It’s Hard To Take The Fiscal Hawks Seriously: Testimony To The Senate Budget Committee

By Simon Johnson

Most of the discussion of federal budget issues today is misdirected.  The shorter run issues are dominated by the likelihood of another financial crisis – and the implications that would have for the budget deficit – but no “fiscal hawks” even want to acknowledge the issue.  It is very hard to take anyone seriously if they refuse to look at these (uncontroversial) numbers.  Medium term, we obviously need tax reform.  The good news, in a sense, is that the US has an antiquated and inefficient tax system; it would not be hard to improve how this operates, raising revenue and actually reducing distortion.  Longer term, Medicare is obviously a tough problem with no easy solutions yet in sight.  But the argument “just cut entitlements” cannot be taken seriously.

Below is my testimony this week to the Senate Budget Committee on these issues.  (This link is to a pdf version; also see this page for my testimony to congressional committees over the past 2 years).

Testimony to Senate Budget Committee, hearing on “A Status Report on the U.S. Economy”, 10am Tuesday, August 3rd (embargoed until the hearing starts).

Submitted by Simon Johnson, Ronald Kurtz Professor of Entrepreneurship, MIT Sloan School of Management; Senior Fellow, Peterson Institute for International Economics; and co-founder of http://BaselineScenario.com.[1] [Numbered links are to footnotes, at the end of this testimony.]

A. Short-term Prospects

1) The global economy continues to improve, although at a disappointing pace.  Sharp recessions traditionally produce rapid recoveries, but the damage wrought by the disruption of global credit in fall 2008 is far in excess of anything we have seen since the 1930s.  This could be the slowest recovery of the post-war period.[2]

2) Global growth, Q4-on-Q4, as measured by the International Monetary Fund was 3 percent in 2008 and, based on the latest revisions, will be probably prove to have been under 2 percent in 2009 – the worst performance since World War II.  This same measure of growth around the world, which uses purchasing power parity weights, is likely to be somewhat under 4 percent for 2010 but should pick up in 2011.

3) The major risk faced by the world economy is not stagnation year-in and year-out, but rather an unstable credit cycle that produces apparent “growth” – perhaps even high recorded growth – in some years for the United States, but then leads to financial crisis, repeated recession, and very little by way of sustained growth.  US GDP in real terms is currently at about the same level now as it was in 2006.  (Real GDP, annualized, was around $12.9 trillion in the first quarter of 2006 and $13.2 trillion in the second quarter of 2010; see Table 3B in the July 2010 BEA report).[3] 

4) Japan’s lost decade in the 1990s was not a sequence of years with zero growth – there were notable expansions and contractions, with high rates of growth in particular quarters and even some years when it seemed that the corner had been turned.  Lost decades are evident only in retrospect.  The US is currently on track for “losing” at least half a decade of growth (from the beginning of 2006 through the end of 2010).

5) The latest iteration of the unstable global credit cycle has done lasting damage to the United States.  This is manifest in the following ways:

a) Long-term unemployment results in skill losses and lower productivity in the future.  This undermines future growth prospects and it may shift up the “natural” rate of unemployment.  So-called hysteresis in unemployment – meaning that it goes up fast but comes down slowly and not fully – has very much been a feature in the experience of other industrialized countries during recent decades.  This is potentially now a major issue for the United States.

b) The credit disruption of 2008-09 is having a persistent impact on hiring decisions in the United States and Europe.  Business equipment spending is recovering fast but firms are reluctant to add workers.  Most of this uncertainty is due to firms not knowing if they will have consistent access to external financing.  As a result, large nonfinancial firms are likely to carry less debt and more cash.

c) The damage to household balance sheets from the boom-bust in real estate will also likely persist; for example, the percent of homeowners with negative equity has stabilized, around 20 percent, but moved down only slightly over the past year.  We should expect US households to save move as consequence and the personal savings rate is now around 6 percent of personal disposable income (compared with 3 percent during the early 2000s and closer to 2 percent in the run up to the crisis).  This is a pattern we have seen in “balance sheet”-related recessions elsewhere.

d) There is a serious sovereign debt crisis in Europe.  While the prospect of default by a eurozone country is not imminent, there is a shift to fiscal austerity across that continent, thus slowing growth further.  Structural issues within the eurozone are unlikely to be resolved quickly, thus weakening the euro and limiting the potential for US exports.  Resulting financial market instability can also still spread quickly to the US.

e) The financial crisis and its aftermath damaged US prestige and capacity for leadership around the world. 

6) It is hard to provide effective stimulus to the US economy in this situation.  The longer term budget needs credible consolidation, which is mostly about reforming Medicare and implementing meaningful tax reform (see section C below).  These are not difficult in technical terms but the potential for a political impasse threatens long-term interest rates – depending on exactly how the post-crisis adjustment process plays out in other major economies, as this affects relative demand for US government debt.  Over the shorter term – i.e., the next decade or so – high levels of systemic risk in the financial sector continue to generate large contingent fiscal liabilities (section B below).

B. Contingent Liabilities from the Financial Sector

1) The scale and severity of the recent recession was due to the nature of excessive risk-taking at the heart of the world’s financial system, in the United States and Western Europe.[4]

2) A series of efforts are underway to change the behavior of major global banks and to prevent them from loading up on risks during the next cycle.  These are unlikely to succeed.  As Jamie Dimon, CEO of JP Morgan Chase remarked in January 2010, “[a financial crisis is] the type of thing that happens every five, ten, seven, years” – and another crisis within that time frame should not surprise us.[5]

3) To see the fiscal impact of the finance-induced recession, look at changes in the CBO’s baseline projections over time. In January 2008, the CBO projected that total government debt in private hands—the best measure of what the government owes—would fall to $5.1 trillion by 2018 (23% of GDP). As of January 2010, the CBO now projects that over the next eight years debt will rise to $13.7 trillion (over 65% of GDP)—a difference of $8.6 trillion.

4) Most of this fiscal impact is not due to the Troubled Assets Relief Program – and definitely not due to the part of that program which injected capital into failing banks.  Of the change in CBO baseline, 57% is due to decreased tax revenues resulting from the financial crisis and recession; 17% is due to increases in discretionary spending, much of it the stimulus package necessitated by the financial crisis; and another 14% is due to increased interest payments on the debt – because we now have more debt.[6]

5) In effect, a dangerous financial system – prone to major collapses – creates a hidden contingent liability for the federal budget in the United States.

6) The Dodd-Frank financial reforms of 2010 are a modest step towards making the financial system safer, but these are unlikely to solve the problem of systemic risk. By all accounts, the internationally coordinated process of raising capital standards – and thus creating greater shareholder buffers against losses – is not making much progress; there will be little real change, much delay in implementation, and far too much “low quality” capital at the end of the day.[7]

7) As long as massive financial institutions continue to take on huge amounts of risk, there remains a strong possibility that governments in the US and other countries will once again face unexpected liabilities and collapsing tax revenues in a financial crisis – pushing up debt by another 40% or so of GDP.

8) Discussion of this risk was largely absent from the recent debate on financial reform and is not currently quantified by the Congressional Budget Office.[8]

9) In this regard, the IMF’s first ever detailed assessment of the US financial sector (known as a FSAP), released last week, is not reassuring.  Our financial system remains undercapitalized, according to the – rather mild – stress tests reported there.  The veiled warning in this report is that the US faces severe fiscal risks going forward, arising directly from our continued inability to rein in the dangers posed by the financial sector.

C. Risks of a Fiscal Crisis

1) Seen in a comparative perspective, our budget issues are serious but not severe and – relative to other industrialized countries currently under pressure – we have plenty of time to deal with them.  Fears of an immediate budget crisis in the United States should not be exaggerated, although we do need fiscal consolidation over the next decade – a combination of tax reform and changes to future Medicare spending.

2) Most other industrialized countries also have to engage in a process of fiscal adjustment and for similar reasons.[9]  Compared with other countries at roughly our income level and with similar demographics, the United States has a major advantage in the sense that we collect relatively little in taxes; in addition, our tax system is relatively antiquated and would benefit from modernization.  Using the IMF’s numbers – which are for “general government” (i.e., the entire government sector, including federal, state, and local) – the US collected 31.8 percent of GDP in 2000 (compared with the UK at 38 percent, Germany at 46 percent, and France at 50 percent).[10]  In both 2009 and 2010 the US collected 30.4 percent of GDP; over the cycle, our revenue relative to other leading industrialized countries remains about the same.

3) Under the CBO’s “alternative fiscal scenario,” which includes policy changes that are politically likely, government debt in private hands will grow to 185 percent of GDP by 2035 as Social Security, Medicare, Medicaid, and other health care programs grow to consume almost all tax revenues.  This should not be a surprise: in 2000, the CBO already projected that these programs would grow to over 16 percent of GDP by 2040—a figure virtually identical to current estimates. This was predictable because it rested on two simple trends: changing demographics and, more importantly, high health care cost inflation.

4) For some commentators, the only possible response for the US is immediate austerity; this is the course being taken in the United Kingdom and parts of the Eurozone. If we continue to spend, the argument goes, markets will lose faith in our ability to repay our debts, interest rates will skyrocket, the dollar will collapse, and our way of life will be at an end.  While this argument is plausible in the abstract, there is no reason for panic or precipitate action now.

5) The US Treasury Department can currently borrow money at historically low interest rates. Investors around the world like saving in a safe currency, the dollar has traditionally been seen as the safest of currencies, and recent developments in Europe and the rest of the world have done nothing to change that.

6) It is true that markets can suddenly lose confidence in a country, with severe economic repercussions. But there is no magical threshold that suddenly makes a country a poor credit risk; Japan’s net government debt relative to its economy is roughly at Greek levels, yet Japan can still borrow money cheaply. A country’s ability to borrow is determined by its economic fundamentals, its position in the international economy, and the credibility of its political system – relative to other systems.

7) While an extra dollar of spending today is an extra dollar (plus interest) of debt later, what really matters are policies that affect taxes or spending year after year. By contrast, $34 billion for extended unemployment benefits—a temporary program that will become smaller as unemployment falls—has no appreciable impact on our structural deficit.

8) The things that do matter are taxes and entitlements. Therefore, the upcoming debate over the Bush tax cuts is of real importance. According to the CBO, extending the Bush tax cuts would add $2.3 trillion to the total 2018 debt. The single biggest step our government could take this year to address our structural deficit would be to let the tax cuts expire. Such a credible commitment to fiscal consolidation should reduce interest rates today, helping to stimulate the economy.

9) Critics say that this amounts to increasing taxes at a time of high unemployment, and instead the tax cuts should be extended as a stimulus measure. This overlooks the fact that tax cuts are an inefficient form of stimulus, because many people choose to save their additional income instead of spending it. If the goal is to boost growth and employment immediately, it would be better to let the tax cuts expire and dedicate some of the increased revenue to real stimulus programs. Alternatively, if some tax cuts are extended, there should be provisions to eliminate them automatically when unemployment falls to a preset level.

10) Complete elimination of the Bush tax cuts is highly improbable. The most likely outcome is that the tax cuts will be extended for families making less than $250,000 per year.

11) Additional tax revenues will also be necessary in the medium term, and at least three plausible ideas are on the table.

a) The first is comprehensive tax reform, to better align our tax policy with desirable economic incentives. We should consider the value-added tax (VAT) favored by Greg Mankiw (former chair of the Council of Economic Advisers under President George W. Bush), among others. A VAT is a tax on consumption, and therefore could reduce the overconsumption that helped feed the recent credit bubble, encouraging savings and investment instead. Although a simple VAT is regressive, it can be made progressive by combining it with a partial rebate or by exempting necessities. Also, as Martin Feldstein and Len Burman have suggested, we should look hard at tax breaks that act like hidden spending programs. One place to start is the mortgage interest tax deduction, currently available on mortgages up to $1 million, which is part of our excessive package of incentives to buy houses—a policy eschewed by most other industrialized countries.

b) The second is carbon pricing, whether auctioning emissions allocations or taxing carbon directly, at rates that start low and rise over the next decades. Politically speaking, it would be easier to pass a carbon pricing bill by rebating the proceeds back to households (or handing them to energy companies in exchange for political support). But given the large potential revenues from carbon pricing, it would make sense to dedicate a portion to cushion the impact of higher energy prices on the poor, while applying the rest to our fiscal balance.

c) The third is a tax on the financial sector, in the form of a Financial Activities Tax on big banks that enjoy implicit government guarantees. This tax would aim to eliminate the funding advantage that large banks enjoy over their smaller competitors and limit the incentive for big banks to become even bigger. As the International Monetary Fund has argued, across the G20 this would help constrain the worst features of our financial system and reduce the competitive distortions created by the megabanks.

12) After taxes, there is the issue of entitlements—which is mainly an issue of health care costs. According to the CBO’s alternative fiscal scenario, growth in Social Security is comparatively modest, from 4.8 percent of GDP in 2010 to 6.2 percent in 2035. A relatively small change in the parameters of this program could lower its future costs, as was done in the 1980s. At the same time, however, Medicare, Medicaid, and other health care programs will more than double from 4.5 percent to 10.9 percent of GDP.

13) There are two ways to reduce the government’s health care outlays: reduce the amount of health care the government buys or reduce the cost of health care. The simplest solution is to mandate that the government buy less health care—by raising the eligibility age for Medicare, capping benefits for high-income beneficiaries, etc. The problem with this approach, however, is that Medicare is not particularly generous to begin with (hence the market for Medigap supplemental policies). In addition, the rest of the nation’s health care system is also in sorry straits; if Medicare were to increase its eligibility age, it would simply push people back onto their employers, resulting in higher health care costs for all working people.

14) In other words, cutting Medicare expenses shifts costs from the government onto individuals, many of whom will simply go without decent health care. If we fail in our attempts to control health care cost inflation, this may be the only option. But the better solution is to figure out how to reduce health care costs.  

15) A top priority should be to preserve and expand the cost-cutting provisions in this year’s Affordable Care Act (ACA).  Another obvious step to consider is phasing out the tax exclusion for employer-sponsored health plans, which will not only increase revenue but also end the distorting effects of employer subsidization of health care.

16) Reshaping our health care system to focus on successful outcomes and quality of life, rather than on employing the newest and most expensive technology, is a challenge for which no one yet has a proven solution. But it remains, more than any other single factor, the key to long-term fiscal sustainability.

17) Fixing our long-term fiscal problems will not be easy. But there is no need to panic. And there is no shortage of possible solutions.

——————-

Footnotes below here


[1] This testimony draws on joint work with James Kwak, including 13 Bankers: The Wall Street Takeover and The Next Financial Meltdown (Pantheon, March 2010) and “The Quiet Coup” (The Atlantic, April, 2009), and Peter Boone, including “The Next Financial Crisis: It’s Coming and We Just Made It Worse” (The New Republic, September 8, 2009) and “Will the Politics of Moral Hazard Sink Us Again” (Chapter 10, in The Future of Finance, July 2010).  Underlined text indicates links to supplementary material; to see this, please access an electronic version of this document, e.g., at http://BaselineScenario.com, where we also provide daily updates and detailed policy assessments for the global economy.

