Archive for December, 2010

The big TARP lie.

Main Street economy can’t get any traction because the TBTF banks (let’s just stop calling them banks because they’re really just massive hedge funds) are sucking the potential recovery out from under us.


The Crises of Capitalism: A Marxist perspective from David Harvey

In Social Justice and the City David Harvey argues that capitalism annihilates geographic, political, and social space to ensure its own reproduction.

In The New Imperialism he argues that the war in Iraq allowed the neo-conservatives to divert attention from the failures of capitalism in the U.S.

I’m not a Marxist, but I don’t want to live in a world where hedge fund managers make $3 billion a year.

What do the hedgies actually do for society, anyway?

Not a damn thing.

Why are the banks making record profits when they should be failing?

Short answer: the little people are paying off the bank’s bad debts.

Warning: this may make your blood boil. Unless you’re a fat-cat banker, then you’re probably gloating and snickering.

Nouriel “Dr. Doom” Roubini with Rachel Maddow

I’m glad to know my country is on solid footing and headed in the right direction. Uhhh…not.

Crisis Economics: A Crash Course in the Future of Finance by Mr. Roubini, who actually prefers the moniker “Dr. Reality” to “Dr. Doom” although they probably both apply.

What happens in a hyperinflation?

Every time the Congress fails to balance the budget or the Fed fires up the presses, the value of the dollar goes down.  What happens when no one wants FRNs anymore?


It’s a much misunderstood term. It’s not simply  really, really bad inflation.  It’s means people have lost any confidence in the value of their paper money. It happens when powerful people trade their deflating assets in for loads of freshly printed cash.  That way they get to spend it before its worthless.  Of course, the money doesn’t trickle down to you until after there done transferring their wealth into something of real value: gold, farms, oil, etc. By the time the money is in your hands, it’s buying power has already been used up.

Trading trash for cash isn’t an economic law. It’s just powerful people taking care of themselves –  otherwise known as politics.  Don’t get hung up on supply and demand equations or get stuck thinking like an economist. Think like a political scientist or a sociologist. It’s just rich and powerful people doing what they’ve always done: inflating and deflating the currency to their own benefit.

When debt overwhelms the system and leverage collapses under its own weight, they know it’s time for a new system. Time to trade trash (MBS, CDS derivatives, etc.) for freshly printed cash. Of course they have to spend the cash on real stuff quickly, before purchasing power drops and prices escalate.  They don’t worry so much, because their first in line for the cash when it’s still worth something.

So what happens when a dollar dies?

  • Stock market depreciate in real terms (although in nominal terms it goes up, up, up)
  • Banks don’t lend money, because assets (and therefore collateral) are falling in price
  • Massive price inflation due to depreciation of the dollar’s buying power:  especially food, gas, clothing cost much more

We’ve seen quite a bit of the above already. Next might be:

  • Nationalization (government stealing) of saving accounts, IRAs, 401ks, etc.
  • capital controls (laws that limit money from leaving the country)
  • More unemployment
  • Decline in government services such as trash pickup, fire, police, road repair, prisons, medical care etc.
  • Strikes, riots, crime waves
  • Black-outs of heat and electricity
  • Martial law

In general, the government and other rich, powerful people become much more interested in their own survival, not necessarily yours.

Sounds fun doesn’t it?

Good Read: When Money Dies: The Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany

Would JFK have prosecuted Wikileaks?

Address before the American Newspaper Publishers Association
President John F. Kennedy
Waldorf-Astoria Hotel
New York City, April 27, 1961

Mr. Chairman, ladies and gentlemen:

The very word “secrecy” is repugnant in a free and open society; and we are as a people inherently and historically opposed to secret societies, to secret oaths and to secret proceedings. We decided long ago that the dangers of excessive and unwarranted concealment of pertinent facts far outweighed the dangers which are cited to justify it. Even today, there is little value in opposing the threat of a closed society by imitating its arbitrary restrictions. Even today, there is little value in insuring the survival of our nation if our traditions do not survive with it. And there is very grave danger that an announced need for increased security will be seized upon by those anxious to expand its meaning to the very limits of official censorship and concealment. That I do not intend to permit to the extent that it is in my control. And no official of my Administration, whether his rank is high or low, civilian or military, should interpret my words here tonight as an excuse to censor the news, to stifle dissent, to cover up our mistakes or to withhold from the press and the public the facts they deserve to know.

But I do ask every publisher, every editor, and every newsman in the nation to reexamine his own standards, and to recognize the nature of our country’s peril. In time of war, the government and the press have customarily joined in an effort based largely on self-discipline, to prevent unauthorized disclosures to the enemy. In time of “clear and present danger,” the courts have held that even the privileged rights of the First Amendment must yield to the public’s need for national security.

Today no war has been declared–and however fierce the struggle may be, it may never be declared in the traditional fashion. Our way of life is under attack. Those who make themselves our enemy are advancing around the globe. The survival of our friends is in danger. And yet no war has been declared, no borders have been crossed by marching troops, no missiles have been fired.

If the press is awaiting a declaration of war before it imposes the self-discipline of combat conditions, then I can only say that no war ever posed a greater threat to our security. If you are awaiting a finding of “clear and present danger,” then I can only say that the danger has never been more clear and its presence has never been more imminent.

