Sunday, February 28, 2010
So why should I stand in front of self-righteous angry mobs who are screaming for the heads of Toyota Motors? Why should I give a damn at all?
A) This blog exists because I believe the Producers are essential for any possible economic recovery. I believe that while Producers should be held to the highest standards, I refuse to join in unjustified Producer-bashing. If Toyota were held to the standards of Washington Post pundits, academic economists, or Wall Street banksters, they would have to be 100s of thousands of times worse to even appear on the bad-guy charts. An academic economist might be lucky to get something right twice in his career, Toyota has to get millions of things right every single day.
Friday, February 26, 2010
|The Daily Show With Jon Stewart||Mon - Thurs 11p / 10c|
|Make it Rain - Bank of America|
Goldman may have made a fatal mistake. Fatal not to the existence of the firm, but to its standing, reputation, legitimacy, and ultimately, to the thing it covets most, its profits.
Power is most effective when it is used as sparingly as possible. Niall Ferguson, in book The Cash Nexus, stressed the importance of financing to military success (he argues that England was able to punch above its economic weight due to its superior tax collection apparatus and more highly developed bond markets). The Rothschilds, which among other things financed governments at war, went to some lengths to underplay their influence so as not to threaten their state patrons/clients.
The problem is that the behaviors that contributed to Goldman’s commercial success have over time become unbalanced, and are putting it at odds with governments. It is one thing to abuse the likes of a Jefferson County, as JP Morgan has. As deplorable as that behavior is, they cannot retaliate. It is quite another to mess with bodies that really are, ultimately, bigger than you are.
When I was young and worked briefly at Goldman, the firm was a pig and let even the very junior staffers understand precisely how its pigginess worked so that they would improve upon it when they grew up. For instance, on the deals it lead managed Goldman managed its stock and bond syndicates so as to extract as much as possible, to the disadvantage of other members of the syndicate, who shared the underwriting risk. I was told that Goldman was far more aggressive than other firms in hogging the deal revenues than any other firm on the Street, but could get away with it as a major lead manager. Similarly, on another deal, I walked into the Syndicate department when one of the most powerful partners at Sullivan & Cromwell was on a conference call, instructing the younger members of the department what the right answers to questions would be when the SEC came in asking questions on what they were about to do on this particular transaction, an underwritten call (note: what made Goldman savvier than most firm was that everyone got the official rationale for technically legal but questionable behavior BEFORE they did it, which made it much easier to maintain party line, rather than after the fact, when some conversations and communiques might contain remarks that were decidedly unhelpful. Note that this practice was well established over two decades before e-mails became pervasive).
By L. Randall WrayRead more.
Richard Teitelbaum reported today (here) that Timothy Geitner's New York Fed hid the smoking gun that proves Goldman played the key role in bringing down AIG. The only plausible explanation for hiding the document is that Geithner et.al. were protecting Goldman. Is this the worst scandal in US history? To ask the question is to answer it.
In brief, here is the story. Recall that securitization of mortgages was supposed to be a risk-reducing innovation that would move mortgages off the books of banks and into well-diversified portfolios of those better able to absorb risks. Mortgage originators would do the underwriting (verify credit-worthiness), securitizers would do the packaging, credit raters would do the rating, and investors would buy the securities and take the risks. Ah, but Wall Street was too clever for all that. So here is how it really worked. Banks owned mortgage lenders who made NINJA loans (no income, no job, no assets), then worked with credit raters to get the ratings desired. The raters did not actually examine any of the loans because the banks bought Credit Default Swap (CDS) "insurance" from AIG to guarantee safety of the Collateralized Debt Obligation (CDO) issued against the mortgages. Goldman and other banks would then either sell the CDO while using a CDS to bet on default; or they would hold the CDO and use the CDS bet against it to hedge risk. Of course, since Goldman had securitized toxic waste, the bet was not a gamble at all. It knew the CDOs would fail. But meanwhile, it got to book all sorts of fees and income so that it could reward its management with outsized bonuses.
Car and Driver magazine dismissed this silliness with the following:
Certainly the most natural reaction to a stuck-throttle emergency is to stomp on the brake pedal, possibly with both feet. And despite dramatic horsepower increases since C/D’s 1987 unintended-acceleration test of an Audi 5000, brakes by and large can still overpower and rein in an engine roaring under full throttle. With the Camry’s throttle pinned while going 70 mph, the brakes easily overcame all 268 horsepower straining against them and stopped the car in 190 feet—that’s a foot shorter than the performance of a Ford Taurus without any gas-pedal problems and just 16 feet longer than with the Camry’s throttle closed. From 100 mph, the stopping-distance differential was 88 feet—noticeable to be sure, but the car still slowed enthusiastically enough to impart a feeling of confidence. We also tried one go-for-broke run at 120 mph, and, even then, the car quickly decelerated to about 10 mph before the brakes got excessively hot and the car refused to decelerate any further. So even in the most extreme case, it should be possible to get a car’s speed down to a point where a resulting accident should be a low-speed and relatively minor event. moreThey also reminded us of past incidents of baseless slander against an automobile maker:
Some Context: Audi's "Unintended Acceleration"
In 1986, the television program 60 Minutes started Audi's "unintended acceleration" scandal. The show trotted out tearful people, recounted death and carnage, spoke to so-called experts, and generally made it seem like the vehicle in question, the Audi 5000, was a roving menace with a mind of its own. In the end, the U.S. government determined that every single so-called unintended acceleration accident was the result of driver error. Some speculated that because Audi's pedals were closer together than those of some other brands, people were too uncoordinated to choose the correct one. The pedal-placement issue Audi faced at that time parallels the throttle-kill issue Toyota faces now.
What Does This Mean for Toyota?
