Wednesday, August 31, 2011

Trained incapacity

I had a very distinguished visitor blow through this August—a full-blown member of the Finnish intelligentsia.  Finland has highly-rated schools so this is no small achievement.  And the lives of the senior members of the professorial class in Scandinavia are, shall we say, blessed.  He has spent much of his working life in Paris and can write and has been published in French.  His passport has many entries—the guy gets around.

Neuschwanstein from the valley
Because Finland has such good schools, many Finns acquire a love of learning that continues throughout their lives.  For example, my guest and his wife had decided recently to take in a performance of Wagner's Lohengrin but before they went, they took classes.  (This was the opera that so impressed Ludwig II he not only became Wagner's lifelong patron, he named his most famous castle Neuschwanstein after the opera's Swan Knight.)  So I was treated to an explanation of Wagner's notions of knightly chivalry and how German society suffered from not adhering to the noble ideals of militarism.  Because Finns will take classes for damn near anything, not just opera, they are informed at a level that is just stunning on any subject that remotely interests them.

Unfortunately, Finland is currently facing some nasty economic choices.  Because she is a member of the Euro, she finds herself being put on the hook for the crazy lending practices of the big European banks.  In this, she is like Germany which is also being told it must lower its living standards to pay for problems in other parts of the Euro zone.  The Real Finns, the party that has come out of nowhere because it will address this issue, are like the kid who must point out that emperor has no clothes because all the respectable folks are too busy admiring the wardrobe that doesn't exist.  My guest, who once was a Marxist and knows Marxist scholarship in minutest detail, has become a thoroughgoing neoliberal because it is the respectable thing to be.  So he is quite horrified that the Real Finns may be right.  And of course, the Real Finns are right about the threat of being forced to pay debts they never incurred—no matter how goofy they may be on other matters.

And so a guy who is so curious he will takes classes just to go to an opera finds himself with a death-of-God crises (again) because he is discovering that neoliberalism is at least as full of shit as Marxism ever was and he has been drinking the Kool-Aid again.  A man in his position cannot join the Real Finns, but between Marxism and neoliberalism, he doesn't have the conceptual tools to figure out how to even explain what is happening as economics threatens to sink the European dream.

For example, he seemed to believe that the Finnish Central Bank had been part of the government because it exercised government-like power.  Since central banks tend to have very similar organizations and missions, I found this highly unlikely but because I didn't actually know the facts, I acted as if it was possible until I could check it out.  So I Googled it and discovered Finland's Central Bank had been formed in 1812, which meant it predated the existence of the Finland, the country, by 105 years.  Pretty hard to be a part of a government in a country that doesn't yet exist.  And I am certain that the privately-owned Finnish Central Bank has paid hack intellectuals to write essays praising the bank's political “independence” at regular intervals over the years.

The problem here is pretty basic.  If you only understand the press-release version of central banking, you are about 90% blocked from understanding why a central bank has very little interest in the well-being of the general public and a whole lot of interest in the well-being of the banking system.  Now it could be argued that without generalized prosperity, the banking system is doomed to fail. (In fact, this is precisely what is happening right now—the failure of borrowers leading to the failure of lenders.)  But this little nugget of wisdom is one of those facts the neoliberals buried in their march to meaningless power.

The question here is, "What happens when a country's finest minds have been deliberately misled into believing unbelievable bullshit?"  And a related one, "How does someone so smart fall into two ideological dead-ends in one lifetime?"  I keep returning to the matter of respectability—by understanding the boundaries of fashionable thought, my guest had managed to obtain one of the cushiest lifestyles I have ever heard of or can imagine.  This is one hell of an accomplishment for a poor boy from a small city in central Finland.  The downside of this ordinarily virtuous behavior is that he and his colleagues in their ivory towers don't understand an economic catastrophe that is clearly apparent to the peasants who make up the Real Finns Party.

This is not a good thing.  After all, our intellectuals are accorded that cushy lifestyle so that they will generate cultural wisdom.  When the culture is threatened by economic chaos, the intelligentsia should be more organized and have more and better conceptual tools than a political party of peasants—it's what they are being paid to do, after all.

