LILA RAJIVA: The Mind-Body Politic
Individuals Not Ideologies
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Archive for March, 2009
Goldman Changes Mind On Gold
“Goldman Sachs now says it expects the gold price to average $930 this year.”
Comment
Well, well. They must be reading us.
Because readers of our humble blog will note that holding to our guns staunchly we’ve said the gold is not performing as well as it might….and unlike Goldman, we didn’t wait for a drop to say that… We’ve been saying that right through even when gold looked like it was going to take out $1000 (Of course, we wish we’d bought a little and taken a quick ride too)
We’ll change our tune in a hurry if we have to, but our own experience over the past year has been that it’s better to wait for the dips.
Quote:
“Gold has gone sharply down below 900. Already I feel better, although it puts my SLV nibble in the red.I held off buying because I thought GLD showed more strengths on its down side moves - but recently I was just wondering if I was wrong after all and whether it was making a solid base at around 900-920. Good thing I held off. That plunge down was sharp and shows that the corrective thrust is stronger than the upthrust still….”
That’s from an earlier post, “Gold Below 885″ (March 18) Also check out “Dollar Index Imponderable” (March 20)
You can check them, and others, by using the search function on the right…..or just search “gold” and you’ll get my take on it over the past year…I’m long term bullish but bearish in the short term, and possibly also in the midterm.
Davy Crockett On Government Giving
Colonel David Crockett tells this story of himself:
“Several years ago I was one evening standing on the steps of the Capitol with some other members of Congress, when our attention was attracted by a great light over in Georgetown. It was evidently a large fire. We jumped into a hack and drove over as fast as we could. In spite of all that could be done, many houses were burned and many families made homeless, and, besides, some of them had lost all but the clothes they had on. The weather was very cold, and when I saw so many women and children suffering, I felt that something ought to be done for them. The next morning a bill was introduced appropriating $20,000 for their relief. We put aside all other business and rushed it through as soon as it could be done.”
“The next summer……… I saw a man in a field plowing and coming toward the road. I gauged my gait so that we should meet as he came to the fence. As he came up, I spoke to the man. He replied politely, but as I thought, rather coldly.”
“I began: ‘Well, friend, I am one of those unfortunate beings called candidates, and-’
‘Yes, I know you; you are Colonel Crockett. I have seen you once before, and voted for your the last time your were elected. I suppose you are out electioneering now, but you had better not waste your time or mine. I shall not vote for you again.’
I begged him to tell me what was the matter.”
“Well, Colonel, it is hardly worth while to waste time or words upon it. I do not see how it can be mended, but you gave a vote last winter which shows that either you have not capacity to understand the Constitution, or that you are wanting in the honesty and firmness to be guided by it. In either case you are not the man to represent me…….”
“I admit the truth of all you say, but there must be some mistake about it, for I do not remember that I gave any vote last winter upon any constitutional question.”
“No, Colonel, there’s no mistake. Though I live here in the backwoods and seldom go from home, I take the papers from Washington and read very carefully all the proceedings of Congress. My papers say that last winter you voted for a bill to appropriate $20,000 to some sufferers by a fire in Georgetown. Is that true?”
“Well, my friend; I may as well own up. You have got me there. But certainly nobody will complain that a great and rich country like ours should give the insignificant sum of $20,000 to relieve its suffering women and children, particularly with a full and overflowing treasury, and I am sure, if you had been there, you would have done just as I did.”
“It is not the amount, Colonel, that I complain of; it is the principle. In the first place, the government ought to have in the Treasury no more than enough for its legitimate purposes. But that has nothing to do with the question. The power of collecting and disbursing money at pleasure is the most dangerous power that can be entrusted to man, particularly under our system of collecting revenue by a tariff, which reaches every man in the country, no matter how poor he may be, and the poorer his is the more he pays in proportion to his means. What is worse, it presses upon him without his knowledge where the weight centers, for there is not a man in the United States who can ever guess how much he pays to the government. So you see, that while you are contributing to relieve one, you are drawing it from thousands who are even worse off than he. If you had the right to give anything, the amount was simply a matter of discretion with you, and you had as much right to give $20,000,000 as $20,000. If you have the right to give to one, you have the right to give to all; and, as the Constitution neither defines charity nor stipulates the amount, you are at liberty to give to any and everything which you may believe, or profess to believe is a charity, and to any amount you may think proper. You will very easily perceive what a wide door this would open for fraud and corruption and favoritism, on the one hand, and for robbing the people on the other. No, Colonel, Congress has no right to give charity. Individual members may give as much of their own money as they please, but they have no right to touch a dollar of the public money for that purpose…..”
Chapter 12, “The Freedom Philosophy” (1988) by The Foundation for Economic Education (Crockett’s story is taken from “The Life of Colonel David Crockett, compiled by Edward S. Ellis (Philadelphia; Porter; Coates, 1884, via Freely Thinking.com
Seymour Hersh - A History of Complicity in State Propaganda?
“On September 25, 1997, ABC used its news magazine program 20/20 to take an unusual journalistic step. In the first segment of the program, Peter Jennings took pains to discredit documents that had been about to be used by its own contracted reporter for an upcoming show scheduled for broadcast. The contracted reporter was Seymour Hersh. The documents purported to show a secret deal involving Marilyn Monroe, Sam Giancana, and President John F. Kennedy. They were to be the cornerstone of Hersh’s upcoming Little, Brown book, The Dark Side of Camelot. In fact, published reports indicate that it was these documents that caused the publisher to increase Hersh’s advance and provoke three networks to compete for a television special to hype the book. It is not surprising to any informed observer that the documents imploded. What is a bit surprising is that Hersh and ABC could have been so naive for so long. And it is ironic that ABC should use 20/20 to expose a phenomenon that it itself fueled twelve years ago.
What happened on September 25th was the most tangible manifestation of three distinct yet overlapping journalistic threads that have been furrowing into our culture since the Church Committee disbanded in 1976. Hersh’s book would have been the apotheosis of all three threads converged into one book. In the strictest sense, the convergent movements did not actually begin after Frank Church’s investigation ended. But it was at that point that what had been a right-wing, eccentric, easily dismissed undercurrent, picked up a second wind—so much so that today it is not an eccentric undercurrent at all. It is accepted by a large amount of people. And, most surprisingly, some of its purveyors are even accepted within the confines of the research community.
The three threads are these: 1) That the Kennedys ordered Castro’s assassination, despite the verdict of the Church Committee on the CIA’s assassination plots. As I noted last issue, the committee report could find no evidence indicating that JFK and RFK authorized the plots on Fidel Castro, Rafael Trujillo of the Dominican Republic, or Ngo Dinh Diem of South Vietnam. 2) That the Kennedys were really “bad boys,” in some ways as bad as Chicago mobsters or the “gentleman killers” of the CIA. Although neither JFK nor RFK was lionized by the main centers of the media while they were alive, because of their early murders, many books and articles were written afterward that presented them in a sympathetic light, usually as liberal icons. This was tolerated by the media establishment as sentimental sop until the revelations of both Watergate and the Church Committee. This “good guy” image then needed to be altered since both those crises seemed to reveal that the Kennedys were actually different than what came before them (Eisenhower and the Dulles brothers) and what came after (Nixon). Thus began a series of anti-Kennedy biographies. 3) That Marilyn Monroe’s death was somehow ordained by her “involvement” with the Kennedy “bad boys.” Again, this was at first a rather peculiar cottage industry. But around the time of Watergate and the Church Committee it was given a lift, and going back to a 1964 paradigm, it combined elements of the first two movements into a Gothic (some would say grotesque) right-wing propaganda tract which is both humorous and depressing in its slanderous implications, and almost frightening in its political and cultural overtones. Egged on by advocates of Judith Exner (e.g. Liz Smith and Tony Summers), this political and cultural time bomb landed in Sy Hersh’s and ABC’s lap. When it blew up, all parties went into a damage control mode, pointing their fingers at each other. As we examine the sorry history of all three industries, we shall see that there is plenty of blame (and shame) to be shared. And not just in 1997….”
James di Eugenio on possible media (in this case, Seymour Hersh) complicity in promoting propaganda on JFK.
Comment
In Language of Empire (2005) I came to a similar conclusion about Hersh, but given his status and the fact that I was an outsider and novice in comparison to such a veteran and well respected figure, I contented myself with this observation. (my editor cut out a lengthy chapter on media ownership, and the word length requirements also posed insuperable problems to exploring this angle properly):
” Or were the torture photos leaked intentionally in a calculated damage-control effort as some have suggested? There is a documented history of ties between the CIA and the major media - from CBS to Newsweek and the New York Times. Reaching far back to the Cold War, this record makes it impossible to discount the possibility of a damage-control campaign.” (The Torture Trompe L’Oeil, p. 162)
My footnote to this passage includes the following references, which I add here for the benefit of anyone who wants to look up more information:
“The CIA and the Media: How America’s Most Powerful News Media Worked Hand in Glove with the Central Intelligence Agency and Why the Church Committee Covered It Up,” Rolling Stone, October 20, 1977.
