The Federal Reserve And The Pathology of Power
by ilene - November 18th, 2010 10:50 am
Courtesy of Charles Hugh Smith, Of Two Minds
The Federal Reserve and the Pathology of Power
The Federal Reserve is an example not just of run-of-the-mill hubris but of the far more profound Pathology of Power.
The rule of law has been supplanted in the U.S. by self-serving propaganda campaigns serving State and financial Elites: this is the Pathology of Power. The Federal Reserve is an instructive example because it is so blatant.
Despite the dearth of evidence that goosing the stock market actually generates a "wealth effect" which "trickles down" from the top 10% who own the vast majority of equities to the bottom 90%, the Fed has waged a ceaseless propaganda campaign claiming this policy goal is now essential for the nation’s well-being.
As Ben Bernanke recently made clear: "Higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending (that) will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion."
No mention of its positive effect on Wall Street; cui bono (to whose benefit?) indeed. To better understand the pathology of power, we should turn first to Pathology Of Power by Norman Cousins, published in 1988.
Cousins was particularly concerned with the National Security State, a.k.a. the military-industrial complex, which at that point in U.S. history was engaged in a Cold War with the mighty Soviet Empire.
In a classic case of structural decay and destabilization (including failed coups), the Soviet Empire dissolved in December 1991. Nonetheless, Cousins’ description of the pathology of power is an uncannily accurate account of the Fed and all the Central State fiefdoms.
"Connected to the tendency of power to corrupt are yet other tendencies that emerge from the pages of the historians:
1. The tendency of power to drive intelligence underground;
2. The tendency of power to become a theology, admitting no other gods before it;
3. The tendency of power to distort and damage the traditions and institutions it was designed to protect;
4. The tendency of power to create a language of its own, making other forms of communication incoherent and irrelevant;
5. The tendency of power to set the stage for its own use.
In broader terms, we might add: the tendency of power to manifest hubris, arrogance, bullying and the substitution of…
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DiggThe Road to World War III – The Global Banking Cartel Has One Card Left to Play
by ilene - September 28th, 2010 2:19 am
The Road to World War III – The Global Banking Cartel Has One Card Left to Play
By David DeGraw (h/t ZH)
The following is Part I to David DeGraw’s new book, “The Road Through 2012: Revolution or World War III.” This is the second installment to a new seven-part series that we will be posting throughout the next few weeks. You can read the introduction to the book here. To be notified via email of new postings from this series, subscribe here.
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Editor’s Note: The following is Part I to David DeGraw’s new book, “The Road Through 2012: Revolution or World War III.” This is the second installment to a new seven-part series that we will be posting throughout the next few weeks. You can read the introduction to the book here. To be notified via email of new postings from this series, subscribe here.
I: Economic Imperial Operations
When we analyze our current crisis, focusing on the past few years of economic activity blinds us to the history and context that are vital to understanding the root cause. What we have been experiencing is not the result of an unforeseen economic crash that appeared out of the blue with the collapse of the housing market. It was certainly not brought on by people who bought homes they couldn’t afford. To frame this crisis around a debate on economic theory misses the point entirely. To even blame it on greedy bankers,…
Beware of Greeks Bearing Bonds
by ilene - September 11th, 2010 6:52 pm
This is a fascinating study of Greece and how the largest of part of its bankruptcy may be in its collective conscience. - Ilene
Beware of Greeks Bearing Bonds
Vanity Fair’s Introduction: As Wall Street hangs on the question “Will Greece default?,” the author heads for riot-stricken Athens, and for the mysterious Vatopaidi monastery, which brought down the last government, laying bare the country’s economic insanity. But beyond a $1.2 trillion debt (roughly a quarter-million dollars for each working adult), there is a more frightening deficit. After systematically looting their own treasury, in a breathtaking binge of tax evasion, bribery, and creative accounting spurred on by Goldman Sachs, Greeks are sure of one thing: they can’t trust their fellow Greeks.
