"Moral Hazards"

When the whole "US Government will backstop Wall Steet" thing happened, all everyone could talk about was "Moral Hazard".

In short, Moral Hazard posits that if the government bails them out this time, then it increases the odds that the Banksters will make even more risky bets in the future, betting on yet another bailout.

What a wonderful mis-direction this is!

"Be careful! Doing this could cause the entire financial system to collapse next time."

"Next time"? WTF? WHAT THE HELL IS THIS?

Again, what a wonderful mis-direction! In essense, its saying, "Well, ok, this time, but not again." Don't punish anyone now, just make sure it doesn't happen again [sound of wrist being slapped].


BS!

It's not a "Moral Hazard" for the future, it is a complete breakdown of morals right now!


Principal: "Ms. Smith, your son has been setting fires in the classrooms and has caused the school to burn down."

Ms. Smith: "Oh, goodness! We should do something about this. One day he could wind up burning down the entire school!"

Principal: "Yes, Ms. Smith. That's very precient of you. He could burn down the school [again]. But in the meantime, WOULD YOU PLEASE STOP GIVING HIM MATCHES!?!?!"

Haiti: Water and Food in Crisis

Will someone who has experience with distributing food and water in crisis areas please consider the following and tell me why it won't/doesn't work?


If there's anything we learned spending 3 days watching hundreds of Americans starve in the Convention Center area of the New Orleans Katrina aftermath, it is that Americans really have no idea of how to provide basic essentials after a disaster.

Well -- pending someone explaining to me why this won't work -- here is a way to make it work.

First year engineering students are often tasked with a competition: create an entry that will drop an egg 'N' feet to the ground without breaking the egg.

I posit that we're have and continue to waste engineering expertise on such a stupid goal. Why not change the challenge to: 'Drop water safely to the ground from 10,000 feet'?

In a widespread disaster, there are plenty of things in short supply (in order of severity): rescue, medical treatment, water, food, shelter, security, communication, transportation.

Unbeknownst to the US military (doesn't the US have any other organization to help people? Most other countries seem to be able to get these things done without toting machine guns.) there are ways to get at least some of these items to people fast. Here's what you do.

Make many different small kits:

A) Water: 5-gal cardboard "cubetainers" would be excellent for this. Fill each container only half-way to provide some crash-resistance. "Cube-tainers" stack well and the inner liner can be easily re-used to store water from other sources as/if it becomes available. If all else fails, strap a parachute on a 1-liter Desani bottle for Christ's sake.

B) "Food": Candy bars, granola bars, Lord knows the US if full of "sports bars". Pack 'em up and strap on a 'chute.

C) Shelter: Tents, battery-powered flashlights, water purification tablets, blankets.

D) Medical supplies: Basics, with instructions in 400 different languages.

E) One-way and Two-way radios: One-way to receive broadcasts such as "Sit tight, we're coming to deliver X in Y hours." A smaller number of two-way radios, hard-tuned to fixed frequencies to allow vicims to organize and radio authorities on their situations, their needs and what resources they have to contribute, if possible.

Now, the US military tries to deliver these things to ground-level in pallets and gets all wound up when starving people rush their helicopters (those damn poor people!)

The right way to do this is push this shit out the back of a C-5 at 10,000 ft. That's right, no 15 pallets of X. I'm talking 10,000 pieces each of A through E. Yes, it will land all over the place and yes, it will land in a lot of "wrong" places. But what this does accomplish is scatter people about. Scattered bits of food, water, clothing, shelter, med supplies, etc. don't get gobbled up by "greedy" people. There's no way to Bogart too much because it's all over the place. Also, it keeps rioting mosh-pits from forming at distribution points because there ain't any.

Yes, you're gonna have to make more trips to do this and yes, it's gonna be "inefficient". But you also are getting water, food, shelter and basic medicine to people *on the day of the disters* and not 2 weeks later after everyone has died from starvation waiting to fill out forms in triplicate.

So yes, the Haitians are rioting. Good on them. Lord knows we should have rioted when the US Gub took 3 days just to get a bottle of water to downtown New Orleans. In-fucking-excusible.