Even if you buy our argument that most of the "unintended acceleration" issues are actually driver error and the company ultimately is vindicated, Toyota is still screwed. Audi sales were depressed for a decade and a half after the false claims leveled against it. Toyota either blames its customers and faces the wrath of the media or expresses contrition and admits it has quality issues. Perhaps having learned from the backlash against Audi when it—rightly—blamed its customers, Toyota has chosen the latter course of action. moreIn fact, this slander is SO baseless, that Mike Whitney over at Counterpunch has written:
It's All Politics
The War on Toyota
By MIKE WHITNEY
Does anyone really believe that Toyota is being pilloried in the media for a few highway fatalities?
Nonsense. If Congress is so worried about innocent people getting killed, then why haven't they indicted US commander Stanley McChrystal for blowing up another 27 Afghan civilians on Sunday?
But this isn't about bloodshed and it's certainly not "safety regulations". It's about politics--bare-knuckle Machiavellian politics. An attack on Toyota is an attack on Japan's leading export. It is an act of war. Here's a excerpt from the New York Times which explains what is really going on: more
Thursday, February 25, 2010
So, Kaiser is much more of the predator class than the producer class. Yet, for whatever reason, he has lately become quite direct in his critique of the economic and financial crises. In the segment below, it is especially interesting to watch the dynamic of the host and the other commentator, and business professor from Paris, reacting to Kaiser's verbal assaults on Goldman Sachs and former Treasury Secretary Henry Paulson.
Wednesday, February 24, 2010
Junk economics and the rape of the middle class
Joseph Stiglitz’s recent book, Freefall [Stiglitz, Joseph E. (2010). Freefall: America, Free Markets, and the Sinking of the World Economy. New York: W. W. Norton. ISBN: 9780-0-393-07596-0], describes the factors leading to the current Great Recession. In addition, I read a pair of articles appearing in the fall 2003 and spring 2004 issues of The American Economist (subscription required but probably could be obtained through a local or academic library). These articles describe the work that earned Stiglitz the Nobel Prize in Economics in relatively nontechnical terms. Follow me below the fold to learn about Stiglitz's perspective on the current economic crisis and the theory that earned him the Nobel Prize.Stiglitz on his new book
Chicago School (Neoclassical, neoliberal, free market) Economics
The story begins with the Chicago school of economics. The essential belief of the Chicago School, "free market," theory is that only a completely "free" market will reach full employment equilibrium and efficient resource allocation. It is the modern version of Adam Smith’s invisible hand. The invisible hand of supply and demand creates a perfect balance and every asset is fairly priced including labor. This means that restraints on the "free" market such as unions and government intervention must be eliminated in order for the "free" markets to work. Hence the "shock therapy" that Naomi Klein so graphically describes in The Shock Doctrine. The purpose of economic shock therapy is to eliminate restraints on free markets so they will reach equilibrium of full employment. In this view, the Great Recession is nothing to worry about because "it was simply the efficient adjustment of the economy to shocks" (p. 258). Government regulation, taxes, unions, social services, Social Security, Medicare, the social "safety net," and regulation of all kinds are considered hindrances to the operation of free markets. When Chicago School economists are in charge of economic interventions, all of these aspects of the economy are attacked. However, the result is not a transition to full employment and a productive society. Instead, a massive transfer of wealth from those who need it the most to those who need it the least occurs.
MTA: 1,000 jobs to be cut to fill latest budget gapI saw that headline in today's email news from RailwayAge, the trade magazine of the North American rail industry. It reminded me of something Doug Henwood wrote on his blog just over a month ago:
New York's Metropolitan Transportation Authority announced Tuesday that it plans to cut at least 1,000 positions in order to cover its latest budget gap of $378 million. MTA said it would eliminate “more than 600 represented and non-represented administrative postions,” while also moving to lay off “up to 500 NYC Transit station agents.”
MTA’s public statement said the cuts “represent 15% of administrative payroll across the MTA, with deeper cuts at MTA headquarters.”
The Metropolitan Transportation Authority (MTA), which runs the transit operations in and around New York City, is facing a budget shortfall of around $400 million. There are likely to be deep cuts to subway and bus service in New York City. There is, of course, “no money” to deal with the problem.
Actually, that depends on what your definition of “no” is. The mayor of New York City, Michael Bloomberg, who also happens to be the city’s richest resident, could comfortably write a check to solve the problem. Forbes estimates his net worth at $17.5 billion—meaning that the MTA’s gap is less than 3% of his personal fortune. He spent $102 million of his own money on his recent re-election campaign, and $159 million on his first two campaigns, for a total of $261 million. That’s two-thirds of the MTA’s gap.
Maybe it’s unfair to expect just a single plutocrat to cure the MTA’s budget ills. The twenty-three members of the Forbes 400 who live in New York City have a combined net worth of just under $130 billion. The MTA’s $400 million problem is all of 0.3% of their net worth.
So it’s not that there’s “no money.” There’s plenty of money. It’s just off limits.
NEW HOME SALES COLLAPSE TO 50 YEAR LOW…GOSH, IT’S SO WEIRD THAT THE BAILOUTS TO BANKS DIDN’T HELP HOUSING THE WAY BUSH/OBAMA PROMISED…
WWW.BIZJOURNALS.COM -- New-home sales plummeted 11 percent to a record low in January, creating more concern about the hard-hit construction and housing market — and the economic recovery. The Commerce Department says new-home sales fell to a seasonally adjusted 309,000 units in January, the lowest level in almost 50 years. In 2009, new-home sales declined to the previous record low of 374,000, a 23 percent drop from 2007. More than a million homes were sold annually from 2003 to 2006, the Commerce Department said. The decline nationwide has construction officials and economists worried. Economists had expected a 5 percent increase last month compared to December, according to an Associated Press report.
Mass Layoffs by U.S. Manufacturers Surge in January
Tuesday, February 23rd, 2010
By definition, a mass layoff in the United States is those job cuts that involve 50 or more workers from the same company. Those types of events increased by 35 in January 2010 to 1,761, according to data released.
