worsening the liquidity crisis that gripped those financial powerhouses, prompting calls for tighter regulation of the industry.
"Sure, having CDS without debt looks odd, and people may balk because credit derivatives were at the center of the AIG collapse, but that doesn't change the fact that CDS prices are the de facto benchmark used to measure the state of the credit market," said Kevin McPartland, senior analyst at research firm TABB Group.
About $750 million of GM credit-default swaps have changed hands since investment banks, including Barclays PLC, Deutsche Bank AG, Goldman Sachs Group Inc., started trading in December, according to traders of the contracts. Some are also trading the CDS in anticipation that the car maker, which exited bankruptcy protection in 2009, will one day issue bonds again.
"Investors that did all the work getting to know GM through its bankruptcy and IPO get to go 'long' the credit now through the CDS," said Jason Quinn, co-head of U.S. high-grade trading at Barclays Capital. The good news for GM: trading in its CDS indicates that many view the car maker as a better bet than rival Ford Motor Co.
A Better Bet Than Ford?
Some hedge funds have been selling GM CDS and buying Ford CDS, traders said. They are betting that GM's perceived risk will decline relative to Ford as the taint of bankruptcy fades and focus shifts to its low debt and improving international business. On paper, the so-called "pair trade" paid off. In December, buyers of GM CDS paid $348,000 a year to insure a notional $10 million of bonds for five years; protection on Ford cost $282,000, according to Markit. As of Thursday, the GM swaps cost $290,000 and Ford's cost $295,000.
While neither car maker is expected to default anytime soon, hedge funds selling derivatives on GM without actual bonds could pose a theoretical problem. When a company files for bankruptcy or fails to meet its interest payments, the market stages an auction to determine the value of the defaulted debt, and how to compensate the CDS holders. The value assigned to the CDS relies on investors being able to buy and sell bonds in the open market, so it is problematic for the newly revived GM not to have any bonds outstanding.
'There Could Be a Problem'
"I would take it people are pretty confident that GM will issue bonds again at some point in future, but there could be a problem in the auction if there was nothing to deliver," said Matthew Magidson, chairman of the derivatives practice at law firm Lowenstein Sandler. For now, GM wants to show investors—and American taxpayers—as trim a balance sheet as possible. GM does have $4.6 billion of loans outstanding, but it has been repaying that at a rapid clip. GM Chief Executive Dan Akerson said on a conference call on Thursday he is aiming to reduce the company's debt further.
If the cost of protection on GM continues to trade below Ford, for example, GM should be able to sell bonds at lower yields than Ford. Ford's benchmark 10-year bond yields about 6% right now, up from 5.6% in January before the company reported fourth-quarter earnings below analyst expectations.
Fannie and Freddie Caught in Vicious Circle on Dividends
by Nick Timiraos - Wall Street Journal
For the first time since the financial crisis, Fannie Mae and Freddie Mac are showing glimmers of profitability. But the two mortgage behemoths still ask the Treasury Department every quarter for billions of dollars in cash, most of it going right back out the door to pay dividends to the same U.S. agency.
The requirement that both companies pay a 10% dividend on preferred shares—which the U.S. government receives for its infusions after taking over Fannie and Freddie in 2008—costs them about $15 billion a year at the current rate. In the last two quarters, the firms have paid $7.5 billion in total dividend payments, while receiving injections of $5.7 billion to help keep them in business.
The dividends could force Fannie Mae and Freddie Mac to keep asking the Treasury Department for more money even after the companies get back into the black, helped by lower losses on mortgages and profits from newer loans. U.S. officials have said those payments are an appropriate way to repay taxpayers.
Fannie Mae's fourth-quarter income of $73 million, announced Thursday, was the company's first profitable quarter in 3.5 years. The bottom line doesn't count $2.2 billion in payments that Fannie Mae had to make to the U.S. government, which was asked to pump an additional $2.6 billion into Fannie Mae.
Freddie Mac, which had a loss of $113 million in the latest quarter, paid $1.1 billion in dividends to taxpayers and asked for $500 million, partly to cover the dividend payment. Company executives and outside groups such as the National Association of Realtors are prodding Treasury officials to reduce the size of the dividend to 5%, or the same percentage that U.S. banks paid in return for aid under the Troubled Asset Relief Program.
New loans are expected to "pay returns for many years, and they ought to find their way to taxpayers," Fannie Mae Chief Executive Michael Williams said in an interview. "The question is: How does the government want to recoup their investment?" In a letter to Treasury Secretary Timothy Geithner, the National Association of Realtors said the current dividend payments are exacerbating losses at Fannie and Freddie, which in turn has prompted the two firms to further restrict their lending standards. Mr. Geithner is expected to testify before a House panel Tuesday morning.
Some mortgage-industry analysts contend that the dividend is so high that it runs at odds with the U.S. government's stated goal of conservatorship, the legal process that put Fannie Mae and Freddie Mac under control of the Treasury Department and is designed to conserve their assets. The government also got warrants to buy as much as 79.9% of each company's common shares. "Even in their best years, they rarely had the type of income to pay these dividends," said Mahesh Swaminathan, senior mortgage strategist at Credit Suisse.
Obama administration officials have defended the current dividend structure because there are no plans to revive Fannie and Freddie as stand-alone companies with publicly traded shares. The White House "white paper" calls for eventually phasing out the firms. In contrast, American International Group Inc. is planning a stock offering of possibly more than $20 billion this spring in order to help disentangle the insurer from government ownership.
A Treasury official said that any changes to the dividend structure would have to be made as part of a broader overhaul and that no changes in current policy are planned. Moreover, easing the dividends could reduce the urgency for such an overhaul and make it easier to eventually reconstitute the two firms, something the Treasury doesn't support.
Fannie and Freddie buy loans from banks and sell them to investors as securities. During the housing boom, the two companies loosened their loan standards and as defaults mounted, the U.S. government rescued the firms and agreed to inject capital. Since then, they have ratcheted up their loan standards, saying their new portfolios contain the highest-quality loans they ever have bought and guaranteed.
The federal regulator overseeing Fannie Mae and Freddie Mac projected last fall that the cost of the taxpayer bailout would grow $19 billion from the current total of $134 billion. The two companies could ask the U.S. government for another $71 billion over the next three years just to fund the cost of their dividend obligations. The White House says the total cost to taxpayers could fall to $73 billion over the next decade.
Mary Hanafin: Why We Gave Away €750 Million When We Didn’t Have To
by Not Pancho - Broadsheet.ie
Last night’s Tonight with Vincent Browne -- with a panel that included Joan Burton, Dr James Reilly and Trevor Sargent -- was a classic. And the highlight was an exchange between the host and Fianna Fail deputy leader Mary Hanafin.It concerned the €750 million payout earlier this month to bondholders who were not covered by the bank guarantee. Why was the money paid when it wasn’t necessary? To put this into context the amount of money saved by social service cuts in November’s budget was around €800 million.
The obvious question now is who got the money? Best not ask Mary, though.
Mary Hanafin: “What happened in Anglo was appalling. It is absolutely disgraceful and I think we would all agree on that.”
Vincent Browne: “Mary, can I just ask you one question? Can I just ask you one question? Why did your government, of which you are a member, two weeks ago pay €750m to bondholders in Anglo Irish Bank who were no longer covered by the guarantee? Why did it do that?”
Hanafin: “Because that was the agreement that was reached.”
Browne: “That is not part of the, that is not part… I’m sorry, Mary. That is not part of the agreement entered into with the EU and IMF.”
Hanafin: “Yeah, no, but it was part of the guarantee that was given.”
Browne: “I’m very sorry, Mary. It was out of guarantee. Now why did you pay €750m to bondholders in Anglo Irish Bank who were not covered by the guarantee? Why did you do that?”
Hanafin: “Because the bondholders around, the senior bondholders around the banks, are people who were given a guarantee at the time two years ago. Those bondholders also include pension funds, they include credit unions, they include ordinary Irish people and their money, and that money had to be protected.”
Browne: “Mary…”
Hanafin: “And the reason we gave that guarantee at the time – and this is important because people are saying we shouldn’t have done it.”
Browne: “We’re not talking about the guarantee.”
Hanafin: “The governor of the Central Bank even says it is a systemic bank and should be guaranteed.”
Browne: “Mary, this is nothing to do with it. Nothing to do with it. I’ll ask the question again.”
Hanafin: “Yeah.”
Browne: “Why did you pay €750m to bondholders who are not covered by the guarantee? And you did that two or three weeks ago at a time when you’re cutting social welfare, you’re devastating the lives of people on the margins, you pay €750m to these people not covered by any guarantee.”
Hanafin: “Well we have obligations to the bondholders because…”
Browne: “What obligations did you have to the bondholders?”
Hanafin: “Because of the agreement that we made two years ago.”
Browne: “Mary -”
Hanafin: “The subordinated bondholders have already lost significantly…”
Browne: “Mary you’re not, you’re not.”
Hanafin: “To the tune of €10bn.”
Browne: “There is no obligation to the bondholders. Zero. Zero obligation to the bondholders. None at all. No moral, no legal, no obligation at all to the bondholders. Why at a time when you’re cutting social welfare did you pay €750m to these people?”
