By Simon Johnson
Most experienced watchers of the eurozone are expecting another serious crisis to break out in early 2011. This projected crisis is tied to the rollover funding needs of weaker eurozone governments, i.e., debts falling due in March through May, and therefore seems much more predictable than what happened to Greece or Ireland in 2010. The investment bankers who fell over themselves to lend to these countries on the way up, now lead the way in talking up the prospects for a serious crisis.
This crisis is not more preventable for being predictable because its resolution will involve politically costly steps – which, given how Europe works, can only be taken under duress. And don’t smile as you read this, because this same logic points directly to a deep and morally disturbing crisis heading directly at the United States.
The eurozone needs to – and will eventually – take three steps:
1. Agree on greater fiscal integration for a core set of countries. This will not be full fiscal union, but it will comprise some greater sharing of responsibilities for each other’s debts. There is much room for ambiguity in government accounting and great guile at the top of the European political elite, so do not expect something completely clear to emerge. But Germany will end up underwriting more of the liabilities for the European core – the opposition Social Democratic Party and the Greens are very much pushing Chancellor Angela Merkel in this direction by calling her “unEuropean”.
2. For the core countries, the European central bank (ECB) will receive greater authority to buy up government bonds as needed. Speculators in these securities will be badly burned as necessary. The wild card here is whether Bundesbank president Axel Weber will get to take over the ECB in fall 2011 – as expected and as apparently required by Ms. Merkel. Mr. Weber has been vociferously opposed to exactly this bond-buying course of action. The immovable Weber will meet the unstoppable logic of economic events. Good luck, Mr. Weber.
3. One or more weaker countries will drop out of the eurozone, probably becoming rather like Montenegro – which uses the euro as its currency but does not have access to the ECB-run credit system. Greece is probably the flashpoint; when it misses a payment on government debt, why should the ECB continue to accept Greek banks’ bonds, backed at that point effectively by a sovereign entity in default? The maelstrom will probably sweep aside Portugal and perhaps even Ireland; the chaos will threaten Spain and Italy.
It would be so easy to set up preemptive programs with the IMF for Portugal and Spain, but this will not happen. The political stigma attached to borrowing from the IMF is just too great.
The unfortunate truth is that despite its much vaunted supposed return to preeminence and the renewed swagger of senior officials, the IMF remains weak and of limited value. It is an effective lender to small European countries under intense pressure – Latvia, Iceland, Greece, etc. But the Fund does not have the resources or the legitimacy to save the bigger countries.
At the end of the day, the Europeans will save themselves, with the measures outlined above – only because there will be no other way to avoid wasting 60 years of political unification. But this action won’t “save” everyone; one or more countries will be forced out of full eurozone membership (although they will likely keep the euro as the means of exchange). And the costs to everyone involved will be large and largely unnecessary.
And remember, when the financial markets are done with Europe, they will come to test our fiscal resolve. All the indications so far are that our politicians will also struggle to get ahead of financial market pressure.
There are plenty of places in Europe where you can find an easy political consensus is to cut taxes and increase budget deficits. Sadly, this no longer pacifies markets. The American political elite – right and left – believes that we are different from the Europeans because we issue the dollar and therefore have some special privileges for ever.
But this is not the 1950s. Asia has risen. Europe will sort itself out and become more fiscally Germanic. The Age of American Predominance is over.
Our leading bankers looted the state, plunged the world into deep recession, and cost us 8 million jobs. And now many of them stand by with sharpened knives and enhanced bonuses – also most willing to suggest how the salaries and jobs of others can be further cut. Think about the morality of that one.
Will no one think hard about what this means for our budget and our political system until it is too late?
An edited version of this post appeared this morning on the NYT.com’s Economix blog; it is used here with permission. If you would like to reproduce the entire post, please contact the New York Times.
The Baseline Scenario 
“Our leading bankers looted the state, plunged the world into deep recession, and cost us 8 million jobs. And now many of them stand by with sharpened knives and enhanced bonuses – also most willing to suggest how the salaries and jobs of others can be further cut. Think about the morality of that one.”
“There is much room for ambiguity in government accounting and great guile at the top of the European political elite, so do not expect something completely clear to emerge.”
People who read blogs on the web are all too aware that the West is governed by a banking mob that owns the political system. The mobsters like to call that Democracy. When the masses finally get bored with their electronic gadgets and multimedia dumb-downs, they may get concerned that they’ve been robbed and used. Given the circumstances, it’s easy to see where that would lead.
I’m sure the mobsters already have the solution mapped out; in fact it may be phase 2 or whatever. Given how easy the Tea Party was co-opted, one truly requires little imagination to see what the future holds. Woe is me..
“We have been gradually disempowered by a corporate state that, as Huxley foresaw, seduced and manipulated us through sensual gratification, cheap mass-produced goods, boundless credit, political theater and amusement. While we were entertained, the regulations that once kept predatory corporate power in check were dismantled, the laws that once protected us were rewritten and we were impoverished. Now that credit is drying up, good jobs for the working class are gone forever and mass-produced goods are unaffordable, we find ourselves transported from “Brave New World” to “1984.” The state, crippled by massive deficits, endless war and corporate malfeasance, is sliding toward bankruptcy. It is time for Big Brother to take over from Huxley’s feelies, the orgy-porgy and the centrifugal bumble-puppy. We are moving from a society where we are skillfully manipulated by lies and illusions to one where we are overtly controlled.”
Excerpt from:
“2011: A Brave New Dystopia”
http://www.truthdig.com/report/item/2011_a_brave_new_dystopia_20101227/
Mr. Johnson says “Will no one think hard about what this means for our budget and our political system until it is too late?”
This is a plaintive cry from one accustomed to hobnobbing with the elite who caused this crisis. Obviously, it is not “our” budget or “our” political system. It is THEIRS. If you can make it to that lifeboat, Mr. Johnson, perhaps you’d better jump.
The question is, what will the rest of us do? What will it take to wrench our gaze from our collective navel?
@RobinH:
The Tea Party was Created, not co-opted. We have Karl Rove and the Koch brothers to thank for that one.
So if peripheral Europe will sort itself out and become more fiscally Germanic, doesn’t this imply some sort of participation in Germany’s export-lead growth model? And if so, to whom does peripheral Europe export? This export-led model, after-all, is what is giving the Germans the air of authority and success in all of this.
It doesn’t seem that a fiscal/financial integration model can truly solve these problems unless one of two things happens: Either the Germans stop running a CA surplus, or someone else starts to absorb surpluses from peripheral Europe + Germany.
The late economist Robert Edmonds pointed out that excess wealth concentration is the root cause of recession and depression. Thus, broadened ownership of wealth is an economic, and not merely an ethical, problem.
Louis Kelso devoted decades of his life to the notion that automation, which has eliminated millions of jobs, might result in aiming at providing half of most incomes from investment, rather than a job.
See the article 20 Hours of Toil at:
http://www.aesopinstitute.org for a few of the implications and possibilities.
The ideas are in need of much more work if a practical program is to emerge. But, they may provide some food for thought. If the goal becomes realistic, more minds can be brought to bear on the incredibly difficult challenges ahead.
Green Light, on the same website, opens a new approach to rapidly replacing fossil fuels. According to NASA,the little known threat of long-term power failures in cities worldwide, as a result of solar emissions, can impact 130 million Americans.
Minimizing the impact of this new, 11 year, solar sunspot cycle can include accelerating development of cost-competitive, decentralized, renewable energy systems.
A few revolutionary examples are in the birth canal and with sufficient support might be born during the coming year.