“America’s Secret Power: the CIA in a Democratic Society,” Loch K. Johnson (New York: Oxford University Press, 1989)
“CIA in America,” Counter Spy, Spring 1980
“The CIA’s use of the Press: A ‘mighty Wurlitzer,’” Columbia Journalism Review, Sept/Oct 1974, p. 9-18.
[There are many more leads in my book. 25 pages out of 225 pages, that is, more than 10% of the book is devoted to footnotes].
The place where the CIA, torture, and propaganda meet is of course the place where all three emanate from - Wall Street.
Kennedy On Going Past Politics
“Let us not seek the Republican answer or the Democratic answer, but the right answer. Let us not seek to fix the blame for the past. Let us accept our own responsibility for the future.”
- John F. Kennedy
Comment
Fixing the blame for the past is sometimes necessary, though. If you don’t know what you did wrong, how will you know which path to take in the future? And which ideas worked and which didn’t? How will you tell the shepherds trying to save the flock from the wolves intent on devouring it?
Blame is necessary. So is judgment. What isn’t necessary is condemnation and hatred.
Global Games: World Bank Boosts the Buck
“The dollar will remain the world’s dominant reserve currency and a strong U.S. currency is critical to lifting the world out of economic and financial crisis, World Bank President Robert Zoellick said on Tuesday.
Speaking at a newsmaker event at Reuters’ London office, Zoellick announced a $50 billion program to reverse a sharp drop in trade in the global crisis and urged G20 leaders to back the effort.
But he played down the chances of a dethroning of the dollar as the world’s leading currency.”
More at Reuters.
Trader Psychology: Freezing from Fear
Today, I’m trying to recall the worst episode of fear I’ve experienced trading.
It was in August, 2004. I blame a certain newsletter for it. The writer had built up a frightening picture of how the US economy entirely depended on the Japanese PM’s good will for it to continue. I forget exactly why. But the short of it was that one day the old man would roll out of bed and decide to pull the plug on us, the writer said. He painted an apocalyptic picture of the day. Unemployment lines, factories shuttered, houses boarded up, foreclosures, stock markets crashing, the dollar worthless, oil prices so high no one could drive any more….
When the market plunged that fall, I thought the moment had come. Everything was down - my pension, some etf’s, long-term positions, short-term plays. I had put a lot into some tech stocks (Juniper, Nvidia, Foundry, Nortel - yes, those - remember? - all of them), because I thought they were due to go back up. And in the beginning of that year they started out promisingly. But then an upswing… that didn’t turned into a downswing… that did.
And kept on swinging down, lower and lower. I stopped looking at my positions. I was sea-sick every morning. Literally.
Which was stupid because there were several times the swings went up and I could have sold out for a smaller loss than I feared.
I didn’t. I was simply unable to face what was happening. The market wasn’t going back up. It was going lower. And I didn’t want to see that. I couldn’t bear feeling that bad. By not looking at the numbers, I didn’t have to feel the loss, so I didn’t. I procrastinated. I wanted to wake up one morning and see the numbers up in black as though they’d never been down. And I wanted to sell at a profit. A plus, however small.
I waited so I could exit without any loss. Wanting the perfect exit, I missed all the good ones. Then even the decent ones. When I exited finally, in August, it was at what turned out to be the very bottom. After that, there was a three-year uptrend.
But I wasn’t on it.
I was in shock for months after seeing the ticker plunge for the last time and jumping out. In shock from having sold everything - the bad, the not-so-bad and the hardly-bad-at-all. I didn’t want any more of it. I didn’t want to have my stomach churning every morning. I didn’t want the the false hopes of paper profits that disappeared before you took them and the constant drain of paper losses that drew blood because you couldn’t hold on any more.
I thought about how hard I’d worked to save the money. It wasn’t ‘easy come’ at all. But it was easy go, alright. I thought about how I’d scrimped on food, weighing things for a difference in a few cents, skipping a meal to save a few dollars. I thought about how I’d done without things I needed so I could pay back my debts. How I’d been hard, not just on myself but on my family.
I’d curl up on my bed, a kind of silent whimpering inside me. I cursed myself and blamed myself for being greedy… for being in the market at all. How could I be so stupid. Trading was for cleverer people than me. It was for people who had money to throw around, not for people who’d always had to be careful. But inside I knew it wasn’t greed at all. I’d never been a greedy person. Fear was my problem. And habit. The habit of not ever thinking about something so tedious as money.
If the bank had paid even 1% more than inflation I’d have left my money in it and forgotten I had it. But it wasn’t. And it hadn’t for a long time.
So it was fear, not greed. Fear that I’d never be able to keep up with things costing more and more. Fear of always struggling and getting less and less. Money in a savings account was like a continuous leak, a bleed you couldn’t staunch. Houses had tripled where I lived. I might just as well not have worked for the past three years. I told myself, I should’ve been a bum. I ought to have gone into flipping them myself, like the people next door. I didn’t. I thought it was wrong to. And now who was the fool? Just trying to make enough to keep up, I’d lost everything I’d made in three years. And all the interest from the ten years before.
A loss that large isn’t something you cry about. It stays somewhere in the background of your mind like the distant shrieking of a gull or the beating of waves in a seaside town. You’re never really far from it. It’s something that’s always going to be there, from now on. Like a scar from an accident. In one moment you become someone else. Some one else who’ll always have this rip across your face, this twisted leg, the odd droop to your mouth. You forget how it used to be before the accident.
That first big loss is like that. The feeling you had before it goes forever.
The feeling of being whole. Of doing well. After that, there’s a kind of a gash. A sense of being on the wrong side of things. Of being a loser. A kind of raggedness.
For a year I couldn’t press a sell or buy order on my screen without second-guessing it dozens of times. It took me two years before I could buy anything without wanting to jump out immediately…..
Only after a long while I began to understand, really understand, that trading isn’t about money. Even money isn’t about money.
It’s about emotions. And success at trading is about understanding your emotions and being able to handle them.
You don’t overcome them but you know what they are. And what they’re making you do.
There’s no place for self-deception if you want to stop losing money trading.
How The Thrifty Were Fleeced
“It was the intention of John Maynard Keynes to return to the age before Noah Webster. He wanted to go back to the Middle Ages when lending at interest was prohibited. At that time, people did not save. No capital was accumulated. Without capital, when a new machine was invented (which was rare), it sat in its inventor’s workshop because there was not enough capital in the world to build many copies of the machine and put it to work in factories producing wealth for people. In a word, the legalization of interest caused the factory system, which vastly increased wealth in the (northern)
Keynes provided an economic rationalization for paper money. He stumbled across two Americans, William Trufant Foster and Waddill Catchings. These were crackpots who had written a defense of paper money called, The Road to Plenty, in which they argued that the road to plenty for a society was to print money.
Keynes was clever enough to perceive that Foster and Catchings were being rejected by the general public because they were conservatives. Keynes plagiarized their theory and dressed it up as liberal and progressive. This is why Keynesianism is called “the new economics” and why it is full of mathematical mumbo-jumbo (which appears absurd to any mathematician and has the sole purpose to intimidate people).
Under Keynes’ influence, the U.S. started printing money in 1933 Since that time the U.S. money supply has multiplied by a factor of 80 (from $20 billion to $1.6 trillion) while the population multiplied by 2.3. (Per capita money supply multiplied by 35.).
But the point is that, if a person tried to save money in the U.S.A after 1933. in the manner that was done in the period 1788-1933, he found that, as his money accumulated from the interest, it lost its value from the depreciation of the currency. Using the official government CPI, the saver (in safe instruments) gained no real value between 1933 and 2009. His buying power was just the same. In effect, Keynes was successful. He did not stop the payment of interest. But he did stop the payment of real interest.
What does this mean for you and your economic plans? It is very simple. In general, you cannot retire. If you save your money and invest it safely, as was normal in the 19th and early 20th centuries, you do not accumulate real interest. The currency depreciates just as rapidly as your interest accumulates, and you are back in the Middle Ages when it was forbidden to pay interest and no one retired.
However, Keynes slipped up in two areas: stocks and real estate. If you own stocks, then the stock pays a dividend. This roughly corresponds to the interest on a savings account. It is a return on capital. And the price of the stock goes up as the value of the currency goes down. This makes up for the depreciation of the currency. It is the same with real estate. If you buy apartments or commercial property, in both of which the tenant pays rent, you are receiving a return on capital. And the rise in the price of the real estate offsets the depreciation of the currency. (Speculative real estate, such as raw land, does not apply here.)
There is one serious problem with both of these investments. They are very speculative. The stock market rose by a factor of 18 times from 1982 to 2007. But from 1966 to 1982, it fell by over 70%. These swings are speculative and tricky. But you cannot retire unless you play them because Keynes has taken away the traditional American (and British) method of safe investment……
- One Handed Economist.
