"When logic and proportion have fallen sloppy dead"

"When logic and proportion have fallen sloppy dead"
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Showing posts with label bad economy. Show all posts
Showing posts with label bad economy. Show all posts

Money in Politics  

Posted by howard in nyc in , ,

2017_07_16 19:45

(I am working with a friend on a possible podcast series.  My preparation for one of our trial runs developed into this essay.  We posed the question, how to move past the undue influence of money in politics. What began as a two minute script enlarged into this much longer rant. )

How to move past the effect of money on politics.

TL:DR - Money has always had influence in our politics, in opposition to the power of the masses of voters.  The relative power and influence of these two forces has varied over time, but in recent decades the power of big money has reached 100% control of national elections (congress and presidential); the federal government is free to completely ignore the needs and desire of the masses, and serve only the interest of the big money interests.  We can fix this, simply (but not easily).  It takes awareness, education, and intelligent (as opposed to emotional) voting out the bastards.  But awareness, education and non-emotional intelligent voting is hard.


“The love of money is the root of all evil”

I may not be a Christian, but I am a big fan of the words and deeds of Jesus of Nazareth.  I like this quote the best.  The whole quote, each word.  Not ‘money is evil’.  Love of money.  Not merely evil, nor simplistically all evil.  The root of all evil.

           ***correction.  As is the case with many historic quotations that I love the most, the general attribution, or my personal attribution, is quite often in error.  These words are Saint Paul,      formerly Saul of Tarsus, credited with many of the New Testament books.  This line if from I Timothy 6:10. The book is an epistle, a letter written by Paul to his younger protege Timothy, offering instructions and advice for leading and growing the young church.  But this is not a bible study essay, so let's continue.

Money has significantly corrupted nearly every institution and nearly every aspect of American society and culture.  ‘The love of money”, to the near exclusion of all other considerations may be a more accurate statement.

I can speak for hours just describing the corruption of education, from preschool to graduate school, corruption of medicine and health care, corruption of our previous efforts to clean up and preserve our water, air and general physical environment (Flint much?), corruption of our police and criminal justice/prison systems (all that surplus military gear that cops now routinely wear ain’t gonna buy itself),

And by corruption, I do not mean simply bad people stealing money; I mean the gross deviation from normal, natural goals that were previously a given, in favor of devotion to the singular goal of profit’ to the exclusion of any other ends, and the total fealty to the false idol of ‘the free market’. 

I’m gonna see a unicorn before I see a free market in any major area of American life.

But while correcting these corruptions are complex and multifaceted, the effect of money on politics is, by contrast, incredibly simple to describe, and even simpler to fix.  So simple and easy, even I can see it clearly.

First, to describe the problem.  Money has been central to American politics since the founding, when Madison and Hamilton made the deal regarding the location of the nation’s capital on the banks of a Virginia river, in return for central government assumption of wartime debts owed by the states.  This debt assumption Hamilton parlayed into capitalizing the early northeastern private banking system (leaking word of the deal to his buddies in New York), and establishing the creditworthiness of the new nation.  Part good, part shady as hell, but set the tone for the next 250 years.  (This is pretty sugarcoated in the musical play; you have to actually read a book on Hamilton to learn the real story, w/o a beat or bass line.  Or stay tuned for a future post or podcast, cuz I love this story.)

Since then money has been integral to the electoral process.  Despite the constant of monied influence over the decades, there has been a shifting balance between the power of big money, against the power of, for lack of a better term, the masses of the people.  A balance whose equilibrium shifts towards one pole, then back toward the other.  In a time of Andrew Jackson, shifts one way.  In the gilded age of the late 19th century robber barons, the other.  Teddy Roosevelt’s time sees a shift, the 1920s of Harding and Coolidge, a shift the other direction.  The rise of organized labor and the necessities forced by the great depression empowered the masses; the postwar prosperity of the 1950s saw (slightly) more power in the now larger than ever, now international corporations.  But the people held significant influence and power in the system, as evidenced by the spread of opportunity to brown and female people, and the general good economic health of the middle and working classes.

This balance between the power of big money and the influence of the masses is a natural component of a capitialist system.  Eliminating the influence of money, establishing a utopian system, is not a worthy nor reasonable goal.

But, as this ebb and flow moved toward one pole quite steadily in the last three decades, the vector steadily increasing, something happened.  It reached the 100% point.  It reached an extreme state, which I believe had never previously be achieved in the USA, save maybe the moment of the establishment of the Constitution, but certainly had been reached in many societies in history. 

The electoral process became 100% controlled by big money and big money interests.  We only recently reached a status in which the voice of, the influence of, the needs of the masses of people holds zero sway in the actions of federal politics.  The 537 elected members of the national government (435 house, 100 senate, president + vice president), plus the top tier of federal judges including the supreme court justices, are free to completely ignore the voice of, needs of, and desires of the masses, as long as they satisfy the people who give them money.  Elections are nearly always won with only money and dishonest rhetoric; the actual record of voting and other behavior of elected officials and the public’s judgment of those records and behaviors have no impact on winning elections.  Politicians win reelection despite complete failure to fulfill prior campaign promises.

The exact historical moment this status was reached is a matter of opinion and dispute, but there is one example I like to cite as an important marker.

During the dubya administration, I am too lazy to look up exactly when, there was a major bipartisan immigration bill, which would continue the flow of cheap labor to feed the profit beast.  Apparently this seemed sure to pass.  The vocal opponents were dismissed as racist reactionaries, and they were discounted or ignored.