After an hour on a plane, two in a taxi, three on a decrepit ferry, and then four more on buses driven madly along the tops of sheer cliffs by Greeks on cell phones, I rolled up to the front door of the vast and remote monastery. The spit of land poking into the Aegean Sea felt like the end of the earth, and just as silent. It was late afternoon, and the monks were either praying or napping, but one remained on duty at the guard booth, to greet visitors. He guided me along with seven Greek pilgrims to an ancient dormitory, beautifully restored, where two more solicitous monks offered ouzo, pastries, and keys to cells. I sensed something missing, and then realized: no one had asked for a credit card. The monastery was not merely efficient but free. One of the monks then said the next event would be the church service: Vespers. The next event, it will emerge, will almost always be a church service. There were 37 different chapels inside the monastery’s walls; finding the service is going to be like finding Waldo, I thought.
“Which church?” I asked the monk.
“Just follow the monks after they rise,” he said. Then he looked me up and down more closely. He wore an impossibly long and wild black beard, long black robes, a monk’s cap, and prayer beads. I wore white running shoes, light khakis, a mauve Brooks Brothers shirt, and carried a plastic laundry bag that said eagles palace hotel in giant letters on the side. “Why have you come?” he asked.
That was
…
The Overlapping Crises of Neoliberal Global Capitalism
by ilene - September 10th, 2010 9:04 pm
The Overlapping Crises of Neoliberal Global Capitalism
Courtesy of Charles Hugh Smith, Of Two Minds
Conventional wisdom holds that today’s global financial crises are political rather than systemic to Neoliberal Global State Capitalism.
It is tempting to place the blame for the U.S. economy’s deep woes at the feet of our corrupt, captured political system of governance and those who captured it via concentrated wealth and power. But that would avoid looking at the crises unfolding in global capitalism itself.
From the "progressive" ideology, the "problem" is inequality of income and wealth, and the "solution" is to take more of the wealth and income away from "the rich" (i.e. those who make more than I do) and redistribute to the "have-less" citizenry.
From the "conservative" ideology, the "problem" is that the Central State, in cahoots with public unions and Corporate Overlords, grabs an ever-larger share of the national income to redistribute to reward its cronies and favorites. In so doing, it mis-allocates the nation’s capital away from productive investments and strangles free enterprise, the only real engine of wealth.
There is of course a grain of truth in each point of view. As I describe in Survival+, there is a positive feedback in the process of concentrating wealth and thus political power: the more wealth one acquires, themore political influence one can purchase, which then enables the accumulation of even more wealth as the State/Elite partnership showers benefits and monoplies on those who fund elections, i.e. the wealthy.
This process eventually leads to over-reach, when the nation’s capital and income are so concentrated that the economy become precariously imbalanced and thus vulernerable to devolution and collapse. Returns on favoritism and capital become marginal, and it take more complexity and capital to wring ever-smaller profits and power from ever-greater investments.
It is also true that the State and the Power Elites mask their massive redistribution to the wealthy and powerful behind politically popular redistributions to the lower-income and/or unproductive citizenry, garnering their loyalty and complicity.
It is also true that as the State and its private-sector Elites channel an ever-larger percentage of the national income to the Central State and its fiefdoms, both public and private, then the productive class suffers a decline in energy, wealth and income. It is also true that the State makes its investment decisions based on favoritism (lobbies, political…
Innovation, Risk and the Forest Fire Analogy
by ilene - July 4th, 2010 3:20 am
Innovation, Risk and the Forest Fire Analogy
Courtesy of Charles Hugh Smith Of Two Minds
To clear open space for innovation to take root, sometimes you need a forest fire to destroy all the deadwood. Instead, we are frantically piling up more deadwood.
What was once an inflammatory outlier--that our brand of "capitalism" incentivizes exploitation, fraud, complicity, corruption and plunder--is now commonplace. Even the most mainstream financial media websites now sport commentaries which excoriate our systemic fraud, and books galore gleefully sport titles containing "hot" words like plunder.
That is a remarkable turn of events: that a radical critique of our entire financial system has gone mainstream, and in many circles has been accepted as "obvious." (For more on the tricky nature of what’s "obvious," please see the chapters on the politics of experience in Survival+.)
In Innovation: Financial, Technical and Institutional (June 30, 2010), I attempted to connect the dots between risk and innovation. I believe that the two concepts are intrinsically bound like oxygen and hydrogen in the water molecule, but this deep structural connection between the two is generally ignored or not even recognized.
In essence, innovations which remain inherently unstable and unsafe regardless of hedges, controls and safety features--that is, they embody intrinsic risk-- cannot be placed in the same category as innovations with inherently low risk.
