Glenn Greenwald — Obama moves to make the War on Terror permanent

Complete with a newly coined, creepy Orwellian euphemism - "disposition matrix" - the administration institutionalizes the most extremist powers a government can claim

A primary reason for opposing the acquisition of abusive powers and civil liberties erosions is that they virtually always become permanent, vested not only in current leaders one may love and trust but also future officials who seem more menacing and less benign. The Washington Post has acrucial and disturbing story this morning by Greg Miller about the concerted efforts by the Obama administration to fully institutionalize - to make officially permanent - the most extremist powers it has exercised in the name of the war on terror.

The Guardian (UK)
Obama moves to make the War on Terror permanent
Glenn Greenwald

Clenching the grip of fascism on the US.

It doesn't requiring any conspiracy theorizing to see what's happening here. Indeed, it takes extreme naiveté, or wilful blindness, not to see it. 

What has been created here - permanently institutionalized - is a highly secretive executive branch agency that simultaneously engages in two functions: (1) it collects and analyzes massive amounts of surveillance data about all Americans without any judicial review let alone search warrants, and (2) creates and implements a "matrix" that determines the "disposition" of suspects, up to and including execution, without a whiff of due process or oversight. It is simultaneously a surveillance state and secretive, unaccountable judicial body that analyzes who you are and then decrees what should be done with you, how you should be "disposed" of, beyond the reach of any minimal accountability or transparency. 

The Post's Miller recognizes the watershed moment this represents: "The creation of the matrix and the institutionalization of kill/capture lists reflect a shift that is as psychological as it is strategic." As he explains, extra-judicial assassination was once deemed so extremist that very extensive deliberations were required before Bill Clinton could target even Osama bin Laden for death by lobbing cruise missiles in East Africa. But 


"Targeted killing is now so routine that the Obama administration has spent much of the past year codifying and streamlining the processes that sustain it."

James K. Galbraith and J. Travis Hale — The rich, the poor, and the presidency

A recent paper from the Russell Sage Foundation reports that income-based residential segregation in America has risen sharply over the past 40 years; in 1970 about 65 percent of families lived in middle-income neighborhoods but only 44 percent do so today. The rest now live in neighborhoods that are distinctly either rich or poor, with affluent Americans being especially likely to be surrounded by their income peers. These findings parallel estimates we have been making, from different data, since 2005. In a generation, the spatial polarization of incomes has become an American fact of life.

Does this fact have political implications? We believe it may. Indeed, there seems to be a party that’s benefiting from increasing residential segregation by income – and, oddly enough, it’s the Democrats.

The Columbia political scientist Andrew Gelman has noted an apparent paradox: in presidential elections rich people tend to vote Republican, but rich states tend to vote Democratic. This can happen because the income-voting relationship differs from state to state. Thus in wealthy but arch-blue Connecticut the relationship is much weaker than in non-wealthy and arch-red Mississippi – a fact that prompted Gelman to ask, in the title to one article, “What’s the Matter with Connecticut?”

But why should the wealthy in (say) Connecticut (or California) tend to be Democrats while those in Mississippi (or Texas) so rarely are? We suggest a possible explanation: It’s not where the wealth is that matters — it’s how insulated it is from where it isn’t.

Reuters Opinion | The Great Debate
The rich, the poor, and the presidency
James K. Galbraith and J. Travis Hale
(h/t Kevin Fathi via email)

Kimball Corson — How and Why Did the Antitrust Laws Disappear?

It started with a law professor I had at Chicago. Richard Posner re-read Sec 1 of the Sherman Act to say it literally only protected competition and it did not protect competitors as everyone then supposed, except as absolutely necessary to protect competition, which was view too narrowly as just price competition. Sec 1, adopted back in the 1890's reads:

"Every contract, combination in the form of trust or otherwise, or conspiracy, in [unreasonable] restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."

(The "unreasonable" limitation was added by judicial gloss and no one disagrees with that.) 

So then, what do we need to have competition under Sec 1, Posner asked. The conclusion he and other Chicagoans reached was it was enough if say two or a few competitors with sizeable market share apparently competed as to price. That was enough to have sufficient competition. It was therefore alright if those few large competitors engaged in anticompetitive acts toward smaller competitors and put them out of business. The apparent competition between big boys was enough to preserve and protect competition. The Sherman Act was not concerned with more....

Wandering the Oceans
How and Why Did the Antitrust Laws Disappear?
Kimball Corson

CNSNews.com: U.S. Government's Foreign Debt Now $47,495 Per Household

Can everyone see the contradiction in this headline?

More nonsense from these disgraced morons.... sad.