See Moving Beyond Oil on the Aesop for more about radically new, presently hard to believe, energy systems that can power home, cars and factories.
Robert Edmonds coauthored a Human Investment Tax Credit program, aimed at creating up to 6 million jobs and assisting 4 million entrepreneurs. A few of the suggested incentives were tried in the Jobs Tax Credits of 1977 and created 2 million jobs. See the Aesop website for details.
Mark Goldes, you say “Thus, broadened ownership of wealth is an economic, and not merely an ethical, problem.”
I must ask, what is the distinction between economics and ethics? I see none.
But anyway, thanks for all the other interesting information, which I look forward to investigating.
We DO need a paradigm shift. Or ten.
This is the second straight post where I find myself asking what Simon’s response is to folks like Krugman, who argue not that the US is immune to the Euro’s problems because it issues the dollar, but because its debt is denominated in its own currency and can thus devalue instead of imposing recessionary austerity (not that the politics of the matter don’t lead to that anyway). The difference may be subtle but it seems real, at least in theory. Yes, there’s China, but can it afford not to hold dollars any time soon? And can’t the Fed buy what it doesn’t if necessary, when the time comes?
Thieves’ Paradise
December 24, 2010 – NY Times – excerpts
“In “Griftopia,” a relentlessly disturbing, penetrating exploration of the root causes of the trauma that upended economic security in millions of American homes, (Matt) Taibbi argues that what unfolded was far from accidental. Rather, the nation suffered the equivalent of a hostile takeover of key areas of its commercial life by investment banking houses, while regulators and members of Congress abdicated their responsibilities either because they were influenced by campaign cash or because they believed the fairy tale that unsupervised markets always work best. The result, Taibbi asserts, was a thieves’ paradise — Griftopia.
A contributing editor for Rolling Stone magazine, Taibbi is best known for the metaphor he hurled like a grenade at the Wall Street goliath Goldman Sachs, calling it “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money….
Taibbi persuasively dismisses the argument that the financial crisis was caused by poor people with a taste for real estate, delineating how Wall Street eagerly handed out mortgages to anyone with a pulse…Wall Street persuaded the Treasury to construct bailouts that Taibbi describes as a “labyrinthine financial sewage system designed to stick us all with the raw waste and pump clean water back to Wall Street.”
In Taibbi’s telling, contemporary finance has perverted markets that once served important functions, turning them into frontier-style betting parlors…The villains of the last crisis, he observes, are the same people now tasked with preventing the next one. “We live in an economy that is immensely complex, and we are completely at the mercy of the small group of people who understand it — who incidentally often happen to be the same people who built these wildly complex economic systems,” he writes.
“We have to trust these people to do the right thing, but we can’t, because, well, they’re scum.”
I meant, in this context, I see no distinction between econ. & ethics.
To my mind, all economics is about ethics, although ethics is about more than economics.
Carla,
I understand.
However, as you know, few economists share that point of view.
A paradigm shift is unavoidable. The real question is: Can it be turned in a positive direction?
Like the Red Queen in Alice in Wonderland, I sometimes think of six impossible things before breakfast.
That is one of them.
Since the difficult can sometimes be done immediately, perhaps the impossible might take just a little bit longer.
Scum is too kind. But who cares when you’re living the high life, apparently:
http://www.reuters.com/article/idUSTRE6BS2ZB20101230?feedType=RSS&feedName=domesticNews
“The eurozone needs to – and will eventually – take three steps”
Brilliant Professor Johnson…an unadulterated thought provoking dialogue – starkly contrast from what these U.S. clowns are rhetorically espousing in Congress concerning our way foward! Pure diaphanous provocation of logic marbleized in reality, Bravo!
The U.S. has no’… want too fix what should be fixed? The public has been methodically labotomized, or better said, cloned into a herd of wandering sheep where their wool isn’t fit for preservation. Harsh words, but when are the people going to wake-up in America – when the butcher has unsheathed his sword with a swoon of carnage snuffing out the mindless.
During 1996 the European Union Community began planning for their grand theme/scheme too come to fruition. It took three years of planning and painstakingly became a reality (granted it was a process evolving, as should be, always viligant, but complacency is a natural phenomenum) in 1999. This was monumental to say the least that Europe could actually be united as one. It was good for all.
The United Kingdom refused a great opportunity to join but has enjoyed the unification enormously riding on the Euro’s coattails.
Why am I mentioning the U.K.? They played a great role in Ireland’s demise/misery mostly because they were exempt from the European Union,and European Central Bank, facilitating Ireland’s debt with more debt. The U.K. at minimum is on the hook for ~ $140bn pounds, Wow! That’s only what’s seen on balance sheets which means big-time trouble for the heavy-hitters’ hung on the chads of the tainted off-balance sheets. Oh, by the way, it was the U.K. that pushed hard for Ireland’s precariously low (geography/logistics) “Corporate Tax Rate”?
The European Union never expected to implode with such despair, but the United States was basically the primer that set the Global “Bust-a Bustin” Western World in “Crises Mode”! It was the arrogant bete`noire, all knowing “Central Planning – Federal Reserve Banking System” that “Mucked-Up” the works up! This oligarchy, undemocratic fascist regime that has ruled America’s Financial Life with impunity since 1913.
Please reference these three (3) reads:
“In Ireland’s Debt Crisis: An ominous reckoning for the European Union”
http://www.washingtonpost.com/wp-dyn/content/article/2010/11/28/AR2010112802910.html
“Ireland bail-out: British Banks hit as Irish rescue falters”
http://www.telegraph.co.uk./news/worldnews/europe/ireland/8152723/Ireland-bail-out-British-banks-hit-as-Irish-rescue-falters.html
“Austerity Measures in the EU: Country by Country/ Special G-20 Issue on Finance”
http://www.europeaninstitute.org/Special-G-20-Issue-on-Financial-Reform/austerity-measures-in-the-eu.html
PS. I’m not advocating the EUC wasn’t slack. but no one could have anticipated the malfeasance, and criminality of the United States Banking Cartel that soiled the free world! Every country in the known financial universe were stained by America’s CMO’s etc., etc., etc.,…and not a one has been charged.
We have kicked the can down the road for the last thirty-years…it’s now a “Tin-Cup”, for a Beggard-Thy-Neighbor that the United States has become!
Thankyou Simon and James, and never,ever stop digging for America’s Sake! :-)
Does it seem to anyone else that the comments section of this blog is now dominated by the tin-foil-hat-wearing left. The paranoia regarding widespread collusion of the “banksters” in “robbing” the people seems to me almost pathologic. It’s almost exactly analogous to the paranoia of the survivalist right who envision black government helicopters coming in the night to take away their guns.
Could it be possible that the financial sector is filled with regular people who are responding in a rational way to the sometimes perverse incentives which are in front of them? No, of course not. It’s clearly a diabolical plot to enslave us all. Some sort of biblical confrontation of pure evil with righteousness. If only Frodo (Elizabeth Warren) could return the ring to Mordor and break the power of Sauron (Tim Geithner), we would all be saved.
Whatever happened to “Stats-guy” with his uniquely apolitical spin on the data, or some of the other professorial types chiming in with unique insights? The last thing our political discourse needs is more bomb-throwing from the far left and right.
Still love the blog, though. Informative posts such as the above are pure gold. Seems to me that Dr. Johnson has been particularly prescient with regard to the European financial crisis.
Simon, I don’t know Europe all that well, but from previous articles and news watching, I can gather that there are powerful elitist forces in Europe not dissimilar to our own, which are reined in because Europe is like a US but with autonomous states that compete.
