Yet Another Reason to Like Elizabeth Warren

By James Kwak

Bob Lawless points me to this 2006 blog post by Elizabeth Warren. Warren describes a first-year contracts class on the case that upheld a fine-print forum selection clause (a clause saying that if you want to sue us, you have to sue us in X jurisdiction–Florida, in this case) on the back of a cruise ship ticket.

Warren’s entire class (Harvard, let me say for the record) insists that, as a factual matter, this decision is good for consumers because . . . well, regular readers of this blog should be able to fill in stock Mickey Mouse economistic hand-waving as well as any first-year law school student. Of course! Forcing people to sue in Florida (or to accept binding arbitration in the forum of the company’s choice) deters frivolous lawsuits and lowers costs for the company, and it can pass those savings onto consumers. Why does it pass those savings onto consumers instead of putting them into shareholders’ (or managers’) pockets? Because in a perfect competitive market, if Alpha Cruise Lines doesn’t, then Beta Cruise Lines will, and Beta will underprice Alpha, . . . Consumers will read the fine print and can make an informed choice between the lower price with the forum selection clause and the higher price without the forum selection clause.

Anyway, this is what Warren’s post is about–how people think that logical inferences from unrealistic assumptions somehow produce “facts.” And it isn’t just first-year law students. I’m reminded of Frank Easterbrook of the Seventh Circuit asserting that sophisticated investors ensure that prices are set rationally, protecting unsophisticated investors–on the basis of a single, purely theoretical law review article (those in the legal world will appreciate the italics).

This is, in a nutshell, why the field of economics has been able to do so much damage in just a few decades–at the same time that economic thinking itself has become much richer (think Akerlof, Stiglitz, Kahneman and Tversky, Ariely, Levitt-Wolfers-Ayres-Donohue, Duflo, etc.) and probably better as well.

I’d like to say that Yale is better, but my contracts class had its own Mickey Mouse economics as well–which I felt compelled to respond to here. (Actually, Yale is better–just not along that particular dimension.)

96 thoughts on “Yet Another Reason to Like Elizabeth Warren

  1. Why is the question of whether the clause is “good for everybody” relevant to whether it is legal? (Apparently it is, since Warren quotes it as part of the Court’s decision. My question is, why? Are corporations obligated to do what is “good for everybody”? Should they be?)

    It seems to me that if you do not like the cruise company’s terms, you can avoid them by the simple expedient of not taking the cruise. But maybe I just do not take enough cruises to relate to the poor oppressed victims in this case.

  2. The discussion was in response to whether this was a question of fact or of law. Quoting Warren: ‘”Fact, of course,” said the students. So I asked how this fact could be proven.’

    And of course the proof provided consisted of marginal economics.

  3. Honestly this isn’t a shameless plug. I’ve pretty much given up on getting any kind of large following. I think of my blog now as some kind of pathetic small town newspaper people read to humor themselves with how many typos they can find in each issue. But I have about 7 links related to Miss Warren on my blog, who I am pulling for quite strongly. I can’t imagine too many people outside of her family and close colleagues who will be more giddy than me if Miss Warren gets the job. Here is the post with the 7 Elizabeth Warren related links. I’d Add Mr. Kwak’s but since all my traffic comes from Baseline it’s a tad redundant.

    I could have added one more link from the “Business Editor” of The Atlantic magazine on my blog related to the topic, but I have a zero-tolerance policy for garbage on my blog.

  4. On the point of unrealistic inferences, to phrase the point in slightly more philosophical terms: the problem with modern economics is that many economists are convinced that economics is an a priori discipline, and yet still think they can derive empirical results from it. If one wants to make empirical predictions one has to be willing to accept empirical refutation, and unfortunately many economists only want this to go one way.

    The sooner we recognise that economics is an a posteriori matter, i.e., a description of the way certain natural systems function and not some abstract science of rationality, the better.

  5. That’s a fallacy. Just because a cruise is arguably a frivolous good doesn’t change the principle or the predatory nature of the practice, which is applied to all sorts of far more down-to-earth goods and services.

    As for good vs. legal, why should something be legal if it isn’t good? (The post of course isn’t about whether these “students” were correct about the rigged law, but about their “rational” and even “moral” arguments defending that law.)

    Are corporations obligated to do what is “good for everybody”? Should they be?

    Yes and yes. Again, why should their existence otherwise be tolerated at all? The answer of course cannot be a debased concept of “freedom”. Nobody has a right to harm others (including infringing on their freedom) in order to seek his own antisocial profit. And that’s what our premise is here – corporate activity which doesn’t foster the common good but aggressively seeks the common bad.

  6. It sounds like Warren’s an excellent educator.

    Which is why it’s all the more baffling why so many people would rather see her rot at a phony CFPB, pointlessly using up all her energy in bureaucratic infighting while accomplishing nothing, instead of taking her show on the road, delivering presentations directly to the public.

    (She shouldn’t be wasting time and energy in academia either.

    Assuming she really does care about the public interest the way she seems to, the fact that she still thinks such system pursuits can possibly be worthwhile at all, let alone a better course of action than the direct public forum she could command, is an all too eloquent testimony to the limits of the self-constructed conceptual box she’s in.)

  7. Why is the question of whether the clause is “good for everybody” relevant to whether it is legal?

    There is a substantial cost imposed on the society, members of which have to check carefully the fine print every time they want to enter into a commercial transaction. What if the fact that you decided to take a number in a supermarket deli department constituted an explicit consent to any food additive the supermarket wants to try in its deli? You were too lazy to read the fine print on the back of that ticket? You thought it was an ad, like in other supermarkets? Sorry, your fault.

