Friday, February 28, 2014

Just concluded another Forex course. No losses once again. Account up 93% in nine months!

Just concluded another weekly online Forex trading course and continued the nine-month-long streak of zero losses and the account is now up 93%.

It's all Market Composition + MMT + Mental Game.

If you don't believe, read the comments of my students. I'd be happy to give you referrals. They're putting what they've learned to practice and already making money.

Here's another recent comment I just received today:

“Mike, I want to thank you for teaching me Forex. It was money well spent. I really appreciate it.”-Aaron

Next Forex class is March 10-14.

For more info go here.

To sign up go here.

Bryce Covert — The Deficit Fell Faster Last Year Than Any Since The End Of World War II

We're supposed to celebrate this? The good news, though, is that it's mostly due to rising revenue rather than spending cuts.

Yves Smith — Vermont Citizens Push to Form a State Bank, But Will Ratings Agencies Kill the Idea?

The rating agencies as "enforcers" of neoliberalism, and about as subtle as a Mafia enforcer.

Naked Capitalism
Vermont Citizens Push to Form a State Bank, But Will Ratings Agencies Kill the Idea?
Yves Smith

Winterspeak — Flexible Exchange Rates, MMT, and the Ruble Crises of MMT

Winterspeak addresses some of Ramanan's observations.

A point of clarification. Winterspeak says, "One of the more interesting MMT insights, as stated by Mosler, is "exports are a cost, imports are a benefit", which is the opposite of the usual narrative where export driven economies, like Japan, are hailed while import driven economies, like the US, are said to be more vulnerable." 

What Warren and MMT economists say is that ""exports are a REAL cost, imports are a REAL benefit," implying a monetary system in which an independent currency ("sovereign" currency) is neither a real good nor backed by a promise of the issuer to exchange it for anything real. I don't believe that is controversial in economics. 

The notion that n export-driven economic is superior to an import-driven one is a holdover from the metal standard, e.g., where international trade was settled in gold or silver and the wealth of a nation was measured by its stock of precious metal. 

That's the mercantilist position. While it is over, the same thinking persists, some would say irrationally. Now, the rational position is to prefer an advantage in real terms if it is possible to achieve, since national prosperity is measured in consumption rather than either financial claims or gold stock.
Flexible Exchange Rates, MMT, and the Ruble Crises of MMT

On matter related to trade that often doesn't enter the discussion in economics is relative power. Power has been demonstrated  in the extreme historically in imperialism and colonialism, and the slave trade, for instance. However even in contemporary, and supposedly, post-imperial and post-colonial times, power imbalance also results in economic and financial imbalance in trade, and usually this is in favor of the more powerful nation in the trade relationship.

Michael Hudson and Jeffrey Sommers — Ukraine: "Go West, Young Man" (or Dr. Strangelove's Revenge)

In Ukraine, the US deep state and its NGO accomplices follow a now-classic path to "peace" - promoting civil warfare, fragmenting countries and hyper-concentrating wealth so as to channel it to London, New York and other financial centers rather than allowing it to be invested at home
Truthout | Op-Ed
Ukraine: "Go West, Young Man" (or Dr. Strangelove's Revenge)
Michael Hudson and Jeffrey Sommers

See also Venezuela's Deep Political Education Means Venezuelans Will Withstand Right-Wing Protests by Kevin Zeese and Margaret Flowers , Truthout | News Analysis

Neoliberalism tries to co-opt "freedom."

Amy Farber — Historical Echoes: Open a Kiddie Book and Read about Economic Principles, or Read it and Sleep

Sometimes, economists think that children’s books get things wrong. Dr. Seuss’s “The Lorax,” about the destruction of a forest by a greedy industrialist, “assumes that there is no economic system in place,” [Indiana State University’s John] Conant said. In a modern capitalist economy, he said, the trees “would get very valuable as they got scarce, and the person with the property rights would harvest them at an economically reasonable rate.”
By and large, the economic lessons in children’s books lean left of center. “I think the writers are not particularly sympathetic to or don’t understand how a market works,” said Gary S. Becker, the Nobel laureate who teaches economics at the University of Chicago. “It’s not easy to convey that to a child. It’s not always easy to convey it to grown-ups.”
More neoliberal propaganda.  I guess Conant and Becker don't travel much and haven't seen vast tracts of clear cutting in the West, or mountain top removal in Appalachia, or polluted rivers, lakes and streams, or ...... Surprising that eminent economists have never heard of negative externality, also known as capitalize the upside and socialize the downside.

What a crock. It insults the intelligence.

FRBNY — Liberty Street Economics
Historical Echoes: Open a Kiddie Book and Read about Economic Principles, or Read it and Sleep
Amy Farber

Thursday, February 27, 2014

Matthew O'Brien — How the Fed Let the World Blow Up in 2008

This is convincing that letting the central bank set the interest rate is insane. Reading the Fed minutes with hindsight, these people had no clue and were paralyzed for action in the face of an emergency. It makes a good case for the soundness of Hayek's The Uses of Knowledge in Society.

The Atlantic | Business
How the Fed Let the World Blow Up in 2008
Matthew O'Brien

INET — Institute Senior Fellow Adair Turner’s Debt Addiction Remarks Turn Heads

Lord Turner, who is the former head of the United Kingdom Financial Services Authority and currently a Senior Fellow at the Institute for New Economic Thinking, pointed to continually rising levels of private debt as a key culprit holding back the recovery of the global economy.

We just had a $100 billion "helicopter drop" and the inflationista's say nothing

Why aren't all the inflation nuts screaming, "money printing, hyperinflation?"

Marion Brady — Want To Solve America’s Curriculum Problem? Here's How

What's the problem? Departmentalization of knowledge and learning, resulting in loss of holism and context.

Here’s this blog’s takeaway: It’s impossible to understand a dynamic, systemically integrated world using a static, fragmented curriculum.
Want To Solve America’s Curriculum Problem? Here's How
Marion Brady | The Washington Post

Robert Parry — What Happened in Ukraine Was a Presidential Coup, Pure and Simple

More shock doctrine.
There was always a measure of hypocrisy but Official Washington used to at least pretend to stand for “democracy,” rather than taking such obvious pleasure in destabilizing elected governments, encouraging riots, overturning constitutional systems and then praising violent putsches.

But events in Ukraine and Venezuela suggest that the idea of respecting the results of elections and working within legal, albeit flawed, political systems is no longer in vogue, unless the “U.S. side” happens to win, of course. If the “U.S. side” loses, then it’s time for some “shock doctrine.” And, of course, the usual demonizing of the “enemy” leader.

Ukraine’s ousted President Viktor Yanukovych was surely no one’s idea of a pristine politician, though it looks like there are few to none of those in Ukraine, a country essentially controlled by a collection of billionaire oligarchs who jockey for power and shift their allegiances among corrupt politicians.

But Yanukovych was elected in what was regarded as a reasonably fair election in 2010. Indeed, some international observers called the election an important step toward establishing an orderly political process in Ukraine.

But Yanukovych sought to maintain cordial relations with neighboring Russia, which apparently rubbed American neocons the wrong way.
What Happened in Ukraine Was a Presidential Coup, Pure and Simple
Robert Parry, Consortium News

Simon Johnson — Truth from the Top

One of those points is that the world’s largest financial firms have equity that is worth only about 4% of their total assets. As shareholders’ equity is the only real buffer against losses in these corporations, this means that a 4% decline in their assets’ value would completely wipe out their shareholders – taking the companies to the brink of insolvency.

