Wednesday, August 26, 2009
Hudson: The Financial Parasites Have Killed the American Economy, and They Are Sucking as Much Money Out as They Can Before Jumping Ship
Michael Hudson is a highly-regarded economist. He is a Distinguished Research Professor at the University of Missouri, Kansas City, who has advised the U.S., Canadian, Mexican and Latvian governments as well as the United Nations Institute for Training and Research. He is a former Wall Street economist at Chase Manhattan Bank who also helped establish the world’s first sovereign debt fund.
Hudson has frequently described Wall Street as "parasitic". For example, in a 2003 interview, Hudson said:
The problem with parasites is not merely that they siphon off the food and nourishment of their host, crippling its reproductive power, but that they take over the host's brain as well. The parasite tricks the host into thinking that it is feeding itself.
Something like this is happening today as the financial sector is devouring the industrial sector. Finance capital pretends that its growth is that of industrial capital formation. That is why the financial bubble is called "wealth creation," as if it were what progressive economic reformers envisioned a century ago. They condemned rent and monopoly profit, but never dreamed that the financiers would end up devouring landlord and industrialist alike. Emperors of Finance have trumped Barons of Property and Captains of Industry.
More recently, Hudson said:
You can think of the financial sector as being wrapped around the real economy, almost like a parasite, and that's why it's been called parasitic for so long. The financial sector extracts interest from the economy, the property sector extracts economic rent, as do monopolies. Now the key thing about parasites, is that it's not simply that they extract nourishment from the host. The parasite takes over the
host's brain, to make it think it's part of the economy, to make it think
it's part of the host's own body, and, in fact, that's it almost like a child of the host, to be protected. And that's what the financial sector has done today.
You have Obama coming out and saying, "We have to save the banks in order to save the real economy". The fact is, you can't serve both the parasite and the host.
And see this.
On August 10th, Hudson went even further. Specifically, he said:
- The giant financial institutions have already killed their host - the real American economy
- Since they realize that the American economy is dead, they are trying to suck as much blood out of America as possible while the corpse is still warm
- Because the American economy is dead, their plan is to soon jump to another host. They will ship all of their money overseas
Tuesday, August 25, 2009
While Swine Flu Vaccine Has Been Declared "Safe", Novel Adjuvants Will Be Used Before Any Meaningful Testing has been Conducted
Dr. Meryl Nass is an expert on vaccines.
Over the years, I have found Dr. Nass to be reasonable, balanced and well grounded in science in her discussions about the anthrax attacks and the criminal investigations into Dr. Hatfield and Dr. Ivins. So I wanted to see what she thought about the safety of the swine flu vaccine.
The US government has contracted with at least 5 pharmaceutical manufacturers to develop and produce H1N1 vaccines, using a variety of platforms and manufacturing methods...On August 11th, ABC News wrote an article entitled "Swine Flu Vaccine: What The Heck Is an Adjuvant, Anyway?" Commenting on the ABC article, Dr. Nass wrote:
A novel feature of the two H1N1 vaccines being developed by companies Novartis and Glaxo-Smith Kline is the addition of squalene-containing adjuvants to boost immunogenicity and dramatically reduce the amount of viral antigen needed. This translates to much faster production of desired vaccine quantities.
Each company has its own proprietary adjuvant, acquired in each case at high cost and intended for the high-stakes business of rapidly producing vaccines for novel pandemics or biological warfare threats.
Novartis' adjuvant is named MF59, and Glaxo's is ASO3. We know they work beautifully to strengthen vaccine efficacy. But how safe are they?
That is a very difficult question to answer. Novartis claims MF-59 has been used safely by over 40 million people. However, FDA has not seen fit to approve even a single US vaccine that contains these novel adjuvants.
One error in the article is this statement: "No link has ever been proven between vaccine and Guillain Barre" Syndrome (GBS). Actually, about ten separate studies of the 1976 swine flu vaccine confirmed that the rate of GBS increased 6 to 10 fold in the 6-8 weeks after vaccination. The link has been absolutely confirmed in all the medical literature. I discussed it as an expert witness in a legal case and the opposing attorney didn't challenge the link...On August 15th, Dr. Nass noted that British doctors are weary of the vaccine, as it contains squalene:
Fauci continued, "There's not a lot of data on adjuvants in young kids--even from the Europeans." [Not to mention lack of data in pregnant women, the potential to cause cancers, etc.--Nass]
Here's a key point: novel adjuvants stretch the supply, so from the perspective of getting enough vaccine for the country or the world in a hurry, they would be indispensable. But from the point of view of the individual, the risk-benefit calculation is problematic.
The June 19, 2009 Science magazine discussed use of novel, antigen-sparing adjuvants for the swine flu pandemic. It quoted Norman Baylor, director of FDA's Office of Vaccine Research and Review, who pointed out that antigen-sparing strategies benefit populations, not individuals. "You have to think about those trade-offs," Baylor said.
If Baylor doesn't understand the issue of novel adjuvant safety, then nobody does.
The Daily Mail reported on letters sent to 600 neurologists in the UK by its Health Protection Agency, asking them to be observant for, and immediately report, cases of Guillain-Barre Syndrome [GBS].
The letter is a tacit acknowledgment of the risk of using an untested vaccine with novel ingredients. But it also indicates that the UK's health services are cognizant of the risks and are taking them seriously, setting up improved surveillance so that if the vaccine does cause Guillain-Barre, vaccinations can be stopped promptly. Bravo.