Veblen, who spent his working life in academe, offered a clue to this seeming “paradox” when he suggested that no group devoted a larger fraction of their incomes in the service of Leisure Class respectability than professors.  My guest indicated that Veblen might have been on to something when he told of the five-day drunk his department organized last spring to honor the 18 people who were getting their doctorates.  This party was so complex they needed to rehearse (mostly because someone suggested it would be fun if they did old dances like the minuet.)  It was dress-up time with sashes and swords and medallions.  But five days of organized merriment does not hide the fact that these folks who are glorying in their Leisure Class respectability have through great effort become incapable of understanding an economic threat seen clearly by the folks who have to clean up the mess they left behind.

Veblen had a term for folks whose fancy educations are mostly a pursuit of Leisure Class respectability to the point where a reality like paying for someone else's debts can no longer be really understood.  He called it trained incapacity.

On my way to the steam show in Edgar, I stopped in a small town to eat a bratwurst served up by the local Lion's Club at a roadside stand.  It was a perfect late-summer day in north-central Wisconsin—warm, sunny, breezy, blue skies, puffy clouds.  The brats were even better than the setting suggested.  I sat down at a picnic table and discovered I was sitting across from the 76-year-old birthday boy who had been grilling the brats.

What a treat he was!  We chatted about the corn crop, commodity prices, the value of agricultural land, the invasion of the Mennonites, and other matters important to his life.  I was obviously a city slicker sitting 100 feet from my Lexus but my new buddy didn't seem to hold any of that against me—especially when I decided to take on the persona of that giant of Wisconsin politics—Robert LaFollette.  Got to try out many of Fighting Bob's best lines.

I wound up staying about an hour and I had to leave my business card behind.  This man proved pretty conclusively to me that a true Producer Class Progressivism would be a real vote-getter even in someplace like rural Catholic conservative Wisconsin.  I was still smiling about my brat experience the next morning—it almost made me think a revolution was possible.  A least it seemed like a USA version of the Real Finns could become strong enough to have a real impact on the economic direction of the country.

Sounds like fun.  At least it would be a lot more fun than trying to attack the Leisure Class stranglehold on “respectable” thought in the corridors of academic and other power.  Besides, I am pretty sure I can never compete with a drunken five-day costume party as a certification of my credentials in the economic debates that must surely be held—and soon.

Tuesday, August 30, 2011

When a plan fails, try the same thing—only harder

The various schemes to saddle the (mostly German) European taxpayers with the unpayable debts run up by the various countries and individuals since the introduction of the Euro would be hilarious if the implications were not so dire.  Of course, the current economic catastrophes were baked into the system when the hyper-conservative, neoliberal wet dream Maastricht Treaty was signed in 1992.

So now we have a system where the banks, who should be taking a haircut as the reward for some truly wretched lending decisions, literally cannot do so without going out of business.  If the world's big banks had to write down their bad loans, there would be none left standing—at least none that I can think of.  And so they are trying to get someone to conjure up the necessary rituals to make their garbage loans portfolios "perform" again.  Hence the plans to get the German and Finnish taxpayers to pay the bills because being a frugal lot, they still have some money left to steal.

And so now we have Euro bonds--and if that doesn't work, something else that will perform the same function.  The problem is that someone like Angela Merkel will commit political suicide if she backs a plan which was clearly prohibited by German law when Germany chose to abandon the Deutschmark for the Euro.  On the other hand, if she doesn't agree to try, she will be blamed for destroying the great Euro dream.  In fact, former Chancellor Kohl is already accusing her of just that.

Monday, August 29, 2011

Tony's customers

A gathering of folks who love and know how to maintain old farm machinery is a damn good place to think about the people who understand the nature and use of tools.

Veblen postulated that the more useless some activity is, the more status it confers.  So a steam and antique tractor show is doomed to have reduced status because it is a gathering of the most utilitarian devices ever cooked up by the mind of humans.  It is saved somewhat because this machinery no longer has to do paying work and collecting is an approved leisure-class activity.  But not much.  The number of persons you could even tell about this niche hobby is tiny and the number of folks who would be impressed by your perfectly-restored steam tractor is probably fewer.  So even though this hobby requires amazing persistence and incredible skill levels to participate, there will likely never be a celebrity tractor restoration specialist.  This is a labor of love—a perfect example of Veblen's "Instinct of Workmanship" on glorious display.

A 1920s-vintage steam engine powers a threshing machine
The people who see beauty in a steam tractor must have a genuine feel for the form-follows-functon aesthetic but that does not stop them from dressing up the wheels with some very non-utilitarian pinstripes.