This is odd in that it has been asserted by government officials that we're on the edge of new jobs being created in the U.S. economy. That doesn't seem likely in the light of the real numbers and not just wishful thinking by politicians. more
In the meantime we watch Greece to see if the inventors of democracy and western civilization itself can muster any meaningful response to a coup attempt by the bankers. And as the moneychangers lash out in an increasingly desperate attempt to collect on their immoral and criminal claims, we will see on whose side the cops will land. After all, the banksters are going after their salaries and pensions too.
Greek Police, Protesters Clash in Nationwide Strike (Update2)
By Natalie Weeks and Maria Petrakis
Feb. 24 (Bloomberg) -- Greek police fired tear-gas and clashed with demonstrators in central Athens after a march organized by unions to oppose Prime Minister George Papandreou’s drive to cut the European Union’s biggest budget deficit.
Hooded youths threw rocks, marble and other objects at riot police after the march today to the country’s Parliament building. At least one person was detained.
“People on the street will send a strong message to the government but mainly to the European Union, the markets and our partners in Europe that people and their needs must be above the demands of markets,” Yiannis Panagopoulos, president of the private-sector union GSEE, told NET TV yesterday. “We didn’t create the crisis.”
Half a million civil servants, who held a one-day strike on Feb. 10, today joined forces with GSEE, which represents 2 million workers, after EU warnings that Papandreou’s government needs to bring in new taxes and make more spending cuts if it fails to rein in the largest budget gap of all 27 EU member states.
Air-traffic controllers, customs and tax officials, train drivers, doctors at state-run hospitals and school teachers walked off the job to protest government spending cuts that will freeze salaries and hiring and cut bonuses. Journalists also joined the strike, creating a media blackout. more
Spain engulfed by pension protests
Spain's debt-laden Socialist government has witnessed the first mass protests by unions in its six years in power as anger over a plan to raise the retirement age spilled onto the streets.
The UGT and the CCOO, the country's two largest unions, called for Tuesday's demonstrations against the reform in several major cities, including Madrid, Barcelona and Valencia.
Further demonstrations are planned in the rest of the country up until March 6 against the plan, announced last month, to raise the legal retirement age from 65 to 67.
The Spanish economy, the fifth largest in Europe, has been mired in recession since the end of 2008 as the global financial crisis hastened a correction that was already underway in its once-buoyant property sector. more
Tuesday, February 23, 2010
Anyway, I have my own catalog of reasons why the economics profession has spun off into cloud cookooland. But here is another's list.
The Hubris of Economics
By Barry Ritholtz - November 4th, 2009, 8:30AM
On Tuesday, the 2nd most emailed article on WSJ.com was Crisis Compels Economists To Reach for New Paradigm.
It is an intriguing look at the problems of the the field of economics. It went, however, way too easy on both the profession and its practitioners. The article fails to ask some very basic questions about the soft science, and does not discuss the fundamental incompetency of many economists.
Given the failures of the profession — failing to anticipate the worst recession in decades, missing the warping effect of the housing boom, not recognizing the credit collapse until too late — a damning indictment of the dismal science might have been more appropriate.
Perhaps I can be of assistance.
There are many areas I would have liked to see the Economics Crisis article explore: The lack of Scientific Method, the mostly awful performance of economists, its misunderstanding of the value of modeling, the bias inherent in Wall Street variant of economics, and lastly, the corruption of economics by politics. I will just touch on some of these; you can fill in much of the blanks yourself.
Let’s start with the basics. Hard “science” — Physics, Biology, Chemistry, and all variants thereto — begins humbly. They try to describe the universe around us by creating theories, and then testing them. These theorems are always preliminary. Even when testing validates them, Science is always prepared — even eager — to replace them with newer theories that are proven to be even more valid. more
Monday, February 22, 2010
The Not-So-Rational Finance Companies
By: masaccio Wednesday February 17, 2010 2:25 pm
There are many stupid things you have to believe if you want to be taken seriously on financial matters. One of them is called rational expectations theory. It and the efficient market hypothesis are two of the Chicago School’s economic theories that share the blame for the Great Crash of 2008. Both ideas depend on the quality of the information available to market players, and both fail when that information is rotten.
In his book, A Failure of Capitalism, and in an interview with John Cassidy in the January 11, 2010 New Yorker*, Judge Richard Posner soundly thwacks the true believers of the Chicago School. This is remarkable: Posner himself was a professor at the University of Chicago Law School, and is one of the founders of the law and economics movement, which he now espouses from the bench of the Seventh Circuit. Cassidy writes:
During our conversation, Posner questioned the entire methodology that Lucas and his colleagues pioneered. Its basic notions were the efficient-markets hypothesis, which says that the prices of stocks and other financial assets accurately reflect all the available information about economic fundamentals, and the rational-expectations theory, which posits that individuals and firms are hyper-intelligent decision-makers who have a correct model of the economy in their heads.
The rational expectations theory is described in more detail in Wikipedia:
Rational expectations is a theory in economics that the sum of all decisions of all individuals and organizations, filtered through an endogenous set of market institutions, is not systematically wrong. more
Lenders are discovering a truth they routinely ignore which is, if someone cannot pay a debt, there is damn little you can do about it. For example, if someone defaults on their mortgage, a bank CAN seize the house. But as bankers are discovering, the last thing they want is a property to maintain and sell because the process is VERY expensive.
So now the moneychangers want their pound of flash from the Greeks. Only the Greeks don't have any to give--see rule #1. So the money guys want Germany to back them up, or maybe Brussels, or maybe the IMF. What has seemingly not been considered is an international bankruptcy where the money changers have to take nothing for their worthless loans.