However, the vocal opponents, in time honored fashion, organized.  And went to work.  They wrote thousands of letters, made tens of thousands of phone calls, and sent literal hundreds of thousands of emails to congresscritters.  Mostly to GOP members.  Making clear not only their reasons for opposition to this bill, but their willingness to work against the re-election of those politicians.

And the bill failed.  Despite the desire of the big money to pass this particular law, despite the desire of democratic politicians to gain more voters for their side (Mexican-American immigrant families still consistently favor dems), a mass of voters stopped it.  Yay democracy.

Now, move ahead to 2008.  The financial crisis.  The usuals blasted over the media the crucial imperative to give the banks and wall street, who had caused the crisis, hundreds of billions of dollars immediately or there would be Blood and Tanks In The Streets. Dem and GOP leader alike spoke in solidarity for the immediate necessity to hand over $800 billion.  Now!  Or else, All will be Lost!

Again, a group of vocal opponents flooded Congress with objections.  The bill came to a vote.  And It Lost.  Enough members of Congress were told, and believed, that enough of their constituents would vote against them if they supported this bailout, they voted against passage.  Yay democracy again.

Here is the but.  But, the leaders of our government, twisted some arms, amended the bill with some giveaways, and loaded up the news media with a propaganda message on loud blast.  And they voted again, about eleven days later. And they passed the first installment, $800 billion of the great Bailout.

Interestingly, despite the assurances of the people ‘in control’ that if this money was not forthcoming IMMEDIATELY, the ATMs would stop working, the entire economy would grind to a halt and there would be horrific violence and the army in the streets, somehow none of that came to pass.  The interim between votes proved this scare tactic to be a lie.  Back then I watched the main news media closely; they failed to point out this simple, giant lie.  The massive transfer of wealth, though, proceeded after that eleven-day delay.  They probably charged us interest and a late fee.

So, what is to be done.

Any attempt to reach for a utopia of zero influence of money on the electoral process is pointless and frankly impossible.  A simple return to the status of a short while ago, is not only possible, but incredibly simple.  It is a simple matter of political will of the masses.

They still let us vote.  If we simply vote em out, vote in only members of congress who actually vote for and pass legislation to this end, problem solved. 

Ah, but there is a catch.  The catch is equally as simple as the description of the situation, and the remedy.  The catch is, the masses need to become aware of the situation, the remedy, and be willing to do it.  Political will requires awareness, understanding, education to get there, setting aside myths and emotions about how bad the other side is compared to My blue/red side. 

I hope I’m wrong (this four word phrase may become my official catch phrase for this podcast series), but I don’t see that happening before our vote is negated either practically by various control methods of surveillance and propaganda which grow more powerful and ubiquitous each day, if not negated literally by removing the vote, or controlling the outcome of the vote via hacking. (PAPER FUCKING BALLOTS, people.)  It’s not who are the candidates that counts, it’s not who votes that counts, it’s who counts the votes that counts.

I wish all the major issues of the day were so simple to describe, address and solve.  Sadly I think this is much less likely to be addressed and fixed than many of the more complex problems.

There is another incident of the dubya era that is an example of the various forces and methods that led us to this state of 100% to 0% equation of money power to mass people power. 

One of the precious few positive things John McCain worked toward as a senator was legitimate, effective campaign finance reform.  Again, somewhere in the middle of the dubya years, McCain working with Russ Feingold crafted a bill with teeth, a bill that had bipartisan support, a bill that would not have fixed the problem but potentially could’ve made a huge difference, maybe even reverse the slide of the balance point to the other direction.  Possibly even a veto-proof level of support.

But.

But, McCain and Karl Rove discussed the issue.  And they made a little deal.  If McCain watered down the bill, so much as to have no real effect in slowing much less revering the progress of big money toward 100% full spectrum dominance, in return the Bush crime family, and further elements of the GOP hierarchy, which Rove had influence over, would not stand in his way of his bid for the 2008 nomination.  In fact, some not insignificant support for McCain was promised, and subsequently delivered.  (Rove does have a good record of keeping his promises, so there is at least sometimes, some measure of honor among thieves.)

McCain wanted to be president more than he wanted campaign finance reform.  Perhaps he lied to himself that once his end was achieved, including this corrupt means, he would as president push the reform.  Somehow such courses of action rarely work out.

But this compromise by McCain, on an issue that had become a signature of his political career, could’ve been punished by Arizona voters, had they elected someone else after this betrayal to the cause of campaign finance reform.  Not only Arizona voters failed to punish this corruption; millions of voters checked his box when he subsequently ran for president.

We keep voting for the people who screw us.  Who can blame them for continuing to screw us?  As long as they let us vote, we can blame only ourselves for voting for the people who then ignore us and our best interests.  Unless you bring your checkbook.

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Been A Long Cold Lonely Winter  

Posted by howard in nyc in , , , ,

2015_4_03
17:35

Glad it is springtime, and that baseball is back.  I've been away from the blog due to some personal setbacks and a difficult illness (nothing life-threatening, but sucks nonetheless.)  Plus, the disconnect between how I see the world, the way our nation is going, and the fictions that most people embrace, as offered by our media and our alleged leaders has worn me down.  I am tired of hearing/writing my own opinions and ideas, and don't feel much like bothering.

Reality will eventually reassert itself.  Part of me wants it to hurry, part of me fears that day.

But things are bad.  War, racism, economic manipulation and oppression, poisoned air, food, water and medications.  I still watch and read, particularly events in the Ukraine, but I have less and less to say.

So, sports.  On to Baseball season, and Giants Tickets.  In the post below.  

why didn't we think of that?  