However, the risk does not begin and end with Guillain Barre Syndrome, as Dr. Tom Jefferson, head of the Cochrane Collaboration vaccine group pointed out in the article. Cochrane performs meta-analyses of the entire world literature on medical therapies. Unfortunately, Cochrane has not found any literature on the squalene-containing adjuvants set to be used in some (most?) swine flu vaccines:‘New vaccines never behave in the way you expect them to. It may be that there is a link to GBS, which is certainly not something I would wish on anybody.That is the bigger problem: the potential variety of adverse reactions to the vaccine is very large, and it will be very difficult to sort out quickly (before tens or hundreds of millions have been vaccinated) which might be vaccine-related.‘But it could end up being anything because one of the additives in one of the vaccines is a substance called squalene, and none of the studies we’ve extracted have any research on it at all.’
On August 23rd, Dr. Nass wrote:
And on August 24th, Nass pointed out:The Washington Post's Rob Stein updates us ...:
Another wild card will be whether the vaccine will be delivered with an "adjuvant" to boost its effectiveness or stretch limited supplies into more doses. Adjuvants have been used in Europe, but the Food and Drug Administration has not authorized their use in the United States.
Officials stress that they are proceeding cautiously. A final decision to move forward will not be made until they get the results of clinical trials -- testing to determine safety and dosing -- and assess the virus's threat. But officials are confident the vaccine will pass muster and expect a campaign will be launched as soon as manufacturers deliver the first vials.
Authorities are adamant that vaccination will be voluntary, and they say there is no reason to think the vaccine will be any less safe than the usual flu vaccine. An adjuvant will be used only if necessary and proven safe, they say...
[So tests of swine vaccines using novel adjuvants won't start until mid to late September, but vaccine is expected to be available for use in mid-October. If I understand this correctly, the adjuvants will have been tested for less than 4 weeks when they start being used. Yet autoimmune side effects take months to appear, in general. GBS took 4-8 weeks. Why aren't they already in US clinical trials?!--Nass]
Dr. Nass - an expert on Gulf War Syndrome - has also pointed out that the official, Congressionally-chartered Research Advisory Committee on Gulf War Veterans' Illnesses found evidence of a link between squalene and Gulf War Syndrome which warranted further study.A US News article of Aug 21 claimed,
"Early results for this first trial among adults have found the vaccine to be safe with no serious side effects," said Tony Fauci.Yet the reportage is misleading. Since none of the US trials have so far used novel adjuvants, they fail to provide any information about the safety of MF59 or ASO3-adjuvanted vaccines.
I asked Nass if the rumors that the swine flu vaccine contains much higher amounts of squalene than the Gulf War vaccine is true. She responded by email:
No one knows how much, if any, squalene was in which vaccines used in the Gulf War vaccine, as the government has denied using it and there was no vaccine tested independently.Update: Someone in the medical field sent me the following comment by email:However, compared to the parts per billion squalene measured in 5 lots of anthrax vaccine by FDA around 2000, use of current squalene-containing adjuvants is likely to provide many orders of magnitude more squalene per vaccine dose than found by FDA.No one knows what this means: i.e., how much it takes to cause adverse effects and what kind, in which populations.
For what it's worth, my understanding from a drug/vaccine rep from
one of the vaccine companies is that there will be a live weakened
intranasal vaccine for H1N1 available (similar to Flumist). It
shouldn't have or need an adjuvant (adjuvants are used in injectable
vaccines to cause the body to notice and react to the antigen you are
trying to produce immunity to - Aluminum is the most commonly used
adjuvent).
So, for anyone who wishes to be vaccinated for H1N1 but not via a
shot (which will no doubt contain some sort of adjuvant) there will
be an alternative (it would probably only be recommended for the
populations who qualify for Flumist, but that hasn't been clarified
for us - Flumist the intranasal live weakened vaccine for the regular
flu is approved for patients over 2 who don't have a condition such
as asthma that's contraindicated with it).
Currently the H1N1 doesn't seem any worse than the regular flu, but
there have been some deaths (the regular flu causes deaths every year
too). The H1N1 like the regular flu is more dangerous and more likely
to cause serious illness and death in certain groups such as pregnant
women, so it might be more important for some groups to be immunized
than others.
If H1N1 transformed into a nastier bug and became drug resistant the
flu vaccine could become very important for everyone who doesn't have
immunity though.
At this point it looks like distribution of vaccine will be through
the government (probably at schools, libraries and other public
venues that are felt to be easy places to vaccinate large numbers of
people who want/need vaccine) rather than private offices. My
understanding is that high risk populations such as pregnant women
and children and health care workers will be prioritized.
Anyway, I hope this info is helpful.
Scientists Confirm the Effectiveness of The Big Lie - People Will Go To Extraordinary Lengths to Create False Justifications for Government Misdeeds
Adolph Hitler wrote in Mein Kampf:
All this was inspired by the principle--which is quite true in itself--that in the big lie there is always a certain force of credibility; because the broad masses of a nation are always more easily corrupted in the deeper strata of their emotional nature than consciously or voluntarily; and thus in the primitive simplicity of their minds they more readily fall victims to the big lie than the small lie, since they themselves often tell small lies in little matters but would be ashamed to resort to large-scale falsehoods. It would never come into their heads to fabricate colossal untruths, and they would not believe that others could have the impudence to distort the truth so infamously. Even though the facts which prove this to be so may be brought clearly to their minds, they will still doubt and waver and will continue to think that there may be some other explanation. For the grossly impudent lie always leaves traces behind it, even after it has been nailed down, a fact which is known to all expert liars in this world and to all who conspire together in the art of lying.