    There is a substantial cost to legal arms race between consumers/consumer advocates and corporations. Rather than trying to sort it out through courts and obscure legal terminology and forcing consumers spend time and effort trying to understand what terms & conditions really mean, would it not be more efficient and “better for everybody” if there were simple, built on common sense, rules of interaction between consumers and corporations, just like traffic rules are simple and largely the same across the country? I wonder if Milton Friedman thought that traffic rules should also be based on free unregulated market rules…

  8. ‘This is, in a nutshell, why the field of economics has been able to do so much damage in just a few decades–at the same time that economic thinking itself has become much richer (think Peter Joseph) and probably better as well.’

    Peter Joseph Lecture: “Where are we going?”

  9. The twisted logic here is that by making it more difficult for the injured woman to sue this benefits consumers and not the cruise line. Individual rights being subordinate to the rights of the corporation. Breath-taking.

  10. One is entertained reading these intra-elite discussions concerning the law and its morality when a more than trivial portion of it was either brought into being or revised to serve self-centered ends somehow seen as “rights” and all of the self-important, self-serving temples of this law – the Harvard, Yale and University of Michigan law schools – are sewers in which pathology postures as intellect. I say erect structures where the vile stench of these cesspools and those “educated” in them is rendered harmless. Perhaps then we can have an authentic justice.

  11. first warren aint gonna get the cfpb job. one of the nominees is a geithner pet. & the white house backtracking shows they r using her popularity to claim victory on reform. 2nd y do corporations get to choose their jurisdictions yet people dont?

  12. The economics profession generally seems to not comprehend a fundamental problem with their attempts to reduce all aspects of ’social metabolism’ to mathematical formulas…

    and this has encouraged politicians (and the electorate) to escape the political necessity of ‘judgment.’

    It’s not that logic and math aren’t important… I’m a great believer in the Enlightenment.

    But what any good logician understands is that formulas only work where the factors of the equation cover ALL variables and conditions of the reality the equation is attempting to represent.

    Economics ignores massive social variables in pursuit of a fantasy of ‘perfectible’ equations that all too often… and especially over time… lead to intolerable distortions of the true ‘metabolism’ of a civilization.

    This is why ultimately economics and politics must be RE-recognized as tightly bound (as they are at their roots – they are social decision systems).

    And they require a very difficult to quantify metric… Wisdom!

    Our decision systems are NOT selecting for either… our economic/political markets have been heavily weighted in favor of the individual and collective lizard-brain.

    Wisdom has been a neglected strategy for too long. It’s not much rewarded.

    Money and the Machinery of Representation

    Personal Democracy: Disruption as an Enlightenment Essential


    History is NOT going to view this period of self-governance in a very positive way. Self-governance requires an informed, involved and empowered citizenry.

  13. Russ,
    Actually, I believe one of the mandates of the CFPB is public education under the rubric of “financial literacy.” So it would be completely within her purview as head of the CFPB to continue to make people aware of the choices they are unwittingly making. And it might be a better platform from which to do it as well.

  14. Because the court system in this country is wealth and power sensitive.

    If that sounds like numerous other countries we used to laugh at…that should tell us something, shouldn’t it?

  15. That’s our Simon. He not only can dish it, but he can take it too, with a stiff upper lip. The same can be said for James.

  16. How long have we been in Iraq? How long have we been in Afghanistan? Anyone know? Anyone remember? Anyone care? How ’bout if we had a DRAFT?? Would we even have gone? Would we even still be there? What about sending the sons and daughters of the warmongers to find those WMDs and make the world safe for corporate excess?

  17. Morality has no place in the law.

    The First lesson of Capitalism is: READ YOUR CONTRACT!

    The Second lesson of Capitalism is: EXPECT THE COUNTER-PARTY TO TRY AND SCREW YOU!

  18. @ Geoff-UK
    Re “Morality has no place in the law.”

    Interesting theory.

    But as Yogi Berra said:

    In theory, theory and practice are the same… in practice they aren’t!

    And here’s another quote from a different smartmouth:

    “Justice is the end of government. It is the end of civil society. It ever has been and ever will be pursued until it be obtained, or until liberty be lost in the pursuit. In a society under the forms of which the stronger faction can readily unite and oppress the weaker, anarchy may as truly be said to reign as in a state of nature, where the weaker individual is not secured against the violence of the stronger.”
    James Madison from Federalist 51

    (And thanks to the blog series at Volatility for bringing that old wiseguy back into the discussion)

    Nothing wrong with caveat emptor… but it’s always important to value human nature for more reasons than just take advantage of its weaknesses…

    Some ‘Social Metabolism’ doodling:

    Decision Technologies: Currencies and the Social Contract

    Technology, Human Development and the Social Energy Grid

  19. The Warren Mystery – “they’re idiots… with all due respect.”

    July 27, 2010 – Paul Krugman – NY Times

    “I have to say, I don’t get the administration waffling on Elizabeth Warren at all.

    Leave aside the merits of appointing Warren, which are considerable, and think about the politics. At this point, not appointing Warren would be seen by the base as a slap in the face, and would seriously dampen enthusiasm going into the midterms. And Democrats need every bit of enthusiasm they can muster to avoid a Republican takeover of the House.

    Given that, it’s crazy to vacillate. Maybe Tim Geithner doesn’t like Warren. Maybe Rahm Emanuel finds her hard to deal with. (I’m speculating here, not speaking from any inside knowledge.) How can such things count compared with the catastrophic effect of a GOP victory on the White House?

    Maybe they don’t understand what will happen if John Boehner becomes speaker. Maybe they don’t realize that they’ll face total obstructionism and quite possibly a government shutdown; maybe they don’t realize that there will be investigations and fake scandals over everything in sight, that Andrew Breitbart will become the de facto GOP whip.

