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The Con of the Decade, (conservatively)

by ARGeezer Sun Jul 11th, 2010 at 05:23:10 PM EST

I discovered Charles Hugh Smith and his blog, oftwominds.com last night at Zero Hedge. His 12 point account of how we got in the mess we are in and where it is going is the best succinct description I have found, so I e-mailed him for permission to cross-post, which he graciously gave and he suggested posting both parts. Herewith:

 


The Con of the Decade Part I    (July 8, 2010)


The con of the decade (Part I) involves the transfer of private debt to the public (the marks), who then pays interest forever to the con artists.

I've laid out the Con of the Decade (Part I) in outline form:

  1. Enable trillions of dollars in mortgages guaranteed to default by packaging unlimited quantities of them into mortgage-backed securities (MBS), creating umlimited demand for fraudulently originated loans.

  2. Sell these MBS as "safe" to credulous investors, institutions, town councils in Norway, etc., i.e. "the bezzle" on a global scale.

  3. Make huge "side bets" against these doomed mortgages so when they default then the short-side bets generate billions in profits.

  4. Leverage each $1 of actual capital into $100 of high-risk bets.

  5. Hide the utterly fraudulent bets offshore and/or off-balance sheet (not that the regulators you had muzzled would have noticed anyway).

  6. When the longside bets go bad, transfer hundreds of billions of dollars in Federal guarantees, bailouts and backstops into the private hands which made the risky bets, either via direct payments or via proxies like AIG. Enable these private Power Elites to borrow hundreds of billions more from the Treasury/Fed at zero interest.

  7. Deposit these funds at the Federal Reserve, where they earn 3-4%. Reap billions in guaranteed income by borrowing Federal money for free and getting paid interest by the Fed.

  8. As profits pile up, start buying boatloads of short-term U.S. Treasuries. Now the taxpayers who absorbed the trillions in private losses and who transferred trillions in subsidies, backstops, guarantees, bailouts and loans to private banks and corporations, are now paying interest on the Treasuries their own money purchased for the banks/corporations.

  9. Slowly acquire trillions of dollars in Treasuries--not difficult to do as the Federal government is borrowing $1.5 trillion a year.

  10. Stop buying Treasuries and dump a boatload onto the market, forcing interest rates to rise as supply of new T-Bills exceeds demand (at least temporarily). Repeat as necessary to double and then triple interest rates paid on Treasuries.

  11. Buy hundreds of billions in long-term Treasuries at high rates of interest. As interest rates rise, interest payments dwarf all other Federal spending, forcing extreme cuts in all other government spending.

  12. Enjoy the hundreds of billions of dollars in interest payments being paid by taxpayers on Treasuries that were purchased with their money but which are safely in private hands.

Since the Federal government could potentially inflate away these trillions in Treasuries, buy enough elected officials to force austerity so inflation remains tame. In essence, these private banks and corporations now own the revenue stream of the Federal government and its taxpayers. Neat con, and the marks will never understand how "saving our financial system" led to their servitude to the very interests they bailed out.

The circle is now complete: in "saving our financial system," the public borrowed trillions and transferred the money to private Power Elites, who then buy the public debt with the money swindled out of the taxpayer. Then the taxpayers transfer more wealth every year to the Power Elites/Plutocracy in the form of interest on the Treasury debt. The Power Elites will own the debt that was taken on to bail them out of bad private bets: this is the culmination of privatized gains, socialized risk.

In effect, it's a Third World/colonial scam on a gigantic scale: plunder the public treasury, then buy the debt which was borrowed and transferred to your pockets. You are buying the country with money you borrowed from its taxpayers. No despot could do better.

Given US "EXCEPTIONALISM", if we are going to be a Banana Republic, we will be a Banana Republic on a memorable scale. USA! USA! USA! In effect this is a bloodless coup via finance. If there is any blood it will be from the authorities enforcing "LAW & ORDER". It seems more like The Con of the Century.

The Con of the Decade Part II    (July 9, 2010)

The con of the decade (Part II) involves sheltering the Power Elites' income while raising taxes on the debt-serfs to pay the interest owed the Power Elites.

The Con of the Decade (Part II) meshes neatly with the first Con of the Decade. Yesterday I described how the financial Plutocracy can transfer ownership of the Federal government's income stream via using the taxpayer's money to buy the debt that the taxpayers borrowed to bail out the Plutocracy.