Steam power was grossly inefficient.  This contraption converts
lots of energy into only 25 horsepower--but it can pull a 6-bottom plow
The reason speculations about the perceived status of tools and the people who use them are important is because people who can use tools gracefully are uniquely positioned to create alternative futures.  Society pays a heavy price for lowering the status of the tool users.  Why?

We expect everyone to learn at least a little science in schools but we will give important jobs to technological illiterates. This is a bad idea for many reasons because here is what the technologically literate bring to the table.
  • They embrace and organize for complexity. 
  • They love big projects. 
  • They have a clear understanding of how many steps are involved between an idea and a working outcome. 
  • They know what it takes to finish a project. 
  • They are much less likely to low-ball the costs of a project. 
And because the tool users suffer from lowered status, their important jobs have been shipped overseas because Leisure Class fools have no way of valuing the tool-users' vital contribution to civilization itself.

The following is from an excellent article in of all places, Forbes, called Why Amazon Can't Make A Kindle In the USA.  Nice that you guys finally get it after 35 years of outright assault on the Producer Class.

Friday, August 26, 2011

Goin' on up to Edgar

Will be spending some time with Tony at the steam show in Edgar Wisconsin starting today.  The banksters probably won't become enlightened before I get back.  In the meantime, perhaps hurricane Irene will offer her opinion of Wall Street.

Some pictures from last year.

Thursday, August 25, 2011

Allowing tiny numbers of financial actors to wreck things

The MOST astonishing thing about the current economic mess is how few people actually benefit from the current ruling ideology.  The numbers are TINY.  In fact, if one subscribes to the notion that the current rule of the banksters ensures calamities like climate change and that no one will escape those effects, there are actually NO winners from the current power arrangements.  NONE!

Wednesday, August 24, 2011

A crises of legitimacy

As someone who has watched with astonishment the scams the moneychangers are able to pull off—year in and year out—I keep wondering how long it will take for the rest of us to wake up and demand change.  Then the realization reasserts itself that the moneychangers have been scamming the rest of us for most of recorded history and have been getting away with it because of human characteristics that are remarkably easy to exploit.

1) The nature of money is just complex enough so that the effort required to understand it is beyond the efforts that most folks are willing to put out to deal with an abstraction.

2) People want to believe that there is a magic that makes money grow on its own and that there are specialists who know how to manage this process.  All the moneychangers have to say is "don't look too closely or the magic stops" and the necessary rigorous regulation of the process can be thwarted.

But every once in awhile—like now—the moneychangers mismanage the economy so badly they trigger a crises of legitimacy.  Folks stop believing in their magic.  All the trappings of money power—the hushed-toned high-ceilinged bank offices, the shiny shoes, the armies of corrupted academics, the lobbyists and the politicians they buy—will not stop someone from pointing out that the moneychangers are nothing more than greedy vandals or "vampire squids."  The power of their "magic" can be unmasked by a child pointing out that the Masters of the Universe have no clothes.

The question then arises—What happens next?  The legitimate services provided by the financial community may only be a tiny, tiny percentage of what they do, but these services are are amazingly useful and need to continue.  So either governments rise up and impose controls on the moneychangers to limit what they do to the necessary services, or groupings come together to create alternative institutions like credit unions to replace the vandals.

So now that the banksters, along with their bought and paid for politicians and academics, have destroyed their own reputations to the point where most decent people want them jailed or eliminated, the time for counter-proposals on how to organize an economy has come.  Yet while there is enough anger out there to trigger riots, the new economic agendas are not yet being advanced.  Perhaps too many people still want to believe in magic.

Tuesday, August 23, 2011

Peak food?

Climate change is beginning to destroy our ability to feed ourselves.  Here in Minnesota, the crops look quite lush but they are VERY late so an early frost would cause a world of hurt.  But just to put the following article into context, when the corn crop around here goes well, the yield is something like 225 bushels per acre.  But from Iowa south, the heat and drought have just devastated all crops but especially corn.

The current price rises seen at your local supermarkets reflects the growing shortage of corn--which accounts for about 25% of the diet in USA.