Similarly, Hitler's propaganda minister, Joseph Goebbels, wrote:
That is of course rather painful for those involved. One should not as a rule reveal one's secrets, since one does not know if and when one may need them again. The essential English leadership secret does not depend on particular intelligence. Rather, it depends on a remarkably stupid thick-headedness. The English follow the principle that when one lies, one should lie big, and stick to it. They keep up their lies, even at the risk of looking ridiculous.Science has now helped to explain why the big lie is effective.
Specifically, sociologists from four major research institutions investigated why so many Americans believed that Saddam Hussein was behind 9/11, years after it became obvious that Iraq had nothing to do with 9/11.
The researchers found, as described in an article in the journal Sociological Inquiry (and re-printed by Newsweek):
- Many Americans felt an urgent need to seek justification for a war already in progress
- Rather than search rationally for information that either confirms or disconfirms a particular belief, people actually seek out information that confirms what they already believe.
- "For the most part people completely ignore contrary information."
- "The study demonstrates voters' ability to develop elaborate rationalizations based on faulty information"
- People get deeply attached to their beliefs, and form emotional attachments that get wrapped up in their personal identity and sense of morality, irrespective of the facts of the matter.
- "We refer to this as 'inferred justification, because for these voters, the sheer fact that we were engaged in war led to a post-hoc search for a justification for that war.
- "People were basically making up justifications for the fact that we were at war"
- "They wanted to believe in the link [between 9/11 and Iraq] because it helped them make sense of a current reality. So voters' ability to develop elaborate rationalizations based on faulty information, whether we think that is good or bad for democratic practice, does at least demonstrate an impressive form of creativity.
All a government has to do is tell a big enough lie, and many people will swallow it hook, line and sinker. Or the government can just do something big - like starting a war for no good reason (or giving trillions in bailouts to the wealthiest corporations instead of the "little people" who most need it?) - and many people will struggle mightily to themselves concoct false justifications for doing so.
The Feds are Starting to Sound Like Wise Guys
You've heard the arguments:
- If we audit the Federal Reserve (which has violated the Federal Reserve Act and other laws), that is a “line that we don’t want to cross,” and it would be “problematic for the country”, according to Tim Geithner
- If we indict those who committed torture (which violates U.S. law and the Geneva convention), then the U.S. will face a terrorist attack, according to a group of senators
Doesn't this sound a wee bit like the old protection racket scam?
"We wouldn't want anyone to get hurt, now would we?"
Monday, August 24, 2009
Zero Hedge Claims that the Federal Reserve ITSELF Traded Over a Trillion Dollars Worth of Derivatives in March Alone
You know Zero Hedge, the popular website which has broken major stories like Goldman's dominance of high-frequency trading.
Some say that Zero Hedge occasionally breaks stories before adequately fact-checking them. I don't know whether that is true or not, but I do know that - in the months I've been reading the site - ZH has broken a number of major stories which:
(1) Were later covered by the world's biggest financial news outlets
and
(2) Have caused Congress members, Senators, the New York Stock Exchange and others to take action to change reporting requirements and to shut down questionable practices
Zero Hedge is now claiming that the Federal Reserve itself traded over a trillion dollars worth of derivatives in March alone:
If Zero Hedge is right about this one, it will end up being one of the biggest stories of the year.Federal Reserve Disclosed Trading $1.4 trillion in OTC "Other" Derivatives in March 2009 *corrected
The Federal Reserve has apparently been engaged in OTC derivatives trading. As of March 2009, they began publishing this information in several categories broken down by 'risk'. Tyler discovered this bombshell last Friday. In Treasury TIC data there are large sums classified as "Other Contracts". While it is not clear what specifically is being traded , we know these are not "Single-currency Interest Rate Contracts" nor are they "Foreign Exchange Contracts". These contracts are classified as "Other Contracts by Type of Risk" -- and they include $85 billion in OTC equity derivatives , and $1.169 trillion (yes, with a T) in OTC credit derivatives.
[Click for full image]
What is interesting here is that prior to March 2009 such trading was not reported in detail. The March disclosure by category is what is completely new. These Fed OTC derivatives have $1 trillion+ in capital in "Other". It is unclear what aspect of the credit capital markets this is allocated to or propping up: is it CDS? And if so, what entities are the contracts written on? At this time, it is unclear what relationship, if any, these $1.4 trillion in Federal Reserve OTC derivatives have to the unusual market activity many of us have been observing.
See this.
Update: The Zero Hedge author who wrote the original story clarified that the $1.4 trillion figure is not just for March, but for the reporting period:
Just a clarification -- this data was reported in March 2009, but includes data over the reporting period, not just March. Regardless this is quite the bombshell!
Roubini: "This Is a Crisis of Solvency ... But True Deleveraging Has Not Begun Yet Because the Losses of Financial Institutions Have Been Socialized"
In an essay entitled "The risk of a double-dip recession is rising", Nouriel Roubini affirms two important points:
This is a crisis of solvency, not just liquidity, but true deleveraging has not begun yet because the losses of financial institutions have been socialised and put on government balance sheets. This limits the ability of banks to lend, households to spend and companies to invest...
