Thursday, December 31, 2009

Well, 2009 really sucked


Watching Barack Obama cluelessly become the worst combination of Herbert Hoover's economics and W. Bush's foreign policy has been disappointing but hardly unexpected.  I didn't vote for him because I'm too old and crabby to be suckered into believing bromides about change and hope.  I mean, pul--eeze.  Actually, I had some real concerns.

My friends were surprised that I, a life-long Democrat from one of the more progressive states in USA, would shun such an attractive candidate as Obama.  Wasn't his combination of community activism, an elite education, an international childhood, and a serious intellect not enough?  In a word, no.

My first doubts about Obama came during his acceptance speech at the Democratic nominating convention in Denver.  In it he claimed he would spend $180 billion over ten years to wean the USA from dependence on foreign oil. 

A liberal's gift to the banksters


Bankers Get $4 Trillion Gift From Barney Frank
Commentary by David Reilly
Here are some of the nuggets I gleaned from days spent reading Frank’s handiwork:
-- For all its heft, the bill doesn’t once mention the words “too-big-to-fail,” the main issue confronting the financial system. Admitting you have a problem, as any 12- stepper knows, is the crucial first step toward recovery.
-- Instead, it supports the biggest banks. It authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. So much for “no-more-bailouts” talk. That is more than twice what the Fed pumped into markets this time around. The size of the fund makes the bribes in the Senate’s health-care bill look minuscule.
-- Oh, hold on, the Federal Reserve and Treasury Secretary can’t authorize these funds unless “there is at least a 99 percent likelihood that all funds and interest will be paid back.” Too bad the same models used to foresee the housing meltdown probably will be used to predict this likelihood as well.  
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A German view of the debacle in Copenhagen


Interview with German Environment Minister Norbert Röttgen
'China Doesn't Want to Lead, and the US Cannot'
German Environment Minister Norbert Röttgen talks to SPIEGEL about the failure of the Copenhagen climate summit, why neither China nor the US can take the lead in the fight against global warming and Germany's role in the new world order.
SPIEGEL: Mr. Röttgen, Chancellor Angela Merkel says we shouldn't bad mouth the outcome of the world climate summit in Copenhagen. Please tell us, as a minister who is loyal to the chancellor, exactly what good came out of it.
Norbert Röttgen: First and foremost, the result is a great disappointment. But one should not overlook the fact that one thing has been achieved and secured: The goal of keeping global warming from rising by more than 2 degrees Celsius is included in the closing document and there is a stated desire to provide aid worth billions for sustainable development in developing nations. China has also agreed for the first time to allow its emissions cuts to be tracked. We agreed to this because it is better than doing nothing. We will now continue on this basis. The alternative would have been a total collapse of the climate protection process.
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Tuesday, December 29, 2009

Will those who corrupted the financial business

ever face justice for their crimes?  I am not optimistic, but our author is.

3 Fraud Probes Target Goldman, AIG: Is It "The" Story of 2010?
by bobswern
It does not take much reading between the lines of recent news stories--although, technically, this is still just speculation--to come to a yet-to-be-confirmed conclusion that many executives from numerous Wall Street firms, including Goldman Sachs' past and present CEOs Hank Paulson and Lloyd Blankfein,  respectively,  may be in the cross-hairs of  multiple fraud investigations by the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA),  and Congress. (See Gretchen Morgenson's NY Times links, further down the page.)
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Cleaning up after the banksters

As sovereign states teeter on default, the current institutions stand ready to step in--at a price.  Naturally, the "price" will fall most heavily on the poor citizens who had NOTHING to do with creating the mess.
No IMF Aid Expected for Greece
EU to Solve Financial Fiasco Alone
Beleaguered Greece is one of 16 European Union member states that are members of the common currency euro zone.
A growing roster of central bankers and politicians are opposed to the idea of an IMF bailout for Greece. They argue it would violate European Union law and that the bloc is big enough to solve the problem on its own.
It is becoming increasingly unlikely that the European Union will allow the International Monetary Fund (IMF) to step in and provide ailing euro zone member state Greece with a bailout. A growing number of politicians and central bankers are opposed to any form of IMF intervention.
"We don't need the IMF," Axel Weber, president of Germany's central bank, the Bundesbank, said, according to a report published in Monday's issue of SPIEGEL. Weber noted that it is illegal in Europe to finance budget deficits using the kind of central bank funds which are at the IMF's disposal. With his statement, Weber joins ranks with German Chancellor Angela Merkel, who believes IMF intervention would send the wrong political signal. The EU, she believes, is strong enough to handle Greece's problems on its own.
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Pollution tariffs

Something that is likely to work is to tax pollution and subsidize clean industry.  Unfortunately, such a plan would cause an open revolt of the Predator Classes.


