Jim Lobe — U.S.: Public More Concerned About Rising China Than Elites

Uh oh. Add rising xenophobia to widespread deficit hysteria. This can only have a bad end if it continues to grow and gets translated into policy.

IPS | Inter Press Service
U.S.: Public More Concerned About Rising China Than Elites
Jim Lobe

Fabius Maximus — Our choice of a leader reflects our true self. What does 2012 tell about America?

Leaders reflect the level of collective consciousness.

Fabius Maximus

Our choice of a leader reflects our true self. What does 2012 tell about America?

Is the US at the stage of the late Roman Republic, awaiting the man on the white horse?

Brad DeLong — The Wall Street Journal Editorial Page Has Shot Itself In The Head

The most fascinating thing about Romney is that he has fallen for a fake statistic created by the Wall Street Journal editorial page as what they call "boob bait for the bubbas"--something that they hope low-information voters will hear, get outraged about, and vote Republican. As Ezra Klein writes: "Among the Americans who paid no federal income taxes… 61 percent paid payroll taxes… 15.3 percent of their income.… Another 22 percent were elderly. So 83 percent… are either working… or they’re elderly…"

 Yet Romney clearly thinks that the following are identical:

• The 47% of the population who are the Democratic base.
• The 47% of the population who pay no income taxes.
• The 47% of the population who are "dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it… [the people whom we] will never convince them they should take personal responsibility and care for their lives…"

But Romney was not supposed to fall for this fake statistic, and make policy based on it--he was supposed to have economic advisors who would brief him, and rapidly deprogram him of fake right-wing talking points that lodged in his brain as things that really were true.

I wonder why they did not do so…

Grasping Reality with Both Invisible Hands
The Wall Street Journal Editorial Page Has Shot Itself In The Head
Bred DeLong |
(h/t Mark Thoma)

Brad, the reason that Romney's advisors did not do so, and they are very smart people, is that GOP strategists consider this is a "base" election in which the winner will be whichever party turns out its base. So the push is voter suppression to reduce Democratic base turnout, and red meat to the the GOP base. So this is a "base" election in more ways than one.

As an overall strategy the GOP has decided to harness the Tea Party energy to the Establishment goal of reversing the New Deal declaring class war against "the moochers." We are now going to see how that plays out.

Donations to the GOP coffers are skyrocketing as a result, and there is a lot more to this than meets the eye. It may be a base strategy in more ways than one, but that is the nature of the contemporary GOP. They have decided to go for the moon and claim a mandate if they win, which they expect to be able to do though superior fundraising, tight targeting of the swing counties, and base management aka the ground game.

Stephen Williamson — Alan Greenspan and the Gold Standard

The evidence that Alan Greenspan was not only a disciple of Ayn Rand but also a goldbug.

Stephen Williamson: New Monetarist Economics
Alan Greenspan and the Gold Standard
Stephen Williamson
(h/t Mark Thoma)

Here's an excerpt from [Greennspan's] "Gold and Economic Freedom": 

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. 

"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."

You could put those two paragraphs in Ron Paul's "End the Fed," and no one would notice.

Just as we hear it over and over from our Rothbardian-Libertarian friends. And, yes, Greenspan credits Rothbard, too.

Dirk Ehnts — "JPMorgan’s excellent Flows & Liquidity team" does not understand the creation of money

Dirk Ehnts calls out JPM on monetarism.

Coming from a monetarist background, it is very hard to understand today’s reality with the concepts of the past. The monetary mechanism – from supply to demand – is completely upside down since at least 1971 and the end of the Bretton Woods System. It also is more of a credit than a money story, which focuses on loans, not on money. For those interested in a modern money perspective I recommend the MMT Primer.

econoblog101
"JPMorgan’s excellent Flows & Liquidity team" does not understand the creation of money
Dirk Ehnts | Berlin School for Economics and Law in Berlin

More "money printing" fun facts!

Here are some more "money printing" fun facts to share with you friends.