The releveraging of the public sector through its build-up of large fiscal deficits risks crowding out a recovery in private sector spending.
In other words, Roubini is confirming what Anna Schwartz and many others have said: that the problem is insolvency, more than liquidity, that the government is fighting the last war and doing it all wrong, and that we should let the insolvent banks fail.
Roubini is also confirming that incurring huge deficits in order to have the federal government itself act as a super-bank is causing a reduction in - and "crowding out" a recovery in - private sector spending.
As I have repeatedly pointed out, a recovery cannot occur until we move through the painful deleveraging process. But instead of allowing this to occur, the government is trying to increase leverage as a way to try to re-start the economy and save the insolvent banks. See this, this and this.
Of course, all of the massive government spending might also be putting governments themselves at risk . . . but that is another story.
Poll: Could a Third-Party Presidential Candidate Win in 2012?
Some analysts believe that a third-party candidate could win the 2012 presidential election.
I've got a poll on the right asking if you agree.
Update: Here are the final results:
1. Yes. | 153 (39%) |
2. No. | 87 (22%) |
3. It Depends on Who It Is. | 107 (27%) |
4. Only if the Economy Gets Worse. | 84 (21%) |
(Doesn't add up to 100%, as voters could vote for multiple answers.)
Sunday, August 23, 2009
"The World [Is Not] a Handful of Huge Financial Institutions, the Dinosaurs That Roamed the Earth [But] 115 Million American Households"
Tarp overseer Elizabeth Warren had a great quote on MSNBC's Morning Joe:
If you think the world as we know it, are a handful of huge financial institutions, the dinosaurs that roamed the earth, then you're right [that the government had to bail out the giant banks]. They are not going to exist without huge infusions of government money. On the other hand if what you really believe is that our economy and our world is 115 million American households you start to see it very differently. And you say, you know if the dinosaurs are gone there are still a lot of stuff to be done.
Watch:
Visit msnbc.com for Breaking News, World News, and News about the Economy
Saturday, August 22, 2009
6 Senators - Who Together Only Represent 2.6 Percent of Americans - Are Deciding the Fate of Health Care
Former Secretary of Labor Robert Reich notes:
It's come down to these six senators. The House has reported a bill as has another Senate committee, but all eyes are fixed on Senate Finance -- and on these three Dems and three Republicans, in particular. But who, exactly, anointed these six to decide the fate of the nation's health care?
...
It's not even as if the gang represents America. The three Dems on the gang are from Montana, New Mexico, and North Dakota -- states that together account for just over 1 percent of Americans. The three Republicans are from Maine, Wyoming, and Iowa, which together account for 1.6 percent of the American population.
So, I repeat: Why has it come down to these six? Who anointed them? Apparently, the White House. At least that's what I'm repeatedly being told by sources both on the Hill and in the administration. "The Finance Committee is where the action is. They'll tee-up the final bill," says someone who should know.
Friday, August 21, 2009
Could a Third-Party Candidate Actually Win in 2012?
Famed trend forecaster Gerald Celente is predicting that a third party candidate will be elected President in 2012. (If you don't know who Celente is, read the postscript below.)
Is he right?
Well, some of the most widely-read liberal writers are saying that progressives are fed up with the Democratic party, and feel that they have been tricked and ripped off by the Democratic leaders.
As Glenn Greenwald writes:
What About the Right?In a superb post the other day, Digby recounted what fueled the Naderite movement in 2000 and warns, presciently I think, that the willingness of Obama/Emanuel so blatantly to disappoint those to whom they promised so much (especially young and first-time voters who were most vulnerable to Obama's transformative fairy dust) will lead them either to support a third party or turn off from politics altogether:
On most fronts that matter -- civil liberties, national security, economic policy, servitude to corporate interests, even rising opposition to Obama's long-promised escalation of the war in Afghanistan -- that defines rather clearly what the Obama/Emanuel approach has been thus far.Rahm Emanuel believes that the key to Democratic success is a coalition in which Blue Dogs and corporate lackeys mitigate progressive change on behalf of the moneyed interests which he believes the political system must serve. Regardless of his malevolent view of how the political system should work, on a political level, I think he's living in the past. . . .
But on a political level, the left has been betrayed over and over again on the things that matter to us the most. The village is pleased, I'm sure. But the Democratic party only needs to look back eight short years to see just how destructive it is to constantly tell their left flank to go fuck themselves. . . .
At the time [in 2000] nobody believed that an incumbent Vice President in a roaring economy would have a race so close that the Republicans could steal it. But we know differently now don't we? And you would think that the Democratic establishment would also know that because of that, it may not be a good idea to alienate the left to the point where they become apathetic or even well... you know. It can happen. It did happen. Why the Democrats persist in believing that it can't happen again is beyond me. . . .
Obama mobilized a whole lot of young people who have great expectations and disappointing them could lead to all sorts of unpleasant results. Success is about more than simply buying off some congressional liberals or pleasing the village. It's worth remembering that a third party run from the left is what created the conditions for eight long years of Republican governance ...
After 2000, what is it going to take for the Democrats to realize that constantly using their base as a doormat is not a good idea? It only takes a few defections or enough people staying home to make a difference. And there are people on the left who have proven they're willing to do it. The Democrats are playing with fire if they think they don't have to deliver anything at all to their liberal base --- and abandoning the public option, particularly in light of what we already know about the bailouts and the side deals, may be what breaks the bond.