Monday, August 22, 2011

Gold makes folks crazy

Considering the world has been on a de facto oil standard since 1973 and Venezuela now seems to have more oil than even Saudi Arabia, one wonders why Hugo Chavez wants to play with his country's rather large pile of gold.  I suppose he has seen what has happened to the stores of wealth held by Iraq and now Libya and does not want something like that to happen to him.

In any case, he sure is driving the gold bugs crazy.

What is so interesting about the gold market is that folks who believe that "fiat currencies" are essentially worthless so want at least some of their portfolio in gold, have not always taken possession of the gold but have settled for paper promises that the gold in some bank vault is theirs.  Now these suckers are discovering that the folks who sold them the paper don't actually have the gold either--or not as much as they have claimed.

Sunday, August 21, 2011

Getting religion on a Sunday morning

When I was growing up, Sunday was often chaotic in the home of a small-town Lutheran preacher.  Not only did my father have to be dressed in the appropriate garb, but all of us had to have our shoes shined, ties in place, fingernails cleaned, etc.  There was always some last-minute excitement over the music--a church service has many elements of show business and making sure the musicians were ready to go on with right scores was essential.

So these days, when my Sunday mornings are so quiet, I still find myself thinking about the topics connected to how folks are supposed to behave towards each other so that we can have a little bit of heaven on earth.  And these days when countries are being required to destroy themselves by the demands of the money-changers, I tend to think about the many writings in the Bible that address the rights of debtors.  And of course, Christianity / Judaism has the BIG idea called the Jubilee Year which says that debts so seriously screw up a society that every 50 years, all debts are wiped out.

I found this essay on Jubilee and even though it is far from the best or most nuanced writing on the subject, it is not half bad for a Sunday in August--even though it contains references to 1000-year cycles and Mayan calendars.  It's Sunday--give the man a break.

Saturday, August 20, 2011

Solar-powered transportation

If the rich have any usefulness whatsoever, it is that they can afford to purchase technology when it is young, unproven, and very expensive. So the idea of a solar-powered yacht actually makes sense and compared to the more typical ways the rich dissipate their fortunes, it is almost enlightened.

Friday, August 19, 2011

Real economics update

There is no shortage of news from the Predator classes these days.  I can be distracted by the media coverage of which foaming barking moron the Republican party will choose as its standard bearer.  My favorite, of course, is Michele Bachmann because she is such a perfect example of what Jane Hamsher calls Supermodel Stupid.  See men, this is what you get when you nod sagely at every idiocy that comes from the lips of a gorgeous woman because you don't ever want anything to ever get in the way of your possibility of getting laid.  And the political men surrounding Bachmann are probably especially solicitous because her husband is so obviously gay.

And then there is the news that there is corruption on Wall Street.  Well duh!  We actually try around here to give that subject the coverage it deserves but it since this news is merely a validation of our primary theme which is, "Thieves are badly qualified to manage an economy" we DO attempt to ignore the cops and robbers aspect of the story.  And in truth, the idea that moneychangers are crooks is about 5000 years old and the current details of this truth are not especially interesting.  The only interesting question is what do the rest of us do about them.

Thursday, August 18, 2011

Those who aren't fools are probably crooks

The great lie of the financial community is that everyone can get rich and no one will get hurt.  Put your faith in the system, they tell us, and the magical money unicorns will do the rest.

Of course, the truth is that millions of people WILL get hurt, most of the players will NOT get rich, and there are no magical money unicorns.  So since reality conspires to foil the true believers in "free markets", anyone who claims to produced the economic returns promised by your basic hack stock pimp is going to have to cheat.  And cheat they do--regularly and often.

Wednesday, August 17, 2011

Neoliberalism is losing somewhere

When Oliver Stone shot South of the Border, he went first to Venezuela to see if Hugo Chavez was really the monster being portrayed in the USA media.  Chavez suggested Stone visit the rest of the new breed of Latin American leaders and one of the stops was Argentina.  In my favorite part of the documentary, we are introduced to the Kirchners.  Nestor will go down in history as one of those few brave enough to ignore the dictates of the banksters.  To ignore the economic conventional wisdom means knowing the subject well enough to independently formulate policy.  Kirchner led Argentina out of an economic catastrophe.

At his side, was Christina--this brilliant little firecracker who understood the anti-bankster economics of her husband well enough to explain it to the uninitiated.  In 2007, she won election as Argentina's Prime Minister because Nestor faced a term-limit law.  Stone's doc had opened when he dies in October 2010.  She seems to be doing quite well on her own and has just won an election that solidifies her power.  She will need all the help she can get--the banksters don't like successful examples of countries who prosper outside their complete control.