Posted by howard in nyc in , ,

obomney announces that he and the g-8 leaders have reached a consensus that they all will do more to promote growth and create jobs.

brilliant!  damn, someone should've come up with this months ago.  growth! that's the ticket.

austerity measures have resulted in collapse of governments in greece, riots in the streets of spain and italy, and ouster of the president of france in favor of an anti-austerity socialist. and the ability to retire the debts of these nations has not occurred.  in other words, austerity measures have fixed nothing.

so, next they'll try growth.  heh.

what can a government possibly do to promote growth and jobs?  specifically a government that is running deep annual budget deficits?

spend more money.

and where will that money come from?

they'll just borrow it.  and/or raise taxes.  or print the money.

these clowns already borrowed unprecedented sums and spent into the economy in the name of stimulating economic growth.  and they got a little bit of growth.  now the growth has ground to a halt in europe, and is likely to do the same in the usa.  the money they borrowed is still owed, plus interest.  the money they printed caused significant inflation of oil and food prices, sufficient to drag economic growth.

they are stuck.  cut spending and decrease deficits = economic stagnation.  borrow/print and spend = inflation sufficient to stagnate economic growth.

the short-term benefits of borrowing and printing have become shorter term and less effective each round.  here, in europe, and in china.

there is no good way out.  economic pain is inevitable.  all they can determine is the particular path to pain--inflation or debt default.

i wonder if they realize this, and are lying, or if they have managed to swallow their own bs and believe that if they just promote growth and job creation, the economy will be fine?

there is no magic 'growth ' button to push.  borrowing/printing more money will make things worse.  they have already demonstrated this reality, with the borrowing/printing of the past three years, and the subsequent inflation, stagnant job results, stagnant gdp growth and return to recession in europe.

excess debt must be paid off or defaulted.  deficit spending must stop when you have so much debt, no one will lend you any more.

growth financed with debt eventually fails.  eventually is here.  debt shrunk by printing money is accompanied by the inflation caused by printing money.

there is no 'solution'. the fruitless attempts at finding a painless solution are now farcical.  there is only the choice of what flavor pain we suffer.  

decaying into a police state  

Posted by howard in nyc in ,

If you want a vision of the future, imagine a boot stamping on a human face - forever.
~George Orwell, 1984

 
All photos courtesy of www.adbusters.org
The process is sadly well under way.  And I am throwing in the towel on the American people for ushering in the police state.  I’m not going to bother cataloging all the recent behavior, authoritative use of violence, lying rhetoric, or even to define what is a police state.  The line of events, from the patriot acts, the department of homeland security, the groping of children and senior citizens at airports, the wiretaps, rendition and torture, the expansion of wars and assassinations, up to the suppression of Occupation Wall Street protests, are part of the historic record.  As is the blatant serial betrayal and misuse of trust, granted the political leaders and perversely twisted against us, most obviously with wars and bailouts, as prequel to the inevitable misuse of trust in the police state the public had granted, and will have used against them down the future line.  No police state in history has ever acted otherwise, and the American one will not be the first.

A police state in the USA can only take hold with the acquiescence of the people.  That prerequisite has been met. Most recently reconfirmed with the acceptance of police violence in several cities, inflicted upon OWS protesters.  Acceptance being the absence of tens of thousands of citizens in the streets, demanding arrest and prosecution of the police officers who committed violence.  But like the bankers, mortgage brokers and other criminals, these have gone un-investigated and uncharged.  The number of American people demanding justice is miniscule.

My former comfortable conclusion that America could never become a police state did not rest on naiveté or swallowing myths from school days.  It rested on what I saw as I moved from youth into middle age; recurrent, consistent evidence of the American citizen's love of personal freedom and intolerance for encroachment upon that freedom.

For example, back when the Clintons were selling their health care run by the insurance industry scheme.  (Btw, where the Clintons failed, the insurance companies won.  They run the show completely, and pocket billions in profits each quarter.)  Anticipating developing technologies, the government planners hatched a plan for a health care information and coverage card.  It would be like a social security card; it would be your 'proof of insurance', provided by the government, and it would a few years later be able to carry all your essential medical history on this credit-card type document.

People hated it.  Overwhelmingly. So rapid and fierce the objection by the masses, the republican opposition didn't even have time to get in front of the issue for political points.

A couple of pundits recognized the reason this idea was so abhorrent to ordinary Americans.  They saw this would be a de-facto national identity card. Identity papers.  Something routinely carried and produced on demand by authorities in most western democracies.  But not the USA, dammit.

Deep in the gut of the typical American was a rejection of the concept of a national id card.  Despite the ubiquity of the social security number used for identification, how many people actually carry their card?  How often is the card itself demanded?

But that gut feeling has eroded.  Slowly, insidiously.  The zeitgeist of the American people is completely different than just a few years ago, regarding the equation of security and liberty.  (An equation, which as ben franklin promised, never ever balances.)  In the early stages of that change, I thought it impossible to go much further.  But further it did.

Things today are way fucking different.

People are cool with government wiretaps.  People are cool with any and all manner of anti-terrorist action.  Even torture.  People are cool with mass violence and death in the deserts above oil fields far from here.  And now, people are cool with mass numbers of riot police to quash peaceful protest, dissent and free speech.  For complete bullshit reasons (sanitation; curfews and time limits numbered in weeks; hurting small businesses and normal commerce; any other crap Bloomberg’s lawyers come up with).

The tolerance of stupid failed wars, so many historians and philosophers have told us, goes hand-in-glove with acceptance of decreased domestic rights.  Now we are seeing this linkage for ourselves.