In other words, this is a fragile system. Worse, the current regulatory treatment of derivatives and of funding for large complex financial institutions – the global megabanks – exacerbates this fragility.
Project Syndicate
Truth from the Top
Simon Johnson | Professor of Economics, MIT Sloan

Neil Fligstein et al — Why the Federal Reserve Failed to See the Financial Crisis of 2008: The Role of “Macroeconomics” as a Sensemaking and Cultural Frame


One of the puzzles about the financial crisis of 2008 is why the regulators were so slow to recognize the impending collapse of the financial system. In this, paper, we propose a novel account of what happened. We analyze the meeting transcripts of the Federal Reserve’s main decision-making body, the Federal Open Market Committee (FOMC), to show that they had surprisingly little recognition that there was a serious financial crisis brewing as late as December 2007. This lack of awareness was a function of the inability of the FOMC to connect the unfolding events into a narrative reflecting the links between the housing market, the subprime mortgage market, and the financial instruments being used to package the mortgages into securities. We use the idea of sensemaking to explain how this happened. The Fed’s main analytic framework for making sense of the economy, macroeconomic theory, made it difficult for them to connect the disparate events that comprised the financial crisis into a coherent whole. We use topic modeling to analyze transcripts of FOMC meetings held between 2000 and 2007, demonstrating that the framework provided by macroeconomics dominated FOMC conversations throughout this period. The topic models also show that each of the issues involved in the crisis remained a separate discussion and were never connected together. A close reading of the texts supports this argument. We conclude with implications for future such crises and for thinking about culture and sensemaking more generally.
Why the Federal Reserve Failed to See the Financial Crisis of 2008: The Role of “Macroeconomics” as a Sensemaking and Cultural Frame
Neil Fligstein Jonah Stuart Brundage Michael Schultz
Department of Sociology University of California Berkeley
February 2014


Chris Dillow — Libertarians & Marxism

There is, though, a third option here. It's to recognize that capitalism and real freedom aren't wholly compatible, and to look for economic institutions - of which a basic income is one - which better promote freedom. Libertarianism and Marxism have much in common.
Of course, Libertarianism of the right and libertarianism of the left have a lot in common in that they both value freedom. Freedom entails rights, and rights entail responsibility. The disagree is over prioritizing rights and responsibilities.

Libertarianism of the right accords the right to security of person and property much greater weight than does libertarianism of the left, which views human and civil rights as having the highest priority. Libertarianism of the right emphasizes individual independence, whereas libertarianism of the left emphasizes balancing individual independence, equality of persons, and interdependence.

Stumbling and Mumbling
Libertarians & Marxism
Chris Dillow | Investors Chronicle

Rumplestatskin — All taxes come out of rents

Mason Gaffney has for years been describing the nature of economic rents and its relation to taxation. His key idea, which would have been uncontroversial prior to the rise of the neoclassical school, is that all taxes come out of rents (ATCOR). This means that a single tax on the rents earned from ownership of natural resources can always provide sufficient taxation revenue.
This post shows how a land tax works, based on the work of Henry George.

Michael Hudson has been pounding on this forever, too. Tax economic rents, not productive contributions. Doh.

Warren Mosler has said that in his view a land tax would be sufficient to control inflation using functional finance. Taxes do not fund government. 

Michael Hudson would also tax away monopoly, oligopoly and monopsony rents, as well as financial rents, too, in order to discourage them, since they disrupt markets and lead to social dissonance. Generally such rents can only be collected with either favor government policy, often from capture of the political process, or at least government inaction to preserve a level playing field.

The hidden agenda of neoclassical economics from the get-go was to exclude economic rent from consideration after it had been featured in classical economics. This has been a roaring success and any attempt to address economic rent is now denounced as anti-free market, socialism, class warfare, and Marxism. So most economists, even heterodox economists other than Marxists and Marxians avoid mentioning economic rent, just as they avoid mentioning class structure and power structure. All these go hand it hand.

Rumplestatskin provides a very simple explanation of how conflating land and capital as "capital," as neoclasssical models do, obscures the role of land rent.
For example, when we whittle our way through the production chain down to the landowner, who has one input, land, the neoclassical framing say that this owner rents their land inputs, which are compensated at their marginal contribution to production. Okay. So she rents off another person who owns the land, who we then model as renting from another person, and so on.
The buck never stops. [This involves the informal logical fallacy of reductio ad infinitum, or infinite regress, also called "turtles all the way down."]
That’s what happens when you conflate land and capital into a single input. They nee[d] to be treated differently because land is not an output of any production process, unlike capital.
When you allow the buck to stop at ownership of land and natural resources, you get a very different picture of the economy. One in which the taxation capacity of rents is not limited their current value. As Gaffney points out, when we “lower other taxes, the revenue base is not lost, but shifted to land rents and values, which can then yield more taxes”.

Henry George made this argument concisely a mere 130 years ago when writing in 1881 about the fund from which taxation is drawn
All taxes come out of rents

Matthew Yglesias — The Chart the Debt Alarmists Don't Want You to See

From Thomas Piketty's book. There is no net public debt (public investment less public debt).

The Chart the Debt Alarmists Don't Want You to See
Matthew Yglesias
(h/t Charles Hayden)

Noah Bierman — Elizabeth Warren delivers first foreign policy lecture, urges greater consideration of civilian casualties

Is Liz positioning herself for something?

Noah Bierman, Globe Staff
(h/t Bill Moyers & Co.)

David Glasner — Methodological Arrogance

Longish but thoroughly enjoyable. "Methodological arrogance." I love it.

No, the debate over economic method is not over in spite of how loudly the mainstream screams it is.

Uneasy Money
Methodological Arrogance
David Glasner

Wednesday, February 26, 2014

Anastasia Nesvetailova — Shadow banking, or why black holes are important in the global financial system

The shadow banking sector is now integral to the global financial system. Its architects are constantly seeking to evade oversight and control through the use of offshore accounting and forbidding complexity. The regulatory reforms that followed the 2007-8 crisis are bound to be tested.
Our Kingdom — politics and liberty in Britain
Shadow banking, or why black holes are important in the global financial system
Anastasia Nesvetailova

There is no effective way to regulate or prohibit shadow banking other than at the margin. The only effective option is to let the financial system collapse,  nationalizing the insolvent firms as the US did in the case of General Motors and  providing the needed fiscal support to the real economy to keep it from being affected by low demand. 

There is no substitute for liquidation in capitalism, and governments have the power to let insolvent firms go under if it steps in and makes up the shortfall during any sort-out period, while nationalizing those firms that are too big to fail. They can be sold off to new equity holders after the crisis has passed and new management can take the reins. The US did that with GM, and it should have done it with financial institutions that were also insolvent, cramming debt down to equity and assuming the equity of the former equity holders.

Kasia Anderson — Harry Reid: Koch Bros. Are ‘Un-American’

This was not an off the cuff remark by Harry Reid, the consummate politician. Either the Koch Bros. are hurting Democrats, or the Democratic Party sees political capital in going after them.

The GOP has been attacking the Democrats as un-American and worse for some time. The Democrats have resisted taking the gloves off and responding in kind. Looks like that may be changing.

Harry Reid: Koch Bros. Are ‘Un-American’
Kasia Anderson

Zachary Keck — In America, China is Public Enemy #1

A new poll finds more Americans see China as their greatest enemy than any other country in the world.
This is huge! It completely shifts the focus of national security. America is now back in the position of having to arm to fight on two major war fronts simultaneously, as the US faces off with Russia over its buffer zone and now China as well.  A new Cold War is heating up.

The Diplomat
In America, China is Public Enemy #1
Zachary Keck

Jonathan Turley — Ninth Circuit Rules Google Must Remove “Innocence of Muslims”

I rarely disagree with Turley, but here I think that Chief Judge Alex Kozinski got it right in writing the opinion. The right to free speech has to be balanced against misrepresentation that is damaging. There is no right of free speech to damage others through misrepresentation anymore that free speech covers yell "Fire!" in a crowded place with limited egress, and I don't understand how Professor Turley thinks otherwise. Liberalism is not "anything goes."