[2] The current recovery is definitely slower than what followed the severe recessions of 1973-75 and 1981-82.  Based on actual performance so far and projected growth through end of 2011 from a range of forecasters, the recovery of 2009-2011 might prove a little stronger than the recoveries experienced after the mild recessions of 1990-91 and 2001.  See Mike Mussa’s influential work for more discussion (April 2009; April 2010 versions); his latest global GDP forecast is 4.5 percent (using the same definition for global GDP as the IMF).

[3] Details of the advance US GDP estimate for the second quarter of 2010 are from the BEA website.  This estimate is notoriously noisy and prone to revision.

[4] We cover this issue in detail in 13 Bankers.

[5] In his memoir, Hank Paulson makes a statement about the frequency of crises very much along the lines of Mr. Dimon.  Larry Summers, in his 2000 Ely Lecture to the American Economic Association, uses similar language.

[6] See also the May 2010 edition of the IMF’s cross-country fiscal monitor for comparable data from other industrialized countries, http://www.imf.org/external/pubs/ft/fm/2010/fm1001.pdf.  The box on debt dynamics shows that mostly these are due to the recession; fiscal stimulus only accounts for 1/10 of the increase in debt in advanced G20 countries.  Table 4 in that report compares support by the government for the financial sector across leading countries; the US provided more capital injection (as a percent of GDP) but lower guarantees relative to Europe.

[7] For a broader discussion of capital requirements and the state of play in the Basel III negotiations, see https://baselinescenario.com/2010/07/29/required-intellectual-capital/.

[8] The CBO routinely assesses the budget impact of other contingent liabilities, including future health care costs and the likely cost of US commitments to the International Monetary Fund.

[9] See Table 6 in the IMF’s May 2010 Fiscal Monitor for budget deficit financing needs across advanced countries (http://www.imf.org/external/pubs/ft/fm/2010/fm1001.pdf).  The US has relatively short maturity debt (4.4 years by this measure), but it is broadly comparable with other industrialized nations on this and other deficit measures.  Table 11 in the same report provides estimates of effects from raising revenue in various sources across the advanced G20 economies.  Again, the US is in the middle of the pack – there is nothing unusually difficult (on paper) about the adjustment required.

[10] Statistical table 5 in the IMF’s May 2010 Fiscal Monitor has general government revenue as a percent of GDP since 2000 and forecast through 2015.

169 thoughts on “It’s Hard To Take The Fiscal Hawks Seriously: Testimony To The Senate Budget Committee

  1. Sorry, but you guys need to lose the notion (stress ‘notion’) of perpetual growth (stress ‘growth’).

    We’re done with that.

  2. Wall Street’s Big Win

    Aug 04, 2010 – Rolling Stone – excerpts

    “But is the nightmare really over, or is this just another Inception-style trick ending?

    But Dodd-Frank was neither an FDR-style, paradigm-shifting reform, nor a historic assault on free enterprise. What it was, ultimately, was a cop-out, a Band-Aid on a severed artery.

    If it marks the end of anything at all, it represents the end of the best opportunity we had to do something real about the criminal hijacking of America’s financial-services industry. During the yearlong legislative battle that forged this bill, Congress took a long, hard look at the shape of the modern American economy – and then decided that it didn’t have the stones to wipe out our country’s one dependably thriving profit center: theft.

    During an other-wise deathly boring year spent covering this debate, I learned to derive some entertainment from watching politicians scramble to give floor speeches about financial reform without disclosing the fact that they didn’t have the first fuxking clue what a credit-default swap is, or how a derivative works.

    This was certainly true of Democrats, but the Republicans were way, way better at it. Their strategy was brilliant in its simplicity: Don’t even bother trying to figure out the math-y stuff, and instead just blame the entire crisis on government efforts to make homeowners of lazy black people. “Private enterprise mixed with social engineering” was how Sen. Richard Shelby of Alabama put it, with a straight face, not long before the bill passed.

    If the volcker rule was a regulatory Godzilla threatening to stomp out Wall Street’s self-serving investments, the proposal to shut down derivatives was nothing short of a planet-smashing asteroid headed straight at the heart of the financial industry’s most reckless abuses.

    The systematic gutting of both the Lincoln rule and the Volcker rule in the final days before the passage of Dodd-Frank was especially painful, in part, because so many other crucial reforms that would have spoken directly to the Big Fraud had already been whitewashed out of the bill. An amendment mandating the breakup of too-big-to-fail companies got walloped back in May, and Congress even rejected a ban on “naked” credit-default swaps – the financial equivalent of selling somebody a car with crappy brakes and then taking out a life-insurance policy on the driver.

    “The next phase of all this – the regulatory phase – is going to be supertechnical and complex,” says one Senate aide. “It raises questions about how journalists are going to keep the public the slightest bit interested. You might as well just hit the snooze button.”

    Worst of all, some analysts warn that the failure to rein in Wall Street makes another meltdown a near-certainty. “Oh, sure, within a decade,” said Johnson, the MIT economist. “The question: Is it three years or seven years?”

    http://www.rollingstone.com/politics/news/17390/188551?RS_show_page=0

  3. “A top priority should be to preserve and expand the cost-cutting provisions in this year’s Affordable Care Act (ACA).”

    Simon, get real. There are no cost-cutting provisions in the ACA. There are pilot projects, no different from the ones that have been going on and gathering dust for 30 years now. There is funding for comparative effectiveness research–but the funds are controlled by a board with nearly all its seats reserved for representative of the health care industry. There are automatically triggered cuts in Medicare payments–no different from the ones in previously existing law that Congress has routinely rescinded just before they would take effect. I could go on and on.

    At the end of the day, anything in the bill that even hints at cost control has been crafted in a way that more or less guarantees it will be ineffective. It’s all appearance, no substance.

    And, of course, by mandating increases in both private and public expenditures on health care (they call it insurance, but it’s really just pre-paid health care laundered through insurance companies) the ACA pumps more money into the health care bubble–what do you think will be the result? The ACA should be renamed the Health Care and Insurance Industry Bailout Act of 2010. Unlike the financial industry bailout, this one will be ongoing for decades and truly will bankrupt us as a nation.

    Particularly disastrous because, as you so correctly point out, the health care cost explosion is the biggest determinant of our economy’s future.

  4. “The scale and severity of the recent recession was due to the nature of excessive risk-taking at the heart of the world’s financial system”

    Instead of just “risk taking” how about adding fraud?

  5. As long as lobbying interests continue to permeate any dialog openly or behind the scenes with cash on hand to sway votes, this argument may well be metered out this November at the polls. Mr. Kashkari’s statements about entitlements a couple of weeks ago put a face on what is wrong with current dialog.

    The financial industry has spent $251 million on lobbying so far this year as lawmakers hammered out new rules of the road for Wall Street, according to the latest lobbying reports compiled by a watchdog group.

    Money Talks. And money in the hands of the man who is sitting in the offices and standing in the halls of Congress is an effective tool for buying the influence and the laws that you want.

    Political campaign financing reform, including stricter limitation of direct contributions by special interests to targeted lawmakers, is at the heart of it.

    Does the First Amendment cover soft bribery? That is how they will spin it. Goldman Sachs has the right to express its opinion to your congressman, while wrapping it in a thick rolls of hundred dollar bills, charged to expenses, and paid for by you.

    And while it is a nice cushion, $251 million is small potatoes compared to the real payoff in jobs and speaking engagements with huge stipends, consulting fees, and sinecures after leaving office. And that is on top of their fat pensions and cadillac benefits.

    Corporatism is the partnership of big business and government. And in the organizational state, the individual (that’s you Mr. Potato Head) is irrelevant. Except for comic relief, someone to be played for the fool, the emotional plaything of paid pundits and party politics. Someone whom they can whip into a frenzy, who really enjoys the show.

    Yeah, we’ll show those new crooks a thing or two, and vote the old crooks back in this November. Especially the ones that make no bones about being in it for the money and the power, and appeal to the worst in us with stereotypes and caricatures. That will teach Washington something about us.

    You bet it will.

  6. “The veiled warning in this report is that the US faces severe fiscal risks going forward, arising directly from our continued inability to rein in the dangers posed by the financial sector.”

    “our continued inability to rein in the” the crooks who own our politicians and “run the place”.

  7. I don’t like to be redundant but from an earlier post. “Rick Scott, leading Republican candidate for governor of Florida this year, Founder of health care provider Columbia Hospital Corporation was forced out as CEO of Columbia/HCA by his board amid the Medicaid/Medicare fraud investigation, by Scott’s company, which resulted in the company paying $1.7 billion to settle the charges.

  8. “Alternatively, if some tax cuts are extended, there should be provisions to eliminate them automatically when unemployment falls to a preset level.”

    Sounds like another incentive for the powers-that-be to keep unemployment high.

  9. “Yeah, we’ll show those new crooks a thing or two, and vote the old crooks back in this November.”

    Until the people are ready to demonstrate and strike massively the pattern you describe above will never change. It will be old-crooks, new-crooks ad naseum. In fact, its has been for some time now new-crooks, old-crooks ad naseum. Sadly, people give up illusions slowly. It will require significant pain for them to drop this one, yet that motivating pain is enroute and ultimately will be felt. There will then be a peoples’ moment in which real justice for these vermin will be meted out.

  10. “There will then be a peoples’ moment in which real justice for these vermin will be meted out.”

    If history teaches us anything, evil is usually replaced by an even greater one.

  11. Good stuff. I don’t have much to add here, except I super super agree with the last sentence of part B6. You can make capital ratio rules, but if those “assets” which comprise part of the capital ratio is garbage paper, it doesn’t really mean a lot, does it???? (rhetorical question)

    Also Basel 3 is already a big F_cking joke. You know, we have the chronically clueless Geithner trying to convince us the bank stress tests in Europe aren’t equivalent to a high school math test with a 20% curve thrown in for the class idiot, while at the same time Euribor rates are rising—so you figure it out….

  12. Massive Social and Geopolitical Change is Coming

    08/05/2010 – zerohedge.com – excerpt

    “What is happening at the moment on the world stage is that essentially the governments of all major countries on planet earth are on the verge of collapse one way or the other. While there are certainly many differences between the governments of China, Russia and the United States for example, there is one huge similarity.

    They are all highly bureaucratic centrally planned economies. What is so interesting about the present time is that we are witnessing the end of the current monetary and financial system that has dominated the world since 1971. This will also invariably mean that we are about to witness dramatic political and social change in virtually every country on earth.

    The very elite in the United States know this which is why they are using their puppets in D.C. to pass laws that will put the citizens into a neo-feudalistic debt slavery so that they will not revolt once it becomes clear to all that the politicians are a bunch of crooks and scoundrels that have sold them out entirely.

    On a positive note, I think a critical mass has already been achieved in the U.S. and I think D.C. will collapse under its own weight. As I wrote to a small group of friends earlier this week as relates to the fact that a sheriff there stated “Our Own Government Has Become Our Enemy.”:

    http://www.zerohedge.com/article/guest-post-russia-bans-grain-exports-end-game-trade-begins

    commentary

    by RicktheDick
    on Thu, 08/05/2010 – 12:56
    #505030

    “The definition of irony: a group of middle-aged out-of shape guys (in all likelihood) sitting around extolling the virtues of living in a bunker and hoarding gold, guns, and SPAM on a website created by former and current Wall Street traders. And using computers manufactured by the same greedy and evil corporations run by other middle-aged out of shape guys who they profess to hate to do it. “

  13. The Return of the $1,000 Down Mortgage

    Fannie Mae and State Housing Agencies Are Offering Little-Money-Down Mortgages.

    8/5/10 – Washington Post – excerpt

    “Buy new with $1,000 down,” the advertisement says, the words resting atop a trim green clapboard house offset by a bright blue sky. “The time has come. Stop wasting rent check after rent check and start building equity in your own home. And with only $1,000 down, affordable monthly payments and no private mortgage insurance required, the dream is closer than you think.”

    It sounds too good to be true. But it is true. This offer does not come from a subprime lender, looking to reel in thousands of unqualified and ill-advised homebuyers, only to slap them with add-ons, fees and variable rates. It is not a teaser or a trick. The advertisement references a program initiated by the National Council of State Housing Agencies and Fannie Mae, the taxpayer-backed, government-sponsored enterprise that buys up mortgages from lending banks.

    The pilot program is called “Affordable Advantage,” and it has now been adopted by three states — Massachusetts, Wisconsin and Idaho. (Other states, such as Pennsylvania, California and Colorado, have similar state programs.) The initiative is small, reaching just a few hundred people so far. But it is looking to expand. Given the dangers of these types of mortgages and the specter of the housing bubble, where unconventional loans wreaked disaster, it is also raising questions from wary housing experts and legislators.”

    http://washingtonindependent.com/93795/the-return-of-the-1000-down-mortgage

  14. This was certainly true of Democrats, but the Republicans were way, way better at it. Their strategy was brilliant in its simplicity: Don’t even bother trying to figure out the math-y stuff, and instead just blame the entire crisis on government efforts to make homeowners of lazy black people. “Private enterprise mixed with social engineering” was how Sen. Richard Shelby of Alabama put it, with a straight face, not long before the bill passed.

    The Reps are even more brazen than that.

    While it’s a lie that subprime lending in itself is one of the main causes of the crash, nevertheless however true it is, that’s primarily the responsibility of REPUBLICANS.

    It was none other than George Bush in 2005 who ordered Fannie and Freddie to go all in on subprime. Talk about buying at the peak. That was 100% Bush.

    Worst of all, some analysts warn that the failure to rein in Wall Street makes another meltdown a near-certainty. “Oh, sure, within a decade,” said Johnson, the MIT economist. “The question: Is it three years or seven years?”

    The sooner the better. It’s our only chance.

  15. If history teaches anything, it’s that we have to keep trying. Being robbed and raped, only a cowardly slave submits on the ground that “maybe something worse” would come after we destroyed the evil which afflicts us.

    (And it’s of course a lie that evil is usually replaced by a worse one. We’re de facto slaves who have been almost completely politically liquidated, and we’re now being economically liqudated. De jure serfdom looms. A restored feudalism looms before us, as clear as the fires of hell. What could be more evil than that?)

  16. Dear Mr. Johnson,
    I was shocked to hear you on 3 August 2010 talk about Carbon emissions and pricing it.
    Do you have any investment in the CCX in Chicago?
    Do you have any large investment in any company that stands to reap from Cap and Trade Law?
    I assume you do not, however I would rather hear it from you.
    Have I miss read something or completely uninformed on carbon as I could be, why would we do this?

    You have my respect, you have ear, I look forward to your help and answers.