Real men don't pull hair
We still enjoy a tremendous degree of personal freedom in the United States.  Setting aside the economic aspects of freedom, the necessity for some degree of economic security for personal freedom to have any meaning, we still have it damn good.  If you compare our liberty to that of the rest of the world, today or looking back in history.

But, our standard is our own history.  Our own recent history.  Most of the current government infringements on our free expression and movement are small and subtle.  But the direction is steady, and the movement is gaining momentum.  Not in a good way.  While the quantity of perceived freedom for the masses of Americans has eroded only slightly, even a hurricane announces itself with but a few raindrops and a moderate wind gust.

The riot-gear clad cops are dispatched not just for drug busts.  Not just for 'riots'.  But for small, peaceful protests.  Frequently for the purpose of intimidation, nothing more or less.  Airport security is engaged in behavior control, ham-handed enforcement of unquestioning obedience, having nothing to do with stopping a terrorist bomb.  Now, tactics of the powers-that-be include centrally planned suppression of the OWS movement. Possibly by the justice department/department of homeland security themselves

But the escalation of police and security acts against the populace is only the symptom.  The sickness is the acceptance of the creeping police state.  The people are cool with it, by and large.

There is exactly one force and one force alone that can stop or reverse the erosion of freedom by authorities.  The people.  The masses of people.  Because left to their own devices, those in power will always choose control over freedom.  And they have been left to their own devices too much for too long.

The suckers who still vote had no trouble re-electing all the clowns who extended the patriot act.  Even so-called 'tea party' candidates who liked the idea of government security powers, voted 'yes' and got returned to congress.  The percentage of people who are not troubled by squads of riot-gear clad thugs swinging batons on peaceful protesters.  That is what counts.  That is the one and only way the police state growing and festering in the United States of America can possibly continue.
If the American people allow it.

Well, the American people are doing far worse than passively allowing the police state to grow.  They are actively approving the suppression of OWS.  Not just a few Americans.  Millions.  Fucking millions.  Maybe even a majority.
Approving the use of riot cops.  Applauding.  Happy with the fact, while befuddled why anyone (like me,) would be disturbed, would think bulldozing the encampments are a big deal.

I never thought Americans would nod approvingly at the things that are commonplace today.  I don't understand why this change in the American psyche came about, even though I have closely and carefully watch it happen.  It makes me sad.

Yes. A fucking tank.  At an 'Occupy' protest.
I suppose comfort and freedom from troubling thoughts has become so necessary to my fellow citizens, that rampant consumer consumption wasn't enough to satisfy the need for comfort.  Order, routine and security from discomfort became more important than rights long ago taken for granted.  Quaint rights like freedom of assembly, of speech, of religion (if you are a Muslim in downtown new york and own a building), to carry a gun, to not be stopped and frisked, rights that people delusionally believe will only be infringed upon for 'other people'; the criminal, the 'terrorist', the political loon or extremist.  Rights people cannot imagine being denied for them.  Completely disconnected in their mind from a little feel-up at the airport, or having to show ID papers to walk down a particular street.

People are more infatuated with stomping on the rights of 'others' who are deemed undesirable, than they are in love with rights for everybody.  They think their personal rights are immune.

Heh.  They got a nasty surprise coming.

So many people wonder how the civilized, politically aware German population allowed the change in their society ushered in by the Nazis from 1933-'39.  Fuck, we Americans of 2011 are so much worse than the German people.  So much worse.  Empty of any common sense or insight regarding the freedom that is the lifeblood of our nation.

By 1933, Germany had suffered their humiliating defeat of 1918; economic privation as a result of the peace treaty; a crippling hyperinflation and currency failure in 1923; ten years of economic depression before The Great Depression even started. Year by year, things went from horrible to much worse; a decade of escalating political violence, deadly violence, on the streets of major cities, political assassinations numbering in the tens of thousands.  And that violence was not monopolized by the rising brown shirts; communists, socialists, monarchists, police forces, private militias, public militias were all shooting and killing one another in the streets.

Hard to blame a people drained by fifteen years of unemployment, economic depression, a failed money system, and blood literally running in the streets, that they were willing to trade a few freedoms in return for some long-denied security.

What’s our fucking excuse?

Traffic was backed up on one day for a big protest march?  Those dirty hippies have taken over one of a hundred parks in your city?  Shit, the cost of police overtime is at least a rational concern when your city is already borrowing to pay pensions and salaries and keep services operating.  And you can be forgiven asking the next question, 'are so many cops working overtime really needed to watch those OWS campers, after a few weeks of peacefully just sitting there'?

Exactly what are you getting in return for allowing (or cheering) the violent suppression of protest by riot cops?

Comfort.  Routine.  Not having your normal evening news entertainment 22 minutes punctuated with people saying and doing weird things and drumming.  That’s all.

Bad trade, America.  There hasn't even been a real riot.  A few broken windows in Oakland; one cop in NYC gets hit in the hand with a piece of glass, and three others are splashed in the face with vinegar.  That is it.  And crass attempts to crush dissent, completely illegally, in complete violation of the letter and the spirit of the bill of rights and hundreds of court rulings over the year, all cool.  No problem, in fact, I’m glad my mayor put things back to normal.

Heh.  The turning upside down of the rule of law in the USA had been just some people are immune to the law, and can steal billions. While the rest of us suffer irrational punishment for petty theft or possession of a joint.  Now, people completely in compliance with the law, and following police commands are arrested and charged.  Not just upside down, but completely twisted and distorted.  Of course a police captain is not charged with assault when he pepper-sprays two women doing exactly as they are told; but they are charged with resisting, disturbing, hell, they'll probably have to pay for the pepper spray.