Dirk Ehnts — Romneynomics is really just neoclassical economics in 2012

Six days ago, Paul Krugman set out to understand Romneynomics. Since I am currently teaching macroeconomics 101 I have collected some quotes and facts in order to show how neoclassical ideas moved from Say to Ayn Rand to Alan Greenspan to Mitt Romney. I think that neoclassical ideas should be seen as a meme, which is like a gene something that can spread. Keynesian economics would also be meme, so please don’t be offended.

econoblog101
Romneynomics is really just neoclassical economics in 2012
Dirk Ehnts | Berlin School for Economics and Law

Adam Weinstein — Meet the US Army's Soldier of the Year, a Nepalese Immigrant

Sgt. Saral Shrestha, a native of Kathmandu, came to America in 2007 and enlisted in the Army in 2009; according to his parents, he came on a student visa but was granted US citizenship in an Army naturalization ceremony. He currently serves as a power-generator technician with the 3rd Special Forces Group, supporting their missions overseas, and reportedly tore up the stiff competition for the service's coveted prize. 

Mother Jones
Meet the US Army's Soldier of the Year, a Nepalese Immigrant
Adam Weinstein

Still a nation of immigrants.

Guest Post: "What would tearing up the debt accomplish? Not much."

Guest post by David Gerlitz.

There's been a lot of discussion going around recently about the Central Bank ripping up the portion of National Debt they hold, thereby reducing the amount of debt of Governments. (See here, here, here and here). Some of the arguments suggest this would be inflationary, even possibly hyper-inflationary. But consider the accounting in such a scenario (using the US as the example): The Fed is not allowed to buy bonds directly from the Treasury. They buy the bonds from the private sector in exchange for reserves. As is well known by now, this is purely an asset swap. Far from being inflationary, it could be considered deflationary by reducing the amount of interest Treasury pays on the bonds to the private sector. By paying the interest to the Fed instead, and then having the Fed turn around and send it back to the Treasury, the repo (or QE) essentially performs the act of tearing up the bonds already. Further, the 'restraining effect,' or 'crowding out' of bonds on private expenditure is largely a myth. Given that Treasuries can be leveraged just as easily as cash, what's lacking in the private sector isn't cash to make investments, but rather profitable investments to risk that capital on. Now consider what happens if you take the extra step and actually destroy the bonds. Now you've got an accounting problem because you destroyed an asset without destroying the liability. One approach then is to simply leave those reserves in the system and have a mismatch between cumulative deficits and debt outstanding. This would maybe be Wray's or Lerner's approach. But let's say you wanted to keep the accounting clean: Assuming you're not going to take back 1.6T from the Treasury (which would defeat the purpose) and you're not going to take back those dollar reserves from the private sector (again, deflationary and absurd), then the only place left to take the liability is from central bank capital. What are the liabilities of the central bank? 1. The reserves they create and 2. The equity they issue. In the US, the Fed is "owned" 100% by the banks. If you wrote that equity value down, then you have to write the value of it down from the banks balance sheets as well. The fact we've gotten this far should show how absurd this line of reasoning is and that it's never going to happen anyway. But ultimately the result is not inflationary. So reducing the debt outstanding in this way isn't helpful because repo's and Quantitative Easing perform the task already. They're exactly equivalent to "ripping up the debt." It doesn't increase the deficit or create wealth for the private sector. Now, Beowulf makes the point that policy makers may feel better with less outstanding debt--if you can get past the accounting issues--and thereby lead to more fiscal spending. But again, I'm not sure that's the case. Reducing the cumulative total of outstanding debt isn't going to change the minds of those who have an ideological bent against government spending, debts or deficits. They'll fight the spending just as hard. But that's exactly what's needed--what's always been needed: better counter-cyclical fiscal spending designed around jobs and increasing private sector incomes, not accounting gimmickry.

It is very likely that the government’s total debt is now peaking thanks to sustained QE. This means the total amount of dollars in the hands of the private sector will be shrinking and any additional spending cuts or tax increases will only hasten that shrinkage.

This could end up being a challenge for the economy, but it also could be super bullish for the dollar because it will create shortages of dollars. It’s exactly what happened in Japan and one of the reasons why the yen is so strong.

