Friday, December 31, 2010
At the peak of anti-German persecution in Minnesota during World War I, German-language schools were closed, the teaching of German in public schools was discontinued, German-American organizations were driven underground, etc. People changed their names--Richter became Richards, etc. People went to jail because they were accused of being "pro-German." This was a VERY big deal because as much as 40% of the population of the state was of German extraction.
I grew up in a Mennonite town. The Mennonites have been officially Pacifist since 1534 so have a well-argued body of positions on the subject of war and peace. In a nutshell, they believe that not only must they personally stay out of warfare, they are not supposed to assist the combatants in any way. What they ARE supposed to do is organize help for the victims of war once hostilities cease.
In practical terms, this meant that I had childhood classmates who had been born in European refugee camps. The local Mennonites sponsored these victims of war and because the "official" language of the Mennonites is German, most of the newcomers came from native German-speaking areas like East Prussia. So I have been around German-American culture my whole life.
World War II threw a giant monkey wrench into the Mennonite worldview--mostly because their core belief that only God could judge who was at fault in a war took a major hit. Hitler's Germany most certainly had victimized Poland, etc. And then some of the young men who had defied their upbringing and gone to war anyway came home with pictures of the death camps they had liberated. The debate over the new reality was still raging when my dad took on a new church and we left town.
The main advantage of seeing this Pacifist German-American culture up close is that it demonstrated for me just why that culture tends to prosper. You take a group of people with virtually no vices, a love of learning, a skill for social organization, and a crazy work ethic, plop them down in the middle of some of the most fertile soil on earth, and not surprisingly, they are quite well off. When this Producer Class side of German culture was placed in power by the occupation powers after World War II, the country exploded out of the devastation with the economic miracle they called Wirtschaftwunder.
When I first read about Wirtschaftwunder, I knew immediately what had happened in big cultural terms. Now I only wanted the details. Been collecting them ever since. And I am enjoying the fact that others are noticing that Germany has figured out how to make industrial, Producer Class Capitalism work for a far wider percentage of its population than our bankster version here in USA. (Notice, there seems to be a theme here.)
Thursday, December 30, 2010
The role of the criminal justice system with regard to financial fraud by elite bankers in 2011 is likely to reprise its role last decade — de facto decriminalization. The Galleon investigation of insider trading at hedge funds will take much of the FBI’s and the Department of Justice’s (DOJ) focus.
The state attorneys general investigations of foreclosure fraud do focus on the major players such as the Bank of America (BoA), but they are unlikely to lead to criminal liability for any senior bank officials. It is most likely that they will lead to financial settlements that include new funding for loan modifications.
The FBI and the DOJ remain unlikely to prosecute the elite bank officers that ran the enormous “accounting control frauds” that drove the financial crisis. While over 1000 elites were convicted of felonies arising from the savings and loan (S&L) debacle, there are no convictions of controlling officers of the large nonprime lenders. The only indictment of controlling officers of a far smaller nonprime lender arose not from an investigation of the nonprime loans but rather from the lender’s alleged efforts to defraud the federal government’s TARP bailout program.What has gone so catastrophically wrong with DOJ, and why has it continued so long? The fundamental flaw is that DOJ’s senior leadership cannot conceive of elite bankers as criminals.
The first test train has run on the new 308km high-speed line linking Haikou with Sanya on the southern Chinese island of Hainan. The train reached a maximum speed of 250km/h during the 90-minute run on December 26.More.
So even though I am absolutely convinced of the historical accuracy of my argument, I don't bring it out very often. Too many possibilities for a misunderstanding. So when I saw one of my favorite arguments applied to the current phenomenon of Wikileaks, I was delighted. Let someone else do the heavy lifting.
Wednesday, December 29, 2010
I read somewhere that all 250,000 State department cables can be zipped into a 1.5 gig file. I cannot confirm this figure but it seems about right. My cable modem can download such a file in less than ten minutes. Once the Internet proved how good it was at passing around large files, it was only a matter of time before the whistleblowers discovered it.
Not surprisingly, I like to see a site like Wikileaks succeed because its existence validates a bunch of beliefs I have about how the world works.