Whether OWS fades away (I doubt it) or grows and thrives (I think likely for several months, but the suppressors will just ramp up their violence and bullshit) is not what I am talking about.  Irrelevant.

The quiet acceptance by millions of Americans (and active approval by millions more Americans) of the suppression of political dissent, with violence, has convinced me.  The decay into a police state is not gonna stop.  A done deal.  I’m crying 'uncle'; throwing in the fucking towel; invoking the mercy rule; no mas, por favor.

Hope he earned another green ribbon for this bit of detective work
It doesn't matter what your personal definition of a 'police state' may be.  A reasonable definition can be applied today, and has been by some friends and pundits.  Doesn’t matter.

Even if the economic catastrophe hits this Monday morning, and causes the slumbering masses of America to wake up and smell the reality, it is too late.  The mentality of the American people has already allowed the advancement on the road to a police state to go too far.   The trend toward sacrificing freedom for the (bullshit) promise of security can't be reversed or undone by anything short of millions of people in the street in opposition.  And those millions ain't gonna take to the streets until they are starving; and that battle will be unnecessarily more difficult and more bloody because we let the enemy arm themselves so well (on our dime).  And gave them ample time to practice.

Sure, I can still write this, without risking arrest and punishment today.  We ain't there yet by my definition.  But that dude who the other day said out loud what a Molotov cocktail can do to a crowded Macy’s store wouldn't have been arrested and punished for those exact words in the exact same context ten years ago.  A 2004 protest of a hundred thousand people in New York City against the Iraq war or the republican convention was met with less violence than an encampment of 200 people in 2011.  Shit has changed significantly, rapidly, and irreversibly.  Until people wake up.

And folks are still sound asleep.

it's not your job to be as confused as Nigel  

Posted by howard in nyc in , ,

9/9/2011  17:55

yet, our leaders seem to be quite confused this week.

the deficit and the debt ceiling were the recent crisis to be solved.  but now, spending $400 billion is imperative to create jobs.  we must cut spending, so important is this need, a congressional supercommittee has been created.  but we must increase spending, right away.

that was president obama, speaking to congress.  he is not alone.  the ben bernanck was confused.

even though he specified severe unemployment, fallen housing prices, high gasoline and food prices and high household debt as current problems.  yet he was puzzled as to why consumer spending is so weak.

now i have yet another reason for unease.  i have been uneasy, dysphoric, and downright depressed because i see the economic calamity unfolding as, well, calamitous.  but nearly everyone around me in america sees things quite differently.

i figured the folks nominally in charge told a bunch of lies (for our benefit, of course) while understanding the score.  the true state of the economy.

now, i am not so sure.  particularly the ben bernanck.  i have vacillated between thinking him evil, knowing exactly what he is doing serving the banks and speculators, and thinking him incompetent, frantically pulling levers and spreading liquidity, not understanding why his drastic monetary stimulus has failed to promote sustained economic growth and prosperity.

the way he sounded yesterday, now i'm pretty sure it is the latter.  he did everything his lifetime of academic work promised would prevent economic depression and deflationary collapse.  he printed up a buttload of money.  he did everything possible to recapitalize insolvent banks.  he manipulated interest rates and the cost of credit to near zero.  he weakened the dollar as far as he dare.  and all he got was energy and food inflation, severe enough to negatively drag on the economy.  no decrease in unemployment, no increase in exports, no GDP growth once QE2 ended.

no wonder he looks and sounds like a broken man.  and no wonder he has nothing new to offer, despite plenty of opportunities (stock market volatility, big jackson hole meeting).  i am figuring we will get little more than words out of the ben bernanck and the fed over the next year.  because the cost of aggressive monetary policy (printing money and buying treasury securities or other 'assets') has become too great--inflation of oil and food prices, weakening of the dollar toward the breaking point.

even if things get so desperate that he tries QE3, those costs will reassert themselves even more quickly than in previous turns.

as for the other folks who are supposed to be less confused, the president and the leaders of the congress bounce wildly from spending to cutting, in their rhetoric.  the third rail of politics is no longer social security, but it is now raising taxes.  woe to anyone standing for election who dares mention increasing taxes, on rich or middle class.

the superficial nihilism of the gop is fake; no one loves big government more than a republican holding office.  they talk 'starve the beast in the cradle' then when they hold power, they nurture the beast on borrowed money, pushing the due date off to the future.  and the superficial populism of the democrats is equally fake; their true loyalty is to the big campaign contributors and to the status quo.  they push off into the future the recognition on the part of their base that they have been bought off temporarily by 99 weeks of unemployment bennies on the wall and 1 in 7 americans being fed with food stamps is a holding action, not true populism.

but mr. obama, railed all summer about the need to cut spending.  even social security spending.  now, he insists $400 billion in new spending is just the ticket.  and he'll explain in 11 days how he will pay for it.

yeah, sure.  one truism, proven over and over again.  the spending always happens.  the paying for it in the future, never happens.  that is how the deficit doubled since the last presidential election (didn't he promise to cut the deficit in half?)  that is how the unfunded liabilities of the government swelled to $100 trillion with a T.  that is how the literal debt, measured by the treasury bond market, grew to $14 trillion so quickly.

an economy built upon credit, once it begins to fall apart because of too much accumulated debt, cannot be repaired with more debt.  an economy built upon consumer spending and consumption, once it tops out because of too much consumer debt, cannot resume growing with more consumer borrowing.

why is that so confusing?

i nearly forgot.  greece is gonna blow up within a matter of days/weeks.  this could spread slow or quick.  but spread it will.  karl thinks "It's Over" and he may be right. 

and here are three good 9/11 anniversary articles.  the first sums up my thoughts precisely.

inflation; deflation; duck season! rabbit season!  