Europe's south refuses to downsize without a fight
The hard-hit 'Club Med' countries of Greece, Spain, Portugal and Italy once flourished within the eurozone. Now the financial markets have turned on Athens, and Greece's neighbours fear they could be next
Helena Smith in Athens, Giles Tremlett in Madrid, Tom Kington in Rome, andJulian Coman
The Observer, Sunday 14 February 2010
Nikos Strovlos has worked for the National Statistics Service of Greece – as the head of the service's accountancy office – for 21 years. He has seen some turbulent times, not least when desperate colleagues allegedly "cooked the books" that were used to parlay Greece into the eurozone in 2001.
Last week, as the chaotic state of Greek accounts and accounting became clear, and Europe's single currency endured its first serious crisis as a result, the sound of disapprobation from Berlin and Brussels became deafening. But Strovlos is not about to apologise on behalf of the Greek government's number-crunchers. more
Reagan refusal to enforce anti-trust laws was a direct result of Milton Friedman’s theories that increasing concentration would benefit the economy by giving larger firms more advantageous scales of economy they would use to better defend the innovation and efficiencies they created. (This is an old idea of laissez faire, the economic school of thought which was repudiated when the weak government structure of the Articles of Confederation was abandoned in favor of the Constitution; see Frank Bourgin, The Great Challenge: The Myth of Laissez-Faire in the Early Republic, Harper & Row, 1989. Lynn and Longman point out that Friedman was able to repackage laissez faire to make it acceptable by calling it free market instead). Lynn and Longman show that what has actually happened since 1981 is just the opposite: technological innovation has been stifled, while the economic efficiencies enforced by monopolistic corporate behemoths have mostly taken the form of cutting employment so deeply, it has effectively crippled the ability of the U.S. economy to create jobs. Hence the title of Lynn and Longman’s article: Who Broke America’s Jobs Machine? Why creeping consolidation is crushing American livelihoods.
Near the end of the article, Lynn and Longman quickly note what I consider to be one of the most difficult and entrenched economic problems we now face:
. . . we will first have to break up the intellectual monopoly that has been forged over so much political economic policymaking in Washington today. The generation of political economists who understood the theory and practice of antitrust as devised by the late New Dealers are mostly retired or dead, and the academic economists who today dominate most discussions either have little understanding of the political nature of antimonopoly law or are openly hostile.For an article of such importance and weight, it is surprisingly short. Unfortunately, it does not include any links to some of the studies and reports that Lynn and Longman cite. A liitle googling will be in order for those who want to learn more. Fortunately, The Enterprise and Innovation Project is a new effort by the New America Foundation that has been launched to address many of the issues raised.
If any single number captures the state of the American economy over the last decade, it is zero. That was the net gain in jobs between 1999 and 2009—nada, nil, zip. By painful contrast, from the 1940s through the 1990s, recessions came and went, but no decade ended without at least a 20 percent increase in the number of jobs.
Many people blame the great real estate bubble of recent years. The idea here is that once a bubble pops it can destroy more real-world business activity—and jobs—than it creates as it expands. There is some truth to this. But it doesn’t explain why, even when the real estate bubble was at its most inflated, so few jobs were created compared to the tech-stock bubble of the late ’90s. Between 2000 and 2007 American businesses created only seven million jobs, before the great recession destroyed more than that. In the ’90s prior to the dot-com bust, they created more than twenty-two million jobs.
Saturday, February 20, 2010
U.S. Economy: Consumer Prices Rise 0.2% in January
By Timothy R. Homan
Feb. 19 (Bloomberg) -- The cost of living in the U.S. rose in January less than anticipated and a measure of prices excluding food and fuel fell for the first time since 1982, indicating the recovery is generating little inflation.
The consumer-price index increased 0.2 percent for a fifth straight month, led by higher fuel costs, Labor Department figures showed today in Washington. Excluding energy and food, the so-called core index unexpectedly fell 0.1 percent, reflecting a drop in new-car prices, clothing and shelter.
Retailers such as Wal-Mart Stores Inc. have reduced prices to lure customers at a time when most employers are reluctant to hire. Restrained inflation will allow Federal Reserve policy makers to keep the benchmark interest rate close to zero to help support the recovery. more
US Federal Reserve - US bank lending falls at fastest rate in history
Bank lending in the US has contracted so far this year at the fastest rate in recorded history, raising concerns that the Federal Reserve may have jumped the gun by withdrawing emergency stimulus.
By Ambrose Evans-Pritchard, International Business Editor
Published: 8:43PM GMT 17 Feb 2010
David Rosenberg from Gluskin Sheff said lending has fallen by over $100bn (£63.8bn) since January, plummeting at an annual rate of 16pc. "Since the credit crisis began, $740bn of bank credit has evaporated. This is a record 10pc decline," he said.
Mr Rosenberg said it is tempting fate for the Fed to turn off the monetary spigot in such circumstances. "The shrinking in banking sector balance sheets renders any talk of an exit strategy premature," he said.
The M3 broad money supply – watched by monetarists as a leading indicator of trouble a year ahead – has been contracting at a rate of 5.6pc over the last three months. This signals future deflation. The Fed's "Monetary Multplier" has dropped to a record low of 0.81, evidence that the banking system is still broken. more
The War on Consumers and Labor Heats Up
Wall Street Moves in for the Kill
By MICHAEL HUDSON
Former Treasury Secretary Hank Paulson wrote an op-ed in The New York Times yesterday, February 16 outlining how to put the U.S. economy on rations. Not in those words, of course. Just the opposite: If the government hadn’t bailed out Wall Street’s bad loans, he claims, “unemployment could have exceeded the 25 per cent level of the Great Depression.” Without wealth at the top, there would be nothing to trickle down.
The reality, of course, is that bailing out casino capitalist speculators on the winning side of A.I.G.’s debt swaps and CDO derivatives didn’t save a single job. It certainly hasn’t lowered the economy’s debt overhead. But matters will soon improve, if Congress will dispel the present cloud of “uncertainty” as to whether any agency less friendly than the Federal Reserve might regulate the banks.