Dorsey Shaw — Fox News Host: It’s “Fascism” To Force People To Bake Cakes For LGBT Weddings

Tucker Carlson uses the F word (fascism) on Fox Noise.

OK, now it's on the table. Let's tear and compare.

Buzz Feed | Politics
Fox News Host: It’s “Fascism” To Force People To Bake Cakes For LGBT Weddings
Dorsey Shaw

Jed Lewison — Poll: Republicans don't want Christie to run in 2016

Paul Ryan doesn't make the cut. Rand Paul, Marco Rubio, Jeb Bush and Ted Cruz are in the lead. I would say that if Jeb Bush wants it, the money will be behind him. This would like be a Bush-Clinton race as things now stand.

Daily Kos
Poll: Republicans don't want Christie to run in 2016
Jed Lewison

Robert Oak — Oh Those Credit Suisse!

Yet another Senate report, yet another bank is busted for tax evasion. The Senate permanent subcommittee on investigations has released a report on Credit-Suisse bank detailing their systemic offshore tax evasion of U.S. funds.
Economic Populist
Oh Those Credit Suisse!
Robert Oak

Kevin Zeese — Breaking News: Occupy Activist Cecily McMillan's Trial For Police Assault Postponed Again

I can't believe that this trumped-up charge is being taken seriously by the prosecutor. Apparently, the court may agree. Hopefully, this will eventually result in dismissal, followed by a successful suit against the city for damages. It's too bad that the buck doesn't stop at the top so that the major and police commissar at the time could be sued personally. 

By the way, is fascism even a crime in the US or the state of New York?

Breaking News: Occupy Activist Cecily McMillan's Trial For Police Assault Postponed Again
Kevin Zeese

Merijn Knibbe — A 1963 critique of neoclassical econmics. Did anything change?

Did anything change?

No. The position hardened as neoclassical economists doubled down.

Real-World Economics Review Blog
A 1963 critique of neoclassical econmics. Did anything change?
Merijn Knibbe

Robert Vienneau — Post Keynesianism Contrasted With Neoclassical Economics

The following is reproduced from "An Essay on Post-Keynesian Theory: A New Paradigm in Economics", Al Eichner and Jan Kregel's 1975 Journal of Economic Literature article. Of course, the table being a summary, all entries are highly stylized.
Thoughts On Economics
Post Keynesianism Contrasted With Neoclassical Economics
Robert Vienneau

David Ruccio — Moral economies

Yesterday in our class on A Tale of Two Depressions, we discussed Robert McElvaine’s notion of “moral economy” (which he introduces in chapter 9 of his book, The Great Depression: America, 1929-1941). The idea is that, during the first Great Depression, Americans were engaged in an intense debate between different moral economies (which McElvaine characterizes as the difference between the “cooperative individualism” of workers and the “acquisitive individualism” of businesspeople).

As I explained to students, all economic theories—for example, neoclassical, Keynesian, and Marxian theories—represent moral economies. And they arrive at very different conclusions concerning the justice or fairness of capitalism. Thus, for example, neoclassical economists argue that everyone gets what they deserve and, through the workings of the invisible hand, the result will be full employment.
In contrast, Keynesian economics is based on the proposition that, while everyone may get what they deserve (with the possible exception of coupon-clippers), it’s quite possible that will result in less-then-full-employment equilibrium, which then requires the visible hand of government intervention.
Marxian economists propose a third possibility: even if everyone gets what they deserve in markets, in production things are different (because of exploitation)—and the consequence, whether there’s an invisible or visible hand, is inequality and instability. In other words, the three economic theories represent radically different moral economies.
These three major theories are not exhaustive of possible explanations and other theories are possible, such as proposed by institutionalists who hold that social, political and economic outcomes result from cultural convention and institutional arrangements reflective of the imposition of a class and power structure, but differently from Marx.  Such theories, which are a combination of life science, social science and economics, are capable of explaining not only capitalism but other social, political and economic systems and their consequences historically as Marx sought to do. But they do it differently on the whole, even though they may make use of some of Marx's insights.

Marxian economics also uses this type of analysis but it is not the only approach that does, even though neoliberals generally tar anyone who does so with the Marxist label. By the way, Marxian economics different from the Marxist variety, in that Marxism is an ideological approach that generally claims faithfulness to Marx, while Marxians interpret insights of Marx contemporaneously.

Ruccio also brings up the point of flawed individuals versus flawed institutions. In my view this a a blurred distinction, since flaws individuals create flawed institutions and also maintain them at least implicitly by participating in them, rather than flawed institutions just happening with good people being caught up in them innocently.

Occasional Links & Commentary

Moral economiesDavid F. Ruccio | Professor of Economics University of Notre Dame Notre Dame

Barkley Rosser — Jean-Baptiste Say Did Not Believe In Say's Law

Short must-read.

So much for invoking "Say's law" against fiscal stimulus to offset demand leakage and unemployment. He anticipated Keynes's criticism of changing propensity to save versus propensity to consume and recognized the potential for short-run supply gluts.

Like Adam Smith and David Ricardo, Jean-Baptiste Say was pressed into neoliberal service.

Jean-Baptiste Say Did Not Believe In Say's Law
Barkley Rosser

Karin Kamp — Preview: The Dog Whistle Politics of Race

This week on Moyers & Company, López, author of the newly released book, Dog Whistle Politics: How Coded Racial Appeals Have Reinvented Racism and Wrecked the Middle Class, joins Bill to talk about how racism has changed in America since the civil rights era. The dog whistle of racism, says López, is “the dark magic” by which middle-class voters have been seduced to vote against their own economic interests. Politicians have mastered the use of dog whistles – code words that turn Americans against each other while turning America over to plutocrats.

And yet, “dog whistle politics doesn’t come out of animus at all,” López tells Moyers.“It doesn’t come out of some desire to hurt minorities. It comes out of a desire to win votes. And in that sense, I want to start using the term strategic racism. It’s racism as a strategy. It’s cold, it’s calculating, it’s considered, it’s the decision to achieve one’s own ends — here, winning votes — by stirring racial animosity.”
Preview: The Dog Whistle Politics of Race
Karin Kamp

Jörg Bibow — On German Public Opinion and Illusory ECB Power

But that overlooks the real hurdle in all this: German public opinion. Not only is the constitutional court one of the two holy institutions in Germany, the other being, of course, the Bundesbank. German public opinion is firmly imprisoned by the failure of Germany’s political leadership to explain to the German public that Germany itself has played a key role in causing the unresolved euro crisis. Germans firmly believe that their country is the ‘Musterknabe’ of the euro and that all would be well in the land of the euro if only everyone else became just like Germany – when nothing could be further from the truth.
Germany’s apparent success under the euro depended on others behaving differently. Forcing everyone to behave just like Germany is making matters worse today. Alas, this is not an appealing insight in a country of citizens sharing the belief that all countries of the world can become more competitive at the same time, with “competitiveness in stability” being the German holy grail; just as having all countries simultaneously run persistent current account surpluses is held possible, according to German math and accounting rules.
Nor has anyone enlightened the German public about the catastrophic consequences for Germany itself in case of euro breakup. As a result, Germans may be easily fooled by the fantasy of a “Gexit without pain” – which appears to be the promise held out by Germany’s growing anti-euro brotherhood.
For a start, then, try to educate the German public that quantitative easing is not a synonym for hyperinflation and euro bonds not a transfer union in disguise.
Multiplier Effect
On German Public Opinion and Illusory ECB Power
Jörg Bibow

Someone should also explain to the German public why "the German solution" has depended on wage suppression for decades in order to run an export economy without wage inflation.

