Comments on: The Two-Track Economy

By: Jenifer L.

Jenifer L. — Fri, 04 Sep 2009 19:59:50 +0000

“If the stock market’s recent gains hold up, CEOs may be the only people who’ve come through the downturen in good shape”– quote from a “Business Week” article dated August 26, 2009:

CEO Pay: Is It Still Out of Sync?
http://www.businessweek.com/magazine/content/09_36/b4145000403938.htm

By: Yakkis

Yakkis — Thu, 03 Sep 2009 19:40:08 +0000

Right on, Dr. Frankie!

By: Dr. Frankie

Dr. Frankie — Mon, 31 Aug 2009 14:29:19 +0000

In fact, it is a negative sum game.
Why? Because on top of every wrong policy about financialization of the economy, we have neglected the most important asset the US ever had; scientific research.

Look around you; every “Next Big Thing” that was “Made in the USA”, especially in the second half of the 20th century was the result of the two-way collaboration between basic and applied research labs. Think Bell Labs, RCA, Xerox PARC, the research departments of IBM IBM, DARPA, NASA, and so on and so forth.

Where are these centers of long term growth today? Don’t look for them.

http://www.businessweek.com/print/magazine/content/09_36/b4145036681619.htm

By: Per Kurowski

Per Kurowski — Mon, 31 Aug 2009 14:18:41 +0000

With capital requirements for banks which established lower requirements if risks perceived by credit rating agencies were low and vice versa, the regulators de-facto subsidized low risk and taxed higher risks.

The sloppy evaluated AAAs? Call it a response to the market demand for AAAs created by the
Regulators.

Or as was explained by the Joker in the movie “The Dark Knight”, 2008.

“You know (the regulators), they’re schemers. Schemers trying to control their worlds. I’m not a schemer. I try to show the schemers how pathetic their attempts to control things really are. So, when I say that … was nothing personal, you know that I’m telling the truth. It’s the schemers that put you where you are. I just did what I do best. I took your little plan and I turned it on itself. Look what I did to this city with a few…” collateralized debt obligations.

By: Silke

Silke — Mon, 31 Aug 2009 13:18:54 +0000

“Again, financial regulators who want to punish risk-taking and push risk-adverseness wants the world to lie down and die!”

… but it was promoting risk-adverseness by providing an ample supply of sloppyly evaluated AAA-products?
aren’t sloppyly evaluated products close to fakes? (as they in the end turned out to be)
I’ve understood by now that Basel II made it extremely desirable to have such AAA-products on offer, serious or fake
- but for me the question remains how intentional was the creation of the fakes? just stupidity and slippery slope or evil genius or something in between?

By: BRUCE E. WOYCH

BRUCE E. WOYCH — Mon, 31 Aug 2009 11:55:28 +0000

The American Economy is, indeed, in a schism. The one dimensional perspective of a single machine-like system, however, has to be questioned. Can the American Economy truly be seen as a monolithic or at least a unilineal system in the first place. Therein is the heart of the problem. The unquestioned premise behind a “2 track” system is that it was ever a one track system at all. A good portion of the idea of “recovery” is distorted primarily because it is an attempt to heal or retore a unified field (financial) system which never actually existed except in the minds of the political finance sector itself. Having noted this, however, it is also very true that this “recovery” (restructuring or if you will…American Perestroika) has orchestrated around the designs of a double standard. The schism, as truthfully demonstrated in the Florida economy as a great example, is one of inclusive/exclusive consolidation elitism over a differentialy dislocated excluded subsistence economy that services the concentric center. Interlocking markets overlap and create specialized class economies that are separate from yet serviced by the central core econoic sector.
This neo-monetary autocracy (Neo-sovereignty) and its oligarchic syndication is a pervasive and insidious parasite on its host so to speak. It is facilitated and enabled by a disconnect between monetary supremacy on the one hand, and legislation that permitted them to gain control and capture of the more assets oriented American Banking system that had been giving us the actual wealth and health over the decades (do a controlled study…you will see the direct correlations that are causal and not associative). It is not surprising to find that our middle class banking professionals are overwhelmed from there position. They are definitely not in lock step with finance. But they are completely subordinate and are essentially only given terms of capitulation that serve (scale) to recapitulate and reinforce the dependency arrangement with high finance gone “global” (in scope). A capital flow monopoly has taken the “contours of this differentiation” not towards a “restoration” (as needed” but towards a “reformative recovery” which is essentially a loose canon in local, regional national and global transgression. The so-called “inside track” of private wealth clubs are having a field day and a feeding frenzy feasting on American assets. Recent comparasons to the Japanese crisis fails to recognize that there was not only capital flight from the Japanese economy but wholesale shortselling of the Yen that underminded every spike towards recovery. America, meanwhile, is being invaded with money to buy assets. Unfortunately, it is not a substratum that will serve the core “tier” of our economy but is seeking to own it outright. Bush told you all in his sinister way when he touted his “OWNERSHIP SOCIETY” vision. And the long term spectre is one of e-money, national tracking systems, and a demographic economy of domesticated renters and their landlords. Market attachments will shape and shift demographics as easily as chattel commodities.
The short term growth, as “Simon Says” will be ecliptical and crisis co-orientated. Inflation and fear mongering rhetoric will drive “the contemptuous market” towards irrational behavior which (like the banking substrate) will not just ask but demand the terms of capitulation. The American Business community never looks beyond its nose and will rattle and rant to defend the system to the point of reactionary factionalism. Welcome to the neocon-artist world of corporatist feudalism. And what of the Globe? Well like America itself it is being shaped into one big Bananna Republic based on a crony model of third world priviledge over misery. Thank you Simon; I am not sure you agree…but you did lay out all the pieces.