What you have outlined is the circumstance which, at least in the US, will become the greatest test for the success of plutocratic rule. Sadly, the plutocracy will probably win, however its win will be a Pyrrhic victory. It’s fine to carry your elitist mentality and bank account, but what good does it do if you so weaken the nation that you become, nationally, subservient to others? This is happening now, and the trend seems irreversible because of the plutocratic paradigm which seems unbreakable at the moment and in the future.
We already know, without question, that whatever happens in the coming couple of fiscal years, that our government will not answer the necessary realistic call for a restructuring in any way resembling those taking place in Europe. The can will continue to get kicked until it can’t be. The problem is, what happens after the can can’t be kicked any more? Answer: Collapse. Not just of the country, but possibly the government. What happens in the next two years when those outside of this country refuse to finance us. Even China will find it difficult to bail us out, no matter how much it may seem in their best interest. If not China, who? Answer: No one will be there and we will just become a great historic experiment turned to flotsam. Sad, isnt’ it?
“Could it be possible that the financial sector is filled with regular people who are responding in a rational way to the sometimes perverse incentives which are in front of them?”
I find this comment naive in the extreme. It’s not like those “sometimes perverse incentives” are laws of nature or just coincidences. Those incentives are there because the finance industry has captured the political process and now dictates those very incentives. Over time they garner more wealth which gives them more power to change the rules so they get ever more wealth and power in a vicious spiral.
In the meantime, the socially valuable part of finance, intermediating between those with surplus funds and those needing funds to start up or expand real enterprises, has become a mere sideline for the financiers who are find pure gambling far more profitable–especially with their ability to shove their losses down the taxpayers’ throats.
Indeed, to my mind the thrust of this blog has been primarily about the political, rather than the purely economic, aspects of the financial crisis. I miss Stats Guy’s commentaries, too. But to the extent that they were apolitical (I don’t really think they were), they missed an important point.
Eurozone yields have been ugly the past few days, but they haven’t been reported on as much as earlier- kind of surprising. Estonia is really stuck in an awful position as it is jumping on board the sinking ship in the next 24 hours.
As it took Nixon, with clear anti-communist credentials to stop the Vietnam war (even with secret bombing of Cambodia, and CIA shenanigans all over Southeast Asia, Kissinger, etc.); unfortunately it looks like it will take a Republican President with tax reduction and deficit reduction credibility in 2012 or in 2016 to finally say to the American people that the honest way out of this mess is to INCREASE taxes. The Republicans have always been masters of this bait and switch. Bill Gates’ and Warren Buffet’s cries of “we think the rich should pay more” will get some great play as morally the right thing.
Obama has no leg to stand on (and no cojones) to raise taxes, and cuts intended to fix the deficit will be deeply politically negative for him. This is of course the Republican master political calculus: force Obama to move to the right of center view on tax reduction and deficit reduction and let him hang on the unpalatable political consequences of increasing poor population, cratered social services, dis-education and broken promises on health care.
I found this to be a helpful commentary or your commentaries:http://www.youtube.com/watch?v=5D0VhS8qXT0&feature=player_embedded
I had a similar thought when I happened to find myself re-watching The Dark Knight the other day. They used the term “mob bank”, and all I could think was “Well that’s redundant.”
It was co-opted. Read Matt Taibbi’s article on the subject:
http://www.rollingstone.com/politics/news/matt-taibbi-on-the-tea-party-20100928
Actually, no. My inflammatory statements come out of the fact that a few thousand selfish, powerful actors with disproportionately large influence over the system have created an emergent problem. Their selfishness, however, blinds them to the damage of their action at best, or leaves them with complete callous disregard for the suffering of others at worst.
I don’t see one carefully controlled central conspiracy, but I *do* see many selfish individuals creating the same results as one would see from an organized conspiracy. It is less efficient in getting the results they each want, but equally devastating to the weaker parties stuck without power.
But please, continue painting with that wide “paranoia” brush and pretending that being apolitical is the only beneficial stance.
Exactly. As the Freakanomics guys were saying on the radio the other day, other people might look at something as ethically acceptable or repulsive. Economists merely look at if its efficient or not.
Unfortunately due to the multinational nature of their businesses, and the ease which their money permits them to reside where ever they like whenever they like, I think many of the elite of the USA do not care if it fails. They can move on to where ever is better whenever they like. The same thing that makes Dodd-Frank’s Resolution Authority provisions useless is why the fate of the USA simply doesn’t register to many of the parties involved.
They’ll suck the country dry and leave it for dead, if that’s what nets them to the greatest profit.
Most of this makes sense, at least economically. Politically speaking the big unknown is what economic price tags will be attached to the various alternatives, each with their own supporters. So I think you are on the right track as far as the EUR zone as a whole is concerned, things will change further.
However, one should never forget that it was the private financial sector that did not believe in the no-bail-out clause in the Stability Pact. What we have seen during 2010 is a poker game between some states who dislike high borrowing costs and fiscal discipline (and probably would not have joined the EUR if not for politics, like some new EU members were accepted under US pressure). That game will lead to either (as first order effects) (1) losses for the citizens of those states (“internal devaluation”), like has already happened in the EURized states to the East of the EUR zone and is underway in Ireland (2) losses for the EU organs (and some member states if they have to bail out local financial institutions holding weak sovereign EUR paper) now funding overvalued EUR paper issues by peripheral states (3) delayed welfare losses for citizens in currently EUR states in the case of an external devaluation (essentially leaving the EUR zone, restructuring gvt debt denominated in EUR (in most cases predominantly held by locals.., etc within that category there are many possible scenarios) and, because of exiting high levels of economic integration, a multitude of bad effects (for instance, loss of purchasing power for most people, widespread loss of corporate autonomy (one of the companions of gvt debt restructuring is widespread corporate failures and subsequently, “internationalization” of the corporate sector.)
My bet is that the debtors will lose their bargaining power very rapidly as “germanic” banks sell out of peripheral debt (to the ECB or the lifeboat) and hence there is not much that can hurt (apart from loss of export markets, but that danger is overrated; the “germanic” exports tend to have few substitutes) Germany as it keeps gaining time. After a while, the local elites will have to choose between hanging on to their directorships and stakes in local firms , or applying hardship to the locals. Italy and Spain shoud be able to do that, plus the cost of keeping Spain afloat is heavily overrated, especially when , for instance Spanish financial regulation (with EU permission) disallows Spanish banks etc to have non-Spanish gvt paper in their portfolios.
So, I agree that being short EUR sovereigns is becoming risky and that maybe countries like Spain are currently cheap.
As to the US, only the Federal Treasury has the capacity for seignorage. But that is not where the problem is. The main problem is in the on- and off balance sheet liabilities of the States plus their backlog of essential infrastructure.
Core EUR land can live with a slightly less private consumption, leaner corporate budgets and a reduction in welfare and white elephant investment. The US will find that much more difficult, for reasons mentioned in your prtevious post.
But then, why is the USD so strong vs the EUR? Technical reasons or fundamentals. Anyway, if you are a non-American, carpe diem, you could get the US disease tomorrow..
Estonia has achieved membership (with honors) in the world’s largest integrated economy. Not bad for a former member of the USSR..And they did not get there as a byproduct of intra EU politics either. Comments like these show total lack of understanding of what this is all about.
>>>The United Kingdom refused a great opportunity to join but has enjoyed the unification enormously riding on the Euro’s coattails.<<<
Don't be an absolute wet. The United Kingdom was resistant to political and monetary union: it still enjoyed the fruits, however, of an economic common market (much the same as Switzerland and Norway). That common market preceded any inkling of political union.