The American Dream -- You Have to be Asleep to Believe It

George Carlin

As I lie in a 33rd floor window of a New Orleans skyscraper hotel, I look out over Canal Street, into the French Quarter and over the Mississippi River... all while surfing Tom Fitzmorris' restaurant reviews on a mobile phone.
Some come to New Orleans for the music, some for the bared breasts of Mardi Gras and the rest for every other thing this heat city has to offer. We've come for the food.
Looking over The Quarter, I'm reminded of the televised images of the flooding, the devastation and the misery of Katrina. Reminded of how an entire nation sat still while one of her great metropolises slowly drowned.

I am grateful that she has mostly recovered, pushing Katrina into the past as she has done with all other storms, floods, fires and other tragedies.

At the time of Katrina, I was infuriated by those that suggested that we should abandon New Orleans, built as she is on such continually sinking ground. Now I see that New Orleans can be no other way. She hasn't been here over 300 years solely on the opinions of a few Internet pinheads.

Welcome back old girl. You didn't need my help, but I came back as fast as I could.

Now let's eat!

Cut Costs! Build it Overseas

My response to Taunter Media's answer to GM's woes:

First-time caller, long-time listener. Love your stuff.

If I may, I would like to respectfully disagree with a few of your suggstions/conclusions.

Firstly,
"A great CEO would build better cars for less money..."

Why should the target be to be cheaper? Almost all other brands, Honda, Toyota, BMW, Mercedes, et. al. cost *more* than US makes, yet led the US makes in sales.

Apple is making a booming business in a near depression selling MP3 players for $400 when you can get them everywhere else for nearly free.

Why 'cheaper'? Why not just 'better'?


Secondly,
"You would place all of your new facilities in the cheapest place possible..."

Sure, this kills the unions, but now leaves us with the question "Who exactly, will be buying these cars?" Without jobs, GM's (and the world's) largest market is bankrupt. There's no money to buy cars. How does shipping one of the country's largest employers overseas put purchasing money into the hands of the world's largest consumer?

Germany is *filthy* with unions, but seems to be doing better than most, even in this "downturn".

I believe these and other similar memes have led us to where we are today. "Make it cheaper!" "Move jobs to where it's cheaper!" "Cut labor costs at any cost" has done but one thing: make recipients of such "savings" richer and the consumer poorer. We're now seeing the very predictable end of that process.

Everyone thought that buying Chinese products at Wal-Mart "saved money". Now, we can afford to shop nowhere else.

Everyone is a huge fan of "Democracy", but for some reason the common belief is that only the rich "know how to spend money properly". The "power of the ballot box" is supposedly reserved to the plebe, but the power of money is always directed to the top.

Who would (and has 1945-1990) make for the better economy? A relatively small few who "know how to spend money best" or 300M prosperous "plebes" who are well-off and spend money often?

US Pharma Racqueteering

Capitalism for you, not so much for us:

TPM

Over the last few years, drug-makers have embraced a startlingly simple tactic for fending off competition from generic brands: paying them off. In a nutshell, the company that holds the patent on a profitable drug strikes a deal with the maker of the cheaper generic brand: you hold off on marketing your generic for several years, and in return, we'll give you a share of our profits on the drug.

So common have these deals become lately that they've been given a name: pay-for-delay. The approach -- a textbook anti-competitive tactic -- is worth billions to drug-makers, because it essentially allows them to buy more protection than their patent confers.

The Linux "Community"

So what is the source of the conflict I'm having with Linux?

In short, I'm getting something for free and bitch that it doesn't work as well as I think it should.

Is that fair? No, it's not.

I can well imagine someone who toils for free year after year to manage, create and improve Linux, just to have some jackass come along and bitch that it doesn't have a GUI to make it easier. "Hey, either contribute or go away. This is a community, not a give-away."

As some might put it, Linux is free as in speech, not as in beer.

Just keep that in mind the next time you decide you're gonna throw together a Linux system. Its an amazing thing, Linux. Despite all the Cum-By-Ya of Ubuntu -- its logo symbolizing people holding hands in a circle after all -- you will have to become not just a system administrator, but a member of The Community. You might not be contributing your time to write code, but more than likely you will be contributing your time to figuring out how to get it running again after each upgrade. Think of your contribution as being part of the Test Community... a lot like Microsoft products.