By: Per Kurowski

Per Kurowski — Mon, 31 Aug 2009 11:30:05 +0000

Dale B. Haling says “The housing crises was due to government interference in the housing market, including Fannie Mae, Freddie Mac and the bond rating agencies, which are a SEC created cartel. These policies pushed for easy credit standards and then lied about the risks”

Fannie Mae, Freddie Mac before they burnt their fingers on the subprime had been around for decades with nothing truly bad happening and I think conservatives could benefit from excluding these from their list of favorite culprits as that would allow them a clearer view of what happened.

Yes the SEC-Basel credit rating agency cartel created is to blame but even worse than the credit rating agencies missing out on the ratings was how the regulators meddled in the risk allocation mechanism of the market by their capital requirements for banks based on risk.

Again, financial regulators who want to punish risk-taking and push risk-adverseness wants the world to lie down and die!

By: BRUCE E. WOYCH

BRUCE E. WOYCH — Mon, 31 Aug 2009 10:54:56 +0000

Revisionist transferance is classic reactionary prologue to more of the same. The gross misappropriation of associated Neo-consequence here is pure Friedman and has created nothing but disrupted chaos since its politically based inception restructured ideology in the cloak of methodological science. Talking points, writ large. Nosce Teipsum.

By: Per Kurowski

Per Kurowski — Sun, 30 Aug 2009 17:28:04 +0000

No, I am a protestant and I now I protest the green indulgencies sold by the neo-Lutherans so as to allow some the right to contaminate! If carbon emissions are a sin then they are a sin and you should not be able to buy yourself out of it; and, if they are not a sin, then selling carbon permits is just another Ponzi scheme.

By: Silke

Silke — Sun, 30 Aug 2009 16:56:38 +0000

why does your description remind me of the time when we were constantly forced to adapt to the latest consultant taught gimmicks?
- at the time I thought I finally understood what Mao’s permanent revolution was about.
Besides that slogan I know nothing of Mao but some of the students hired as extras whom I had to supervise in the first half of the 70s tried to press the Little Red Book on me
- maybe BaselII can be found in there? they all seemed rather confused – couldn’t multiply without a machine, didn’t know the sequence of letters in the alphabet etc. but knew all about how society was to be reformed. They should have had about the right age to get a hand in at BaselII.

By: Silke

Silke — Sun, 30 Aug 2009 16:45:55 +0000

maybe the protestants have realized since that they erred ;-)

I am not especially interested in church matters per se, I am interested in how competition plays out at the top, how they grab and re-grab power and in that the churches have been major players from their first days on

By: Per Kurowski

Per Kurowski — Sun, 30 Aug 2009 15:56:19 +0000

“CONSERVATIVE” IDEOLOGY GAVE US THE CURRENT “GREAT” RECESSION SAME AS IT DID IN “GREAT” DEPRESSION”

I do not agree. This recession originated in the minds of some extremely arrogant financial regulators who naively thought they could control for risks in the banks; and that with their innovative regulations managed to fertilize the markets to better grow all type of creative and innovative shenanigans

Republicans, Democrats, conservative and progressives stood all mostly on the sidelines in this, not even understanding what was going on. It was mostly the doings of regulatory technocrats.

By: Per Kurowski

Per Kurowski — Sun, 30 Aug 2009 15:46:10 +0000

This is indeed a side note but seeing your interest in the German church could you explain how it comes that the land which gave us Martin Luther is now in the forefront selling carbon emissions indulgencies?

By: Per Kurowski

Per Kurowski — Sun, 30 Aug 2009 15:41:38 +0000

Absolutely, but pushing innovations is to assume risk, which is not so easily done when financial regulators, on top of what the market charges, place their own layer of taxes on risk.
And in this we are really talking about the original sin of the Basel Committee

By: Per Kurowski

Per Kurowski — Sun, 30 Aug 2009 15:29:26 +0000

Silke: “highlight that we can know a lot about what we believe and disbelieve by investing a relatively small amount of time.”

Absolutely and given the topic of this blog many would do reading the Bible or Koran of the financial regulations since is suspect that most of you, including the owners of this blog have not read in its entirety.
One of the problems with our financial clergy is that is profoundly misinformed about their own religion and sort of makeup sermons as they go along… like wheeling and dealing rural preachers. It is so much more fun and productive shouting out with fervor against the local oligarchs.
You can find the latest Basel Epistles here http://www.bis.org/publ/bcbsca.htm