United Front Against Austerity (UFAA) declines my offer to speak

I contacted this organization about a week ago offering to speak from an MMT perspective. They're having a rally in NYC on Oct 27. I was going to talk not only about why austerity was bad and self defeating, but also about how those who are opposed to austerity must begin to understand that deficits are good and taxes do not fund government spending. Until that happens, the 1% would remain in control and we would have austerity.   The person I spoke to said he knew me from my Fox and other media appearances and knew of this blog.   Well, that person just got back to me and told me that UFAA cannot offer me a spot on the speaker list. So this is who will be speaking:

Webster G. Tarpley Author, historian and economist, tarpley.net Cindy Sheehan Antiwar Activist Dr. W. Randy Short SCLC, University of Virginia Don DeBar Founder, Community Progressive Radio Anthony Monteiro African-American Studies, Temple University Dr. Jay Arena Professor of Sociology, College of Staten Island, CUNY Eric Lerner Popular science writer and Occupy Wall Street activist Rev. Edward Pinkney Benton Harbor, Michigan (via Skype) Murrell Brooks Political Science, Virginia Wesleyan College Eric Draitser Independent journalist, StopImperialism.com Bruce Marshall, moderator former Congressional candidate, Green Party of Vermont

What a joke! Not even a single economist on the list, let alone an MMT person. Like a freakin' 1960s antiwar rally. And they wonder why they get nowhere with their demands for change.

Here's their website.

New Website — Resilience.org

Building a world of resilient communities.

Resilience.org

Marshall Auerback — ‘The Chicago Plan’ does not deserve to be revisited

Marshall Auerback sets forth an MMT-based viewpoint.

Pinetree Capital | Macrobits
‘The Chicago Plan’ does not deserve to be revisited.
Marshall Auerback

(h/t Kevin Fathi via email)

Alexander Reed Kelly — CIA Torture Whistle-Blower Pleads Guilty in Naming Colleague

Former CIA officer and whistle-blower John Kiriakou pleaded guilty Tuesday to leaking the name of a fellow agent involved in the agency’s post-9/11 rendition and torture program to a reporter. He faces 2½ years in prison.

Kiriakou was initially charged under the World War I-era Espionage Act, but those charges were dropped. Critics of the case, as well as Kirakou’s lawyers, say the former agent was selectively prosecuted for revealing wrongdoing by the CIA. In 2007, Kiriakou told journalists that waterboarding was sanctioned by the White House.

truthdig
CIA Torture Whistle-Blower Pleads Guilty in Naming Colleague
Alexander Reed Kelly

Travesty of justice. A pox on all who were involved in this, and the buck stops at the Oval Office.

Lars Syll — Ben Bernanke and MMT

In this interesting video Federal Reserve Chairman Bernanke basically says that idle balances don’t chase goods and services and that a fortiori we don’t have to be overly afraid that quantitative easing will spill over into inflation. And – which actually is the most interesting part of the speech – he also confirms the Modern Monetary Theory view that the financing of these operations is made possible by simply crediting a bank account and thereby – by a single keystroke – actually creating money.

One of the most important reasons why we’re still stuck in depression-like economic quagmires is that people in general – including most mainstream economists – simply don’t understand the workings of modern monetary systems. The result is totally and utterly wrong-headed austerity policies, emanating out of a groundless fear of creating inflation via central banks printing money, in a situation where we rather should fear deflation and inadequate effective demand.

Lars P. Syll's Blog
Ben Bernanke and MMT
Lars P. Syll | Professor, Malmo University

Now if we can just get Ben to stop talking about the public debt "problem."

Matthew E. May — Approach to Innovation

• Lean features
• Loose Reins
• Quiet Minds

The Harvard Business Review | HBR Blog NetworkThe Less-Is-Best
Approach to Innovation
Matthew E. May

Announcement — inaugural issue of the Review of Keynesian Economics will be published by the end of the week

Naked Keynesianism
First issue of ROKE will be published soon
Matias Vernengo

David Rothschild | The election is over! (Results embargoed two weeks)

No good news for Gov. Romney from the prediction markets. Unless there's either a Romney surge or an Obama crash, the results are likely in.

Yahoo News | The signal
The election is over! (Results embargoed two weeks)
David Rothschild | Predictwise

Winterspeak — Analogy by Reason

One needs to look more carefully at the function of a bank, and see that they are at the intersection of two distinct activities. Muddling the actors in these two activites, and ignoring the correct role of Government, leaves you in a horrible pickle where you curse FDIC insurance and argue that Grannie should pay for Blankfein's sins. I exaggerate, but not by that much.

The two activities are 1) payment clearance and 2) credit decisions.

Winterspeak
Analogy by Reason

Matias Vernengo — What's the deal with PPP?

It is obvious that there are 'imperfections' and the natural rate of interest is not equalized in the real world, so the exchange rate also deviate from the natural rate. But that isn't the main problem with the mainstream view. As we saw, the capital debates undermine the theoretical basis for a natural rate of interest, and hence for a natural exchange rate (or a natural rate of unemployment for that matter). Hence, it is the Keynesian (and Sraffian) institutional rate of interest, as determined by monetary authorities that rules the roost. The conventional rate of interest is then connected to a conventional exchange rate [ther institutional factors become relevant, like the existence or not of capital controls, etc.].