Paulson spelled out in step-by-step detail the strategy of “doing God’s work,” as his Goldman Sachs colleague Larry Blankfein sanctimoniously explained Adam Smith’s invisible hand. Now that pro-financial free-market doctrine is achieving the status of religion, I wonder whether this proposal violates the separation of church and state. Neoliberal economics may be a travesty of religion, but it is the closest thing to a Church that Americans have thesedays, replete with its Inquisition operating out of the universities of Chicago, Harvard and Columbia.
If the salvation is to give Wall Street a free hand, anathema is the proposed Consumer Financial Protection Agency intended to deter predatory behavior by mortgage lenders and credit-card issuers. The same day that Paulson’s op-ed appeared, the Financial Times published a report explaining that “Republicans say they are unconvinced that any regulator can even define systemic risk. … the whole concept is too vague for an immediate introduction of sweeping powers. …” Republican Senator Bob Corker from Tennessee was willing to join with the Democrats “to ensure ‘there is not some new roaming regulator out there … putting companies unbeknownst to them under its regime.” more
MIT researchers have demonstrated the first laser built from germanium that can produce wavelengths of light useful for optical communication. It's also the first germanium laser to operate at room temperature. Unlike the materials typically used in lasers, germanium is easy to incorporate into existing processes for manufacturing silicon chips. So the result could prove an important step toward computers that move data — and maybe even perform calculations — using light instead of electricity. But more fundamentally, the researchers have shown that, contrary to prior belief, a class of materials called indirect-band-gap semiconductors can yield practical lasers.
Friday, February 19, 2010
The reason is quite simple. It is not just steelworkers or family farmers that have gotten the shaft in the past 35 years--it is the whole of the Producer Classes. Including the Producer "Royalty." This includes even the Rocket Scientists. In most of planet earth, the top of the Producer food chain is occupied by the engineering profession. In the Latin countries, Ing is a title placed in front of the name of licensed professionals. In Scandinavia, the status of engineers FAR outweighs that of lawyer or medical doctor.
By contrast, engineers in USA are treated like shit. SHIT! They barely appear in the culture, the media ignores them, and women consider them mercy fucks. During the 2000 SPEEA strike against Boeing, a technological illiterate with a job she was clearly unqualified for (Chief Financial Officer for The Boeing Company) named Debbie Hopkins, asked (we think) rhetorically, "Why does Boeing need engineers, anyway?" A pure Predator idiot, Hopkins couldn't understand that without their engineers, Boeing literally didn't exist. So now she is the "technology expert" at Citibank. Predator stupidity is literally breath-taking.
Joe Stack was a classic engineer. Hard working, smarter than hell, informed, and as we discovered, a passible musician and an excellent writer. Because of when he was born, he probably had some good years during the dotcom madness, but generally, his career was probably miserable as the Predator assaults on Producers escalated from the late 1970s on.
Unlike most engineers, Stack was politically quite sophisticated, the last sentences of his manifesto / suicide note were:
The communist creed: From each according to his ability, to each according to his need.
The capitalist creed: From each according to his gullibility, to each according to his greed.
There are a LOT of political writers in history who never penned anything that clever or memorable. Or try this:
Why is it that a handful of thugs and plunderers can commit unthinkable atrocities (and in the case of the GM executives, for scores of years) and when it's time for their gravy train to crash under the weight of their gluttony and overwhelming stupidity, the force of the full federal government has no difficulty coming to their aid within days if not hours? Yet at the same time, the joke we call the American medical system, including the drug and insurance companies, are murdering tens of thousands of people a year and stealing from the corpses and victims they cripple, and this country's leaders don't see this as important as bailing out a few of their vile, rich cronies. Yet, the political "representatives" (thieves, liars, and self-serving scumbags is far more accurate) have endless time to sit around for year after year and debate the state of the "terrible health care problem". It's clear they see no crisis as long as the dead people don't get in the way of their corporate profits rolling in.But dammit Stack. Why did you have to kill yourself? I understand that having a whole life of constantly losing ground while you are working your ass off is enough to depress Flo, the Progressive Insurance lady, but really, suicide?
Here's a hint for the rest of the Producers out there who have been clobbered by the assholes. Blowing shit up is not the answer. Besides, it is SO out of character for a Producer. You want to know why Scandinavian engineers get more respect and excellent sex partners than Americans? Because they have the good sense to form trade unions and their trade unions have the good sense to understand that their members have political and economic interests. So unlike Joe Stack, their members can develop their political positions with the help of professionals who actually understand the economics and politics of Producer interests.
The dime-store shrinks will tell us that Stack had some form of insanity. They miss the point. The truly scary thing about this is how completely rational his decision loop was. He thought that his position in society in no way matched the effort he had put into succeeding professionally. He was economically as bad off as when he was a student. He's 55! The energy to climb the mountain one more time was gone. He wanted to take out some of his tormentors. He had learned to fly. He wanted to leave a mark. Everything was utterly logical.
The politicos are making even bigger analytic errors. The Obamabots want to make him into a teabagger. The right wing points at the "lefty" elements of Stack's manifesto. But American politicos have spent the last 35 years denying that Producers even exist, much less that their interests have been destroyed. So to say they have clue one understanding a massively frustrated and pissed off engineer is a MAJOR stretch.
But don't take my word--Stack tells his own story below
Thursday, February 18, 2010
Wall Street's Bailout Hustle
Goldman Sachs and other big banks aren't just pocketing the trillions we gave them to rescue the economy - they're re-creating the conditions for another crash
Posted Feb 17, 2010 5:57 AM
On January 21st, Lloyd Blankfein left a peculiar voicemail message on the work phones of his employees at Goldman Sachs. Fast becoming America's pre-eminent Marvel Comics supervillain, the CEO used the call to deploy his secret weapon: a pair of giant, nuclear-powered testicles. In his message, Blankfein addressed his plan to pay out gigantic year-end bonuses amid widespread controversy over Goldman's role in precipitating the global financial crisis.