The defining strategies of the Predator Classes are force and fraud. Producers have had limited success against force but it is amazing how well they do against fraud. Producers have invented amazing strategies for exposing lies from printing and universal literacy to the scientific method and systematic basic research. The Internet is just the latest way for Producers to combat fraud and Wikileaks is a perfect use for the technology.
Of course, this is not all about intellectual validation. Wikileaks is about discrediting the bad guys and it cannot be long before we start to see the evidence of the economic crimes of the past 30 years and the disgusting levels of corruption and complicity of the political classes in allowing them to happen. There can be no real economic recovery until these crooks are rooted out and removed from proximity to serious economic decisions. So Wikileaks has the possibility of doing immeasurable good.
But there is also the pure pleasure of watching the smug arrogant bastards that work for the State Department exposed as the clowns they are. I found out how aggressively ignorant our diplomats were in the early 1980s (by accident) but have had trouble convincing my fellow citizens it is really as bad as I discovered. Now we get to see evidence of official foolishness on an almost daily basis. No wonder the Village is in an uproar!
Tuesday, December 28, 2010
The Germans have grown tired of the Euro. According to this article, opposition to the Euro has reached at least 57% of the population.
Monday, December 27, 2010
As you know, Ken has talked to Larry Summers about serving on Enron's Board of Directors. Larry told Ken that in light of his selection to head Harvard, he wants to hold off going on any corporate boards for now. My understanding is that Larry will most likely accept Ken's offer at the end of the year.There is a lot more detail, and a few more damning memos, in Conner's short article, Celebrating Ten Years of Derivatives Deregulation. It's well worth the time to read the entire article.
In the meantime, let me suggest a candidate for Enron's Advisory Committee. Lee Sachs was Assistant Secretary of Treasury for Financial Markets under Bob Rubin and Larry. Lee coordinated the energy negotiations for Larry at the end of the Clinton Administration. You probably met Lee at those meetings. Lee is brilliant. He was a Managing Director at Bear Sterns before joining the Treasury team. He is a huge fan of Enron and is constantly telling me how extremely well positioned Enron is for the future. He has done considerable research on our business model and is constantly talking to his buddies on Wall Street about us. Lee will undoubtedly be a significant player in any future Democratic Administration. I know he would be an invaluable addition to this Committee. He has not decided what he is going to do next, but has several extremely good offers on the table from large investment firms and hedge funds. None of these would conflict with this type of activity. I thought I would plant this suggestion with you not knowing exactly how these things are done.
Sunday, December 26, 2010
Saturday, December 25, 2010
And it would be except for one MAJOR problem--the amount of energy stored in a small amount of gasoline is more than the energy stored in hundreds of pounds of the best batteries we can make. Well, that shouldn't be such a problem--simply make the rest of the car lighter to compensate for those heavy batteries.
Putting the whole car on a diet seems like such a virtuous exercise. The lighter the car, the less energy it requires to run. And some elements of a modern car could simply be discarded--the premium sound system, the 8-way powered seats, the GPS-nav system, etc. But a lot of the "frivolous" weight in the modern automobile is for things mandated by law such as the airbags. Ok, then cut the weight out by replacing the steel in the structure with something lighter.
Using aluminum gets you some weight savings but to get a significant weight reduction, carbon fiber is the way to go. Unfortunately, mass-producing carbon fiber parts is nearly impossible and the affordable automobile requires mass-produced parts. And while fabricating carbon-fiber parts can be a garage project, doing it for profit is so difficult, very few auto makers will even try. BMW claims to have made progress but the carbon-fiber car is still incredibly expensive--even by BMW standards.
Friday, December 24, 2010
But the Mennonites were clearly not responsible for my greatest difference between me and my culture--my distaste for intellectual specialization. Of course there are GOOD reasons why folks specialize--the best being that to be really superb at something, it helps to devote large blocks of time and considerable effort to learning one thing. But since I was born with a nearly unlimited curiosity, I did not like the idea of knowing only one thing at all. I wanted to know a LOT about everything!