The Threat of Pollution Tariffs
Economists Warn of a Climate Trade War
By Markus Becker and Christoph Seidler
These days, screwing with the environment could cost you: The failed summit in Copenhagen has spawned the idea for a carbon surcharge in global trade. Just how serious are the threats from Western politicians against China & Co.? International lawyers and environmental economists are skeptical.
John Kerry was on a roll. At the Copenhagen climate summit, the former US presidential candidate delivered a fiery speech that was mostly directed at China. If the US has to accept binding targets for reducing their greenhouse gas emissions, then Beijing must do the same, Kerry told his audience. Workers in the US should not "lose their jobs to India and China because those countries are not participating in a way that is measurable, reportable and verifiable," he said.
This was an expression of the old fear in industrialized countries that aggressive action on climate change could lead to local economic disadvantages. Environmentalist politicians and academics have long been calling for the establishment of a global emissions trade. It is a simple and captivating idea for many: Each state gets a certain amount of CO2 allowances. Those who want to emit more must buy emissions rights from other countries that emit less CO2. Ideally, poorer countries would automatically make money, and rich countries would at the same time have a financial incentive to reduce their CO2 emissions.
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Progress or catastrophe

We are looking at a very bleak future.  Fortunately, we actually have some alternatives.

The New Decade: Billionaire Bailouts or Progressive Resurgence? 
Les Leopold Author, "The Looting of America"
We just got a glimpse of the future and it ain't pretty.
Over the past decade Wall Street went on a reckless betting spree that nearly ruined us. First, they gambled their way into enormous riches based on absurd financial instruments that turned toxic, They paid themselves lavishly, went bust, and then forced the taxpayers to cover all their bad bets. After begging for and receiving the largest welfare package in history, their record profits and bonuses are miraculously returning, while the (BLS U6) jobless rate hovers over 17 percent. Thankfully, that's over and done with.
Or is it? Too-big to fail is now our official policy: The nineteen largest financial institutions that comprise two-thirds of our banking system have been declared permanent fixtures. Our leaders talk of reining them in and of collecting fees to help pay the cost of future bailouts. But, talk is cheap and campaign contributions are always welcomed.
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Why the finance folks get their way

Simple--they bribe politicians.
The Cash Committee: How Wall Street Wins On The Hill
The question was simple: Should the lending practices of auto dealers be regulated?
It was already October and the 42 Democrats and 29 Republicans on the House Committee on Financial Services had spent the better part of the year hashing out the details of a new federal agency dedicated to protecting consumers from dangerous and deceptive financial products.
Auto dealers seemed like an obvious target for the new agency; nearly every time someone buys a car, the dealer also sells them an auto loan, complete with promises like zero per cent interest and a pile of cash back. Americans hold some $850 billion in car debt and dealers are responsible for marketing roughly four-fifths of that amount. They pocket lucrative commissions with little oversight, and the committee seemed poised to change that.
Enter Rep. John Campbell (R-Calif.), a former Saab dealer from Orange County, who according to his latest financial disclosure statement still collects rent from some of his former auto dealer colleagues. Campbell downplayed the importance of his industry partners and proposed an amendment to the bill exempting dealers from the new agency's purview. On October 22, it came up for a vote.
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How Producers are different

The idea that Producers are mostly pathetic peasants is just WRONG.  Fortunately there are also highly skilled and paid Producers.  J May, who has designed some of Ford's more popular vehicles is one of them.  Not surprisingly, he is a very interesting guy.  Some recent quotes include:

J Mays: What I've Learned
Ford's chief designer on erasing the Mustang history, hating cell-phone status, and more
By Cal Fussman
I don't think Americans see themselves as clearly as Europeans see them.
The dirty little secret about simplicity is that it's really hard to do.
A designer is only as good as what he or she knows. If all you know is what you've garnered from fifteen years of living in Detroit, it's going to limit what you can lay down. If you've had experiences around the world, you'll be able to design a much richer story for people to enjoy.
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Monday, December 28, 2009

What do the banksters really cost?


Calling the financial community Predators may seem excessive harsh at times.  But the truth is, they are very costly to the wider society.  The following addresses the question of how much damage they do.

Note to “Salary Czar” Feinberg: Bankers Yield Negative Returns
By: Cynthia Kouril
The New Economics Foundation has done an analysis of executive pay based upon an approach called social return on investment. They have produced a rather scholarly looking report [PDF] entitled A Bit Rich, which with the authors being Brits and all, is also a double-entendre.
The study looked at six different jobs and compared what the worker got paid vs. the value of that work to society, among them bankers. The report concluded that City bankers to destroy £7 of social value for every pound in value they generate. In other terms, this is a net negative £6 (roughly $10 in U.S. currency) for every unit of production.
Hospital cleaners on the other hand were estimated to produce £10 of social value for every £1 they are paid; mostly because their work helps to stop the spread of disease and provide for better (less expensive) outcomes for hospital patients. Waste Recycling workers were estimated at 12-to-1.
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Wonder who is really going to bail out the banks?