Comment
I was wondering why the name Waddill Catchings sounded familiar. Now I remember. He was involved in one of the most famous Ponzi schemes of all times, one at the center of the Great Crash of 1929. Mr. Catchings was part of the launch of the Goldman Sachs Trading Corporation (GSTC). Yes (sigh) Goldman was a part of that mess too…..
Commercial Shorts And the Market for Metals..
“The CFTC also publishes a Bank Participation Report [2] on a monthly basis. This report gives the long and short positions of Banks who hold positions in commodities grouped as foreign and domestic. They also state how many banks make up the domestic bank holding and the foreign bank holding. In silver there are only two US Banks involved and in Gold there are three.
The position of the banks is also included in the “Commercial” category of the COT. So once per month we can see what share of the commercial trading in gold and silver is performed by these US Banks.
To observe what influence anyone is having on the market we have to determine what “Net Position” they hold. If you were to buy 100 contracts long of silver and sell 100 contracts short at the same time, your influence on the market price will be nil. If however you buy 10 contracts long and you sell short 100 contracts your effect on the market price is a function of the net short position of 100-10=90 contracts.
The commercials collectively are nearly always net short. Their effect on the price is a function of the commercial net short position which is the total commercial short position minus the total commercial long position. To determine how influential the positions of the
Adrian Douglas in “Pirates of the Comex”
Comment:
As the article indicates, the commercials have a huge influence on gold and silver prices. Investors may be buying but if the commercials are short, that is going to cap the prices. That’s one reason why I am not (yet) long gold and have only a small silver position. And I’m not nimble or confident enough to short something that’s in a long-term bull market.
(By the way, my trader comments are only asides. I am not a professional trader of any kind., and only manage my own money because bank accounts don’t pay enough to cover inflation and brokers - in my experience - are mostly good for leaving you broke. As I’ve said elsewhere, I’m an ex-school teacher and academic, who would much rather have nothing to do with finance, if I could. But I can’t.)
Trader Wars
“There are plenty such victims available. “Farmers and schoolteachers and plumbers are taking responsibility for their own investments,” says John Yost, whose San Francisco firm, Black Rocket, created the famous TV commercial for Discover Brokerage about the tow truck driver who bought his own private island from his stock-trading profits. “If you really care about your health, you have to be more involved in learning about medical care,” says Yost. “If you really care about your financial health, you have to be more involved in investing your own money.”
Harvey Houtkin, the CEO of All-Tech Direct, a pioneering daytrading firm, has long argued that the more people there are who actively trade for themselves, the more liquidity and competition the market has. He believes that the new, high-volume daytrading scene is producing so much volume that the traditional exchanges will soon be obsolete. “Why do you think the New York Stock Exchange and Nasdaq want to go public?” asks Houtkin. “To bail out on the public. You’ll be able to enter orders through an electronic mechanism, so what does the New York Stock Exchange do? ‘Hmm, well, there’s a lot of suckers out there; we’ll go public.’”
But while advocates of the Internet stock market see the growth of amateur electronic trading as a popular triumph, a stream of greedy and ill-informed newcomers shoring up the bottom layer of the pyramid is also helpful. Anthony laughs with scornful delight at the notion of a fair and massively popular stock market. He views the competition among brokerage firms, market makers, and the new electronic trading system merely as a staged showbiz feud, and he pictures the Nasdaq market as an evil partnership: The online brokerages lure new herds of sheep into the game and collect the admission fees while the market makers do the shearing. “Right now,” Anthony says, “people just get wild hairs up their ass, and all of a sudden a whole sector will move and there is no rhyme or reason to it. Take online banking. Net banks are at 20 or 30 bucks and then they shoot up to 200 because everybody is talking about how people will do more banking online, and over a four-month period they drop back down to 20 bucks. The more volatile the market, the more risk associated with it, and undoubtedly the more losers. You have the public versus the professional, and the public is going to lose in the end.”
Joey Anuff and Gary Wolf, Adventures of a Day Trader (excerpted in Wired magazine, 2000) citing convicted fraudster-turned-FBI informant, Anthony Elgindy, on the rigged market.
The Psy-War At Home…
“Award winning reporter and likely Mossad propagandist Seymour Hersh tells us that we must resort to the tactics the Jordanian security service used to catch the notorious Palestinian terrorist Abu Nidal. “The Jordanians did not move directly against suspected Abu Nidal followers but seized close family members instead, mothers and brothers,” Hersh notes. Then he quotes an anonymous CIA officer as saying, “Jordan is the one nation that totally succeeded in penetrating a group,” because it was able “to get their families under control.”
So much for family values.
Hersh disingenuously adds that these tactics defy CIA procedures, but suggests it’s a better alternative than “sitting around making diversity quilts.”
Well, this is exactly the type of psychological warfare you can expect to be subjected to on a daily basis from here on out. As noted in the Marine Corps Gazette, “Psychological operations may become the dominant operational and strategic weapon in the form of media/information intervention. Logic bombs and computer viruses, including latent viruses, may be used to disrupt civilian as well as military operations. Fourth generation adversaries will be adept at manipulating the media to alter domestic and world opinion to the point where skillful use of psychological operations will sometimes preclude the commitment of combat forces.”
“Television news may become a more powerful operational weapon than armored divisions.”
Let me say it one last time: in the name of anti-terrorism, all of the nation’s pent-up anger and frustration over Vietnam, and a host of other, mostly Clinton-related issues, is poised to be unleashed on an enemy that lurks inside our borders.
And that enemy is you….”
Investigator and reporter, Douglas Valentine, author of the best book on the Phoenix Counter-Insurgency program, writing back in 2001.
Gandhi On Business Without Morality
The things that will destroy us are: politics without principle; pleasure without conscience; wealth without work; knowledge without character; business without morality; science without humanity; and worship without sacrifice. –Mahatma Gandhi
Eurozone Rebuffs Brits On Bail-Outs
“GORDON BROWN’S carefully laid plans for a G20 deal on worldwide tax cuts have been scuppered by an eve-of-summit ambush by European leaders.
Angela Merkel, the German chancellor, last night led the assault on the prime minister’s “global new deal” for a $2 trillion-plus fiscal stimulus to end the recession.
“I will not let anyone tell me that we must spend more money,” she said.
The Spanish finance minister, Pedro Solbes, also dismissed new cash being pledged at Thursday’s London summit.
“In these conditions I and the rest of my colleagues from the eurozone believe there is no room for new fiscal stimulus plans,” he said.
Nicolas Sarkozy, the French president, has insisted that “radical reform” of capitalism is more important than tax cutting….”
Libertarian Laura Nyro
“Give me my freedom for as long as I be. All I ask of living is to have no chains on me.
All I ask of living is to have no chains on me,
and all I ask of dying is to go naturally, only want to go naturally.”
Laura Nyro, “And When I Die”Good Cop Paul and Bad Cop Tim
”Ultimately, it really doesn’t matter which proposal is being batted around, whether it’s diddled this way and called “nationalization” or twiddled that and called “helping the market” or “preprivatization” or “private-public” or anything else - none of it is likely to make a substantial difference, as long as the government stays trapped in the sticky web of Goldman Sachs, AIG, & Friends.
“Nationalization” is likely to have been no more than “internationalization” - linguistic cover for a power-grab across national lines by the globalists, masquerading as economic therapy for your friendly neighborhood business.
And a power grab can be hustled through even without “nationalization.”In fact, with nationalization shelved, Geithner has just turned around and asked for extraordinary powers for the Treasury.
Maybe Krugman is simply playing good cop to Geithner’s bad cop. And the real goal - more power for Treasury - is a done deal regardless of which program gets by the public?”
Comment
That’s the conclusion of a long (very long) piece I’ve been working on this whole month about what looks like a propaganda thrust involving most of the administration. I don’t buy the Bernanke/Geithner versus Paul K spectacle. I have a feeling that anyone whose voice gets heard at that level in the debate is already an insider and debates well within the parameters of the acceptable.
I have not way of proving what I’m saying, but when I put the timeline together (which is why it’s taking forever) it does give a better explanation of everything that’s happened so far. And it explains why gold hasn’t really done much in a crisis that ought to have set it on fire…
Currency War: China May Press G20 To Make Uncle Sam Pay Up
China’s leaders may press at the Group of 20 summit for specific steps to protect its more than $1 trillion of dollar assets as U.S. fiscal policies risk sparking a “currency war,” a senior Chinese researcher said.The dollar weakened after the Federal Reserve said March 18 it would buy as much as $300 billion of Treasuries and the U.S. this week outlined plans to buy as much as $1 trillion of illiquid bank assets.
U.S. purchases of Treasuries are “irresponsible” because they may weaken the dollar, Li Xiangyang, of the government- backed Chinese Academy of Social Sciences, told a forum in Beijing today. “Chinese leaders are likely to articulate their concern to their U.S. counterparts strongly and ask for specific measures.”