It requires a change in outlook, a change in tactics, a change in missions–by the government, by the people, by every businessman or labor leader, and by every newspaper. For we are opposed around the world by a monolithic and ruthless conspiracy that relies primarily on covert means for expanding its sphere of influence–on infiltration instead of invasion, on subversion instead of elections, on intimidation instead of free choice, on guerrillas by night instead of armies by day. It is a system which has conscripted vast human and material resources into the building of a tightly knit, highly efficient machine that combines military, diplomatic, intelligence, economic, scientific and political operations.

Its preparations are concealed, not published. Its mistakes are buried, not headlined. Its dissenters are silenced, not praised. No expenditure is questioned, no rumor is printed, no secret is revealed. It conducts the Cold War, in short, with a war-time discipline no democracy would ever hope or wish to match.

Nevertheless, every democracy recognizes the necessary restraints of national security–and the question remains whether those restraints need to be more strictly observed if we are to oppose this kind of attack as well as outright invasion.

For the facts of the matter are that this nation’s foes have openly boasted of acquiring through our newspapers information they would otherwise hire agents to acquire through theft, bribery or espionage; that details of this nation’s covert preparations to counter the enemy’s covert operations have been available to every newspaper reader, friend and foe alike; that the size, the strength, the location and the nature of our forces and weapons, and our plans and strategy for their use, have all been pinpointed in the press and other news media to a degree sufficient to satisfy any foreign power; and that, in at least in one case, the publication of details concerning a secret mechanism whereby satellites were followed required its alteration at the expense of considerable time and money.

The newspapers which printed these stories were loyal, patriotic, responsible and well-meaning. Had we been engaged in open warfare, they undoubtedly would not have published such items. But in the absence of open warfare, they recognized only the tests of journalism and not the tests of national security. And my question tonight is whether additional tests should not now be adopted.

The question is for you alone to answer. No public official should answer it for you. No governmental plan should impose its restraints against your will. But I would be failing in my duty to the nation, in considering all of the responsibilities that we now bear and all of the means at hand to meet those responsibilities, if I did not commend this problem to your attention, and urge its thoughtful consideration.

On many earlier occasions, I have said–and your newspapers have constantly said–that these are times that appeal to every citizen’s sense of sacrifice and self-discipline. They call out to every citizen to weigh his rights and comforts against his obligations to the common good. I cannot now believe that those citizens who serve in the newspaper business consider themselves exempt from that appeal.

I have no intention of establishing a new Office of War Information to govern the flow of news. I am not suggesting any new forms of censorship or any new types of security classifications. I have no easy answer to the dilemma that I have posed, and would not seek to impose it if I had one. But I am asking the members of the newspaper profession and the industry in this country to reexamine their own responsibilities, to consider the degree and the nature of the present danger, and to heed the duty of self-restraint which that danger imposes upon us all.

Every newspaper now asks itself, with respect to every story: “Is it news?” All I suggest is that you add the question: “Is it in the interest of the national security?” And I hope that every group in America–unions and businessmen and public officials at every level– will ask the same question of their endeavors, and subject their actions to the same exacting tests.

And should the press of America consider and recommend the voluntary assumption of specific new steps or machinery, I can assure you that we will cooperate whole-heartedly with those recommendations.

Perhaps there will be no recommendations. Perhaps there is no answer to the dilemma faced by a free and open society in a cold and secret war. In times of peace, any discussion of this subject, and any action that results, are both painful and without precedent. But this is a time of peace and peril which knows no precedent in history.

>It is the unprecedented nature of this challenge that also gives rise to your second obligation–an obligation which I share. And that is our obligation to inform and alert the American people–to make certain that they possess all the facts that they need, and understand them as well–the perils, the prospects, the purposes of our program and the choices that we face.

I not only could not stifle controversy among your readers–I welcome it. This Administration intends to be candid about its errors; for as a wise man once said: “An error does not become a mistake until you refuse to correct it.” We intend to accept full responsibility for our errors; and we expect you to point them out when we miss them.

Without debate, without criticism, no Administration and no country can succeed–and no republic can survive. That is why the Athenian lawmaker Solon decreed it a crime for any citizen to shrink from controversy. And that is why our press was protected by the First Amendment– the only business in America specifically protected by the Constitution- -not primarily to amuse and entertain, not to emphasize the trivial and the sentimental, not to simply “give the public what it wants”–but to inform, to arouse, to reflect, to state our dangers and our opportunities, to indicate our crises and our choices, to lead, mold, educate and sometimes even anger public opinion.

This means greater coverage and analysis of international news–for it is no longer far away and foreign but close at hand and local. It means greater attention to improved understanding of the news as well as improved transmission. And it means, finally, that government at all levels, must meet its obligation to provide you with the fullest possible information outside the narrowest limits of national security–and we intend to do it.

It was early in the Seventeenth Century that Francis Bacon remarked on three recent inventions already transforming the world: the compass, gunpowder and the printing press. Now the links between the nations first forged by the compass have made us all citizens of the world, the hopes and threats of one becoming the hopes and threats of us all. In that one world’s efforts to live together, the evolution of gunpowder to its ultimate limit has warned mankind of the terrible consequences of failure.

And so it is to the printing press–to the recorder of man’s deeds, the keeper of his conscience, the courier of his news–that we look for strength and assistance, confident that with your help man will be what he was born to be: free and independent.

The high price you pay for food

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