The wonder of Linux is that it is modern magic. Once you know the correct incantation, it is amazingly simple to do mind-bogglingly complex tasks. Learning the correct incantation, however, is gonna take you some time... and sometimes learning to drive a car without a steering wheel.

In that respect, Linux may always remain a "hobby" system. Sure, it can be used in "production" environments, but it will always require a dedicated Sys Admin to keep it running. This in a society where computers are moving from being specialized tools to being appliances.

Overheard in the Heart of Recycling Land

Even here in the heart of Recycling Country, it can be hard to save the world without sounding priggish. I overheard the following conversation at a recent holiday get-together:

Guest: Where can I find the paper towels?
Host: Oh, we're not that kind of family. Here, use this wet cloth.
Guest: So it's ok to put my son's booger in it?
Guest: Oh, here, have a tissue.

Far away in the arctic, another polar bear cracks through the melting ice and drowns.

Linux in a Nutshell

So I once again upgrade my Linux server and watch everything inexplicably stop working. I take out my fury and frustration on an old friend and co-worker:

"Why the frickety f*ck does Linux just randomly stop working any time you do an upgrade and require another 36 hours of forum-surfing before finding some hack way to get it working again?

Every time they change something, they frequently don't bother to create a GUI interface to replace the one the old version had. Hell, I'm a computer programmer with all the time in the world and I can't sum up enough Give A Sh*t to go sorting through the codespace every time somebody decides to change something and not document it. Why the f*ck do we have to rely on random people on the internet to explain to us how to fix things (that used to work) that were broken or changed by other random people on the internet in order to keep a server working?

Its like getting your car back from the mechanic and he's replaced your shifter, steering wheel and pedals with a bunch of cords with knobs tied to the ends. "What the fuck is this?", you'd ask, only for the mechanic to sneer, "Real drivers would figure out how to pull the cords correctly in order to drive."

Every time its the same cycle. Get things working, upgrade, something changes, spend 3 days surfing the web trying to find a way to get it working again, all the while with some jackass posting "read all the documentation and edit the config files. Real men don't use GUIs".

Reason given? "They slow things down."

Seriously. Apparently chewing up hours and hours of research getting the system to work again doesn't count as "slowing things down."

I love it how all these "He Men Don't Use GUI" trolls manage to post these messages to the internet using their CLI (Command Line Interface). Are they not using a browser? Do their computers not have a mouse connected? Of course not. Whoo hoo! They spent the time and effort to get Lynx running on their TRS-80s. Good for them. Meanwhile, the real world wants to get a job done and move on.

Its the technological equivalent of having to dig through a box of 50 remote controls to find which one works every time you power-cycle your TV. What would these nerds do in that situation? They'd go balistic and hurl their X-box through the screen. Oh, wait, they don't use X-boxes, do they? X-boxes aren't controlled by 8 toggle switches and a "load" button. F*ck."

To all of this, my old friend simply says,

"Linux exists solely for the self-aggrandizement of its contributors."
-- A. Petit

Strangely, that quote answers every question I've even had regarding why Linux works the way it does.

Fuck Linux

I've been running a Linux server for 10 years and I'm tired of this shit.

Upgraded the server to Ubuntu 9.10 the other day. (I gave the new release a few months to shake out... long enough... I thought.)

Well, they've decided to change the way Ubuntu starts and stops services. Fine. I'm ok with that. As long as it works, I don't care.

Well, what do you know! While everyone was out there replacing the old sysv whatever method of starting and stopping services with "upstart" (whatever in the hell that is) no one ever thought that maybe a GUI interface might be needed. So I do what one does every time Linux stops working: I consult the documentation. You probably know it as "the internet". So what do we get?


1. Fifteen thousand posts to the 'tubes' of "Hey! I can't find the old GUI that allows me to change services. How do I get it to work again?"

2. They changed it to "Upstart".

3. Cool. How do I start the "Upstart GUI"?

4. There isn't one.

5. Ok, ummm.... (posting to Ubuntu bug lists) "Can we get a GUI for upstart"?

6. 50 thousand responses of "Why don't you learn to use the command line interface?" "Any *real* Linux user doesn't need a GUI to get things done. It only slows things down."