Hanafin: “I know you want to talk about cutting social welfare which was a very different thing to do as well and we accept that, but if you’re going to bridge the gap between what the government is taking in and what we’re spending, unfortunately that’s what had to be done.”
Browne: “You had to pay €750m to bondholders not covered by the guarantee.”
Hanafin. “No, no. I’m picking up on the point of the about social welfare. No, but it was part of the agreement and it had to be done and we had to honour that agreement.”
Browne: “What agreement? Mary you’re not, you’re not… We agreed to guarantee certain bondholders and depositors in the banks and some of those guarantees expired and there was no longer a legal or moral obligation to pay them anything. and … you still paid €750m in the last two weeks.”
Hanafin: “Yes, well, bit longer I think.”
Browne: Incredible isn’t it?
Hanafin: “It is a lot of money and I accept that but this is part of our obligations.”
Browne: “Where? What obligations?”
Hanafin: “To support the Irish banking system.”
Browne: “It’s nothing to do with the Irish banking system.”
Hanafin: “And to ensure that we can always go back then. The money we’re borrowing internationally, for example, we have to be able to continue to be able to go back, to make sure.”
Joan Burton: “But we’re not borrowing internationally. We’re out of the markets. That’s the whole point. We’re out of the markets. We’re not borrowing. That’s why you can deal with the bondholders.”
Hanafin: “But we have to make sure that when we do go back to the markets, which of course is our aim, and to be able to do it fairly quickly, is that we will be able to do that.”
Browne: “Sure they’ll think us crazy.”
Hanafin: Well they’ll certainly think us crazy if we don’t honour our debts
Browne: “But these are not our debts. They’re not our debts Mary. THEY ARE NOT OUR DEBTS! These are the debts of Anglo Irish Bank. We gave a guarantee, the guarantee expired. No longer do we have any obligation and yet we paid. Why?”
Hanafin: “Yeah. Because we gave commitments and we gave a guarantee, and we have to honour that.”
Browne: [high-pitched sound]
Hanafin: “And we do expect to go back to the markets and we do expect to be able to compete in those markets the same as everybody else and to make our way
Browne: “Very thin, very thin explanation. A very, very thin explanation Mary, very thin…”
Japan Passes Budget Amid Kan’s Fight Over Financing Bills
by Takashi Hirokawa and Sachiko Sakamaki - Bloomberg
Japan’s lower house of parliament passed Prime Minister Naoto Kan’s record 92.4 trillion yen ($1.1 trillion) budget amid fighting over related legislation to finance the world’s largest public debt.
The lower house, controlled by Kan’s Democratic Party of Japan, approved the measure for the fiscal year beginning April 1 early today by a vote of 295-158. The budget becomes law within 30 days regardless of whether it is voted on by the opposition-controlled upper house. Kan has been unable to persuade opposition lawmakers to authorize 44.3 trillion yen in government bonds to help fund the budget, a measure that must be approved by both houses. The stalemate has increased the likelihood of a snap election and his popularity is plummeting amid dissent within the DPJ.
Kan’s efforts have been complicated by an intra-party rebellion. Sixteen DPJ lawmakers, who last month announced their opposition to his push to raise the sales tax, abstained from this morning’s vote. The group is loyal to indicted former DPJ leader Ichiro Ozawa, whose suspension from the party during his trial for violating campaign funding laws provoked a backlash.
‘Nearly Impossible’
The dissension makes it "nearly impossible" for Kan to pass the financing bills and avoid a shortfall that could damage an economy already burdened by rising welfare costs and deflation, said independent political analyst Hirotada Asakawa. "Kan will be forced to either resign or call an election," Asakawa said. "He’ll probably choose to dissolve the lower house in May or June."
Real estate transaction fees, some tariffs and small business taxes all would rise unless the bills are passed, and Kan’s pledge to increase a monthly allowance to 20,000 yen from 13,000 yen for families with children under three years of age wouldn’t be implemented. DPJ dissident leader Koichiro Watanabe said the group didn’t vote on the budget because of Kan’s failure to keep a campaign pledge to restrict the influence of the country’s bureaucrats, not because of Ozawa.
"The Kan administration has been clearly sabotaging civil service reform," Watanabe told reporters today. "We can’t support the budget bill unless it’s changed to cut spending on public servants." The DPJ’s executive committee today proposed suspending Watanabe for six months and reprimanding the other 15.
Debt Rating
Moody’s Investors Service on Feb. 22 lowered Japan’s debt rating outlook on concern political gridlock will constrain efforts to tackle debt that is set to exceed twice the size of gross domestic product this year. Standard & Poor’s last month cut its rating for Japan to the fourth-highest level, citing the debt and the possibility the financing bills won’t be passed.
"There is no doubt that a failure to pass the budget bills will cause trouble for Japan’s economy and public," Finance Minister Yoshihiko Noda told a news conference in Tokyo today, saying the government aims to get the legislation approved by the end of the month. "I don’t think Japan can afford to play a game of Chicken."
A report today showed Japan’s unemployment rate held steady at 4.9 percent while payrolls rose in January, adding to signs the nation’s recovery is gaining pace after a temporary slowdown. While the world’s third-largest economy contracted last quarter, gross domestic product will probably expand 1.47 percent in the year starting April, according to a survey by the government- affiliated Economic Planning Association released on Feb. 10.
Kan’s approval ratings fell to 20 percent in an Asahi newspaper survey published Feb. 21, down 6 percentage points from January and the lowest since he took office in June. His disapproval rating rose eight percentage points to 62 percent, and 49 percent of those surveyed said he should resign.
Moody's Says Spanish Banks May Need $69 Billion
by Mark Brown and Christopher Bjork - Wall Street Journal
Spanish banks may need to raise as much as €50 billion ($68.77 billion) to improve their solvency and regain market confidence, more than twice the amount the government has said would be needed, Moody's Investors Service said Monday.
The estimate is up from the €17 billion that Moody's had calculated in December, and would be mostly concentrated among savings banks, senior analyst Alberto Postigo said in the rating agency's Weekly Credit Outlook publication. The figure is in line with what other private-sector analysts have suggested. Moody's estimate came as Qatar said it plans to invest €300 million in Spain's savings banks, or cajas. It would be the first injection of sovereign capital into the savings banks since the start of the global financial crisis.
Qatar Prime Minister Hamad bin Jassim bin Jaber bin Muhammad al-Thani made the statement in Doha, Qatar, in a press conference held jointly with the visiting Spanish Prime Minister José Luis Rodriguez Zapatero, Spain's government said in a press release. It wasn't clear how this would be done. Moody's revised estimate assumes that the savings banks will need to reach a core capital ratio of 10% in coming months, in line with new banking rules approved earlier this month by the Spanish government.
The new rules impose minimum capital ratios of 8% on all the country's banks. They also set a higher minimum ratio of 10% for lenders that don't have a significant share of private investors among their shareholders and depend on wholesale markets for their financing, which is the case for most of the savings banks. To meet the higher requirements, Spain's savings banks, which account for 42% of the country's banking assets and have been particularly hard hit by the collapse of a decade-long construction boom, are seeking to sell parts of their businesses. Four of the nation's 17 cajas have said they plan to sell shares through initial public offerings.
The Spanish government has said banks will need to raise about €20 billion to satisfy the new rules and said it will take stakes in lenders that fail to do so by September, through its Fund for Orderly Bank Restructuring. In his report, Mr. Postigo said that Moody's remains cautious on whether the government's plan for recapitalization will allow Spanish financial institutions "to regain markets' confidence, as this would very likely require a full clean-up of losses embedded in banks' balance sheets."
The Bank of Spain said last week that the cajas hold some €100 billion in "potentially problematic" real estate assets, out of a total exposure to the building sector of €217 billion. Mr. Postigo said that these "potentially problematic" assets are "credit negative" for Spain's own Aa1 credit rating, which Moody's put on review for a possible downgrade in December. However, he added that making public the data is a "significant and positive step" toward restoring market confidence in the banks. "Confidence in Spain's savings banks will only be completely restored once the problematic exposures are translated into losses and the adequacy of bank capital is robustly tested," Mr. Postigo said.
Collective behaviour
by Economist
Human beings like to think of themselves as the animal kingdom’s smartest alecks. It may come as a surprise to some, therefore, that Iain Couzin of Princeton University believes they have something to learn from lesser creatures that move about in a large crowd. As he told the AAAS meeting in Washington, DC, groups of animals often make what look like wise decisions, even when most of the members of those groups are ignorant of what is going on.
Coming to that conclusion was not easy. Before lessons can be drawn from critters perched on the lower rungs of the evolutionary ladder, their behaviour must first be understood. One way to do this is to tag them with devices that follow them around—motion-capture sensors, radio transmitters or global-positioning-system detectors that can put a precise figure on their movements.
Unfortunately, it is impossible to tag more than a few individuals in a herd, flock or swarm. Researchers have therefore tended to extrapolate from these few results by using various computer models. Dr Couzin has done quite a bit of this himself. Most recently, he has modelled the behaviour of shoals of fish. He posited that how they swim will depend on each individual’s competing tendencies to stick close to the others (and thus move in the same direction as them) while not actually getting too close to any particular other fish. It turns out that by fiddling with these tendencies, a virtual shoal can be made to swirl spontaneously in a circle, just like some real species do.
