Why the Glass-Steagall Act be Restored.

There is a time when everything has already occurred. There is optimism everywhere, the economy is ostensibly normal; on wall street bankers are despised but rewarded. There is no lack of “conflicts of interest.” On the contrary, there are more and more conflicts of interest.

Nor has there been discussion on the repeal of the so-called “Glass-Steagall Act.”

Enacted in 1933 under the Roosevelt administration as part of regulatory reform in response to the Great Depression, the Glass-Steagall Act called for tough oversight over  banking-investment institutions as well as full disclosure and prohibition of conflicts of interest via a disjoint – not shared in common - banking practice between commercial and investment banks.

The prohibition of conflicts of interest was particularly central to Glass-Steagall as it helped curb the loss of confidence in investors during economic downturns.

The following is my read on what would occur if we do not re-enact the Glass-Steagall Act  – or some variation of it  - as part of regulatory reform in the face of the recent financial crisis:

namely, chances for a depression will  increase.

Depressions & Confidence

Some of you may have read Irving Fisher’s celebrated 1933 article , “The Debt-Deflation Theory of Great Depressions,” where Fisher defines a “depression” as the point at which the value of assets sinks below the value of debt on those assets.

As simplistic as that may sound – a debt is fixed unless a debtor can find relief . While the value of assets may vary according to investor “confidence.”

Now, “ a cup of confidence goes a long way, but a lack therein can destroy even the best among us ” – my father.

The restoration of confidence for instance was J.P. Morgan’s intention after the stock market crash of 1902- joining a bankers’ pool to invest in the stock market.

Franklin Roosevelt hypothesized on the Great Depression in similar terms. “The only thing we have to fear, ” he declared in his first inaugural address in 1933, “is fear itself.”  In fact, there is exists a strong-positive correlation between business downturns and loss of confidence from time-inception of our great republic.

John Maynard Keynes was among the first to adopt into his economic theory the notion of confidence. Incidentally, it was originally proposed by Richard Kahn as a sort of feedback system (I won’t bore you with details). More recently, Shiller and Akerlof propose a corollary concept , which they call the confidence multiplier (Animal Spirits).

The so-called multiplier  – which should be viewed in terms of rounds with the initial round belonging to the government stimulus -  limits each dollar spent in the stimulus as a fraction of income for some people, which they then spend. That fraction is called the marginal propensity to consume (MPC).

Here is the gist.

Any initial government stimulus puts money into people’s hands, which they then spend.

The second round belongs to the people. Their investment in turn generates income for yet more people in an amount equal to the MPC dollars. The sum of all these rounds may be represented by the formula $1 + $MPC + $MPC^2 + $MPC^3 + $MPC^4 + … For those wondering the sum is not infinite. It is in fact 1/(1 – MPC), called the Keynesian multiplier.

If, for example, $MPC = $0.75, then $1 /$0.25 = $4.

Note: the usual (easily measured) way to think of economic multipliers is by way of expenditure, consumption, or investment.

The notion of confidence, on the other hand, isn’t so easily measurable.

Is it enough, for instance, to simply declare confidence in order to be  in fact measured as confident?

How is confidence measured so as to avoid its subjective stance?

Is consumer confidence as measured by the Conference Board a sufficient matrix?

As you could imagine, it becomes increasingly complex when dealing with human emotions such as the feeling of confidence.

Shiller and Akerlof propose the following:  let the set of multipliers –  which include consumption, investment , and, government expenditure  - also contain the confidence multiplier.

Further, let the confidence multiplier be an extension (equal in set) to the consumption multiplier – as resulting from different rounds of expenditure. Then any change in confidence implies change in income and confidence in the next round, where each change affects income and confidence in successive rounds.

Why does confidence matter?

The depression of the 1890s was largely associated with a crash of confidence – associated with remembered stories of economic failure, including stories of increased corruption in the years that preceded the depression.

In Irrational Exuberance it was shown that person-to-person contagion of thought spurred by an initial stock market price increase can lead to the amplification of optimistic new era stories ( Akerlof and Shiller).   The investor  excitement [confidence]  itself propagate such stories.

The Great Depression – as has been inferred from work by Barry Eichengreen and Jeffery Sachs - spread from one country to the next through the collapse of the gold standard.