How many go-rounds of this do we need before we just start shooting these people in the face? Let's all repeat this together: "Not everyone wants to spend their life in front of a screen trying to figure out how to turn off a fucking Linux service or some other minor horseshit to get their system working." Make an easy GUI or spend the rest of your days wondering why Apple is taking over the world. And from one geek to another: go talk to a girl for once.

"Buy American" Bad for America

I love these "truisms".

Similar ones are "Try to regulate Wall St. and it'll go somewhere else", "We pay huge bonuses to keep our (finance) executives from leaving our company", "The guys that got us into this mess (Wall St.) are the only ones who understand it and therefore can't be punished", "Jobs Americans don't want to do", etc.

This whole "Americans are too expensive" meme has got to be conquered before this economy can be rebuilt. Yes, I said "rebuilt" not "recover".

When we sit here and debate how impossible it is to spend American tax dollars *in America* we are *exposing the very problem*, not running into an unassailable problem whose only solution is to concede and send our tax money to other countries. Sending our incomes to China hasn't helped the economy... how will sending our tax dollars there turn out any differently?

http://www.greenbiz.com/blog/2009/11/11/buy-american-bad-america

Grateful Head

Aren'tcha always?

Never-Ending Happy Hour

MSM Reporting as Propaganda

Naked Capitalism

I’m of two minds about taking up this theme, since stating what ought to be obvious but is nevertheless unpleasant and inconvenient is apt to get one branded as lunatic fringe.

Access journalism has created what is in many respects a controlled press. And that matters because people are far more suggestible than most of us wants to admit to ourselves.

Let us start with the cheerleading in the media over Wall Street, and in particular, Goldman earnings. Matt Taibbi, in “Good News on Wall Street Means… What Exactly?,” tells us why this is so distorted:

It’s literally amazing to me that our press corps hasn’t yet managed to draw a distinction between good news on Wall Street for companies like Goldman, and good news in reality.

I watched carefully the reporting of the Dow breaking 10,000 the other day and not anywhere did I see a major news organization include a paragraph of the “On the other hand, so fucking what?” sort, one that might point out that unemployment is still at a staggering high, foreclosures are racing along at a terrifying clip, and real people are struggling more than ever. In fact the dichotomy between the economic health of ordinary people and the traditional “market indicators” is not merely a non-story, it is a sort of taboo — unmentionable in major news coverage.

The press has been on a downslope for at least a decade, as a result of strained budgets and vastly more effective government and business spin control (and it was already pretty good at that, see the BBC series, The Century of the Self, via Google video, for a real eye-opener). I met a reporter who had been overseas for six years, opening an important foreign office for the Wall Street Journal. He was stunned when he came back in 1999 to see how much reporting had changed in his absence. He said it was impossible to get to the bottom of most stories in a normal news cycle because companies had become very sophisticated in controlling their message and access.

I couldn’t tell immediately, but one of my friends remarked in 2000 that the reporting was increasingly reminiscent of what she had grown up with in communist Poland. The state of the US media became evident to me when I lived in Australia during the run-up and the first two years of the Gulf War. I would regularly e-mail people in the States about stories I thought were important and I suspected might not be getting much play in the US. My correspondents were media junkies. 85% of the time, a story that had gotten widespread coverage in Australia appeared not to have been released in the US. And the other 15%, it didn’t get much attention (for instance, buried in the middle of the first section of the New York Times). And remember, Australia was an ally and sent troops to the Iraq.

Why does this matter? Because influence via the adept packaging of information and images is very effective. The creator of the public relations industry, Edward Bernays, was the nephew of Freud and set about to use the subconscious to shape public opinion. His books included This Business of Propaganda and Manipulating Public Opinion. But it doesn’t fit our self image of being masters of our own view to recognize that we might be swayed.

In his classic, Influence: The Art of Persuasion, Robert Cialdini describes how salesmen can adeptly use social conditioning and norms to elicit favorable responses. Cialdini, a social psychologist, notes that even though he is aware of these techniques, he is unable to resist them.