This author argues that the deficit "hawks" will be going after Social Security and other entitlements to pay for the insanity of the banksters.  Hard to fault his logic.

When the Economic Crisis Ends, the Political Crisis will Begin
Who Will Pay For the Economic Collapse?
By SHAMUS COOKE
First Iceland, then Ireland, now Greece. Much of Europe is mired in inescapable debt and bankrupt nations, the result of crashing banks, bank bailouts, and soaring unemployment. The U.S. and U.K. watch from a distance, knowing their turn is next.
The European corporate-elite — like their American counterparts — lavished non-stop praise on the “bold yet necessary” decision to bail out the banks; the economy was supposedly saved from “impending collapse.” But every action has an equal but opposite reaction. Bailing out the banks saved the butts of dozens of European bankers, but now millions of workers are about to experience a thundering kick in the ass.
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Seeing Earthrise

1968 was a traumatic year for anyone minimally aware--The ML King assassination, followed shortly by the killing of Bobby Kennedy, the Prague Spring and Warsaw Pact tanks rolling into town, the student uprising in Paris, the police riot at the Democratic convention in Chicago, and more.

And then on Christmas Eve the folks of Apollo 8 sent us this:



This picture became the basis, in many ways, for the environmental movements that would follow.  Seeing our planet as this tiny speck in space was sobering indeed.  It was the highlight moment of the space race.

More of the story can be seen here;

Friday, December 25, 2009

Surviving Christmas 101

I was well onto my 50s before I got over my traumas about Christmas. So for those folks who find that Christmas is mainly a reason to be miserable, here's what I've learned about surviving that season of "joy."

Let me explain. I grew up in a Lutheran parsonage. The life of the preacher's kid is a series of events where the PK is expected to be the model of good behavior. Other kids had the option of singing in the choir--I did not. My mother believed that if you always followed the social rules, you would always be above criticism--think of a more decorous preacher's wife version of Dana Carvey's church lady, and you would be about right. And of all the get-it-right moments in the church year, NOTHING was more important than Christmas. We're talking about Christmas plays, and caroling, and authentic smorgasbords, and a Christmas letter that went out to about 500 people. For extra Christmas fun, I was sent to a religious elementary school that would stage a Christmas show so elaborate, we began working on it the second day of school in September.

The stress of all this perfectionism was offset by the disappointing reality that in rural churches on the windswept prairies of Minnesota and North Dakota, a lot of singing was off-key, the Christmas tree was pretty scrawny, and the smorgasbord wasn't very authentic. All that effort for such a miserable outcome left me feeling cheated and I hated the shouting matches that would erupt over some sentence in the Christmas letter, or whatever.

I grew to loathe Christmas--at least the versions I had known. So when I went to university, I continued singing in choirs. I thought that maybe if the music was done well, I could actually find that elusive joy we kept singing about. And yes indeed, it is MUCH more fun to sing in a good choir. But I was still miserable. So I stopped trying. I often claim my favorite Christmas was the one where I drove a taxi until midnight before going home and defrosting the refrigerator. But even ignoring Christmas doesn't work very well because of this:


Keillor's genius

I have an obscenity of riches this year--over time, I have downloaded 7 different versions of the Bach Christmas Oratorio. I can't listen to all of them today but the one by a couple of Bach groups from Stuttgart (Helmuth Rilling: Stuttgart Bach Collegium, Gächinger Kantorei) is in the front running. The Swabians created Mercedes-Benz and Porsche, why should I be surprised they are dynamite at singing Bach?

The only thing I forgive religion for is music and Christmas has, by FAR, the best music. Kiellor is right--we SHOULD object to the commercial dreck that sullies our musical heritage. I mean, have you ever actually eaten a roasted chestnut--and what does it have to do with Christmas? And why does Rudolf get to share the stage with Berlioz' L' Enfant du Christ, or Handel's Messiah, or O Day Full of Grace? Or the immortal Bach?

Of course, that doesn't mean that Keillor didn't set off the PC crew with his little rant. It shouldn't take long to figure out why if you read the whole thing. The paragraphs below show Keillor also understands a great deal about the absurdities of academic economics.