    But if they don’t realize that, they’re idiots. And I say that with all due respect.”

  20. Geoff-UK wrote:

    “Morality has no place in the law.”

    Ex-Regulators Get Set to Lobby on New Financial Rules

    July 27, 2010

    “One corporate lobbyist who worked as a regulator, asked whether he believed he had an inside edge in lobbying his ex-colleagues, said: “The answer is yes, it does. If it didn’t, I wouldn’t be able to justify getting out of bed in the morning and charging the outrageous fees that we charge our clients, which they willingly pay.”

  21. What that former regulator is actually relying on is directly related to issues related to ‘the boundaries of biological altruism’…

    and this has an intimate connection to problems in scaling a healthy civilization around since the birth of organized agriculture.

    Ayn Rand & Alan Greenspan: The Altruism Fly in the Objectivist Ointment

    Compensation and the Social Network

    (sorry for all the links but it just seems so relevant… and I’ve just started paying attention to this blog.)

  22. Let’s not forget that the existence of corporations is, itself, a major state intervention in the economy. If the state grants certain people the ability to act together towards certain means and grants them also limited liability for the consequences of their actions and taxation of their profits at favorable rates compared to individual income taxes, then, yes, the state should demand in return that these corporations behave in ways that are socially desirable and on balance do more good than harm. (I don’t know what “good for everybody” is–that’s rarely going to be achievable if taken literally.)

    In fact, it strikes me that although corporate behavior is driven by individuals and their incentives, it seems to me that most of the serious economic predation in our society is perpetrated by or through corporations, rather than individuals acting alone. I wonder what the world would be like if we abolished corporations altogether, or severely limited their size and powers.

  23. I would say to Krugman, no respect is due.

    And they’re not idiots. It’s been clear all along that they don’t really want effective consumer protections. So of course they’re going to appoint somebody who is either ineffective or, if they can pull it off, a saboteur.

  24. “Nothing wrong with caveat emptor…”

    Maybe, if the buyer has the knowledge and resources to really evaluate what is being offered for sale and has a meaningful range of choices available. But that is hardly ever the case in our time and place.

  25. I think everyone can agree with Krugman on this point. But Obama is nothing if not a team player, and he will not pick EW if his Wall Street gang doesn’t approve. Maybe he just needs to recover the crystal ball that he seems to have lost since becoming president. I am sure he will find his lost clarity again around election time.

  26. You’re right, CBS. They’re not idiots. They’re STUPID IDIOTS (with all due respect, of course). Not that there’s anything wrong with that, of course.

  27. Isn’t it fascinating that the basturd John Boehner says nothing after we find out Bush and Cheney put $8.6 Billion dollars in Iraq and nobody knows where it went???? Where is Republican John Boehner’s outrage that Bush and Cheney gave $8.6 Billion to Iraqi’s to pilfer??? It may be the only thing in years that has kept Boehner speechless.

    Seems obvious to me we need a CFPB for Republicans so taxpayers can know when they’ve been fleeced by the Pentagon.

  28. Ayn Rand was a Nihilist.

    Nihilism definition #4 (the social metabolism of definitions 1-3) – “A doctrine among the Russian intelligentsia of the 1860s and 1870s, denying all authority in favor of individualism and advocating terrorism.”

    All technology invented up to the atomic age was “biological” because it extended the “powers” of labor that the human body was provided with, dare I say it – through supermortal design,

    and the senses which the brain depends upon to function – vision, hearing, touch, etc.

    If you reverse the engineering of “too big to fail” – reconstruct it into a human body – what would you get?

    Definitely not a biological metabolism :-) remotely resembling the mechanism you see in the mirror!

    The bone marrow would tell the heart that it must provide a bigger piece of the liver’s function that processed the kidney’s output

    or no leukocytes for you :-)

    Nihilists are neither scientists nor are they philosophers.

    The FACT that there is no other “secret” cult in control of the “economy” other than a self-proclaimed cult of “experts” is one HUGE case for “discrimination”, no?

    Anyone who pointed out the “flaw” to Greenspan was dispatched with a wave of the hand as “stupid” and put on the “list” that the Lobby kept.

    “We won’t get fooled again”….

    One can exhibit tolerance for their inexplicable madness following a dogma that their mind invented about an “infallible mind”,

    but we do not have to jump off the cliff after them…individualism is not attained through terrorism.

  29. I supported the man for President, and I reticently support him now. But he can spout “Yes We Can” and “Change” all he wants, if he doesn’t nominate Elizabeth Warren for head of CFPB, come hell or high water I won’t check his name on a ballot in this lifetime. And I don’t think his political base will either. He can kiss 2012 goodbye on this one.

  30. So why don’t we just repeal all corporate laws entirely and replace them with a simple one-liner: “Corporations shall act in ways that are good for everybody.” Then simply let courts decide whether any particular corporate action is good or bad. That would save a lot of work for the legislature, wouldn’t it? Taken to its logical conclusion, we can dispense with our elected representatives entirely and just let judges decide what is “good” and what is “bad” for everybody. Wouldn’t that be great?

    I understand that what I am saying is tangential to Warren’s point. But most of these responses are tangential to mine. As part of its decision, the Court (apparently) wrote, “passengers who purchase tickets containing a forum clause like that at issue in this case benefit in the form of reduced fares reflecting the savings that the cruise line enjoys.” Obviously that statement itself is a question of fact, not of law. But my point is that I do not see how this fact, whether it is true or not, could possibly be at all relevant to the Court’s decision.