The bank had already set aside a tidy $16.2 billion for salaries and bonuses — meaning that Goldman employees were each set to take home an average of $498,246, a number roughly commensurate with what they received during the bubble years. Still, the troops were worried: There were rumors that Dr. Ballsachs, bowing to political pressure, might be forced to scale the number back. After all, the country was broke, 14.8 million Americans were stranded on the unemployment line, and Barack Obama and the Democrats were trying to recover the populist high ground after their bitch-whipping in Massachusetts by calling for a "bailout tax" on banks. Maybe this wasn't the right time for Goldman to be throwing its annual Roman bonus orgy. more
Wednesday, February 17, 2010
Wall Street and Washington Hope You Are Gullible: Disappoint Them
Janet Tavakoli, President, Tavakoli Structured Finance, Inc.
Posted: February 14, 2010 09:14 PM
If a high-on-crack driver crashed his speeding rental car into your house and killed your spouse, you would be outraged if law enforcers took bribes and gave the driver a pass on a blood test. If the judge then merely fined the killer and ordered you to pay it, you would appeal, wondering what happened to justice. If the government then handed the crack-driver keys to a bigger rental car and presented you with the rental bill, you would certainly protest.
How is it, then, that you have remained largely silent in the face of the same sort of behavior by Wall Street and Washington? Bonus-seeking bankers careened off the right path and ran Ponzi schemes that nearly ruined our economy. Bureaucrats and elected officials bailed them out without demanding consequences. Bankers are revving their engines again.
Bankers Get Bonuses, the USA Gets the Great Recession
Taxpayers are asked to believe that over-borrowing by U.S. consumers created a global financial crisis. This myth aids and abets Wall Street. The economy was nearly destroyed because banks borrowed massively, and they borrowed many multiples more than they could afford. Wall Street pumped the Fed's cheap money through financial meth labs, and deceptive financial vehicles ran over securities laws at top speed. moreAnd remember, "savvy" is just another word for "cunning"--perhaps the primo Predator virtue.
Obama and the "Savvy" Bankers
Co-Director of the Center for Economic and Policy Research
Last week, when President Obama was asked about the $9 million bonus for Goldman Sachs CEO Lloyd Blankfein, he described Blankfein as a savvy businessman, adding that Americans don't begrudge people being rewarded for success. While the White House later qualified Obama's comment about Blankfein and his fellow bank executives, it's worth examining more closely some of the ways in which Blankfein and the Goldman gang were "savvy."
Perhaps the Goldman gang's best claim to savvy was in buying up hundreds of billions of dollars of mortgages and packaging them into mortgage backed securities, and more complex derivative instruments, and selling them all over the world. Blankfein and Goldman earned tens of billions of dollars on these deals. The great trick was that many of the loans put into these securities were issued by banks filling in phony information so that borrowers could get loans that they would not be able to repay. But this was not Goldman's concern. They made money on the packaging and the selling of the securities. more
While accounting will credit something called "goodwill" it has never properly accounted for institutional memory--which may be the most important asset of all.
And since they make this incredibly major error, Predator Class economists tell us things like: There are many companies that would be worth more shut down and broken up for parts; You only gain a cheaper workforce if you move a production facility off-shore--there are no costs; or my favorite, courtesy of George HW Bush's chief economist Michael Boskin, who claimed it made no difference if a country made computer chips or potato chips. I often like to cite that remark as the single stupidest sentence ever uttered by an economist, but really, there are so MANY to choose from.
Employers Take a Beating by Laying Off Employees
by Sherwood Ross | February 17, 2010 - 10:06am
It's not only employees who suffer when they get laid off but the firms responsible for handing them the pink slips can take a beating, too.
As millions of Americans have been fired by employers struggling to remain profitable, we have all borne witness to Corporate America's calloused disregard of its workers. Now, canny business economists claim the layoffs have hurt employers, too.
That's part of the story of now-defunct Circuit City, an article in the current Newsweek reports, after it lopped off 3,400 of its highest-paid sales associates to cut costs. "A company cuts people. Customer service, innovation, and productivity fall in the face of a smaller and demoralized workforce," Newsweek points out. moreIt may be tempting to blame the Republicans who are the most wedded to economic theories that have been utterly discredited--after all, they brought them in in a major way with the Reagan administration. But there are PLENTY of Democratic politicians and economists with the same problem. It is the inevitable result of an intellectual hegemony.
|The Daily Show With Jon Stewart||Mon - Thurs 11p / 10c|
Tuesday, February 16, 2010
It was during the 1980s when I was doing my research for what became Elegant Technology that I stumbled across the history of the Non-Partisan League. I was searching for examples of Producers (farmers, in this case) seizing political power and discovered that the best story, by FAR, was from North Dakota. What was even better for my own purposes was that this organized uprising had accomplished an enormously ambitious agenda which included the establishment of a state-owned bank.
Over the years, the Bank of North Dakota has been a very conservative institution--especially when compared to the ideas of its founders. Actually, it isn't much of surprise because young people with big ideas and plans tend to leave the state at the first possible opportunity. So even though the the Bank of North Dakota may theoretically be the most innovative banking institution in the country, it would hard to distinguish its operation from any other legally-run bank. My guess is that if other states were to follow North Dakota's lead, they would be as innovative as local conditions permit.
The history of the Non-Partisan League is probably best told in a book called Political Prairie Fire. This book was the basis of an incredible movie called Northern Lights which won an award at Cannes. Please understand, in spite of the tongue-in-cheek use of the word socialism below, the Non-Partisan League was largely composed of sane Republicans (yes Virginia, there once were sane and enlightened Republicans.)
Bank Of North Dakota: America's Only 'Socialist' Bank Is Thriving During Downturn
BY DALE WETZEL | 02/16/10 04:27 AM |
But now officials in other states are wondering if it is helping North Dakota sail through the national recession.