    Regards,

    Jeff Skalla

  17. And it is precisely riff-raff of this type that will be feeling the heat of the peoples’ anger when the time comes for justice. Envision a wholly contrite and tearful Scott after arrest and interrogation blubbering out acknowledgement of his crimes in public proceedings held in some enormous sports stadium. Then we will see what kind of public service
    opportunities should be made available to this slime.

  18. Re: @ Anonymous___Sheriff there stated “Our Own Government Has Become Our Enemy” – as long as (sheriff & dep’s) their on the payroll those guns will be pointed your way…ditto…this goes for the Nat’t Guard (5 Killed in Ohio?)! Simon has stated the problems are manageable. The first step would be having a referendum on every states ballot (ASAP) calling for, “Redistricting becoming Unconstitutional”. This would immediately purge the scum from the system. Ironically…this is that classic case of where actually, “One Size Does Fit All”(Format ID`; Software/Hardware Integrity; Cross Ref. all integral Databases Locked via Duplicity,..etc.)with every known SSA#/DOB/Country Origin,..etc. in the database. It’s already there so no privacy rights will be compromised. PS. It up to the public too find solutions – obviously the gov’t doesn’t want to deal with it…et.el “Immigration”?

  19. Re: @ Jeff Skalla___This is the very question you should ask “Al (The Planet is Melting) Gore? Carbon Emissions are just swaps that have been used since inception to backdoor the system. Nothing new except an increase in premium to be passed on to the unknowing consumer through your fuel-charge.

  20. Good synopsis

    “What it was, ultimately, was a cop-out”

    The Dodd-Frank financial reform required policymakers to determine whether the capital market needed reform by amending the existing deterministic, one-size-fits-all system; or, whether the capital market system was broken and required fundamental structural repair.

    • If the former, what is new or innovative in the 2,000-plus pages of Dodd-Frank?

    • If the latter, which proposals introduce REAL structural change?

    I posited that the solution for Dodd-Frank-type legislation was to provide structural change for the one-size-fits-all deterministic regulatory metrics by segmenting randomness into: predictable (money market investments), probable (positive cash low, earnings-driven, NYSE and NASDAQ issuers that are marked-to-the-market) and uncertain (negative cash low, event-driven issuers that are marked-to-the-model) regimes.

    Dodd-Frank proponents lacked precision of language (such as the conflation of risk and uncertainty) to clearly and concisely conceptualize steps necessary for reform. Either you define your legislation or your opponents will define it for you.

    Furthermore, Dodd-Frank proponents needed an elevator pitch. Too often they substituted the moral imperative of “I’m good, you’re bad” for the merits of the argument. Too often “wordsmithing” was put forth as reform by changing commas into semi-colons. Maybe it was the fundamental lack of knowledge as you noted.

    In any event, it was a blown opportunity.

    Excerpted from: Dodd-Frank: A fine alphabet soup appetizer, but where’s the beef?
    http://readingthemarkets.blogspot.com/2010/07/dodd-frank-fine-alphabet-soup-appetizer.html

  21. One has to wonder if it’s actually productive to speak in complete and intelligible sentences to the crowd in question, but nonetheless, well stated as usual…

  22. @ Ted K

    Good point — “if those “assets” which comprise part of the capital ratio is garbage paper, it doesn’t really mean a lot, does it????”

    If those “garbage assets” have negative cash flow and are valued on a mark-to-model, they can be classified as “uncertain,” and supportive of a key issue of my argument.

    But this is typical boom-bust scenario. Recall the S&L meltdown, where the indeterminate “asset” on the books of many insolvent S&Ls was “regulatory goodwill” – the regulator’s reward for acquiring an even more insolvent thrift. Who could have foreseen the Resolution Trust Corporation’s (RTC) liquidations that occurred when minimum reserve requirements became illusory in a setting where capital consisted of vapor assets?

    Excerpted from: Dodd-Frank: A fine alphabet soup appetizer, but where’s the beef?

    http://readingthemarkets.blogspot.com/2010/07/dodd-frank-fine-alphabet-soup-appetizer.html

  23. One point I would like to make which is certainly related to the fiscal issue. I noticed Ford Motors got something like a $250million in guaranteed loans from the government today specifically for encouraging exports. This is one of President Obama’s better moments, showing he has a few economic marbles rolling around in his head instead of just following Geithner and Summers blindly.

    QE spending is not going to work!!!! Why?? Because QE is the absolute worse type of targeted spending you can do now. You are funneling huge amounts of money to what has been (in at least the last 5 years) the most inefficient sector of our economy—the banking sector. What we need is a Congress which can grow some testicles and over-ride (through rule changes) the obstructionist Republicans’ filibustering. Then we can do targeted spending in obvious future growth areas.

    Also I would like to say, it would be a master stroke of genius to appropriate all VAT revenues to direct payment of the nation debt/deficit. That way you take the Republicans’ budget arguments and throw it right back in their face in the worst (worst read best) way.

  24. Good idea, but to really retire the debt we need VAT to apply to CORPORATE consumption as well. In many states as well as at the federal level the proportion of taxes paid by corporations to that paid by individuals has declined. We should be consistent in our treatment of “persons”.

  25. So what? Whether it’s a cap and trade policy or a straight carbon tax, we consumers will eventually pay. I vote for a carbon tax – less chance for hanky-panky gaming of the system.

  26. Simon, you remind me of why I dislike the Tea Party so much. They are just screamers, not thinkers. I wholeheartedly agree with them that what we have for government now is dysfunctional for the average citizen. I was have been talking with a much younger ex-collegue in the real estate business recently. She has told me of massive changes occurring in subtle areas which show the real weakness in our economy. State and local governments are finding new and innovative ways to penalize entrepreneurs with licensing charges, business entry fees, and all sorts of revenue enhancing gimmicks. Plain and simple, what we need is a flat tax. Perhaps two levels, but probably just one would do. The suggestion has been made for a 20% flat tax with a $60,000 individual taxpayer exemption, and no mortgage deduction. Other countries in Eastern Europe are having great success by going in this direction.

    You have made some great observations, and, as always, don’t mince words. We still have one core problem. Very few elected officials who are interested in the public weal, and no way to get them elected in the days of the Great American Plutocracy. We can look at all kinds of historical examples, and the worst ones look very much like us.

    As a final note, it’s time to dramatically cut our military. We could cut between 60% and 75% of military spending and be just as secure. We don’t have a responsibility for being the world’s policemen. And, with nearly 800 overseas bases, we spend most of our military budget angering the countries where we have located these bases. We an do without spending many billions annually researching a space based ABM (SDI) program, which has yet (in nearly 30 years of research and countless billions spent) to find anything effective, and now we have a treaty which is quickly eliminating many missle based delivery systems. Billions of dollars of the military budget is comprised of scheduled payments to foreign governments to allow us bases in their countries. Why? Because we have a large group of Congress people who are supported by that industry.

    As I constantly say, listen to Larry Lessig. He is the loudest voice for electoral reform. Otherwise, we will get to a revolution, and it won’t be pretty.

  27. Constitutional Convention

    In 2010 Lessig began to organize for a national constitutional convention.[9]

    Lessig, along with Mark McKinnon, wrote the following in an e-mail proposing their idea of a constitutional convention to the public:[10]

    The framers left open a path to amendment that doesn’t require the approval of Congress: a convention. Article V of the Constitution requires Congress to call a convention to propose amendments if 34 state legislatures demand it. Any proposed amendment would then have to be ratified by both houses of 38 state legislatures (three-fourths of the states). This entails 76 separate votes in the affirmative by two houses of 38 state legislatures. Easy to do? No. But possible? Certainly, yes. There hasn’t been a time when there has been such anger and frustration directed at our nation’s capitol. There hasn’t been a moment when the opportunity to organize to build a movement among the states has been as real. The beauty of a convention is that it would provide a forum of possibility for conservative Tea Party types who might want an amendment calling for a balanced budget, or a line-item veto for the president as well as progressives who would like to amend the constitution to make it possible to enact meaningful campaign finance reform. The only requirement is that two-thirds of the states apply, and then begins the drama of an unscripted national convention to debate questions of fundamental law. It would be a grand circus of democracy at its best.

    http://en.wikipedia.org/wiki/Lawrence_Lessig

  28. “As a final note, it’s time to dramatically cut our military. We could cut between 60% and 75% of military spending and be just as secure.”

    Yes it is. But such a noble objective will never be realized what with the control the munitions and Israel lobbies exert over the operation of our government. Trust me, we’ll be in a war with Iran in a year’s time thanks to the warmongering, threats and intimidation of AIPAC, the ADL, the neo-con foundations and Gary Bauer’s Dispensational Nazis. A cut in military spending while the Congressional tail is being wagged by the Likudist dog is simply vain. Netanyahu was right to say that the American Congress is easily controlled. He ought to know, his friends here have paid enough for them.

  29. The Clash of Two Worlds

    The Battle between Knowledge and Ignorance

    Click to access The-Clash-of-Two-Worlds-2-7-10.pdf

    “No matter what culture we look at and no matter what time frame in history, there is always the Clash of Two Worlds between knowledge and ignorance. Where this sinister view toward knowledge has come I do not know. Yet one thing for certain, it has been going on for a very long time.”(P.15)

    “Yet with all of these advancements through science, for some strange reason, when it comes to economics, we are very much still in the Dark Ages. I personally believe we are captive of our own silly delusions. We are sitting in some corner with a pointed hat, clapping and laughing with perfect delight basking in our own applause.

    What we should have done in this crisis was to simply freeze all CDS transactions. Once you pause the system, we could have then made the proper decisions. The refusal to do that and just to hand out 100% pay-outs to those who did not even form anything within the economy but speculators, wiped out public confidence and did not prevent the contagion on Wall Street from infecting Main Street. Just sometimes, you have to just hit that pause button. What we now have is a massive acceleration in public debt that has increased the time table for sheer economic disaster. The year 2012 will in fact now be a year that history will indeed remember.

    Just as neuclear power plants are carefully controlled by computers to which we entrust our lives and the lives of our children, is it not time to do the same in economics? Is the foundation of society anything less vital to our society?

    It is time to stop storming the castle and burning the libraries. It is time to build our future and just may be we can make it to that next level in the game. We have to try to do it, if not for ourselves, then for our children. It’s Just Time!”. (P.19)

    * Recommended reading by Micheal Krieger @

    http://www.zerohedge.com/article/michael-krieger-last-dance

  30. “In the end the Party would announce that two and two made five, and you would have to believe it. It was inevitable that they should make that claim sooner or later: the logic of their position demanded it. Not merely the validity of experience, but the very existence of external reality was tacitly denied by their philosophy. The heresy of heresies was common sense. And what was terrifying was not that they would kill you for thinking otherwise, but that they might be right. For, after all how do we know that two and two make four? Or that the force of gravity works? Or that the past is unchangeable? If both the past and the external world exist only in the mind, and if the mind itself is controllable – what then?”

    – Winston Smith in George Orwell’s 1984

    http://www.zerohedge.com/article/insights-americas-disneyland-mike-krieger-and-our-neo-feudalistic-gulag-casino-economy

  31. “He ought to know, his friends here have paid enough for them.”

    There are now more people and paper-outfits involved in making sure people stay UNEMPLOYED

    than there are “full-time” employees at global corporations.

    Perfect description of “law” makers in Congress –

    “Contingent workforce management solution.”

    Want to call UNEMPLOYED people all day and “soften” them for accepting their paycheck to be cut in half? No problem in getting a “permit” to become a such a noble, sustainable “business”.

    Want to re-tool an engine to get better mileage?

    OMG – that’s a declaration of war…no “permit” for you…

    We get to choose which HISTORY we want to repeat.

    Don’t you have to ask the question – “what is WRONG with their MINDS that they keep choosing the same path to self-annihilation BELIEVING it is self-preservation?

    More and more often, I keep imagining a world where the neurotic, greedy “humanist” stops playing “god” with people’s lives. But you have to be smart enough to realize your are not smart enough to play god with people’s lives…so who’s stupid now?

  32. “Reshaping our health care system to focus on successful outcomes and quality of life, rather than on employing the newest and most expensive technology, is a challenge for which no one yet has a proven solution.” To this end, see Atul Gawande’s article, “Letting Go,” in the 8/2/10 issue of the New Yorker.

  33. “More and more often, I keep imagining a world where the neurotic, greedy “humanist” stops playing “god” with people’s lives. But you have to be smart enough to realize your are not smart enough to play god with people’s lives…so who’s stupid now?”

    That’s called humility, Annie, and that’s a virtue that went out when the science replaced Christianity as the religion of choice in the Western World. Now we have the nieve arrogance of a Stephen Hawking and the frontal lobotomies of modern psychiatry to help us.

  34. Re: @ SARose___I too am for Green Technology – have been for years, but not for the reasons espoused by the Gore’s, Obama’s, Clinton’s, Bush’s, JPMC’s, etc., of the “New World Order”! The small stipend the Taxpayers/Gov’t realize is pathetic when this government gives 16x that away as foreign aid? Our leaders “All” have laid aside the “Golden Tree”…tasting “The Oligarch Forbidden Fruit”…and obviously it was good? Ref: http://www.globalresearch.ca/index.php?context=va&aid=16449

  35. The best scientists also exhibit humility, as they have directly contemplated the complexity and power of nature and humanity’s transient role within it. It is the mediocre scientists and the opportunistic merchants and politicos who substitute hubris for wisdom, playing upon the natural human predisposition to the short term and the easy explanation.
    Please don’t blame our condition on a lack of Christianity. All major world religions have at their core a belief in compassion, humility, and sacrifice, though many have forgotten it in the regrettably eternal quest for power and control. The real need is for us to embrace the complexity of the world and replace the pat answers of corrupted faith and sloppy science with pragmatism and true compassion.

  36. Dear Prof. Johnson,

    You wrote:

    “There is a serious sovereign debt crisis in Europe.”

    This is exactly wrong. There is a speculative attack against sovereign debt of some countries in Europe, using credit default swaps, one of the should-be-banned financial instruments, combined with the well-known problems of the economic straitjacket called the Euro.

    Amusingly, you then wrote:

    “there is a shift to fiscal austerity across that continent[Europe]…”

    But as a deficit hawk yourself this should please you, shouldn’t it?

    To confound misery with further confusion, you then write:

    “there is no reason for panic or precipitate action now[in regard to fiscal austerity].”

    How odd that you should write this. All you’ve been talking about since January of this year is the fiscal deficit problem and how it must be dealt with right away. But now it seems you think that maybe it doesn’t need to be dealt with right away.
    What a shame that you weren’t saying this back in January of this year. Instead you gave political cover to the deficit hawks by bleating on about the deficit.
    But it’s good to see that you’ve changed your position on this.

    Also, I see you’ve dropped the TBTF concern for the most part, which is good since you never really answered Paul Krugman’s arguments demonstrating that TBTF is not a real problem. Of course, your endless nattering on about it obscured the real issues and made policymakers jobs that much more difficult.