And, may I say, how little you American commentators know Europe: you seem to all think that this political union is a boon onto all and sundry, that the European peoples are crying out for more unification, that they want to see the effectuation of a United States of Europe.
The Irish rejected the Lisbon Treaty but the autocrats in Brussels didn't heed the Irish democratic voice, and instead forced their hand in another [undemocratic vote] (with a few back handers and not too subtle threats relating to fiscal support for the Irish economy).
And what about the European Constitution itself? Rejected by both the Dutch and French, and yet again the autocrats found a way of imposing it contrary to the democratic will of the people: a simple rehash and effectuation without due democratic process. Nice one totalitarians.
Lately we see that 49% of Germans want to return to the Deutschmark: and this isn't a sporadic figure: ever since the crisis, reservations of the German people to the European project has increased. The authour of this article makes no contingency for what the people of these countries want; they can be dictated to for only so long by their political masters. (and don't you forget it: the European Union is a project borne from the fancies of Europe's political elite, not her people – if the nations have to suffer merely to save an IDEAL, to save an IDEOLOGY, then that simply won't be tolerated by the nations people).
It’s clear you suffer from a syndrome called “Booker T syndrome” It’s when you read all the books but can’t find the answers. Similar to the golden 4 leaf clover, we know it’s there, but it turned to alices resturant garbage. Redundancy is in ones own mind.
My focus has always been environmental although this excellent blog has done much to educate me about financial/political issues over the past few weeks as it served as my browser’s homepage.
I would just like to point out that the folks who focus on economic/political or often military/political issues seem to be largely unable to factor in the environmental/resource crisis to their analysis. This consists largely of a two horned beast of climate change and energy depletion that will almost certainly be the ever increasing driver of our fates on this planet.
I feel failing to integrate this reality in any analysis inevitably results in a myopic and stunted position which also dooms any solutions proposed to failure.
That’s priceless, Bill; Thanks for posting. Fortunately for the West, the political elite do not account to the people, they account to the crooks who own the political system for their own selfish gain. In this game, the people are mere pawns. The only logic that truly matters is how aggressively the robbers rob their sleeping victims.
A new strategy is proposed that addresses this concern. See Green Light at http://www.aesopinstitute.org
The little publicized threat of weeks long blackouts can be best addressed by little known and presently less believed energy breakthroughs that will emerge in the coming months.
With sufficient support, they can insure a Happy New Year!
“Could it be possible that the financial sector is filled with regular people who are responding in a rational way to the sometimes perverse incentives which are in front of them?”
Could it be possible that the populace is filled with good people who will be soon be responding in a rational way to the perverse conditions which are in front of them because of those perverse incentives? When did wanting genuine democracy become a leftist struggle? You may like this blog, but you haven’t anything to show for it.
@eric smith: I hope if you have not already, you will consider signing the position statement of the Center for the Advancement of a Steady State Economy (CASSE), and that you might also help to promote the ideas it clearly outlines. I think CASSE may address many of your concerns.
You can find the position statement at http://www.steadystate.org.
“The paranoia regarding widespread collusion of the “banksters” in “robbing” the people seems to me almost pathologic. It’s almost exactly analogous to the paranoia of the survivalist right who envision black government helicopters coming in the night to take away their guns.”
It’s not paranoia – it’s monkey-brain retard math that works in its SIMPLICITY:
More misery for others = More money for ME ME ME
The dark humor is that they complicated the “process” of theft so much that they lost track of how much they stole – LOL
SWAT Teams doing “practice” drills (first one they did) shot and killed a homeowner unfairly being foreclosed who was winning the time-battle with the banks (wife-y helped set him up – go figure)
so don’t act as if MANY pre-emptive shots haven’t already been taken by The Wrecking Crew….
There is an eternity of difference between what I dubbed as “The Duh Constant” (Greenspam admitting to a “mistake” – but which “mistake”? – the one that made clear that they were stealing the same thing over and over again so “someone” doesn’t actually “own” all USA “homes”)
and full blown Kleptocracy – which is “iniquity”…
We have a clear kleptocracy in operation – look at the army of foreign hooligans “legally” starting businesses to go get people to pay up their debts….
Which proves how retarded they are – the BANKSTERS got bailed out already – so why are they still after the individuals with, literally, no pot to piss in…?!
Which means that the LEGAL (!!) “new businesses” springing up as a consequence of banks giving out private information to foreign thieves is the end of the line for “peace”…or any pretense of “civilization”…
Everything is CLEAR to see now…how many more books like Griftopia need to come out…?
Too many decades of shape-shifting “enronista” businesses…we’re in the ugly “gangs of NY” battle now, like it or not….
This, too, is a 30 year long battle with hooligans clearly too intellectually challenged to understand, much less “co-operate”, with the reality of the construction of Spaceship Earth.
Keep in mind that is was FIAT $$$ and that there is absolutely no possibility to access the rivers of trillions (pouring out to fund “end times” and bury real DATA)
to do anything GOOD in the way of progressive science that does the greatest good for the greatest number in COOPERATION with the construction of Spaceship Earth –
So just start doing what needs to be done and do what the great-grandpas/ma did – print your own money :-) money as the symbol that it is getting done
Re: @ Shane___Well said. Where have you been hiding? Enjoyed the feedback even though I needed a towel.
Just a couple points I’d like to add. The European Union Community (EUC) would be a relic of the past…as is England’s Monarchy today if not for some bravehearted souls (in the very heart of europe) being able to look beyond these “Internecine (Limey’s) Lowbrows squatting on the Throne”!
The EU needs to adjust the fiscal parameters allowing for “Economies of Scale”. A quite simple, and very paragmatic tool – currently “MIA” in the ECB toolbox.
Lastly, the EU would be torn to shreads in the latter half of the 21st century if they become fragmented. The emerging markets will swoon in, devouring the fragmentated states (divide and conquer?) as crumpets for mornings’ tea?
As for the United States…it has California, Illinois, Florida, Massachusetts and others (small countries [?] with Calif. being the 7th/8th largest economy in the world > than France – all about to go bust!). Why because the “Federal Reserve Banking System” prints money out of thin air. The ECB doesn’t deal with inflation/deflation this way because of a democratic fiscally-responsible constitution.
Ref: “The Creature from Jekyll Island, The Federal Reserve” by Edward Griffin (dated 1993) and then get back to me. China, India, and others have made this a “Must Read”!
http://www.bigeye.com/griffin.htm
PS. I find it reassuring that the money centers are staying away and not “Mucking-Up” the EU scenario…Cheers
Since the little publicized threat of solar flares causing massive, long-term, power failures in cities everywhere on the planet, that will provide a lever to move toward decentralized, cost-competitive, renewable energy.
See Green Light at http://www.aesopinstitute.org for a few of the details of the problem, as well as a suggested course of action.
NASA estimates the cost of a hit by a solar flare emission of the type that very narrowly missed our geomagnetic field last month would be between $1 and 2 Trillion the first year.
Imagine the world economy with the power grid lost for weeks on large parts of the planet.
Think about the effects on the economy of that all too possible scenario.
With wise initiatives, much of the damage might be mitigated.
And the necessary actions can begin with individuals.
Our leaders are likely to find themselves forced to follow – right across the political spectrum.
Sorry for the grammatical errors in the first paragraph above. Not enough coffee yet today.
@eric smith and Mark Goldes:
Here’s a blog posting you may find pertinent to your (our) concerns:
http://steadystate.org/steady-state-economics-and-the-new-congress/
Your comment apparently had enough truth to cause some here to find it unpleasant. But it also misses much. It is no accident that we have failed to charge the TBTF’s for the implicit insurance they receive and failed to impose sufficiently rigorous regulation. It may be ordinary people responding to perverse incentives, but as a group they wield damaging political force.
