Yohei

THE GREAT GLOBAL WARMING SCAM

Indeed.

Central Banks: More Harm than Good?

Agree fully that the Austrian school is an accurate description of reality. Certainly it is the only theory that back tests economic history.

America: A Bona Fide Plutonomy

You write, "..the stimulus money has had a proportionately greater benefit to the wealthy - most certainly an unintended consequence of the Obama plan that is designed to take more from the rich."

I disagree utterly. The very idea that Obama is for the little guy is absurd. You have to evaluate what politicians DO, and pay no attention to what they SAY.

Can you possibly think that Summers, Geithner, et. al. were put into their jobs for any other reason than protecting the very, very rich? Don't let yourself be deluded. The situation is obvious.


On Sep 08 12:46 PM Matt Blackman wrote:

> Interesting point but Michael Moore has yet again done his best to
> suck the public into his truth-distorted sensationalist mockumentary
> world. Those who take him seriously do so at their financial and
> intellectual peril.
>
> But the Citigroup findings do bring up an interesting point. Although
> the top10% income group earned 43% of the total income, in the same
> year (2006) the top 10% paid 70.22% of total taxes in the US and
> this proportion has been steadily rising according to the National
> Taxpayers Union.
>
> Translation? While the percentage income earned by the top brackets
> has been rising, the amount the government claws back through higher
> taxes is rising even faster.
>
> But if the conclusion that the wealthy have done better through this
> meltdown versus the Great Depression is true, it means that all the
> stimulus money has had a proportionately greater benefit to the wealthy
> - most certainly an unintended consequence of the Obama plan that
> is designed to take more from the rich. But it would seem that the
> rich are better at catching the money being thrown out of Fed Reserve
> and government helicopters....

How the Fed's Low Interest Rates Are Hurting Us

A cogent and accurate depiction of reality. Unfortunately there is another aspect of reality involved here and this aspect has overwhelming power.

This aspect is human nature, of course, Freud's "the It", Strachey's "the Id", the "reptillian underbrain" of the mind, the real and actual self, the home of the emotions, demanding, power and pleasure seeking (and not as "unconscious" as all that). The real reason people do something is because they want to.

The lust for wealth and power go back forever (think of the King Croesus legend) and attempts to meliorate the inevitably disastrous results of the lust for personal and family wealth and power using social controls (nothing older than Communism's promises, including the professions of prostitute and politician) go back even further.

An economy run on Austrian principles would be vastly different from what we are used to. It would require a guardian class able to resist the temptations of power and wealth, with each member willing to be incorruptible, to be of the most self effacing and unegotistical sort who takes pleasure solely in duty. Even contemplating such a thing requires a droll and rather dark humor, see Plato's "Republic", or More's "Utopia".

Of course, in theory we could re-establish the Founders' Republic.

It is interesting to muse about the exact time and place of the Republic's demise. One could point to Hamilton's assumption of State Revolutionary War financial obligations by the Treasury Department (January 1779), the Supreme Court cases "Charles River Bridge vs. Warren Bridge" (the end of the contract clause, 1795), or "Marbury vs. Madison" (1803, the end of checks and balances, that is, if a State or individual wanted to sue the Federal Government they could do so only in Federal Court), or jump right ahead to 1861 - 65, where and when the north east banker - capitalist - mass media faction crushed it's last remaining competition. The Washington - Wall Street gang has been in power for nearly 150 years. Be a much bigger job than people think to get them out of the saddle.

So, smile, and giddyup, horsey.

Pandit's Loaded Gun

Let us imagine for a moment that we indeed had "Change we can believe in" instead of empty promises.

Imagine that Geithner was gone and Volker had the Treasury. Imagine that the Goldman clique, Summers and Rubin and all the others, fired or ostracized. Imagine that the Bush - Paulson policies had been repudiated not reinforced. Imagine that "too big to fail" meant making those "too big to fail" history instead of bigger. Imagine Sheila Bair survives her coming destruction at the hands of the Goldman clique.

Imagine that Americans who bought the "sizzle" insisted on the "steak" instead.

Ah, daydreams of justice in a world of fools and knaves.