In order for the con to work, however, the Power Elites and their politico toadies in Congress, the Treasury and the Fed must convince the peasantry that low tax rates on unearned income are not just "free market capitalism at its best" but that they are also "what the country needs to get moving again."

The first step of the con was successfully fobbed off on the peasantry in 2001: lower the taxes paid by the most productive peasants marginally while massively lowering the effective taxes paid by the financial Plutocracy.

One Year Later, No Sign of Improvement in America's Income Inequality Problem:

    Income inequality has grown massively since 2000. According to Harvard Magazine, 66% of 2001-2007's income growth went to the top 1% of Americans, while the other 99% of the population got a measly 6% increase. How is this possible? One thing to consider is that in 2001, George W. Bush cut $1.3 trillion in taxes, and 32.6% of the cut went to the top 1%. Another factor is Bush's decision to increase the national debt from $5 trillion to $11 trillion. The combination of increased government spending and lower taxes helped the top 1% considerably.

The second part of the con is to mask much of the Power Elites' income streams behind tax shelters and other gaming-of-the-system so the advertised rate appears high to the peasantry but the effective rate paid on total income is much much lower.

The tax shelters are so numerous and so effective that it takes thousands of pages of tax codes and armies of toadies to pursue them all: family trusts, oil depletion allowances, tax-free bonds and of course special one-off tax breaks arranged by "captured" elected officials.

Step three is to convince the peasantry that $600 in unearned income (capital gains) should be taxed in the same way as $600 million. The entire key to the U.S. tax code is to tax earned income heavily but tax unearned income (the majority of the Plutocracy's income is of course unearned) not at all or very lightly.

In a system which rewarded productive work and provided disincentives to rampant speculation and fraud, the opposite would hold: unearned income would be taxed at much higher rates than earned income, which would be taxed lightly, especially at household incomes below $100,000.

If the goal were to encourage "investing" while reining in the sort of speculations which "earn" hedge fund managers $600 million each (no typo, that was the average of the top 10 hedgies' personal take of their funds gains), then all unearned income (interest, dividends, capital gains, rents from property, oil wells, etc.) up to $6,000 a year would be free--no tax. Unearned income between $6,000 and $60,000 would be taxed at 20%, roughly half the top rate for earned income. This would leave 95% of U.S. households properly encouraged to invest via low tax rates.

Above $60,000, then unearned income would be taxed the same as earned income, and above $1 million (the top 1/10 of 1% of households) then it would be taxed at 50%. Above $10 million, it would be taxed at 60%. Such a system would offer disincentives to the speculative hauls made by the top 1/10 of 1% while encouraging investing in the lower 99%.

Could such a system actually be passed into law and enforced by a captured, toady bureaucracy and Congress? Of course not. But it is still a worthy exercise to take apart the rationalizations being offered to justify rampant speculative looting, collusion, corruption and fraud.

The last step of the con is to raise taxes on the productive peasantry to provide the revenues needed to pay the Plutocracy its interest on Treasuries. If the "Bush tax cuts" are repealed, the actual effective rates paid on unearned income will remain half (20%) of the rates on earned income (wages, salaries, profits earned from small business, etc.) which are roughly 40% at higher income levels.

The financial Plutocracy will champion the need to rein in Federal debt, now that they have raised the debt via plundering the public coffers and extended ownership over that debt.

Now the con boils down to insuring the peasantry pay enough taxes to pay the interest on the Federal debt--interest which is sure to rise considerably. The 1% T-Bill rates were just part of the con to convince the peasantry that trillions of dollars could be borrowed "with no consequences." Those rates will steadily rise once the financial Power Elites own enough of the Treasury debt. Then the game plan will be to lock in handsome returns on long-term Treasuries, and command the toady politicos to support "austerity."

The austerity will not extend to the financial Elites, of course. That's the whole purpose of the con. "Some are more equal than others," indeed.

Something like this, in a loosely confederated, cartel-like form, seems likely to be the structure and plan of at least some of our existing financial luminaries. If so, the question becomes: "How well and how long can this work?" I suspect that it will be so unstable that collapse is inevitable -- eventually. But what comes next could well be worse. And there will be no way out of it but by taking on and effectively dealing with the con artists.