Leave aside the theoretical problems of purchasing power parity measures, since they are NOT attractors of the actual exchange rates [the reasons why Argentina had a 1 to 1 exchange rate with the dollar for a decade, or Greece has a 'fixed' parity too are political and institutional], and even if for some purposes you may want to use PPP rates as a measure of material welfare, one may also be interested in actual market exchange rates for other purposes. Indeed, for most of the relevant matters that concern economic well being, particularly in peripheral countries, like the capacity to repay foreign debt and avoid default and import capital goods to promote growth, it is the market exchange rate that is central to convert incomes in different countries into a common numeraire.

Naked Keynesianism

What's the deal with PPP?
Matias Vernengo | Associate Professor, University of Utah

Lars Syll — Leverage cycles (wonkish) [video]

John Geanakoplos has a great lecture at Yale University on why central banks should pay much more attention to leverage cycles.He is forcefully arguing that one of the missing ingredients in the macro models used by central banks today are endogenous default and endogenous lending terms distinct from the interest rate. Focussing to much on interest rates have made them unable to recognise that changes in the perception of potential defaults can have serious repercussions on economic activities. It has also made central banks unable to detect the financial bubbles and to a faulty understanding of the nature of debt and leverage. In short – central banks have to a large degree based their policies on the wrong models.

Lars P. Syll's Blog
Leverage cycles (wonkish) (video)
Lars P. Syll | Professor, Malmo University

Lord Keynes — Lerner on “The Burden of the National Debt”

This article by Abba P. Lerner is central to the debate about the nature of government debt:

Lerner, A. P. 1948. “The Burden of the National Debt,” in Lloyd A. Metzler et al. (eds.), Income, Employment and Public Policy, Essays in Honour of Alvin Hanson. W. W. Norton, New York. 255–275.

I provide a summary of Lerner’s key points below:

Social Democracy in the 21st Century
Lerner on “The Burden of the National Debt”
Lord Keynes

John Harvey — Of Course the Government Can Create Jobs!

A recurring theme in the Presidential Debates has been the role of the government in the economy. There are obviously many complex issues involved and a number of tradeoffs and caveats exist with any policy. That said, however, the assertion that the government cannot create jobs is ridiculous. It is a function of a biased definition of “job” designed to decide the question even before it has been asked....

But, those who say that the government cannot create employment are adding another element to the definition. To them, a job is any routine activity for which we earn income paid by an entity required to earn a profit.... 

Why would someone would embrace such a questionable characterization? Because their true goal isn’t to generate a scientific understanding of the manner in which the macroeconomy operates, but to make a moral statement.

Specifically, their contention is that only those routine activities financed by profit are truly of value. Everything the government does is unnecessary because if people really wanted it, they would have bought it in the private sector: that which is useful is profitable....

It is not surprising that those who espouse this view are almost always in the private sector themselves. It says, “I deserve my income because I work hard creating something of value. Meanwhile, government employees are just handed a portion of my salary for doing something no one really wants. Therefore, not only am I morally superior, but my taxes should be cut!” It’s a very convenient philosophy, but it’s not economic analysis.

Forbes | Pragmatic Economist
Of Course the Government Can Create Jobs!
John T. Harvey | Professor of Economics, Texas Christian University

WashingtonsBlog — Earthquake-Causing Fracking to Be Allowed within 500 FEET of Nuclear Plants

Yikes!

WashingtonsBlog
Earthquake-Causing Fracking to Be Allowed within 500 FEET of Nuclear Plants

Romney ahead in electoral votes, at least according to betting data

This is the first time that I've seen the electoral map has flip to Romney. While polls had Obama and Romney neck and neck, with Romney even ahead in some, the electoral map remained firmly in Obama’s corner until now. This map is courtesy of Intrade.

Vinod K. Aggarwal and Simon J. Evenett — The Sad Truth Behind Growing Clashes at the WTO

What we've seen instead [of tariffs and other forms of protectionism] is selective subsidization—a more direct response to the fact that, at the onset of a crisis, firms need cash more than they need customers. Indeed, so many governments implemented subsidies (thereby delaying reductions in capacity and employment in many sectors and thus distorting trade flows) that we saw the perverse effect for a while that no one brought cases to the WTO. As the saying goes, people who live in glass houses mustn't throw stones.