That is a start. But real shoals do not exist to swim in circles. Their purpose is to help their members eat and avoid being eaten. At any one time, however, only some individuals know about—and can thus react to—food and threats. Dr Couzin therefore wanted to find out how such temporary leaders influence the behaviour of the rest.
He discovered that leadership is extremely efficient. The larger a shoal is, the smaller is the proportion of it that needs to know what is actually going on for it to feed and avoid predation effectively. Indeed, having too many leaders with conflicting opinions results in confusion. At least, that is true in the model. He is now testing it in reality.
Tracking individual fish in a shoal is hard. Fortunately, advances in pattern-recognition software mean it is no longer impossible. Systems designed to follow people are now clever enough not only to track a person in a crowd, but also to tell in which direction his head is turned. Since, from above, the oval shape of a human head is not unlike the oblong body of a fish, this software can, with a little tweaking, follow piscine antics, too.
Robo fish
Dr Couzin has been using a program developed by Colin Twomey, a graduate student at his laboratory, to track individual fish in a tank. The result is not just a model of shoaling fish, but a precise numerical representation of their actual movements and fields of vision. That means it is possible to investigate whether real-life fishy leaders have the same effect on a group as their virtual kin.
Alas, merely observing a shoal does not make it clear which individuals lead and which follow. Instead, Dr Couzin has built a biddable robot three-spined stickleback. A preliminary study of a shoal of ten flesh-and-blood sticklebacks shows that they do indeed mingle with the robot and that they follow its leadership cues as predicted. He is now making a robot predator to see how the shoal reacts to less benign intruders.
If the models are anything to go by, the best outcome for the group—in this case, not being eaten—seems to depend on most members’ being blissfully unaware of the world outside the shoal and simply taking their cue from others. This phenomenon, Dr Couzin argues, applies to all manner of organisms, from individual cells in a tissue to (rather worryingly) voters in the democratic process. His team has already begun probing the question of voting patterns. But is ignorance really political bliss? Dr Couzin’s models do not yet capture what happens when the leaders themselves turn out to be sharks.
89 comments:
@mistah charley piled high and deep
The phrase "extended criminal organization currently masquerading as our government" was not meant to convey anything other than that our government has been behaving in a criminal manner. It has had much assistance in these endeavors, e.g. Halliburton, JP Morgan-Chase, Merrill Lynch, etc. etc. One might even say that it has been guided by these and similar actors.
These last would be the "extensions" to what we normally think of as our government. My impression is that they have been behaving, in concert with our government, in a criminal manner. Hence, the "extended criminal organization" portion of the phrase.
I also take it as a given that there were periods in the past when our government and it's closer corporate associates did not behave in a manner quite so open and far reaching in it's obvious defiance of law.
This last is perhaps disputable.
The phrase is in no sense intended to imply any "conspiracy" beyond that which is open for all to see. Though that too is perhaps a matter of opinion. I suppose that it could be asserted, and indeed is implied daily in the regular media, that it is conducting itself in an entirely proper and lawful fashion.
And with this I end my attempt to introduce any ideas to this forum. As I suspected, the effort to introduce any substantive discussion which might lead to solutions to the future I see for us has proven fruitless. These petty arguments over phrases and paranoia don't address any issues. But that appears to be the way here at AE.
The control of terms and words in language always tends to control the conversation.
Take the term "Federal Reserve"
The 'Federal' part is a lie.
The public either doesn't know this or understand the deception inherent in using the phrase or doesn't care because it thinks it's irrelevant to their short term goals of conspicuous consumption, the Good Life.
Even the 'Reserve' part is a lie.
We have effectively a zero 'Reserve' system were there is no collateral behind the currency and loans or collateral posted that is essentially worthless. Either way, there is no working 'Reserve' backing our financial econosphere.
What if it was called the Private Banking Cartel Reserve or just the Private Cartel Reserve.
Would this alarm the Sheeple?
If a major media campaign buy produced TV, radio, Internet and cable ads 're-branding' the Federal Reserve as the Private Cartel Reserve and explain by constant hammering home of the message that the U.S. government unconstitutionally handed over it's legal obligation to issue it's own currency.
This hoax has been going on for nearly a century in broad daylight, hardly what you could explain as a 'conspiracy'. It's right there at the end of our noses.
The few times this has come up in conversation with 'intelligent' college educated upper middle class gatherings, people could not believe it was true. That the mighty U.S. of A did not even issue it's own currency.
Imagine, a country setting up the system where by a Private Banking Cartel is granted an exclusive monopoly to issue a country's sovereign currency and then immediately charges the country not only a 'fee' for this monopoly power but interest charges on top of it for the government to borrow it's own currency.
These so called 'intelligent' middle class Americans were in complete denial of this Reality and got all defensive and anal about this obvious lack of sovereignty in their own country. And for the last Hundred Years!
All because the poison pill was wrapped in the term 'Federal Reserve'.
And the Cherry on Top of the Sundae is that the inherent inflation to the currency, which is baked into the cake from the start of this Ponzi, could not have happened without a funding method, to compensate for the built in devaluation of the privately issued 'sovereign' currency, namely the Federal Income Tax.
Drum roll, nothing but net, swooshhhh.
"Eleven charts that explain everything that's wrong with America."
Well, really, not everything.
This bit, for instance, isn't covered there, I think; and it has always struck me as one of the most glaring proofs that something is indeed wrong:
The USA has 743 people in prison; for every 100,000 citizens.
That's the worst ratio in the "advanced" world, folks, and not by a little bit. It's double the nearest neighbor; which happens to be France, at 365.
Norway has 71 prisoners per 100k; Germany, 85.
The fact that the majority of the prison population in the US is "non-white" likewise - does not bode well.
(all from a nice chart in the NYT last month, based on CIA and other official type data)
Speaking of 'alternative energy' fuel, the comedian Jake Johannsen said they should invent a car that runs on tears.
"You could just cry into the tank...that way you could then drive by the industrial park where your job use to be..."
I would hope that the banksters have hired private security, every last one of them, and that they pay them EXTREMELY well. Because I predict that soon it will be open season on banksters as people realize that no, it's not Muslims, Jews, gays, or whatever that are responsible for this mess, it's corporate bigwigs and wall street muckety mucks. And this will come to pass because governments, ours especially, did nothing to even preserve the illusion of justice.
I would guess that what played out in this news story will be possible at more levels very soon if unions are successfully busted.
http://www.rawstory.com/rs/2011/02/28/caught-on-tape-cops-talk-about-stealing-mans-property-over-bag-of-weed/
Where do these people think they will go in a flight to safety after they destroy the rest of us?
Finnish elections in April may also shake the table. Funnily Bloomberg has the fast rising party named as true Finns whereas in Finnish the party name is more like basic or elementary Finns. People here are pretty pi55ed on the bail-out money pi55ed away. Just a little heads up from this side of the pond...
Math is different at the top: Introspection among
the uber wealthy appears as fear of not living to the
level they have grown accustomed. In rare glimpses will greed display forbearance; when painted into a corner by pending death or abandonment usually.
Why so? Likely because these characters are wound tight, driven by a script that invites comparison
only to their own kind salted with historical figures.
The historical figure may be theself suffering at the
hands of an uncaring society early in life. No matter,
the unflinching choice is made, and all subsequent
affirmation forms the new person without reproach.
Gas thieves drilling holes into tanks of parked vehicles
Hmmm...now what would some "individuals" do if the price of gas, let's say, doubled?
Regards,
Paul
A few years ago in Portland, Oregon there was a rash of gas tank drilling incidents. It was reportedly an organized attempt to punish owners of gas guzzlers.
Stoneleigh said "We do not make wind turbines with wind power or solar panels with solar power".
True.
Its all about the time line.
Green zone where functioning hydro power, nuclear power, will be the result as the grid falls apart.
---
From How Rich Are the Superrich?
Bottom 90% $31,244
Top 1-10% $164,647
Top 1% $1,137,684
Top 0.01-0.1% $3,238,386
Top 0.01% $27,342,212
Those figures indicate that very few people can afford to live in vancouver. A mortgage of 3X $164,647 = $493,941. This is lower than the average price per house.
A 20% down payment on $493,941 is = $98,788.
This 20% is beyond the saving capability of anyone making only $164,647.
The rich will therefore, become richer as they become “rentier/slumlords”.
jal
I. M. Nobody said...
"It was reportedly an organized attempt to punish owners of gas guzzlers."
I thought it was for the gas, like they did it in Eastern Europe! :D
Truth be told I did eyeball one of the neighbor's H3 this morning.
Regards,
Paul
These petty arguments over phrases and paranoia don't address any issues. But that appears to be the way here at AE.
JF,
Stick around and keep your cool. :)
Your point about "Climate Change" being a fraud has been raised before (by myself for one). Over here, because the politics are local, it is easier to see what is going on. Scaring people is a brilliant way of making money for the few.
Melbourne desalination plant inevitable: Thwaites (January 2007) - referes to $1 billion project
Baillieu 'powerless' over $24 billion desal bill (February 2011) - project now costing $24 billion and contracts signed by previous government
Meanwhile, the the drought has ended:
The sun: all rise and no shine (March 2011)
Melbourne's sixth wettest summer on record. More than 300 millimetres of rain fell from December 1 to February 28, and there were 40 days of rain - 14 more than normal.