Dollar Index on 9/19/2011: 77.14
Gold price on 9/19/2011: $1803 per ounce
Dollars "printed" in past year according to US Treasury: $65 TRILLION
Dollar Index today: 79.05
Gold price today: $1770 per ounce
Dollar is up.
Gold is down.

But don't worry...dollar debasement and inflation are coming all you gold lovers! Really, I swear!

Bernanke Not the Only One Telling Romney to Bug Off?

DoD Not Making Plans for Sequester Cuts

"For months, even as congressional negotiations have faltered, defense officials have insisted that they aren’t planning for harsh automatic budget cuts slated to go into effect in January because lawmakers will find an alternative solution."

Read into this as much as you want. One way or another, could sanity still prevail?

Or, could things get much worse?

Pentagon press secretary George Little called the automatic cuts “irresponsible” and repeated that “it is time for Congress to enact a balanced reduction in the deficit and a law halting the entire sequestration.”

“It’s pretty difficult for members to make informed decisions about the issue if they don’t fully understand the consequences ... ,” another committee staffer said. “It’s hard to create enough urgency to solve the problem.”

For Pete's sake! If they only knew how true that was.  More than they're letting on publicly.

"... failing to present realistic alternatives to lower the national deficit and prevent a national security disaster."

That's a very twisted way to present voluntary austerity, depression, and economic suicide. It actually is a national security disaster, but not in the way they're representing it.  We better hope that sanity actually could prevail.

The Defense Department isn’t the only federal agency left in the budgetary limbo. In July, the Office of Management and Budget issued guidance to federal agencies instructing them to continue normal spending and operations “to avoid unnecessarily diverting scarce resources.”

Could it be that the whole fiat deficit issue could go away after the election ... by fiat?

Kelly Evans — US Fiscal Drag is World's Problem—Cliff or No Cliff

Sectoral balances.

CNBC NetNet
US Fiscal Drag is World's Problem—Cliff or No Cliff
Kelly Evans | CNBC Reporter

Counterfeit gold? You betcha.

What makes so devious is a real gold bar is purchased with the serial numbers and papers, then it is hollowed out, the gold is sold, the tungsten is put in, then the bar is closed up. That is a sophisticated operation. source

Zero Hedge
Tungsten-Filled 10 Oz Gold Bar Found In The Middle Of Manhattan's Jewelry District
Submitted by Tyler Durden

First study showing Northern Hemisphere enveloped by Fukushima radiation

AbstractMassive amounts of anthropogenic radionuclides were released from the nuclear reactors located in Fukushima (northeastern Japan) between 12 and 16 March 2011 following the earthquake and tsunami. Ground level air radioactivity was monitored around the globe immediately after the Fukushima accident. This global effort provided a unique opportunity to trace the surface air mass movement at different sites in the Northern Hemisphere. Based on surface air radioactivity measurements around the globe and the air mass backward trajectory analysis of the Fukushima radioactive plume at various places in the Northern Hemisphere by employing the Hybrid Single-Particle Lagrangian Integrated Trajectory model, we show for the first time, that the uninterrupted complete revolution of the mid-latitude Surface Westerlies took place in less than 21 days, with an average zonal velocity of >60 km/h. The position and circulation time scale of Surface Westerlies are of wide interest to a large number of global researchers including meteorologists, atmospheric researchers and global climate modellers.
© 2012 Elsevier B.V. All rights reserved

Science of the Total Environment 438 (2012) 80–85
Tracking the complete revolution of surface westerlies over Northern Hemisphere using radionuclides emitted from Fukushima
M.A. Hernández-Ceballosa, Department of Applied Physics, University of Huelva, Huelva, Spain, G.H. Hong, Korea Ocean Research and Development Institute, Ansan 426–744, South Korea , R.L. Lozano a , Y.I. Kim Korea Ocean Research and Development Institute, Uljin 767–813, South Korea, H.M. Lee, Korea Ocean Research and Development Institute, Ansan 426–744 , S.H. Kim Korea Ocean Research and Development Institute, Ansan 426–744 , S.-W. Yeh, Department of Environmental Marine Science, Hanyang University, Ansan, 426–791, South Korea , J.P. Bolívar, Department of Applied Physics, University of Huelva, Huelva, Spain, ⁎, M. Baskaran, Department of Geology, Wayne State University, Detroit, Michigan, USA a Department of Applied Physics, University of Huelva, Huelva, Spain
(H/t Peak Oil)

INET — Cracks in the German Economic Orthodoxy: Is Economic Theory Detached From Reality?