New York Times Shills For AIG
Boo-hoo. Poor AIG employees are suffering unfairly from the public outrage over executive bonuses.
Look, we know these guys aren’t the culprits. The bad guys are too powerful (Hank Greenberg & Co.) or have skipped town.
So, yes, we know that the letter writer isn’t the problem. BUT….
He and his colleagues ARE senior people who worked at AIG while rampant fraud/crime was prevalent at other divisions. Did any of them say anything or do anything about it? AIG was involved in repeated infractions of the laws, over decades - a lot of which had already been exposed to the public eye or was being prosecuted. These guys didn’t know? Give me a break. And sez who the other divisions did nothing shady? How much do we really know?
Even if they themselves didn’t do a thing wrong, in light of their company’s centrality to the whole financial crisis, they should have had enough decency to have refused their bonuses. Where’s their public spirit?
Yes, the whole bonus fracas is a distraction and purely symbolic. But symbols are important. And people are understandably outraged.
Instead, we get this rather narcissistic letter in the Times that tells a single personal story.
Dear me, senior managers at a major financial firm work 12-14 hours, do they?
So do a lot of people who don’t get that kind of compensation.
Tough. There’s a serious problem and everyone has to contribute what they can, especially the people directly involved in the crisis.
Notice how the NY Times has been playing the bonus story.
Read this story by Allen Salkin
He says AIG rage isn’t healthy - chill it, you yokels. Interesting. I checked through Mr. Salkin’s archives to find out if he’d ever commented about politics so directly. But no. The only time since 2000 Salkin ever had anything to say about politics was recently - to try to douse rage over AIG and to defend their executive salaries (you need 500k to live in New York, he says here).
Thousands of people in the financial industry were killed in the 9-11 attacks. President Bush went on a rampage in Iraq that killed thousands of US servicemen and women and mutilated tens of thousands of them, in addition to killing over a million Iraqi civilians and reducing the country to near rubble in many areas. It was, arguably, a genocide. Since the 1990s, the financial industry in New York has created huge bubbles of fraud and crime that have destroyed the life savings, income, credit, and productivity of millions of people and firms all over the globe and has set off what looks like a global depression that could last for years. Did Allen Salkin at any time tell any of the frenzied speculators, corrupt regulators, and slavering real estate salesmen who pushed all this on the public to take a yoga class and chill? Did he tell them that lying, cheating, swindling, cosmic looting and mass murder are “not healthy”? No, I don’t recall he did.
Had New York journalists been doing their duty ( a central discipline necessary for practitioners of yoga) in the past two decades, I doubt the world would be in this mess.
Selective high-mindedness isn’t reason speaking. It’s servility to power masquerading as spirituality. Don’t fall for it.
The outrage over the bonuses was a distraction, yes, but it symbolized for struggling working class and middle-income people what’s wrong in the let-them-eat-cake world of the financial elites. To treat their outrage (which was also carefully orchestrated by the administration, by the way) as simply populist feeling gone mad is strangely and suspiciously selective.
Full disclosure: Salkin called me for comments for his piece. I said roughly what I said above. He didn’t use those comments.
PS: Nice to see Karl Denninger thinks along the same lines.
I have no idea who Denninger is but his take on things is almost identical with mine (dollar contrarian, psyop-savvy).
PPS: I note that Matt Taibbi wrote a post on this same letter and posted it on Alternet the day of this blog post.
US Regulators take over US Central Federal Credit Union
“Regulators seized the top clearinghouse for U.S. credit unions, citing a critical deterioration in the finances of the provider of services to thousands of retail credit unions.
The National Credit Union Administration (NCUA) took control of U.S. Central Federal Credit Union, a huge wholesale credit union with about $34 billion in assets based in Lenexa, Kansas.
It also seized Western Corporate (WesCorp) Federal Credit Union of San Dimas, California, another corporate credit union with $23 billion in assets.
Stress tests of corporate credit unions had uncovered an “unacceptably high concentration of risk” at these two institutions, the regulator said in a statement.
The immediate costs of the takeover are coming out of a $7 billion industry-maintained insurance fund, but will mean higher premiums levied on retail credit unions.
The action highlighted strains in the nonprofit banking sector that has recently been touted as a source of new lending, even as many for-profit banks limit their lending and receive billions of dollars of taxpayer-funded capital injections.
U.S. regulators also seized another three small banks on Friday, bringing the total to 20 so far this year….”
More at Reuters
Petty Bourgeois Radicals..
” Mutualists belong to a non-collectivist segment of anarchists. Although we favor democratic control when collective action is required by the nature of production and other cooperative endeavors, we do not favor collectivism as an ideal in itself. We are not opposed to money or exchange. We believe in private property, so long as it is based on personal occupancy and use. We favor a society in which all relationships and transactions are non-coercive, and based on voluntary cooperation, free exchange, or mutual aid. The “market,” in the sense of exchanges of labor between producers, is a profoundly humanizing and liberating concept. What we oppose is the conventional understanding of markets, as the idea has been coopted and corrupted by state capitalism.
Our ultimate vision is of a society in which the economy is organized around free market exchange between producers, and production is carried out mainly by self-employed artisans and farmers, small producers’ cooperatives, worker-controlled large enterprises, and consumers’ cooperatives. To the extent that wage labor still exists (which is likely, if we do not coercively suppress it), the removal of statist privileges will result in the worker’s natural wage, as Benjamin Tucker put it, being his full product.
Because of our fondness for free markets, mutualists sometimes fall afoul of those who have an aesthetic affinity for collectivism, or those for whom “petty bourgeois” is a swear word. But it is our petty bourgeois tendencies that put us in the mainstream of the American populist/radical tradition, and make us relevant to the needs of average working Americans. Most people distrust the bureaucratic organizations that control their communities and working lives, and want more control over the decisions that affect them. They are open to the possibility of decentralist, bottom-up alternatives to the present system. But they do not want an America remade in the image of orthodox, CNT-style syndicalism.”
From Kevin Carson at Mutualist.org
Comment:
I find a lot of Kevin’s work and thinking useful, but I should point out I’m not a mutualist myself. I don’t subscribe either to the Marxist labor theory of value, nor the Rothbardian subjective theory. They’re both incomplete. But my thoughts aren’t fully worked out yet in those areas…
Geithner Hits Dollar
“Geithner said he was “quite open” to China’s suggestion of moving toward a currency system linked to the International Monetary Fund’s Special Drawing Rights (SDRs), a basket of dollars, euros, sterling and yen, as a super-sovereign reserve currency.
That hit dollar sentiment as it could mean countries selling large portions of their dollar reserves, highlighting the use of gold as a hedge against the U.S. currency, analysts said.”
Comment
But then Geithner said dollar would be the reserve currency for a long time and gold sold off a bit…
Why doesn’t this fellow at least put on a pair of spangled tights in advance. Then we’ll be sure to keep in mind it’s a high-wire juggling act and not any kind of responsible Treasury.
Libertarians of the World Unite
You have nothing to lose but your parasites….
(Outraged now not so much at the government and banks, as at the media, which invokes calm and reason when there’s even the teeniest ding in their Ferrari lives, but when it comes to mass murder, bombing and pillaging, or looting our own treasury - where are they? )
Libertarian Living: The Nano Car
“The mini-car is the brainchild of one of India’s top industrialists, Ratan Tata, who had a dream to move millions of Indian families off their two-wheelers and into a safer, all-weather alternative. Many auto experts here have likened the Nano to the Henry Ford Model T that revolutionized American life a century ago. The down payment for a Nano is about $70. I made a promise and I kept that promise,” the soft-spoken 71-year-old Tata said at a glitzy launch party Monday. “I dedicate this car to the youth of India who designed it and will use it to transport their families. It shows that nothing is really impossible if you set your mind to it.”
The global economic downturn has only made the car more desirable, and not only in developing nations, Tata said. The company is planning to launch a version of the Nano in Europe in 2011, and after that a souped-up Nano for the U.S. market…..”
More at the Washington Post.
Comment
Hmm. Hate to sound like some desi nationalist preening. But really. Jack Welch comes out with a begging bowl (he was one of the business men selling the bail out and now he was one of the loudest voices asking for calm on the AIG bonuses)…..
And Tata gives us a car for the masses (I mean the American masses too). No more hideous gas-guzzling SUVs. A downsized car for a downsized economy….
This was my feel-good story for the month. Business and technology supplying a market need and solving problems, in spite of what anti-business propaganda might say. Of course, I don’t consider the rent- seeking parasites who cozy up to government to be anything more than a criminal class, the kind free-loading inevitably produces, whether at the bottom of society, or more perilously, at the top….
Geithner Demands More Stick-Up Powers
Orange alert moves to red: these folks keep changing the name of the game but the moves are all the same: give us more power.