Marshall Auerback — China And The Emerging Markets

"Another shoe to drop."

China And The Emerging Markets
Marshall Auerback

Thomas Palley — Explaining Stagnation: Why it Matters

Pally lays out the alternatives.
The big analytical difference between Foster and Magdoff and myself is that they see stagnation as inherent to capitalism whereas I see it as the product of neoliberal economic policy. Foster and Magdoff partake of the Baran-Sweezy [monopoly capital] tradition that recommends deeper socialist transformation. I use a structural Keynesian framework that recommends reconstructing the income and demand generation mechanism via policies that include rebuilding worker bargaining power, reforming globalization, and reining in corporations and financial markets.
These views are not mutually exclusive, but in the end, reforming capitalism leads to a dead-end. It's possible to reform capitalism away from the neoliberal variety, but in the end, capitalism will be capitalism, that is, biased toward increasing capital share over labor share, saving and investment over worker income and consumption, therefore, supply over demand. Having superior power and the ability to capture governments, capital is destined to win over labor unless workers assert themselves against this institutional structure and are able to win. This is about power.

Capitalism involves a demand problem structurally through its very definition, privileging capital over labor, asset value over worker incomes, and production over consumption. This is only going to increase with globalization and labor fungibility as we enter the global age, as well as the growing introduction of automation and robotics as we enter the digital age.

This is a one-two punch delivered to the chin of incomes and demand. Or, a sucker punch to the workers of the world. The result is chronic oversupply and lagging effective demand unless the entire view of political economy is  revisited and revised from the bottom up, putting people first instead of machines and money. The Post Keynesianism that Palley prescribes is only punting, although it would relieve the pressure for awhile.
Larry Summers’ story of serial bubbles delaying stagnation has substantial similarities with both accounts but he avoids blaming either capitalism or neoliberalism. That is hardly surprising as Summers has been a chief architect of the neoliberal system and remains committed to it, though he now wants to soften its impact.
This is the typical capitalist strategy of co-optation — give only as much as absolutely necessary to keep the system in place as it is while keeping it going. It's keeping the goose that lays the golden egg on life-support.

Tuesday, February 25, 2014

Geoffrey Ingham — Whose money is it?

Money is currently produced by a ‘public-private partnership’ between the state and the financial sector, a partnership whose nature remains obscure to the great majority of the population. Is another distribution of knowledge – and hence of power – possible?
Prime Economics
Whose money is it?
Geoffrey Ingham

Geoffrey Ingham is the author of The Nature of Money.

Philip Pilkington — Some Personal Reflections on Contemporary Economic and Scientific Indoctrination

The new religion — science. Same as the old religion when used normatively and prescriptively.

However, to the degree that C. P. Snow is  right about the two cultures, science and the humanities, quite a few people read in the humanities rather than science and come to opposite conclusions. I was one of the latter.

One path leads to materialism and reductionism and the other to humanism and holism.

There is no barrier to their integration, however, other than rigid thinking.

Fixing the Economists
Some Personal Reflections on Contemporary Economic and Scientific Indoctrination
Philip Pilkington

Thom Hartmann — Is It Time for a New Church Committee?

Between 1975 and 1976, the Church Committee published fourteen reports on intelligence gathering abuses by U.S. intelligence agencies.
In August of 1975, the Church Committee released its findings.
Senator Church went on NBC's Meet the Press after the findings were released, and said that, "In the need to develop a capacity to know what potential enemies are doing, the United States government has perfected a technological capability that enables us to monitor the messages that go through the air. Now, that is necessary and important to the United States as we look abroad at enemies or potential enemies. We must know, at the same time, that capability at any time could be turned around on the American people, and no American would have any privacy left such is the capability to monitor everything—telephone conversations, telegrams, it doesn't matter. There would be no place to hide."
Church added that, "I don't want to see this country ever go across the bridge. I know the capacity that is there to make tyranny total in America, and we must see to it that this agency and all agencies that possess this technology operate within the law and under proper supervision so that we never cross over that abyss. That is the abyss from which there is no return."
Truthout | Op-Ed
Is It Time for a New Church Committee?
Thom Hartmann, The Daily Take, The Thom Hartmann Program

Fred Guerin — Privacy as the New Free-Trade Zone of Corporate Exploitation

What is the precise connection between human surveillance, the collection of different forms of data and metadata, and a system of corporate capitalism? Many have argued that the increasing push to collect private information or metadata is for the sake of our national security, and only secondarily, about commercial interests. However, this line of argument would be much more persuasive if the boundary between government and corporate interests were clear and unambiguous. It is not. In fact, as corporate capitalism becomes globalized, the distinction between government power and corporate power is all but erased.
Given this, it is not difficult to imagine that the surveillance infrastructure designed and built by powerful communications and tech industries, and implemented and enforced by way of government institutions and bureaucratic systems, would tend to serve the interests of the corporation first and foremost, with governments playing a parasitic or subsidiary role. To properly address the question of whether government or corporate interests are at the center, we need to first think about how to visualize or articulate the boundary between public and private....
It is crucial to understand here that the free-trade zone of individual privacy is not merely the creation of a new capitalist commodity or the realization of an untapped potential for profit. At the human level of lived experience, the eradication of privacy also creates a widespread sense of impotence, powerlessness and apathy before powerful governmental institutions and corporate hegemonies. This state of affairs will be pivotally important in the furtherance of rampant capitalist exploitation. Why? Precisely because eradicating the private sphere is also extinguishing the possibility that individuals can act in concert to resist what is happening to them. The truth is that we discover and sustain our sense of solidarity and commonality with others when we grasp that we are unique and irreplaceable beings who need to relate to ourselves and to each other in both a private and a public way. The condition of possibility for individual reflection, for community, for acting in concert, is that the distinction between the private and the public remains inviolable. The corporate capitalist system has achieved its singular totalitarian purpose when it is able to violate the inviolable.
Truthout | Op-Ed
Fred Guerin

Why this is one very, very, very, scary chart!

This is a chart of real GDP (total output of goods and services) divided by the Civilian Labor Force. We know that the labor force has been declining and is at, like, a 40 year low. Despite that, however, the output of our economy has never been higher.

What this implies is that fewer and fewer people are reaping or participating in the wealth thrown off by our economy.

Soon we will have robots doing most of the work. And then what? On the one hand you will have even greater efficiencies (robots don't tire, need to be paid, take vacations, etc) and, therefore, even more wealth being produced.

On the other hand you will have lots and lots less people reaping the benefits. So, are they left to starve? Live in the streets? Go without medical care? Walk around naked, without transportation, electricity, heat?

This is not just a looming crisis for the United States, it's a looming crisis for mankind. The only way to avoid this is for people to be guaranteed minimum levels of income with which to consume some of this output. Otherwise, there will be human misery and chaos everywhere. The world will look like Mel Gibson's post apocolyptic movie, Mad Max.

Epic confrontation between Bill Gross and Mohammed El-Erian at Pimco (*Corrected)

Note: I am making a correction to this post. Pimco did not have a "terrible year." According to the firm it beat its index so one could say it simply had a bad year relative to past performance. In addition, the firm claims that outflows were due to "rotation." The main point of my post, however, is that Gross fundamentally misunderstood the fact that the funds to buy Treasuries come from government spending itself and he continues to mischaracterize the United States as a household that can run out of money.

I have extended an open invitation to Bill Gross to discuss these topics on my show that I do at the NYSE for Hard Assets Investor or, right here on Mike Norman Economics.

I've said for a long time that Bill Gross doesn't know what he is talking about. We've cited examples on this blog, like the now-infamous, "Who's gonna buy them now" comment that Gross tweeted back in 2011. With that comment the "Bond King" displayed to the world that he had no understanding of sovereign fiat money systems.