The article suggests that economists had only realized recently that the “homo oeconomicus” paradigm is misleading, when other social sciences such as philosophy and sociology had come to that conclusion long ago.

INET Blog
Cracks in the German Economic Orthodoxy: Is Economic Theory Detached From Reality?
INET

Favorite line:

Hayek: No one can be a great economist simply by being an economist, and I am even tempted to add that someone who is only an economist can easily become a nuisance, if not a real danger.

UMd Law Financial Reform Symposium This Week

University of Maryland School of Law Financial Reform Symposium: September 20-21

The University of Maryland School of Law is hosting a free symposium on financial reform this Thursday and Friday (September 20-21), in Baltimore, Md. Former CFTC Commissioner Brooksley Born will speak on Thursday evening - in the "Ceremonial Courtroom". 

Also, on Friday, in the "Krongard Board Room (Room 106)" Michael Greenberger will moderate a panel discussion entitled “Regulatory Enforcement and the Financial Regulatory System” between 10:15 and 12:00 on Friday morning. The panel features Wally Turbeville, Mike Eisenberg, Bill Black, Arthur Wilmarth, and Lynn Stout.

Imagine that! Maybe finance can still be reformed.  Is there is, or is there isn't hope for the USA?

Noirp Social Diseases and Lunchhaving by Proxy Syndrome

(Commentary posted by Roger Erickson)



Reading the daily news makes me realize that we're suffering from a highly distributed, scalable, Lunchhaving by Proxy Syndrome, where we're always convincing ourselves that something that is NOT wrong with us, is somehow to be considered as systemically wrong - all so that our Upper Looting Class sociopaths can get intellectually & culturally obese, by uselessly eating everyone else's lunches.

Take our politics, Please! We just saw the instant when most Republican voters could realize that they've been duped again ... or at least get a chance to start realizing it, since the self-deception actually runs to even deeper levels.

The Real Romney Captured on Tape Turns Out to Be a Sneering Plutocrat

Will voters catch on, soon enough to matter, and start selecting from an entirely different class of policy candidates? Only if we accelerate our electoral dynamics by the bare minimum now required. Those few Dems who actually exercise  their capability of reading WIDELY realized they'd been duped, about 6 months into Obama's admin. Prior to that the time lag to catch on was traditionally 4-8 years. When will GOP party members also start abandoning the gang process? You typically need a tattoo to join a criminal gang. To join a political gang, ... er, "party" you need to accept something more subtly damaging, a brain-taboo, or an agreement to stop thinking. It's infectious simply because it unburdens people from the calories required to engage their brains and actually think. Yet that culturally-infectious disease has been killing our culture ever since George Washington warned us not to become susceptible to it.

When will enough citizens catch on to our deeper self-deception, and junk the now-useless political party baggage altogether? If we ever get that far, then maybe we could get on with the simple task of setting national goals and organizing our national culture to achieve them? A country capable of setting and achieving adaptive goals? Now that sounds like a Desired Outcome worth achieving, and then maintaining. Doesn't sound difficult either. Why are we MAKING it so difficult?

Surely citizens now have a historic opportunity to realize that the real dupes are themselves - whenever they accept that they have only 2 choices?

Next, take our stupid fiscal policy, Pretty Please?!!

MMT - by describing fiat currency operations, and basic reserve-banking operations - addresses only a process, not the original reasons why we are misusing that process to begin with. We need wider sharing of common sense, across our growing lists of modern cultural operations. Call it modern operational operations. MOO! :)

Look, if a cow can exquisitely integrate gazillions of biochemical processes, within trillions of cells, of hundreds of types, across dozens of organs ... and make a behaving unit called a cow ... then surely a band of supposedly more intelligent humans can organize a national economy? Doesn't seem so difficult, in comparison. Yet, despite the obvious, expect many sheople to carry on saying baaah, by sheared statistics alone.