Latest from the DC Klepto-class (I’ve bolded the significant parts):
“As we have seen with AIG, distress at large, interconnected, non-depository financial institutions can pose systemic risks just as distress at banks can,” Geithner said. “The administration proposes legislation to give the U.S. government the same basic set of tools for addressing financial distress at non-banks as it has in the bank context”
Geithner made it clear he believes the treasury secretary should be granted unprecedented power, after consultation with Federal Reserve Board officials, to take control of a major financial institution and run it. The treasury chief is an official of the administration, unlike the FDIC, which is an independent regulatory agency.”
More here.
Translation: Treasury/Goldman Sachs/banking cartel is going to get its hands on non-bank financial institutions that are bleeding…..
Madoff Fraud In Europe Has Criminal Implications
“Ward said U.S. prosecutors were working with law enforcement authorities in other countries, including the Serious Organized Crime Agency in London.
She said there were “criminal implications” involved in Madoff’s international securities business. The judge did not immediately decide the issue….”
More here.
Madoff’s accountant Friehling (of Friehling & Horowitz) has been charged with creating sham audits and falsely testifying that they were up to professional standards. He faces a jail sentence of upto 105 years. Madoff faces upto 150 years.
Comment
Well, we already knew that. Question: what’s the difference between crime and serious crime?
Modern Economics Masquerading as Hard Science
“The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (Swedish: Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne), sometimes referred to as the “Nobel Memorial Prize in Economic Sciences”, is an award for outstanding contributions in the field of economics and is generally considered one of the most prestigious awards in that field.[1] It is commonly referred to as the Nobel Prize in Economics[2] and it is identified with the Nobel Prizes, although it is not one of the five Nobel Prizes (in Physics, Chemistry, Physiology or Medicine, Literature, and Peace) which were established by the will of Alfred Nobel in 1895.[1][3][4][5][6] The Prize in Economics, as it is frequently referred to by the Nobel Foundation, is a prize established and funded by the Bank of Sweden, in memory of Alfred Nobel. It was instituted in 1968 on the 300th anniversary of Sveriges Riksbank (the central bank of Sweden, sometimes called the Bank of Sweden or the Swedish National Bank).”
Notice that the prize is actually an award made by a central bank.
Bringing Water to Villages in Haiti
The 2008 Templeton Freedom Award winner, Deep Springs International a Pennsylvania group that coordinates the work of NGOs (which provide point-of-use water treatment technologies that are relatively inexpensive - about $3 to $80), microfinance institutes (which provide money to train the poor and to help them start businesses), and local schools and institutions (which usually don’t focus on water treatment).
Deep Springs has a number of ways you can help them, from donating, to buying items on their page, to changing your search engine to
Good Search and iGive.
Remember that gold mining is one of the worst offenders in using up water. So if you do hold physical gold (I don’t and it’s one of the reasons I don’t), remember you may be contributing to water problems in those areas and have some responsibility to help where you can.
Gold Forming A Base for Future Rise
“If there was ever a doubt that gold’s bull market is forming an eight year low, it’s gone now. The Fed’s action guarantees that gold has much further to rise in the years ahead. So far, gold’s four week intermediate decline we call B has been moderate, but it’ll remain underway if June gold again declines below $953. Gold will stay firm above $880. Keep in mind, gold has been much stronger than most markets over the last several months, which means the other markets are poised to outperform gold for the time being...”
Comment
I still think (and this could be wishful on my part) that gold will go lower than 880 (and under 750). But, as always, the price action dictates my opinion.
Meanwhile, supporting my cautious hopefulness about the stock market, here is Investor’s Business Daily on the often repeated assertion that this is a replay of 1929. IBD suggests that our 1929 has already happened. What we have now is 1938:
The Nasdaq’s price action since the 1990s, like clockwork, closely parallels, tracks, and eerily replicates the Dow Jones Industrials’ wild speculative run-up to its 1929 bubble peak, the ensuing three-year, 88% collapse to the Depression lows in June 1932, followed by the recovery run-up to 1937 and the ensuing sharp correction. Based on historical data, today’s market is likely to be a repeat of 1938 — not 1929.
The only problem with that scenario is 1938 was a year before World War II began. I hope IBD isn’t pushing that parallel too hard.
File IBD’s report as Wall Street boosting the market…
Kevin Duffy On The Wall Street Shuffle, March 23
Kevin Duffy of Bearing Asset Mgt., a contributor to Lew Rockwell, and a non-interventionist on the bail-out will be a guest this afternoon on “The Wall Street Shuffle,” hosted by Dan Kofal and Ed Butowski, from 5:30-5:58 pm EST. The show is anti-bailout so they should be open to a non-interventionist view of the financial crisis.
www.thewallstreetshuffle.com. Click on “Listen Live.” It may work on Firefox, but it definitely works on Explorer.
Give Immigrants Residency to Prop Up Housing Market
“The Obama administration should seriously consider granting resident status to foreigners who buy surplus houses in this country. This makes more sense than the president’s $275 billion housing bailout plan, which Americans greeted with a Bronx cheer.”
Comment:
A great proposal and one I wrote up here on March 6 2009….
http://www.google.com/search?hl=en&q=lila+rajiva&start=30&sa=N
Lila Rajiva: The Mind-Body Politic. Individuals Not Ideologies ….. Lila Rajiva on Washington Won’t Let Skilled Immigrants Solve Housing Crisis …
lilarajiva.org/ - 57kSome of my pieces have this weird way of getting tucked behind the others, even when they’ve been opened many more times.
The immigration piece only shows up on the second or third page when you do a search for Lila Rajiva. Same for this piece:
The Paulson Putsch
Sep 25, 2008 … Lila Rajiva [send her mail] is the author of the ground-breaking study, The Language of Empire: Abu Ghraib and the American Media (MR Press, …
www.lewrockwell.com/rajiva/rajiva10.html - 56k - Cached -But this one with far fewer hits is on the first page.
Three Card Capitalists.
Oct 1, 2008 … Lila Rajiva [send her mail] is the author of the ground-breaking study, The Language of Empire: Abu Ghraib and the American Media (MR Press, …
www.lewrockwell.com/rajiva/rajiva11.html - 35k
It’s from the same site, Lew Rockwell, so I don’t see why Google wouldn’t put that on the first page of a search. Got to figure that out.
That Darn Elusive Black Swan
“The profit motive is a good thing when it operates in an environment where bad bets are punished with losses and good investments are rewarded. Only government can distort that healthy profit-and-loss system, giving people incentives to make bad decisions. And it’s in this environment that greed is no good to anyone. It turns out, however, that greed—or better, rational self-interest—can help our economy stabilize faster than government ever could. As the lubricant of our economic system, self-interest will cause a million market actors to recalibrate and to direct resources to projects that create value in our society. We the people will temper our irrational urges and mitigate our risks if government restores the rules that let profit and loss bring discipline. But if government continues to change the rules to bias the market in favor of irrational behavior, rent-seeking, and corporatism, the chaotic aspects of the system will continue to wobble out of equilibrium. Black swans will become commonplace.”
Thanks to Mike Martin for pointing out the piece.
Comment:
This is a nice piece pointing out how metaphors govern our thinking - we talk about the economy as it were a machine when it’s actually more like an eco-system. Interestingly, Tom Wolfe made a similar point about the misuse of metaphors in Freudian psychology (for eg. the term repression, as though the body were in need of an outlet to blow-off steam).
But there are at least two things I object to here.
One is - greed isn’t rational self-interest. That’s a complete confusion of terms. Gordon Gekko-like greed is anything but rational. It’s compulsive. The self has many other interests and drives besides doing down other people. Rational self-interest is the prudent self-interest of “right reason,” as the Catholics call it. A well-ordered reason. Not one that’s the slave of your drives. It’s self=governing reason which produces genuine self-interest.
And two: sigh. None of this was a black swan. Taleb himself doesn’t claim it was, either. Black swans only make sense in talking about an un-manipulated world, I would think. Taleb was talking about the way risk is modeled. He says on his website that he uses the banks in his book as an illustration and then gives some quotes in support, which, he says he wrote between 2003-2006 (the book was published April 2007).
But Felix Salmon at Portfolio.com points out that his actual comments on Fannie in an interview before they went bust were quite vague.
However, the author of this piece is spot on in the rest of this comments.
I’ll try to post my calls on this, not to prove I can predict the markets (I can’t), but to prove that we don’t have a market. We have a kind of rigged puppet show, which you can (sort of) predict, not because of any genius on your part, but because of the obviously crooked motives of of several leading actors. The only special skill you need for this is the ability to recognize propaganda.
I know I came across Fannie’s corruption when I was researching Goldman Sachs in July 2006 from the Washington Post which had a long series of excellent articles on it from 2004. So, how was this crisis unexpected?
Here’s my piece (from 2006)
“Most recently, regulators are looking into claims that Goldman (among others) helped managers at the US Federal National Mortgage Association (known as Fannie Mae) prettify their books to maximize performance bonuses at the company entrusted with keeping US home loans afloat. Which means that Goldman was center-stage not only in the credit and derivative booms, but in the housing boom too. (Goldman and the other firms deny wrongdoing.)”