Then somewhere along the way, I discovered that the really interesting stuff is found where intellectual specialties intersect--for example between biology and chemistry. The reason I was so intellectually attracted to town planning is because it involved so many of these intellectual intersections--such as those between demographics, transportation, housing, environmental design, sanitation, etc. And of course, one important measure of the success of these arrangements was called economics.
Unfortunately, the subject of economics had been atomized into tiny sub-specialties in the post WW II period too. The big economic thinking that would be relevant to town planning was now just a tiny room filled with folks who called themselves heterodox economists. So here I am, a self-described heterodox economic thinker who got this way because I dislike learning about only one thing.
However, it turns out my "tribe" has a similar value set to mine--at least according to one recent study. So even though my Swedish ancestors came to North American in the late 19th century, enough cultural signals filtered down so that I agree with most of this. I am pretty sure that the most important cultural signal was the idea that it was virtuous to be well-read.
Thursday, December 23, 2010
In the meantime, Kucinich has run for President several times and has attracted a small but loyal following over the years. And while some of his ideas have seemed wildly impractical (Department of Peace, anyone?) his economic positions have been surprisingly sound. And lately, he has decided to take on the Fed--which of course is not surprising because it is the logical institution to target in any period of economic decline. He calls this effort the ‘‘National Emergency Employment Defense Act of 2010.’’
Wednesday, December 22, 2010
Tuesday, December 21, 2010
- Our failure to maintain what we have built
- Our absurd energy "policy" of pretending oil will exist forever
- We are ruled by morons
My good friend has offered friendly amendments to my core complaints:
- The complete indifference to workers, the sick and children.
- The total corruption of the institutions from Congress to health care.
- The glorification of policeman and the constant fear factor of enemies around every corner.
- The private prison industry and the gathering of information by ill-trained monkeys believing they are doing their patriotic duty.
- The use of the Ivy League as the source of stockbrokers and company CEO's and presidents.
Monday, December 20, 2010
Here is the story of how the big October 2008 raid on the public purse--the one we were told was critical to the survival of the global financial system--was already well planned in March. And of course, this particular evil just HAD to involve the Bank of England. Of course.
Sunday, December 19, 2010
In the world of Producers, the reality is that truth can be rather easily determined. If you claim that you have planted a field and have not, the evidence that you lied rather quickly emerges when plants fail to sprout. If someone claims to have fixed the brakes on a school bus and has not, the result can be loud, dramatic, and very tragic. ETC! In the world of Producers, there is so MUCH truth that is beyond any reasonable debate, a person could spend their life collecting these truths and only gather a tiny fraction of them.
It is impossible to run the real economy well without a large percentage of the population totally dedicated to honesty in their dealings. This means whenever there is a segment of a society whose prime operating scheme is force and fraud, their success will cause real and significant damage to the real economy. That is why you can easily predict the success of a given society simply by measuring the general levels of either honesty or corruption.
Saturday, December 18, 2010
Then there is the problem of allowing lawyers using standard debating techniques to bargain over carbon limits. Some folks think this is a deal to be negotiated. What they forget is that the laws of nature are not negotiable.
Thursday, December 16, 2010
Anyone with a nodding acquaintance with the folks in the State Department cannot be even a little surprised at the revelations. I haven't read that many of the documents but can see already that they are infused with the official state religion which teaches that because we are #1 in all ways important, we don't have to know anything about anyone else because if they are worth knowing, they will be struggling to be ever more like US!
Besides the outrage that comes from acute embarrassment, official Villager reaction to the WikiLeaks dump is, "Of course these assessments of others are blunt. We have to be like that in our back-channel communications--lives are at stake." What will not be talked about when this unprecedented document release is discussed is why we in USA feel entitled to treat the rest of the world so shamefully, a non-neglible fraction of the planet's youth want to kill as many of us as they can.
But aside from the routinely ignorant and self-important horseshit coming from our "diplomats," there really ARE interesting nuggets to be found. My favorite is their assessment of critically important elements of the real global economy. Given the overwhelmingly Predator Class bias of the diplomatic corps, their list of critical infrastructure around the world is only interesting to them for it's military and strategic value, whatever rents can be extracted from control of these industrial choke points, or whether they are potential targets for "terrorism." The questions of how these industries came to be, whether they should be so important, their current state of repair, or their environment impact just don't much interest the Predator mind.