    So keep at it Mr. Johnson, there’s hope for you yet!

    Sincerely,
    DV

  37. oregano,

    “The best scientists also exhibit humility …”

    Sorry, oregano, but haven’t noticed much of a coupling of modern science with any authentic sense of limitation and that largely owing to its refusal to have a grounding in anything outside of itself. A simple recognition of one’s obvious limits is hardly virtue, paramecia achieve that much. Its where one goes with that knowledge and science has gone absolutely nowhere.

    “Please don’t blame our condition on a lack of Christianity …”

    Now the reference here was to the Western World where science has had its most profound development. In such circumstances would it have been credible for me to have blamed our condition on a paucity of Zoroastrianism?

  38. Mr. Johnson,
    Carbon TAX, have I missed something is there proof that co2 emissions is harming the earth/ Is this about money?
    There seems much disagreement, and we have such revered scientists who were exposed for what kind of character they have and what they were doing when they thought no one was looking. They were busy making many misrepresentations.
    Mr. Johnson, why has there not been any kind of criminal prosecutions for the 08-09 financial fleecing?
    How could anyone vote for a bill that allows the SEC to escape providing information under the FOIA?
    Is the SEC private?
    We see again in this rotten bill ambition is never enough you must have wisdom, knowledge, and character.

  39. This country, with its institutions, belongs to the people who inhabit it. Whenever they shall grow weary of the existing Government, they can exercise their constitutional right of amending it or their revolutionary right to dismember or overthrow it……

    A.Lincoln

  40. Re: @ oregano____Copyright 1989, by Lloyd Shearer – Quotes…”A Guide To A Happy Life”: #1/9 No one will ever get out of this world alive. Resolve therefore to maintain a reasonable sense of values. #2/9 *Take care of yourself.**Good health is everyone’s major source of wealth.***Without it, happiness is almost impossible. #3/9 Resolve to be cheerful and helpful. People will repay you in kind. #4/9 Avoid zealots. They are generally (LB?) vengeful. #5/9 Resolve to listen more and talk less. No one ever learns anything by talking. #6/9 Be chary of giving advice. Wise men don’t need it and fools won’t heed it. #7/9 Resolve to be tender with the young, compassionate with the aged, sympathetic with the striving and tolerant of the weak and the wrong. Sometime in life you will have been all of these. #9/9 ****Do not equate money with success.*****There are many successful moneymakers who are miserable failures as human beings.******What counts most about success is how a person achieves it.- end quotes LS! Quote Unknown Author:___”The length of your education is less important than its breadth, and the length of your life is less important than its deapth. End Quote Unknown___finally Quoting Comic Strip – “Calvin and Hobbs…Let’s say life is this square of the sidwalk. We’re born at this crack and we die at that crack.- – Now we find oueselves inside the square, and in the process of walking out of it. Suddenly we realize our time here is fleeting.- – Is our quick experience here pointless? Does anything we say or do in here really matter? Have we done anything important? Have we made the most of these precious few footsteps?? End/End PS. These quotes I have mentioned are only useful to me…therefore I had them framed in a 8×10 and placed on my dresser for my daily thoughts. Please note…everyone is uniquely different but it is humanity that bonds us all as one. Thanks oregano ;-))

  41. Entitlements and taxes are only half of the picture. Why do you and others keep forgetting the huge military budget as if it is untouchable and everyone thinks it is a good idea?

  42. You need a Declaration of Independence 2010

    BEFORE

    you start spinning out Amendments, like duh.

    “We the People” will let you know when we need the Ivy League’s rich man’s idiot sons and daughters to speak for their “class”.

    :-))

  43. Re: @ Deja-Vu___Meteorologist rides the cross-currents into the neo-economic tsunami headwinds and survives? Yes…indeed I reference Simon. #1) The euro is currently at ~134, whereas six weeks prior, stood at the lowly ~117 – a ~15% +/+ increase. #2) Fiscal Austerity, ie.) “Radicalized”… shuts down the consumer, and in this scenario it is the worst of two evils (the tide does change the variable does it not?). #3) Masochist “Not”, is he when it comes to FinReg when the bar has been set so high for a deficit hawk (quite literally into the stratosphere) by the current adminisration { et.el.) can’t beat a dead horse to death, now can you?}. #4) TBTF is simply a waste of energy when splitting the atom is actually easier than splitting the congress. Finally #5) Krugman’s thesis was a failed attempt of pacifying the left – and just that. Your Welcome

  44. Lavrenti, you miss my greater point – humility is not reserved to the religious, but it is often lacking in those who profess it. So to is it lacking in many those whose profess sciencism, humanism, etc. If the role of religion – or should I say faith, because religion is the application of human bureaucratic structures to the very personal experience of faith – is in guiding us to be compassionate towards one another in all ways, then it has a vital role to play. So too can science guide us to be more compassionate, but its methods are more pragmatic. Unfortunately, the message and methods of both can be corrupted by unskillful and opportunistic practitioners.
    However, I take your further point that you were speaking in a Western context. But my point still stands – even for Zoroastrians. ssssssssss

  45. Deja-Vu wrote:

    “I have no idea what you’re trying to say.”

    If you did, then I’d be concerned. :-)

  46. Rene quoted:

    “There is always the Clash of Two Worlds between knowledge and ignorance… sometimes, you have to just hit that pause button. ”

    Agreed. The answer is different for each person – one size does not fit all.

  47. Oh, I quite readily grasped your “greater point”, oregano, but I’m not at all sure that you’ve grasped mine. Humility hardly consists in the simple acknowledgement that there are limits to human reason and that we need to tread carefully in the presence of the unknown. That’s not humility, that’s just plain old common sense and there’s nothing particularly virtuous about that, eh? Rather, an authentic humility is characterized by a certain recognition of context, a maturity to which science never quite obtains. Science and its method are entirely self-referential, bounded. What may seem to be humility in its practitioners is more precisely a kind of acquiescence, that’s all. Science isn’t and can’t be made “compassionate” by “compassionate practitioners”, it is intrinsically sterile and objectifying. Not so faith.

  48. George Vockroth wrote”

    “Reshaping our health care system to focus on successful outcomes and quality of life, rather than on employing the newest and most expensive technology..”

    Milwaukee Teachers Fight For Viagra Drug Coverage

    (AP) – 12 hours ago – excerpt

    MADISON, Wis. — “With the district in a financial crisis and hundreds of its members facing layoffs, the Milwaukee teachers union is taking a peculiar stand: fighting to get its taxpayer-funded Viagra back.The filing is the latest in a two-year legal campaign in which the union has argued, so far unsuccessfully, that the board’s policy of excluding erectile dysfunction drugs discriminates against male employees.

    You’ve got to be kidding me,” said Fields, a Milwaukee Democrat. “The fact that is the point of contention is kind of frightening. What are our priorities? I’m all for love and peace. But almost 1 million dollars? And you go to court over this issue?”

    By 2004, the number of claimants receiving prescriptions skyrocketed (their words not mine) to more than 1,000 per year, costing the district $207,000. ”

    http://tinyurl.com/2fwodmu

  49. “We are here to make limbo tolerable, to ferry wounded souls across the river of dread to the point where hope is dimly visible, and to stop the boat, shove them in the water and make them swim.”

  50. Knowledge and Ignorance

    “Just as nuclear power plants are carefully controlled by computers to which we entrust our lives and the lives of our children, is it not time to do the same in economics? …?”

    I’m afraid we already have.

    Market Data Firm Spots the Tracks of Bizarre Robot Traders

    Aug 4 – The Atlantic – excerpts

    “….thanks to Nanex, the data services firm… In the aftermath of the May 6 “flash crash,” which saw the Dow plunge nearly 1,000 points in just a few minutes, the company spent weeks digging into their market recordings, replaying the day’s trades and trying to understand what happened. Most stock charts show, at best, detail down to the one-minute scale, but Nanex’s data shows much finer slices of time. The company’s software engineer Jeffrey Donovan stared and stared at the data. He began to think that he could see odd patterns emerge from the numbers. He had a hunch that if he plotted the action around a stock sequentially at the millisecond range, he’d find something. When he tried it, he was blown away by the pattern. He called it “The Knife.”

    But already since the May event, Nanex’s monitoring turned up another potentially disastrous situation. On July 16 in a quiet hour before the market opened, suddenly they saw a huge spike in bandwidth. When they looked at the data, they found that 84,000 quotes for each of 300 stocks had been made in under 20 seconds.

    “This all happened pre-market when volume is low, but if this kind of burst had come in at a time when we were getting hit hardest, I guarantee it would have caused delays in the [central quotation system],” Donovan said. That, in turn, could have become one of those dominoes that always seem to present themselves whenever there is a catastrophic failure of a complex system.

    “They are moving the high-frequency services as close to the exchanges as possible because even the speed of light matters,” in such a competitive market, said Stanford finance professor Peter Hansen.”

    http://tinyurl.com/3y5bgrb

  51. Financial Activities Tax / Carbon Pricing

    Both taxes will shape behaviors but if the issue is use of carbon or size of financial institutions, why not legislate unless the purpose is to increase government revenues.

    To that end those taxes will increase costs, costs that will ultimately be passed on to some consumers (with margin)in the form of fees or higher prices.

    Your dismissal of austerity is much like the underwater homeowner who facing foreclosure spends Saturday at Best Buy loading up on the latest technology, a fraction of what he owes on his house so why not spend it he/she reasons.

  52. Nicely put, Lavrenti. I agree with your point so stated. The Dawkins and Hitchens of the world only anger me with their swagger. The scientists that I most admire possess a humility that arises from some sort of faith. It just may not be a Christian one, or a Zoroastrian one, or even involve a personified God. And the faith leaders that I admire most possess a flexibility that arises from an understanding that the human capacity for reason and discovery of how the world works – and for the many ways that faith can be expressed – is a part of the grand design.
    For me, the form of humility that Bhuddism practices is most appealing.

  53. How do you know what the underwater homeowner is doing with “credit”?

    Whatever happened to “mind your own business”?

  54. @ Lavrenti Beria

    On a much more mundane, base, and self-centered level-

    Do you apply “limits to human reason and that we need to tread carefully in the presence of the unknown” to capital market governance to segment the legacy one-size-fits-all deterministic system into predictable, probable, and uncertain (unknown as to cash flow and valuation)?

  55. As with everything, it all depends on what you BELIEVE in your own head that you made up and how off-kilter those beliefs are in relation to LIFE MAINTENANCE.

    When you go from Pharisaism to Atheism and cherry-pick “data” from a men-who-stare-at-goats perspective about what is possible

    you are hardly being consistent with the exacting precision that “science” demands to keep that plane in the air, for instance.

    There ARE limits to what is possible. Urban legend has it that all the decades worth of data compiled – globally and by independent teams who did not know that someone else was also thinking about it –

    regarding the “god particle” and “gene therapy”

    were and are being dismissed because “someone” (god?) believes that the people who did that work were just not smart enough.

    I think it is very possible to have a belief system that you made up in your own head,

    had the $$$, or whatever magic juju others believed you had

    unleashed your private madness into the world as an “economy”

    and now BELIEVE that you have the luxury to sit around, scratch your a–, and wonder how to hide the programed thieving better next time.

    In short, Brother Beria, there is no capacity for “humility” to be even an idea in such buzybuzybuzy minds…

    So let’s stick to making sure SCIENCE can still be about the POSSIBILITY for “pain and suffering is NOT an option”….

    Politics, religion, and $$$ obviously are operating on the fumes of the pollution left behind by made-up belief systems that allowed the criminals to play god with people’s lives (typical psycho behaviour – don’t you guys ever watch a detective show?!)

    :-)

  56. It’s a wee bit disturbing that the leader of a nuclear power was seeing a shrink who offed himself and left a note with alarming details about the patient he was seeing for 9 years. The warnings from Castro should not be so quickly dismissed as attention grabs.

    http://www.rebelnews.org/opinion/middle-east/246653-psychiatrist-of-israeli-prime-minister-benjamin-netanyahu-commits-suicide

    http://www.globalcrisisnews.com/middle-east/former-cia-chief-predicts-iran-strike/id=1765/

  57. “it represents the end of the best opportunity we had to do something real about the criminal hijacking of America’s financial-services industry.”

    We should drop the fiction that such an opportunity ever existed. When a nonentity like Scott Brown can hold up modest reform, there’s no chance for “something real.”

    This isn’t a matter of who has cojones and who doesn’t. The legislative system is broken; as a result, the opportunity for “something real” depends on a national political unity that doesn’t exist.

    The structure of the United States Senate allows 41 senators representing less than 11% of the population to derail legislation. It allows 60 senators representing less than 25% of the population to pass any bill they want. That’s what’s real, and until it’s fixed, progressives will have to settle for incremental gains and partial repairs on just about any issue we can think of.

  58. Mr. Johnson wrote:

    “By all accounts, the internationally coordinated process of raising capital standards – and thus creating greater shareholder buffers against losses – is not making much progress…..”

    $49 -Trillion in Deravitives – Goldman

    08/07/2010 – Tyler Durden – Zerohedge

    “As part of its most recent FCIC grilling, David Viniar left the political theater a month ago with a homework assignment to disclose all of the firm’s derivative profits, as well as provide granular detail on its derivative trades. Today, courtesy of a memo from Goldman intercepted by the WSJ, we now know that derivative trades accounted for between 25% and 35% of 2009 revenue. “Based on the percentages provided by Goldman, such businesses generated $11.3 billion to $15.9 billion of the company’s $45.17 billion in net revenue for 2009.”

    As a reminder, the Office of the Currency Comptroller noted (table 2) Goldman had $49 trillion in total derivatives as of Q1.

    However, the bulk of the profit comes from trading credit derivatives where Goldman, post the assimilation of Bear and Lehman into the collective, is now virtually an undisputed trading powerhouse, and due to the OTC nature of the product allowing firms to set bids and asks as is, as long as liquidity in cash products continues to decline, Goldman will continue to dominate not only the most profitable vertical of derivative trading, but CDS will continue to generate roughly a third of the firm’s profits, for both flow and prop.”

    http://tinyurl.com/366p9g9

  59. Re: @ Anonymous___A chess match is predictably finite – being that the linear playing field has limited visability – throw in time, and the game adds another dimension – but it is only when you introduce the factor of change as a synbiotic variable you have the reality of cubism – a multi-dimensional field of infinite deterministic probabilities – thusly…the humbled wiseman knows that change is the only constant in the universe?___#1) Quote: T.S.Eliot (1888-1965)…What we call the beginning is often the end, And to make an end is to make a beginning. The end is where we start from…Fini___ #2) Quote: Sidney Webb (Baron Passfield 1859-1947)…First let me insist on what our opponents habitually ignore, and what they seem intellectually incapable of understanding, namely the inevitable gradualness of our scheme of change…Fini___Finally in closing …metaphors are nice when explaining intangibles…and intangibles are easily explained through the osmosis of time sequenced with tomorrow.;-)) PS. I hope this is confusing enough?