    Either such a “forum clause” violates some law, or it does not. Whether it is “good for everybody” or “bad for everybody” or “indifferent to everybody” is simply irrelevant, unless our laws themselves have become so fuzzy as to be meaningless. (Or more precisely, so fuzzy as to mean whatever any particular judge “feels” like it “should” mean.)

  31. I suspect the delay in naming the new CFPB head is because of the enormous forces churning below the surface, battling for control.

  32. Not sure who’s the bigger schlemeil here, neo-liberal, DNC shill, Krugman, who supports her or Elizabeth Warren for having allowed herself to be used as a sop to the academic and non-profit brie and wine sets. Warren’s credibility was irreparably damaged whe she accepted the compromise creating the
    cfpb only to have it placed under the auspices of the Fed. She really must have wanted the appointment at all costs. I mean no agency, no appointment, right? Elizabeth Warren – and Paul Krugman – are cut from the same self-promoting mold. Its just that Warren has the good opinion of League of Women Voters types while Krugman has – well – no one’s good opinion.

  33. What is the point of having laws if not to regulate behavior in ways that do more good than harm in aggregate? No, you can’t accomplish it by a one-liner of the type you mention. But making decisions about what does more good than harm in the world is precisely what legislatures are supposed to do. (In reality it seems they mainly decide what does more good than harm for their cronies/clients/friends/contributors, etc.)

    My main point is that the existence of corporations is in no sense a “right.” It is a privilege granted by the state. Corporations, as we currently do things, are immortal, immune to any form of punishment but financial, do not have to make restitution for the harms they do in the world beyond the extent of their designated capital, and in most jurisdictions pay lower taxes on their earnings than inividuals do. That’s a lot of benefits! Surely we can require some social benefit in return for all that privilege. Who decides what constitutes aggregate social benefit, and by what process, and under what forms of accountability is a major issue–but one that gets to the heart of government itself and is not specific to the regulation of corporations.

    Economic predators have used the corporate mechanism greatly to their advantage. We can try to regulate their behavior better–but that has proven extremely difficult. Perhaps it is better to deprive them of the powerful tool we have so generously given them asking little in return.

    Having minimally regulated corporations has proved disastrous in the financial services industry, and most of us who comment here believe that there has been little or no concomitant social benefit. I’m just generalizing the point beyond finance.

    The tobacco industry is a good example. It continues to kill upwards of 300,000 Americans every year (some estimates are much higher), and the toll is much higher world-wide. It is unlikely that prohibiting tobacco would be any more effective or less problematic than the prohibition of narcotics and hallucinogens has been. The problem seems to stem from the aggressive marketing undertaken by the tobacco corporations: get kids to start smoking so they’ll already be addicted by the time they have the maturity to make sensible decisions. And it would be really hard to craft rules that would stifle such advertising without also inhibiting other kinds of freedom of expression that are important and socially very necessary and desirable. So maybe the solution to the world tobacco problem is to ban tobacco corporations. That is, prohibit the possession, sale, or other distribution of tobacco by any corporate entity (or perhaps just by any corporate entity large enough to undertake serious marketing). Those who really wanted to smoke tobacco would still be free to grow and smoke their own, or even form small consortia with other people to do so; but the leviathan industry that promotes addiction, affliction, and death would be eliminated and I suspect tobacco usage would decline to minimal levels _with no infringement on anybody’s personal freedom._

    Tobacco is one of many examples of corporate danger that come readily to my mind. So it leads me next to question the value of corporations to society altogether. I can think of industries where the privileges and economic power of large corporations seem to have done a lot of good, of course. (The computer industry comes to my mind–though some might disagree.) But maybe the benefits we derive from those corporations isn’t sufficient to justify the predation we suffer from the rest. Anyway, I’m just saying I wonder what the world would be like without corporations (as we know them). Would it perhaps be a better place? Or would that be throwing out the baby with the bath water? Just wondering.

  34. Re: @ Anonymous____Please note: The “SEC” can no longer be sidetracked by the “FOIA”, it is now under congressional oversite – simply put, “The Freedom of Information Act” is “Null and Void”! Ref: 1st paragraph “FinReg” :^(

  35. Why yes, earle. Even if they don’t have law schools, we can include Princeton and Smith on principle if you’d like. :-)

  36. Blistering point Ted K. The propagandists and disinformation warriors, regurgitated relentlessly by the gospel according to Fox, and wingnut extremists on talk radio during the bushgov managed to mangle language to such an extreme extent, that Amerika’s most core and essential principles and ideals are forever warped, distorted, bastardized. A few example. Tyranny, pillaging of other nations resources, slaughtering untold numbers of that nations innocent civilians, and wanton profiteering – is majikally shapeshifted into liberation and democratization. The predatorclass purchasing government and regulatory bodies, gaming the financial system, conjuring ponzi schemes that benefit the predatorclass alone and which cause serious harm to the greater population, engaging in criminal enterprises, (bribery, fraud, collusion, predatory lending, tax evasion, et al), and then heaping all the costs and debt on tax payers after catastrophic FAILURE, – is somehow tranformed into “privatization”.

    Ditto, – the Pandora’s box of wanton profiteering in the monstrous private military and private intelligence industrial complexes that exploded under the fascist regime of the bushgov, – all justified by the glories of “privatization”, free markets, ect.

    The predatorclass, the superrich, 1% of the population given massive taxcuts and other forms of government largess, is falsely framed as “letting mainstreat and small business keep more of their money.”

    Joe the Plummer is hoisted as a wingnut icon of the working class.

    And I could go on for pages. The point which Mr Kwak and Ms Warren address, is that if our underlying assumptions are false, the ultimate ends are certain to be deleterious.