Wednesday, December 15, 2010
Tuesday, December 14, 2010
And the point is completely obvious. It is utterly impossible to impliment any meaningful solutions to the problems facing planet earth until we reform the way we fund such projects. What possible good can come from research into solar energy systems, for example, if the world of finance will not allow the new infrastructure to be built.
We have allowed some greedy pinheads to convert money, an essential element of the economy, into a video game. And while (mostly) kids plunder the planet playing their online video games--only with real flesh-and-blood victims--the rest of us are told we cannot possibly do anything meaningful with our lives because they must have ALL the electronic money or their game is over.
Monday, December 13, 2010
On one hand, Germany's real economy is recovering from the various financial catastrophes quite nicely. Exports are up. Unemployment is down. Bet you could find some smug damn Germans these days. Even though industrial capitalism has taken a mighty beating at the hands of the neoliberals around the world, it still burns in Germany--even if not so brightly as it once did.
Of course the banksters, noticing that the Germans have some prosperity to go rob, have figured out a way to make the German taxpayer bail out their sour loans in Ireland, Portugal, Greece, etc. And of course, since Germany also is home to some of the more ham-fisted banksters headquartered in Frankfurt, it is clear that this is in some ways just a move by German banks to seize a greater share of German industrial output.
Of course, none of this is especially new. In 1915, when Americans were first being told that they must enter WW I with Germany as the enemy, Thorstein Veblen wrote an incredible book called Imperial Germany and the Industrial Revolution. It would be the best example of Institutional Analysis he would write. It's a big book with lots of conclusions that are almost eerily accurate today.
In one example, Veblen postulated that the Germans got the way they were because they are the product of nearly equally-powered cultural elements. The newcomers were the upstarts--the titans of industry who built the Ruhr valley into a colossus that by 1900 had surpassed both France and especially England. For sake of simplicity, I call them the "geniuses." But Germany was also the country of the Prussians, the Junkers--the "militarists." This combination of genius and militarism pushed Germany into waging war in 1914, argued Veblen, and it was a cultural problem that would guide German behavior for a long time no matter the outcome of WW I.
Of course, WW II pretty much destroyed the German militarist class which caused an industrial renaissance they called Wirtshaftwunder. But as global finance took on a more predatory tone after 1973, the Germans have discovered they still have a lot of Prussian left in their culture.
Ah yes Veblen--right again. What a shockeroo! And I am certain he would just love the piece in today's Spiegel. On one hand, we see Ms. Merkel who has listened to the geniuses at some level, and on the other hand, we see Finance Minister Schäuble who could be a freaking Junker come back to life.
No really? Merkel is also being criticized by a guy named Juncker? I just love it when the militarists start criticizing the geniuses for 'simplistic thinking'. You cannot make this shit up. (sigh)
It turns out that the same conditions that made 2010 so good here in Minnesota is exposing severe strains in the way the planet feeds itself.
Sunday, December 12, 2010
One of the first parties held by the international organization was a meet-and-greet with the school's new president--a little guy with the funny name of Malcolm Moos. (Yes, I was tempted to ask him if he was related to Bullwinkle but thought better of it.) I knew absolutely nothing about the man except for the fact that he had been appointed to please the Republicans in the state legislature and that he had worked for Eisenhower. Turns out Moos and I would stay at the University of Minnesota for exactly the same length of time 1967-74.
As I passed through the reception line that day, I wish I had known he had authored one of the more famous speeches of the 20th century.
Saturday, December 11, 2010
Some pictures from out our windows. This clip starts out with the plowing of the last snow followed by pictures of this latest blast of winter. I feel sorry for those who spent all fall working on a Christmas program that would have been performed tonight.
Interestingly, in spite of mountains of evidence to the contrary, politicians have been led to believe the sky will fall if we cease to pay the tribute that the moneychangers demand. And it's utterly amazing what politicians will socially destroy at the will of the lords of international finance.