  60. @ earle, florida “Change has Changed”

    See: “We’re All Screwed” Book Review: Brenda Jubin, Ph.D Thursday, October 8, 2009

    http://readingthemarkets.blogspot.com/search?updated-max=2009-10-15T06%3A23%3A00-04%3A00&max-results=7
    We’re All Screwed Review!

    Central to Boyko’s segmentation is the accepted distinction between risk and uncertainty. Risk is quantifiable and has foreseeable consequences, uncertainty is indeterminate and has unforeseeable consequences. But Boyko goes further and, within the context of his argument, defines change as the movement in either direction between risk and uncertainty. “When uncertainty becomes risk, that’s learning or innovation; you have greater control over your underlying economic environment. On the other hand, when risk becomes uncertainty, there is either confusion (too much information), or ambiguity (too little information). Should the uncertainty become unstable . . . you have chaos.” (p. 61)

    This relationship of change between risk and uncertainty is complicated by the fact that change has changed. “In the Industrial Age, change was binary—yes or no. A linear queuing theory drove change, and this theory had a first-move advantage. In the Information Age . . . change is now governed by wave and complexity theories. And unlike the Industrial Age, where usage depreciates an asset’s value, in the Information Age usage appreciates the value of intellectual property.” (p. 62)

    In advance of his thesis Boyko draws on familiar literature, but he offers a unique perspective akin to a 3_D Rubik’s cube regulatory model (p. 140)

  61. In the video game room (yes, kitchy retro pacman era designer decorating )

    at the local Bergen County NJ diner,

    I’ve retained my status as highest scorer:

    165,983,452,397,211,787,145,198,124,413,217

    alien craft shot down across all quadrants of the Milky Way…most are extra bonus points when you also blow up their planet with the voordumb ray which was developed in 2013 AD, Earth, by inwestors using Gold Man’s Sacks CDSs.

  62. Mr. Johnson wrote:

    “But there is no magical threshold that suddenly makes a country a poor credit risk; Japan’s net government debt relative to its economy is roughly at Greek levels, yet Japan can still borrow money cheaply…”

  63. Re: @ Rickk___Disclaimer: Ford never took a penny from the government…GM, and Chrysler (private entity?)came with hats out begging. China is now the 2nd largest (GDP) economy in the world surpassing Japan late 2009. According to M3 statistics…americans were actually discouraged, “Not to Save” by Greespan. Why? He ignored M3 knowing the return on savings was miniscule too investing in equities/bonds via the general public. In all honesty, american’s weren’t spend happy as most political pundids would perscribe…but quite the (looking in all the wrong places?) contrary. Lastly …our dependence on hydrocarbons could end tomorrow retrofitting all farm/industrial equiptment with propane. ref: http://www.wisegeek.com/what-is-the-difference-between-propane-and-natural-gas.htm

  64. Stephen,

    Economics is a human science and as with any human science as soon as one finds oneself under the spell of its method, one finds oneself subject to its limitations. And that means accepting both that there are “limits to human reason and that we need to tread carefully in the presence of the unknown”. Just don’t envision such an acceptance as virtue, it isn’t.

  65. Annie,

    “In short, Brother Beria, there is no capacity for ‘humility’ to be even an idea in such buzybuzybuzy minds”.

    Very largely, that’s my point, Annie. An arrogant poseur like the physicist, Stephen Hawkin, makes a imbecile of himself with his monsterous over-reach. For Hawkins and those like him there is no context for science, not even truth. To them, science IS the context. In such people, one sees without difficulty the meaning of Genesis 3:3-5:

    “3 But of the fruit of the tree which is in the midst of the garden, God hath said, Ye shall not eat of it, neither shall ye touch it, lest ye die.

    “4 And the serpent said unto the woman, Ye shall not surely die:

    “5 For God doth know that in the day ye eat thereof, then your eyes shall be opened, and ye shall be as gods, knowing good and evil.”

    For science and reason to be valid they must be referred – consecrated as it were – to truth. They cannot see themselves as its master, almost as its author, with it submitting out of some craven necessity to their machinations. Herein lies the most fundamental flaw in humankind. It makes for banksters, warmongers, and, yes, many Dr. Frankensteins.

  66. Can it be done without a blood bath? Isn’t this what’s happening aroung the world?

  67. earle, florida,

    I appreciate the stream of consciousness. Please break down the dialectic, into smaller more easily digestible chunks, one issue at a time. You offer insightful perspectives.

    “Dialectic (also called dialectics or the dialectical method) is a method of argument, which has been central to both Indic and Western philosophy since ancient times.

    The word “dialectic” originates in Ancient Greece, and was made popular by Plato’s Socratic dialogues.”

    http://en.wikipedia.org/wiki/Dialectic

  68. Word Ted K!

    “No need to panic”?

    The Fed is printing untold amounts of money, (cash, this paper that supposedly holds some value), out of the myst, and funneling the bulk of that cash electronically and illicitly into the offshore accounts of select predatorclass oligarchs, and Olympians.

    Our politicians are craven spaniels, bowing to the will of the predatorclass oligarchs and Olympians.

    Nothing has changed.

    The predatorclass oligarchs and Olympians are sociopaths, delirious with wanton greed, and the insatiable thirst for blood, control, and domination.

    There is indeed a dire need to panic! The predatorclass is seeking, and succeeding in enslaving or eradicating the rest of us.

    The criminal PONZI schemes conjured by the US Government, and the predatorclass finance oligarchs are evil structures and mechanics that intentionally harm and injure the people, and the nation for the exclusive and singular benefit of select predatorclass oligarchs and Olympians.

    Our entire finance sector, and particularly the Olympians managing the oligarchs are a “den of vipers and thieves”!!!
    2010 Amerika’s political system is a kleptocracy, wherein thefew ruthlessly savage, pillage, rob, and persecute themany.

    Amerika dominates the world with our terrible swift swords, not our business acumen, or moral fortitude.

    That thing they call the Constitution is reduced to a tattered, torn, and effectively meaningless “goddam piece of paper”

    The socalled judicial system ruthlessly prosecutes and punishes the people, – while cloaking, ignoring, or excusing the wanton crimes of the predatorclass.

    There is indeed a dire need to panic! The predatorclass is seeking, and succeeding in enslaving or eradicating the poor and middleclass.

    Amerika’s socalled government today, and the Amerikan government we will bequeath our children tomorrow is drowning in debt, piloted and controlled by criminals, and crime syndicates; lawless, supremist, ruthless, toxic, kleptocratic, and owned and controlled by a sociopathic predatorclass den of vipers and thieves.

    There is a megastorm on the horizon.

  69. Underwater Homeowners

    08/07/10 – AOL

    “By the end of the first quarter of 2010, the number of mortgaged residential properties with negative equity had declined slightly to 11.2 million, down from 11.3 million at the end of 2009, according to a report issued by real estate analytics firm CoreLogic.

    The bad news: Those 11.2 million loans make up roughly 24% of all U.S. mortgages. Add the 2.3 million borrowers who are close to slipping underwater (those with less than 5% equity), and the numbers rise to 13.5 million — 28% of mortgages.

    http://srph.it/b2zIRM

  70. Re: @ Rickk___What I failed to mention in the piece above – Japan: “America’s Lost decade” ie.) Federal Reserve, and Chairman Alan Greespan annouced in late 2005 that the M3 money supply was being shut down from the public eyes – since 2006 the M3 money supply is now no longer available. Now…back to Japan – their biggest obstacle is limited space…that is being an island where their sole dependence relies upon export. This, I believe is why Japan can borrow at will, whereas the Greeks, and others have no industrial base other than 50 year old retiree’s. It’s like comparing an apple too an olive? PS. China will lend money – steal IP – re-engineer – swollow Japan, as they will Taiwan eventually, and the U.S. won’t be able to raise a finger!

  71. “The criminal PONZI schemes conjured by the US Government, and the predatorclass finance oligarchs are evil structures and mechanics that intentionally harm and injure the people, and the nation for the exclusive and singular benefit of select predatorclass oligarchs and Olympians.”

    So getting back to the Washington Post reporting on The Patriot Act and Homeland Insecurity from a couple of weeks ago – what the h—l are all THOSE people doing to provide SECURITY to 90% of USA citizens who have just been robbed of SS funds, retirement SAVINGS, any and all property equity, “identity”, JOBS JOBS JOBS, health care, etc.

    Seriously – are all those chaotic new-fangled, high tech “security” personnel just the shape of the new-age mercenaries getting RICH off the “wars”?

    People are just sharing one-liners in passing to each other everywhere in the “public” squares as casually as if passing on info on the traffic jam they are in –

    all quips in passing are on the same page – a Declaration of Independence 2010

    and a LEGAL hit of the “stop” button BY THE PEOPLE on the current shenanigans of a “government” that does NOT protect the individual from force and fraud but rather has become the SOURCE of force and fraud against the individual ever since The Patriot Act.

    The IMF wants in on Social Security – that’s patently ABSURD!

    Who are these people and WHY are they not “contained” by Homeland Security?

    There’s your “megastorm” – The Patriot Act serving global plutocrats in emptying out all the $$$$ ONE PERSON AT A TIME from USA born and bred citizens.

    Start telling the truth amongst yourselves – EVERYONE WAS ROBBED IN THE SAME WAY – listen to one another!

  72. hermanas,

    I think it can. As a matter of fact, I would see a collapse of the kind that happened in Eastern Europe in the late 1980s as being far more likely than any blood-bath. But even in that case, for the sake of justice, one cannot rule out the detention, interrogation, and public trial of those in the ruling class. The integrity of the new structures that come about will depend very largely on their being made impervious to the influence of these criminals or others like them. It is of the essence to insure that they never again get their hands on governance.

  73. America Goes Dark

    August 09, 2010 – Paul Krugman – excerpts

    “The consequences of “three decades of antigovernment rhetoric” are evident:

    America Goes Dark, by Paul Krugman, Commentary, NY Times: The lights are going out all over America — literally. Colorado Springs has made headlines with its desperate attempt to save money by turning off a third of its streetlights, but similar things are either happening or being contemplated across the nation, from Philadelphia to Fresno.

    Meanwhile, a country that once amazed the world with its visionary investments in transportation, from the Erie Canal to the Interstate Highway System, is now in the process of unpaving itself: in a number of states, local governments are breaking up roads they can no longer afford to maintain, and returning them to gravel.

    And a nation that once prized education … is now cutting back. Teachers are being laid off; programs are being canceled… And all signs point to even more cuts ahead. …

    And what about the economy’s future? Everything we know about economic growth says that a well-educated population and high-quality infrastructure are crucial. Emerging nations are making huge efforts to upgrade their roads, their ports and their schools. Yet in America we’re going backward.

    How did we get to this point? It’s the logical consequence of three decades of antigovernment rhetoric, rhetoric that has convinced many voters that a dollar collected in taxes is always a dollar wasted, that the public sector can’t do anything right…

    So the end result of the long campaign against government is that we’ve taken a disastrously wrong turn. America is now on the unlit, unpaved road to nowhere.”

    http://tinyurl.com/24lfnur

  74. 02/03/2010 – denverpost.com

    COLORADO SPRINGS — “This tax-averse city is about to learn what it looks and feels like when budget cuts slash services most Americans consider part of the urban fabric.

    More than a third of the streetlights in Colorado Springs will go dark Monday. The police helicopters are for sale on the Internet. The city is dumping firefighting jobs, a vice team, burglary investigators, beat cops — dozens of police and fire positions will go unfilled….

    The parks department removed trash cans last week, replacing them with signs urging users to pack out their own litter….

    “I guess we’re going to find out what the tolerance level is for people,” said businessman Chuck Fowler, who is helping lead a private task force brainstorming for city budget fixes. “It’s a new day.”

    “How are people supposed to live? We’re not a ‘Mayberry R.F.D.’ anymore,” said Addy Hansen, a criminal justice student who has spoken out about safety cuts. “We’re the second-largest city, and growing, in Colorado. We’re in trouble. We’re in big trouble.”

    http://www.denverpost.com/news/ci_14303473

  75. Annie, you got me to thinking that The Patriot Act and “Homeland Security” are just Orwellian double speak. Their lack of interest in how international bankers are screwing everyone makes me think “Oligarch Security”.

  76. oregano,

    I see that Hawkins is now concerning himself with human survival and the interstellar migration of the species:

    http://www.myfoxnepa.com/dpps/news/stephen-hawking-abandon-the-earth-dpgoha-20100809-fc_9088678

    One wonders how an allegedly great mind like Hawkins gets himself emmeshed in the most mind-numbingly pedestrian question of the age, global warming. I suspect its the same kind of out-sized ego that makes him so contemptuous of the faith of more ordinary folks. I mean they pay him for pronuncements of this kind?

  77. The biggest problem is that under-educated folks like simon johnson are put in this capacity of testifying to the senate committee. This is precisely the reason regulators pass bad laws. For example, johnson states,

    ” 2) A series of efforts are underway to change the behavior of major global banks and to prevent them from loading up on risks during the next cycle. These are unlikely to succeed. As Jamie Dimon, CEO of JP Morgan Chase remarked in January 2010, “[a financial crisis is] the type of thing that happens every five, ten, seven, years” – and another crisis within that time frame should not surprise us”

    For some unknown reason, Johnson is already attributing the next crisis to excessive risk taking at banks. He is simply lying.

    The 2001 financial crisis was caused by the proliferation of dot com technology firms. Not banks. The most recent crisis was caused by the greedy American public who borrowed excessively looking to flip homes and make a quick buck.

    again, johnson’s under-education and propensity to lie is clear.

  78. Lavrenti,
    I do believe you enjoy a good argument. On the subject of Dr. Hawking, global warming, and interstellar migration – I haven’t followed Dr. Hawking’s comments for some time and don’t really care. He long since has lost relevance for me though his earlier contributions to physics and cosmology were seminal.
    All scientists AND clerics are human, and subject to human limitations, including ego, insecurity, and far more than the 7 enumerated deadly sins.
    Once dogma and ego replace methodical inquiry and self-reflection in any human system, be it scientific, philosophical, or belief, the system and the individual lose their effectiveness.
    To the extent that the world’s scientists continue to raise their voices warning us of our overreach (our tendency to act in dominion of this world rather than in stewardship), and presenting evidence in support of their concern, I’m all for it.