It's really not too much to ask that they deliver at least one thing the left demands, it really isn't. And it's not going to take much more of this before their young base starts looking around for someone to deliver the hope and change they were promised.
The Washington Examiner writes:
The fact that just doesn't register with Washington GOP establishmentarians is that the Tea Party Protests seen around the country in April were aimed as much against them as they were against the tax and spending policies of Obama and the Democratic Congress.There are millions of libertarians and traditional conservatives (or "paleo-conservatives", in contrast to Neo-conservatives) in the U.S. who are very unhappy with the direction the Republican party has taken in recent years.
Post-Partisan Coalitions
There are many millions of liberals and conservatives who have become disgusted by their parties and have started judging candidates based upon what they are actually doing.
As just one example, there are millions of Americans who would support either Ron Paul as president and Dennis Kucinich as vice president or the other away around. Why? Both challenge the status quo, and have proposed legislation which will actually help the American people.
Conclusion
Based on the above trends, I believe that Calente could be right. A third-party candidate could win in 2012.
Postscript: Here's what people have said about Calente over the years:
"When CNN wants to know about the Top Trends, we ask Gerald Celente."
— CNN Headline News
"[Calente is supported by] a network of 25 experts whose range of specialties would rival many university faculties."
— The Economist
"Gerald Celente has a knack for getting the zeitgeist right."
— USA Today
"There’s not a better trend forecaster than Gerald Celente. The man knows what he’s talking about."
- CNBC
"Those who take their predictions seriously ... consider the Trends Research Institute."
— The Wall Street Journal
"Gerald Celente is always ahead of the curve on trends and uncannily on the mark ... he's one of the most accurate forecasters around."
— The Atlanta Journal-Constitution
"Mr. Celente tracks the world’s social, economic and business trends for corporate clients."
— The New York Times
"Mr. Celente is a very intelligent guy. We are able to learn about trends from an authority."
— 48 Hours, CBS News
"Gerald Celente has a solid track record. He has predicted everything from the 1987 stock market crash and the demise of the Soviet Union to green marketing and corporate downsizing."
— The Detroit News
"Gerald Celente forecast the 1987 stock market crash, ‘green marketing,’ and the boom in gourmet coffees."
— Chicago Tribune
"The Trends Research Institute is the Standard and Poors of Popular Culture."
— The Los Angeles Times
"If Nostradamus were alive today, he'd have a hard time keeping up with Gerald Celente."
— New York Post
“There’s a Growing Sense Among Progressives [and Conservatives] That They Have Been Punked”
Paul Krugman wrote in the New York Times yesterday:
I don’t know if administration officials realize just how much damage they’ve done themselves with their kid-gloves treatment of the financial industry, just how badly the spectacle of government supported institutions paying giant bonuses is playing. But I’ve had many conversations with people who voted for Mr. Obama, yet dismiss the stimulus as a total waste of money. When I press them, it turns out that they’re really angry about the bailouts rather than the stimulus — but that’s a distinction lost on most voters.
So there’s a growing sense among progressives that they have, as my colleague Frank Rich suggests, been punked. And that’s why the mixed signals on the public option created such an uproar.
Krugman makes a good point. Progressives are furious that the giant gamblers which caused the financial crisis have gotten taxpayer money showered on them by the government, without any reform. (Whether Krugman's take on Keynesian stimulus is right or wrong is beyond the scope of this discussion.)
And Krugman is right that progressives are more sceptical of Obama's "public option" than they would have been if Obama hadn't so obviously sold out on financial issues.
Krugman's reference to Frank Rich, of course, refers to Rich's essay "Is Obama Punking Us?", where Rich writes:
Yet there is real reason for longer-term worry in the form of a persistent, anecdotal drift toward disillusionment among some of the president’s supporters. And not merely those on the left. This concern was perhaps best articulated by an Obama voter, a real estate agent in Virginia, featured on the front page of The Washington Post last week . “Nothing’s changed for the common guy,” she said. “I feel like I’ve been punked.” She cited in particular the billions of dollars in bailouts given to banks that still “act like they’re broke.”
But this mood isn’t just about the banks, Public Enemy No. 1. What the Great Recession has crystallized is a larger syndrome that Obama tapped into during the campaign. It’s the sinking sensation that the American game is rigged — that, as the president typically put it a month after his inauguration, the system is in hock to “the interests of powerful lobbyists or the wealthiest few” who have “run Washington far too long.” He promised to smite them...
What disturbs Americans of all ideological persuasions is the fear that almost everything, not just government, is fixed or manipulated by some powerful hidden hand, from commercial transactions as trivial as the sales of prime concert tickets to cultural forces as pervasive as the news media. It’s a cynicism confirmed almost daily by events ... legitimate suspicions on the right and left alike that even their loudest public voices can be silenced if the business interests of the real American elite decree it...
[Obama's] first questionable post-victory step was to assemble an old boys’ club of Robert Rubin protégés and Goldman-Citi alumni as the White House economic team, including a Treasury secretary, Timothy Geithner, who failed in his watchdog role at the New York Fed as Wall Street’s latest bubble first inflated and then burst. The questions about Geithner’s role in adjudicating the subsequent bailouts aren’t going away, and neither is the angry public sense that the fix is still in. We just learned that nine of those bailed-out banks — which in total received $175 billion of taxpayers’ money, but as yet have repaid only $50 billion — are awarding a total of $32.6 billion in bonuses for 2009...