I wonder what will be the effect on the value of the euro – will it rise after being relieved of the weak members? Or will the immediate upshot be a collapse in its value?
Dr. Johnson, what do you think of the new bill introduced by Dennis Kucinich two weeks ago to abolish debt-based currency for the US dollar, abolish the Fed, abolish fractional-reserve banking and give the monetary authority to a branch of the US Treasury?
see: http://kucinich.house.gov/UploadedFiles/NEED_ACT.pdf
The comment was patently and obviously ridiculous. No one here has been clamoring for socialism, communism, or the elimination of private enterprise. What is required is the elimination of kleptocracy.
http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=5929
IN AND OUT OF CRISIS:
Leo Panitch
PANITCH: Well, there were 72 financial crises around the world in the 1990s as a result of the enormous flow of capital that we call globalization, with the removal of capital controls, the enormous flow of foreign direct investment and short-term financial investment to the Third World, etc. That was the root of Ireland’s development and current situation, as well as China’s and Brazil’s, etc. This produced a series of financial crises because there was so much hot money and short-term money floating around the globe. And you saw it a year after, for instance, NAFTA was signed, just after Mexico had an election and tried to raise its interest rates to cope with the enormous size of its fiscal deficit, as they were (as usual) bribing people to vote for them. Investors reacted with panic at these higher interest rates and began to pull their money out of Mexico. The American Treasury immediately had to come in and bail out Mexico. But in bailing out Mexico, they were bailing out Wall Street. Congress didn’t want them to do it, and so they used the fund that they’ve had since the New Deal, since the Great Depression to directly put billions of dollars into what were known as Mexican “tE-s@-%bo-noUz/, Mexican bonds, in order to bail out the Wall Street banks. This was commonly done, but it was most importantly done in the 1997 and ’98 Asian crisis, which, as you’ll remember, spread to Russia, which defaulted on its Treasury bills, and then to Brazil. And then, again, it was the United States, the American Treasury, above all, which played the central role in coordinating and organizing the saving of the banks through–either directly or via the IMF, or in conjunction with the finance ministries and central banks of Japan and Europe, bailing out first Taiwan, then Indonesia, and above all, you’ll remember, South Korea. Now, the crucial thing here–and it’s going on exactly today in Greece and Ireland, and we’ll soon see it in Portugal and probably in Spain–the crucial thing here is that there’s a run on a nation’s currency and capital starts flowing out of the country as banks refuse to start rolling over the lending that they’ve done to these governments, or more commonly (’cause it isn’t always going to governments) the lending they’ve done to banks in those countries.JAY: By “rolling over” you mean loaning countries more money to be able to continue paying debt they’ve already borrowed.PANITCH: That’s right, whether it’s a bank or whether it’s a government, they borrow for a certain period, and then they have to pay off that debt–not only the interest on it but the principal on it. They then try to secure another loan in order to keep going. And insofar as things are ticking over, they’re provided with that loan. When there’s a fear that they will not be able to secure the same rates as they secured before, or that the bank won’t be able to pay or the government won’t be able to pay, then those debts aren’t rolled over. This happened in the great debt crisis of the 1990s. It happened all the more after the 1990s and to the current period. And it’s harder to control, ’cause it isn’t only bank lending; it’s lending coming from hedge funds, insurance companies, pension funds, all of whom are buying private bonds and government bonds.
The math is incontravertable. There will be a great culling. Perhaps some otherwordly visitation or event, or some conjuring of our own doing, – but the earth and humanity cannot sustain or survive under the present trajectories.
Happy 2011.
Gentlemen…I rest my case.
More worthwhile reasoning coming from the interview at The Real News Network (TRNN): full video & text:
http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=5926
http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=5927
excerpts:
PANITCH: Well, yes. I mean, the rich are in favor of it because they are the investors. One needs to understand that it’s not that governments aren’t concerned or even the rich aren’t concerned about the depth of this crisis and its implications. They are concerned. But they’re, above all, concerned to save their own skin and to protect the system of capitalist globalization as it’s been constructed over the past three decades. And the main work that states do, and especially the American state does, is try to get the economy, not only the local economy but the global economy, through each one of these inevitable crises that are produced by financial volatility, so that the game can keep on going. And that’s really what it’s all about.
JAY: Well, let’s focus on the American situation for this segment. So if there isn’t this immediate pressure on the US, in terms of people really being worried about the Americans defaulting on government debt, why the immediate pressure coming from not just the Republicans, but Obama’s in on it, this deficit commission that they have in the Congress? All the talk is about where cuts are going to take place. There’s no talk of more stimulus. And it seems fairly obvious that if there isn’t more stimulus, there’s going to be more recession. The economy really isn’t coming back on its own. So why is there so much pressure on the US side now in the short term?
PANITCH: Well, it’s primarily internal pressures–not exclusively, but it’s primarily the internal balance of forces. You know, politically in the United States it is indeed difficult to be–to simply ignore large deficits. There is this tax mania, this constant tax revolt that politicians play to, and especially the Republicans, ever since Reagan, have made the centerpiece of their politics. It’s combined with a whole small-state vocabulary and rhetoric that doesn’t at all square–I mean, a lot of it’s quite illogical and irrational–doesn’t square with the size of the Pentagon, the size of the security apparatus, the role that the state plays in underwriting business and correcting crises. But that is the rhetoric of American politics. It’s the populism of American politics. It’s the appeal to people in terms of we will reduce your taxes, however ridiculous that is in terms of the enormous savings on taxes by the rich, and the miniscule, if anything, savings on taxes by most Americans. But they look upon politics in that sense–as a means of reducing your taxes. So there’s an internal dynamic in terms of political ideology and the balance of class forces in the United States.
JAY: It seems somewhat self-defeating from the point of view of people with a lot of money. I mean, if what you’re worried about is that someday in the future the US state may not be able to fulfill its obligations, and if you listen to people like Pete Peterson, who has this foundation–he’s a billionaire who’s been fighting taxation and for smaller government for quite some time. If you look at it from their point of view, if the country goes into deeper depression because of these cutbacks in government, then government has less revenue and even less ability to pay back its bondholders and its lenders. So it seems to be a no-win situation on that side as well. But they still seem to be pursuing it.
PANITCH: Well, I mean, one should never think that capitalism, let alone capitalists individually, are rational. That’s only a myth of the economics profession, number one. Number two, people like Peterson–who, by the way, was Nixon’s commerce secretary and has played this kind of role for upwards of 40 years in the United States–is obviously of the type who believes in trickle-down economics. He thinks we only get anywhere insofar as we feed the rich and then we live off the droppings that the rich give us. That’s his politics. And you would expect–and he often engages in this kind of hysteria. He very famously did in the mid-1980s, predicting American decline at a time that Japan was presumably going to replace the United States as the leading capitalist power. He always engages in this kind of hand wringing, to the end of reproducing and extending the dependence of people on private businessmen, and especially on wealthy hedge funds of the kind that he runs in the United States.
Thank you Carla: I placed a position statement over at the site but unfortunately neglected to copy it before I submitted it (I would have pasted it here…I am not sure where the comments are posted). I also signed onto the site. Bruce
ok Carla: on this other site I remembered to copy. It is a bit less ecological and a bit more cynical/critical:
http://www.cnbc.com/id/15840232/?video=1653093678&play=1
This business of war game scenarios that are not designed to protect American citizens in mass as much as to suppress the population with a “crisis” driven (ambiguous and relatively undefined: completely open to interpretation) polcy front and apparatus that appears to be a physical extension of our newly emerging secret policing state.