One experiment from cognitive bias research assembles a number of people in a room together, but all save one are actors. Everyone in the room is shown a series of lines and asked to say out loud which is the shortest (the background design makes it a bit difficult to discern without concentrating a bit). For the first five or six rounds, the actors (and the lone experiment subject) pick the shortest one. Then, the actors start calling the LONGEST line the shortest one. After a few round s of this (and inevitably, the one not in on the game looks puzzled) about one-third of the experiment subjects start agreeing with the crowd, even though that answer is clearly incorrect. And there is boatloads of other evidence of suggestibility. For instance, numerous studies have found that if a number of people tell an individual he looks tired or sick, he will start feeling tired or sick, as the case may be.

Back to the main theme: the media dares not say anything too negative about financial services firms or their government operatives lest they lose access. The private sector has learned the lesson of the Bush Administration, that the threat of freezing a reporter out is a powerful weapon. I have had some well connected readers tell of story ideas that they served up in some detail that the media would not touch out of fear of alienating their sources. This is the sort of thing that one associates with banana republics, but we have been operating on that level for quite some time.

Not surprisingly, the government and large corporations were firmly in charge of the message during the crisis (remember the gap between the MSM reporting and the anger in the populace over the TARP, which was finally noted ONLY when Congress responded to a barrage of calls and e-mails and voted down TARP v. 1.0?) and perhaps more important, in pushing the, “move past that car wreck, things are really better” message. From the Pew Research Center:

Three storylines have dominated: efforts to help revive the banking sector, the battle over the stimulus package and the struggles of the U.S. auto industry. Together they accounted for nearly 40% of the economic coverage from February 1 through August 31. Other topics related to the crisis have been covered much less. As an example, all the reporting of retail sales, food prices, the impact of the crisis on Social Security and Medicare, its effect on education and the implications for health care combined accounted for just over 2% of all the economic coverage.

Actions by government officials and business leaders drove much of the coverage. The White House and federal agencies alone initiated nearly a third (32%) of economic stories studied through July 3. Business triggered another 21%. About a quarter of the stories (23%) was initiated by the press itself and did not rely on an external news trigger. Ordinary citizens and union workers combined to act as the catalyst for only 2% of the stories about the economy.

Fully 76% of the datelines on economic stories studied during the first five months of the Obama presidency were New York (44%) or metro Washington D.C. (32%). Only about one-fifth (21%) of the stories originated in any other city in the U.S., and about a quarter of those emanated from two other major media centers: Atlanta and Los Angeles…

Once the economic situation showed some signs of improvement—and the political fights over legislative action subsided—media coverage began to diminish. After accounting for 46% of the overall news coverage in February and March, for instance, coverage of the economic crisis dropped by more than half (to 21% of the newshole studied) from April through June. And in July and August, it fell even further (to 16%). The clearest example came in cable news. Once the political battles subsided, coverage fell by about two-thirds from March to April.

Notice even Pew has fallen for the party line a bit. The stock market rally started in March. That is not a sign of economic improvement (Krugman has said something along the lines of “The stock market has predicted 20 of the past 9 recoveries.”).

So what do we have? A media that predominantly bases its stories on what it is fed because it has to. Ever-leaner staffing, compressed news cycles, and access journalism all conspire to drive reporters to focus on the “must cover” news, which is to a large degree influenced by the parties that initiate the story. And that means they are increasingly in an echo chamber, spending so much time with the influential sources they feel they must cover that they start to be swayed by them. It is less intense, but not dissimilar to the effect achieved when reporters are embedded in military units. The journalists often wind up adopting the views of the people they associate with frequently (I am sure readers will add more nefarious theories in comments, but the point here is a simple: an up the center description of what has happened to the media shows it has fallen under the sway of powerful interests).

Now how do we get to the propaganda part? Not only, per Taibbi, are we getting the view of the economy from the vantage of the bankers, as opposed to a broad swathe of the population, but we now we have the media (well, this example is that odd hybrid, an MSM blog) telling us there is no outrage. From the Los Angeles Times (hat tip JohnD):

Except for Michael Moore, whose new movie posits that capitalism is one big Ponzi scheme, the news Wednesday that banks are thriving and that Wall Street analysts are in line for big bonuses this year seemed to land with all the political weight of a dull thud.

Oh sure, the chairman of the House Oversight and Government Reform Committee said he’ll soon hold hearings on executive pay at firms that got taxpayer bailout money, like AIG and Bank of America….