Gross went on to have a bad year relative to his past performance and we also predicted large capital outflows from his fund and that's exactly what happened.

And Gross wasn't the only one on the receiving end of our scorn. There was Mohammed El-Erian, the Pimco CEO and former IMF economist who spoke in riddles when it came to the economy, perhaps to hide his own ignorance.

Now there's a story out today in the Wall Street Journal about an epic internal clash between these two behemoths. To me it seems like a battle between two partners who basically ran their firm into the ground (maybe that's too harsh) or, we can say at least, damaged its Tiffany reputation.

Check this out from the WSJ piece:

Mr. Gross—by his own admission, a demanding boss—had long showed respect for Mr. El-Erian and indicated that the younger man eventually would take over the world's biggest bond firm. But one day last June, the two men squared off in front of more than a dozen colleagues amid disagreements about Mr. Gross's conduct, according to two people who were there.
"I have a 41-year track record of investing excellence," Mr. Gross told Mr. El-Erian, according to the two witnesses. "What do you have?"
"I'm tired of cleaning up your s—," Mr. El-Erian responded, referring to conduct by Mr. Gross that he felt was hurting Pimco, these two people recall.

Pretty uncivil if you ask me. And don't forget, this is a "white shoe" Wall Street firm. Anyone who's ever worked at a top of the line, white shoe, Wall Street firm, knows that discussions, conversations, indeed, even arguments, are all conducted in the most civil, low volume, non-confrontational manner that you can possibly imagine. You're NEVER going to see two co-CEOs out there trying to tear each other down in front of the hired help. If daggers are to be thrown they get thrown quietly, usually behind backs, but never EVER out in front for all to see. That's what makes this confrontation so amazing. They were really going off the rails.

I've long said that ever since Paul McCulley left Pimco in 2010 that was teh end of their dominance. McCulley was not only Pimco's brilliant and ecclectic chief economist, but he was also an MMT adherent. You can't say that about Gross.

I remember back in 2003, when I had Gross on my radio show, he brought up his now very well known, but incorrect, anaolgy of the United States as a household. When I asked him how he did not recognize the distinction between a currency user, like a household and a sovereign government that is a currency issuer he seemed baffled and even bothered by the question. He said to me, "At the end of the day, they're really the same."

That's the thing, Bill. They're not. They're just not.

IBEX—Plasma Ribbon Confirms Electric Sun

Video below from the "Electric Universe" people commenting on some recent empirical findings of NASA deep space missions.

Looks like another orthodox school within the contemporary academe is under going exposure as a dogma-factory, here the academe of astro-physics.

NASA's IBEX and Voyager 1 missions have shattered all conventional ideas about the heliospheric boundary, the region separating our solar system from interstellar space. In 2009, the IBEX spacecraft created the first all-sky map of the boundary revealing an astonishing ribbon of energetic neutral atoms. According to scientists, it's still a big mystery.

Monday, February 24, 2014

Timothy B. Lee — Comcast’s deal with Netflix makes network neutrality obsolete

Clonal: The Internet backbone was built with Federal dollars. It will take Federal dollars to keep it alive. Netflix is just killing the internet
and net neutrality. No private investment to increase bandwidth. It just
will not produce enough returns!

(h/t Clonal via email)

John T. Harvey — Four Reasons You Should Consider Washington's Deficit As Your Surplus

I could hear Meet the Press on in the background at my house on Sunday and the reporters were discussing various means of reducing the budget deficit. I didn’t bother to sit down and listen, however, because I knew that none of it made any sense. All were based on the same false premise: federal government deficits represent a burden on the private sector.
They do not.
Four Reasons You Should Consider Washington's Deficit As Your Surplus
John T. Harvey | Professor of Economics at Texas Christian University

Zero Hedge — The Conspiracy Theory Is True: Agents Infiltrate Websites Intending To "Manipulate, Deceive, And Destroy Reputations"

Glenn Greenwald report. Creepy people and sick stuff. Fascistic if as reported.

Zero Hedge
The Conspiracy Theory Is True: Agents Infiltrate Websites Intending To "Manipulate, Deceive, And Destroy Reputations"

Philip Pullella — Pope revolutionizes Vatican by opening finances to scrutiny

Pope Francis on Monday revolutionized the Vatican's scandal-plagued finances, inviting outside experts into a world often seen as murky and secretive and saying the church must use its wealth to help the poor.

Francis, elected nearly a year ago with a mandate for reform, used a document known as a Motu Proprio - Latin for "by his own initiative" - to implement immediate changes including appointing an auditor-general.

The document says the Church must see its possessions and financial assets in the "light of its mission to evangelize, with particular concern for the most needy".

A new Secretariat for the Economy will report directly to the pope and will be headed by Australian Cardinal George Pell, 72, currently the Archbishop of Sydney and a key proponent of financial transparency in a committee that advised the pope. A Church source said Pell would move to Rome.
Pope revolutionizes Vatican by opening finances to scrutiny
Philip Pullella

Reactions to Mike Lofgren’s Essay on the Deep State (via Moyers & Company)

Reactions to Mike Lofgren’s Essay on the Deep State (via Moyers & Company)
Credit: Dale Robbins This week, Mike Lofgren spoke with Bill about what he describes as America’s “Deep State,” where elected and unelected officials collude to protect and serve powerful, vested interests. In conjunction with the show, Lofgren…

Andrew Kaczynski — Republicans Now Attacking Florida Democrat For Supporting Simpson-Bowles

You knew this was coming.
The National Republican Congressional Committee (NRCC) has taken an odd course in the Florida special election to replace Republican Rep. Bill Young after his death in October of last year: The NRCC is bashing Democratic candidate Alex Sink for supporting Simpson-Bowles, a deficit reduction plan Republicans most often attack President Obama for abandoning or ignoring.

"Alex Sink supports a plan that raises the retirement age for Social Security recipients, raises Social Security taxes and cuts Medicare, all while making it harder for Pinellas seniors to keep their doctors that they know and love," Katie Prill, a spokeswoman for the NRCC said, according to the Sunshine State News. "Sending Alex Sink to Washington guarantees that seniors right here in Pinellas County are in jeopardy of losing the Social Security and Medicare benefits that they have earned and deserve."
BuzzFeed - Politics
Republicans Now Attacking Florida Democrat For Supporting Simpson-Bowles
Andrew Kaczynski

Lynn Stuart Parramore — Economics Has a Surprising Mental Disorder

Psychoanalyzing the economists to account for their fetish over models that don't work because the assumptions are unrealistic.

Economics Has a Surprising Mental Disorder
Lynn Stuart Parramore

Alert — Freedom of the press under attack?

Guardian journalist Luke Harding says paragraphs of his writing mysteriously disappeared while working on his latest book 'The Snowden Files.'
Bizarre. Much more to the story than the headline implies. 

Transcript of Amy Goodman's interview of The Guardian's Luke Harding.

'The Paragraph Began to Self-Delete': Did NSA Hack Snowden Biographer's Computer?
Amy Goodman | Democracy Now!

Volatility — Corporatism and Globalization: The Context of the TTIP and TPP

Perhaps the best way to prove the tyrannical intentions of the globalizers is to start with their own words. If we look at the manifestoes and comments issued by the various business consortiums, industry groups, and individual corporations, we find the unvarying demand that all government action be subordinated to the corporate profit prerogative, and that no other value be allowed to interfere with this.