My original investment report on which this article is based had much more on Fannie and I will post it here. I’m pretty sure there were plenty of prominent people in the financial world who had already decided that Fannie was going to go bust. In fact, I think a lot of people had taken short positions on it. I’m not sure how on that basis you could argue this crisis was a Black Swan.
Madoff’s Swiss Account
“In the case of the Fulds, it might not be that challenging because the transfer was made after Lehman’s collapse already occurred, and the home “was obviously sold for well below fair-market value,” said Roccy DeFrancesco, an asset protection attorney and founder of the Wealth Preservation Institute in St. Joseph, Mich. “On the surface, that would seem to have all the signs of a fraudulent transfer,” he said. The Madoffs, however, present a much more challenging scenario: Many of the major assets that are currently in Ms. Madoff’s name, including three residencies in the United States and France worth a combined $19 million — were purchased directly by Ms. Madoff years ago, according to court documents.
She bought the New York penthouse in 1984, according to a financial statement Mr. Madoff submitted to the Securities and Exchange Commission that was disclosed earlier this month. Ms. Madoff also ponied up for the family’s $11 million mansion in Palm Beach , Fla. , in 1994, and then she bought a $1 million home in France ’s Cap d’Antibes in 2000 or 2001, according to court documents. The Madoffs’ $3 million home in Montauk, N.Y., was jointly purchased by the couple in 1979.
Given the timing of these purchases, the assets may now be considered “old and cold,” or off-limits to Mr. Madoff’s victims, noted Mr. Rothschild.
Mr. Madoff, when he entered his guilty plea this month, said that “to the best of my recollection, my fraud began in the early 1990s.”
More at Investment News.com
Comment:
Oh well, that takes care of that. We’ll just have to take the gentleman’s word for it.
The game started in the 1990s, eh? In the beginning he said the game began only in 2005. Now, it’s aged by 15 years. A few more months and we’ll find the truth out. It probably began 15 years before that. Prosecutors have already said it began in the 1980s, - which sounds much more likely.
Zim or Bust? (Update)
“Matt Stiles, who writes at Stockhouse.com, who also happens to identify with the Austrian School of economics, argues why these hyperinflation fears are way overblown, and why we won’t see a Zimbabwe scenario here:
It is often said that we live with a “fiat currency” or with “paper money.” This is not entirely accurate. A very small portion of our total supply of money and credit is in the form of physical currency. It depends on how you count it, but regardless, it is under 10% of the total. This is what differentiates our monetary system with that of Zimbabwe or Weimar Germany circa 1920’s. Their economies were based on nearly 100% physical currency because nobody would accept the promises of government in order to issue credit.
The vast majority of our money supply is in the form of electronic credit. Electronic credit can be destroyed, while physical notes issued by a central bank cannot. This is why deflation is possible in a credit based monetary system, but not in a paper based monetary system.
…
All in all, the central banks are not nearly as powerful as they’d have you believe. The amount of the total money supply that is controlled by them is minimal. They won’t tell you that. They’d prefer you to think that just by them moving their lips they can affect the entire economy’s decision making processes. It simply ain’t so.
This begs the question: why is gold going up? Who knows. It has a mind of it’s own. But if it really only moved due to inflation concerns, it wouldn’t have declined 75% over two inflationary decades (80’s, 90’s) would it? If inflationary concerns were real, we would see TIP yields rising along with the gold price. They’re not. We’d also be seeing other typical inflation hedges rising - like property prices. That is obviously not the case. A better explanation is that gold is rising because of increased instability….”
More here
Comment:
Back later with more. But just one demurral. We won’t see Zimbabwean inflation because…well, because, Zimbabwe doesn’t influence the world in a million ways, through global institutions and laws and propaganda. The rest of this argument, I simply don’t understand. Electronic credit is still a claim on paper money.
But notice stocks are up…and we can see the reason why here: existing home sales for Feb rebounded at the fastest pace in 6 years, according to Reuters. That’s mostly (45%) in the foreclosure market as we’ve been telling you guys. There are cheap deals out there - and not just in Detroit.
Meanwhile, the Treasury came out with a detailed explanation of their bail-out which has people reassured. It’s the details of Geithner’s public-private partnership which has been overdue by 2 months and is cheering up the market.
Update:
Gold ended down, pressured by the rising stock market and the dollar. It rebounded against the pound, euro, and yen, but ended down.
Update: My conclusion is that this piece by Stiles is just more stock-boosting to mask the (long-term) bullish scenario for gold.
Short to midterm we are probably due for a correction in gold.
Inflation Helps Warfare-Welfare State
“In the big picture, inflation supports big government. It is a major method of financing governments. With the help of inflation and the inflation tax, government is orders of magnitude larger. Inflation therefore supports the evils of big government. For example, big government quite often chooses armaments and warfare. In this way, inflation helps states to maintain belligerent postures toward one another that lead to waste, frictions, and wars that undermine economic progress. Inflation helps governments to control their peoples or peoples they claim sovereignty over. They often are then enabled to make war on dissident and breakaway movements. Inflation enables governments to finance social programs, many of which undermine the society they purport to support. Inflation benefits some in society at the expense of others. This invariably undermines social cooperation…”
Michael Rozeff, Lew Rockwell
India Declining….
“There are four Indians—Anil Ambani, Lakshmi Mittal, K P Singh and Mukesh Ambani—among the 10 biggest losers of wealth globally—who are the same four Indians ranked among the 10 richest of the world last year.
Globally, 656 billionaires took a hit on their net worth, against only 44 adding to their wealth during the year. The total billionaire wealth has shrunk to $2.4 trillion, from $4.4 trillion last year.
“Out of total 25 richest Indians, only Malvinder and Shivinder Singh saw their net worth rise.
As many as 29 Indians have lost their billionaire status, while the net worth of the remaining ones has more than halved to just over $100 billion.
“Last year’s biggest billionaire gainer is this year’s biggest loser. His (Anil Ambani’s) fortune is down from $32 billion as shares in his Reliance Communications fell by two-third..”
From India Journal.
Buchanan On the Real Crisis
“In this deepening crisis, what is being tested is not simply the resilience of capitalism, but the character of a people.”
MindBody: Mirror Neurons And The Notion of Souls
Thanks to Leslie Marsh of Sussex University for a video at his highly-recommended site, manwithoutqualities, for this passage by neuroscientist V. S. Ramachandra, Mirror Neurons and The Brain In the Vat:
“Iaccomo Rizzolati and Vittorio Gallasse discovered mirror neurons. They found that neurons in the ventral premotor area of macaque monkeys will fire anytime a monkey performs a complex action such as reaching for a peanut, pulling a lever, pushing a door, etc. (different neurons fire for different actions). Most of these neurons control motor skill (originally discovered by Vernon Mountcastle in the 60’s), but a subset of them, the Italians found, will fire even when the monkey watches another monkey perform the same action. In essence, the neuron is part of a network that allows you to see the world “from the other persons point of view,” hence the name “mirror neuron.”……….Dissolving the “self vs. other” barrier is the basis of many ethical systems, especially eastern philosophical and mystical traditions. This research implies that mirror neurons can be used to provide rational rather than religious grounds for ethics (although we must be careful not to commit the is/ought fallacy)……
Intriguingly, in 2000, Eric Altschuller, Jamie Pineda and I were able to show (using EEG recordings) that autistic children lack the mirror neuron system……
Mirror neurons also deal a deathblow to the “nature vs. nurture ” debate (I like Matt Ridley’s suggested replacement “Nature via Nurture”) for it shows how human nature depends crucially on learnability that is partly facilitated by these very circuits. They are also an effective antidote to sociobiology and pop evolutionary psychology; the assertion that the human brain is a bundle of instincts selected and fine-tuned by natural selection when our ape-like ancestors roamed the savannahs…… But, the notion that human talents and follies are governed mainly by instincts hard-wired by genes is ludicrous.
Thanks to mirror neurons the human brain became specialized for culture, it became the organ of cultural diversity par excellence. It is for this reason (rather than moral reasons or political correctness) that we need to cherish and celebrate cultural diversity. To be culturally diverse is to be human…..
I will conclude with a metaphysical question that cannot be answered by science. I cannot decide whether the question is utterly trivial or profound. I call it the “vantage point” problem foreshadowed by the Upanishads, ancient Indian philosophical texts composed in the second millennium BC, and by Erwin Schrödinger. I am referring to the fundamental asymmetry in the universe between the “subjective” private worldview vs. the objective world of physics………
…… It’s a fair assumption that the identity of your conscious experience (including your “I”) depends on the information content of your brain, “software” representing millions of years of accumulated evolutionary wisdom, your cultural milieu, and your personal memories; not on the particular atoms that currently constitute your brain…… [Lila: atoms that are replaced regularly]
Now imagine speeding up this replacement process so that I destroy your present brain and replace it with a replica/simulacrum with identical information. There would be no reason to believe your conscious experience would not continue in that other brain…..