Yet why are we expressing so much collective stupidity, in the midst of so much distributed knowledge and skill? It's curious. Perhaps our culture is infected by a group-intelligence-altering cultural-parasite, a cultural-virus or even a cultural-prion agent?

That would help explain our baffling, unusual group behavior. On the cultural level, the closest concept I can think of is the INVERSE of a prion disease process. Instead of a diabolically unpredictable lock-&-key agent which recruits & perverts individual processes throughout a system, we now have a diabolically unpredictable system process managing to invent virtual, systemic but entirely nominal "process problems."

For effect, I'll call that inverted phenomenon a "Noirp" cultural disease, and even go on to predict higher order versions of the same cultural perversions, to be labeled Uoijd cultural diseases (double-inverse-font of "prion").

Our culture needs an advanced semantic immune system - just to protect itself from itself.

Just as Socrates saw through the Sophists who were saying that "your mother-dog is YOUR 'mother'" ... we need a modern day "Setarcos" to reverse our nonsense back to sense. Socrates' reverse-image might convince us of what we have backwards vs forward. Hopefully, she could remind us that "our nominal debt is our real private currency stock" rather than believing in what is functionally backwards, i.e., that our fiat currency accounting, "nominal deficit" figure is our real debt.

In the process of draining entirely nominal banking reserves by finagling double-entry accounting gimmicks, and then confusing those gimmicks for REAL process constraints, we're actually draining our situational awareness, and our group intelligence too! Both Socrates & his double agent Setarcos would be appalled at our lack of policy agility, operational agility and semantic agility. They're all linked.

Forget showbiz, there's no degeneracy like semantic degeneracy. As a remedy, let's just try to have our pace of group discourse keep up with dynamic situations! Loose paradigms sink economies.

"Politicians Claim America is “'Broke' to Justify Layoffs and Draconian Cuts in Critical Services."

commentary by Roger Erickson

PRWatch is calling for a "Robin Hood Tax."

They don't seem fully in-paradigm with modern currency operations, but the title line really caught my eye. It's the first mainstream sentence that speaks truth to ignorance. This may be a start, even if PRWatch doesn't fully grasp the implications of what it is saying.

Now if they went on to say that an ignorant, paranoid Upper Looting Class everywhere is mindlessly set on over-taxing and under-funding all perceived competitors ... they'd be even closer.

Sadly, that's moving too fast for 99.999% of all electorates, whose minds aren't even heading to the station yet, let alone boarding.  In fact, they don't even appreciate the value of a train system, nor the national security threat of a failed adaptive rate.

More evidence that we may already be going over the fiscal cliff

Northrop Grumman lays of 600 people.

Northrop Eliminates Nearly 600 Aerospace Jobs [Los Angeles Times] Facing what it calls “defense budget uncertainties and pressures on current and projected business,” Northrop Grumman Corp. has accepted buyouts from nearly 600 workers in its aerospace division, the Los Angeles Times reports. Most of the affected jobs are in Southern California, including the company’s satellite facility in Redondo Beach. “This is a necessary step to address the affordability that will allow us to effectively compete in a very cost-conscious marketplace,” Northrop spokesman Thomas Henson said in a statement.

This shows that companies are now starting to factor in the spending cuts into their own planning and budgets. Defense industry insiders say that up to 1 million jobs could be lost.

Economic data in the coming weeks likely to show some deterioration and it could be rapid.

'Managerial Cowardice' Plus Failed Situational Awareness

commentary by Roger Erickson

Forget Mice & Men, Steinbeck could have written a quite similar novel called, "Of Paradigms and People."

Parts of this sounds good, but then it all goes south.  Buddy, can you spare a paradigm?