It now appears that we first set up externally systemic enforcement and security methods in foreign and remote lands under covert operations and then insidiously bring them slowly back home as legitimate devices and apparatus against domestic and constitutional stability by civil society.
The perimeter security (treaties) being quietly designed to envelope North America is the inverse and asymmetrical version of the peripheral boundary setting (missile) systemics that are being set up to encircle Russia and China in a dangerous model that feels all too close to the geopolitical militarization of the continents prior to World War I.
Obama, who appears to act like a CIA executive asset with ac-company group think in tow, did not have a domestic life here in his early years of enculturation. I have serious doubts about the “narrative” and even misinformation about his background despite being a staunch democratic supporter. His speeches now appear fabricated in retrospect, his actions completely defy the pure rhetoric of his communications.
The Domestic Intelligence Apparatus has to be appreciated not just as an extension of the National Security State, but also as a more deeply historical extension of the apparatus left secreted in the shadow of the Cold War power operatives. Are we really so immune from our own secret intelligence community to believe that, like Russia and their KGB, they have no hand in the power dynamics of our political system? The assault on American political culture has been a sequence of succession planning and insults, and my own suspicions include all aspects of capture and positions including the Presidency itself over the last three to four decades (at least).
Consider the list of changes to American ethical stances which include pre-emptive warfare; extra judicial killing (read: assassination squads); 6 covert war actions run simultaneously; mercenary private armies and outsourced privatizing of military operations (corporate and outside the law for the most part); neo-colonial “free market” profiteering and exploitation of underdeveloped countries (and calling them “emergent” to give it appeal) with concurrent policing and political crony leveraging that has given us the reputation of being the single most “DEMOCRATIC BUSTING” power in the global community. I am sure that you can extend this “foreign” policy list of “accomplishments” from the recent past news events if you have followed the trail at all.
Doestically we have the “Bust-Out” and Looting of the Federal Reserve to finance the high crime strata of international finance and secure/fortify the upper classes against the stress and distress swarming and storming of our economy as the central power elements of this apparatus steal and seal their fortunes and futures. If you look at the way we have handled the outside world in terms of economy, politics and military policing you can not help but recognize that the very same exact thing is happening now to our domestic infrastructures and mid-range superstructures. It is all being reorganized under false premise one by one but also in mounting complexity. The first amendment assaults from corporate to crisis induced wiki-journalism suppression. The outright censorship of information in the federal sector level (a very huge president and core initiating facto for the test on and against the rest of us later on as it is expanded. Same holds true for the pension surrendering and salary stagnation imposed by Obama policy directives. A new “easier” to enroll listing of terrorist suspects has just been announced which essentially has no criteria except to be accused (well where have we seen THAT before all over the world used to exterminate political enemies…) .Indefinite detention, no doubt, is about to break loose since we already do have cases of people disappearing that are less than legal, so this process opens the door for legitimating the “Manning” canning of American rights to due process.
Obama is supposed to have been a “Constitutional” specialist at the U. of Chicago? Well look at the history and financing of those departments at the U. of Chicago and now look at his personal track record (lip service and zero action is the norm) in office. The list goes on…and on…and on…The American system of democratic liberty is being privatized and dismantled by pure manipulation, crisis machination, legitimation and capture. Misinformation and outright professional narratives and counter-narrative strategies are opaque and market forwarded from dissembled cognitive dissonance through sustained disbelief and denials to illusions under appeal to authority systemics of hierarchy and power scalar (“trickled down” ) to mass delusions, disenchantment and disillusionment; antagonized by financed ranting groups couched in righteous terms of patriotic favor and kindling a reactionary dissent that can only fuel the fires of more Unified Quest controls in our crisis orchestrated future. So what I would like to know is how a steady state actuates itself when it is a process of manipulation and deceit domestically and politically?
http://en.wikipedia.org/wiki/Balance_of_power_in_international_relations
We tend to think of “equilibrium” and systems theory homeostasis and steady states as questions of civil society (civilization) but the power “statics and dynamic” are more derived from the geopolitical status of “self preservation” (at all costs) between systems as much as and perhaps more than within them. Consider the thinking that goes on daily under financial wars and hostile intentions between nations and states: each attempting to “stabilize” their own perceived self preservation as a steady state (relatively speaking). It is constant change. Fluidity and balance defy a universal gravity.
Consider the passage simply explaining “balances of power” in the above linked google search page:
“n international relations, a balance of power exists when there is parity or stability between competing forces. The concept “describes a state of affairs in the international system and explains the behaviour of states in that system” (Fry, Goldstein & Langhorn, 2004).[1] As a term in international law for a ‘just equilibrium’ between the members of the family of nations, it expresses the doctrine intended to prevent any one nation from becoming sufficiently strong so as to enable it to enforce its will upon the rest.
“BoP” is a central concept in neorealist theory. Within a balance of power system, a state may choose to engage in either balancing or bandwagoning behavior. In a time of war, the decision to balance or to bandwagon may well determine the survival of the state.
Kenneth Waltz, a major contributor to neorealism, expressed in his book, “Theory of International Politics” that “if there is any distinctively political theory of international politics, balance-of-power theory is it.”.[2] However, this assertion has come under criticism from other schools of thought within the international relations field, such as the constructivists and the political economists[3][4]”
and:
The basic principle involved in a balancing of political power, as Charles Davenant pointed out in his Essay on the Balance of Power, is as old as history, and was familiar to the ancients both as political theorists and as practical statesmen. In its essence it is no more than a precept of common sense, born of experience and the instinct of self-preservation.
More precisely, the theory of Balance of Power has certain key aspects that have been agreed upon throughout the literature on the subject. First of all, the main objective of states, according to the Balance of Power theory is to secure their own safety, consistent with political realism or the realist world-view. Secondly, states reach an equilibrium because of this objective of self-preservation. States, by trying to avoid the dominance of one particular state, will ally themselves with other states until an equilibrium is reached.[5]
As Professor L. Oppenheim (Internal. Law, i. 73) points out, an equilibrium between the various powers which form the family of nations is, in fact, essential to the very existence of any international law. In the absence of any central authority, the only sanction behind the code of rules established by custom or defined in treaties, known as ‘international law’, is the capacity of the powers to hold each other in check. If this system fails, nothing prevents any state sufficiently powerful from ignoring the law and acting solely according to its convenience and its interests.”
Somewhere between the multilateral and the unilateral balances of external and domestic forces is a line of self interests that are in direct contradiction with a civilization process of homeostatic steady state economy and this does not even enter into the crisis in consciousness between economic and ecological disequilibrium. The regressive forces are counterbalancing and sustaining a delusional “stasis” termed status quo and laissez faire.
Pardon me if I appear cynical, but I don’t think this is a “systems capacity” problem.
Mark Goldes: I would say you are good as “gold” and right on the money. Thanks for the references!
Check these out.
The consolidation of actual ownership in America is one of the central distinctions found in these studies; and (if my reading was accurate) it appears that it is considered the more complex version of really why “TOO BIG TO FAIL” is a reality problem in both theory and design; essentially consolidation leads to self contradiction.
http://search.aol.com/aol/search?invocationType=webmail-hawaii1-standardaol&query=Concentrated%20Corporate%20Ownership%20%28National%20Bureau%20of%20Economic%20Research%20Conference%20Report%29
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Happy new year, Corporate America. We’re sure 2011 will be as wonderful for your bottom line as 2010 (thanks globalism). With all the tools in Washington at your disposal, why shouldn’t it be? It’s fantastic buying and owning your own political systems, isn’t it?