I fully expect this $24 billion plant to never be of any use. However, it will double the price of household water - just to pay off the loans.
re: conspiracy
IMHO, while it is possible to hoist one giant lie over the American people every 10 years or so, it is not possible to do so every few months.
While I accept that the bankers in the US, and elsewhere, are ripping everyone off, it is not some sort of master plan. It is simply the way the game has been set up. It is structural and they are making the most of it just like most of us in their position would.
Every time I read some article which attempts to explain some very complex financial scam, I remind myself of a guy who was my friend in a previous life - he was best-man at my wedding and now is the top risk management guy for a huge insolvent bank that is mentioned frequently in the articles listed by TAE. This guy, who I obviously like very much, could hardly add a row of numbers without a calculator. He is thick and he knows it. I guess he ended up so high up in their hierarchy because he was the least threatening person to have around. I would not dream of asking him what it feels like to be responsible, indirectly, for such gargantuan losses - it would probably embarrass him.
I really agree with trying to find the simplest explanation for some of these crazy things that we read about here.
as the stomach turns... how... ? why... ?
1. POPULATION -- If not another single person were born tomorrow nothing would change... too little, too late.
2. CLIMATE -- Permafrost methane bomb due to start in 10 - 20 years. Irreversible. Combined with ocean acidification will destroy most life on earth.
3. PEAK OIL -- Downside hasn't started yet. Goodbye light sweet crude, Hello heavy sour crude. Sour crude looks more like oatmeal and takes lots more energy and C02 to refine.
4. CORRUPTION -- To get worse because everybody with half a brain can see the coming confluence of crises. Every man for himself !
5. COGNITIVE DISSONANCE -- Doesn't matter when you live hand to mouth. Yeah baby!
email: outreach.connection@gmail.com
@ Walk in the woods 10:41am
Yes! I think there's a song in that.
Tears for Lucifer's Hammer
When the "hammer" fell
I just cried in my tank
Like a bat outa hell
Made a run for the bank
Was the last in line
There, to get my dough
Then I heard 'em say
We ain't got no mo'
Left the folks behind me
Shedding big tears
With the sad caveat
They can drive for years!
Damn good post at 10:14 as well!
I can just see the history books, sites, references, circa 2055 (if there are any)...
...Back in the teens it was being revealed and spread via internet and social media sources that the upper echelon of the corporate and banking organizations had systematically destroyed the working balance of the world economy, therefore it was decided that the thing to do was... destroy the unions!
:-) Hehehe
@Nassim
I've found the most simple explanantions [which can still admit all pertinent facts] to presuppose the existence of a culture of dominant sociopathy being present throughout urban civilization, institutional emanations thereof seem to be somehow inherent in the historical growth of cities, periodically resonating into unspeakable horrors of unnaturally focused intent.
Conversely, in addition to features of organic criminological structuring, the grandest conspiratorial narratives need no longer rely on excessive or unreasonable extrapolation of motives or methods; a grand globaloid plot to subsume control of all capital, nations and peoples, the final revolution orchestrated by a tiny elite [perchance comprising mostly dysgenic sociopaths], as now reaching completion via synchronous dialectics, has become sufficiently substantiated and partially self-admitted by their own publicised documentation. In light of overwhelming evidence, it would be irrational to deny such purposeful intent in the advancing implementation of scientifically attenuated maliciousness.
Who is Alex Jones, specifically.
... it should surprise no one that so many Western analysts, researchers, journalists and government experts failed to recognise the obvious signs of Arab youth movements that would soon erupt into revolutions capable of bringing down some of the most pro-Western regimes in the Middle East. That failure has exposed a profound lack of understanding in the West of Arab reality.
We saw the Arab revolutions coming
As usual, it was very obvious to me that something like it was eventually going to happen. The difficulty was always to know when.
@ mistah charley
Thanks for your post (in the previous set of comments) - I agree.
I believe it is not constructive to imagine powerful groups in full control of what going on. Absolutely, there are some groups that want to hide their agenda. But I don't attribute a small group of humans with being adept enough to control more than a few levers.
One insight that struck me in some of Julian Assange's early writings was that agencies that depend on secrecy (e.g. the CIA) suffer from their own inability to fully communicate. Such organizations can't have it both ways (hiding behind the cloak makes it hard to share knowledge across the agency). One of WikiLeaks goals is to force such agencies to become even more secretive (in reaction to the exposed leaks) and hence become more dysfunctional.
Similarly, I am skeptical of the fears and mystery surrounding the "Bilderbergers" and other such societies. I don't think they meet to plot world domination. The kind of people who attend are self-serving and greedy. When did they start co-operation for mutual benefit. More likely, they would plot to take over their adversaries (who may also be part of such groups). For example, I wouldn't be surprised if the Lehmann collapse wasn't somehow abetted to the benefit of some parties, but I certainly don't believe it was a well-orchestrated maneouver (certainly not all elites benifitted).
In summary: I do believe therd are many conspiracies (hidden agendas) on many levels across the globe. But not any one that dominates in an organized and controlled manner.
Some readers may cast me as naive and overly optimistic. Au contraire. Many conspiracy theories have a simple solution - find and expose the perpetrators. Systemic problems have no such simplistic solutions. And focusing on "they" is dis-empowering, when one should focus on one's own actions.
In an interview, Johan Galtung said something like "Dictators are less powerful than they think they are, and the people are more powerful than they think they are".
Since I can't post to him and it's still relevant over here anyway:
Karl, we are so far over the side of the cliff that we'd need an airplane to find the cliff you believe Bernake knows we're at!!
We are slowly (and increasingly not-so-slowly) being strangled to death!
The fact is that, as I said here, we are well between TEOTWAWKI and TSHTF. It's already over. The current system is dead and cannot be saved, and the same can be said for about 30-40% of the US population at this point.
When Fannie and Freddie got nationalized, that was TEOTWAWKI. The entire economy, on the consumer end, was essentially inflated home prices and mortgages being 2nd-ed and 3rd-ed -- houses as ATMs.
This was especially true with the need for everyone to "keep up with the Joneses". If you didn't have the "right look", you were essentially outcasted and basically made unemployable.
The chickens are beginning to come home to roost -- and it's just going to be whether they can play more games to keep this going a while.
If they can't, blood will run. The only reason it hasn't, when I predicted it would, is because of the previous game-playing.
The problem is simple:
Deficit spending supports the population. To remove the deficit spending means the elimination of what would then be "excess population".
It's that simple. And don't think those asked to leave will go quietly.
Nassim:
I disagree that you can't hoist a big lie on the American people every few months.
It's the only reason we still have a country.
"power to the people"
Hombre:
There is a song already :)
"Part of the scheme in my dream is clouded in my vision
All that I say takes away another part of me
One thing for sure, that the cure for this sad condition Let the hammer fall down
Some people say that the day is going to be tomorrow
Others contend that the end is never coming here
One thing I know is that no one will be safe from sorrow
When the hammer falls down"
Regards,
Paul
Blogger jackie said...
"power to the people"
Right On!
From the "There's a song for that" Dept, sponsored by "The proggers knew best" Dept:
Van der Graaf Generator - Sci-Finance
Lyrics since it's and old recording.
Regards,
Paul
"Blogger ogardener said...
Blogger jackie said...
"power to the people"
Right On!"
RIGHT ON! "El pueblo unido jamas sera vencido." (The people united will never be defeated.)
http://www.youtube.com/watch?v=7F_9FEx7ymg&feature=related
It would appear that Jeff Rubin is agreeing with Stoneleigh's thesis that recession will cause a significant pull back on the price of oil.
Jeff Rubin - "We are moving inexorably closer to another oil price induced recession. And when we get there, oil demand and oil prices will once again collapse.
The only question is will we see $200 per barrel oil first?"
http://www.jeffrubinssmallerworld.com/2011/03/02/only-a-recession-stands-in-the-way-of-200-oil/
The Fed 6% dividend is on paid-in capital, not on profits. Member banks own shares in one of twelve regional Fed banks, not the Federal Reserve that regulates monetary policy. The Fed does make a profit, all surplus funds are returned the US Taxpayer general fund account.
http://www.federalreserve.gov/aboutthefed/section7.htm
Mark,
The banks do not find their profits in the Fed's investments (which will eventually be revealed as worthless... chalk up another huge loss for taxpayers), but from control of the Fed's operations, which is what their shares and political clout give them. ZIRP, QE, discount loans, etc. give the banks free money to speculate in secondary and derivative markets and make huge returns.
Mish is starting to get it (or maybe he got it long ago and now he is starting to say it?); Anyway, this should be sobering for many of his many readers:
Oil Prices are Double-Edged Sword; Peak Everything?
Regards,
Paul
Sir, I read with interest the news that the UK government is freezing billions of dollars in assets belonging to Muammer Gaddafi and his family. I would also be intrigued to know whether the banks and other financial institutions handling these assets have applied the same anti-money laundering (AML) procedures to these assets as are applied to every other “normal” banking client in the UK.
I am less interested in whether Col Gaddafi and his family were able to supply passport copies and utility bills but more interested in what evidence they were able to present as to the source of the funds.