Posted by howard in nyc in , ,

9/3/11  17:50

some of my best lessons have come from people with whom i seriously disagree.  i am often rewarded when i read/pay attention to viewpoints and ideas provided by smart, thoughtful people i think are wrong about one thing or another, large or small.



Jesse, on his wonderful daily blog, Jesse's Café Américain is one of those.  kinda sorta.  there is precious little of his economic and market analysis and opinion with which i disagree.  but, he is an 'inflationist' (horrors!).  no, he does not believe inflation is a good thing; he anticipates the resolution of our economic collapse will be inflation.  he proffers that the commodity inflation we have experienced was an entirely expected result of conditions and behaviors by leaders over the past few years.  he called it before and during QE1 and QE2.  mad props for his profferings.

he writes a wonderful piece today, entitled About Those Falling Interest Rates and the Fallacy of Monetary Deflation at the Zero Bound

folks spend time arguing inflation vs deflation without ever clarifying their definitions of or understanding of the terms.  jargon, technicalities, and lack of agreement over simple historic events confound defining and mutual understanding of the very definition of these words.  even once those chores are complete, inflation and deflation are difficult factors to understand, much less to forecast.

money is an even more difficult, complicated concept.  juxtaposed by the apparent simplicity of the question 'what is money'?

Jesse begins with addressing what is and what is not money, in the context of the events of the last few years.  i appreciated that he and others do not consider credit and debt to be money (many other folks, including me, do so consider).  but i did not understand why he did not consider credit to be money.  until i read his piece today.

Let me give you three things to think about.

First, credit is NOT money. Money can be created from a number of sources throughout an economy. The expansion of credit at the business and banking level, often involving savings and fractional reserve leverage, is the major organic source of money, the point of its creation from economic activity or transactions themselves.   It is the most utilitarian form of money, because it is directly tied to what one might ordinarily expect to be productive investment and economic benefits.

Sometimes this mechanism is distorted and abused, in the case of fraud or reckless lending for speculation as an example, and then the money supply begins to decouple from the real economy.  It is the job of the regulators and the Fed to control this.

Like gold or any other asset or liability, credit must be transformed into a utilitarian form of wealth, or money, in order to effect the exchange. You may HAVE a million dollars in credit somewhere, but at some point someone must agree to transform that credit into actual money for you to use it. If an unused million dollar credit line expires, we do not see ourselves as a million dollars poorer.

When organic credit expansion fails to create money, the Fed or the Treasury can step in and create money non-organically, that is, not as the result of economic activity. In the case of an external standard, the Treasury can formally devalue the currency, as the US had done in the first half of the 1930s. Monetary authorities do not like to do this, because it makes their activity more transparent, and therefore more controversial. 

i don't agree with many of Jesse's points and arguments.  i am not smart enough or knowledgeable enough to counter many of those disagreements clearly or intelligently.  but the essay helps me understand his position and perspective much more than i had previously.  

i will briefly state that i believe his distinction between credit and conversion of same into actual money is a distinction without a difference, when applied to the US economy of the past 15 years.

without bothering to try to find some actual numbers (hey, i'm a blogger, not a frigging economic historian; and i ain't getting paid for this), i am gonna take a wild leap and guess that the vast majority of credit made available during the 90s and 2000s was actually converted into money (and debt).  and further converted into assets.  housing, other real estate, stocks, bonds, wages, goods and services.  and vast amounts of those debts were destroyed, (default), as were many of those assets (housing/real estate equity and valuations, stock share values).

and, in short, at least i now understand why and how Jesse does not consider credit to be money or a money equivalent.  i don't agree, but i get where he is coming from.  and i sure as shit understand he may well be right, and i may be wrong.  (um, i think the betting public would be justified and correct in setting odds on him, and against me.)

unfortunately, Jesse falls into some rhetorical traps (while discussing the mother of all liquidity traps), lumping all of the opposing point of view into a mis-characterization he describes.  and some name calling.  these are tense times; there is a lot of falling into such traps going around.

Jesse correctly (imo) states a pair of truths in his other two of three things to think about:

The second thing to remember is that the extent of inflation or deflation is a policy decision in an otherwise unconstrained environment.

Greece does not have such a choice, for example, because the ECB controls their currency.  The US probably has the most choice of all, because it not only owns its currency, but the dollar is also still the world's reserve currency. While the audience is not captive, it is at a disadvantage.

The third thing is that the creation of money from the Fed or Treasury may result in more money, but it may not result in a sustainable recovery.    Money created by the Fed is high powered money, created as it were from the will of the monetary authority's policy.

Money creation, or monetary stimulus, works well in situations wherein the economy has fallen into a temporary slump, especially because of some exogenous shock or a slack period that is cyclical in nature, such as seasonal variation.

But in the event of a secular crisis or problem, monetary stimulation is a palliative, but no cure.   The remedy lies generally on the fiscal and political policy actions, with the aim of correcting or repairing whatever had caused the problem in the first place.  