Display:
We are at step 9 at this point, but the financial sector, collectively has already purchased enough of the White House and Congress to control actions as required. It does not hurt that all mass media are either owned by or cowed by the financial sector also.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Jul 11th, 2010 at 05:33:53 PM EST
of why all those endless articles about clever things we should do to fix the economy are irrelevant blather.  

Its not that reregulating the deregulated financial system to stop fraud, and all the other various things are bad ideas!  But they overlook the question:  Who, exactly, is to do the regulating?  

The government?  But the government is already owned by the fraudsters.  Reregulation can never happen.  

It's a lot like the BP Gulf blow-out.  There is no way to put all that spilled oil back, and similarly, there is no way to undo the collapse of a looted-out economic system.  

Americans will have to learn to live without an economic system (including jobs, and all the rest of it . . . )  We can hope this will prove easier than the challenge facing Gulf residents--to live without unpoisoned food, air, and water!  

The Fates are kind.

by Gaianne on Mon Jul 12th, 2010 at 12:22:47 AM EST
[ Parent ]
Worse. I fear it is not just "Americans". The UK might even be ahead of the USA in some respects on these scores and, while arguably it was not the lack of regulation in Europe that permitted the con to get started, Europe has by no means been spared the effects. In fact we see very similar dynamics playing out in Europe. I will leave to the Europeans to decide if the current craze for austerity is pigheaded stupidity or if some there see reasons similar to those set forth above by Smith.

Even if most in continental Europe don't want to go down this road, highly questionable in the cases of several countries, they are exposed by having been involved in and buying lots of high yielding counterfeit securities. Worse, if the US financial sector sets the standard on return based on fraudulent activity, this is very hard to deal with. Europe is ill equipped to investigate and prosecute the biggest fraudsters even if it so desired.

I think it is important to note that the whole process can work as described even if many or most of the players think that another game is being played. In fact, the process almost requires that to be the case. The process would be characterized by selective misdirection. This gives the real players cover.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Jul 12th, 2010 at 12:54:43 AM EST
[ Parent ]
...things we should do to fix the economy...

I don't accept that it is hopeless, but before the economy can be fixed the political system in which it functions has to be fixed and the fraudsters prosecuted. It does starkly show the scope of the problem. That is an improvement.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Jul 12th, 2010 at 01:09:30 AM EST
[ Parent ]
I don't accept that it is hopeless, but before the economy can be fixed the political system in which it functions has to be fixed and the fraudsters prosecuted.

Yes, and before the political system can be fixed, the owners of the political system are going to have to learn that they are being conned, determine correctly who is doing the conning (can't rely upon the media to teach them that, eh?) and are going to have to gather/coordinate/disseminate enough knowledge of how to improve the system and actually formulate and follow a workable plan, and the gather enough strength so that they don't capitulate the first time they make a mistake or the rich and powerful put the squeeze on them...uh, us.

  1. Workable
  2. Easy to understand,
  3. Easy to disseminate,
  4. Attacking the correct problem (and its source) without destroying anything that might be worth salvaging or being unjust to those who should be rehabilitated, and with
  5. Willingness and eventually the
  6. Ability to carry it all the way through.

And on the 7th day (perhaps of the 7th Generation), we can all rest.


Never underestimate their intelligence, always underestimate their knowledge.

Frank Delaney ~ Ireland

by siegestate (siegestate or beyondwarispeace.com) on Mon Jul 12th, 2010 at 07:10:28 AM EST
[ Parent ]
The government?  But the government is already owned by the fraudsters.  Reregulation can never happen.  

It's a lot like the BP Gulf blow-out.  There is no way to put all that spilled oil back, and similarly, there is no way to undo the collapse of a looted-out economic system.  

Americans will have to learn to live without an economic system (including jobs, and all the rest of it . . . )  We can hope this will prove easier than the challenge facing Gulf residents--to live without unpoisoned food, air, and water!

Ah, the counsel of despair. How refreshing. Or something.

When the Americans can no longer maintain their empire, or when the conflict between maintaining the masters of the universe in the style to which they have become accustomed and putting bread on the table of main street becomes too stark, the power dynamic changes.