It seems to me entirely implausible that Col Gaddafi could have earned billions of dollars through legal means. And yet if the AML procedures, to which we are all subjected, have not been applied rigorously to the likes of Col Gaddafi and his family, one is forced to ask what purpose they really serve.
Charles L.M. Horner,
Bangkok, Thailand
How Did Gaddafi Bypass US Anti-Money Laundering Rules To Bank With Goldman And JPMorgan?
Just as I thought, the UK and the USA would go down the drain if hot money was not allowed in - that is what comes in through the "capital account" and props up the currencies.
population growth is the last taboo subject no one dares discuss because, frankly, there is only one highly unpalatable solution.
Thank you for the link Paul.
"population growth is the last taboo subject no one dares discuss because, frankly, there is only one highly unpalatable solution."
This so-called discussion gets on my nerves.
There is one solution, and one only, to the overpopulation issue: volunteer to get off the planet yourself. That's it, and that's all. Whoever doesn't understand why that is so needs to think harder.
.
... gets on my nerves
Me too. I was born is a country that had a population of 3-6 million for five thousand years and now it has 80+ million. It quadrupled since I was born. Truly nerve wrecking.
Years ago, on a large construction project, I was talking to a non union worker on the job.
The subject turned to hourly wages. He was from a southern state with a fervently nurtured culture of vitriolic animosity toward unions.
He had been indoctrinated from birth with the idea that it was 'wrong' to organize for better wages, as a member of the cult of Hyper-individualism, you were suppose to achieve 'greatness' exclusively through the application of your own Individual (Triumph of) Will and Hard Work.
Any assistance from a Group was forbidden.
When asked about Management being fiendishly organized (against workers, better wages, and benefits) he replied that Management was allowed to organize "because that is their job".
Well I thought, There You Have It, a Simple Solution to a complex problem.
From Nassim just up the post:
"I really agree with trying to find the simplest explanation for some of these crazy things that we read about here."
It's funny when people whip out the Occam's Razor card about the simplest answer is usually 'the right thing'.
The Wiki notes as regards to Occam's:
"The principle is often incorrectly summarized as "the simplest explanation is most likely the correct one"
The correct use of Occam's is:
"It ..is a principle that generally recommends selecting the competing hypothesis that makes the fewest new assumptions, when the hypotheses are equal in other respects..."
A sublte but radical difference.
Demagogues have always seem to use a Simple Answer to explain to the masses why things have Gonetoshit ( it's the gypsies, jews, commies etc...kill them!!!) and it's almost always wrong.
Back to the the non-union guy.
A union workers happens to overhear our discussion and interject his two bits.
He says the union wages are a bench mark for the non-union wages.
He says the non-union workers are quite smug and self satisfied about 'making it on their own'.
As an exmple he said if union wages dropped from $25 to $12 an hour, non-union wages would drop from $12 to minimum wage( $4 at the time)
He then told the non-union guy several actucal examples of where this had happened, quoting chapter and verse and news articles and supporting documents, even said he would get him photo copies of the articles.
The non-union guy of course refused to even entertain the notion that Management would do something like that..
Hahahaha, hope springs eternal, aye?
_
In the mid 1960's Raymond Dasmann made an educated guess that California once supported about 100,000 Indians. If so it's population has increased about 373 times. The increase has been about 6.57 times since I was born
RW California
Ilargi said: There is one solution, and one only, to the overpopulation issue: volunteer to get off the planet yourself. That's it, and that's all. Whoever doesn't understand why that is so needs to think harder.
I think this needs lots more discussion. It's the elephant. My twin freshmen are doing a project for social studies on how to fix world water & food. So they go with the reducing population model. No...they are supposed to come up with plans to feed & water the overpopulated. Then what do you get...more overpopulation. (Although I do feel everyone needs clean water & no guinea worm per Jimmy Carter.) Anyway, this is not a tired subject.
"population growth is the last taboo subject no one dares discuss because, frankly, there is only one highly unpalatable solution."
It's actually been discussed since the 1800s, beginning with the writings of Thomas Malthus. The same essential concepts inform most of the "debate" today. The only problem is, they've been proven wrong, time and time again by population economics studies.
They sound good though. I did a book report on Ehrlich's book The Population Bomb when I was in eighth grade and I remember being quite convinced of how dire our future was.
But things didn't quite pan out the way Ehrlich said they would.
Those who prefer to cleave to dogma because it is the one true faith will have no interest, but some may wish to look at the numbers, and the science. The real science, not the propaganda that is promulgated by those who attempt to popularize the "study" of population.
Essentially, the rate of population growth is inversely correlated with income levels. Poor people have lots of children because most of them die, and one needs children to work enough to earn a subsistence existence. As income levels increase, and correspondingly, wealth levels, fertility begins to decline.
This is why the United States, Japan, Western Europe, Russia, even China, and pretty much the whole world except for Africa and India are headed for the real population crisis - declining birth rates have led to a situation where there aren't enough young people to keep the great Ponzi of social security going.
I don't know the numbers and I'm not going to look them up. Anyone who wonders whether it's possible that the received wisdom on the "problem" of population growth is yet another case of something everyone knows that's wrong might want to start with the UN's figures.
Now someone will want to venture off into projections of resource depletion, and carrying capacity, and the like, and how these limits will all be reached long before we turn the corner that the UN's own figures used to indicate.
And that is fine. But understand that is as much an argument assuming a certain lifestyle operating under an assumed financial and energy regime, and wealth and income distribution, as it is an exploration of population dynamics that are literally locked in at this point for the next century or so barring a change in what we understand as the limits of reproduction now. Actually that probably should be considered, though as a function that is likely to decline, not increase.
You might find that the taboo subject is not population growth, or any of the unpalatable solutions, but why the situation has been misrepresented, who is behind the misrepresentations, and what agenda the misrepresentations might serve.
Or not.
Consider, for instance, this.
http://ipsnews.net/news.asp?idnews=54475
Fast Ageing Population Brings New Challenges
By Marcela Valente
BUENOS AIRES, Feb 14, 2011 (IPS) - Although Latin America still has an image of a young region, the base of the population pyramid is shrinking fast as a result of declining birth rates while the top section is expanding due to the growing numbers of elderly -- a phenomenon that poses enormous demographic challenges.
...................
"Latin America is ageing at a faster pace than Europe," said Enrique Peláez, director of the master's degree programme in demographics at the National University of Córdoba's Centre of Advanced Studies. "In just 30 years the birth rate dropped sharply and the number of older adults is growing, which poses the need for paradigm changes in the area of health and in terms of the scope of social security coverage."
Peláez, who is also secretary general of the Latin American Association of Population Studies (ALAP), pointed out that the biggest challenges in the region have always been cutting infant and maternal mortality rates. He remarked that although there is still much to do in these areas, there are new needs that have largely gone unaddressed.
"We have many paediatricians, but very few gerontologists," he noted.
He said the ageing of the population, which is most marked in Costa Rica, Cuba and Uruguay, raises the need to pay more attention to prevention and care of elderly persons who are losing their independence, in families that are made up of a smaller and smaller number of individuals.
...............
[Fresh soil for the Ponzi, which has pretty well exhausted that in it's northern hemisphere}
A change in pension schemes is also needed. There is a large disparity between countries, some of which provide pension coverage to 80 percent of the elderly, like Argentina, Brazil and Uruguay, and extreme cases where coverage is below 15 percent.
In many countries, such as Bolivia, Dominican Republic, Ecuador, El Salvador, Guatemala, Nicaragua and Paraguay, the great majority of older adults are not guaranteed an income, and are basically forced to keep working until they are no longer able to or until they die.
In the report "Social Security Coverage in Latin America", Rafael Rofman, a World Bank senior economist and pensions expert from Argentina, says "most of the region’s countries have serious problems in meeting the basic objectives of their social security systems."
................
To get around these limitations, countries like Chile and Bolivia "have developed non-contributive programmes of a significant magnitude," the study says. It also mentions the case of Brazil, which has adopted a non-contributory pension for older adults in rural areas.
In Argentina, after centre-left President Néstor Kirchner took office in 2003, a solution was offered to homemakers and elderly persons who had not made payments towards their pensions because they worked in the informal sector.
............
Some governments in the region are thus reaching the conclusion that general tax revenue, and not only contributions by formal sector workers, should be used to finance incomes for all older adults -- a tendency that will take on increasing significance as the proportion of elderly persons grows over the next decades.
@Blogger A Walk in the Woods said...
The correct use of Occam's is:
"It ..is a principle that generally recommends selecting the competing hypothesis that makes the fewest new assumptions, when the hypotheses are equal in other respects..."
.................................
That would include considering the facts in their totality. Unfortunately some of the more salient facts bearing on understanding the role of that destroying unions had in the genesis of our current situation go unmentioned regularly. Prof Richard Wolfe, maybe the last avowed Marxist economist in the United States, presents the most succinct yet complete overview I've run across.
http://video.google.com/videoplay?docid=7382297202053077236#
I don't wish to imply that I agree with Dick's proclivity for socialist solutions, but he does a capable job of accurately representing some neglected facts that matter.