Tuesday, August 16, 2011

Debt collection gone mad

Under "normal" circumstances when a borrower finds himself unable to pay off a loan, the lender and borrower meet--usually at some place designated by the courts, and work out who gets what.  The lender gets the collateral pledged for the loan and depending how the loan was written, that is where things end.  The lender takes a haircut and goes off to find other borrowers with better prospects for repaying a loan.

These days, however, when a bankster discovers that a loan is not going to be repaid, he tried to fob off the obligation on some unsuspecting third party.  And because most western politicians can be bought so cheaply, it's the taxpayers who they try to saddle with the payments.  Except for Iceland, this has worked pretty well.

But with countries like Greece, the debts are so large that the Greeks can never repay them.  So the banksters try to get someone else to pay them off--in this case, anyone in the rest of the Euro zone who still has something to grab.  The latest scheme is something called the Euro bond.  No German in his right mind could ever agree to such a scheme but that hasn't even begun to reduce the bankster pressure on the Germans to accept the idea.

Monday, August 15, 2011

Running out of ideas

The notion that the financial elites and the politicians they have corrupted are out of ideas is debatable.  For example, it could be argued that neoliberalism was merely a new name for evil notions that have been around since feudalism so they cannot be running out of ideas because they never had any new ones to start with.

But Andreou (below) HAS a point.  If the best idea an outfit like IMF can come up with for Greek debt restructuring and national renewal is to sell the Acropolis to a hotel chain, then the Predators truly have run out of meaningful ideas.

Putting people back to work building a sustainable society, of course, is not even on the public policy radar because it would mean utterly rejecting neoliberalism, taking serious power out of the hands of the banksters by forcing them to write off their bad loans, giving respect to actual work, and treating money as a tool for social development rather than a magical substance that enhances sexual prowess.  Naturally the Predators HATE the very thought that such a world could even be possible so it is highly unlikely THEY would ever advance such ideas.

So yes, the Predators (at least) are out of ideas.

Friday, August 12, 2011

Lessons from the Great Depression

The differences between the current economic mess and the Great Depression are many and often critical.  But having said this, the similarities are often so powerful as to be spooky.

Thursday, August 11, 2011

Serious energy work being done

Modern life is all about energy.  Many, if not most, of the economic problems facing USA can be traced to the failure to take seriously the ramifications of national Peak Oil in 1970.  Instead of coming up with meaningful solutions, we chose instead to make up the shortfall with imported oil--most coming from some the most troubled spots on the planet.  And because we really didn't have an export business that would pay for all those oil imports, we chose to sell off our national assets and go into debt.  So here we are, forty years later with few assets left to sell and the global economy crashing because everyone has run out room to borrow.

So while the efforts to address our oil shortage are at best pathetic, we simply must celebrate those who ARE taking the problem seriously.  We start with a grumpy German CEO who gives us insight into what someone who understands energy really sounds like.

Wednesday, August 10, 2011

Watching London burn

As someone who has never written in a book nor even turned down a page corner, who once expended much more energy than I had to save a crumbing old building in a slum full of abandoned buildings, you might imagine how I feel about vandalism.  I know there are folks out there who just love to watch destruction.  I am not one of them.  So there is a part of me that is just disgusted by the scenes from London.

Setting a building alight is the easiest, most unimaginative thing a person can do.  A kid playing with matches can do it by accident, for goodness sakes.  There are literally NO problems that can be meaningfully addressed by starting a building on fire and those who think there are represent the most reptilian among us.  You know, Predators.

But let's be clear about something here.  The church ladies (of both sexes) who are tut-tutting about those horrible folks who are causing the riots are damn near as annoying as the vandals themselves.  Talk about missing the point.  Poor young males with dead end lives may get some entertainment value out of watching a carpet store go up in flames, but what can be the excuse for the high-end vandals whose wanton destruction is literally setting the planet ablaze?  And if you can become morally offended by a carpet store setting the night alight, why are you not MORE offended when your government sets a village on fire on the other side of the world with a Predator drone.