Don't mess with Christmas
It's a Christian holiday, dammit, and it's plain wrong to rewrite "Silent Night." Unitarians, I'm talking to you! 
BY GARRISON KEILLOR 
People in Cambridge learn to be wary of brilliance, having seen geniuses in the throes of deep thought step into potholes and disappear. 
Such as the brilliant economist Lawrence Summers, whose presidency brought Harvard to the verge of disaster. He was the man who, against the advice of his lessers, invested Harvard's operating funds in the stock market and lost the bet. In the cold light of day, this was dumber than dirt, like putting the kids' lunch money on Valiant's Fancy to win in the fifth. 
And now the genius is in the White House, two short flights of stairs above the Oval Office. This does not make Cambridgeans feel better about our nation's economic future. 
You can blame Ralph Waldo Emerson for the brazen foolishness of the elite. He preached here at the First Church of Cambridge, a Unitarian outfit (where I discovered that "Silent Night" has been cleverly rewritten to make it more about silence and night and not so much about God), and Emerson tossed off little bons mots that have been leading people astray ever since. "To be great is to be misunderstood," for example. This tiny gem of self-pity has given license to a million arrogant and unlovable people to imagine that their unpopularity somehow was proof of their greatness. 
And all his hoo-ha about listening to the voice within and don't follow the path, make your own path and leave a trail and so forth, encouraged people who might've been excellent janitors to become bold and innovative economists who run a wealthy university into the ditch.

Thursday, December 24, 2009

Getting it WRONG #2

Rewarding a Catastrophe

Bernanke and the Corruption of Washington Culture

By DEAN BAKER

The Senate Finance Committee overwhelmingly voted to approve Federal Reserve Board Chairman Ben Bernanke for another 4-year term. This is a remarkable event since it is hard to imagine how Bernanke could have performed worse in his last 4-year term. By Bernanke’s own assessment, his policies brought the economy to the brink of another Great Depression. This sort of performance in any other job would get you fired in a second, but for the most important economic policymaker in the country it gets you high praise and another 4-year term.

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Wednesday, December 23, 2009

Of course, Copenhagen was a failure

A climate-change conference is probably going to be useless by its very nature. The best way to lower the carbon in the atmosphere is to put out fires. Since we humans have been spending the past 100,000 years finding ever more clever ways to burn things, this is a monumental change in direction. A conference not only won't seriously address this BIG problem, it is likely to just make the carbon problem worse.

So mostly, this isn't a problem to be solved by politics but by engineers. And if all the financial resources are going to go to Wall Street in their worse-than-useless Cap and Trade schemes, the chance that the engineers will have the necessary resources to do their work is nearly zero.

50,000 People Went to Denmark and All They Got was a Lousy 3-Page Political Agreement

What Really Happened in Copenhagen?

By BRIAN TOKAR

Detailed accounts from participants in the recent Copenhagen climate summit are still coming in, but a few things are already quite clear, even as countries step up the blame game in response to the summit’s disappointing conclusion.

First, the 2 1/2 pages of diplomatic blather that the participating countries ultimately consented to “take note” of are completely self-contradictory, and commit no one to any specific actions to address the global climate crisis. There isn’t even a plan for moving UN-level negotiations forward. Friends of the Earth correctly described it as a “sham agreement,” British columnist George Monbiot called it an exercise in “saving face,” and former neoliberal shock doctor-turned-environmentalist Jeffrey Sachs termed it a farce. Long-time UN observer Martin Khor has pointed out that for a UN body to “take note” of a document means that not only was it not formally adopted, but it was not even “welcomed,” a common UN practice.

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The "shocker" of the decade

Banks and Bailouts: Playing Politics?

12/21/2009 --

Ross professors say banks with strong political ties were more likely to get government bailout funds.

ANN ARBOR, Mich. — Banks with strong political connections were more likely to receive bailout money from the government — and more of it — in the past year than those with weaker ties, say Ross researchers.

A new study by Ross professors Ran Duchin and Denis Sosyura found that banks with connections to members of congressional finance committees and banks whose executives served on Federal Reserve boards were more likely to receive funds from the Troubled Asset Relief Program, the federal government's program to purchase assets and equity from financial institutions to strengthen its financial sector.

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The Senate health care bill

I try not to look at the health care bills wending their way through the halls of congress. I have a weak heart and seeing this much stupidity up close would kill me. But it has been a clear demonstration of what is wrong with the political "system" in USA.

1) The corruption has been just naked and brutal. Overwhelming majorities of the citizenry want a better deal on medicine. So we have a public screaming for change versus the sociopaths from K Street. So far, K Street is winning in a walk. This in a country that likes to lecture others on the subject of democracy.

2) There are good reasons why centrally-run public health care systems are the norm in the rest of the world. For-profit medicine is just too expensive. But did we hold hearings where we would ask representatives from around the world to explain what's good about their systems, what's not working, and what they would change? Are you kidding me? This would mean that we would have to admit that we could learn from others. This would NOT go over well with the "We're number 1" crowd.