There are hundreds of examples. My favorite concerns Nelson Mandela. Here was a guy who spent long years in a South African jail because of his battle to overturn Apartheid. He had supporters who risked their lives to keep the flame alive. Finally the day came and it was announced that South Africa would renounce Apartheid. There would elections. Mandela would go from prison to the governor's mansion. Except sometime before his inauguration, he was presented with the "message."
The message said, "Mr. Mandela, you are about to become President of South Africa. All the serious institutions of power in the country believe this is a good idea. But there is one small detail, your government has to agree to service the debts of the country." By agreeing to this economic "detail," Mandela sold out his movement. All the promises and expectations of his supporters would go unfunded while Mandela would have to tax his supporters to pay the debts run up by the people who had imprisoned him.
Shit sandwiches don't get much shittier than that!
Friday, December 10, 2010
First of all, we should recall the fiasco that was Copenhagen 2009. It turns out that there was more than simple incompetence at work in that mess.
Thursday, December 9, 2010
So I try not to get into specific political personalities here at Real Economics. Even so, the plunge of a "progressive community organizer" like Obama into the utterly depraved depths of neoliberalism has me in a near state of shock—and I didn't even vote for the man.
Wednesday, December 8, 2010
In order to get as much of society’s financial resources into the hands of the rich - the people in the private sector who supposedly would do a better job investing it - Reagan, the Republican Party, and American conservatives in general developed a simple-minded faith in tax cuts, especially in reducing taxes on the highest incomes.
What are the results of this thirty year experiment low taxes? The Reagan / Republican / conservative theory DOES NOT WORK. For the first time in American history, we now have a generation that has less education and worse economic prospects than their parents did thirty years ago.
Tuesday, December 7, 2010
This is the silliest set of arguments that have ever been created by serious intellectuals. If I told you the list of assumptions required to prove that markets are efficient, you would think I was kidding you.Watch or read the entire 11 minute interview, here: What Does Wall St Want Out of Austerity and What Benefits Does it Gain From a Small Government?
Sunday, December 5, 2010
Such people are often called "Fundamentalists" and I was raised to be one. This was a fairly grueling process involving attending a lot of Bible studies classes where a handful of verses would be discussed in excruciating detail. And then there were those Mennonites who educated me K-6 who believed a good education involved memorizing hundreds of Bible verses. These Mennonites were purists--the only Bible worth learning was the "Yea, though I walk through the valley of the shadow of death" King James Version.
Actually, if you are forced to memorize Bible verses, The King James version is probably the one to learn. It was translated by favored establishment scholars whose elegance and grace with the language made their contemporary Will Shakespeare's writing look vulgar and primitive. Learning such English at a very early age promotes a profound literacy that is difficult to produce any other way.
On the other hand, my Lutheran preacher father was of the opinion that the elegance of King James English posed a formidable obstacle to understanding. After all, the essential Lutheran stress on universal literacy was the belief that everyone should be able to read and understand the sacred texts for themselves. So when it came to translations, he was quite the trendy--embracing any new version that lowered the language barriers to understanding.
Saturday, December 4, 2010
Mostly, however, I believe the reason folks do nothing is because they don't understand the nature of the problems they face NOR the sorts of solutions that have been tried in similar situations in the past.
The Four Horsemen of the Teapocalypse
Meet the dead thinkers who defined 2010.
Friday, December 3, 2010
Eric Cantona's call for bank protest sparks online campaign
Thousands of French protesters have taken up the former Man United footballer's call for a mass cash withdrawal
Thursday, December 2, 2010
IT'S OUT - Federal Reserve Bailout Details Released
Courtney Comstock | Dec. 1, 2010, 12:02 PM |
In 2008, a Bloomberg reporter used the FOIA to request details from the Federal Reseve on the bailout that they don't want to publish.
Well, THEY'VE JUST BEEN PUBLISHED. Everything but the info about the discount window, which will be published in 2 weeks.
Wednesday, December 1, 2010
Just like bailing out AIG was really about bailing out Goldman Sachs, so bailing out Anglo-Irish Bank is about saving some very large German banks.
Bankers Gone Wild in Ireland AND Germany