The larger fear is that Obama might be just another corporatist, punking voters much as the Republicans do when they claim to be all for the common guy. If anything, the most unexpected — and challenging — event that could rock the White House this August would be if the opposition actually woke up.
So it is not just progressives that feel like they've been punked by Obama. Remember that many conservatives, mainstream Democrats, and libertarians voted for Obama as well. Conservatives, libertarians, liberals, progressives all feel like they've been punked. It is not a partisan issue.
Indeed, the only people who don't think they've been punked are:
1. The banksters, derivatives traders and others who have directly benefited from the bailouts and maintaining the broken financial system the way it is without any true reform
and
2. Those who believe the propaganda of group number 1.
Thursday, August 20, 2009
“The Real War Is Not Between the Left and the Right. It Is Between the Average American and the Ruling Class ...Who Would Make Us Their Slaves”
Sometimes the message is great, no matter what you think of the messenger.
Larry Flynt - yes, that Larry Flynt - wrote today on Huffington Post:
The American government -- which we once called our government -- has been taken over by Wall Street, the mega-corporations and the super-rich ... Both Democrats and Republicans dance to the tune of their corporate masters. In America, corporations do not control the government. In America, corporations are the government.
This was never more obvious than with the Wall Street bailout, whereby the very corporations that caused the collapse of our economy were rewarded with taxpayer dollars. So arrogant, so smug were they that, without a moment's hesitation, they took our money -- yours and mine -- to pay their executives multimillion-dollar bonuses, something they continue doing to this very day. They have no shame. They don't care what you and I think about them. Henry Kissinger refers to us as "useless eaters"...
The reason Wall Street was able to game the system the way it did -- knowing that they would become rich at the expense of the American people (oh, yes, they most certainly knew that) -- was because the financial elite had bribed our legislators to roll back the protections enacted after the Stock Market Crash of 1929.
Congress gutted the Glass-Steagall Act, which separated commercial lending banks from investment banks, and passed the Commodity Futures Modernization Act, which allowed for self-regulation with no oversight. The Securities and Exchange Commission subsequently revised its rules to allow for even less oversight -- and we've all seen how well that worked out. To date, no serious legislation has been offered by the Obama administration to correct these problems.
Instead, Obama wants to increase the oversight power of the Federal Reserve. Never mind that it already had significant oversight power before our most recent economic meltdown, yet failed to take action. Never mind that the Fed is not a government agency but a cartel of private bankers that cannot be held accountable by Washington. Whatever the Fed does with these supposed new oversight powers will be behind closed doors...
The real war is not between the left and the right. It is between the average American and the ruling class. If we come together on this single issue, everything else will resolve itself. It's time we took back our government from those who would make us their slaves.
It is well worth your time in reading Flynt's article in full. He gives some valuable history lessons (including the context of a quote by Thomas Jefferson being bandied about today) and proposes a concrete plan to effect change: a one-day national strike.
What's Up With China?
What's up with China?
MarketWatch argues:
A weak set of economic indicators for July laid the foundation for the latest market correction, challenging the Shanghai Composite's nearly doubling in value in the first seven months of the year.
Official figures released earlier this week also showed foreign direct investment into China also dropped more than 35% in July from the year-earlier period.
Meanwhile, data released earlier this month also showed a slowdown in the growth rates for industrial production and investments in urban fixed assets.
Then a sharp slump in bank lending in July -- following record loan disbursals in the first half of 2009 -- led to worries that a slowdown in credit could affect liquidity, a crucial factor behind the previously strong market performance.
And MarketWatch notes that UBS Research's China strategist John Tang reports that a further correction is likely over the next 30 days. But it quotes a Morgan Stanley analyst who is bullish on China, who says that it is a good time to buy in.
But let's dig a little deeper.
China's current-account surplus is off 32% for the first half of the year.
Financial Times Alphaville writer Izabella Kaminska convincingly argues that China's stimulus money is being recollected back from the people who receive it before it can do any good.
China has lent out a huge amount of money. Marketwatch's David Weider notes that "China loaned $852 billion globally through the first five months of the year".
Vitaliy Katsenelson argues that while China has been blowing a huge bubble in lending, the government may have enough of a surplus to pull it off - at least for a couple of years (especially given that the banks are controlled by the government).
But - at some point in the future - the bubble in bad loans will likely burst.
Katsenelson also argues - citing a report by the American Enterprise Institute - that China's growth figures are a mirage:
The country showed robust GDP growth while electricity consumption declined.
The laws of economics appear to be suspended for the Chinese, but they are not. They just have "better" accountants, ones that would make Enron's bean counters seem like dilettantes. A paper published by John Makin at American Enterprise Institute explains very well how Chinese got their GDP growth:
"Once China had announced its 8 percent growth target, it began to disburse funds directed at a sharp increase in public-works spending," Makin wrote.
"It is important to understand that the disbursal of funds is recorded as GDP growth," Makin continued. "So the government can easily control the pace of growth by the pace at which it releases funds that have already been allocated in the stimulus package to the creation of higher production or growth numbers."
Nice trick, huh?
"Funds disbursed for fixed-asset investment by state-owned enterprises or provincial governments are counted as having been spent when they are disbursed," Makin noted.