3) Watching the debate get stuck on abortion means that triviality will run the ethical day in DC. If you cannot figure out a way to finesse the debate over abortion--and it's been around for 40 years--its pretty certain you are going have trouble with a heavyweight issue like whether a society should be spending $500,000 to extend the miserably painful life by 45 days of some old person begging to die.

4) While the insurance companies have been absolute pigs in all of this, I'm not sure we should be forgetting about the rest of the bad guys. When you have a medical system that reduces sick people to economic prey, it turns a lot of otherwise good people into predators. The doctor who bills you $25,000 because he stuck his head into the O.R. for three minutes during your bypass surgery may have once gone into medicine for altruistic reasons--hard as that may be to believe.

5) When you are selling bullshit, it's possible you may have to skip over the facts on the ground. So we see things like the recent political attack from the White House on Howard Dean. The fact that Dean is a doctor who has organized medical delivery systems as a governor is just an inconvenient fact in the way of some name-calling.

Anti-Dean Salvo Fuels War on Progressives - "Bushkrieg" Bares Audacity of Arrogance

by Robert Becker

Headline from the Wall Street Journal, "Rahm Emanuel: Don't Worry About the Left," reporting how Obama's chief of staff conspired with Joe Lieberman to dump the public option and Medicare buy-in. The result, according to one "former Democratic official," is White House denial about "how much trouble they're in" and costly miscalculations about "what's happening with progressives and the left."

If instead progressives are right, then this jumble called "health reform" is not just bad medicine for millions, but a drone strike against hard-won Democratic House majorities. As a result, Obama's war on progressives surged again this week, as the dark side of take-no-prisoners, obedience-is-all, Chicago-style politics surfaced. Two nasty, parallel attacks impugned the leftwing icon, Howard Dean, for logically stating his mind: this is not health reform but an "insurance company's dream" written by the industry lobby and setting off a "Washington scramble."

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Monday, December 21, 2009

BMW stops hydrogen research

This news is not especially surprising. It was always a fact that internal combustion engines could be fueled with hydrogen. The stuff explodes. So if one could get the "small" problems solved--most especially how to store enough to give the vehicle a reasonable range and keep the super tiny hydrogen molecules from escaping--it was always possible to get a car to run on H. And BMW threw a bunch of engineering at the problem because hydrogen as a storage medium for energy is a pretty good bet.

But just burning hydrogen is a pretty primitive use of the substance. The fuel cell seems to get better energy conversion. But the fact that killed the hydrogen vehicle was the lack of infrastructure. The are a LOT of problems to be solved before hydrogen is produced, distributed, and stored in the volumes and locations necessary to support a fleet of automobiles.

BMW Halts 7 Series Hydrogen Vehicle Testing

By Eric Loveday

photo credit: Nick Humphries.

Is hydrogen dead? According to BMW, the answer may be yes for now. The company has decided to halt real-world testing of the 7 Series Hydrogen vehicles citing a lack of infrastructure and high conversion costs of the newly introduced 7 Series as the reason to end the on road test program.

The 7 Series hydrogen test program has logged more than 2 million accumulative miles to date in the hands of 100 selected individuals. The two year test program will come to a halt early next year. Though BMW does see promise in hydrogen technology, they do not see widespread support or necessary infrastructure components to make hydrogen a reality any time soon.

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Why Obama became such a sell-out

Why Obama Is Failing

by Robert Parry

A year ago, as Barack Obama was assembling his administration, he was at a crossroads with two paths going off in very different directions: one would have led to a populist challenge to the Washington/New York political-economic establishments; the other called for collaboration and cajoling.

Faced with a dire financial crisis and two foreign wars – not to mention a host of long-festering problems like health care, the environment, debt and de-industrialization – Obama’s choice was not an easy one.

If he took the populist route and further panicked the financial markets, the nation and the world might have plunged into a new Depression with massive unemployment.

There were also political dangers if he chose the populist path. The national news media rests almost entirely in the hands of corporate “centrists” and right-wing ideologues, who would have framed the issues in the most negative way, blaming the “radical” Obama for “wealth destroying.”

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Neoliberal Blowback

It looks like the banksters will keep prescribing more misery until they have a full-blown revolution on their hands. In some places on Southern Europe, that day may be closer than one thinks.

Euro 'Diktats’ risk terrorist response across Southern Europe

By Ambrose Evans-Pritchard, International Business Editor, Telegraph UK

It is becoming dangerous to associate with economic and ideological power in Southern Europe, or what Europol calls the "Mediterranean triangle" of anarchist violence.

Greece's Revolutionary Struggle detonated a car bomb at the Athens Stock Exchange in September. Citigroup's branches have been targeted twice this year.