Gates Slams Congress for 'Managerial Cowardice'

First the good.
"Former Defense Secretary Robert Gates on Monday issued a scathing criticism of lawmakers who he claims are willing to cripple the U.S. economically and strategically in the world to retain the votes and financial backing of the ideologues they’ve become beholden to.

“Too many are more concerned with winning elections and scoring ideological points than with saving the country,” he said in remarks at a meeting of the Center for Security and International Studies in Washington."


Gets even better.
“Across the board cuts are the worst possible way to exercise budget discipline,” Gates said. “When Mike and I were working together, my guidance was if we had to cut or find more resources we would never resort to across the board cuts. I referred to it as managerial cowardice, a refusal to make choices and establish priorities,” he said.
...

Gates likened [across the board budget cuts] to a scene in the Mel Brooks Western spoof, “Blazing Saddles.”
“The sheriff holds a gun to his own head and warns the crowd not to make him shoot,” Gates said."

Then it all goes south!
"Gates said if the politicians are serious about getting the country’s spending under control, they have to look at Social Security and Medicare, which constitute a much larger percentage of federal spending than defense."

Does this vaguely remind you of a troupe of ballerinas trying to discuss ballistics? Or quantum physics? Try as they might, there's simply nothing in their training that prepares them to discuss operations outside their prior areas of experience and reading. It's baffling. Even DoD managers can't extend situational awareness past points of propaganda that "every one knows?"

When it comes to situational awareness, what part of transition from a gold-std to a fiat currency standard didn't the Pentagon recognize?

How can military planners dare to try contingency management without at least determining which paradigm they're tasked with working in?

“Ideas are like rabbits. You get a couple and learn how to handle them, and pretty soon you have a dozen.”

But what if you don't get 'em fast enough? Or can't handle them? Predator prey cycles feature crashes when the predators can no longer find rabbits. If we run out of our own ideas, or we can't find and explore 'em, we'll crash too.  There's a suspicion that a Deficit Terrorist couldn't find a free idea even if it tried to gate-crash what passes for his brain.  There's no "snare," there.

What do you call it when a managerial class is prejudiced against any paradigm outside it's class-based ideology? A Dead-Culture-Walking?

Which Candidate Has the "Edge" in Misrepresenting the Fiscal "Deficit"

This is truly like an Alice in Wonderland episode. What's even more ironic than a Catch-22? A Deficit-23?

Romney at risk of losing edge on deficit

The Washington Post reports that in the race to better represent "the nation’s gaping budget deficit" ... Romney is in danger of falling behind Obama. That's supposedly the only issue where Obama hasn't been "leading" Romney.

It's a sad day when candidates vie to be most out of paradigm in order to win election to a leadership position.

When supposed leaders have to prove that they're more wrong than the other guy to get elected ... you'd normally want to hedge your bets and look for an exit route. We better hope the USA is resilient enough to survive ignorant leadership and a misinformed electorate. Rome wasn't, but of course that was a long time ago.

Can somebody resurrect the Rhyme of the Ancient Marriner Eccles? Our current electorate & Congress has forgotten it.

Eric W. Dolan — Former Justice Souter: ‘Pervasive civic ignorance’ in U.S. could bring dictatorship

Former Justice Souter: ‘Pervasive civic ignorance’ in U.S. could bring dictatorship (via Raw Story )

Retired U.S. Supreme Court Justice David H. Souter thinks the decline of civic education is putting the United States in danger. During a question and answer session last week at University of New Hampshire School of Law, Souter described “pervasive civic ignorance” as one of the biggest problems…

Lehman, QE1, QE2, Operation Twist, QE3 and dollar is still higher!

I've been over this a million times here in this blog and MMT has been very clear about how the Fed's monetary policy actions do not equate to "printing money" and how there is there is no negative impact on the dollar whatsoever.

So here it is again for all you skeptics...Lehman, QE1, QE2, Op Twist and now QE3, and the dollar index is higher (with exception of where it was following QE1).

Economics of The People Against Themselves

commentary by Roger Erickson

We're seeing the unfolding story of the people against themselves, which is tragic.  A capable populous divided, cannot be stood on it's ear by anyone but itself.