The exercise is not so much to topple the current masters of the universe - they will self-destruct on their own - as it is to avoid the brownshirts moving in and filling the power gap. Oh, and limiting the collateral damage from the collapse of the empire would be nice too.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jul 12th, 2010 at 07:28:47 AM EST
[ Parent ]
When the Americans can no longer maintain their empire, or when the conflict between maintaining the masters of the universe in the style to which they have become accustomed and putting bread on the table of main street becomes too stark, the power dynamic changes.

Ah, the counsel of blind optimism. How refreshing. Or something.

We will maintain the empire until the US fragments.  The masters of the universe will maintain their lifestyle and they'll keep the starving citizens in line with brutal police force.  And the brownshirts ... Palinites waiting in the wings.

The good news ... it's only a life sentence. You eventually leave this planet of idiots.

by THE Twank (yatta blah blah @ blah.com) on Mon Jul 12th, 2010 at 07:40:00 AM EST
[ Parent ]
We will maintain the empire until the US fragments.

That is also a change in the power dynamic, and it will most certainly undermine the current masters of the universe.

When this happened to the Soviet Union, you got mid-level apparatchiks like that drunken moron Yeltsin in charge. Now, I'm not quite as clear on how the Americans appoint their state governors, so I don't know to what extent popular influence can be exercised on the state governors.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jul 12th, 2010 at 07:51:25 AM EST
[ Parent ]
Good morning Jake.

State governors are elected; here in CA we've got a race between good old Jerry Brown and corporatist Meg Whitman.  I remember how quickly the USSR went from being an established fact to whoa ... gone, so we'll see.  I think CA would be better off without the US.  The only hitch would be who controls the Pentagon; probably the Chinese.  That would suck.

The good news ... it's only a life sentence. You eventually leave this planet of idiots.

by THE Twank (yatta blah blah @ blah.com) on Mon Jul 12th, 2010 at 07:57:50 AM EST
[ Parent ]
State governors are elected

Yeah, right. And your presidents are also "elected."

But while I have a reasonable idea about what actually goes on behind the election theatre when it comes to the presidential and congressional elections, I haven't been following the state-level game so closely.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jul 12th, 2010 at 08:05:08 AM EST
[ Parent ]
In the case of CA, she has spent enough money to make it look like a dead heat (from 20% behind). Since she has lots of money left, there's a good chance she'll be "elected".
by gk (g k quattro due due sette "at" gmail.com) on Mon Jul 12th, 2010 at 08:09:07 AM EST
[ Parent ]
If Meg wins, CA will get what it deserves.  Just goes to show you what really matters.  "I can outspend you for advertising.  I don't have better problem solving skills.  I'm just better at selling a flawed product."

Truly sad.  And we'll pay if it happens.

The good news ... it's only a life sentence. You eventually leave this planet of idiots.

by THE Twank (yatta blah blah @ blah.com) on Mon Jul 12th, 2010 at 08:14:55 AM EST
[ Parent ]
THE Twank:
If Meg wins, CA will get what it deserves.  Just goes to show you what really matters.
You make it sound like the Davis recall never happened...

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Mon Jul 12th, 2010 at 08:48:09 AM EST
[ Parent ]
I was here (CA) during the Davis recall.  Davis had as much personality as Reid in Nevada ... I've seen livlier corpses.  There was also rumors of Davis "play for pay" corruption which he did nothing to dispell.  And we had the Arnold ... people can't resist the bullshit of an actor.

The good news ... it's only a life sentence. You eventually leave this planet of idiots.
by THE Twank (yatta blah blah @ blah.com) on Mon Jul 12th, 2010 at 09:22:55 AM EST
[ Parent ]
And the whole thing was bankrolled by Darrell Issa...

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Mon Jul 12th, 2010 at 09:52:45 AM EST
[ Parent ]
Well, I don't know what to say.  Perhaps you know more than I do ... wouldn't take much.  All high level elections seem to take the same form.  The last big deal was the attempt of the Repubs to put crooked machines in place without paper trails in order to steal elections.

The good news ... it's only a life sentence. You eventually leave this planet of idiots.
by THE Twank (yatta blah blah @ blah.com) on Mon Jul 12th, 2010 at 08:11:41 AM EST
[ Parent ]
And your presidents are also "elected."