….The possibility of multiple “minds” in a single brain is not as bizarre as it sounds. It often happens in dreams. I remember having a dream once in which another guy told me a joke and I laughed heartily even though the “other guy” was my mental invention, so I must have already known the joke all along!
The question of whether “you” would continue in multiple parallel brain vats raises issues that come perilously close to the theological notion of souls, but I see no simple way out of the conundrum. Perhaps we need to remain open to the Upanishadic doctrine that the ordinary rules of numerosity and arithmetic, of “one vs. many”, or indeed of two-valued, binary yes/no logic, simply doesn’t apply to minds — the very notion of a separate “you ” or “I” is an illusion, like the passage of time itself.
We are all merely many reflections in a hall of mirrors of a single cosmic reality (Brahman or “paramatman”). If you find all this too much to swallow just consider the that as you grow older and memories start to fade you may have less in common with, and be less “informationally coupled”, to your own youthful self, the chap you once were, than with someone who is now your close personal friend. This is especially true if you consider the barrier-dissolving nature of mirror neurons. There is certain grandeur in this view of life, this enlarged conception of reality, for it is the closest that we humans can come to taking a sip from the well of immortality….
Will you choose the vat or the real you? This exercise might not provide an obvious answer, but fortunately none in this generation or the next will have to confront this choice. For those in the future who are forced to answer, I hope they make the “right” choice, whatever “right” means….”
NB: Again, apologies for a bit of splicing and reduction of the original passage in the interests of clarity. No meaning is altered by it, and the original is easily compared from the link.
Von Mises On Marxist Dogma
“Marxism gives philosophers before Hegel about the same place which Christianity gives to the prophets, and grants Hegel the same position which Christianity assigns to the Baptist in relation to the Redeemer. Since the appearance of Marx, however, all truth is with the Marxist, and everything else is lies, deception, and capitalist apologetics.
III.21.9
This is a very simple and clear philosophy, and in the hands of Marx’s successors it becomes still simpler and clearer. To them science and Marxian Socialism are identical. Science is the exegesis of the words of Marx and Engels. Proofs are demonstrated by the quotation and interpretation of these words. The protagonists exchange accusations of ignorance of the “Writ.” Thus a real cult of the proletariat arises. Engels says: “Only in the working class does the German theoretic mind persist unstunted. Here it is not to be exterminated. Here no regard is paid to career, profit-making, gracious patronage from above. On the contrary, the more regardlessly and disinterestedly science proceeds the more it finds itself in unison with the workers’ interests and strivings.”*104 According to Tönnies “only the proletariat, i.e. its literary spokesmen and leaders,” suscribe, “on principle, to the unscientific view and all its consequences.”*105
III.21.10
To reveal these presumptuous assertions in their proper light we have only to recall the socialist attitude towards all scientific achievements during recent decades. When about a quarter of a century ago, a number of Marxian writers tried to cleanse the party doctrine of its grossest errors, a heresy hunt was instituted to preserve the purity of the system. Revisionism succumbed to Orthodoxy. Within Marxism there is no place for free thought….”
Von Mises in “Socialism: An Economic and Sociological Analysis.”
Comment:
Von Mises is a little unfair to Marxism here, it sounds to me. But then maybe it was true at the time he was writing. More to think about.
Von Mises On Time
“Time for man is not a homogenous substance of which only length counts. It is not a more or a less in dimension. . . . It is an irreversible flux the fractions of which appear in different perspective according to whether they are nearer to or remoter from the instant of valuation and decision.” - Human Action
Keynes Wanted Laissez Faire But Not Laissez Passer
“Had Keynes (really) spoken of the end of laissez faire et laissez passer, then he could not have failed to see that the world today is sick precisely because, for decades, things have not been regulated by this maxim. He who rejoices that peoples are turning away from liberalism, should not forget that war and revolution, misery and unemployment for the masses, tyranny and dictatorship are not accidental companions, but are necessary results of the antiliberalism that now rules the world.”
Geithner’s New New Plan
“Geithner’s new plan is meant to attack what is widely viewed as the major failure of the bailout program so far: the inability to rid banks of a mountain of soured loans and troubled mortgage-backed securities.”
More at MSNC
Comment
“The inability to rid banks of a mountain of soured loans” is a major failure? It’s the whole point of the exercise, so if that isn’t working, the entire business is a diddle.
Cato Thinks Taxation of Bonuses Is Unconstitutional
“The rule of law requires that like people be treated alike and that people know what the law is so that they can plan their lives in accord with the law. In this case, a law is being passed to impose taxes on a particular, politically unpopular group. That is a tyrannical abuse of Congress’s powers. And in addition, it is retroactive legislation, changing the law upon which AIG and its employees had relied. As James Madison wrote in Federalist 62, “It will be of little avail to the people, that the laws are made by men of their own choice, if the laws . . . undergo such incessant changes that no man, who knows what the law is to-day, can guess what it will be to-morrow.”Selective taxation is tyranny. Ex post facto legislation violates the spirit of the liberal order, even if a particular piece of legislation can be “structured” to pass constitutional muster.”
David Boaz at the Cato Institute web-page
On the other hand, Lawrence Tribe, at The Atlantic, who is on President Obama’s legal team, thinks the taxation can be structured so as to avoid constitutional objections (challenges as a violation of due process and a bill of attainder).
Comment:
Are they serious?
The rule of law requires that like people be treated alike and that people know what the law is so that they can plan their lives in accordance.
This same Congress has just dumped the follies, fraud, and recklessness of the entire financial industry on the laps of the population, regardless of whether they had anything to do with it, hustling the whole thing through with propaganda and distortion at every turn, has destroyed the economy, continues down the same path of redistributing the wealth of the public (present and future) to the very people most responsible for destroying it, with nary a thought for the constitution and now, lo and behold, niceties of law are an insuperable objection.
Fine. Under law, interpreted constitutionally, one could as well say the entire financial industry turned fraudulent in the past few decades and was acting criminally, so no contracts from the period are valid to begin with, let alone bonuses.
Rather than taxes, call it a penalty or fine.
The Societal Underpinnings of Bull Markets
“It is easy to fall for the aesthetic gyrations of the stock market. Their stylized cycles make them look natural. They “revert to mean,” as Francis Galton would have it. They oscillate within fairly clear boundaries. Their ups and downs seem almost automatic (at least in retrospect). Their regularities are so neat many are tempted to forget David Hume and extrapolate the past into the future.
And here lies the problem. The long-term cycles of the stock market, no matter how stylized and regular they seem, are not self-generating. They don’t just happen on their own. Each cycle has a reason, and that reason is deeply social and historically unique.
Note that, during the twentieth century, every oscillation from a bear to a bull market was accompanied by a systemic societal transformation:
- The crisis of 1905–1920 marked the closing of the American Frontier, the shift from robber-baron capitalism to large-scale business enterprise and the beginning of synchronized finance.
- The crisis of 1928–1948 signaled the end of “unregulated” capitalism and the emergence of large governments and the welfare-warfare state.
- The crisis of 1968–1981 marked the closing of the Keynesian era, the resumption of worldwide capital flow and the onset of neoliberal globalization.
Furthermore, none of these transformations were “in the cards.” Most observers in the 1900s didn’t expect managerial capitalism to take hold; few in the 1920s anticipated the welfare-warfare state; and not too many in the 1960s predicted neoliberal regulation. All three transformations involved a complex set of conflicts, their trajectories were all fuzzy, and their outcomes were all but impossible to anticipate.
In other words, underneath the seemingly repetitive long-term patterns of the market lies an open-ended and inherently unpredictable reordering of the entire political economy. Although past bear markets have always given way to long bull runs, these transitions were never automatic. Each and every one of them reflected a profound transformation of the underlying social structure. And in our view, this correspondence still holds. In order for the current crisis to end and a new upswing to begin, something very big has to happen: the social structure must change.
The precise nature of this transformation—assuming it occurs—is likely to remain opaque until the process is well under way. But one thing seems clear enough. A new upswing means the rekindling of accumulation, and if we are to understand what this upswing might entail, we need to go back to the beginning and start from the entity that matters most: capital.
For more on that issue, stay tuned for the next installment in our series….”
Shimshon Bichler and Jonathan Nitzan in Dollars and Sense.
Thieving Theocrats: The Righteous Left-Wing Press Steals From Its Own
“The April 21, 2005 issue of the LONDON REVIEW OF BOOKS carried a lead article titled ‘Blood for Oil?’
The paper is attributed to a group of writers and activists – Iain Boal, T.J. Clark, Joseph Matthews and Michael Watts – who identify themselves by the collective name ‘Retort.’ In their article, the authors advance a supposedly new explanation for the wars in the Middle East.