@A Walk In The Woods (8:40 pm) -
That is a very good summary. I have lived in a so-called "right to work" southern state for the past 6 years. Coming from a working class family in the upper NE, I have been annoyed and even outraged about the anti-union, pro employer attitude so prevalent in the South.
Then, this past Xmas, I visited my son and his family in the Boston area. While there I realized that the South, in general, has no history of a working class and that pretty much explains why they are so hard to understand from an outsider's viewpoint. Hell, the industrial revolution largely didn't even arrive in the south until the Great Depression. It was Roosevelt's WPA and other programs that finally brought electricity to the greater population here.
So, given their background, it is difficult to see how the differences might be resolved short of force. These people still believe, and are taught in public schools throughout the states that, the Civil War was really the " War of Northern Aggression". Consequently, getting these people to accept the idealistic goals of WI unions, or any egalitarian cause for that matter, is in their best interest is a difficult sell. The propaganda campaign has created a large number of sychophants that are troublesome to overcome, to say the least.
Yet, I know that this must be overcome if we, as a nation, are to move on.
Linda said "So they go with the reducing population model."
What's that "model" exactly? Tell people they can't have children? Kill people?
I think the unspoken truth is that the "solutions" to our systemic problems are being handled by the systems themselves... you just have to do your part, whatever that may be.
Population.
Chalk one up for Jay Hanson. You can almost hear the genes talking.
Stoneleigh - John Michael Greer made the argument today that the days of the dollar being the safe haven currency are over, citing recent market events. Do you think his argument is sound? I know this goes against what you've been saying about the dollar.
@Ilargi,
The Church of Euthanasia would disagree with you. They say there are Four Pillars, or solutions.
Draft,
Greer said this in the article you linked to: "... for the first time in living memory an international crisis has sent investment money running away from US dollar-denominated investments rather than toward them. For decades now, as most of my readers will doubtless be aware, the US dollar has had the reputation of a safe haven for investments, and wars, revolutions, and financial crises overseas have reliably sparked flows of money into investments denominated in dollars, most of them here in the United States. That’s one of the factors that have kept America’s interest rates down and its trade deficit manageable, at least so far, in the face of the federal government’s epic mismanagement of the public purse.
Those days may just be over. The article just mentioned notes that since the current round of troubles hit North Africa and the Middle East, money has been flowing away from the dollar, heading toward other relatively stable currencies such as the Swiss franc and the Japanese yen. Even the euro, which has its own drastic problems, has benefited noticeably from the flight from the dollar."
I disagree. A falling dollar is part of a constellation of effects characteristic of a rally (rising stock markets, rising commodity prices, rising bond yields), and all can be expected to reverse trend once that rally is definitively over. They may not do so all at once, but I do expect all those trends to reverse over the next few months because they all depend on the waxing and waning of confidence, and therefore liquidity. Once we move back into full-blown liquidity crisis, the dollar should rise significantly. In contrast, I expect the euro to fall a very long way.
I just finished reading "Ishmael" by Daniel Quinn. If one has some time on their hands, it is a "must read". I remember it was recommended by someone posting here. Thank you!
I read "The Long Emergency" last week also. Funny JHK talks about entropy also. :)
There are always alternative search engines one can explore before the internet goes down and the libraries up in flames.
Regards,
Paul
I disagree. A falling dollar is part of a constellation of effects characteristic of a rally (rising stock markets, rising commodity prices, rising bond yields), and all can be expected to reverse trend once that rally is definitively over. They may not do so all at once, but I do expect all those trends to reverse over the next few months because they all depend on the waxing and waning of confidence, and therefore liquidity. Once we move back into full-blown liquidity crisis, the dollar should rise significantly. In contrast, I expect the euro to fall a very long way.
-----------------------------
I sincerely hope that you are right, but there are some very ominous signs on the horizon.
The IMF is fairly slavering all over itself with it's latest SDR proposal, which appears to have much of the technical work missing from previous discussion fleshed out.
The French finance minister speaking as the chair of the G-20 came out with a statement days after the IMF, obviously coordinated with theirs, professing willingness which seemed more like eagerness to "assist" in the transition to a more sustainable global currency regime, or some such patronizing phrase.
Then there's this from the Chinese
http://www.zerohedge.com/article/china-moves-making-renminbi-reserve-currency Admittedly, zerohedge may be engaging in a bit of fear mongering with the headline China "Attacks The Dollar" - Moves To Further Cement Renminbi Reserve Currency Status, but it is apparent that the Chinese aren't letting the grass grow under their feet on this one.
Then there's this from a guy who is something of an insider, also at zerohedge http://www.zerohedge.com/article/guest-post-mapping-critical-2011-themes
But really this is the tone reflected in the markets and the opinions of numerous commentators.
The thing is, when Middle East production of oil is decisively interrupted, probably before, the dollar is going to lose it's last support - it's status as the unit that oil is priced in. I don't really follow currency markets well enough to be certain, but the buzz is that each resort to the dollar as the safe haven is increasingly less decisive. The metals appear ready to go ballistic.
Which isn't to say that it dies this week, but the race to bury it seems to be accelerating. If I were dealing in conspiracy theory I'd point out that there are powerful interests with an apparent interest in seeing it go, which actually caught me a little by surprise. I would have thought that giving up the sole right to print money in the world to satisfy debts was something that would never be willingly surrendered. But I guess I was wrong. Hypothetically speaking, of course.
I understand your argument, for the dollar surviving and gaining in value as we slide into full blown deflation. But if the dollar's value collapses in international trade because the one good that it was needed to purchase goes off the dollar standard, doesn't that pretty much decouple the Treasury market from the international bond market?
Blogger Brunswickian said...
"Population."
"Chalk one up for Jay Hanson. You can almost hear the genes talking."
I've chalked more than one up for Jay Hanson.
Cheers
Blogger Robert said...
"In the mid 1960's Raymond Dasmann made an educated guess that California once supported about 100,000 Indians."
Imagine how beautiful and abundant the place must have been back then.
"I'm not in the stagflation camp"
--Rosenberg
In related news the M2 just came in the mail; Surprise, it's a bill! Wanna inflate, Benny Boy? Mail the M2 as a check to the public, not to the banks.
Regards,
Paul
How conveeeeeeenient!
Ash said, "What's that "model" exactly? Tell people they can't have children? Kill people?"
Precisely why it's such an elephant. Things that reduce population are anathema to society--bad health care, lower birth rates, disease... No one is pro these things. I think my twins' project will be to donate to Planned Parenthood or something.
JF,
I sincerely hope that you are right, but there are some very ominous signs on the horizon.
Exactly. Widespread ominous signs are what you would expect to see at a bottom. Things are cheap precisely when no one wants them.
@JF
Mish make some very good points about your concerns.
Regards,
Paul
Entropy
Is population effected by this principle?
Civilizations and their various accompanying cultures seems to plateau population wise when they taste 'the good life' and have confidence it will continue. (Italy for example, very low birthrate)
They also plateau and decline population wise when they are 'depressed' (Japan for example, way below replacement level)
Raising kids is hard and expensive and a scary proposition to many. It 'cramps' the life style of affluence, it's horribly depressing sometimes, especially when your depressed, even if you have wealth. (send the kids off to private boarding school ASAP)
War and disease worked fairly well earlier in the Hominid Experiment, but nowadays, not so much.
Now about 85 million people are still being added per year, about the number killed in all of WWII.
That was one of the biggest wars so far in human history and it's chump-change in the total tally.
Back to entropy.
My guess is that the population will stabilize at the point where you have the absolute highest number of people living at the lowest possible per calories intake state.
The Nazis at the Mittelwerk had calculated the lowest caloric intake per ca pita for the forced laborers to work on and not die before an 'acceptable' amount of work was extracted from them.
That is the number we as a species will be shooting for, lowest energy per person.
Because there are no other checks on population. Certainly not behavioral ones, other than affluence and depression.
Enlightened self interest has always been off the table for H. s. sapiens, it's no more in their limited genetically predetermined mental landscape than higher forms of social organization were for Neanderthals. (like mass murder for instance)
As far as squalid living conditions and hyper inyourface density, just visit the some of the worst slums on the planet.
They can go on like that for a very, very long time, it's not a mental endurance problem or a psychological one, people adapt to mind boggling squalor and degradation, it's in the core make up of H. s. sapiens to live with conditions like that. It's been done for milleniums.
Europe bounced back from several go-rounds with the Black Death. No problem with the over all 'progress' of population, it was just a hiccup on the road to bigger and better things.
We as a species, as bad as it looks now, are nowheres near the lowest per capita calorie/living density Nazi calculated thing. We have many miles before we sleep....
People cope, it's just not going to be a very Aesthetic Experience
_
World population will add more billions but sooner or later growth may may pass through a phase where death rates equal birth rates. I doubt that there will be a world wide Garrett Hardin type birth rate solution I would look upon a natural Jay Hanson type dieoff as the ultimate free market mechanism, as it is in the natural world. I watched Jay debate these issues on the USENET during the late 90's. Among other things he was the first to put L. F. Ivanhoe's Hubbert Center Newsletter on the internet. I once visited him in Hawaii along with others for a three day mini conference, In recent years he has developed unfortunate obsessions with economists and corporations as well as totally unworkable solutions such as having experts assign 10 % of the population to do the work and deliver essential goods - including medical care - to the other 90% who will stay at home to minimize the consumption of energy and materials.