  79. Country Goes Under
    By Andrew J. Bacevich, Metropolitan Books
    Posted on July 29, 2010
    http://www.alternet.org/story/147675/
    The following is excerpted from WASHINGTON RULES: America’s Path To Permanent War by Andrew J. Bacevich, published this month by Metropolitan Books, an imprint of Henry Holt and Company, LLC. Copyright (c) 2010

    “… — summoning Americans to take on the responsibilities of an active and engaged citizenship — has become especially acute. For me personally, education became possible twenty years ago at the Brandenburg Gate when I contemplated the disparity between what I had been conditioned to believe and what I was actually witnessing. The dissonance was too great to ignore. The ensuing process of confronting illusions (including my own) and of dissecting the contradictions besetting U.S. policy was sometimes painful and never easy”
    “Americans today must reckon with a contradiction of gaping proportions. Promising prosperity and peace, the Washington rules are propelling the United States toward insolvency and perpetual war. Over the horizon a shipwreck of epic proportions awaits. To acknowledge the danger we face is to make learning — and perhaps even a course change — possible. To willfully ignore the danger is to become complicit in the destruction of what most Americans profess to hold dear. We, too, must choose.”

    Andrew J. Bacevich, a professor of history and international relations at Boston University, retired from the U.S. Army with the rank of colonel.

  80. “… our tendency to act in dominion of this world rather than in stewardship …”

    A important distinction and one that virtually defines how humankind in the West has seen itself in relation to the world. Its basis in theology – and you may already know this – is to be found in the different treatments given to the question “Why did God Incarnate” by Thomas Aquinas on the one hand and John Duns Scotus on the other. One of the most important contributions of twentieth century theology to the history of Christian thought is to be seen in its decided preference for the Scotian point of view, a vision which sees humanity together with Christ at the center of creation rather than at its apex, peering downward.

    One wonders what vision grounds Hawkin’s rather trite and knee-jerk ecologism except some poorly articulated construct arising purely from within himself. But clumsy fumbling like Hawkin’s here is typically what happens when exalted practitioners of science venture off into philosophy and the giving of homilies. I disagree. I think the cause of the environment deserves better spokesmen than that.

  81. Intern wrote:

    “The 2001 financial crisis was caused by the proliferation of dot com technology firms. Not banks. The most recent crisis was caused by the greedy American public who borrowed excessively looking to flip homes and make a quick buck.”

    Again, the Intern’s under-education and propensity to lie is clear.

    “All you need in this life is ignorance and confidence; then success is sure.”

    Mark Twain (1835 – 1910), Letter to Mrs Foote, Dec. 2, 1887

  82. Inflation Or Deflation? “Yes”

    08/09/2010 – Zero Hedge – excerpts

    “I am absolutely in the camp that we are seeing inflation in some areas and deflation in others. The continuous commodity index is absolutely screaming inflation at this point in time, but at the same time we are seeing houses decline in price, we are seeing a number of other things decline which I think is what the Fed is most concerned about at this point in time. I think we are going to see both.” So stagflation?

    “England is already in stagflation and we are dangerously close to it ourselves. We are experiencing both inflation and deflation, and that is squeezing workers even harder than any other condition you can experience because wages are stagnant while the price of goods and services rises” and the biggest asset of the working American, his home keeps declining.

    It will be up to the Fed to push the needle definitively into either side of the inflation/deflation debate tomorrow, or the whispers over the imminent arrival of stagflation will just keep getting louder.”

    http://www.zerohedge.com/

  83. The Jobs Emergency

    August 9, 2010 03:53 PM – Robert Reich – excerpt

    “Washington’s latest answer to the worst jobs crisis since the Great Depression is $26 billion in aid to state and local governments. This still leaves the states and locales more than $62 billion in the hole this fiscal year.

    And because every state except Vermont has to balance its budget, the likely result is 600,000 to 700,000 more state and local jobs vanishing over the next 12 months (including private contractors and other businesses that depend on state and local governments) according to the Center on Budget and Policy Priorities.

    Say goodbye to even more of the teachers, firefighters, sanitary workers, and police officers we depend on.”

    http://www.huffingtonpost.com/robert-reich/the-jobs-emergency_b_676067.html

  84. @ intern

    “borrowed excessively looking to flip homes and make a quick buck”

    Your economic comments are descriptive and lack causality since people usually over-borrow at the end of a boom-bust cycle (see: Minsky Moment).

    “We’re All Screwed” http://www.traderspress.com/detail.php?PKey=671
    Argues that the subprime crash was the result of the combination of three conflation errors:”

    1. Renters equated with owners—where no money down, liar loans enable renters to appropriate property rights,

    2.Indeterminate uncertainty equated with determinate risk to frustrate market’s price discovery mechanism, and

    3.Rule-writing one-size-fits-all regulation equated with governance.

    When two dissimilar categories are treated as though they were similar, error is likely to follow.

    Regarding “johnson’s under-education and propensity to lie” it his blog and he can lie if he wants to, lie if he wants to — my apologies to Leslie Gore.

    What “is clear” is ad hominem attacks are a “clear” sign that the attacker is out of intellectual bullets.

  85. Perhaps I should have said, “and effectively presenting evidence in support of their concern…”
    “…the Scotian point of view, a vision which sees humanity together with Christ at the center of creation rather than at its apex, peering downward.”: if your synopsis of Aquinas’ and Scotus’ views is precise, I take issue with the idea in its language that humanity stands at the apex of creation. Enhumbling? No. Rather, humanity is one small part of that creation that happens to have developed the capacity for self-awareness and to think outside the bounds of the immediate present. Fat lot of good it has done us of late. The late Stephen Jay Gould, in “Full House”, offers a more realistic and yes, humble view of humanity’s place in creation – not at the apex of a directed progression, but rather at the edge of a distribution generated by the randomness of evolution and the presence of a hard lower limit to the size of living creatures. In billions of years of creation, the most successful and populous creature is has always been and still is the bacterium. The natural laws by which creation operates may have been supernaturally written, but us as its result was not foreordained. We can just as easily disappear tomorrow. Even Bhuddism considers humanity special because humans are self-aware; hard to be more humble than a good Bhuddist.
    I enjoyed this discussion. Shall we move on to the next post of Mssrs. Johnson and Kwak?

  86. Rise Of The Stock Market Machines – Part 2

    08/09/2010 20:30 -0500 – Zerohedge – Tyler Durden – excerpts

    “And so it continues: since we first posted Nanex’ report on quote stuffing two months ago, and the follow-up analysis, the firm’s images of visualizable HFT algorithmic “crop circles” have appeared everywhere, from the pages of Huffington Post to The Atlantic.

    Which is terrific, as it further raises public awareness of the fact that no matter what one does, the market is now merely a computerized playground in which human traders have no chance of even breaking even in the long run, as the adversary uses consistently illegal means (intentional bid stuffing) to extract every last penny from whoever is left trading.

    In order to keep the public’s, and the SEC’s ADD-addled attention on this matter of major significance, we present the latest patterns of illegal computerized quote stuffing as further glaring evidence that the regulators have given up trying to restore any sort of credibility in the market (and people wonder why ICI reports 13 consecutive weeks of mutual funds outflows).

    Our only hope is that someone will be clever enough to reverse engineer the pattern generators in these algos, and to punish the HFT operators who day after day leave their fingerprints all over the biggest crime in capital market history with complete impunity.”

    http://tinyurl.com/3ymxsfl

  87. oregano,

    “… if your synopsis of Aquinas’ and Scotus’ views is precise, I take issue with the idea in its language that humanity stands at the apex of creation …”

    As I do. Without getting into an exhaustive discussion of the two points of view, their premises and their logic, let it suffice to say that the Scotian view is considerable more compelling. It provides a context for a single-minded and consistent vision of human service whereas the position of Aquinas is frequently distorted into a justification for what amounts to environmental exploitation.

    “Shall we move on to the next post of Mssrs. Johnson and Kwak?”

    For God’s sake, man, don’t let me wear you out. :-)

  88. Ah, I misconstrued your synopsis, but my We need to goad Mssrs. J and K to post something new.

  89. Sorry, slippery fingers. I misconstrued your synopsis to refer to Scotus instead of Aquinas. My comments still stand for either man, but Scotus is definitely more enlightened. And besides, M & K haven’t posted anything new, so I figure that we need to give them the chance…Cheers!

  90. “If history teaches us anything, evil is usually replaced by an even greater one.”

    That’s crazy talk. If that were true, everyone on Earth would be enslaved under the thumb of a murderous despot.

  91. “And besides, M & K haven’t posted anything new, so I figure that we need to give them the chance…Cheers!”

    Trust me, we’re not standing in the way of Johnson or Quack posting. Its just that they’re posting once ever other leap year these days. :-)

  92. The lies are conjured and bruted by the over camp, Simon J Needs an Internship.

    We have inflation because the hobgobllins in the Fed are simply printing money, out of the myst, and pouring those pieces of paper which supposedly hold some unknown unknown value into the offshore accounts of select predatorclass oligarchs and Olympians.

    We have deflation because very few crumbs are falling of the richmans table, and the poor and middleclass are by wrenched by massive losses of wealth, income, job security, access to decent healthcare, education, and lastly faith and hope. The poor and middleclass who would actually spend money, are pinching every penny to survive, or saving for the next rainy day.

    The “doomloop”, the financial megastorm, whose haunting shadow darkens the horizon is certain because NOTHING HAS CHANGED! Nor can there be any meaningful CHANGE, until and unless the predatorclass, by whatever means necessary is put back in the keep, and the predatorclass criminals and den of vipers and thieves in the finance sector join the growing ranks of the unemployed, and many of them justifiably sent to jail.

    As for religious blabber. All the worlds religions are economic political entities selling a commodity they call religion for profit and political power. There ain’t no religion in this world. Look around if you dare, and show me where religion has contributed positively to humanities development or evolution in the last 30 years.

    Wingnuts and the fascists in the gop who ghoulishly exploit thebabyjesus, and proclaim god talks to them and tells them to do this or that pernicious act, are the most unjesuslike creates on earth. Shame! Have any of these idiot read the bible. Yet the bible is a work of fiction written, edited, mangled, perverted, and rewritten by men, – not godz, or god. All the worlds institutional religious orders and evil; drenched in oceans of innocent blood, insatiable in their shared lust for wealth, control, and dominance, and responsible in someway for most of humanities divisions and divisiveness.

    Keep religion in you silly opulent churches, and allow science to explore and quantify the mysteries and miracles of creation.

    I do not hold to any book as the word of god, – what sane creature would, but I offer these Matthew 19:23-24, Mark 10:24-25 and Luke 18:24-25 quotes from a book of history and fiction, majik and fraud, comedy and tragedy.

    It is wingnuts and fascists in redneck Amerika, and the predatorclass they somnabulantly worship that speak with forked tongues and spew a relentless chari vari of LIES, – not Simon Johnson.

  93. commentary by Cognitive Dissonance
    on Tue, 08/10/2010 – 07:42
    #512268

    “Everything is coming together for a reversal here and now, meaning over the next few days. Let’s see if the PPT can hold back the flood waters trying to break over the banks of the river. I doubt it. More like they’ll be able to throw up a few road blocks to slow the rush from time to time but it’s becoming clear to even the brain dead that the roller coaster has reached it’s peak and is headed back down.

    Whee……. Look mom, no hands.”

    http://www.zerohedge.com/article/not-everybody-pool-yet

  94. Morgan Stanley’s $11 Billion Makes Chicago Taxpayers Cry

    Aug 9, 2010 – Bloomberg

    “Chicago drivers will pay a Morgan Stanley-led partnership at least $11.6 billion to park at city meters over the next 75 years, 10 times what Mayor Richard Daley got when he leased the system to investors in 2008.

    Morgan Stanley, Abu Dhabi Investment Authority and Allianz Capital Partners may earn a profit of $9.58 billion before interest, taxes and depreciation, according to documents for a $500 million private note sale by their Chicago Parking Meters LLC venture. That is equivalent to 80 cents per dollar of projected revenue. Standard Parking Corp., which runs 30,000 spaces at the city’s O’Hare and Midway airports, earned 4.84 cents on that basis last year, data compiled by Bloomberg show.

    The deal illustrates how Wall Street banks, recipients of more than $300 billion in taxpayer bailouts in the worst credit collapse since the Great Depression, are profiting from helping states and cities close record recession-induced deficits by selling bonds and leasing public properties.

    Chicago gave up billions of dollars in revenue when it announced in 2008 that it leased Morgan Stanley its 36,000 parking meters, the third- largest U.S. system, for $1.15 billion to balance its budget, said Alderman Scott Waguespack.”

    http://tinyurl.com/25dnv6a

  95. Elizabeth Warren Uncovered What the Govt. Did to ‘Rescue’ AIG, and It Ain’t Pretty

    The government’s $182 billion bailout of insurance giant AIG should be seen as the Rosetta Stone for understanding the financial crisis and its costly aftermath. READ MORE

    William Greider / The Nation

    (read as one page) : http://www.alternet.org/story/147788/elizabeth_warren_uncovered_what_the_govt._did_to_%27rescue%27_aig%2C_and_it_ain%27t_pretty?page=entire

  96. http://www.alternet.org/story/147788/elizabeth_warren_uncovered_what_the_govt._did_to_%27rescue%27_aig%2C_and_it_ain%27t_pretty?page=entire

    “Three governmental investigative bodies have now pored through the AIG wreckage and turned up disturbing facts—the House Committee on Oversight and Reform; the Financial Crisis Inquiry Commission, which will make its report at year’s end; and the Congressional Oversight Panel (COP), which issued its report on AIG in June.

    The five-member COP, chaired by Harvard professor Elizabeth Warren, has produced the most devastating and comprehensive account so far. Unanimously adopted by its bipartisan members, it provides alarming insights that should be fodder for the larger debate many citizens long to hear—why Washington rushed to forgive the very interests that produced this mess, while innocent others were made to suffer the consequences. The Congressional panel’s critique helps explain why bankers and their Washington allies do not want Elizabeth Warren to chair the new Consumer Financial Protection Bureau.”

  97. @ Bruce E. Woych

    Regulation is a negatively defined business “Thou shall not …except for” the key is to get a comparative advantage exemption. So AIG settles, in most cases neither admits nor denies, pays millions as the cost of doing business, establishes settled case law that makes the federalis happy. Most importantly AIG then petitions the regulators for a narrowly defined exemption that protects their comparative advantage for conducting a specific type of business.

    Any wonder why regulated industries become oligopolies that favor other oligopolies, or why competitive markets are difficult (as opposed to undesirable) to establish via regulation, or why SMEs are presently having difficulty getting capital to compete and create jobs? Regulating problems have the unintended consequence of creating barriers to entry that financial oligarchs are very skilled at manipulating. Note that the center piece of Dodd-Frank (or Didn’t Frank as it is now being called), “systemic risk” has not been defined.

    Ms. Warren is very accomplished, but so were many of others in her position. To reverse this trend requires changing the terms of engagement from 2-D to 3-D metrics. It is why I believe, one-size-fits-all rule-writing is toxic.

    Stephen A. Boyko

    Author of “We’re All Screwed: How Toxic Regulation Will Crush the Free Market System” and a series of articles on capital market governance.

    http://www.traderspress.com/detail.php?PKey=671

  98. Steve, I’m a little confused by your categories, what would the wheat crop failure in Russia by drought or Australia by locusts be?