Hooded extremists attacked the rector of Athens University in his office this month, sending him to hospital with head injuries.

In Milan, the Informal Anarchist Federation (FAI) planted 2kg of dynamite last week at Bocconi University, the symbol of the free market in Italy.

The FAI left a note threatening a "bloodbath" for capitalists. Security forces have issued alerts for the Milan bourse, Unicredit, and Barclays. Italians have begun to ask whether their country is returning to the 1970s, the "years of lead" when the Red Brigades murdered ex-premier Aldo Moro.

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How close the Banksters came to failing

Video: Goldman and Morgan Stanley were this close to bankruptcy

Foreclose on the Banksters

Foreclose on the Banks: How to Give America Its Best Christmas Ever

by Ted Rall

Who knew bankers could be so amusing? In an interview, Citi mortgage czar Sanjiv Das acknowledged that "moratoriums are not permanent solutions" and said his company was looking for "some long-term fundamental alternatives" to throwing people out of their homes because they've fallen behind on their payments. But he didn't offer a specific example.

Here, allow me. There's one "long-term fundamental alternative" that's righteous, makes sense, and legal: Let's foreclose on the banks. It's time for the U.S. government to show Mr. Das and his buddies down at the country club who is the boss.

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Sunday, December 20, 2009

Manufacturing Capacity Was Demolished In 2009


Chart found at Clusterstock. In 2009, the U.S. experienced one of the worst bouts of manufacturing capacity destruction in decades. Note those good little Predators have excuses for why this catastrophe is a good thing.




Predator Banking

Increasingly, the bankster fiction that they are just trying to help the economy grow has been replaced with the naked truth that the banksters merely look on the rest of us as prey

California Bonds Fail on Advice Bill Lockyer Couldn’t Refuse

By Michael B. Marois

Dec. 17 (Bloomberg) -- For California Treasurer Bill Lockyer, the offer from Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc. was too good to refuse.

If California was willing to forgo competitive bidding for a $4.5 billion bond offering, the banks promised more orders from individuals and a lower bill to the taxpayers. The firms insisted that by negotiating with them, the state would benefit from its special relationship with the Wall Street troika and wind up with what two underwriters called a salutary “buzz” to boost demand for the debt.

When the October offering failed to sell as planned, California was forced to accept 8 percent less money than it needed and to pay as much as $123 million more in interest than the banks said was sufficient for the market. And the threesome made $12.4 million on the deal, contributing to record bonuses in the securities industry a year after getting a total of $80 billion in a federal bailout.

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Our Economic Guru

The very idea that a bonehead like Larry Summers has become the top economic advisor to Obama should frighten us all. Apparently there is no bonehead like a Harvard-educated bonehead. Fortunately, thanks to Summers screwed-up view of economics, Harvard will no longer be quite the force to be reckoned with.

Harvard Swaps Are So Toxic Even Summers Won’t Explain
By Michael McDonald, John Lauerman and Gillian Wee

Dec. 18 (Bloomberg) -- Anne Phillips Ogilby, a bond attorney at one of Boston’s oldest law firms, on Oct. 31 last year relayed an urgent message from Harvard University, her client and alma mater, to the head of a Massachusetts state agency that sells bonds. The oldest and richest academic institution in America needed help getting a loan right away.

As vanishing credit spurred the government-led rescue of dozens of financial institutions, Harvard was so strapped for cash that it asked Massachusetts for fast-track approval to borrow $2.5 billion. Almost $500 million was used within days to exit agreements known as interest-rate swaps that Harvard had entered to finance expansion in Allston, across the Charles River from its main campus in Cambridge, Massachusetts.

The swaps, which assumed that interest rates would rise, proved so toxic that the 373-year-old institution agreed to pay banks a total of almost $1 billion to terminate them. Most of the wrong-way bets were made in 2004, when Lawrence Summers, now President Barack Obama’s economic adviser, led the university. Cranes were recently removed from the construction site of a $1 billion science center that was to be the expansion’s centerpiece, a reminder of Summers’s ambition. The school said last week they will suspend work on the building early next year.

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Friday, December 18, 2009

A "Civilized" Predator Class President

As charming as I find Obama, I am not at all surprised that he has committed himself to the Predator agenda--war and peace to the warmongers, economics to the banksters, etc. Nothing in his background would indicate he even knows the Producer Classes exist--much less that their agenda is worth considering.

More and more, Obama seems a faux liberal

December 16, 2009

By JOHN R. MacARTHUR

NEW YORK

Following President Obama’s war speeches at West Point and Oslo —- two breathtaking exercises in political cynicism that killed any hope of authentic liberal reform — I’ve got only one question: Have the liberals who worshipped at the altar of “change you can believe in” had enough?