Perhaps in a Calvinist sense. It is good to be amongst the elect.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Jul 12th, 2010 at 02:41:34 PM EST
[ Parent ]
Oh boy, I did not have such a big laugh (in front of the computer, at least), in a long time.
by t-------------- on Wed Jul 14th, 2010 at 12:15:01 PM EST
[ Parent ]
Stay alive until the US folds and the states are left.  Know your neighbors.  Know the local farmers.  Screw the debt ... it'll never get paid.

Oh yeah.  Stockpile weapons you feel comfortable with.

The good news ... it's only a life sentence. You eventually leave this planet of idiots.

by THE Twank (yatta blah blah @ blah.com) on Sun Jul 11th, 2010 at 07:15:13 PM EST
.. honestly, shit advice. If things go to hell to the extent of being resolved by violence, either the army is going to be on the side of the revolution, in which case, you wont need guns, or it will be cracking down on said revolution, in which case guns will get you dead.
by Thomas on Mon Jul 12th, 2010 at 12:25:21 AM EST
[ Parent ]
It's bad advice for another reason:
American society has already descended into a state where survival is based on violence as a tactic for resolving conflict. It's will not be so much the military that's the most consistent threat, it will be the neighbors, the guy at the store, on the corner, violence coming home from the market, etc.
What's left to defend, as a society?
The US has adopted a single strategy for conflict resolution already: shoot "Them".
So, who is "Them"? Turned out, -- it was us.
Yes, the military may well become the ideology police, like the Ohio National Guard did. At Kent State, the Guard was convinced by a neanderthal governor that "them" was a bunch of rowdy idealistic college students, and so they shot them. But the government will be reluctant to bring home a mass of soldiers who may well turn on the government itself, and
General Casey's remark of yesterday

 is revealing in this regard.  Nothing has changed, except perhaps that the emergence of the Muslim "them" has temporarily diverted our attention from the domestic "them".
War on crime, war on drugs,  in 1990's 50% of the prison population in Florida were there for offenses involving small amounts of pot, no guns, no violence.
So it aint the army so much, folks. It's "them"---us.

From another perspective, what if all you want to do is stay alive? Sounds draconian, even sensationalist, but we concluded that weapons only made you a target for those flailing about in an anguished state of denial, looking for---a target. like Wife of Bath, we left in part because Americans no longer do reality, they do violence. It looked to us as if that could be a direct personal issue soon.
 

Capitalism searches out the darkest corners of human potential, and mainlines them.

by geezer in Paris (risico at wanadoo(flypoop)fr) on Mon Jul 12th, 2010 at 04:52:05 AM EST
[ Parent ]
OK, have it your way.  Just trying to be helpful.

The good news ... it's only a life sentence. You eventually leave this planet of idiots.
by THE Twank (yatta blah blah @ blah.com) on Mon Jul 12th, 2010 at 07:02:17 AM EST
[ Parent ]
There are intermediates between a civilized society and full apocalypse. Can you envision them?

Maybe the local police is broke and will only come tomorrow because it is overstretched. Some direct mechanism of dissuasion might be useful.

Well, I have no guns myself, but I can see the argument.

I also recall, when flying in the US that some houses are so isolated from everything else, that the only way of defense is self-defense (the police will never get there on time). I think I can understand the motivation of some isolated rural people who live mostly alone to have guns.

by t-------------- on Wed Jul 14th, 2010 at 12:20:29 PM EST
[ Parent ]
Some of your proposals fly in the face of the standard myths/dogma of most Eurotribers:

Belief in local solutions (federalists around here)

Self-defense (dislike for weapons for many reasons)

Village-mentality (strong cosmopolitanism)

Massive disbelief in institutions (strong belief, especially in EU institutions)

Over the last few years I've changed my stance from a federalist, believer in the formal systems of governance to totally cynical in approach. Still a cosmopolitan but, as I see things, my granddads farm starts to seem like a decent future (compared with the possibility of indentured servitude).

by t-------------- on Wed Jul 14th, 2010 at 12:14:02 PM EST
[ Parent ]
It's amazing what geniuses they are, isn't it, being able to steer a complex system through such a complicated con? Why are they so much cleverer than the rest of us?
by Colman (colman at eurotrib.com) on Mon Jul 12th, 2010 at 09:57:34 AM EST
Were they geniuses we would not have had the disorderly collapse of Lehman and AIG. I do think there are some very smart people involved, but the smartest thing they did was to buy Washington. That made it a lot less important just how cleverly they concealed things. They didn't even really have to try.