    There are no freemarkets!
    There is no such thing as TBTF!
    Fierce regulation is necessary to prevent industry from robbing, pillaging, abusing, and injuring the greater population!
    Big government cannot be slimed and gutted when it benefits and advances the peoples best interests, and then hailed as godzwill and bloated to obscene levels enriching the predatorclass den of vipers and thieves on Wall Street, and prosecuting unnecessary and unjust wars of choice for the single purpose of wanton profiteering by and for the predatorclass.

    There is this thing called the Constitution, and in it the Bill of Rights which was drafted to protect the citizenry from the abuses of government, and so government has no right to spy on, or target American with due process, probable cause, and a court ordered warrant.

    There is no such thing as immunity for crimes committed.

    Anyone and any nation that would sacrifice freedom for security, deserves neither freedom nor security.

    We must revisit the definitions of democracy, justice, freedom, freemarkets, capitalism, (fill in the blank) which have been so mangled by the fascists in the bushgov, wingnuts, redneck Amerika, the socalled MSM, – and decide yet again, what kind of “more perfect uniont”, or nation we are attempting to evolve. America as we once knew and according to the quaint notion and guiding principles of the past, is dead and rotting. What we inhabit now is fascist Amerika, oligarchy, wherein the predatorclass alone, singularly and exclusive benefits from and owns and controls the government, and the 80% of the nations wealth and resources.

    This place we inhabit now is NOT America.

  37. The scariest part — the responses from Warren’s students. Not one questioned whether it was “factual”? Not one spoke up when Warren asked for “what the plaintiff might offer as proof to show that the justice was wrong”?

    These are suppose to be some of the best and brightest?

    This situation, if reported accurately by Warren, is reflective of a dumbing down of education in the U.S. and a vacuum of critical thinking.


  38. Heh, Yale is better. That’s hardly worth mentioning when you’re discussing two low class institutions that have precious little to do with the field they purport to be teaching students about. Have fun in your little academic caves, troglodytes.

  39. Sans a “public option” – there is no real healthcare reform, and no way for the people to protect themselves from, or choose to reject abusive predatory healthcare, insurance, and pharmaceutical oligarchs.

    Allowing the TBTF crime syndicates and oligarchs to remain whole, and continue conjuring PONZI schemes and cloaking toxic assets’, and failing to demand transparency in the 600TRILLION dollar derivatives market is certainly NOT financial reform.

  40. I’m totally with you, but you realize other legal entities will lurk in the graveyard of the corporation, ready to exploit regular citizens at the first opportunity. Yes, let’s eliminate corporations. But we must also educate the citizenry and demonstrate that there are valid reasons for ordinary people to become involved in community life. If we can’t do that, what’s the point of eliminating corps?

  41. Being FORCED to consume for-profit health insurance is truly the most sadistic act that The Wrecking Crew has coughed up. Period. Worse than 2 years of redefining torture.

    And the reason that they did it was because the SS kitty was not big enough anymore. Some people always manage to find a way to live BEYOND their means but the math formula that they use IS troglodyte:

    More misery for others = More money for ME ME ME

    I just heard some pol hack saying that al queda is a threat to western civilization. Maybe they need to come out and tell us that al queda are big cockroach-like looking aliens from another planet with superior weaponry who are here on our planet because – well, why would they be here…? Someone else has to add their own speculation to my wild speculation that is based on the premise of the alien invasion threat to western civilization called “al queda” because nothing else could “threaten western civilization”…

    and why USA dollars are so meaningful to alien cockroach-like beings – is that what they eat? Special cotton paper?

    11% of USA citizens trust “Congress” to keep the 300 million USA citizens secure in our future. I’d say the jig is up and we need to get up and read the DOI 2010 with courage, conviction, and passion and get busy with REALITY.

    Hey, I just wanted Boone Pickens to be President and keep us focused for 4 years on the FUTURE of transportation…all this happy bs with the first ebony and ivory keyboard Big Giant Head running the rigged slot machine that is D.C. is a ludicrous red herring. LUDICROUS.

    Too bad we don’t have a Berlin Wall to dismantle – helps to have something symbolic to rally around…unearthing that ship at the construction site in lower Manhattan was symbolic, but the propaganda machine was unable to process that news.

  42. Tony,
    Labeling those suffering economic hardships due to 8 years of Bush and Republican policies an “ant” is blistering.

    Calling a basturd a basturd—that’s truth telling or calling a spade a spade.

  43. What are you saying!?!?!?! “W” Bush graduated from Yale. And got his MBA from Harvard. They say “W” drove every company he ran into bankruptcy, but that’s not true, he was general partner in the Texas Rangers.

    I heard he later married a stunt car driver from Midland Texas.

  44. earle.florida

    elaborate, please,on your comments pertaining to FOIA and the SEC via finreg.

  45. “Anonymous”,
    The eternal optimist in me says that Rahm Emanuel is cracking heads behind closed doors to get more Congressman/Senators on board with Miss Warren. The realist in me says that hypothesis gives them waaaaaaaaay too much credit.

  46. Re: @ Lavrenti Beria___All law is 90% +/+ interpretation – all listen with the same ears – all are not deaf, even though most listen with their sight – reading lips of the purveyors not! Note: abstract___ eg.) a field of corn has a thousand ears – conversely a field of potatoes has a million eyes or vice versus, but it is only the tongue of the plow that brings about their fruition – this strangeness also holds true in life, whereas our senses provide for our existence…but not without subsistence. PS. Just checking your vitals? :-) Thanks James and Simon for the “13 Bankers” and never “Stop Digging for America’s Sake”!