Monetary stimulus alone, without the will to effect political reform for example, results in very uncommon economic conditions, one of which Keynes described as a 'liquidity trap.'

even if i reject my own analysis, opinions, and judgments that rest upon what i have managed to learn about our economic collapse, and 100% agree with Jesse's formulation of the finance/macroeconomic world, i can continue to hold tightly to one of my central ideas regarding the path of our collapse.

it is an idea that was little more than a wild-assed guess in 2007.  and today, while i have acquired a rudimentary understanding of macro and finance, this idea is informed much more by human action, than by numbers and exponents.  (wtf did you expect?  i love mises to pieces; and Human Action is a great fucking book.)

as bad as a deflationary depression is for the interests of the true powers that be, the people who actually run the country and the economy (not our puppet president and elected officials), a hyperinflationary collapse is worse.  much worse, if you are a superwealthy former chief executive of a wall street bank, pharmaceutical house, or other mega corporation.

and while collapse is inevitable, particularly since zero significant reform and restructuring has occurred in our banking and finance system, the mode of collapse is ultimately a policy choice.  (Jesse said so!)  and while high inflation is very appealing if you are a short-sighted politician (sorry for that redundancy), it is the only thing more scary to the uber-rich who actually call the shots than deflation.

i learned a lot from this essay, gained tremendous food for thought, and came to value his ideas and opinions that are directly contrary to my own even higher than the price of Apple stock three weeks ago.  like Chomsky, Richard Brookheiser, Gore Vidal, at times Howard Zinn, and tons of others, thank goodness for really smart people whose ideology i do not share, but whose ideas i always value and often find agreement.

i'm tired  

Posted by howard in nyc in , ,

i know how you feel, lily.  sing it girl.
8/6/11 15:27

one thing that fatigues me is continuing to spoonfeed my friends, in real life and on the internets, the facts and obvious conclusions that stem from those facts about the sorry state we find ourselves.  the economy, the political system now 100% captured by the big money interests, the society that embraces lying, cheating and stealing as a way to get ahead, while remain oblivious or in active denial about what is in front of our eyes.  denial most often activated by sinking into emotionally satisfying lies, that one party or another is to blame, that things will get better because they always do, that what we are living through is not unique to our lifetimes (unless you lived through the 1920s and early 1930s).

particularly tiresome is folks who will argue with me over facts.  often after admitting they are not knowledgeable or informed about a particular item or subject, about which i have spent a lot of time and effort to learn.  then they proceed to argue that i am wrong, because they 'feel' it must be wrong.  or they can't 'accept' that what i say is possible, much less is true.

so stop doing it, asshole.

thanks.  i needed that. hey, those voices in my head have steered me pretty damn straight lately. i'd be a fool to stop listening to them now.

and it is not as if i am infallible.  i am often wrong.  like yesterday, about the s+p downgrade of the creditworthiness of the united states of america.  i don't mind being wrong, when i am i promptly admit it and when needed, to make amends.  but facts prove me wrong, not what people feel, or what they can or cannot accept.

i did not think the s+p would downgrade.  wrong, bubba.  fine.  i'm interested in why.  why i was wrong, but much more importantly, why they downgraded.

(hint--it was not because all of a sudden this week the creditworthiness of the nation took a dive.  if these assholes were honestly and systematically evaluating fed credit, this downgrade would have come years ago.  if not decades ago.)

(hint #2--it was not because these assholes are honest, objective evaluators of anything.  their record makes this obvious.  how did they rate AIG?  AAA.  how did they rate all those junk mortgage backed securities?  AAA.)

i don't know, but i have a good idea why.  what led me to my reasoning, the following articles.  read 'em yourself, fish for a lifetime.


Is Too Much Significance Given to U.S. Credit Rating?

 

Police raid Milan offices of Moody's and Standard & Poor's

 

that first article is long; skim it and you get the jist.  there was another good piece on S&P's abysmal record of collecting fat fees for marking shit AAA, from michael shedlock's blog, but i cannot find it now.  him, and yves smith, are my first reads darn near every morning.  the ponds where i do my fishing.


but i'm also tired of repeating where i get my news and analysis.  i guess i'll start a blogroll on the right side, like all the cool kids.

last thing that makes me tired.  my personal dissonance.  seeing the facts, rejecting the overwhelming sea of lies, thinking instead of emoting, that is hard enough.  but recognizing the realities of our economic and political failures, while almost everyone else is unaware, or blissfully wallowing in the lies, delusions and emotional salves provided by the folks running the show for their own benefit, this disconnection from the mainstream weighs me down.  makes me tired.  really really damn tired.

at least that is coming to an end.  folks are starting to wake the fuck up; lights are flickering on, dots are being connected.  it is about damn time.




 

hide yo kids, hide yo wife!  

Posted by howard in nyc in , ,

7/11/2011  14:23

I have not ranted and spewed venom, errr, I mean I have not crafted a thoughtful and restrained essay on economic and financial collapse in a few weeks now.  I have not been moved to words by any recent non-events.  All due respect to Casey Anthony and the federal budget farce coupled to the juvenile lie of 'pending default', the two leading non-events being tracked faithfully by the joke of our news media and the sugar high distraction of the cultural consciousness.  I don't know which is more surprising:  the number of friends and acquaintances who were outraged over some white lady's acquittal, which i would've expected them to be unaware of, much less so strongly opined about; or how many of the same folks believe that TBTB are in any danger of failing to make a $30 billion monthly interest payment, out of $300 billion monthly expenses, when monthly income is ~$175 billion.

The interest on the national debt will be paid before salaries of all those government employees who do not carry weapons, or the social security/medicare/food stamps payments to the hoi polloi (yes, that includes doctors, or 'health care providers', which I am told is the preferred term.