Nor do I thing it is all a "vast" conspiracy. These folks are smart enough to read the situation and do what will both benefit themselves and their company and preserve the ongoing swindle. That is why I referred to the process as a loose cartel. Pirate's cabal might be a better description. And those are significant parts of the reasons the system is unstable.

What is needed to bring it down is enough influence in Congress to prevent a repeat of the TARP at the next crisis and a broad understanding that a financial collapse of the existing system is necessary and is likely the only way it will ever be ended. What Bernanke, Paulson and Geithner did in 2008 was to prevent the collapse by preventing the bad debt from being exposed and written down. All that has done is to prolong the agony.  

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Jul 12th, 2010 at 10:52:38 AM EST
[ Parent ]
... theory and institutional analysis ...  there is absolutely no need for the system as a whole to have been planned by some cabal. Rather, individuals work to shift the rules of the game in their favor, using precedents already established by others doing the same ... and those changes in different areas that are mutually reinforcing gain the benefit of less blowback to fight through.

These kinds of self-reinforcing vicious spirals are always there in the realm of possibility. They often win, but sometimes do not.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Jul 12th, 2010 at 03:58:48 PM EST
[ Parent ]
Techno would be proud. I am doing untutored institutional analysis! I must read Veblen.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Jul 12th, 2010 at 04:37:37 PM EST
[ Parent ]
When you want to know how to break the rules for real, you gotta know the rules.

book recommendations:

Administrative Behavior by Herbert Simon
The Economic Institutions of Capitalism by Oliver Williams

Diversity is the key to economic and political evolution.

by Cat on Wed Jul 14th, 2010 at 12:50:53 PM EST
[ Parent ]
The Golden Rule - sorry, Goldman Rule - is....if a Rule is inconvenient; have it changed.

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Wed Jul 14th, 2010 at 01:20:52 PM EST
[ Parent ]

"It sho do pay to be a tax atty!"

Diversity is the key to economic and political evolution.
by Cat on Wed Jul 14th, 2010 at 01:57:26 PM EST
[ Parent ]

"arr rah rah hra ahr RAH" *

--
trans. "with dependents"

Diversity is the key to economic and political evolution.

by Cat on Wed Jul 14th, 2010 at 02:07:12 PM EST
[ Parent ]
And if you want to fix broken rules it is best to understand current practice. Thanks for the recommendations, even if I am not doing so good on my "fun" reading just now.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jul 14th, 2010 at 02:04:53 PM EST
[ Parent ]
Cat,

Google "The Economic Institutions of Capitalism by Oliver Williams "

You may find someone you know in the list that comes up!

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jul 15th, 2010 at 12:24:43 AM EST
[ Parent ]
too many syllables! lol

Diversity is the key to economic and political evolution.
by Cat on Thu Jul 15th, 2010 at 08:05:34 AM EST
[ Parent ]
Your comment recommending the book came up! ET's page rank on Google searches.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jul 15th, 2010 at 09:32:12 AM EST
[ Parent ]
Still comes up for me.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jul 15th, 2010 at 01:03:26 PM EST
[ Parent ]
hmm. I'm pretty sure the rank's because of the typo + the title and peculiar to GOOG cache life-cycle. The result for this instance is not duplicated elsewhere. I once tried out an SEO strategy to lever context sensitive vocabulary across 4 engines. (You might not believe what kind of ROI advertisers expect from keyword bids, trust me anyway.) The reference will expire relatively quickly as unsupported by an sufficient number of calls.

a wee too eccentric.

Diversity is the key to economic and political evolution.

by Cat on Thu Jul 15th, 2010 at 02:08:55 PM EST
[ Parent ]
I'm not sure it's genius. It's a rather simple con. With so much noise in the information system, the simple con is not that hard to pull off. Politicians are so totally bought that their dissembling on the evening talk shows is farcical. In the end, it's just pure greed.
by Upstate NY on Tue Jul 13th, 2010 at 09:57:54 AM EST
[ Parent ]
Disheateningly informative. But it does seem to describe much of what has recently happened. So where is JM Keynes when we need him?