Humans must get through the POPULATION problem.
Fewer humans means more for the survivors.
There are many ways that this will happen.
Human controlled, Gia controlled or a little bit of both.
SUPERBUGS has the highest probability of being the vector.
The H1N1 emergency response demonstrated that the world is powerless to prevent or contain the spread.
jal
“(Reuters) - China hopes to allow all exporters and importers to settle their cross-border trades in the yuan by this year, the central bank said on Wednesday, as part of plans to grow the currency's international role.”
China aims to settle nationwide trade in yuan by 2011
From ZH: The number of people now using "food stamps" in the US hits 44.1 million.
Based on the graph…
(http://www.zerohedge.com/article/charles-ponzi-day-we-celebrate-another-all-time-record-food-stamp-usage)
…that's about a 70% increase since 2007!
Is Egypt (or worse, Libya) coming to America, or is this just the new normal?
To put the food stamp statistic into some perspective, the so-called "participation rate" (nice euphemism, eh?) in 1969 was about 1.4% of the total US population. Today it's 14%.
GDP per capita:
• 1969: $4,800 ($21, 021 in 2005 dollars)
• 2011: $48,387.
Just more evidence of income and wealth disparity.
While watching the massif exodus of people out of Lybia, I did not notice any of the airport/border security that is so prevalent in N.A.
jal
The conditions for a fast die-off scenario seem to be alligning in force, confluences of imperial currency collapse, regional war, energy deflux or starvation events could easily result in zero global pop growth within two years. If matters turn particularly ill, global pop could die off precipitously towards 5 billion by 2030, or even 4 billion by 2020, quicker rates of decline mostly require active kill-offs or global wars. While it ought to be perfectly possible to house 12-15 billion people on this planet in an equitable and enjoyable state of living without disrupting the biosphere or running out of resources, more successful forms of societal organisation may be beyond the sustainable rationality and emotional equilibrium of imperial culture.
Many aspects of this historical period cannot be explained by a single criminological narrative,
but some observable patterns are still most reasonably explained by ponerological narratives involving a massive and historically unique criminological confluence of disparate power conspiracies. It is to be expected that adaptive devices of predatorial modality would be more clearly expressed during imperial contraction, and this situation could be considered to be the most violent and pervasive imperial collapse in history.
Conspiracy theory as a defined subset of criminology should be a decisive element of any socioeconomic theory used to facilitate a comprehensive understanding of the contemporary planetary predicament in financial and political terms, whereas particular irregularities of the overarching global credit collapse definitely cannot be placed outside a coherent behavioural framework of financialised or politicised socio-organic criminology.
According to today's post by Golem XIV, more than just the math is different at the top.
Regulatory Arbitrage - what bankers don't have to tell us
Frank A said(11:46 p.m.):
"the South, in general, has no history of a working class"
"Hell, the industrial revolution largely didn't even arrive in the south until the Great Depression."
"So, given their background, it is difficult to see how the differences might be resolved short of force."
"These people still believe, and are taught in public schools throughout the states that, the Civil War was really the " War of Northern Aggression"."
These have to be some of the most uniformed comments I've ever seen on this sight.
On the topic of population growth, I have a few comments:
1 - in the early 1990s, I used to post my online comments with the signature tagline "one child per couple is the solution to pollution". I was widely vilified by mostly women who scolded me with "keep your hands off our bodies" type comments. So I withdrew from that conversation and I knew then that humankind was in for a rough ride that could only end in a crash.
2 - I had a private correspondence for years with Alex King, co-founder of the Club of Rome. We would arrange to meet and discuss issues over lunches or dinners when he came to Canada. I had hoped that his brilliant mind could offer insight as to how I could forward the population discussion. He couldn't and he suggested that if most people couldn't intellectually accept that there were limits to growth, they would never be able to accept limits to population. He was right.
Not to be too pessimistic but I suggest that some variation of Richard Duncan's Olduvai Theory will play out in the long run.
In the interim, I build my community connections, prepare to have a steel roof installed on my home in Spring, install my wood / coal kitchen stove and go about living.
@ Gravity
I would like to know where you dug up the notion of "ponerology". It is not a household word.
Ciao,
FB
@Gravity
Loved the reference to ponerology.
I hadn't run across the term in years. Had a friend who was really into the study of it way back in the day.
It spawned the word Pathocracy.
This is just the natural ruling class mindset throughout history.
Has a nice ring to it.
UN statistics supposedly indicate that family size is inversely correlated with income only because female fertility is inversely correlated with education level [including basic contraceptive empowerment] and acquired professional vocation, roughly reducing fertility at about -1.0 child per female per 6 years of additionally enjoyed higher education above grade-school. Such educational opportunities are then largely linearly correlated with income or socio-economic status, potentially allowing for the multigenerational derivative inflection [demographic transition] of self-sustaining microeconomic energy flux densification far above subsistence stress levels.
@FB
There's a book called 'political ponerology' I haven't read yet, it apparently formulates a psycho-social/political interface model which predicts highly structured and non-randomly bifurcated malicious conduct within society, generally present in all oligarchies, explained by an institutionally and historically dominant criminological narrative. I'm uncertain whether it explores the role of minority groups of clinical sociopaths within the institutional conductivity of evil, but it would certainly enumerate general anti-social conduct within politics, its likely to be somewhat similar to my own incomplete theories involving 'dominant sociopathy'.
Its rumoured the publication of this book was deliberately frustrated or almost prevented by censorial pressure exerted by unnamed parties. If true, this might indicate said parties are unfavourably mentioned in said publication. No other suspects would logically be motivated to prevent propagation of such obscure criminological insights.
Any such theories of bifurcated evil may ultimately be useful to explain the most intense historical horrors. The holocaust, especially considering the purposeful planning and ideological foundation thereof, is a good example of an event that may not be fully explicable by any interaction of common human evils. Such may indicate the existence of exceptionally evil and unnaturally organised conduct located outside the perceptual awareness of less evil people.
I'm actually trying to avoid slipping into demagogy while exploring configurations of dominant sociopathy. An integral part of the framework posits that concurrent demonization or directed political persecution of any socio-economic, political or ethno-religious group-behaviour whatsoever is undeniably misplaced and thusly replaced by a more coherent narrative, since the only subgroup of people exhibiting consistently anti-social behaviour and conduct worthy of particular demonization, is expressly sociopathologically inclined beyond the behavioural modality of any other confined identity.
Many political or ethno-religious persecutions sadly do involve misattributing defined sociopathological behaviour or ponerological value-systems to minority groups in discriminatory discourse, which is to be avoided.
The cultural-institutional propagation of dominant sociopathy, if existant, is not the worst of humanity's problems, yet as collapsing imperial culture seems most conductive towards nefarious workings of predation, more highly organised behaviours alligning with purposes of evil increasingly do tend to intensify and controllably focus other problems and conflicts which otherwise wouldn't involve any purposeful criminological organisation.
I was considering ways in which select clinical states of sociopathy could be rendered autonomously criminally offensive and prosecutable by themselves, but besides requiring society-wide psychological screening for all public power positions, such policy quickly turns nastily discriminatory and becomes vastly oppressive without guaranteeing any improvement.
Could I humbly ask posters with links to do us all a little favour?
Please explain what that link is all about so that one can decide, in an intelligent way, whether to go there or not. Links to youtube and and tiny are especially problematic as the anchor itself has no useful information.
Here is an example of a tricky one
<a href="http://tinyurl.com/4jjwvon">Great Stuff</a>
Here is the same link presented in a more useful form
<a href="http://news.yahoo.com/s/afp/20110217/sc_afp/usastronomytelecomnasachina">Earth dodges geomagnetic storm: scientist</a>
One added bonus is that it is also easier to find that article later on if one needs to go back to it or to send it to someone.
I hope what I am saying here makes sense. Thank you.
If you do a search on Amazon for the term "Ruling Class", you will find a plethora of books on the subject.
The first book I read on that subject was as a school kid in the 1960's. It was a translation of a work by Gaetano Mosca
Mosca's enduring contribution to political science is the observation that all but the most primitive societies are ruled in fact, if not in theory, by a numerical minority. He named this minority the political class.
There is no escaping it. Every society worthy of that name has a ruling class. The real question ought to be what to do so as to align the interests of this elite with the vast majority of the population. In Egypt, that was, and still is, clearly not the case. In today's USA, that is also clearly not the case. How to design the system so that these people are selected so as to perform their most useful functions properly?
It goes without saying that "one man one vote" does not to work any more - when small subsets of the population hold all the reins and a huge proportion of minorities are incarcerated.
A lot of impressive and obscure words are being tossed around in advocacy of an unachievable situation. The reality is that if the "ruling class" can be prevented from ruling in its own favor, then it isn't the ruling class anymore. Be assured, the new ruling class is doing it.
I think keeping the ruling class interests aligned with the rabble requires being willing to revolt at the drop of a hat. That might not work out well either.
@ FB
I wasn't familiar with ponerology either, but I did find this definition which does fit in with Gravity's dialog.