And where were you church ladies when the mergers and acquisition boys destroyed the industrial USA midwest?  It was pure naked vandalism by folks who organized and profited from the destruction.  A town's main industry, built by folks who worked hard every day for several generations, destroyed so that a handful of crooks could become obscenely rich.  You watched THAT without uttering a peep but you can get your panties in a twist over a carpet store fire in London?

I HATE vandals but I know enough about the Predators to not waste my fury on the petty variety.  So unless the petty vandals of London go down to the City and set alight the buildings where the evil schemes for global vandalism are hatched, this really isn't much of a story.

Tuesday, August 9, 2011

There's no future - and England's burning

It has now been three days since riots began in North London after police shot and killed a man reported to be involved with a local drug gang. According to at least one source, the fact that the riots appear to be organized using the relatively secure Blackberry network is evidence that British drug gangs are leading the riots in reaction to recent, highly successful police efforts to terminate many drug gang operations. The reasoning is that unemployed teen punks would not be able to afford Blackberry's. So, it must be drug gang members. Supposedly, the British police are "allowing" the riots to continue (for three days now?!?) so they can get plenty of photos of gang members organizing riots on their Blackberries. Oh, and to sway the "civil liberty types" toward further expansion of an already oppressive police state in Britain:

Catching up with reality

As the world of finance becomes further removed from the real economy, it can float above the destruction it causes.  But not forever.  Math tends to work and eventually even the folks selling credit default swaps tend to get caught up in the generalized destruction as the rot moves up the food chain.

Now is one of those times.  Thirty-five years of treating the economy like a slum landlord has pretty much destroyed the places where folks from finance can hide from an economic storm.  And now that the Predators have made war on institutions like representative government and the thinking that produced the Enlightenment, socializing their losses at the expense of the wounded forces of Productivity is no longer possible.  Or as the question is asked below, "Who will save the saviors?"

But even after a day of 600 point stock losses, it is never wise to write off the forces of Predation.  These folks have stayed in charge for most of recorded history because they are cunning.  They just got a Democratic President to attack Social Security and Medicare so it would be insane to write them off as losers even when their precious markets are crashing all around them.

Monday, August 8, 2011

Confusing the financial markets with the real economy

For most of my adult life, the needs and wants of the moneychangers have taken precedence over the needs of the real economy.  So now that the real economy has been crippled, it is really not surprising that the Predator economy which preys on it is stumbling as well.  And so NOW the heavy hitters in the media are beginning to notice like they NEVER did when the casualties were farmers and other members of the Producing classes.

Sunday, August 7, 2011

The American love affair with The Market

One of the most pathetic spectacles these days is some supposed American citizen mourning the loss of "value" in his or her 401ks and IRAs or other retirement accounts, without ever evincing any awareness that their plight is directly tied to the de-industrial and financialized decimation of the entire U.S. economy. Forthwith: E-Trade Baby Loses Everything.

Saturday, August 6, 2011

Standard and Poors? now this is rich

I have long held Standard and Poors in an extra special level of contempt.  Not because they are utterly corrupt (which they are) or because they are hopelessly incompetent (ditto) but because through a string of otherwise meaningless mergers, they are a branch of a company called McGraw-Hill.  Yes THAT McGraw-Hill--the name that somehow always caught my eye on the textbook whenever any class in school actually drove me to tears of boredom.  If any company is more responsible for turning the USA citizenry into blank-stare ignoramuses than McGraw-Hill, I would be hard-pressed to even suggest who it would be.

So yesterday, the same Standard and Poors that routinely handed out AAA bond ratings to bundles of liar-loan mortgages decides to further cripple the USA (and probably the global) economy by downgrading USA debt.  The sheer arrogance of this literally takes your breath away.  And of course, being a division of McGraw-Hill, S&P couldn't even get its math right.

Friday, August 5, 2011

The markets go nuts

One of the main reasons I don't pay much attention to the Gold Bugs is because they actually believe that if you cannot exchange your money for something like Gold, the money isn't "worth anything."  Of course, the idea that Gold is "something" is really pretty silly.

On the other hand, those of us who believe that money becomes valuable because of the hard work and ingenuity of the Producing Classes are obviously less concerned with the form money takes.  Rearranged electrons on the back of a piece of plastic is just fine so long as it represents Producer energy.

The big problem is that not enough of the money has made it to the wider public.  If financial markets are supported by anything, it is by the ability of Producers to purchase their output.  But in the last 35 years, the money validated by Producer energy has wound up in fewer and fewer hands.