But with the Dow Jones hitting 10,000 and the economy stepping back from the precipice of last fall’s collapse, there was little of that tea-party outrage that might have been expected.

Have we moved on? Arguing that the country is now more concerned with Afghanistan and healthcare, the Wall Street Journal said of bonus outrage: “That’s so last March.”

Maybe taxpayers have simply given up on Washington’s efforts to corral Wall Street.

Now why is this sort of thing (and the media was full of more subtle versions, of happy talk re Dow 10,000 and Goldman earnings) more pernicious than it might appear?

The message, quite overly, is: if you are pissed, you are in a minority. The country has moved on. Things are getting better, get with the program. Now I saw the polar opposite today. There is a group of varying sizes, depending on the topic, that e-mails among itself, mainly professional investors, analysts, economists (I’m usually on the periphery but sometimes chime in). I never saw such an angry, active, and large thread about the Goldman BS fest today. Now if people who have not suffered much, and are presumably benefitting from the market recovery are furious, it isn’t hard to imagine that what looks like complacency in the heartlands may simply be contained rage looking for an outlet.

But per the social psychology research, this “you are in a minority, you are wrong” message DOES dissuade a lot of people. It is remarkably poisonous. And it discourages people from taking concrete action. I was surprised that some people bothered to comment on a post I put up yesterday, calling on people in the Chicago area to attend some peaceful demonstrations against the banking industry during the American Bankers Association national meeting, October 25 through 27. Some people weighed in, saying (basically) “don’t bother”.

I suppose it makes a difference whether one is old enough to remember the 1960s. Because people in large numbers got out and protested, two sets of changes that seemed impossible came about: civil rights for blacks and an end to the US involvement in Vietnam (if you read the histories, the military and intelligence experts were on the whole persuaded it was an unwinnable war, but it was seen as too costly to US prestige for America to withdraw).

And even if the effort you make narrowly is not successful (does any one person’s effort have much impact?) it breeds apathy and cynicism to suggest that doing nothing is the best course of action. If nothing else, it is better for one’s psyche to do what one can, however small, to make a difference.

Now America does not have a tradition of taking to the streets; demonstrations and rallies historically are working class affairs. But the middle class is on a path of downward mobility while the elites continue to take the cream. The widening gap might waken some impulses that have been dormant in the American psyche.

Sacrificing to the Volcano God

Love this quote:

"Capitalism will never fail because Socialism will always bail it out."
- Nathra Nader

The Economic Populist

Hundreds of years ago the Incas would sacrifice virgins to appease their Volcano God.
The Gods and methods of sacrifice may have changed, but the tradition remains.

Like the Incas of old, we find ourselves helpless against forces we do not understand. The foundations of our economy shake and falter in terrifying ways.
In o The High Priests of Economics tell us that "globalization cannot be stopped," just like the wrath of the Volcano God. We've been told that there is no alternative to neoliberal globalization other than utter ruin.
The High Priests tells us that the destruction wrought by "Globalization is good" and should be embraced, and those that denounce multinational corporations are not just wrong, but dangerously wrong.

There is no shortage of politicians and media outlets who will tell you that free trade agreements are a "win-win" proposition, and that they will always create more jobs than they will destroy.
Yet history shows otherwise.ur desperation for answers we turn to High Priests of Economics who tell us these evils have befallen us because of our sins. We must sacrifice the innocent to the Volcano God or it will destroy us all.

The High Priests of Economics never explain exactly how these sacrifices will fix the economy, nor do they mention that the sins in question might be their own. Yet we still rush to offer up our children's futures through unpayable debts while never considering that there might be better alternatives.

...


A good example is NAFTA. Despite predictions that NAFTA would create 170,000 American jobs in just the first two years, Congress set up the NAFTA-TAA (Trade Adjustment Assistance) program for displaced workers. Between 1994 and the end of 2002, 525,094 specific U.S. workers were certified for assitance under this program. Because the program only applied to certain industries, only a small fraction of the total job losses were covered by this program.

...