Gubernatorial candidates in Florida and Oregon and a Washington state legislator are advocating the creation of state-owned banks in those states. A report prepared for a Vermont House committee last month said the idea had "considerable merit." Liberal filmmaker Michael Moore promotes the bank on his Web site.
"There's a lot of hurt out there, a lot of states that are in trouble, and they're tying the Bank of North Dakota together with this economic success that we're having right now," said the bank's president, Eric Hardmeyer. more
How the Nation’s Only State-Owned Bank Became the Envy of Wall Street
— By Josh Harkinson
| Fri Mar. 27, 2009 5:33 PM PDT
The Bank of North Dakota is the only state-owned bank in America—what Republicans might call an idiosyncratic bastion of socialism. It also earned a record profit last year even as its private-sector corollaries lost billions. To be sure, it owes some of its unusual success to North Dakota’s well-insulated economy, which is heavy on agricultural staples and light on housing speculation. But that hasn’t stopped out-of-state politicos from beating a path to chilly Bismarck in search of advice. Could opening state-owned banks across America get us out of the financial crisis? It certainly might help, says Ellen Brown, author of the book, Web of Debt, who writes that the Bank of North Dakota, with its $4 billion under management, has avoided the credit freeze by “creating its own credit, leading the nation in establishing state economic sovereignty.” Mother Jones spoke with the Bank of North Dakota’s president, Eric Hardmeyer. more
Monday, February 15, 2010
Saving the Baltic sea
After the Copenhagen debacle, Finland has set a new standard for environmental action
guardian.co.uk, Sunday 14 February 2010 23.00 GMT
Finns aren't afraid to take on the world. Between 1939 and 1945, military minnow Finland was variously at war with the Soviet Union, Britain and Germany, and survived to tell the tale. The big problem in 1940 was not the large numbers of invading Red Army troops, Finns joked, it was where to bury them all.
Finland, population 5.3 million, challenged the international powers-that-be again last week, hosting an ambitious one-day "action summit" to rescue the Baltic sea from decades of pollution, environmental degradation and neglect. National leaders from all nine Baltic coastal states, plus "catchment" countries such as Norway and Belarus, attended. So too did EU representatives and about 1,500 delegates, representing regional organisations, large and small businesses, NGOs and local activist groups.
Germany's chancellor Angela Merkel did not come to Helsinki, which was probably a mistake. But Russia's most powerful man, Vladimir Putin, did. He pledged environment clean-up programmes around St Petersburg, on the Gulf of Finland, and in the Kaliningrad enclave. Dropping his tough guy act for a day, Putin emphasised that Russia, too, is green at heart. more
Branson warns that oil crunch is coming within five years
• Virgin chief and fellow business leaders call for action
• Energy crisis threatens to be more serious than credit crunch
guardian.co.uk, Sunday 7 February 2010 20.18 GMT
Sir Richard Branson and fellow leading businessmen will warn ministers this week that the world is running out of oil and faces an oil crunch within five years.
The founder of the Virgin group, whose rail, airline and travel companies are sensitive to energy prices, will say that the coming crisis could be even more serious than the credit crunch.
"The next five years will see us face another crunch – the oil crunch. This time, we do have the chance to prepare. The challenge is to use that time well," Branson will say. moreAnd matter how much you hate Word, you must admit Gates is a pretty smart cookie who has been having his ears filled with some of the most carefully thought-out advice in human history. People who get to have face-time with Bill Gates come prepared.
Bill Gates' TED Speech 2010: Climate Change Is Bigger Issue Than Vaccine Development
First Posted: 02-12-10 07:56 PM
Microsoft founder Bill Gates took on climate change during his TED Talk Friday. He told those at the technology conference that climate change will cause poverty and famine that will disproportionately affect the world's poorest people.
To cut CO2 emissions to zero and stop climate change -- a problem that he said is bigger than creating new vaccines -- Gates urged researchers to find clean sources of energy. CNN Reports:
Gates said the deadline for the world to cut all of its carbon emissions is 2050. He suggested that researchers spend the next 20 years inventing and perfecting clean-energy technologies, and then the next 20 years implementing them. more
So here we find ourselves facing these life-and-death economic problems and the people paid to have answers are hopeless and helpless because their expertise in economic issues has been reduced to the ability to do "fast algebra". They are completely lost when it comes to public policy issues because they literally know nothing about any significant issues save the golf-locker-room nonsense they spout. It is literally pathetic.
However, our economic problems are not new. They are almost identical to the dilemmas of the 1920s and 30s. So, unlike our great-grandfathers, we don't have to reinvent the wheel. Unfortunately, all the rational folks have long since been run out of the economics profession--which pretty much explains why there are about 40,000 practicing economists and about 10 of them have any on-record predictions of the current economic mess. So the only folks worth attention these days are probably historians first, and economic theorists second. And of these folks, the Marxists and Austrian School zealots can be safely ignored--they HAVE been discredited.
New Phase, Not Just Another Recession
By ISMAEL HOSSEIN-ZADEH
It is becoming increasingly clear that the financial meltdown of 2008 and the subsequent economic contraction that continues to this day represent more than just another recessionary cycle. More importantly, they represent a structural change, a new phase, the phase of the dominance of “finance capital,” as the late Austro-German political economist Rudolf Hilferding put it. (If you haven't read my take on the difference between industrial and financial capitalism, now might be a good time.)
Although the current domination of our economy by finance capital seems new, it is in fact a throwback or “retrogression” (as financial expert Michael Hudson puts it) to the capitalism of the late 19th and early 20th centuries, that is, the capitalism of monopolistic big business and gigantic financial institutions. The rising economic and political influence of powerful financial interests in the early 20th century led a number of political economists (such as John Hobson, Rudolf Hilferding and Vladimir Lenin) to write passionately on the ominous trends of those developments—developments that significantly contributed to the eruption of the two World Wars and precipitated the devastating Great Depression of the 1930s, by creating an unsustainable asset price bubble in the form of overblown stock prices.