Cheap advice, folks. Don't believe someone who is trying to sell you something unless you know what you are doing. Learn to recognize propaganda when you see it. "There is a sucker born every minute" and you better believe this means you.

Boomers in Trouble: The Unheralded Economic Mega-Trend, Part 1

My experience with Boomers is that they live in an utter dream world. Boomers as a group are utterly detached from reality. They are not insane, however, but rather are not sane.

There are individual exceptions. Unfortunately they are so few that when one such encounters another it can be a novel and very enjoyable experience. Most Boomers who don't live in their inner fantasy world are unpleasant and cynical folks.

Speaking with authority here. I was born in 1946. Been there, done that, as they say.

Forget Green Shoots: These Are the Brown Shoots Turning Black

Obama has had plenty of time to change course. Plenty of time. He has not.

Get rid of Summers and his proteges, the whole Rubin - GS group. Tell Geithner to resign. Put Volker at Treasury. Start rolling back TARP and the whole alphabet soup of similar programs. Do the same with pork. Stop pumping trillions of dollars into Wall Street. Pass a new Glass - Steagall. THAT would be "change we can believe in."

Endless excuses based on "Bush did it" won't cut it anymore. Leadership is in order. Not more of the same old stuff.


On Jul 12 02:58 PM EX-AD-MAN wrote:

> Wall Street threw the country's financial body over a log and banged
> away while W ruled the roost, but somehow it's Obama's fault for
> not fixing things after less than a year in office? That IS priceless.

'The Crash of 2008 and What It Means' by George Soros

What Soros is pointing to is the infinite capacity of human beings to be fools. This has been written about for ages, literally. Contemplate the Mahabharata, Lao Tzu, or the Western tradition from Plato, Thucydides, etc. through Shakespeare and Thomas More.

Now combine this understanding of human nature with the fact that humans are herd animals, or, more accurately, a combination of herbivore and carnivore, and so are herd animals that hunt in packs.

Using Freud's metaphors, the center of the human psyche is the Id, irrational and power seeking; the intellect is the willing good servant of emotion and not vice versa. Emotion is the foundation of the self and "Cogito ergo sum" childish nonsense.

Humans tell stories to each other and these stories propagate in accordance with the times. People tell stories about reality, human nature, etc. and are believed on the basis of desire to believe them true. Concrete reality intrudes; the more intrusive reality becomes the more the emotional self demands "understanding" of the rational self and the more frantic become the rationalizational effort.

Really, this is all that need be said. We all individually respond to this human reality in accordance with our character.

Does Felix Have Criminal Tendencies?

Lots of people saw it coming. Warren Buffett, for one, said that "Derivatives are financial weapons of mass destruction." Bennett Sedacca at Minyanville held similar opinions; he saw that the CDOs were highly unsafe investments. Doug Noland at Prudent Bear has given exact analysis over the years of the continuing deterioration in credit quality.

Myself, when the Feds starting requiring banks to write bad mortgages and business loans for political reasons I thought it obvious that this trend continued long enough a blowup must result. Actually I was surprised at how long the blowup took to occur.

One of the only truly infinite things is the foolishness of humankind. As Shakespeare put it, "What fools these mortals be!"


On Jul 09 05:33 PM klarsolo wrote:

> You know, sometimes complex systems blow also up because of a huge
> multitude of reasons and uncalculatable, unprecedented feedback loops.
> It's not always a mountain of stupidity and criminal behavior. Tiny
> acts can huge effects.
>
> As with every black swan it is now easy to look back and say "Any
> reasonable person should have seen this coming". But fact is, almost
> nobody foresaw it. We all knew housing was in a bubble in a handful
> of States, but not in your worst nightmares could you have foreseen
> the cascading effects this would have on the entire global economy.
>
>
> Guys, please keep this in mind when you wants heads to roll.

New Unemployment Claims Fall: Hold Off on the Bubbly

My own random checking indicates the entire West Coast has horrible unemployment. Still reasonably OK here on the Wisconsin - Illinois border area but many other midwest areas are in bad shape and getting worse. Ohio and Michigan are as bad as anything on the West Coast.