One of the keystones of the Survival+ critique is the realization that the risks of our systemic "financial innovations" are ontological and cannot be massaged away to zero. Indeed, the idea that this was possible underpinned the entire credit bubble and its inevitable implosion.
Mathematician Benoit Mandelbrot discredited this notion in depth in his book (highly recommended) The Misbehavior of Markets.
I addressed this last year in The Yellowstone Analogy and The Crisis of Neoliberal Capitalism (May 18, 2009):
For decades, the operative theory of forestry management was that limited controlled burns-- mild reductions of dead underbrush and debris--would essentially reduce the possibility of a major fire to near-zero.
But the practice actually allowed a buildup of dead wood which then fueled the devastating forest fire which swept Yellowstone National Park in 1988. Various revisionist views sprouted up later, claiming the fire was not the result of misguided attempts to limit natural forces (Vast Yellowstone Fire Now Seen as Unstoppable Natural Cataclysm (NT Times, 1989)).
Now we’re in a financial conflagration which is widely considered the result of
…
TOO SMALL TO MATTER
by ilene - June 23rd, 2010 3:00 am
TOO SMALL TO MATTER
Courtesy of Jim Quinn at The Burning Platform
As I watched the documentary GASLAND last night on HBO my blood began to boil. I’m sure my blood pressure went up dramatically during the 1 hour and 40 minute film. After watching our corrupt government decide that the biggest baddest banks on the planet were too big to fail over the last two years and giving my children’s and their children’s money to these behemoth criminal enterprises, I was not surprised to see poor working class Americans treated like dirt by these same corrupt politicians. Big corporations can buy off politicians to ensure profits. The “small people”, as the Chairman of BP likes to call them, are expendable and can be ignored. They are too small to matter.
Dick Cheney was the CEO of Halliburton from 1995 until 2000, when he became VP of the United States. Halliburton had invented a new process for extracting natural gas from shale formations. The Halliburton-developed drilling technology of “fracking” or hydraulic fracturing has unlocked a “Saudi Arabia of natural gas” just beneath us.…
As Broken Market Limps Along, SEC And CFTC Conduct Worthless Hearing: Watch It Live Here
by ilene - June 22nd, 2010 2:46 pm
As Broken Market Limps Along, SEC And CFTC Conduct Worthless Hearing: Watch It Live Here
Courtesy of Tyler Durden
Watch the highly conflicted trading industry representatives, and the highly corrupt regulators try to convince each other that the May 6th events were totally unique, will never happen again, why there is no need to change anything, and why the joke of that is single stock circuit breakers (another reactive not proactive "solution") is all that is needed to return investor confidence. We wish them all the best as they continue to buy and sell stocks from each other, now that everyone else is out of the market permanently. Readers can watch the "Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues Meeting" here. (click here if stream does not show up).
Austerity is stupid, stimulus is dangerous, lying is optimal, economic choices are not scalar
by ilene - June 18th, 2010 12:05 pm
As usual, Steve presents a very balanced view of economic matters. Always worth reading. – Ilene
Austerity is stupid, stimulus is dangerous, lying is optimal, economic choices are not scalar
Courtesy of Steve Randy Waldman at Interfluidity
I’ve been on whatever planet I go to when I’m not writing. Don’t ask, your guess is as good as mine.
When I checked out out a few weeks ago, there was a debate raging on “fiscal austerity”. Checking back in, it continues to rage. In the course of about a half an hour, I’ve read about ten posts on the subject. See e.g. Martin Wolf and Yves Smith, Mike Konczal, and just about everything Paul Krugman has written lately. While I’ve been writing, Tyler Cowen has a new post, which is fantastic. Mark Thoma has delightfully named one side of the debate the “austerians”. Surely someone can come up with a cleverly risqué coinage for those in favor of stimulus?
Here are some obvious points:
Austerity is stupid. Austerity is first-order stupid whenever there are people to whom the opportunity cost of providing goods and services that others desire is negative. To some economists, that sentence is a non sequitur. After all, nothing prevents people from providing goods and services for free, if doing the work is more beneficial to them than alternative uses of their time right? Economists who make this argument need to get out more. Doing paid work has social meaning beyond the fact of the activity, and doing what is ordinarily paid work for free has a very different social meaning. It is perfectly possible, and perfectly common, that a person’s gains from doing work are greater than their total pay, so that in theory you could confiscate their wages or pay them nothing and they would still do the job. But in practice, you can’t do that, because if you don’t actually pay them, it is no longer paid work. The nonmonetary benefits of work are inconveniently bundled with a paycheck. Under this circumstance, having the government pay for the work is welfare improving unless the second-order costs of government spending exceed both the benefits to the worker in excess of pay and the benefit to consumers or users of the goods and services purchased.