There was already ample evidence of Obama’s feeble commitment to peace, progress and justice. Ever since he started fundraising for his presidential campaign, it’s been clear that the principal change in the offing was skin tone and slogans. One only needed to read “The Audacity of Hope” to see how thoroughly Obama was enmeshed in the neo-liberal orthodoxies of the Robert Rubin-Clinton wing of the Democratic Party. Obama’s impeccably establishment party credentials — that is, his fealty to the Democratic leadership of Chicago and Capitol Hill — practically guaranteed that he would hew to the status quo when forced to choose.

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At least Labor gets it

This is an excellent example of a representative of the Producer Class describing the evils of Predator Class economics

Trumka Takes on the ‘Neoliberalism’ that Broke U.S. Economy

In Tuesday’s live Web chat, AFL-CIO President Richard Trumka talked about what we need to do to fix our economy in both the short term and the long term—and touched on a vital, too-infrequently discussed issue: the need to end the stranglehold neoliberal economic thinking has on our politics.

Spurred by Milton Friedman and other economists, the neoliberal agenda is based on the radical principle that it’s markets, not people, that matter most. By nature, the neoliberal principle is hostile to collective bargaining, public regulation and all manner of ways to leverage community power to balance out the power of wealth. Trumka sums up Friedman’s poisonous political philosophy:

He believed that anything that got in the way of the free market was something that was bad and should be eliminated. Any regulation on business is bad, so get rid of it; any tax on business is bad and distorts the marketplace, get rid of it. A union is bad and distorts the marketplace, so you have to get rid of it.

For the last 30 years, that’s the system that we’ve had here. It brought us to this crisis.


Trying to fix things on the cheap

The real problem at Copenhagen is that folks think there are ways to solve the climate change problems without spending a PILE of money. This slumlord mentality will doom us all.

Leaked UN report shows cuts offered at Copenhagen would lead to 3C rise

UN secretariat initial draft shows gap of up to 4.2 gigatonnes of CO2 between present pledges and cuts required to limit rise to 2C



Read the UN analysis document here

UN secretariat initial draft shows gap of up to 4.2 gigatonnes of CO2 between present pledges and cuts required to limit rise to 2C
Suzanne Goldenberg, John Vidal and Jonathan Watts in Copenhagenguardian.co.uk,
A rise of 3C would mean up to 170 million more people suffering severe coastal floods and 550 million more at risk of hunger, according to the Stern review. Photograph: Stephen Morrison/EPA The emissions cuts offered so far at the Copenhagen climate change summit would still lead to global temperatures rising by an average of 3C, according to a confidential UN analysis obtained by the Guardian.
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Wednesday, December 16, 2009

The Person of the Year

Under normal circumstances, the very notion that a third-rate flack like Ben Bernanke should make the cover of Time Magazine as the "Person of the Year" is just insane.

But as a salvo in the war to keep the operation of the Fed secret, the choice makes perfect sense. There is a bill to audit the Fed working its way through congress. The Fed cannot allow this to happen. They suspect, with good reason, that if the American public actually found out what they have been doing, there could be violent revolution.

So now when Bernanke smiles at congress and says that auditing the Fed would be a bad idea, he can now imply that it would be bad manners to question the honesty of the "person of the year."

The Triumphs of Predation

The naked power of the Predators has been on flagrant display this year. They have just rolled Obama--assuming he wants to fight back which, given his background, is pretty iffy.

Obama's fat cats

by Brent Budowsky

When President Barack Obama denounced "fat cats" during his performance on "60 Minutes," and made weak comments after his meeting with bank CEOs, I was reminded why so many Americans are angry with everyone in Washington.

The president says Wall Street doesn't get it. He has it backward. Wall Street gets it. He still doesn't.

Wall Street knows that "sticks and stones can break my bones, but faux anger cannot hurt me." Wall Street believes the president can be rolled, Congress can be bought, consumers can be screwed, jobs can be destroyed, the nation can be harmed, the public can be enraged -- and it can continue these practices without limit and without shame and pay itself gigantic bonuses for it, and nobody will fight to change this.

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Taxing the Speculators

There seems to be an effective way to raise money for public projects while at the same time reducing the amount of damage speculators can do to the real economy. It called the "transaction tax"--a sales tax on trading.


The Virtues of a Financial Transaction Tax

Easy and Fun Money

By DEAN BAKER

There is a growing movement in both the United States and around the world for taxing financial speculation. The logic is simple: even a very small tax on trades in stock, options, credit default swaps, and other derivative instruments can raise an enormous amount of revenue.

Even assuming large reductions in trading volume due to the tax, the country could still raise more than $100 billion a year in revenue or more than $1 trillion over the 10-year budget horizon. Trading costs have plummeted over the last three decades due to improvements in computer technology. Therefore, modest taxes on financial speculation, such as a 0.25 percent tax on the purchase or sale of a share of stock, would only raise trading costs back to the level of the 70s or 80s.