  99. Steve, I had a question and inserted in the wrong place below,(intern; “Honni soit qui mal y pense.”) But, I’m a little confused by your categories, what would the wheat crop failure in Russia by drought or Australia by locusts be?

  100. @hermans

    I argue that the inability to hedge, was a major subprime flaw. Investments that lack cash flow and are valued on a mark-to-model basis are uncertain. Credit default swaps (CDSs) are uncertain derivatives that required constant hedging by dealers. This activity resulted in cost with very little benefit.

    Difficulties arise when “risk” is “conflated” with uncertainty under deterministic, one-size-fits-all governance metrics that frustrate the market’s price discovery function. We can insure (put options) and hedge (Ford and Exxon) risk. We can insure (natural disaster insurance- similar to what you cite) uncertainty, but we cannot hedge (Ford and pork bellies) uncertainty. If we cannot hedge, we cannot regulate risk and uncertainty in a one-size-fits-all regime due to non-correlative information.

    It is similar to having a single thermostat regulate temperature for H2O conditions of ice, water, and steam.

    See: Dodd-Frank: A fine alphabet soup appetizer, but where’s the beef?

    http://readingthemarkets.blogspot.com/2010/07/dodd-frank-fine-alphabet-soup-appetizer.html

  101. San Francisco Fed Sees Significant Chance of Recession in Next Two Years

    Monday, 09 Aug 2010 – MoneyNews.com

    “There is a “significant” chance the U.S. economy will slip back into recession in the next two years although a reversal is unlikely in the next few months, researchers at the San Francisco Federal Reserve Bank said on Monday.

    The probability of another recession during the next 18 to 24 months is higher than that of expansion, researchers said in the latest issue of the regional Fed bank’s Economic Letter.”

    http://tinyurl.com/32728lf

  102. hard to take seriously the idea of “FISCAL HAWKS” as there may be 1 or 2 people who might fit that category, but the “GUYZ” who are looking at these issues and calling themselves “FISCAL HAWKS” still have NOT a CLUE as to what is required to stop this “Ship of State” from consuming its young, old, and families in support of the “NOMINEES of WEALTH”.

    Probably the right thing to do is individual action. You can see by the pix of the VELOCITY of MONEY published by the ST.Louis FED, that we are undergoing a classic transition to a slower, lower level of economic activity.
    Link to Chart and Back-Up docs->http://denaliguidesummit.blogspot.com/
    Trust yourself, do you own DD, the “HAWKS” wont do

  103. Gosh how long have we had these committee? These testimonies? These reports? These concerns? What has been the outcome of these meetings? More debt, more deficit and more problems.

    Nothing has changed. I was watching the 1992 Presidential debate and all I heard was the fiscal crisis. Wowza! 18 years later, $14 trillion debt. Ross Perot was the only one with common sense.

    Anyway, nowadays we just accept the debt because know nothing is going to be changed and we allow the corporatist buffoons take all our money and bail out their buddies.

  104. Re: @ TonyForesta___”wisdom is fabricated by our crative imaginations – when man believes that it is he himself that is of his own creation – the spontaneity of a incipient recalcitrant innate consciousness makes for a nascent reality – thus isolating spirituality with a unnatuaral inculation of selfish indulgence bifurcating the very genesis – thusly, defeated remnants of consequential subliminal turmoil erodes the very abstract objectivity of creativity – the birthing confluence…the very foundation in which atrothy enhances negativity begetting failure – the conceptual marriage of imaginary shift-shaping your inner spirit ability to mutate, and overcome adversity in the tangible realm -unthinkable for those of the thought-masters in the modern world who believe the manifestation,and internecine of religion has become passe having rationalized spiritual exisistence to a subculture of compartmentalized society so be it – be forewarned – once predicated by the inception of our cllective consciousness, the once almighty “GOD” has become a tool of eugenics, a variable by-product of the “Darwinism Doctrine Equation” – the masters of modern day societies are once again deities – nothing has changed since recorded time – there is however one constant, that being mankinds unique innerfaith replinishing the soul’s immortality incapable of death as the folly spoken of, and by the atheist, and agnostic’s dismissing religions timeless miracles of intangible spiritual energy – does one roll the dice wishing all as trivial too dismiss eternal bliss as heresay?”

  105. John McCloy wrote:

    on Tue, 08/10/2010
    #513096

    “… It is irrelevant when you pull the stimulus away ….whenever that moment is, the crash comes, only it is compounded because ….interventions only distort temporarily and are more harmful because they lull people into a sense of security.

    Our entire financial markets are now completely reliant upon the Federal Reserve, and at the markets will need low rates from here on out and annual MBS purchase just to seem “healthy”. And this is how a free market vanishes. Quasi-Fed and Quasi-Markets. In the interim gold telling the truth and eventually even the Federal chairman will not possess the tools needed to move the markets.

    The drugs have a diminishing effect on the crackhead and he requires more frequent and stronger doses to feel the same euphoria.”

    http://tinyurl.com/38u549v

  106. Re: @ Stephen A. Boyko___Indeed,..the very fulcrum of sequipedalian protracted exaggerations foments the “Shout” of absurity, giving life to an allegorical inquisition often abated? :-)

  107. Re: @ Anonymous___We must be careful not to get in a “Time-Parallel” regarding FDR’s depression/wartime devaluing the dollar, and demanding all United States citizens turn over their precious gold to the governments coffers? Let us not forget the past, and then ~25+ years “Tricky Dick” switches to the fiat system?

  108. Today’s Dose Of “Crop Circle” Quote Stuffing Algos

    08/10/2010

    “…nobody is left to trade except the Fed, the Primary Dealers and a few semi-sentient computers (and yes, be very afraid of Flash Crash like volatility….”

  109. N.Y. Judge Grants Bail For Angry Flight Attendant

    Updated 5h 13m ago – Associated Press – excerpt

    NEW YORK — ” A flight attendant accused of cursing out a passenger on an airplane passenger-address system, grabbing some beer from the galley and exiting on an emergency slide was suspended Tuesday. The attendant’s lawyer said a rule-breaking passenger provoked him.

    Steven Slater wore a slight smile Tuesday as he was led into a Queens courtroom to be arraigned on charges of criminal mischief, reckless endangerment and trespassing. The judge set his bail at $2,500, but it wasn’t immediately clear when Slater might be able to post the money.

    JetBlue Airways removed him from duty pending the investigation; the airline declined to comment on the specifics of the flight from Pittsburgh to Kennedy Airport.

    Police and prosecutors said Slater, a 38-year-old airline industry veteran, lost his temper Monday afternoon after a dispute with a passenger, then fled the parked jet by deploying the emergency chute and walking across the tarmac to an unlocked door that led to the street.

    At his arraignment, defense attorney Howard Turman said Slater was under stress because his mother has lung cancer.

    Afterward, he provided reporters with a different account of what happened aboard the aircraft than the version authorities initially offered.”

    http://www.usatoday.com/money/industries/travel/2010-08-10-jetblue-attendant-bail_N.htm

    http://en.wikipedia.org/wiki/Déjà_vu

  110. “Comedian George Carlin would often say, on stage, that he was experiencing “vuja de,” which he would then explain was the phenomenon of feeling like none of this has ever happened before, and just like that, it’s gone.”

  111. “Quantitative Neutrality”

    8/10/2010 06:14:00 PM – by CalculatedRisk – excerpt

    “The NY Fed will announce the size of the September purchases tomorrow and that will give an idea of how much the Fed expected the outright holdings to fall. The recent increase in refinance activity might have accelerated the process.”

    http://www.calculatedriskblog.com/

  112. Thank God FDR did, as the people with the gold were close to dissolving the United States and creating the plutocratic dictatorship right on the spot then.

    It is the sad secret many don’t want to admit.

  113. Please, the FED hasn’t printed a thing and won’t print a thing. Everything they do dies. Because the banks are involvent, everything they recieve dies.

    When are you fools going to figure it out. I am amazed how well the trick has worked and kept working while Americans have rebuilt their savings.

    If Big Capital starts spending, so will jobs increase, small business(where they get their business) demand increase and so forth. It is not hard people. A liquidation won’t work. The MNC’s will just shut down go into their gated properties and wait out the storm while Rome(United States burns). You whine about bailouts and stuff, but the cost of liquidation would far outrun it in terms of cost.

    But the real pleasures of liquidation is the stupid American peoples turnaround toward politics. The feelings of betrayal as their entire life savings are destroyed when the banks die, when their businesses go bellyup as all production ceases. Internally, it would mean the end of America. Oh, the hatred that can create will foster a true uprising against the Merchant caste.

    But how far down the road will that go, to the political actors of the creditors finally win over the government and make the liquidation a reality? My children shall have fun.

  114. I should have paid closer attention to the “marketing” of “banks” in the past 30 years.

    It seems like as soon as I opened a personal savings bank account,

    BELIEVING the sell that the bank will PROTECT my “small fortune” of pennies (customer service from another era was RESPECTFUL)

    as much as it protects the personal bank account of one with a larger fortune

    the very existence of that savings account unleashed some kind of collective madness of avarice! It took a while, but the banksters never gave up in emptying out my little fortune.

    So if banks aren’t protecting the INDIVIDUAL PERSON’S hard earned wealth but rather are TRANSFERRING it – why would “liquidating” them be such a horror?

    Isn’t the LOVE of money the source of all evil in the world?

    Stop playing god with people’s lives might be a good place to start with the banks and religion.

    USA rules of “government” – “We the People”.

    PHYSICS – One might even say it’s how GOD “feels” about the material world :-)

    Sun continue to rise in the East. And “man” would never create a flower out of atoms…

    In passing a humorous and practical suggestion for the situation – “we’ll build a SECRET White House and as soon as it is ready and manned, we’ll fire the other White House…” :-)

    My recommendation is to build a WALL around D.C. and turn it into an “institution” – an “asylum” – where people can live in their “perception is reality” world without actually needing to react with the “reality” of We The People.

    Funny how no one seems to mind anymore that “trust” is gone…

  115. http://www.pbs.org/wgbh/pages/frontline/warning/view/#morelink
    “In The Warning, veteran FRONTLINE producer Michael Kirk unearths the hidden history of the nation’s worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.”
    “…Greenspan, Rubin and Summers ultimately prevailed on Congress to stop Born and limit future regulation of derivatives. “Born faced a formidable struggle pushing for regulation at a time when the stock market was booming,” Kirk says. “Alan Greenspan was the maestro, and both parties in Washington were united in a belief that the markets would take care of themselves.”

  116. http://seekingalpha.com/article/145100-regulatory-capture-and-obama-s-policy#comment-560670

    http://www.google.com/search?hl=en&source=hp&ie=ISO-8859-1&q=CHURCH+COMMITTEE&btnG=Google+Search

    http://www.pbs.org/moyers/journal/10262007/profile2.html

    http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=433%3Aus-bank-fraud-systemic-and-intentional-william-black&catid=53%3Afeatured&Itemid=102

    http://www.pbs.org/moyers/journal/04032009/watch.html

    http://www.informationclearinghouse.info/article3308.htm

    https://www.web-purchases.com/SVSfusebox/WSVSJ447/landing.html

    http://www.naomiklein.org/main?page=4

    http://homepage.newschool.edu/het//schools/apologist.htm

    http://homepage.newschool.edu/het//schools/chicago.htm
    http://en.wikipedia.org/wiki/Bootleggers_and_Baptists

    http://en.wikipedia.org/wiki/Category:Supranational_banks

    Try these for a full perspective, I had more but someone in this blog system apparently refused to post it all. I have a comment on the top article concerning “regulatory capture” which is still applicable to this article and reformer propaganda. It seems tha Enron is a distant history and much of the “baseline” is merely just a “bottomline” without a conscience. Lip service to education but no real open information flow. It mimics “free” market vs open market rhetoric. And the term “REFORM” has no fixed meaning. It was used all over the world to destroy democratic processes of participating in full spectrum economies. Follow the money and see the same names and faces with their ugly logic:

    Devastating “Free Market” Reforms Imposed on Serbia
    By Gregory Elich
    URL of this article: http://www.globalresearch.ca/index.php?context=va&aid=15849

    From SourceWatch http://www.sourcewatch.org/index.php?title=Bechtel

    http://en.wikipedia.org/wiki/Samba_Financial_Group

    http://en.wikipedia.org/wiki/Kingdom_Holding_Company

    http://en.wikipedia.org/wiki/Blackstone_Group

    http://aolsearcht11.search.aol.com/aol/search?s_it=topsearchbox.search&q=George+Bush+e-Government
    http://www.tarpley.net/bush2.htm

  117. @ Bruce E. Woych

    I saw the PBS piece on Brooksley Born. As someone who has argued at various regulatory venues for more than 5 years that the legacy one-size-fits-all, deterministic regulation needs to be segmented into predictable, probable, and uncertain regimes, I find what Ms. Born was able to take on to be quite admirable. Moreover, her ability to be professional when I know she wanted to scream and slap some of the regulatory suits is a teastimony to her character.

  118. I just re-read this column and recommend all doing that, like a good book. My question is how does the concentrating of wealth effect market motions? Also I’ld like to see a graph of U.S. military spending vrs. world and U.S. GDP vrs world. It’s gone like 30%- 30% to 50%- 25% in twenty years. That should present a time line to work with.

  119. Is This Finally The Economic Collapse?

    August 11, 2010: 2:07 PM ET – Fortune – excerpts

    “Markets trade on expectations. Yesterday’s zig-zag in the S&P 500 was unlike most sleepy August trading days in America. That’s because the ‘government is good’ crowd leaked word that this second round of “quantitative easing,” known as QE2, was coming, and that Ben Bernanke was going to respond to our buy-and-hope begging. (The first round of quantitative easing was the Fed’s unprecedented purchase of agency debt to prop up the housing market, along with credit facilities for big banks, which began in 2008 and ended earlier this year.)

    So now what?

    With 40.8 million Americans on food stamps (record high) and 45% of the unemployed having been seeking employment for 27 weeks or more (record high), what’s left if (or when) QE2 doesn’t kick start GDP growth? Should we start begging for QE3? Should we cancel the bomb of the National Association of Realtors’ existing home sales report, scheduled for public release on August 24th?

    Or should we bite the bullet and accept that current economic policy dictates 0% returns-on-savings, even as Washington continues to lever-up our future to the point of economic collapse?