Much of their explanation – including both theory and fact – is plagiarized. It is cut and pasted, almost ‘as is,’ from our own work. The primary source is ‘The Weapondollar-Petrodollar Coalition,’ a 71 page chapter in our book THE GLOBAL POLITICAL ECONOMY OF ISRAEL (Pluto 2002). The authors also seem inspired, incognito, by our more recent papers, including ‘It’s All About Oil’ (2003), ‘Clash of Civilization or Capital Accumulation?’ (2004), ‘Beyond Neoliberalism’ (2004) and ‘Dominant Capital and the New Wars’ (2004).
In their paper, the Retort group credits us for having coined the term ‘Weapondollar-Petrodollar Coalition’ – but dismiss our ‘precise calibration of the oil/war nexus’ as ‘perfunctory.’ This dismissal does not prevent them from freely appropriating, wholesale fashion, our concepts, ideas and theories – including, among others, the ‘era of free flow,’ the ‘era of limited flow,’ ‘energy conflicts,’ the ‘commercialization of arms exports,’ the ‘politicization of oil’ and the critique of the ‘scarcity thesis.’ Nowhere in their article do the authors mention the source of these concepts, ideas and theories…..”
More at the website of Nitzan and Bichler.
The theocrats I refer to in my post title are the leftist ideologues (state socialists) who never met a fact they couldn’t twist into a socialist pretzel.
Karl Denninger On Our Fraudulent Market
“I love the whining about “contract law”. Where were those complaining about this when AIG wrote CDS against no capital? Contract law calls that fraud folks - intentionally inducing someone into an agreement that you have no intention or ability to perform on. Further, we can do fraudulent concealment too, which is what the law calls it when you hide the fact that you’re functionally insolvent for more than six months as it becomes apparent to you that you won’t be able to perform, and while you know this, you draft “retention bonuses” for the very people that put your company in this position.”
That’s Karl Denninger on Brad Sherman’s (D) sensible idea to tax the bonuses that were wrongfully given (Update: I’ve had some second thoughts about it since but main point is that the whole business of bonuses is an idle distraction considering the rest of what’s happened with AIG and its counterparties).
Comment
A contract entered into with the fore-knowledge that you don’t intend to perform on it, is a fraudulent contract. A contract where you give misleading information is fraudulent. A contract where one person has asked specifically for information and the other person has given wrong information intentionally is fraudulent. And when someone later uses their powerful position and contacts to create false paper trails, cover up the evidence of wrong-doing, and pretend that the victim was actually in the wrong (think Bill Clinton), that’s another form of criminal behavior.
Folks, AIG, Goldman Sachs, and the rest are not anomalies. This is Standard Operating Procedure for many corporations, especially those with government and CIA links, with powerful billionaires backing them. That’s how the so-called free market, the agora, to give it the Greek name beloved of anarchist groups, works today. Unless we fight back, we’ll never get the real agora, which is the only way free people can live.
Massive socialism (what we have today, albeit with fascist features) is collectivism.*
You don’t need to have a Swedish-style social net for socialism to exist. And mind you, we do have a huge welfare state as well. But the problem is not the welfare alone. That’s where right libertarians are mistaken. The welfare only counterbalances the relentless growth of state intervention at every level and the relentless anti-market pressure of mega corporations, mega banks, mega insurance companies. Which must inevitably lead to the authoritarianism-with-a-happy face we have. It’s not democracy. It’s mass control. It’s Madison Avenue totalitarianism
Collectivism is simply the bureaucratic expression of hierarchical, authoritarian systems, masquerading as equality.
Yes, equality for everyone, except the managers and beneficiaries of the state. Go back and read Orwell. The pigs are in power. Big Brother is watching your computer screen as you watch it (the two-way screen). There’s doublespeak: saying you hate Christianity makes you thoughtful and a humanitarian, and saying you hate Zionism makes you racist slime. The media have their “two-minute hate”: “Islamo- terrorists are coming…” (on the right) and “the fundies are out to get you….” (on the left).
People who don’t think the official way (outside the two-party discourse) are evil, are unpersons.
I might have been on my way to becoming an unperson too, but I’m not so easy to get rid of.
Why? Very simple. I’m battling with a different manual in my hand.
And no, it’s not the Bible or the Torah or the Upanishads or the Lotus Sutra or the Koran, although I love all of them. It’s what the Hermeticists called Liber Naturalis (The Book of Nature).
If you read the book wrong, which you are certain to when you don’t even know it exists, then, of course, you won’t be able to see things that are clearly visible.
*It’s not the existence of massive levels of government aid or intervention alone that defines the degree of socialism. It’s the degree of totalitarian control evidenced in the technology - even when it’s not fully used…..
Writers As Hanging Judges
“The historian should be a hanging judge, for the Muse of history is not Clio but Rhadamanthus, the avenger of innocent blood.”
-Lord Acton
And journalists too…
Let The System Die..
The current financial crisis is the best opportunity we have had in a very long time for a bloodless revolution against the faceless fascism under which we have been living, unaware, for much too long. Let us seize the day….”
Douglas Rushkoff in Arthur Mag
Comment:
I won’t quibble about calling what we have fascism. I think that’s true in some ways.
But I’ll quibble about other things. The system didn’t turn people into debtors or the real world into speculative assets. The real world has always had a speculative angle to it. When people hoard, buy in bulk, store, buy cheap and sell high, they are speculating. People have always speculated. But it used to be that not everyone could speculate, because not everyone had access to cash or the savings needed for it. Or the knowledge and tools to do it. But now, the banks have sold everyone the possibility of risk-free speculation with other people’s money. They sold us on the notion that risk can be taken out of life. And we bought it. That every loss can be made good. That 1+1 can equal 3 or anything else, but that 1-1 can never be 0. That has nothing to do with business. It has to do with the desire for comfort, for being looked after and for having someone else do your thinking, your acting, your good deeds, your fighting, your spending and your saving for you.
That someone is the state.
And so I think this isn’t the end of the “machine” of statism at all. I think it’s just another stage - the death throes of the overly imperial nationalist form, leading to another, more internationalist….
A Call To The Plagiarized
If you are a writer, blogger, or journalist whose work has been used without attribution, distorted, plagiarized, or stolen, I would be interested in hearing from you.
All letters should include a brief description of what happened and a way to contact you.
If you post on this blog, please post anonymously and I will contact you at the email that my admin panel displays.
Capital Flowing Out
Here’s the Treasury’s January report on international credit flows that was released this past Monday (3/16):
“Net foreign purchases of long-term securities were negative $43.0 billion.
- Net foreign purchases of long-term U.S. securities were negative $18.8 billion. Of this, net purchases by private foreign investors were negative $10.2 billion, and net purchases by foreign official institutions were negative $8.5 billion.
- U.S. residents purchased a net $24.2 billion of long-term foreign securities.
Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been negative $60.9 billion.
Foreign holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities increased $30.9 billion. Foreign holdings of Treasury bills decreased $15.4 billion.
Banks’ own net dollar-denominated liabilities to foreign residents decreased $118.9 billion.
Monthly net TIC flows were negative $148.9 billion. Of this, net foreign private flows were negative $158.1 billion, and net foreign official flows were $9.2 billion. .”
The whole report can be found at the Treasury website.
Comments
The only US securities foreigners are purchasing are short-term, and it looks like only foreign governments are doing that.
For comparison, here’s the TIC report for January 2008, (release 3/17/08)
Monthly net TIC flows were positive $37.4 billion (compared to negative $148.9 billion this year). Of this, net foreign private flows were negative $38.2 billion, and net foreign official flows were positive $75.5 billion. That means on a net flow basis, only foreigners were really buying last year as well.
Avinash Persaud - The Currency Expert
34 year old Avinash Persaud, Managing Director and Global Head of Research for the Global Markets Group of State Street Bank and Trust Company. in England, one of the world’s leading financial services for institutional investors ( nearly 12% of the world’s securities under custody), is a top ranked analyst in global surveys of currency research. Persaud has won the major awards in international finance including the Jacques de Larosiere Award from the Institute of International Finance and an Amex Bank Award.
Some career highlights:
During 2000/2001, the first private-sector, Visiting Scholar, of the IMF.
Non-Executive Director of the Overseas Development Institute.
In 1999, Head of Currency Research at JP Morgan.
Mr Persaud and his Morgan team developed an indicator for currency crashes in emerging markets which predicted a Russian devaluation four months before it occurred and a “regime machine,” which gauged which macro-economic factors and behavioral sentiments were most influencing currency movements at a given point in time.
Graduate of the London School of Economics
Former governor of the LSE as well (19988-1989).
Comment:
(Check back later)
Dante on the Reasonableness of the Universe
Ché la luce divina è penetrante per l'universo secondo ch'è degno, sì che nulla le puote essere ostante.
Because the light of God so penetrates the universe according to the worth of every part, that no thing can impede it.
Paradiso 31, La Commedia Divina,
Paradise, Canto 31, The Divine Comedy
Dante Alighieri
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