“Robert Edmonds coauthored a Human Investment Tax Credit program, aimed at creating up to 6 million jobs and assisting 4 million entrepreneurs. A few of the suggested incentives were tried in the Jobs Tax Credits of 1977 and created 2 million jobs. ”
Why hasn’t the Obama administration come up with similar legislation?????
Yes. It deserves to be put out to pasture. Being a chump is nothing to be proud of.
Simon Johnson says what needs saying.
This is a real good piece.
See OP ED, June 7, 2009, The New York Times – The Economy Is Still at the Brink, by Sandy Lewis and William D. Cohan
paraphrasing: regular people responding to perverse incentives? (Big House market makers) SURELY you do jest!
Please explain how “regular people” at GS and JPM can orchestrate a near perfect trading score from the first quarter; practically statistically impossible for ONE, let alone TWO Big Houses. “regular people”- ah-ha.
I agree with Prof. Johnson’s three points as a feasible approach to resolution. In the meantime, the EU focus takes the heat off the US and puts a short-term shelf under the USD while allowing profit taking on euro shorts, CDS pay-offs, etc, etc, by – gee, the “regular people” running the big houses.
@ Bruce E. Woych___First and foremost “Happy New Years”, Bruce :-)
“It is so appropriate that ‘Ronnie’ the GOPster starts by spinning the Top`- squaring the circle with a slick of his tongue, setting us up for a slight of hands – the masters acrobatic act of “Flip`Flop-ology” doesn’t stop here.
It begins with, “The Sisyphus Paradox Syndrome” via “Trickle Down Economic’s”, the greatest mare’s`nest that the American public ever swollowed whole? All that was needed was a “Snake Oil Salesman called, Reaganomic’s” who turned out to be a “B`Rated – PT Barnum Oracle” that bathed in vanity daily whilst napping?
The truth be known that “Trickle-Down Economic’s is Trickle-Up Economic’s to the n`th degree played too a dyslexia serfdom audience.”
Shame on these “Money Changers” doing God’s Work!
“world’s largest integrated economy” – is that a great achievement even if that system is crumbling before our very eyes?
They have proposed employment tax credits which died in the House.
However, I think a unified set of credits such as Edmonds and L.V. Watkins suggested as a Human Investment Tax Credit program might get a better hearing.
If it followed a strong initiative to minimize the long-term blackouts threatened by solar flare emissions – see Green Light at http://www.aesopinstitute.org
That program might boost the economy strongly enough to make tax incentives appear much more practical.
Small business is the backbone of the economy. We currently have a shortage of employers needing people. A strong shot in the arm for the economy could change the situation, perhaps dramatically.
But the key remains the potential energy kick.
That will inherently change the ballgame.
Many thanks!
The references and links are much appreciated.
While I don’t agree with your level of dismissal for
“regular people who are responding in a rational way to the sometimes perverse incentives” statement, I do appreciate your bringing up the point that “the system” is made up of individuals carrying out their lives for their best interest, and accepting that, if their goal is success and financial gain it is in their best interest to put proper morality, ethics and conscience on the far back burner.
I spent a good chunk of my career as an (eventual) executive at a large and very aggressive retailer. As an junior level executive, right out of college, I was told my job was to screw vendors and contractors to the brink and beyond, if necessary, of bankruptcy while I was also responsible, upon demand, to purchase items and services for senior executives and then submit those purchases on my expense forms. I regularly carried $10,000 on my personal credit cards for these “expenses” but fully well knew how completely wrong it was and, at the same time, how absolute was this demand in order to promote my future with the company.
By the way, I wasn’t in the financial or buying end of the biz. I was just a store designer. I can’t imagine how depraved the incentives are in the financial services and banking industries but, let’s face it, they’re probably MUCH worse even than retail.
Exactly. Personally, I’m quite fond of the competitive nature of our system. When individuals aren’t abusing it, it truly DOES bring out the best in those competing. It’s only the types that attempt to exploit loopholes and weaknesses in order to extort gains far beyond their actual individual contributions that break it. I only ask that behavior along those lines be curbed.
All we needed to do as a 10,000 year old civilizations from a MATH perspective
was to set up a common sense
man to land ratio
and stick to it…PROVE genetic superiority by “living within one’s means – air molecules and water molecules as the MEANS”
– why the freekin’ OVER-breeding…?
They had the Patriot Act and other insider information like this from a link posted under another topic on this board:
“The minutes from that same gathering of the powerful Federal Open Market Committee, or FOMC, are made available to the public — but only after a three-week lag. So Meyer’s clients were provided with a glimpse into what the Fed was thinking well ahead of other investors.”
You are a “chump” when you put a quarter in a slot machine….now it’s when you “buy” a house with a mortgage?!
Constant and shameless promotion of your snake-oil magic free energy claims in no way helps any of the serious problems discussed.
Your claim that the recently issued patent is representative of free energy is a direct lie as proven by the correspondence between your attorney and the patent office where he specifically disclaims that really bad transformer concept as a device that produces output energy in excess of the input energy. To continue claiming as you do that the device does produce free energy is to assert that your attorney perjured himself to the patent office. Fortunately for him, it is you who are the consummate liar.
Conventional renewable energy conversion systems, while they can be expected to fall in price, cannot compete with carbon based systems sufficiently to meet the need to rapidly supersede oil, coal and other fossil fuels.
Breakthrough magnetic systems that can generate electric power cost-competitively, first surfaced in Germany in 1925 when Hans Coler demonstrated a solid-state device. Two years later Werner Heisenberg, who won a Nobel prize in physics, stated:
“We could utilize magnetism as an energy source.”
In 1937 Coler demonstrated a 6,000 watt generator which became a Secret project when the German navy tried to develop it to recharge submarine batteries without the need for a sub to surface. The lab was bombed by the Allies. A Report on the Coler device was issued by British Intelligence in 1946 and declassified in 1980. it now appears on the web.
New information about the Coler work was the subject of a presentation we gave in a Symposium in Vienna, Austria last March.
U.S. Patent 7,830,065 issued in November. It reflects one of several families of magnetic generators in development that promise to produce electric power at highly competitive cost.
However, all such devices are considered impossible by most scientists and engineers as they violate textbook physics.
Only when seemingly self-powered devices enter the market, and are readily tested by those who are certain they are impossible, will they change their minds.
To the surprise of almost everybody, such systems are under development worldwide at present.
Most such claims are inventor’s delusion or measurement error. Some are scams with wide distribution on the internet.
But, a few will make it into products and cause much head-scratching among those who are certain they are impossible.
Perhaps, that may begin to occur by the end of this new year. But, I have been over-optimistic in the past and that may well prove to be the case once again.
An early market for such generators, with and without moving parts, will be schools and universities, as textbooks will need to be revised to reflect a new reality.
Your attempt at revisionism doesn’t have a lot of meat on it.
To recap, Wall Street built itself a machine that – despite all the chatter about the brilliance of its quantitative analysts – it didn’t understand. When the machine started going haywire, the largest of the investment houses created shell corporations whose only purpose was to bury the unbought and unwanted trash from those CDOs:
http://www.propublica.org/article/banks-self-dealing-super-charged-financial-crisis
This has noting to do with politics, it’s about criminal behaviour, about bringing the con-men and women to justice. This is fraud, pure and simple. You can slice it and dice it any way you want and use that silly language about leftists and democracy if it makes you feel better. But the most trenchant critique has, in fact, come from a conservative, something which none of the current crop of Wall Street execs can rightfully claim to be. Kevin Phillips has been hammering away at this for at least fifteen years, warning against the finacialization of such a large part of our economy, of the historical precedence that bodes ill, and of the loss of our manufacturing sector.