  47. People will stop participating with banks as they are structured now. The only “consumers” of financial products will be the “elite”. So what’s the point of a “consumer protection” agency.

  48. Re: @ TonyForesta___Agreed – all three branches of government will soon be captured, there will be no recourse for society other than taking the medicine of despair,…sad. PS. We are all animals on that farm being brought to market not knowing but sensing the outcome with a instinctive fatal nervousness. Which begs the question?

  49. Re: @ Cedar____The public (off limits) cannot get any current/future data/info regarding personally investigating the financial sector. The job is now in the hands of congress, and the federal regulatory agencies. PS. Another coup for Obama – Health Care/FinReg…how good does it get? Wait! Good things come in three’s,…can you say “Higher Taxes” anyone?

  50. The Common Good

    1998 – Noam Chomsky – excerpted

    “You need something to frighten people with, to prevent them from paying attention to what’s really happening to them.

    “The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum – even encourage the more critical and dissident views. That gives people the sense that there’s free thinking going on, while all the time the presuppositions of the system are being reinforced by the limits put on the range of the debate.”

    … it’s ridiculous to talk about freedom in a society dominated by huge corporations. What kind of freedom is there inside a corporation? They’re totalitarian institutions – you take orders from above and maybe give them to people below you. There’s about as much freedom as under Stalinism.

    … the power of business propaganda in the U.S. … has succeeded, to an unusual extent, in breaking down the relations among people and their sense of support for one another.

    Now that … workers are superfluous, what do you do with them? First of all, you have to make sure they don’t notice that society is unfair and try to change that, and the best way to distract them is to get them to hate and fear one another.”

    * The critique about limiting the spectrum of opinion appears to apply to government, corporations and media.

  51. Great post, Rickk. Also, I’m not sure if most Americans understand that we are rapidly losing our basic civil liberties in the name of ‘homeland security.’ Did they suppose that Obama would reverse the abuses of the Bush/Cheney administration? Just like they supposed that main street would reign in wall street under the Obama watch? Well, they got FOOLED AGAIN as the abuse of power continues donkey-style. The days of free speech on the internet (the greatest threat to corporate masters) are numbered.

  52. That’s exactly my point. Harvard and Yale, two low class institutions that fail to teach the law, and produce graduates every bit as bad as those who come from Cooley. Wrap it up, Ivy failures, your reputation is all based on the inertia and ignorance of public opinion.

  53. Re: @ Wally____Uncle Sam intends to have every born ( didn’t say illigal citizen now did I?) US Citizen to be registered with them (as in a e-social-secuity card/via Dept. of Nat’l Security?) by 2016 if not sooner. Nice to have a government that cares? PS. Could happen at midnight before the newly elected President takes office?

  54. It is unlikely that prohibiting tobacco would be any more effective or less problematic than the prohibition of narcotics and hallucinogens has been. The problem seems to stem from the aggressive marketing undertaken by the tobacco corporations

    So, by inference, the problem with narcotics and hallucinogens stems from the aggressive marketing undertaken by sellers?

    But that is a tangential point :-). We actually agree more than you probably think. I am no fan of corporations.

    But I am a fan of representative democracy. When talking about government, there is no “good”; there is no “bad”; there are no “victims”; there are no “terrorists”; there is no “true”; and there is no “false”. There is only who decides. And the elected legislature is who decides what is “good for society” or “bad for society”. So I find it odd for a court to even consider whether the venue clause is “good for everybody”. That question should be irrelevant to the court. The court’s role is to determine (a) what happened and (b) whether what happened violated any laws. Period.

  55. Great point. Unfortunately, the question then shifts to whether an economy is a natural system that can be studied like we study physics or chemistry (a posteriori, to your point). I say no, because the “rules” of an economy (i.e. laws passed through some form of government) are arbitrary human constructs (as based in a priori “rationality” as they may be), thus forever dooming economics to the realm of the social sciences, which, to this admitted social scientist, “are neither very social nor scientific,” (not sure who to reference here–sorry). While I have the utmost respect for the many brilliant thinkers in the field, the pretentious wannabe philosopher in me just can’t take it very seriously sometimes. Especially considering how at least some blame for our current mess lies with policy-makers over-reliance on the field (or maybe just a few within it–alan greenspan anyone?).

    Okay back to work.

  56. Re: @ Wally___If we can anticipate the rate of change (radical maybe, but theoretically & hypothetical borderline reality?) we can influence the velocity (rate of change) – time is on our side. eg.) Voters Rights via Term Limits…Eliminate Jerrymandering as unconstitutional…Limit Powers of Presidents in questionable “Wartime” absolutisms…Finally, and most important, eliminate the Federal Reserve Act! PS. I firmly believe that our government is infested with communist/fascist and that MacCarthyism was halfway correct, but it was the socialist/fascist he overlooked? We as Americans have always risen to the challenge…so lets be prepared for the tell-tale signs.:^))

  57. I think she is. All the “resistance” smells like just theater, to make her a more sympathetic character. She’s a PR construct meant to lull us into the belief that we have a motherly figure making sure we don’t burn ourselves on the toasters.

    Still haven’t heard from anyone how she was compensated for her role in the NextWave swindle, or if she was, in fact.

  58. Wally wrote:

    “The days of free speech on the internet (the greatest threat to corporate masters) are numbered.”

    Thanks for the kind words. I agree that most Americans are unaware of the true nature of the threat to their lifestyles.

    I think the threat to the Internet from the “corporate masters”, is minimal from my perspective – I’ve worked in the media my entire life.

    An open and informed mind is your best defense.

  59. Germany and Russia did agree on one thing, separately, of course, but still, shows the UNITY of those two “isms”

    They agreed on what to do with Poland.