@Eric in TX
You do realize that I was drawing on my personal experience and interaction in my recent "community" in order to amplify A Walk In The Woods comment that
"Years ago, on a large construction project, I was talking to a non union worker on the job.
The subject turned to hourly wages. He was from a southern state with a fervently nurtured culture of vitriolic animosity toward unions.
He had been indoctrinated from birth with the idea that it was 'wrong' to organize for better wages, as a member of the cult of Hyper-individualism, you were suppose to achieve 'greatness' exclusively through the application of your own Individual (Triumph of) Will and Hard Work."
Obviously you didn't like my comment but to call it "uninformed" is insulting to say the least. I can only guess that you are completely comfortable with the many hang ups so prevalent in the South, regarding unions, education, civil rights, woman's rights, environmental responsibility, science, ... shall I go on?
And Eric, before you say it, I will be leaving it to you and yours at the earliest opportunity, but no later than next summer (2012) latest.
California Ticker-Head "Bohemian" finally is the first I've seen to finally just plain admit it:
"Cut Social Security now - all of it. Let's kill some old ladies."
If it were anywhere else, I'd expect some degree of sarcasm declaration.
Bohemian, start the war.
jal said...
SUPERBUGS has the highest probability of being the vector. The H1N1 emergency response demonstrated that the world is powerless to prevent or contain the spread.
There was no H1N1 pandemic, just a dramatised response to a flu bug to sell vaccines.
Diseases do not kill large swathes of any human population unless that population is malnourished and/or has little access to good sanitation and/or has a heavily polluted lifestyle. Small pox is a classic example. Those areas that had good hygiene responses to outbreaks saw very low mortality rates in 19th century Europe. Those that relied on vaccination did not fare well. When proper sewerage was introduced to many major cities around the turn of the 20th century the disease promptly gave up the ghost and went away. Some of the largest outbreaks of the 19th century in Europe were during periods where vaccination was mandatory and those who refused it were punished. Don't be fooled by pharmaceutical company /WHO propaganda.
The other main concern with disease will be those that attack our mono crops. The dominant natural state is diverse for a reason. There is a high probability they will do more damage than any human bug.
"There was no H1N1 pandemic, just a dramatised response to a flu bug to sell vaccines."
On the other hand I believe that all that H1N1 was a world wide TEST of the emergency response infrastructures.
jal
Re: what would an ideal ruling class look like?
Like this:
On a visit to the East Coast, Suzuki Roshi arrived at the meeting place of the Cambridge Buddhist Society to find everyone scrubbing down the interior in anticipation of his visit. They were surprised to see him, because he had written that he would arrive on the following day. He tied back the sleeves of his robe and insisted on joining the preparations "for the grand day of my arrival."
@ Gravity
Its rumoured the publication of this book was deliberately frustrated or almost prevented by censorial pressure exerted by unnamed parties.
Difficult to pronounce, perhaps, but not unnamed. www.ponerology.com says it was Zbigniew Brzezinski who prevented publication.
Ya doomers. Things are going to be fine!
The US is all set to create 200,000+ jobs each & every month for the next 120 months. This will raise revenue, income & prosperity. While allowing banks to rebuild their balance sheets & repay all taxpayer largesse. US exports will double in 4 years & the DOW will be trading at 28,000 in a decades time.
I mean after all peak oil & climate change are a non issue given that we're going to innovate & come up with fantastic new technologies allowing us to decarbonize our fossil fuel economy into green-tech. I mean building a nuclear plant a day along with 1 Billion electric powered cars is so simple and we'll do it in 10 years to escape the worst runaway effects of climate change.
Then we'll just set about increasing world food supply to supply endless banquets & parties. We just need to produce more grain in the next 40 years than we did in the previous 500! While we also need to build way more golf courses taking up productive farmland to allow the new emerging middle class to escape from the stresses of society.
There's nothing technology, money printing, overconsumption & hubris can not solve.
Wheeeee. Bonuses all round for every banker!
@Nassim et al - more on societies and rule via a long quote from a genius on these matters (in my opinion)
“The very name “society” as denoting groups of men who live together is equivocal and utopian. ... any sociology must at least make all haste to state with equal emphasis, and to accord equal weight to, the fact that man is also unsociable and bristling with antisocial impulses. Both social and antisocial forces are at work wherever men are living together. ... Why omit in the name the antisocial component. By simply inserting it we shall become aware that no society has ever been a “society.” Men, to be sure, live together, but their living together cannot truly be called a society. It merely is an attempt at becoming one, if it is not an outright wasting away of earlier relatively accomplished forms of social organization. Society, by its own nature, provides the place for social and antisocial doings alike, crime occurring as normally as love of one’s neighbor. Major criminal elements may at best be kept at bay temporarily. But even so they only lie concealed in the underworld of the social body ready at any moment to break loose de profundis.”
“Let it not even be said, therefore, that society means the triumph of the social over the antisocial forces. Such triumph has never come to pass. What in fact prevails is an unceasing fight between the two forces, and the ups and downs characteristic of all struggle. ...
“Society does not work miraculously by itself like a healthy organism. If it works--and so it does; not always, but in most cases--it certainly works not miraculously or spontaneously, as liberalism would have it, but lamentably, owing to the fact that the best parts of the positively social elements let themselves be consumed in the sad pursuit of imposing order upon the antisocial remainder of the so-called society. This pursuit--horrible for many reasons, but indispensable--thanks to which human coexistence turns into something like a society, is called rule, and its apparatus is the state. In his book De legibus Cicero enunciates solemnly that “without government existence is impossible for the household, a city, a people, the human race, physical nature and the universe itself.” But government and consequently the state, in the last instance, spell violence, mitigated in prosperous times, formidable in times of crisis.”
“... Let us admit that societies cannot exist without government and state authority; that government implies force (and other things more objectionable...); and that for this reason “participation in government is fundamentally degrading,” as Auguste Comte, whose political theory was authoritarian, said in an amazing sentence ... A weird thing indeed this reality we call society, in which the socially most valuable elements are obliged to devote themselves to a degrading task and to prove, by accepting this obligation, their superior sense of responsibility. The recongnition of this fundamental fact will have to stand at the beginning of any future sociology.”
From “Concord and Liberty” by Ortega y Gasset (pgs. 24-26). Written around 1940 while he was in exile in Argentina and bearing the Spanish title “Del Imperio romano”. Hard to find but one of the great essays of the 20th C. In the same vein, and available for free on the net "The Revolt of the Masses". See especially the chapter entititled ‘Who Rules in the World.’ Ortega, Revolt of the Masses
Blogger Nassim said...
Could I humbly ask posters with links to do us all a little favour?
Please explain what that link is all about so that one can decide, in an intelligent way, whether to go there or not. Links to youtube and and tiny are especially problematic as the anchor itself has no useful information.
Can't you just use your mouse cursor and put the cursor on the hyperlink and read the URL in the status bar of your browser?
The idea behind Political Ponerology is the description and analysis of psychological evil. Evil on micro and macro scales that all point to underlying deficiencies. Unlike psychopathy, sociopaths appear to be normal but lack compassion/empathy and will act out of that lack to 'ponerize' others - i.e., turn others to actions that also are sociopathic. In societies, in families, in institutions. There is nothing normal about it and it can be dealt with. We are not talking about moral evil but psychological evil. You must read this book. After 50 years of study, I finally understand the source of Nazism (and all the other evil regimes) and how it literally infected the entire society. Ideologies that start out as expression of normal people (who have common sense and normal empathy) get twisted by psychopaths and sociopaths (the front men) - which convinces people to act against their own best interest. The very essence of lack of common sense.
Dr Lobaczewski wrote this in communist Poland (with other clinicians during the '40's) and it was sent to and hidden by a variety of ponerized people and institutions - including the Catholic Church and Zbiggy.
It will resonate with all these misgivings you have had about how our world (mis)works and why. There is a scientific REASON that this chit keeps happening like this. Mental illness.
I guess I don't have an ID! This is published under Bucky's name but the description of Political Ponerology was from Mrs Bukko. I have been freed of so much anxiety about our entire race (human) and what will be possible in future. WE REALLY AREN'T ALL CRAZY AND SELFISH. Like good deadheads, we will survive and take care of each other. That's the DEAL.
Mrs Bukko
Can't you just use your mouse cursor and put the cursor on the hyperlink and read the URL in the status bar of your browser?
ogardener,
Perhaps I explained myself badly. :)
If one does as you suggest and the anchor title is something like Look here great info and the link is to either youtube or tiny, it is quite impossible to glean what is there without actually going there and opening it. If the anchor title said something like Bernanke: "The End of the World is Neigh" then one would get lots of information before opening it. Also, it would be easier to find it, should one wish, later on.
Blogger Nassim said...
"Bernanke: "The End of the World is Neigh"
Nigh. Nassim. Horses neigh ;-)
@VK
Motivational video for your 2011 resolution:
Art DeVany and Robb Wolf. Art is 73 years old!
At least we can benefit something from the one time oil glut - health and wellbeing, not cars and shiny things (youtube prog-metal video).
Regards,
Paul
New post up.
Damned if you do, doomed if you don't
.
@rcg1950
Thanks so much for the Ortega quote on rule and society. I have yet to read any of Oretga's work.
What with " the masses " in revolt mode looks like a timely read.
Post a Comment