This is why I call corporations and their intent totalitarian. My definition of this term: A powerful person or entity is relentless in pursuit of an imperative, at every moment wants to enforce the domination of that imperative to the fullest extent possible, and refuses to recognize the right of any other value to exist at all. A totalitarian may or may not be willing to “tolerate” the existence of something purely extraneous. But where there’s any conflict between the corporate domination imperative and any other value, it’s taken for granted there can be no compromise. The non-corporate value must submit, if necessary to the point of its own extinction. As the historical record makes clear, this is true of all human values – health, happiness, prosperity, culture, tradition, religion, morality, simple human decency and fairness. None of these can coexist with corporations. In the long run these must all go extinct, if corporatism continues to exist.
Corporatism and Globalization: The Context of the TTIP and TPP

Here is a comment I left elsewhere on a related matter that fits here:

The underlying problem is not economic per se but actually political, resulting from capture on a vast scale by an elite determined to carve the pie in its favor. This involves institutional capture, intellectual capture, regulatory capture, and even state capture.

Unemployment, boom-bust cycles, imperfect competition, and the rest of the pimples on the face of neoclassical economic theory in its application, including contemporary mainstream so-called Keynesianism, result from not only flawed theory but also neoliberal policies that are rationalized by academia in the pay of the elite to dupe the rubes and deliver the goods to the top.

The essences of neoliberal "capitalism" is crony capitalism, and its political counterpart is the corporate state masquerading as the market state. Just as the excess of socialism is totalitarian communism; so too, the excess of capitalism is totalitarian fascism.

Rumplestatskin — Inequality is about capital vs labour

Many researchers do in fact note that decreasing labour share, and therefore increasing capital share, of national income has been a global trend since the 1970s. What few say however is that this is trend is a result of policy choices informed by neoliberal ideology. We certainly could have avoided this trend if we desired. It was simply a matter of different policy choices. And to reverse the trend is also very simple, should be desire to do so.
In a mere technical sense, reversing the trend couldn’t be easier. Off hand I can think of dozens of policies; from inheritance taxes, greater public transparency of personal income data (including trusts), land taxes, improving the power of shareholders in the determination of executive pay, grants of land or capital for public service, and more. The options are limitless.

The barrier to change is modern realpolitik. Those at the top have captured the political process, partly by capturing the media. Any change will entail a massive redistribution of wealth from those who bankroll the political parties, to those with the least resources, the least education and the least interest.
Inequality is about capital vs labour

Randy Wray — MMT And External Constraints

Randy agrees with Brian and Neil.

Economonitor — Great Leap Forward
MMT And External Constraints
L. Randall Wray | Professor of Economics, University of Missouri at Kansas City

Neil Wilson — It's the Exporters Stupid

As usual Neil sums it up pithily.

However, in the EZ the exporting countries apparently haven't clued into this obvious fact yet and are killing the geese that lay the gold eggs for their economies by forcing austerity on the periphery and reducing their own exports as the periphery cannot afford them and also seeks to increase its own exports. Yes, Germany, we're talking about you in particular.

It's the Exporters Stupid.
Neil Wilson

Sunday, February 23, 2014

Brian Romanchuk — Why Rich Countries Should Float Their Currencies

This article provides more depth to some comments I made in"MMT and Constraints". I explain why developed countries should allow their currencies to float, which is the policy stance advocated by Modern Monetary Theory (MMT). It is probably a good idea for developing countries to float their currencies as well, but they face inherently difficult policy problems that I do not know enough about to comment on. The implication of advocating a free-floating currency is that I do not see the "external constraint" as being a serious issue, or at least an issue that policy makers can hope to do anything useful about.

In that previous article, I made some quick comments in response to an assertion by Thomas Palley that the "foreign exchange market constraint" is very important for countries other than the United States. Since he did not explain that assertion, I was unable to offer a very detailed criticism. My response was too short, and drew some comments. I expand my explanation here.

I will first explain why I do not think that there is a significant external behavioural constraint on policy makers; but an accounting constraint obviously exists.

I will also note that what I am writing is my opinion, and does not necessarily reflect the views of the economists who developed MMT. I think that poorer countries face some difficulties with free-floating currencies, a view with which they may not agree.
Bond Economics
Why Rich Countries Should Float Their Currencies
Brian Romanchuk

G20 vows to add $2 tn to world economy to lift growth (via AFP)

G20 vows to add $2 tn to world economy to lift growth (via AFP)
The world's biggest economies vowed Sunday to boost global growth by more than $2 trillion over five years, shifting their focus away from austerity as a fragile recovery takes hold. Finance ministers and central bank governors from the Group of 20,…

Rebecca Smithers — Almost half of the world's food thrown away, report finds

As much as half of all the food produced in the world – equivalent to 2bn tonnes – ends up as waste every year, engineers warned in a report published on Thursday.

The UK's Institution of Mechanical Engineers (IMechE) blames the "staggering" new figures in its analysis on unnecessarily strict sell-by dates, buy-one-get-one free and Western consumer demand for cosmetically perfect food, along with "poor engineering and agricultural practices", inadequate infrastructure and poor storage facilities.

In the face of United Nations predictions that there could be about an extra 3 billion people to feed by the end of the century and growing pressure on the resources needed to produce food, including land, water and energy, the IMechE is calling for urgent action to tackle this waste.
So much for efficiency of markets. Add this to chronic unemployment and boom-bust cycles.

The Guardian (UK)
Almost half of the world's food thrown away, report finds
Rebecca Smithers, consumer affairs correspondent
(h/t JR Barch in the comments)

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Garth Brazelton — History of Jobs Guarantee Program

The idea that a buffer stock of employed citizens be created by the government as a kind of 'employer of last resort' is not a new concept but I've been wondering exactly how old an idea it is. I at the same time was reading exerts from my copy of Thomas Paine's "Rights of Man" 1791 for a completely unrelated reason, and came across this section which sketches an outline of what such a program might look like (at his time). I know of no other such outline (be they from a political persuasion as below or an economic persuasion) written earlier than this (consider this a challenge!)....
Nice find. Gareth is putting together a history of the JG/ELR and is looking for input, both from the history of economics (theoretical) and economic history (actual programs).

Reviving Economics
History of Jobs Guarantee Program
Garth A Brazelton

Saturday, February 22, 2014

Ukrainians shed blood to liberate themselves. Now they want to join the EU? A tragedy on top of a tragedy.

The courageous people of Ukraine overthrew a dictator. Many paid with their lives. Now what? Well, if it's up to Yulia Tymoshenko, the former Prime Minister who had been jailed by the Yanukovych regime, Ukraine is going to join the European Union.

And if she gets her way it will be a tragedy upon a tragedy.

Are these people blind?

EU membership has been a disaster for Greece, Spain, Portugal, Ireland, Italy, Latvia and others, even those waiting on line to join.

It's one thing to give your life for sovereignty, freedom and self-determination. It's quite another to throw it all away for a different type of tyranny.

Mary Bottari — What a Victory: How a $40 Million Attack on the Middle Class Went Up in Smoke

The blow-by-blow of the grassroots v. the astroturf.

What a Victory: How a $40 Million Attack on the Middle Class Went Up in Smoke
Mary Bottari | Director of the Center for Media and Democracy’s Real Economy Project and editor of the site for bank busting activists

Brian Merchant — The Math That Predicted The Revolutions Sweeping The Globe Right Now

Why climate change will lead to massive social unrest and conflict.
It's happening in Ukraine, Venezuela, Thailand, Bosnia, Syria, and beyond. Revolutions, unrest, and riots are sweeping the globe. The near-simultaneous eruption of violent protest can seem random and chaotic; inevitable symptoms of an unstable world. But there's at least one common thread between the disparate nations, cultures, and people in conflict, one element that has demonstrably proven to make these uprisings more likely: high global food prices.