    Different day, same ol’ same ol’ war lord “politics”…except someone wants to do it to the USA!!!


    And then the sober moment – they’re freekin’ crazy as a loon…

    People need to start the movement by shutting off their TVs for the month of August and not visit the “news” websites, either…

    Peaceful, SANE, taking CONTROL of issues….that’s what I’m going to do…

    I heard that “yay!”….


  60. That is really the root problem with our legal system. Everything is legal until you are caught AND convicted. It’s why we have so much on-going white collar crime; because even if they are caught, they pay a fine (substantially less than what they stole), settle and claim they did nothing wrong. Then the next guy to come along sees if he steals a billion he only has to pay back 550 million (Goldman).

    It’s a nice racket when you control not only the rule making, but the rule enforcers as well.

  61. Update @ Cedar? Talk in some circles is that US Rep. PK could have been in compliance, but,…? Check out Fox Business today,…

  62. Dodd Sounded Out Bair Over Consumer Post

    JULY 31, 2010 – Wall Street Journal – excerpt

    WASHINGTON—”Senate Banking Committee Chairman Christopher Dodd (D., Conn.) approached Federal Deposit Insurance Corp. Chairman Sheila Bair in recent days to gauge whether she would be interested in running the new consumer financial agency, people familiar with the matter said.

    Mr. Dodd’s behind-the-scenes courtship of Ms. Bair suggests he is trying to find a nominee who might win favor in the Senate. It will be Mr. Dodd’s job to move the nominee through a preliminary vote on his committee and then defend the person’s record on the Senate floor.

    Many consumer groups, labor unions, and liberal Democrats are pushing the White House to nominate Harvard Law Professor Elizabeth Warren, who is credited with coming up with the idea of the consumer agency. Mr. Dodd has publicly expressed reservations about whether Ms. Warren could garner the 60 votes necessary to win Senate confirmation. White House officials have said she is “confirmable.”

  63. Re: @ Rickk___Sheila Bair will get the nod,…should there be any confusion just follow the mindset infused/layered in the yellow brick road: Emanuel; Axelrod; Bernanke; Geithner; Summers; Volcker; Orszag (off the radar for now?); *Bair; Schapiro; Romer; Bernstein; Mills; and last but not least…Gensler? ;^))

  64. You used to write posts that were other than drivel. The fact that you have suddenly discovered that for a thousand years the common law tradition has recognized public policy as one guiding principle does not make it news, nor does it justify wasting so much thread space.

    If you don’t know, be silent. Shhh!

  65. Thanks for the warning Russ.

    I hope my fellow commenters haven’t been so unaware and closed-minded of your blog as I have been. My sincere apologies.

    I always read your comments, but for some strange non-sensical reason I never entered your blog (?)

    You are a writer. Stop being so modest. We need people like you to lead us.


    Do you agree with me that there are far too many writers and intellectuals out there working on their own?

    Don’t you agree that they should unite and come together for a proper debate?

    Possible format and platform;

    The Four Horsemen: Dawkins, Dennett, Harris, Hitchens (1/12)

  66. @Dan

    “It’s a nice racket when you control not only the rule making, but the rule enforcers as well.”


    “Protection is a racket whether said by Don Corleone or Don Columbia law school (We’re All Screwed p.70-71).” But let’s go beyond the classroom to ask why should the total societal compliance effect (regulatory and enforcement) be any different for the capital market than it is for immigration?

    Regulation is a negatively defined business “Thou shall not …except for” the key is to get a comparative advantage exemption. So Goldman settles, in most cases neither admits nor denies, pays $550 million as the cost of doing business, establishes settled case law that makes the federalis happy, and 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?

  67. @ Russ

    Do you think the CFPB mission will be as certifier to qualify investors or as a utility (library) to be a repository of infomation?

  68. Re: @ Anonymous___”An open and informed mind is your best defense”:_____”the lense of free speech in america’s aperture is slowly exhausting it’s infinite depth-of-field – the aggregate polymerization of ideas has metastasized into a nebulous zeitgeist of acquiescent opaqueness – the tacid stalactite nihilism subverted on the eunuched fourth estate are succinct and eerily consequential – as is a three legged lectern at best – complacency of origin is the foretelling of a diametrical tragedy interspersing ambiguity – one’s life starts today or would it have been best yesterday”

  69. Thanks, Rene.

    I think those who want to fight for the public interest as citizens and not “consumers” are far too isolated from one another and uncoordinated.

    We need to settle on a platform, strategy, and tactics, and assume activist responsibilities.

    As they did the first time around, we need to start with organized Committees of Correspendence. The Internet democracy ought to make at least that part of the task much easier than it was in the 1770s.

  70. The best things a CFPB could do would be to outlaw finance speculation and terrorism while educating people not to be “consumers” of finance “products”.

    Needless to say that wouldn’t happen even if the thing were independent of the Fed where it’s been sent to die; and I doubt anyone who could possibly be appointed including Warren (who is, after all, a system cadre even if a “dissenter within the system”) would want to carry out such a true public interest program.

    So I guess the best we can hope for in this practice is if Warren went in there and just tried to chip away at the most egregious cons while trying to educate the public about the normal frauds.

  71. @ Russ

    Back to a fundamental regulatory question of what is the independent variable:

    Do you certify the investor (disintermediate the broker) as capable of investing at a certain level to remove the “noise traders” that are the feed stock of cons,


    Do you infomediate the product with disclosure items (Surgeon General’s Warning).

    It is not easy and there may be no preferable answer but it is the linchpin of your strategerie from which to begin regulating.