This bait and switch perpetrated by the mortgage-finance machine, has resulted in an economy that’s largely a shell of its former self. The mantra has been the same for years. Manufacturing wouldn’t be needed, and neither would retirement benefits, medical care, any of it. We we’re all going to be made rich beyond our wildest dreams and have all our needs met by investing in the stock market.
So much for wishcasting. The economy is limping along after the mortgage flameout, (at least) eight million jobs have been vaporized just as Simon points out, all due to a fake economy brought to us by people who had no idea what they were doing with all that computing power they’d acquired over the last 20 years or so.
The centrifugal force of the explosion has spewed out parts of that corrupt machine all over the economic landscape. As one small example – there are many others – dead people are robo-signing affidavits to get bankruptcy declared on home-owners in Florida. Shades of the old Chicago machine!
Sticking it to the poor saps holding the underwater mortgages is predatory, but that’s the only way that banks can continue to profit from those homes through their mortgage servicing operations and the fees they generate. The poor saps who were told, over and over again, to refinance and get more leverage out of their assets? They were rubes ripe for the carnival barkers to fleece.
Intellectual bankruptcy is what we have, not just financial. It doesn’t have anything to do with left, or right. It has to do with ethics and moral intelligence. The suits lost their way, badly. Makes me wonder about business schools. What the hell have they been teaching?
One more point: Until the liars and cheats who put us in this hole are brought to justice, there won’t be any buyin from the public nor should there be. Without that buyin it’s easy to predict there won’t be any easing of political pressure on either party. That tension is itself a drag on the economy and the consumers who are supposed to help power it. We either think this place is one country or we don’t. And if the wealthy are really convinced they’d like to live in increasingly isolated enclaves where they’re walled off from the reality they’ve created then they don’t understand history or politics.
Agree or disagree with their vision, we should all nonetheless thank Simon and James for their+ intellectual honesty. It’s in very short supply these days.
Good review and Taibbi’s points are right on. The only thing I’d argue with is that the quants actually understood what would happen to the system. We need to dispel the myth that they’ve built a machine that they and no one else can understand. The truth is much starker. They don’t have an inkling about the behaviour of their creation because it’s unpredictable.
As I’ve written in these pages before, computerized trading adds a hair-trigger twist on the market for securities. That market has non-linear iterated discrete dynamics. In short, it’s chaotic. It will periodically transition to other states distinct from the “normal” ones. That is to say it will periodically crash and burn. And we don’t know when that will happen. It’s the nature of such systems that without an absolutely precise knowledge of their current state, something which is not possible, you don’t know where they’re going and when they’ll transition.
That’s the reason that this needs to be dealt with now – something Congress has been loath to do. It’s not because the suits who bribe them know better than the politicians and the people they’re supposed to represent. Rather it’s because they don’t have a damned clue as to how the black box they’ve built can behave. Not a clue.
“Our leading bankers looted the state, plunged the world into deep recession, and cost us 8 million jobs.” — Sorry Simon, your populist fervor is exciting but the principal looting was done by the chaps we elected to Washington, and their minions, who not only punched a hole in the federal/state budgets but also generated umpteen billions of unfunded and off-balance-sheet liabilities for the taxpayers.
Those ‘chaps’ are obviously owned by citizen INC.
I, for one, welcome our new tinfoil hat overlords.
@AlanDownunder
I agree with gasgangrene. It’s foolish to buy into paranoia and assume if other people don’t they’re crazy.
All these doomsday predictions are so cowardice. People have been making them since the beginning of time and it’s never happened. It’s all born out of arrogance. The world is not going to end while you’re living just as it hasn’t ended yet. Your world ends when you die. But guess what, the world will still be spinning when you’re long gone.
So while you’re here, while you’re alive, do your best to inject the best ethics you can into the system to help the people that come behind you. You’re not that important. Get over it. The world is not going to end. To think that way is to think like a coward.
Why does everyone fantasize so much about doomsday? Anyone who proposes these doomsday scenarios is a coward.
I live in Michigan and I’m not afraid of anything. If this world goes to hell in handbasket, I’ll just start a garden and can veggies all summer for the winter. But I’m not going to stew about fantasizing about the end of the world.
Good luck with your paranoia.
Can an Economist moralise ad nauseam or should he/she like Newton in all humility chant ‘hypothesis non fingo’
Let’s not get testy. The fears and concerns of many people on this wild and violent earth are born out of very real, well documented realities. Do a little exponential growth calculus on oil consumption, oil supply, water consumption, and usable water supply, population growth, the proliferation of weapons of all varieties and you run into very scary futures. Then look at the rapidly expanding divide between thehaves and thehavenots, the concentration of political power in America’s corporate predatorclass, and the equally swift diminishing of the peoples freedoms, rights, privelages, and protections, and there is even more dread concern and peril. The earth may survive, but the trajectories for most of the earths populations are frightingly negative.
The predatorclass brutes the fiction that all is well in the land of Oz and that so long as the sheeple go quietly to the pens and eventually slaughterhouses, – all is fine and dandy. From the predatorclass lofty perspective, delirious with the bounties of illgotten imponderable wealth and manifold political power, – the world we inhabit now is nirvana, a kind of predatorclass heaven, wherein the predatorclass owns and controls all of the earths wealth and resources, and stands Olympian, untouchable, unaccaountable, above and beyond the rule of law and the principles that formally defined our once more perfect union.
The terrible mistake the predatorclass makes, – is imagining that all of us will go quietly or peacefully to the homeland security detention centers, or gitmo, or be forced into far below poverty level slavewages employment, or sent to the ovens. Not on your life. In a world where there are no laws, – there are no laws for anyone predatorclass biiiiaaaatches!!!
The majority will go quietly and peacefully as long as there’s multi-media entertainment and the next ipod gadget to look forward to. You say you want a revolution? Dream on.
while everyone is looking at Europe, the U.S. is getting little attention to how much in debt they really are. Another u.s insurmountable crisis is coming, which of the morethan25 to 30 states will default first? California ? who will bail them out ? the feds ? not likely as they have troubles of their own, + if they help them what will they do with the others states who are also on an unavoidable collision course with financial disaster. each of these states have as much if not more of an economic impact as Ireland , Portugal,Italy,Greece and others combined why is no one talking about that ?????
oh dear, i hope professor, that you are not getting discouraged with that last sentence.
i assure you that a lot of people are thinking about it… unfortunately or perhaps not, its at the back of their minds rather than in their pre-frontal cortex.
keep going doc, we’re with ya!
When hearing yourself speak, profound and sweeping observations are the order of the day… to wit comments section on here is littered with soap boxes for educating the rest of us idiots with deep wisdom NOT listening and learning.
Interestingly you might have noticed the low correlation between the many insights embeded in Dr. Johnson and Mr. Kwaks writings and the received wisdom of the comments section. It is one of the essential paradoxes of the Internet, that despite the depth of analysis here, most readers pay no heed to it in their responses, especially when it interferes with the preconceived notions of how it is.
earle,florida
You have made this argument repeatedly about the “U.S. Banking Cartel” yet the real issue of European crises is the same as the real issue of American economic crises and that is sovereign debt, for which Wall Street, which mind you today includes BNP, Barclays, UBS Deutsch Bank, and all the other European houses of high finance, are only bit players.
Most of your nattering on about the U.S. is a distraction for the real question democracies have to face… which is how not to vote your self into fiscal obesity and experience the heart attack that follows. The obsession with a single villain distracts from answering the hard questions… but i suppose thats not the point when moral outrage is so much more exhilarating.