The final act of the Predators has been to loot governments so that there now remains almost no one to purchase much of anything.  Along with the other austerity measures taken around the world to prop up tottering banks, the recent debt ceiling deal accomplished almost nothing except for severely damaging governments as final consumers.  So now that the prime pillar supporting the very existence of the markets has been crippled, it is really no surprise that around the world, the bourses are in near panic.

Thursday, August 4, 2011

Marching over economics

Some of the young of Spain have come to the conclusion that their problems are being created in Brussels and have dispatched a contingent to make their point heard.  As followers of Coxey's Army can tell you, these thing do not have an especially good track record of success.  But it is a measure of the desperation that this is what is being tried.

Wednesday, August 3, 2011

The debt ceiling debate distraction

Thanks to Tony's generosity, I am currently reading Marriner Eccles 1950 memoir Beckoning Frontiers.  (Don't worry Tony, now that I have seen what this is worth over at Amazon I'll be VERY careful with it.) This is a book I probably should have read 30 years ago because it is THAT informative.

Eccles was the head of the Federal Reserve during the New Deal and no less an authority than John Kenneth Galbraith called him the most important New Dealer of them all.  I am only halfway through the book and am willing to believe that if anything, Galbraith was vastly understating things.

What made this book a perfect read these days is how instructive it was to see the economic madness on full display during the debt ceiling debate and compare it to the arguments that Eccles faced in 1935.  If you are of the opinion that Larry Summers or Austan Goolsbee are drooling idiots, you should read the 1930s economists at Harvard and Yale explaining how the Great Depression was somehow going to heal itself.

Keep in mind, Eccles was an enormously wealthy Mormon banker from Utah who had basically saved Utah banking during the Depression.  He even had to organize the group that bailed out the bank owned by the Mormon Church!!  So he is this hero banker that is being asked to serve on the august banking bodies and make important speeches.  Considering how unlikely it was that a Mormon from Ogden became FDR's goto guy on economic and monetary policy, Eccles must have been impressive!

Yet when it came time to reorganize the Fed in 1935 so it could act with authority to monetize the New Deal, he ran into powerful opposition from both Carter Glass AND Henry Steagall (yes those guys) who were worried that this cowboy was going to endanger their pet project--The Federal Reserve System--which was not even 20 years old when FDR was inaugurated.  But what really freaked out the old guard on the banking committees was that Eccles was questioning the received wisdom of the sound money / gold standard boys.  The disciples of Alfred Marshall.

So here we are, facing the ginormous project of transitioning out of the Age of Petroleum, and we have a President using the power of that office to explain the need for austerity measures that will actually kill people--using the principles of Marshall.  The poor man doesn't even know there are alternatives including those that have actually worked in the past.

Of course, what we are REALLY missing during the current economic calamity is another Marriner Eccles.  They went and named the Federal Reserve building after him but if anyone with his views walked into that building today, he would probably be shot on sight.

And while we are having this let's-pretend debate over the debt ceiling, the real problems of climate change and Peak Oil march on.

Tuesday, August 2, 2011

Tired of rich fools?

The mayor’s office of the Lithuanian capital, Vilnius, has published a video showing its head charging an armored military vehicle over a Mercedes car parked in a bicycle lane.

Now whether I would think this so funny if the car was a Lexus is a whole 'nother matter.

Economists occasionally getting it right

Ken Galbraith's The New Industrial State was my personal introduction to the subject of economics.  Over the years I would make a reasonably determined effort to read almost everything he wrote.  I watched with a sinking feeling the rise in influence of his opposite Milton Friedman and the Chicago Boyz in the 1970s because it was like the return of the Dark Ages.

This intellectual debate turns out to have been extremely important.  Only last night, the forces of darkness were able to force through the USA Congress a package of austerity measures that, as Keynes and Galbraith would have predicted, are exactly the wrong measures at the wrong time.

So today it is only appropriate that we remember when economists were not barking insane.  Ken's son Jamie keeps the flickering light of sanity alive for a "profession" that has utterly lost its way.

Monday, August 1, 2011

Watching Washington sell out the country

The debt ceiling debate came to the worst possible end yesterday (I think), although in truth, it would be difficult to see how USA's destruction could be even more thorough.  Seriously.