  72. I don’t think certifying “consumers” makes sense.

    I’d mediate the “product” with disclosures, and a lot more beyond that. Like I said I’d outlaw most of them. Reinstate the bucket laws. Drive all gambling back into the filthy alleys where it belongs.

    And I’d actually impose justice on financial criminals.

    Of course none of those things, not even the disclosures, are on tap for this bogus CFPB. They drove out a vanilla requirement, the most modest, obvious, common sense measure, as too radical for them.

    Yet people think Elizabeth Warren is going to make bricks with no straw.

  73. This haunting fact alone is why the den of vipers and thieves on Wall Street fear a Warren nomination.

    (“Klee, the UCLA professor, said financial firms just didn’t like the attention Warren had brought to some of their practices.

    “She has a strong drive for truth and justice,” he said. “Along those lines, she doesn’t have a lot of sympathy for people who obfuscate things or take advantage of people unfairly.”

    Those socalled practices are abusive, many of them criminal (bribery, collusion, tax evasion, intentional deception, predatory lending, et al) and THAT alone is why the predatorclass den of vipers and thieves on Wall Street fear her. She would advocate for the peoples rights, which would automatically demand accountability and massive flow of resources back into the poor and middleclass, (in the form and structure of less abuse and criminal activities by the predatorclass swindlers, thieves, and rebrobates on Wall Street) being allowed or cloaked, or ignored.

    Look to the socalled freemarkets to plunge if she is nominated. Why??? Because she would advocate for the people and NOT the predatorclass. Those criminals will pump up the markets within a quarter anyway, since own and control the entire system. Do not be deceived by the cowardly and treasonous threats of the den of viper and thieves on Wall Street – Warren is the ONLY viable choice, and the socalled freemarkets will adjust in time. But finally, they, the den of vipers and thieves on Wall Street would have to look over their crooked shoulders, and curb their abuses, knowing there was someone with the courage and the intrepidness to call a crime a crime, and a criminal and criminal.

    Fear of accountability for criminal activity is the single reason why den of vipers and thieves on Wall Street is so averse to Elizabeth Warren heading the Consumer Finance Protection Agency.

    A pox on the house of the predatorclass!!!

  74. Stephen Colbert: Elizabeth Warren Could Have Oprah-Like Power (VIDEO)

    08- 5-10 04:43 PM – Huffington Post – excerpt

    “On a recent episode of the Colbert Report, Stephen Colbert spoke to Barney Frank, Chairman of the House Financial Services Committee, about the possibility of Elizabeth Warren becoming America’s first Consumer Protection Czar. Frank is pushing hard for Warren to get the job, which, Colbert joked, has the kind of “unchecked power that must be reserved for Oprah.”

    Colbert took note of Frank’s attachment to Warren, joking the two should get “a subcommittee hearing room already.”

    Colbert: Sir, why do you liberals love Elizabeth Warren so much? Besides the fact that she’s a damn fine looking woman. You’d agree with me there wouldn’t you?

    Frank: Well, yes, but you do realize that that would not be my motivation. The fact is, she’s important because she would be a great administrator of that agency which she helped create. She is an extraordinarily zealous pragmatist. She has a dedication to a set of issues and a great way of accomplishing them — and I think we need more examples of that.

    Colbert: Well, then why has the White House so far not heeded your call? I mean why would Senator Dodd say that she may not be confirmable?

    Frank: The argument that you could easily be confirmed in the Senate–I don’t think that’s an argument in favor of you.”

  75. Aug 5, 2010 5:44 pm – PC World – excerpt

    “Several digital rights and consumer groups objected to a private deal between Verizon and Google.

    “The notion that a critical question of public policy could be privately negotiated between two industry giants turns the notion of Internet neutrality on its head,” Leslie Harris, president of the Center for Democracy and Technology, said in a statement.

    “The goal of Internet neutrality is to prevent gatekeepers and ensure a level playing field. Any negotiation that begins and ends with two companies threatens to undercut that goal.”

  76. Yes, there it is (thanks, rortybomb):
    (d) OFFICE OF FINANCIAL EDUCATION.— (1) ESTABLISHMENT.—The Director shall establish an Office of Financial Education, which shall be responsible for developing and implementing initiatives intended to educate and empower consumers to make better informed financial decisions.

  77. Back from the grave are you Lav?

    You do an excellent imitation of the quite insane paranoid fantasies of high-up muckety-mucks in a totalitarian regime.

    I do hope you never have to speak with one of your role models.

  78. Good God! thanks CBS for your simple clarity.

    And Nemo don’t come and tell us that your aren’t well aware of those arguments..

    You are starting to sound like a spinner to me.

  79. I agree with your assessment for the need to counteract the trend of imprecise language. “We’re All Screwed” 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 functions are treated as though they were similar, error is likely to follow.

  80. “As for good vs. legal, why should something be legal if it isn’t good?”

    Good for whom, sir? Your interests and mine probably differ most steps of the way, so any talk of “good” is relative.

    “Are corporations obligated to do what is “good for everybody”? Should they be?

    Yes and yes. Again, why should their existence otherwise be tolerated at all? The answer of course cannot be a debased concept of “freedom”. Nobody has a right to harm others (including infringing on their freedom) in order to seek his own antisocial profit. And that’s what our premise is here – corporate activity which doesn’t foster the common good but aggressively seeks the common bad”

    Nonsense. I owe you nothing simply due to the fact that you draw breath. We impose limits on competition between ourselves in order to improve the workings of the system (i.e. government monopoly on force, contract enforcement through legal system, etc), but do not mistake that for some non-existent over-arching “social good”. Ultimately, there’s good-for-me and good-for-you, and the intersection of those sets is only a subset of either. They are not equal.

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