The governments behind these subsidies weren't only interested in stabilizing their firms. They were also interested in restoring economic growth. In addition to across-the-board monetary and fiscal policy measures, many of them targeted specific sectors and even specific firms as growth poles. This amounts to a revival of the industrial policy that has been pooh-poohed for decades in the US, the UK, and much of the English-speaking world.

Now, disputes have arisen over these crisis-era state efforts at industrial policy, particularly in auto parts, wind power, and solar panels—and also over some pre-crisis industrial policy initiatives, such as those relating to biofuels. But do these formal objections reveal only the tip of the iceberg?....

Here's the bottom line for managers: don't count on WTO rules to protect your interests. It is clear that, during the crisis era, policy choice has sought to circumvent the stricter WTO rules. Because so much of this favoritism has taken the form of various subsidies rather than import-reducing measures such as tariffs and antidumping measures, governments have felt they did not have to change their rhetoric. Publicly, they can claim to maintain "open borders" to commerce even as they aggressively shift the odds in favor of a select few.

Don't be misled by the avowed rejections of protectionism. Just because tariffs aren't being raised across the board, it doesn't mean firms' overseas commercial interests are being treated without prejudice. Policymakers' commitment to the level playing field has been tested during the crisis era and found wanting—and managers must now live with the consequences.

The Harvard Business Review | HBR Blog Network
The Sad Truth Behind Growing Clashes at the WTO
Vinod K. Aggarwal and Simon J. Evenett

Steve Roth — Deep and Long: Private Debt and Financial Recessions

And it’s worth remembering who that devastation is visited upon: the middle class and the poor.The rich do just fine.

Recessions are nature’s (and neoclassicals’) way…of keeping the little guy down.

Aymptosis
Deep and Long: Private Debt and Financial Recessions
Steve Roth

Think of business and financial cycles in terms of the alternation of expansion and consolidation phases that chiefly benefit owners, with workers chiefly bearing the brunt of the consolidation — by design. Which is a reason I call neoclassicism and neoliberalism advocacy rather than economic science.

Mike Bloomberg: Vote Brown or Warren could ‘bring socialism back, or the USSR’

Yeah, he really said that — he who sit at the controls of his own secret police, the NYPD, and gives the commands. Do you prefer life — that is, "feel safer" — under fascism or socialism? I think I'l go for the "socialism," thank you.

The Raw Story
Bloomberg: Vote Brown or Warren could ‘bring socialism back, or the USSR’
David Edwards

Study: Open access publishing of science research rising at unanticipated rate

A new study shows that the rise of open access publishing of academic research is faster than anyone had previously realised

The Raw Story
Study: Open access publishing of science research rising at unanticipated rate
The Guardian (UK)

Bill Mitchell — A Greek exit would not cause havoc

I am in Seoul (South Korea) today and tomorrow working on a project I have with the Asian Development Bank. It is a mega city that is for sure – more than 10 million in the city itself and 25 million in the nearby areas linking Seoul to the airport. Quite a place where you see massive public sector involvement in planning and infrastructure developing aiding mega capitalist firms. But I will report on the work I am doing here in due course, once government clearances are available. Today, I am focusing on the Eurozone after I read a report sent to me that was written by a German consulting firm of some note predicting havoc if the Greeks exit the Eurozone. The European press gave the report oxygen that it does not deserve. It is another example of a highly selective and “fixed” study, which is influencing the debate because of its scare value. It substance is largely zero. The reality is that a Greek exit would not cause havoc and is to be recommended (about 3 years ago)!

Bill Mitchell — billy blog
A Greek exit would not cause havoc
Bill Mitchell

Paul Omerod — Did Economists Go Mad? Networks and the Economic Crisis

Steve Keen: "This is the second of two contributed pieces by Paul Ormerod, the author of Positive Linking and, as I noted in my last post, in my opinion the most effective developer of multi-agent models of the economy."

Steve Keen's Debtwatch
Did Economists Go Mad? Networks and the Economic Crisis
Guest post by Paul Omerod

Peter Fryer — What are Complex Adaptive Systems? — A brief description of Complex Adaptive Systems and Complexity Theory

Short description of complex adaptive systems.

trojan mice
What are Complex Adaptive Systems? — A brief description of Complex Adaptive Systems and 
Complexity Theory
Peter Fryer

Ambrose Evans-Pritchard — IMF's epic plan to conjure away debt and dethrone bankers

So there is a magic wand after all. A revolutionary paper by the International Monetary Fund ["The Chicago Plan Revisited"] claims that one could eliminate the net public debt of the US at a stroke, and by implication do the same for Britain, Germany, Italy, or Japan.

The Telegraph
IMF's epic plan to conjure away debt and dethrone bankers
Ambrose Evans-Pritchard
(h/t Andy Blatchford via email)