Just over a year ago, complex systems theorists at the New England Complex Systems Institute warned us that if food prices continued to climb, so too would the likelihood that there would be riots across the globe. Sure enough, we're seeing them now. The paper's author, Yaneer Bar-Yam, charted the rise in the FAO food price index—a measure the UN uses to map the cost of food over time—and found that whenever it rose above 210, riots broke out worldwide. It happened in 2008 after the economic collapse, and again in 2011, when a Tunisian street vendor who could no longer feed his family set himself on fire in protest.

Bar-Yam built a model with the data, which then predicted that something like the Arab Spring would ensue just weeks before it did. Four days before Mohammed Bouazizi's self-immolation helped ignite the revolution that would spread across the region, NECSI submitted a government report that highlighted the risk that rising food prices posed to global stability. Now, the model has once again proven prescient—2013 saw the third-highest food prices on record, and that's when the seeds for the conflicts across the world were sewn....
The Math That Predicted The Revolutions Sweeping The Globe Right Now
Brian Merchant

Carole Cadwalladr — Are the robots about to rise? Google’s new director of engineering thinks so…

Ray Kurzweil is given all the resources of Google to play with. AI, the Singularity, and other stuff. Something's going to come out of it, and Google is betting it is going to make a boatload of money.

But what is pretty clear is that with AI likely not far off, money will not be needed to run a primitive distribution system like a monetary economy in a superabundant and omniscient environment.

Greg Afinogenov — Russia under Putin

In the mold.

Russia under Putin
Guest post by Greg Afinogenov

Edward L. Glaeser — Tax land, not buildings, to help cities thrive

Contemporary Georgism.

The Boston Globe
Tax land, not buildings, to help cities thrive
Edward L. Glaeser
(h/t Dan Sullivan)

See also The 140 year cycle in macroeconomic thought at Fresh economic thinking— New ideas and analysis by Cameron K Murray

Aaron Campbell — Review of “Debt: The First 5000 Years” by David Graeber

The history of debt is a vast and consequential topic that remains understudied. So there is no way this book could live up to its title. Much work remains to be done before anyone could produce a satisfying summary of debt history in 400 pages, if that will ever be possible. Graeber’s book is however a remarkably original achievement, and even the hubric title is well chosen. The ultimate value of this work depends on its reception, and whether it becomes a departure for further critiques and research. Hopefully this book will someday be re-written in several volumes, but this is a good start for now.
Many interesting comparisons and a good summary of the history and consequences of metallic versus credit money.

The review also illustrates the contrast between the breadth of undertaking and of view of anthropologists and sociologists, and the narrow undertaking and view of conventional economics.

Supposing (n) one
Review of “Debt: The First 5000 Years” by David Graeber
Aaron Campbell aka Zegreus Moole

Steve LeVine — This was the key moment that turned the tide in Ukraine

Incredible bravery and determination.

Ian Welsh — A Few Words on the Ukraine

Where we are now. This is not over.

A Few Words on the Ukraine
Ian Welsh

Mike Lofgren — Exclusive Essay: Anatomy of the Deep State

Nothing really new revealed here, but it's gathered in one place. What Lofgren calls the "deep state," I would call the fascist state, or the totalitarian state, which is a combination of a corporate state, a national security-surveillance-police state, and extra-constitutional government. It's here, folks. Big time. "Government of the people, by the people, and for the people" is an American myth.

Bill Moyers & Co.
Exclusive Essay: Anatomy of the Deep State
Mike Lofgren

Qin Guangrong — Chinese Shift: Put the Environment Above GDP Growth

"We would rather reduce our growth rate a bit in order to protect the environment and never seek short-term economic development at the expense of the environment. We should never pursue a 'pollution first, treatment later' approach. "
World Post
Chinese Shift: Put the Environment Above GDP Growth
Qin Guangrong | Communist Party Secretary of Yunnan Province, China

Rebecca Leber — Exxon CEO Joins Suit to Stop Fracking By His Home Because He's Worried About His Property Values

But Big Oil Exec Rex Tillerson is fine with hydrofracking when it adversely affects others.
Rebecca Leber, Climate Progress

Alice Philipson — Queen and Prince Charles using power of veto over new laws, Whitehall documents reveal

That crown is not just ceremonial.

The Telegraph
Queen and Prince Charles using power of veto over new laws, Whitehall documents reveal
Alice Philipson
(h/t Yves Smith at Naked Capitalism)

Chris Dillow — The "middle class", & Marxism

The current situation is precarious for "captialists" v. "workers" in Marxist terms since it is crucial for the haute bourgeoisie that is, the rentiers, capitalists and top managers, to keep the petite bourgeoisie, or small business people, with them rather than the petite bourgeoise allying with the proletariat, that is, those selling their labor as opposed to those selling the product of others' labor.

While this is a somewhat dated point of view today, since conditions have changed considerably since Marx was writing, there are parallels that Chris Dillow brings out and which others are also noticing and calling to attention.

While conditions may have changed since the time of Marx, class structure and power structure persists.

Stumbling and Mumbling
The "middle class", & Marxism
Chris Dillow | Investors Chronicle

Fannie Mae finally "profits" Uncle Sam

Out of paradigm headline at Housing Wire here.

Fannie Mae is paying the U.S. Department of Treasury $7.2 billion, bringing its total dividend payments now to a level exceeding the total bailout it received. 
“Obviously, it’s good news for taxpayers that Fannie Mae is profitable,” Chief Executive Officer Timothy Mayopoulos said during the earnings conference call.Fannie Mae will have paid the Treasury $121.1 billion when this dividend payment is made.
Since 2008, Fannie received $116.1 billion in government bailouts. 
the federal government counts the money from quarterly profits as dividends instead of as a repayment of the bailout. 
As of Sept. 30, 2013, the GSEs returned $185 billion to the Treasury

So the way the government currently arranges the operations of these nationalized housing GSEs is another act that foments the smaller deficit we have seen over the last year.

These GSE operations coupled with the actions of the Fed to return interest it receives on both the US Treasury securities as well as the GSE bonds it is factoring has greatly contributed to what we can see ex post as a reduction in the federal deficit.

Its in many ways a "new world" post 2008 as far as evaluating fiscal policy.

David Ingram — Not a typo, monopsony in spotlight in U.S. cable deal

If U.S. antitrust enforcers decide to challenge the proposed $45 billion merger of Comcast Corp and Time Warner Cable Inc, it may be because of an idea with a funny-sounding name that has been gaining currency in government offices.

The idea is monopsony power, the mirror image of the better-known monopoly power but a concept that is just as old.

A monopoly is one seller with many buyers, while a monopsony (pronounced muh-NOP-suh-nee) is one buyer with many sellers. A textbook example is a milk processor that is the only option for dairy farmers to sell to, and that then forces farmers to sell for less.

Friday, February 21, 2014

Mike Gongloff — The Fed Was Hopelessly 'Behind The Curve' During The Financial Crisis, New Transcripts Show

Federal Reserve policy makers were repeatedly caught by surprise as the economy and financial markets collapsed around them in 2008, according to newly released transcripts of their meetings from that year.

If you believe, for some reason, that the Fed has special fortune-telling abilities, these records should disabuse you of that notion pretty quickly.

Repeatedly throughout that crisis year, the Fed took relatively hopeful views of the economy's fate, only to play catch-up when the situation got much worse than they expected, sometimes in a matter of just weeks or days.

To be fair to the Fed, the unfolding economic collapse took a lot of people by surprise. And the Fed did act fairly aggressively when it got around to acting. But these records are reminders that the human beings pulling the strings of the world's largest economy are no better than most other economists at predicting the future.

Shahien Nasiripour and Zach Carter — Federal Reserve Transcripts Show Fretting About Inflation As Economy Collapsed

Janet Yellen comes out looking pretty good, well, among the best of a bad bunch, anyway. Fred Mishkin got it, too. But they didn't know what to do.