The harrowing experience of the Great Depression, followed by the devastating years of World War II, generated momentous social upheavals and extensive working class struggles worldwide. The ensuing “threat of revolution,” as F.D.R. put it, and the “menacing” pressure from below prompted reform from above—hence, the New Deal reforms in the US and socialist/Social-Democratic reforms in Europe. Combined, these historic developments significantly curtailed the size and the influence of big business and powerful financial interests—alas, only for a while. more
The New Deal in Reverse
How the Obama Administration Ended Up Where Franklin Roosevelt Began
By Steve Fraser
On March 4, 1933, the day he took office, Franklin Roosevelt excoriated the “money changers” who “have fled from their high seats in the temples of our civilization [because...] they know only the rules of a generation of self-seekers. They have no vision and where there is no vision, the people perish.”
Rhetoric, however, is only rhetoric. According to one skeptical congressional observer of FDR’s first inaugural address, “The President drove the money-changers out of the Capitol on March 4th -- and they were all back on the 9th.”
That was essentially true. It was what happened after that, in the midst of the Great Depression, which set the New Deal on a course that is the mirror image of the direction in which the Obama administration seems headed.
Buoyed by great expectations when he assumed office, Barack Obama has so far revealed himself to be an unfolding disappointment. On arrival, expectations were far lower for FDR, who was not considered extraordinary at all -- until he actually did something extraordinary.
The great expectations of 2009 are, only a year later, beginning to smell like a pile of dead fish with new rhetoric -- including populist-style attacks on villainous bankers that sound fake (or cynically pandering) when uttered by Obama’s brainiacs -- layered on top of the pile like deodorant. more
Globalization Is Killing The Globe: Return to Local Economies
by Thom Hartmann | February 9, 2010
Globalization is killing Europe, just as it's already wiped out much of the American middle class.
Spain and Greece are facing immediate crises that many other European nations see on the near horizon: aging boomer workers are retiring with healthy benefit packages, but the younger workers who are paying for those benefits aren't making anything close to the income (or, therefore, paying the taxes) that their parents did.
Globalists/corporatists/conservative "free market" and "flat earth" advocates say this is a great opportunity to cut benefits for the old folks (and for the young folks in the future), thus bringing the countries budgets back into balance, and this story is the main corporate media storyline.
But it overlooks the real issue (and the real solution): how globalization is killing these nations' economies and what can be done about it.
From the days of Adam Smith, classical economics pointed out that manufacturing and extraction are the only two ways to "create wealth."
"Wealth" is different from "income." Wealth is value, which endures at least for some time. Income is simply compensation for work. If you wash my car for $10 and I mow your lawn for $10, we have a GDP of $20 and it looks like we both have income and economic activity. But no wealth has been created, just income.
On the other hand, if I build your car, I'm creating something of value. And if you turn my lawn into a small farm that produces food we can all eat, you're creating something of value. Not only do we have an "economy" with a "GDP," we also have created wealth. more
The Goat in the Clearing
By ALEXANDER COCKBURN
That was quick. It seems only yesterday – in fact it was only yesterday - that we had Barack the Populist flailing away at the banks. He didn’t run for office only to end up "helping out a bunch of fat cat bankers on Wall Street", he told CBS’s 60 Minutes in December. Early, he’d talked hotly of the obscenity of the bankers’ bonuses. In January he was shaking his fist at the mighty powers of Wall St: "If these folks want a fight, it's a fight I'm ready to have." In his State of the Union speech he dealt the bankers another couple of glancing blows.
BUT now it’s Valentine’s Weekend and love is in the air. On Friday Bloomberg Business Week featured Obama telling two Bloomberg reporters he doesn’t begrudge the million-dollar pay-outs made to two of Wall Street’s most powerful men because, after all, “there are some baseball players who are making more than that.”
What about JP Morgan chairman Jamie Dimon ($16.1m plus a $1m salary) and Goldman’s boss Lloyd Blankfein ($9m)? "I know both those guys; they are very savvy businessmen," the President said. "I, like most of the American people, don't begrudge people success or wealth. That is part of the free-market system." more
Which Way to the Bastille?
Fri Feb 12th 2010, 10:29 AM
By David Glenn Cox
Who do we throw our shoes at now? Does Wal-Mart have everyday low low prices on torches and pitchforks? Made in China of course, but the question is a serious one, what are we going to do, in this country, about a government that refuses to acknowledge our distress?
Yesterday I read that there are almost 20,000 homeless teenagers in New York City alone, so how many is that nationwide? Colorado Springs is turning off streetlights and sold their police helicopter and fired the pilot and mechanic. The default rate on jumbo mortgages is near 10%. Jumbo mortgages are at least $250,000 and ranged up to $729,750 but the stimulus bill reduced it to a paltry $625,500. Big fish with big loans and they’re going belly up just like the rest of us.
These economic hard times are not isolated; they are widespread and growing daily. Financial experts have said, “Thank God for the census hiring thousands.” Except census takers count households and we have millions that have no house to hold. Asking them if they have a high speed Internet connection or how many toilets they have misses the mark at this point. At this point the questions should be: are you getting enough to eat? Are your children attending school; do you have money to wash your clothes?
They don’t ask us and won’t ask us because they won’t like the answers, so it’s best to just ignore us. The President, in his State of the Union Address, announced a new jobs bill. Oh goody! More god-damned tax cuts that made the last stimulus so successful. Let me ask you, if I offered a 50% tax cut on the purchase of a new Ferrari or Rolls Royce, would you buy one? You won’t buy what you can’t afford no matter how big the tax break. Employers won’t hire workers to drive a truck if they don’t have orders to deliver, even with a tax cut. more