But perhaps the most insightful analysis comes from Andy Xie. Xie argues that China - like America - is erroneously applying Keynesian solutions during a period in which Keynesian solutions cannot work, i.e. after the collapse of a huge bubble (when only Schumpeterian economics works):
Keynesian thinking ignores structural imbalance and focuses only on aggregate demand. In normal situations, Keynesian thinking is fine. However, when a recession is caused by the bursting of a big bubble, Keynesian thinking no longer works.
Many policymakers actually don't think along the line of Keynes versus Schumpeter. They think in terms of creating another bubble to fight the recessionary impact of a bubble burst. This type of thinking is especially popular in China and on Wall Street. Central banks around the world, although they haven't done so deliberately, have created another liquidity bubble. It manifested itself first in surging commodity prices, next in stock markets, and lately in some property markets. Will this strategy succeed? I don't think so...
The current recovery is based on a temporary and unstable equilibrium in which the United States slows the rise of its national savings rate by increasing the fiscal deficit, and China lowers its savings surplus by boosting government spending and inflating an assets bubble.This temporary equilibrium depends on government action. It does not have a market foundation that would support sustained and rapid growth. Nevertheless, improving economic data will excite financial markets.
China's stock market is cooling because the Chinese government is jawboning it down, based on fears of a big bubble downside. And the economy is beginning to slow. Markets outside China will likely do well for the next two months; diverging trends reflect that China's market recovered four months before others, and adjusts before others as well.
Financial markets will turn down again when investors realize that the global economy will have a second dip in 2010, and that the U.S. Federal Reserve will raise interest rates soon. The turning point may well come sometime in the fourth quarter. By then, it would become apparent that China has slowed. U.S. unemployment will not have improved and, hence, its consumption will remain stagnant. And production data that's pushing expectations now will cool after the inventory cycle runs its course...
This fool-the-market strategy may work temporarily. Its effectiveness must be reflected in oil prices; the Fed needs to target oil prices in its interest rate policy. If oil prices run from current levels, it means the market doesn't believe the Fed. That would force the Fed to raise interest rates quickly which, unfortunately, would trigger another deep recession.
Instead of a V-shaped recovery, we may instead get a W curve. A dip next year, although perhaps not statistically deep, could deliver a profound psychological shock. Financial markets are buoyant now because they believe in the government. The second dip would demonstrate the limits of government power. The second dip could send asset prices down -- and keep them down for a long time.
The 4 Secrets to Giving a Successful Talk
There are four keys to giving a successful talk or presentation:
(1) Preparation
(2) Energy
(3) Humor
and
(4) Learning how to harness your nerves
Preparation
"It usually takes more than three weeks to prepare a good impromptu speech."
- Mark Twain
- Actress Ruth Gordon
Nothing can replace preparation.
Unless you are one of the lucky people who can improvise well, you should outline your presentation, and then write out notes or use index cards to map out exactly what you want to say. Then practice until you don't need the notes anymore.
If you feel like you need some notes with you during the presentation, just jot down key words to jog your memory. If you try to read anything other than a couple of key words, you won't be able to pull it off.
Energy
Energy is a vital component to good presentation. If you're dragging and listless, you won't do well, no matter how prepared you are or how insightful your comments.
Roger Ailes - Ronald Reagan's chief of communications and now the head of Fox News - might be a rabbid ideologue, but he wrote a whole book on this subject which is really pretty good. The whole book can be summed up in the statement: "An ounce of energy is worth a pound of technique".
Ailes gives the following advice:
How do you get that kind of positive energy, especially when you're nervous about giving a speech, chairing a meeting, or being interviewed for a job or by the news media, for example.
Ask yourself: What am I thinking about? Am I focused on positive things like "This is an opportunity ....Let me review my agenda: What are the points I want to make? This can be fun; I've been asked to speak because the believe I'm an authority and can contribute something"? These kinds of thoughts will energize you in a way that will help you be successful.
If you like exercise, then you already know that vigorous exercise will boost your energy and pump you up. Go exercise before your talk.
If you aren't the exercise type (or even if you are), you may want to know that deep breathing and deep relaxation can effectively charge up your energy levels.
Humor
The best speakers throw in at least a little humor. World-class speakers often start their talks with a joke.
If you are not a naturally funny person, you can try to write out a joke in advance as part of your preparation (see above). But be sure to try it out on a friend - bad humor is worse than no humor at all.
At the very least, you can use the following proven trick for reducing nervousness during your presentation: visualize your audience members' heads as being heads of cabbage. No one else has to know what you're doing, but it will help put you in a relaxed state of mind.
Harnessing Your Nerves
I have performed in front of thousands of people. And I can attest that everyone gets nervous. It is simply human.
But don't believe me. Listen to the top performers: they all say that they still get nervous before performances.
In fact, the top speakers, musicians, athletes and performers in every field know that nervousness is a good thing.
Why?
Because nervous energy is the raw fuel which powers their performance. The top performers know how to channel that raw energy into a good performance. Successful performers actually look at nervous energy as rocket fuel to power an outstanding performance.
The trick is not to fight it. If you try to force your self not to be nervous, you will get more nervous and will not perform well.
Instead of labeling that feeling as being "stressed" or "nervous", think of it as being "excited" or "energized".
Nothing I can write will convince you that stress if the fuel for a successful performance. I have performed enough to know what I'm talking about, and performance experts say the same thing. But you have to verify this for yourself.
Practice speaking in front of groups of friends. Practice making a presentation to a co-worker. Practice getting nervous and performing well anyway. (And if your presentation is clumsy, go back and prepare more. Also ask your friends or co-workers what would make it better. Keep practicing - the more you practice the better you'll get.)