And it wasn't just the wages of Americans that fell. The wages of manufacturing workers in Mexico have done nothing but go down in relative terms. In 1993, Mexican hourly compensation costs for production workers in manufacturing were 14.5% of those for their counterparts in the United States. By 2001 they had fallen to 11.5% of U.S. costs.
This shouldn't surprise anyone. David Ricardo, legendary economist and free-trade proponent, explained how this dynamic worked nearly two centuries ago.

How Wars "Cure" Depressions

Long post with lots of insights into other aspects of the current US economy.

Le Café Américain

By far this presents the most compelling case for a deflationary episode. As the money that is created flows into financial assets, it is 'taxed' by Wall Street which takes a disproportionately large share in the form of fees and bonuses, and what are likely to be extra-legal trading profits.

If the monetary stimulus is subsequently dissipated as the asset bubble collapses, except that which remains in the hands of the few, it leaves the real economy in a relatively poorer condition to produce real savings and wealth than it had been before. This is because the outsized financial sector continues to sap the vitality from the productive economy, to drag it down, to drain it of needed attention and policy focus.

The monetary stimulus of the Fed and the Treasury to help the economy is similar to relief aid sent to a suffering Third World country. It is intercepted and seized by a despotic regime and allocated to its local warlords, with very little going to help the people.

...

Those who have taken a huge share of the last three bubbles would like to stop the bubble now, keep their gains, and return to a system of fiscal restraint with light taxation on their windfall of assets.

So why does this not just simply happen? Because the political risks become enormous. It is difficult to reduce a population of free men into debt slaves, without risking a significant reaction. Therefore, it seems most likely that the government and the Fed will try to 'muddle through' for the time being, and look for an exogenous event to break the stalemate.

The traditional solution has been a military conflict, which stifles dissent against the government while generating artificial demand sufficient to energize the productive economy. It is a means of exporting your social misery, official corruption, and fiscal irresponsibility to another, weaker people.

Makin' it Rain

After watching this video, my thought was, "Wow! All that money and all you look forward to is impressing a bunch of hookers?"

But after thinking about it for a while, how is what Slim Thug does any different than a day at Congress?


The Daily Show, Oct 7, 2009


Slim Thug: "There's definitely not as many video ho's as there used to be... and now they bring their kids with them."

Really, how's this different than the health care industry, the energy lobby or any of the rest when they show up to the strip club...er 'Congress' to buy some favors and throw money around. So many Representatives and senators yelling, "Make it rain, Boss, Make it Rain!"

The Meaning of Information

"There is no inherent meaning in information. It is what we do with that information that matters."

http://www.ted.com/talks/beau_lotto_optical_illusions_show_how_we_see.html

American Colonialism

Some have predicted that the American Empire will soon go the way of the British Empire. I wonder, did Britain's Colonialism turn inward on itself like American C0lonialism has? George Orwell's description of colonialism sounds very much like Wall Street's view of America in the late 2000s.


Satyajit Das

... is a view of the emerging world best captured by the term ‘Orientalism’, associated with Edward Said. A Palestinian academic, Said’s writings on colonialism explored the caricatures, cliches and pre-conceptions that shaped Western perception and therefore relationships with Eastern nations. Said’s argument was that the West’s view of the East was shaped by political power and unequal commercial exchange.

Said’s work built on George Orwell’s criticism of colonialism. Writing in 1939, Orwell provided a vivid and stark view of the developing world that has rarely been equalled: “When you walk through a town like this – two hundred thousand inhabitants, of whom at least twenty thousand own literally nothing except the rags they stand up in – when you see how the people live, and still more, how easily they die, it is always difficult to believe that you are walking among human beings. All colonial empires are in reality founded upon the fact. The people have brown faces – besides they have so many of them. Are they really the same flesh as yourself? Do they even have names? Or are they merely a kind of undifferentiated brown stuff, about as individual as bees as coral insects? They arise out of the earth, they sweat and starve for a few years, and then they sink back into the nameless mounds of the graveyard and nobody notices that they are gone. And the graves themselves soon fade back into the soil.”

Exaggeration of Wall Street's Ethics

Many have alleged that Wall Street's ethics can be best summed up as "Willing to sell their mothers for a nickel."

This is exaggeration. The more accurate assessment would apparently be "Willing to sell everyone else's mother for a nickel."

Please make a note of it.