Nb41

by nb41 on Mon Jul 12th, 2010 at 02:30:08 PM EST
where is JM Keynes when we need him?

Thoroughly discredited in the eyes of the public and the serious people.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Migeru (migeru at eurotrib dot com) on Mon Jul 12th, 2010 at 02:32:49 PM EST
[ Parent ]
where is JM Keynes...?

Sadly, on lots of financial blogs in in much of the main stream media what passes for Keynes is the distorted image reflected off of the funny mirror Samuelson created in order to introduce Keynes to the USA. And he is reduced to the prescriptions for counter-cyclical spending which have been made in his name. Keynes would have been certain to lambaste the spending on the TARP. The closest thing we have to what Keynes would likely support if alive today would be Modern Monetary Theory and the work of Steve Keen.

Too many financial journalists, bloggers and commenters learned their economics in college, mostly in a one year, at most introductory course, but some in higher level undergraduate courses in economics or business curricula. Bruce McF, Steve Keen and other "heterodox" economists have lamented the tenacity with which the academy clings to their discredited NCE "micro" based approach. Students in business and economics are unlikely to get exposure to conflicting ideas until grad school. Even there MBAs are, I suspect, still being taught the Efficient Market Hypothesis, ICAPM, Black-Scholes option pricing, etc. but not critiques of the underpinnings of the theory or critiques of the underpinning of economic theory in general.

In 1997 Robert Merton and Byron Scholes were awarded the "Nobel Prize in Economics" and Black, deceased, was mentioned in the award. The next year Long Term Capital Management, with Merton a director, turned out to be short term capital destruction. Perhaps on the theory that this was just bad luck, Merton kept at it and in 2007, Merton was hired as Chief Science Officer of Trinsum Group, which declared Ch. 11 bankruptcy on January 30, 2009.

With this illustrious career in business behind him in June, 2010 Merton returned to MIT as a professor at the Sloan School of Management. Is this a vindication of the old saw: "Those who can do. Those who can't teach."?  At least Keynes was a highly successful investor and had an uncanny feel for the market.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Jul 12th, 2010 at 03:24:29 PM EST
[ Parent ]
Interestingly enough, although Smith  is writing about the US, the same political narrative is at play in Europe. In Greece, we must be at stage 11 at least: "As interest rates rise, interest payments dwarf all other [government] spending, forcing extreme cuts in all other government spending." Yup.

And in the rest of the continent, such as Germany or France, we are already past stage 7 or 8: the banks that have been bailed out at taxpayers expense are now holding the state's debt and ringing the alarm bell about excessively indebted government, with ensuing calls for austerity and immediate dismantlement of the European social model.

Sarkozy has bee remarkably efficient in that regard: in barely three years he has managed to turn the country's assets over to the power elites and warned the peasantry that yes, we'll have to pay for this.

All this  while cutting taxes for the wealthier (the infamous "fiscal shield"), of course: tonight he was on national television explaining, with his trade-mark righteous indignation, that no other country on earth is taxing the rich as heavily as we are doing in France. We should feel sorry for them.

As Emmanuel Todd alluded in his 2008 book, the end of democracy is a very distinct possibility, along with brown shirts (who got along quite nicely with the 1930s plutocracy, if I'm not mistaken).

by Bernard on Mon Jul 12th, 2010 at 04:25:46 PM EST
...brown shirts (who got along quite nicely with the 1930s plutocracy, if I'm not mistaken)

While they were useful they got along. But then there came that awkward Nacht der langen Messer at the end of June, 1934. Modern would be organized thugs, take note!

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Jul 12th, 2010 at 04:47:38 PM EST
[ Parent ]
by Bernard on Mon Jul 12th, 2010 at 05:02:29 PM EST
[ Parent ]
Organized thugs as in KKK or "Posse Comitatus" or Brown Shirts are more disposable than organized corporate thugs.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Jul 12th, 2010 at 05:48:33 PM EST
[ Parent ]
"that no other country on earth is taxing the rich as heavily as we are doing in France"

Which is complete and utter drivel of course.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Tue Jul 13th, 2010 at 12:42:01 AM EST
[ Parent ]
Yes, France is a veritable capital-gains tax-haven compared to Sweden...

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Tue Jul 13th, 2010 at 09:08:06 AM EST
[ Parent ]


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