Doing that will prove to you that nervousness is simply part of the package, and that you can perform even when you're nervous. Again, remember that you're in good company - everyone gets nervous, including the world's top performers.
Now go perform!
Note: One-on-one presentations to Congressional aides or sales presentations have their own nuances. For example, listening to the person you are talking to, seeing what is important to him or her, and drawing out his or her perspectives is vital. This essay focuses more on presentations to a group.
Wednesday, August 19, 2009
India Will Become World's Most Populous Country by 2050. Almost All Population Growth Will Occur in Asia, Africa, Latin America and the Caribbean
The 2009 World Population Datasheet - published by the Population Reference Bureau - gives a number of important statistics on population trends, including the following:
- India will have more people than China within a couple of decades
- 97% of global population growth over the next 40 years will occur in Asia, Africa, Latin America and the Caribbean
Is the Bank of Montreal (Canada's 4th Largest Bank) About to Crash?
Dan Amos - who called the crash of Lehman and other giants beforehand - says that a major bank is lying about its ability to pay shareholder dividends, has been gaming its books, and is about to crash.
Amos doesn't say which bank he's talking about, but gives the following hint:
[It has] a 192 year old history and 37,000 employees . . .
A quick Google search reveals that this can only be the Bank of Montreal, also known as BMO Financial Group.
Stock Gum Shoe - a website devoted to guessing at the companies hinted at in stock tips - confirms that Amos was talking about Bank of Montreal.
This is newsworthy because the Canadian banks have widely been seen as the world's safest and most stable banks. Indeed, the Bank of Montreal was listed as the 33rd safest bank in the world by Global Finance (see page 2).
Amos says that the Bank of Montreal won't be able to pay the promised $1.5 billion dividend scheduled later this year, which will precipitate a crash in BMO's stock by December.
Note: I am not an investment advisor and this should not be taken as investment advice.
Pimco: Dollar is Losing Reserve Status, Diversify Your Currency Holdings
Pimco portfolio manager Curtis A. Mewbourne writes that the dollar is losing its status as world reserve currency as the U.S. pumps massive amounts of money into the system. (I - and many others - have repeatedly written on this issue).
The dollar will probably depreciate the most against emerging market currencies. Pimco is advising clients to diversify out of the dollar.
Indeed, as Bloomberg points out:
Bill Gross, who runs the $169 billion Pimco Total Return Fund, is also warning the U.S. currency will fall.
Holders of dollars should diversify before central banks and sovereign wealth funds do the same because of concern government budget deficits will deepen, Gross said in June.
Tuesday, August 18, 2009
Weimar Germany's Hyperinflation Was Nothing Compared to Other Countries
You've heard how bad things were in the Weimar Republic, when people would rush straight to stores to buy food after receiving a pay check because their money would buy much less the next day.
But it turns out that Germany's hyperinflation in 1923 was nothing compared to that experienced by Hungary, Zimbabwe and Yugoslavia.
In a new paper published by the Cato Institute, economics professor Steve Hanke lists the all-time worst episodes of hyperinflation:
(click for full image).
Note that Hungary's daily inflation rate was ten times greater than that in Weimar Germany, and prices doubled almost six times faster in Hungary than in the Weimar Republic.
Life in Weimar Germany was extremely difficult. But Hungary in 1946 was a lot worse.
Note: While the commonly accepted explanation for hyperinflation is government printing too much money, Ellen Brown argues that the real explanation is a concerted attack on a country's currency by foreign speculators and/or foreign governments.
"It's Almost As If The Administration Is Opting for a Rose-Colored-Glasses PR Strategy" Instead of Looking at Reality and Adopting Appropriate Policy
Donald W. Riegle Jr. is a former Senator, serving as both a Democrat and a Republican. He was - for 5 years - chair of the Senate Banking Committee.
Riegle co-wrote an article today with the former CEO of AT&T Broadband and the international president of the United Steelworkers saying:
It's almost as if the administration is opting for a rose-colored-glasses PR strategy rather than taking a hard-nose look at actual consumer and employment figures and their trends, and modifying its economic policies accordingly.As I have repeatedly pointed out, psychologists say that - until government and business leaders prove they can behave responsibly, and until the perpetrators of financial fraud are held accountable - real trust will not be restored and the economy will not recover.
There was massive fraud between 2001 and 2007. Indeed, massive fraud is continuing today.
But Team Obama has not prosecuted any of the criminals (other than a few token bad guys, like Madoff). And the White House and Congress have not made any real changes. They haven't put the separation between investment and depository banking (Glass-Steagall) back in place, they haven't cracked down on naked credit default swaps or naked shorting, or done anything fundamental at all to ensure that another crash doesn't occur. See this, this, this and this.
Papering over fraud, propping up the same old system and turning up the volume on the happy-talk PR campaign will not work.
The economy cannot recover unless those who gamed the financial system are indicted, the real consumer, employment and other core numbers are discussed, and fundamental structural changes are made to the banking, credit rating, regulatory and financial systems.
John Williams: Numbers Show "Ongoing Depression"
In his "flash update" today, PhD economist John Williams says:
July Housing Starts Showed Ongoing Depression...
The economy continues in a severe, deepening downturn, with no meaningful signs of a pending upturn. Based on continued weakness in weekly money supply reporting, the systemic solvency crisis is intensifying and also is far from resolution.
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