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Tuesday, December 15, 2009

John Perkins--was Iceland a Target for economic hit men?

Getting it WRONG #1

If there is one single moment when the economics profession began to lose its way, the Nobel Memorial Prize given to Paul Samuelson for his Neo-Classical economics text is certainly in the running for that moment. I had it at the University of Minnesota--utterly detested every sentence in it. So even though this is hardly a eulogy for the recently deceased, it seems appropriate to keep the record straight. But I'll let Professor Hudson explain...

Elegant Theories That Didn't Work

The Problem with Paul Samuelson

By MICHAEL HUDSON

Paul Samuelson, America’s best known economist, died on Sunday. He was awarded the Nobel prize for economics, (founded one year earlier by a Swedish bank in 1970 “in honor of Alfred Nobel”). That award elicited this trenchant critique, published by Michael Hudson in Commonweal, December 18, 1970. The essay was titled “Does economics deserve a Nobel prize? (And by the way, does Samuelson deserve one?)”

It is bad enough that the field of psychology has for so long been a non-social science, viewing the motive forces of personality as deriving from internal psychic experiences rather than from man's interaction with his social setting. Similarly in the field of economics: since its “utilitarian” revolution about a century ago, this discipline has also abandoned its analysis of the objective world and its political, economic productive relations in favor of more introverted, utilitarian and welfare-oriented norms. Moral speculations concerning mathematical psychics have come to displace the once-social science of political economy.

To a large extent the discipline’s revolt against British classical political economy was a reaction against Marxism, which represented the logical culmination of classical Ricardian economics and its paramount emphasis on the conditions of production. Following the counter-revolution, the motive force of economic behavior came to be viewed as stemming from man's wants rather than from his productive capacities, organization of production, and the social relations that followed therefrom. By the postwar period the anti-classical revolution (curiously termed neo-classical by its participants) had carried the day. Its major textbook of indoctrination was Paul Samuelson's Economics.

Read the whole article

Monday, December 14, 2009

Ouch! This hurts


When I was writing
Elegant Technology back in the 1980s, it had become quite obvious that the Germans and Japanese were the most likely to produce working green technologies--I even put such a claim on my book cover. This conclusion stemmed from the fact that "green" technologies had to be an improvement on current technologies. This meant that only the folks who operated on the technological bleeding edge had any hope of advancing the art.

Because the English-speaking world was deliberately de-industrializing behind the public faces of Thatcher and Reagan, it was effectively eliminated in the race for Elegant Technologies in comparison to places like Germany and Japan that still retained their respect for their industrial base.

I always thought that Britain was worse than the USA when it came to environmental cluelessness. So it is with some pain that I note this spot-on critique from the Guardian of the performance by Dr. Chu at Copenhagen. Our secretary of energy is a Nobel Laureate in Physics but when it comes to subjects like Energy Efficiency, it's like he is stuck holding a caulk gun trying to figure out how to solve big problems on the cheap.

US left behind in technological race to fight climate change
A speech by the US energy secretary, Steven Chu, shows how America's unquestioning belief in the free market has held back technological innovation


Steven Chu

Steven Chu, US secretary for energy. Photograph: Ben Margot/AP

I have just been watching the tragic sight of a fallen giant flailing around on its back like a beetle, desperately trying to turn itself over.

The occasion was a speech by the US secretary of energy, Steven Chu. He is, of course, a Nobel physicist, brilliant, modest, likeable, a delightful contrast to the thugs employed by the previous administration. But his speech was, in the true sense of the word, pathetic: it moved me to pity.

Yesterday afternoon in Copenhagen – where the UN climate talks are entering their second week – Professor Chu unveiled what would have been a series of inspiring innovations, had he made this speech 15 years ago.

Read the whole article




Sunday, December 13, 2009

Celebrating the Heritage on St. Lucia Day

My Swedish-Lutheran people have been perfecting this holiday over the years. What it "means" or why it's celebrated is barely important. But the cultural impulses are all over these rituals.

1) It is an excuse to be lavish with candles. Hard to overstate the importance of outbursts of light in a places where dark is the norm for about four months.

2) It gives young people an activity that is actually educational. Got to learn music and arriving in the right place to sing it. Folks actually have fun doing this sort of thing.

As can be imagined, these cultural motors can result in elaborate, well-rehearsed productions. What appears below is this year's celebration at the Vaxjo Cathedral as produced by the official national television channel of Sweden. The King was probably there. Vaxjo was the nearest big town for my grandmother as a child and there are lots of Swedish Americans whose ancestors are from that area.