Every fucking news report has the word 'default' in the lead.  And it is a big fat hanging lie.

See?  I have nothing much new on my mind about real events in the world.  Wars, rumours of war, unemployment, bank fraud, sovereign debt crises (at least that is heating up--finally).  Just waiting for another big shoe to drop, in Damascus, Tripoli, Brussels or Wall Street.

In the meantime, two things I read that I really liked, and wanted to share.

First, from Jesse's Café Américain, one of my daily reads.  A wonderful descriptive analysis (or maybe analytic description) of our horrible, hated president:


A bright fellow no doubt, but unseasoned by things like family, tradition, and the personal experience of hardship: a great story teller, a rationalizer, a perpetual outsider, and a thoroughly modern relativist. You have to keep your eye on what he does, rather than what he says. But that is a given with all modern managers.


The other, from a source I do not regularly read, but via Yves at Naked Capitalism, her daily news and commentary links are a daily don't miss for me.  A blog called Decline of the Empire, a clip from a post non-sarcastically (and non-ironically) called This Time Really Is Different:

I've got some news for people like John Mauldin, Barry Ritholtz, Carmen Reinhart and Ken Rogoff—this time is different, but not in the sense you intend. To understand what is happening in the United States, it is necessary to go far beyond an historical survey of financial crises. You must consider the specific historical circumstances that led to the current crisis. Such a review would include but not be limited to the following observations—
  • The United States has been hemorrhaging manufacturing jobs for 30 years.
  • Almost all of the income gains made during that time went to the top 10% of wage-earners, with most of them going to the top 1%. Wealth inequality grew accordingly.
  • Health care costs have been soaring all that time.
  • College tuition costs skyrocketed at a pace far beyond the rate of inflation.
  • Households took on more and more debt to replace lost income.
  • We had not one, but two, substantial economic bubbles during the last 15 years. Without those bubbles, how much would the U.S. economy have grown?
  • The private debt to GDP ratio grew and grew, clearly indicating that more and more debt was required to add an additional point of GDP.
  • The Federal Government more and more became the tool of monied special interests.
And so forth. When people endorse Reinhart and Rogoff, we are supposed to understand that the Tough Times we're experiencing now have a well-defined beginning—the financial crisis after the fall of Lehman—and will have a well-defined end—however many years it takes to work through the credit problems. This is utter nonsense. The "historical obversations" I listed above are in fact the root causes of our current predicament.

And in each case, the historical trend has not changed, or has gotten worse. Households now have only slightly less debt than they did before the crisis, but trillions of dollars of housing wealth has disappeared. Health care costs continue to soar, as do college tuitions. Income gains still go to the wealthiest Americans. In short, nothing has changed.

That leaves those who want to believe that All Will Be Well with the same unsolvable dilemma we started out with: how do you tell a credible story that everything will turn out OK? I'm sorry, but no amount of convenient, hopeful rationalization is going to change the American disaster while the roots of the crisis remain in place. The financial meltdown was the proximate, not the ultimate, cause of America's economic woes.

This time really is different.

are we collapsed yet?  

Posted by howard in nyc in ,

6/11/2011 15:33
 
You said it, mang.  We are all having fun, zip!
i have been too disheartened to post much, or think about the short-term future of the united states economy, and everything else.  i see little to be heartened about.  unemployment; housing prices continuing down, down; sharply increasing gas, oil and food prices; 100% disconnect of the political system from the needs of the people; global war and revolution spreading, due to our sending armies and to our feeding speculation in the food commodity markets; environmental disasters looming (yes, me, of all people, the anti-tree hugger, the one determined that if oil is running dry, let me drive at 110 mph until the day comes--ionizing radiation in massive deadly amounts has that effect on a boy).

a world of hurt.  but so many people i encounter are oblivious.  either they are misinformed by the media and their own lack of curiosity, or they are trapped by their human tendency to counter bad news and bad facts with denial and delusion.  i know people who are intelligent and well informed, who sincerely believe obama has done a good job of managing the economy, and his failures are due primarily to his objectives being blocked by 41 republican senators. or folks in the other tribe who sincerely believe obama is trying to institute a socialist program, that the phoney health care reform was actually socialized medicine, and will hurt doctors tremendously.  (what other industry would think a government subsidy and government coercion herding 40 million new customers to your door would hurt your income?  only doctors' logic.)

people can't/won't/don't think.  trapped in their habits, delusions, comfort zones, what have you, they so very often emote rather than think.  and are confused that the two are the same.

a lifetime of having emotional buttons pressed to shape buying decisions, by literal hundreds of thousands of television commercials over the 18 years of a childhood, having those same emotions tickled by teachers, bosses, and politicians, then by the sources of news, who specialize in triggering emotive responses to attract and hold on to viewers.  

people even use the words 'believe' and 'feel' in place of think, conclude or decide.

i have decided to no longer do this.  i will only say 'i believe' when i am referring to a moral, ethical, or religious (well, maybe not religious) belief.  not, 'i believe obama has been a horrific president'.  or 'i believe the stock market is going to suffer a sharp correction this summer, maybe even this week'.

use of 'believe' is technically appropriate in such instances.  but it has been way overused, and the meaning has seriously shifted.  as people get more defensive if you challenge their 'belief' than your opinion, assessment, conclusion or what you think.

jihad declared on my use of the words 'believe' and 'feel' when i mean think.  save believe for 'i believe white people are evil', or 'i feel hatred for the dodgers'.  

but when asked, 'how do you feel'? i reserve the right to answer, 'with my hands'.