A mind may be a terrible thing to waste, but a Group Mind is an order of magnitude worse thing to waste. Bill Mitchell, makes a valid point familiar to anyone working with any scalable system, whether biology, military, networks, software, or anthropology. "The brightest minds can be so dumb in particular circumstances."  Unfortunately, that holds more than triply for group-minds, i.e., collective intelligence ... aka national policy. The only way to leverage the economics of a group-mind is to exercise it. Otherwise, the dynamic value of having one doesn't compound, while the static costs keep scaling.

There are countless other examples than the one Bill Mitchell uses, such as our counter-productive efforts to NOT prosecute fraud, and instead over-zealously prosecute those who attempt to refer fraud cases. Given what our actual capabilities are, it's surprising how poorly we select what to use those capabilities on. It almost seems that frauds are running the asylum. The only other credible theory is that our distributed divisions render us conquered by our own disorganization. What would Pogo say about the irony in that reality? We've met the evil genius dividing & conquering us, and that distributed intelligence also defaults to us, simply for lack of exercising it's own, distributed IQ.  The perennial greatest enemy to each of us is all of us.

So why do locally capable aggregates tend to dissociate and fail as they grow? Simply because any rapidly growing population size initially makes more of it's members more isolated - regardless of whether growth occurs by numbers alone, or by increasing specialization of dedicated members. Any form of growth always dooms us to become collectively dumber, before we can get collectively smarter again, through expanded group practice. Coordination always has to chase population demands, and the latency of catching up differentiates surviving vs extinct cultures. For social species, every adaptive race is eventually a race to scale up coordination faster than either population or distributed capabilities does.

During that race, the cost of coordination rises exponentially faster than population size alone, and is ALWAYS the highest cost, by far, in any organized system. The ONLY return that exceeds the cost of coordination is the return-on-coordination. Hence, scalable coordination methods are the ONLY things worth investing in. It's the only way to save ourselves, our nation and our children. Everything else is a life-threatening distraction for all people in all cultures.

How badly will we have to fail, before it's again clear that we must once again quickly organize on an even greater scale? When we recover the ability to smoothly self-organize faster than we spawn new members? An amoeba can do that, so can every human embryo. However, no human culture on earth can gracefully do that yet - except the internet. We have brutal national growing pains that are embarrassing to watch in the mirror.

When will we learn, fast enough? Will the next milestone occur when everyone currently over 30 dies off? Or are we making Luddites faster than internet engineers? We don't need kids who cry wolf, but we certainly need kids who will cry "mobilize!" Since we're spawning more people, and exponentially expanding group potential, we need to continually mobilize to reach for insanely great things ... or else we regress, through our own intrinsic overhead, the cost of coordination.

I keep coming back to a simple, obvious but seemingly still uncommon conclusion. We need to accelerate how fast we learn to hoard coordination capabilities* - and we desperately need to reduce hoarding of everything else - since everything else only slows us down, and hampers coordination. Instead, we're still hoarding everything EXCEPT return-on-coordination!  And we're encouraged to do so by the failed paradigm of a totally brain-dead, maladaptive economics orthodoxy!   At this rate, some other culture could eclipse us rapidly and completely. Why isn't THAT threat to national security our #1 political campaign issue?

*ps: In fact, what we need to hoard, and continuously develop, are methods for accelerating our coordination capabilities. Or else we're toast.

Set Up To Fail — Interview with Professor Michael Hudson by Karl Fitzgerald

Audio and transcript.

MichaelHudson.com
Set Up To Fail
Renegade Economist's interview 05.09.2012

Interview with Professor Michael Hudson by Karl Fitzgerald

KF: We welcome to the show Professor Michael Hudson, Distinguished Research Professor at the University of Missouri-Kansas City, the leading Post-Keynesian university in America. It’s been fantastic to see, Michael, that the public profile of UMKC has really taken off with Randall Wray, yourself and Stephanie Kelton being quoted quite widely these days. Can you explain what Post-Keynesianism is?