The Huffington Post
Federal Reserve Transcripts Show Fretting About Inflation As Economy Collapsed
Shahien Nasiripour and Zach Carter

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Yanis Varoufakis — Can the Internet democratise capitalism?

Technological fixes to time-honoured problems are all the rage these days. Bitcoin is meant to fix money, social media are seen as an antidote to Rupert Murdoch and assorted tyrants, networked robots are to help countries like Japan deal with demographic declines etc. Perhaps the largest claim is that the Internet has helped (or is about to help) democratise capitalism. Ten years ago that claim struck me as both fascinating and dubious. So, I sat down and wrote an article about it (circa 2004). Its gist: The Internet is a wonderful leveller. But democracy requires a great deal more than mere ‘levelling’.
Primarily, it requires political institutions that enable the economically weak to have a decisive say on policy against the interests of the rich and powerful. Ten years later, I am re-visiting this question, under the shadow of a global crisis that made it even harder to convert an e’Demos into genuine e’Democracy. What follows is an updated version of the original paper.[1] (Click here for a pdf version or just read on.)
Can the Internet democratise capitalism?
Yanis Varoufakis

Read the notes, too.

Capitalism and democracy are antithetical. There is no "democratizing capitalism." Capitalism is inherently oligarchical, and modern "democracies" are republics through which an established power structure functions.

Democratizing capitalism is either some from of socialism, either public or worker ownership of the means of production, or a mixed economy that is not controlled by the rich and powerful.

Henry Giroux on Resisting the Neoliberal Revolution (via Moyers & Company)

Henry Giroux on Resisting the Neoliberal Revolution (via Moyers & Company)
Reactions to Anatomy of a Deep State Credit: Dale Robbins The notion of the “Deep State” as outlined by Mike Lofgren may be useful in pointing to a new configuration of power in the US in which corporate sovereignty replaces political sovereignty…

Tony Wikrent — The amazing historical ignorance of US business leaders

....Chester Bowles, a Madison avenue advertising executive who would become governor of Connecticut in 1949, and would serve President Kennedy as Under Secretary of State, then as Ambassador to India.... wrote in a 1946 book, Tomorrow Without Fear, “that prosperity cannot continue unless enough income is being distributed to all of us—farmers and workers as well as businessmen.”
....The plutocrats had had their opportunity, and they had blown it [just prior to the Great Depression]. America had given them everything they desired. The freedom to do whatever they wanted. The power to bend others to their will. And ever-grander fortunes as both incentive and reward. Americ choked on those fortunes. A maldistribution of income and wealth that severe the American economy simply could not swallow.

“Even with the most business-minded administration in our history, even with falling taxes and a government surplus, even with everything that businessmen thought they needed to insure continued prosperity,” Bowles reflected, “we could not duck that basic issue for more than a few tinsel-decorated years.”
Quoted in Sam Pizzigati, The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970
The scourge of neoliberalism

real economics
The amazing historical ignorance of US business leaders
Tony Wikrent

Andrew Bacevich on Washington’s Tacit Consensus (via Moyers & Company)

Andrew Bacevich on Washington’s Tacit Consensus (via Moyers & Company)
Reactions to Anatomy of a Deep State Credit: Dale Robbins What words best describe present-day Washington politics? The commonplace answer, endlessly repeated by politicians themselves and media observers alike, is this: dysfunction, gridlock, partisanship…

Joe Trippi — There Will be a Libertarian President. And Sooner Than You Think

Dr. Housing Bubble — Serfdom nation

I think it is safe to say that investor activity in the housing market has changed the face of real estate buying. Back when the crisis hit in 2007, some analysts were cheerleading the hedge fund crowd as a tiny blip in the market. It is hard to call it a blip when 30 to 40 percent of all purchases are going to investors for close to half a decade. A recent analysis from RealtyTrac found that the estimated monthly home payment for a regular three bedroom home (costs include mortgage, insurance, taxes, maintenance, and subtracting the income tax benefit) rose an average of 21 percent from a year ago in 325 US counties. What about household incomes? That is another story. So it is no surprise that we are largely becoming a nation of renters. It is also no shocker that young households are largely unable to begin household formation via buying a home. Many are living with parents well into “young” adulthood. For the first time in history, we had a six year stretch where we added more renter households than that of actual homeowners.
Many details in this post.

Dr. Housing Bubble
Serfdom nation

A principle feature of The American Dream is owing one's own home. That possibility is becoming more and more remote for more and more people. If this crystallizes, it is going to change American culture in ways that cannot be foreseen. But it is quite foreseeable that the consequences will be profound socially, politically and economically.

4 ways the rich will pay more this tax season

Higher tax receipts and lower deficits, i.e. lower savings, on the way.  Both leakages, this policy substituting one leakage for another.  Economic activity to be unchanged.

Thanks to the fiscal cliff deal and the Affordable Care Act, the top 1% of taxpayers - and many in the top 3% as well - will have to pay a bigger tax bill come April 15.

Story here from CNN Money via Yahoo.

Alan Pyke — Wall Street Is Drooling Over The Money It Will Make On Americans Who Can’t Afford Houses

Bad news for American families is great news for the financial industry, according to the real estate finance industry trade magazine CRE Finance World (CREFW).

Workers’ incomes will continue to decline and homeownership will become an ever more remote dream for the typical American, boosting demand for rental housing and pushing the cost of rent up, an article in the magazine’s new edition says. That will cause the market for rental housing securities — complex financial contracts backed by rental properties — to explode over the next year, Deutsche Bank analyst Harris Trifon writes.
Think Progress
Wall Street Is Drooling Over The Money It Will Make On Americans Who Can’t Afford Houses
Alan Pyke

First, securitize the mortgages, then foreclose, then securitize the rents. What could go wrong?

Dave Johnson — 5 Billionaires who are making life miserable for ordinary Americans

Pete Peterson is right at the top of the list.
Here is how it works these days: You start hearing about a big, national problem and then it becomes a drumbeat. First there are a few articles and columns mentioning that such-and-such is a problem. Then a number of articles appear, then a “study” from a “think tank” confirms the problem and sounds the alarm about how terrible it is, and then just as the issue seems to be the only thing you are hearing about a solution is presented. Of course, the solution always involves taking something away from you and giving it to some company or industry standing in front of a billionaire or three. The right question to start asking when you hear about these “problems” is which billionaire is driving this.

Here are five-plus examples of billionaires who use their money to try to get us to think what they want us to think in order to enact a right-wing economic agenda.
5 Billionaires who are making life miserable for ordinary Americans
Dave Johnson, Alternet

Lindsay Abrams — It still Isn’t Over: The Polar Vortex Is About To Hit For The Third Time

Next week is going to be brutal [over two-thirds of the US].
Alaska and the West Coast way above normal as jet stream shifts.

Thursday, February 20, 2014

Amy Goodman and Stephen Cohen — As Ukraine Violence Escalates, Leaked Tape Suggests U.S. Was Plotting Coup

... the longer-term outcome may be—and I want to emphasize this, because nobody in the United States seems to want to pay attention to it—the outcome may be the construction, the emergence of a new Cold War divide between West and East, not this time, as it was for our generation, in faraway Berlin, but right on the borders of Russia, right through the heart of Slavic civilization. And if that happens, if that’s the new Cold War divide, it’s permanent instability and permanent potential for real war for decades to come. That’s what’s at stake.
Democracy Now!
As Ukraine Violence Escalates, Leaked Tape Suggests U.S. Was Plotting Coup
Amy Goodman and Stephen Cohen, professor emeritus of Russian studies and politics at New York University and Princeton University