    Lest our doom and gloom seem built entirely on technical measurements, what they boil down to is actually quite simple — an idea about our country which dates back to 1835. Alexis De Tocqueville, author of Democracy in America, which was published that year, seemed to warn of this day when he wrote:

    “The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.”

    http://tinyurl.com/28momvd

  120. Re: @ Rickk___ Recently C-Span aired a program hosted by Paul Solomon (7/9/10) titled “Aspen Ideas Festival”…Jobs & US. Economy. The four panelist present were as follows (R-L?) Mr. Thomas Donohue…the Pres. & CEO U.S. Chamber of Commerce; Mr. Jeffrey Pfeffer*… Stanford Business School of Economic Organization Behavior (Professor 30 yrs.); Ms. Hilda Solis…U.S. Labor Secretary, and Mr Richard Trumka…Pres. AFL-CIO. The one point I thought worth mentioning was when Professor Pfeffer was at a business convention – this is the best I can quote: “Aerican Business has gotten the US Labor force so far down on the “Real Wage Scale” that the laborers in Mexico Auto Manufacturing Plants are making more than their American Counterparts ~$14/Hr…and boasted with such hubris it had turned his stomack” PS. Please …let me remind you this was off my head the exact quote…but the storyline is quite similar. (The Atlantic Institute)

  121. http://philsbackupsite.wordpress.com/2010/08/08/weekend-reading-the-crisis-of-middle-class-america/

    “Nowadays in America,” says the Times, ”you have a smaller chance of swapping your lower income bracket for a higher one than in almost any other developed economy – even Britain on some measures. To invert the classic Horatio Alger stories, in today’s America if you are born in rags, you are likelier to stay in rags than in almost any corner of old Europe. Combine those two deep-seated trends with a third – steeply rising inequality – and you get the slow-burning crisis of American capitalism. It is one thing to suffer grinding income stagnation. It is another to realise that you have a diminishing likelihood of escaping it – particularly when the fortunate few living across the proverbial tracks seem more pampered each time you catch a glimpse.”

  122. http://www.nakedcapitalism.com/2010/08/guest-post-strip-mining-the-u-s-economy.html

    “The logic chain goes something like this:

    * The spigot of cheap money from the Fed buoys the fortunes of U.S. corporations.
    * Investors are happy to lend to blue chip borrowers, but not to small businesses.
    * Public companies keep profits up by ruthlessly slashing costs (i.e. jobs).

    Wall Street then cheers the numbers as three self-reinforcing trends are sustained:

    1. Strength begets strength on the bottom up outlook for public companies.
    2. Weakness begets weakness as American jobs are “strip mined” for profit.
    3. The Fed’s easy money stance is sustained by persistent economic malaise.”

  123. Goldman Goes Goo-Goo For Gold: “Gold Market Poised For A Rally As US Real Rates Head Lower”

    08/11/2010 – Zerohedge.com – Tyler Durden – excerpt

    ” Goldman dedicates 9 pages to a regime change in which it goes openly bullish on gold. The report is attached, which we present without commentary but as always, if there is one flashing red light saying the peak price for any asset has been hit, it is a Strong Buy signal by Goldman. The report will likely result in a brief pop in spot over the next 24 hours as the idiot money rushes into the latest Goldman trap. Alas, it also means that GS is now offloading. Be very wary of market dynamics over the next month.”

    ” Our US economics team also expects renewed quantitative easing measures by the US Federal Reserve in late 2010/early 2011….”

    http://tinyurl.com/35o53hy

  124. I Paint What I See
    — by E.B. White

    “‘What do you paint, when you paint on a wall?’
    Said John D.’s grandson Nelson.
    ‘Do you paint just anything there at all?
    ‘Will there be any doves, or a tree in fall?
    ‘Or a hunting scene, like an English hall?’

    ‘I paint what I see,’ said Rivera.

    ‘What are the colors you use when you paint?’
    Said John D.’s grandson Nelson.
    ‘Do you use any red in the beard of a saint?
    ‘If you do, is it terribly red, or faint?
    ‘Do you use any blue? Is it Prussian?’

    ‘I paint what I paint,’ said Rivera.

    ‘Whose is that head that I see on the wall?’
    Said John D.’s grandson Nelson.
    ‘Is it anyone’s head whom we know, at all?
    ‘A Rensselaer, or a Saltonstall?
    ‘Is it Franklin D.? Is it Mordaunt Hall?
    Or is it the head of a Russian?

    ‘I paint what I think,’ said Rivera.

    ‘I paint what I paint, I paint what I see,
    ‘I paint what I think,’ said Rivera,
    ‘And the thing that is dearest in life to me
    ‘In a bourgeois hall is Integrity;
    ‘However . . .
    ‘I’ll take out a couple of people drinkin’
    ‘And put in a picture of Abraham Lincoln;
    ‘I could even give you McCormick’s reaper
    ‘And still not make my art much cheaper.
    ‘But the head of Lenin has got to stay
    ‘Or my friends will give the bird today,
    ‘The bird, the bird, forever.’

    ‘It’s not good taste in a man like me,’
    Said John D.’s grandson Neslon,
    ‘To question an artist’s integrity
    ‘Or mention a practical thing like a fee,
    ‘But I know what I like to a large degree,
    ‘Though art I hate to hamper;
    ‘For twenty-one thousand conservative bucks
    ‘You painted a radical. I say shucks,
    ‘I never could rent the offices—–
    ‘The capitalistic offices.
    ‘For this, as you know, is a public hall
    ‘And people want doves, or a tree in hall
    ‘And though your art I dislike to hamper,
    ‘I owe a little to God and Gramper,
    ‘And after all,
    ‘It’s my wall . . .’

    ‘We’ll see if it is,’ said Rivera.

  125. Re: @ Anonymous___The wealthy have always lived off the dividend yielding equities – ironically investing in dividend yield equities for the retail investor is a wash…or at best a hard fall, period! I’ve studied this phenomenon, or convincing argument for years – what happens is your dividend paying equity gets a haircut of 20%-40% in value, and the dividend yield also gets flattened…so your well thought out plan gets slammed into a wall on a two way street. The NY Stock Exchange is a misnomer…and has been for half a century. The euphoric cry from the financial community that a rising tide (stock market) raises all boats (consumers, and american business? Not true…for these banksters, and Financial Markets could just as well take up shop in Liberia – for all they invest in today is off-shore. Fact: the U.S. employed more electronic/programming engineers in 1979 than they do today, actually that goes for our entire indusrial/high tech space! Fasinating…but the real road for recovery…the barometer of our very success as a nation is too buy american made – create indigenous mutual funds that invest wholly in strickly american made products, and labor start-up companies – those true to our colors from the get go. The info/data is out there – whose on our side – because it ain’t “Wall Street”, period! It’s time to be proactive “America”. :^))

  126. Mr. Bernanke had better get his act together and soon as it seems the bankruptcy wolves are knocking at our front door.
    From Bloomberg Aug 10

    Bloomberg
    U.S. Is Bankrupt and We Don’t Even Know
    By Laurence Kotlikoff
    Aug 10, 2010

    Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.

    What it can and must do is radically simplify its tax, health-care, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy.

    Last month, the International Monetary Fund released its annual review of U.S. economic policy. Its summary contained these bland words about U.S. fiscal policy: “Directors welcomed the authorities’ commitment to fiscal stabilization, but noted that a larger than budgeted adjustment would be required to stabilize debt-to-GDP.”

    But delve deeper, and you will find that the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: “The U.S. fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates.” It adds that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.”

    The fiscal gap is the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years.

    Double Our Taxes

    To put 14 percent of gross domestic product in perspective, current federal revenue totals 14.9 percent of GDP. So the IMF is saying that closing the U.S. fiscal gap, from the revenue side, requires, roughly speaking, an immediate and permanent doubling of our personal-income, corporate and federal taxes as well as the payroll levy set down in the Federal Insurance Contribution Act.

    Such a tax hike would leave the U.S. running a surplus equal to 5 percent of GDP this year, rather than a 9 percent deficit. So the IMF is really saying the U.S. needs to run a huge surplus now and for many years to come to pay for the spending that is scheduled. It’s also saying the longer the country waits to make tough fiscal adjustments, the more painful they will be.

    Is the IMF bonkers?

    No. It has done its homework. So has the Congressional Budget Office whose Long-Term Budget Outlook, released in June, shows an even larger problem.

    ‘Unofficial’ Liabilities

    Based on the CBO’s data, I calculate a fiscal gap of $202 trillion, which is more than 15 times the official debt. This gargantuan discrepancy between our “official” debt and our actual net indebtedness isn’t surprising. It reflects what economists call the labeling problem. Congress has been very careful over the years to label most of its liabilities “unofficial” to keep them off the books and far in the future.

    For example, our Social Security FICA contributions are called taxes and our future Social Security benefits are called transfer payments. The government could equally well have labeled our contributions “loans” and called our future benefits “repayment of these loans less an old age tax,” with the old age tax making up for any difference between the benefits promised and principal plus interest on the contributions.

    The fiscal gap isn’t affected by fiscal labeling. It’s the only theoretically correct measure of our long-run fiscal condition because it considers all spending, no matter how labeled, and incorporates long-term and short-term policy.

    $4 Trillion Bill

    How can the fiscal gap be so enormous?

    Simple. We have 78 million baby boomers who, when fully retired, will collect benefits from Social Security, Medicare, and Medicaid that, on average, exceed per-capita GDP. The annual costs of these entitlements will total about $4 trillion in today’s dollars. Yes, our economy will be bigger in 20 years, but not big enough to handle this size load year after year.

    This is what happens when you run a massive Ponzi scheme for six decades straight, taking ever larger resources from the young and giving them to the old while promising the young their eventual turn at passing the generational buck.

    Herb Stein, chairman of the Council of Economic Advisers under U.S. President Richard Nixon, coined an oft-repeated phrase: “Something that can’t go on, will stop.” True enough. Uncle Sam’s Ponzi scheme will stop. But it will stop too late.

    And it will stop in a very nasty manner. The first possibility is massive benefit cuts visited on the baby boomers in retirement. The second is astronomical tax increases that leave the young with little incentive to work and save. And the third is the government simply printing vast quantities of money to cover its bills.

    Worse Than Greece

    Most likely we will see a combination of all three responses with dramatic increases in poverty, tax, interest rates and consumer prices. This is an awful, downhill road to follow, but it’s the one we are on. And bond traders will kick us miles down our road once they wake up and realize the U.S. is in worse fiscal shape than Greece.

    Some doctrinaire Keynesian economists would say any stimulus over the next few years won’t affect our ability to deal with deficits in the long run.

    This is wrong as a simple matter of arithmetic. The fiscal gap is the government’s credit-card bill and each year’s 14 percent of GDP is the interest on that bill. If it doesn’t pay this year’s interest, it will be added to the balance.

    Demand-siders say forgoing this year’s 14 percent fiscal tightening, and spending even more, will pay for itself, in present value, by expanding the economy and tax revenue.

    My reaction? Get real, or go hang out with equally deluded supply-siders. Our country is broke and can no longer afford no- pain, all-gain “solutions.”

    (Laurence J. Kotlikoff is a professor of economics at Boston University and author of “Jimmy Stewart Is Dead: Ending the World’s Ongoing Financial Plague with Limited Purpose Banking.” The opinions expressed are his own.)

  127. Re: @ Rickk___”Believe It Or Not”…this is no joke – the U.S. Treasury/Government lends out our “Gold Reserves”. The Bank of England (BOE) sets the price of gold 24/7/365 at their special tea time in the A.M., and guess who runs the show? PS. Gold in all reality should be trading at $5k/oz.

  128. Irish Nuns Sue Morgan Stanley, Deutsche Bank Over Bad Bond Deal

    08-11-10 06:11 PM- Huffington Post – excerpt

    Has Judgment Day arrived early on Wall Street?

    “Taking their cue from their American sisters, several groups of Irish nuns are suing Morgan Stanley and Deutsche Bank for misleading them into buying worth of bonds and incurring losses of five million Euros (approximately $6.4 million), Reuters reports…

    Instead of fulfilling its alleged promise, Morgan Stanley waited five months before selling the bonds, the claim says. Reuters reports that the bank made $11.2 million in the delay. But by then, the bonds were worth less than 20 percent of what the plaintiffs had paid.”

    http://tinyurl.com/2cfjwzo

  129. Testosterone levels in men reach a yearly peak in early September. Not joking, it’s true. They used the energy for gathering a harvest in the past.

    “Cultures” that never “grew” wealth through an evolutionary, cooperative agricultural age

    will always be nihilistic and annihilate-istic.

    Like the CIA-armed native “businessmen” (cell phone metal fame) of the Congo – they wait until the farmers harvest the crops (do the labor) before they jump out of hiding in the jungle and kill EVERYBODY and take over the “fruits” of the farmer’s labor. Getting close to that level of “savage” here, ain’t it, with the banksters?

    Media voodoo shamanism predictions getting more hysterical by the nanosecond…

    Still wondering what defines “national security” post Patriot Act…?

    .

  130. 08/12/2010

    “It is getting really bad: we have now had over a quarter of non-stop redemptions by mutual funds, which of course means, by end-retail investors. The problem is that now everyone is starting to notice the stench that the market is not supported by anything except momentum manipulation and primary dealer machinations.

    Per ICI, the week ended August 4 saw an outflow of ($2,788) MM, bringing the total to over $46 billion in domestic equity redemptions year to date.

    Retail is now fully boycotting stocks, as the no-volume surge of July was not even sufficient to bring one meager week of inflows, and in fact, July saw almost $16 billion in outflows. If not even a 10% surge in stocks is capable of bringing retail back into stocks, perhaps it is time the administration and the SEC ask themselves, “what will?” We can not wait to see how the market drop of this week impacts fund flows. If history is any indicator, it will not be pretty.”

    http://tinyurl.com/fantazy-island

  131. @Anonymous: This is the kiss of death for Wall Street. How can you rally-on without suckers? What will happen when everyone notices the ‘stench’ from their hopelessly corrupt government?

    “It is getting really bad: we have now had over a quarter of non-stop redemptions by mutual funds, which of course means, by end-retail investors. The problem is that now everyone is starting to notice the stench that the market is not supported by anything except momentum manipulation and primary dealer machinations. “

  132. Perhaps the full book or significant portions of it are enlightening, but this passage alone sounds like something out of Private Eye’s “Pseuds Corner”.

  133. Quite a few of us would have thought it. In my opinion, Matt Taibbi has had the most through – and realistic – take on the financial collapse and the politics behind it of anyone. He’s gotten an lot of press, including a lot of hate mail from Wall Street which is the best recommendation you could have.

    You should subscribe – or hit the website regularly. I’d recommend Taibbi’s entire series of columns
    for starters.

  134. Thanks Norm, I remember when I was working the track gang for Penn Central in ’71, one of the machine operators was reading it.

  135. There are four approaches that can be applied to the solution of our finanacial and economic cycles:

    1)The Academic ,2) The political,3)the social, and 4) the cloud nine.

    Prof. Simon Johnson (above) has a good handle on this one!Then consider it in all it’s complexities.
    2) Larry Summers or John Boehner can provide this,then take a few sleeping pills and go to bed

    3)in the morning upon arising one should look in the mirror and then ones’s bank account which together will provide a basis for one to develop ones’ unique solution for his pocketbook.Discuss it with ones’ family The pop a few dozen anti acid pills and go out and take a long walk while discussing it with your dog

    4)Pray to the Almighty and have a good day!

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