A bit out of paradigm in places, though

So if you don’t create money – if the central bank doesn’t monetize the government deficit by just printing money electronically and spending it into the economy....

Zero Hedge — Richard Koo Explains It's Not The Fed, Stupid; It's The Fiscal Cliff!

While Koo-nesianism is only one ideological branch removed from Keynesianism, Nomura's Richard Koo's diagnosis of the crisis the advanced economies of the world faces has been spot on. We have discussed the concept of the balance sheet recession many times and this three-and-a-half minute clip from Bloomberg TV provides the most succinct explanation of not just how we got here but why the Fed is now impotent (which may come as a surprise to those buying stocks) and why it is the fiscal cliff that everyone should be worried about. As Koo notes, the US "is beginning to look more like Japan... going through the same process that Japan went through 15 years earlier." The Japanese experience made it clear that when the private sector is minimizing debt (or deleveraging) with very low interest rates, there is little that monetary policy can do.The government cannot tell the private sector don't repay your balance sheets because private sector must repair its balance sheets. In Koo's words: "the only thing the government can do is to spend the money that the private sector has saved and put that back into the income stream" - which (rightly or wrongly) places the US economy in the hands of the US Congress (and makes the Fed irrelevant).

Zero Hedge
Richard Koo Explains It's Not The Fed, Stupid; It's The Fiscal Cliff!
Submitted by Tyler Durden

Lance — QE Won't Work Because There's No Demand For Credit

Traders get it. Economists, not so much.

Business Insider
QE Won't Work Because There's No Demand For Credit
Lance Roberts | Street Talk Live

Mish — Email From Lead Analyst, Weekly Petroleum Supply Team on Possibility of Recession

Those charts confirm exactly what Tim Wallace and I have stated. Moreover, I specifically point out the opinion of James Beck "The decline year-over-year in these three core transportation indicators suggest a slowing in the economy if not a recession."

For more on the likelihood of a recession please see ...
• ECRI's Lakshman Achuthan Says US in Recession Now; That Makes Three of Us

• 12 Reasons US Recession Has Arrived (Or Will Shortly)

• Case for US and Global Recession Right Here, Right Now; Recognizing the Limits of Madness; Permabears?

Mish's Global Economic Trend Analysis
Email From Lead Analyst, Weekly Petroleum Supply Team on Possibility of Recession
Mike "Mish" Shedlock

Tracey Keys and Thomas Malnight — The Exploding Business of Bartering

What do Honda, Haymarket Exhibitions, and your plumber have in common? Bartering. Business bartering is big, and it's happening at every level. The International Reciprocal Trade Associationreports that in 2011 over 400,000 companies worldwide used bartering to earn an estimated $12 billion on unwanted or underused assets.

Our Global Trends research, along with discussions with senior executives around the world, show that in response to tighter credit and budgets companies are exploring new ways to create and capture value. In this context, they see bartering as a way to steer around the restrictions imposed by cash and credit, to extract value from perishable or underperforming assets, and to expand channels to market and find new customers.

Harvard Business Review | HBR Blog Network
The Exploding Business of Bartering
Tracey Keys. Director of Strategy Dynamics Global SA, publisher ofwww.globaltrends.com, and Thomas Malnight, professor of strategy and general management, IMD, Lausanne, Switzerland, where he directs the Leading in a Connected Future Research project

Dirk Ehnts — Real personal income and depression

Dirk Ehnts looks at a 1999 Papadimitriou and Wray paper. (Short)

econoblog 101
Real personal income and depression
Dirk Ehnts | Berlin School for Economics and Law

Michael Pettis — By 2015 hard commodity prices will have collapsed

Michael Pettis joins Randy Wray in predicting a commodity collapse in the works.