Dunno, U-6 is 16.5%, but it looks to me, from my travels, to be higher. Maybe John Williams is correct and actual unemployment is about 21%. This is a national aggregate, of course, and for somewhere where unemployment is not as bad as this there is another somewhere where it is worse. The whole West Coast looks to me to have an unemployment rate of over 25%, more like 30%. Everything west of the 100th meridian is now visibly affected.

Going to be a lot of people on the dole, millions and millions of them. Maybe unemployment benefits will just be made permanent. In any case jobs are so hard to get that expecting welfare recipients to find work is irrational.

Equity Risk Premium Levels Suggest March Lows Will Hold

The Feds are not going to be able to maintain the current low return rate on Treasuries and other government guaranteed debt. Even using the present estimated Federal deficits rising rates are inevitable (and probably sooner than commonly expected).

The current official Federal deficit projections should be taken with plenty of salt in any case; they are based on expenditures not increasing above what is "planned", overestimated economic growth and subsequent increased Federal income from taxation.

Notice the steadily increased pressure for another "stimulus package" of late. (Got to buy them votes, eh.) If the coming bailout of State and local finances hits first "health care reform" is toast; California will get Federally guaranteed loan issuance rights within weeks and many or all States will soon follow. No way to say how this will turn out.

All this is common knowledge. That is why "health care reform" is being pushed through at maximum speed; the "window of opportunity" is very short. Once "health care reform" is in place it is expected to be politically impossible to curtail the resulting spending growth. (Like Social Security on steriods.)

All is proceeding according to plan.

California - And by Extension the U.S. - Headed for Permanently Smaller Economy

The exponentially increasing trend of the ratio of increase in debt divided by the increase in GDP has been in place for a long time. This exponential curve expressed as dollars of debt divided by dollars of increased GDP has been in place since the 1950's

The curve continues to form the right hand side of an upwards opening parabola. The curve is now very steep and looks like a standard market blowoff pattern. In the political sense dealing with this is currently impossible. As with any market this price (in terms of credit increase) cannot go to infinity. One suspects that the current incredible rate of increase in debt generation (governmental debt, to be sure) will not prove to be rapid enough to keep GDP from falling; that is, it is no longer possible, no matter what is done, to increase debt rapidly enough to create the perception of economic growth.

As Mr. MacDonald puts it, "I call this the hidden terminus. The crossover point where resources were harder to attain, but, the techniques of the economy kept advancing (to some extent masking the underlying countertrend in resources). It now seems likely the United States reached this point in the year 2000."

Looking at the new credit divided by new GDP ratio over time, I think that the year 2000 is too late a date. 1964 is more like it because 1964 is where one first sees a permanent conscious negative real interest rate Fed and Treasury policy. Except for the Volker era a negative real interest rate policy has been the rule.

Money Velocity Is Likely Stabilizing

There is no GDP data since last year currently published on FRED. Holding GDP constant the change in M2 since 1-1-09 indicates current money velocity is 1.65 (M2 from FRED, St. Louis Federal Reserve site) Official GDP is probably a little bit higher than late last year, so my estimate is that velocity as GDP/M2 is now 1.60 to 1.65.

More Stress Over Stress Tests

Looks to me like a Thimblerig game.

Those of you too young to find my metaphor clear, Wikipedia has a good article on the Thimblerig game, also known as "the shell game".

Mark-to-Market vs. Mark-to-Model: What Ever Happened to Real Value?

Interesting to watch such a puerile "Platonic" argument unfold. Surely the conversation was fictional? Although one acknowledges MBAs are generally very personally ambitious taken as a whole they show few other distinctive properties other than second rate minds. Terrible managers, just terrible, usually. I know some exceptions though.

Surprising the number of people who hate mark-to-market. I suppose the process of price discovery leaves many disgruntled.

The changes in FASB 157 were made so the Big 19 banks could make positive "earnings", that's all. To bad for the rest of us if we believe such nonsense.

Had to do something to get the suckers' money into play, or else The Joker won't be laughing, and you don't want that.

Speaking of this recent stock rally, of course. "The game is rigged" is an understatement. The greatest pain for the greatest number is in store.