Stimulus is dangerous. The second-order costs of government spending are real, and we are very far…
BP DISASTER: PUT THE OIL SPILL BIRDS OUT OF THEIR MISERY
by ilene - June 11th, 2010 1:10 am
BP DISASTER: PUT THE OIL SPILL BIRDS OUT OF THEIR MISERY
Courtesy of Richard Metzger of Dangerous Minds
Tony Hayward, the tactless sh^*head CEO of BP might “like his life back,” but what about the 99% of the birds caught up in the oil spill catastrophe who will inevitably die from suffocation and liver and kidney damage?
According to a post at Treehugger, animal biologists with experience dealing with birds caught up in oil spills, know what cruel fate has in store for them: slow painful deaths. Conservationists who have set up emergency clean-up centers for oil-coated avians have their hearts in the right place, but scrubbing crude oil off the afflicted birds’ feathers still won’t help them live much longer. The kinder thing to do for the birds—and it pains me to type this—would probably be a mass euthanasia:
Threehugger, quoting Der Spiegel:
Despite the short-term success in cleaning the birds and releasing them back into the wild, few, if any, have a chance of surviving, says Silvia Gaus, a biologist at the Wattenmeer National Park along the North Sea in the German state of Schleswig-Holstein.
“According to serious studies, the middle-term survival rate of oil-soaked birds is under 1 percent,” Gaus says. “We, therefore, oppose cleaning birds.”
Instead, she says, it would be less painful for the birds to kill them quickly, or to let them die in peace.
The World Wildlife Fund agrees: “Birds, those that have been covered in oil and can still be caught, can no longer be helped. … Therefore, the World Wildlife Fund is very reluctant to recommend cleaning.”
I’m sure that after reading that depressing bit of information, you’re either weeping or extremely angry. If you want to become even angrier, then read this:
The spill, the scandal and the president: The inside story of how Obama failed to crack down on the corruption of the Bush years – and let the world’s most dangerous oil company get away with murder (Rolling Stone)
House Committee on Homeland Security Seeks Cooperation from Max Keiser on Financial Terrorism
by ilene - May 21st, 2010 3:42 pm
House Committee on Homeland Security Seeks Cooperation from Max Keiser on Financial Terrorism
Courtesy of Mish
Here is an email from a member of the House Committee on Homeland Security to Max Keiser regarding Financial Terrorism. Both the email and Max Keiser’s response had me laughing my head off.
Hi Mr. Keiser,
My name is Chris Beck and I work on the staff of the House Committee on Homeland Security in Washington, DC. I have been reading and listening to you regarding the May 6 stock market plunge and the likelihood that this was an act of financial terrorism. I think this is a huge issue that has not been given enough attention, and may warrant oversight by our committee. I would greatly appreciate the chance to talk to you to make sure I understand the nuts and bolts, and to figure out what avenues may be available to correct what appears to be a massive fraud that could undermine U.S. National Security. Can you please contact me and let me know if you are available to talk?
Thank you,
ChrisChris Beck, Ph.D.
Senior Advisor for Science and Technology
House Committee on Homeland Security
I asked Max Keiser how he responded.
Max Replied "I told him to investigate this financial terrorist crime happening right now! in real time!"
Max went on to say …
I think it’s really incredible how clueless these people are.
Given the recent track record of corrupt regulators in D.C. it’s not hard to imagine that Chris Beck is wittingly or unwittingly just bird dogging intelligence that will be fed to Goldman and used to package ever more exotic Financial Terrorist weapons.
My position is the government IS Goldman and any info gleaned by this type of thing will end up helping no one BUT Goldman.
Here is the video that Chris Beck was responding to. Play the first few minutes of it. It will have you rolling on the floor.
I am also told that homeland security was interested in talking with David DeGraw about his post on Market Oracle Financial Terrorism Operations: 9/29/08 & 5/6/10.
This reads like a spoof straight out of The Onion, but I have phone numbers and email address and a chain of emails to verify.
It is difficult to believe that anyone on a house committee…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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