China Financial Markets
By 2015 hard commodity prices will have collapsed
Michael Pettis

This has created a selection process that favors accumulation. Companies that prefer to hold more, rather than less, inventory of commodities and goods in which commodities are a high cost component have outperformed their rivals, and so the whole market has moved towards a preference for stockpiling, much in the same way that, according to Hyman Minsky, periods of stable or rising asset prices force the financial system into taking on excessive risk. [emphasis added]

Since overstocking has always been a winning strategy until very recently, it is a pretty safe bet to assume that Chinese traders, speculators, end-users and investors have a built-in prejudice towards being long or longer inventory.

The overstocking problem in part has also had to do with financing constraints. In late 2010 and early 2011 in this newsletter I wrote often about commodity inventory financing as a popular tactic among Chinese businesses and banks aimed at getting around regulatory constraints on lending.

By importing commodities that were funded through trade financing and then using inventory receipts to borrow domestically, banks and borrowers could get around lending restrictions.　 We have never been able to figure out exactly how much of this was going on, but there was plenty of anecdotal evidence to suggest that this was a pretty wide-spread scheme and it involved a variety of commodities – copper, most famously, but also soy, magnesium, cotton, rubber and several others.

Finally, I should add that in China there is, more than in any other country I know, a sense that physical ownership of commodities or of commodity producing facilities creates substantial intangible benefits.　This may be a legacy of Maoist perceptions of self-sufficiency, or it may have to do with a history of unstable political and monetary arrangements, but whatever the reason Chinese are often obsessed with the need for physical control of commodities.

The result has been a tendency to hold much larger commodity inventories than can be justified by business needs and risk management concerns.

Peter Van Buren — The persecution of John Kiriakou

...no one except John Kiriakou is being held accountable for America's torture policy. And John Kiriakou didn't torture anyone, he just blew the whistle on it.

Asia Time Online
The persecution of John Kiriakou
Peter Van Buren, 24-year veteran Foreign Service Officer at the State Department

The one man in the whole archipelago of America's secret horrors facing prosecution is former CIA agent John Kiriakou. Of the untold numbers of men and women involved in the whole nightmare show of those years, only one may go to jail.
And of course, he didn't torture anyone. 

The charges against Kiriakou allege that in answering questions from reporters about suspicions that the CIA tortured detainees in its custody, he violated the Espionage Act, once an obscure World War I-era law that aimed at punishing Americans who gave aid to the enemy. It was passed in 1917 and has been the subject of much judicial and congressional doubt ever since. Kiriakou is one of six government whistleblowers who have been charged under the Act by the Obama administration. From 1917 until Barack Obama came into office, only three people had ever charged in this way.

The Obama Justice Department claims the former CIA officer "disclosed classified information to journalists, including the name of a covert CIA officer and information revealing the role of another CIA employee in classified activities".

Obama and Holder belong in the dock at the Hague along with Bush and Cheney.

The same Department of Justice that is hunting down the one man who spoke against torture from the inside still maintains a special unit, 60 years after the end of World War II, dedicated to hunting down the last few at-large Nazis. They do that under the rubric of "never again". The truth is that same team needs to be turned loose on our national security state. Otherwise, until we have a full accounting of what was done in our names by our government, the pieces are all in place for it to happen again. There, if you want to know, is the real horror.

Bill Mitchell | The brightest minds can be so dumb in particular circumstances

Bill Mitchell rips the economics profession a new one — again. And explains how and why the US "predicament" as a fantasy.

Bill Mitchell — billy blog
The brightest minds can be so dumb in particular circumstances
Bill Mitchell | Professor of Economics, Research Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the University of Newcastle

Randy Wray — Crony Capitalism, American Style

The Wall Street bank’s business model is fraud. In many of my blogs I’ve been focusing on US real estate because a) homes are where most of the wealth of the bottom 99% of the population is held; b) the real estate mess is like Shrek’s onion, with layer upon layer of fraud; c) the bursting of the real estate bubble is what set off the Global Financial Crisis; and d) real estate fraud is the main tool used by the 1% to move all wealth to the top.

Each day we get more evidence to support what many of us have been saying for the past couple of years.

Economonitor | Great Leap Forward
Crony Capitalism, American Style
L. Randall Wray | Professor Economics, UMKC