With a worldwide loss of confidence in the currency, central banks could defend the gold standard only by substantially raising interest rates, thereby squelching their own economies.

As is imagined confidence-optimism play a central roll in economics. How much confidence exists if our lender is also our wealth manager?

But that is exactly the result with the repeal of Glass-Steagall.

Leave it to political hacks to propose an outright  repeal in 1999  – under the Clinton administration.

The repeal enabled commercial lenders such as Citigroup, which may in fact be the largest U.S. bank, to underwrite and trade instruments such as “mortgage-backed securities” and “collateralized debt obligations. ”  The removal of Glass-Steagall in both the U.S. and U.K. was integral to the Global Financial Crisis of 2008-09  – Elizabeth Warren , one of five outside experts who constitute the Congressional Oversight Panel of the Troubled Asset Relief Program ( TARP), Telegraph.co.uk.

History

Contrived to prevent a repeat of the 1920s’ quick profit-swindle, in which banks made speculative investments to their own detriment and to society at large , Glass-Steagall required commercial banks to be tightly supervised – further, gain access to federal deposit insurance-savings. This would have prevented – as well it did - runs on banks.  Investment banks, on the other hand, weren’t government guaranteed – free to engage in more speculative transactions for the prospective investor.

The New Deal also acted on the home mortgage front.

During the Great Depression millions were loosing their homes and farms to foreclosure. In response, the Roosevelt administration proposed and created the modern era of home finance. Before the New Deal, mortgages were typically issued as short-term notes, where most of the principle was due and payable at the end of a brief term – often just three to five years.  Can you imagine home ownership under terms  just 1/6 on what most notes are held today?

Congress in turn created the Federal Housing Administration (FHA) to insure these mortgages and – yes – win their confidence among lenders.

As you could imagine, the system worked like a charm – combining sound lending standards with expanded opportunity. The rate of home ownership rose from 44%  in the late 1940s to 64% by the mid – 1960s . Savings and loan associations almost always ran in the black, there were no serious scandals or loss in confidence and the government deposit insurance funds regularly returned a profit.

This is much more than one can be said of banks today.

Despite the steep yield curve – the relation between the interest rate (or cost of borrowing) and the time to maturity of the debt for a given borrower in a given currency.

The banks are now borrowing at 0-.25% points and charging borrowers several percentage points.

In the 1980s, under the Reagan administration, legislators in the name of free-market capitalism began to make exceptions to Glass-steagall.

For example, ”Regulation Q, ” which allowed the Federal Reserve to regulate interest rates in savings accounts – repealed by the Depository Institutions Deregulation and Monetary Control Act of 1980. To add insult to injury, in 1999 uder the Clinton administration, Congress repealed the Act outright – the Gramm-Leach-Bliley Act -  permitting financial supermarkets such as Citigroup to operate any kind of financial business imaginable without regard to the notion of conflict of interest.

The ideal classical economists’ dream if I may say: the efficacy to profit from multiple conflicts of interest.

The dot-com bubble of the late 1990s and the so-called Enron scandal not to mention the subsequent market crash - from which the Nasdaq is yet to recover – were the result of the SEC and bank regulators not able to police conflicts of interest. By the year 2000 , much of the remainder protective apparatus was repealed.

Now

Fast forward to 2007-09.

For decades, real estate prices have appreciated faster than incomes  – surprisingly – given a house is worth at most – or at least should be – what some buyer can afford to pay and not what a buyer is willing to pay.

Yet, housing prices continued to appreciate artificially –  motivated by historically low rates and extended credit to those with questionable credit. Mortgage companies relying not only on speculative investment strategies but also on the false premise that prices shall appreciate year-over-year add infinitum.

A confident bunch but confidence misplaced.

“Stirctly-free market economics leads to chaos!”

As an investor, what do you need beyond the usual terms of money and/or vision?

Full disclosure and avoidance of conflicts of interest.

Glass-Steagall called just for that.

It was based on the pillars of  disclosure and outright prohibition of inherent conflicts of interest.

Namely, all publicly traded-listed companies were required to disclose to the Securities of Exhange Commission (SEC) and to the public at large of financial information deemed “material” to investor decisions. The New Deal which contained Glass-Steagall also prohibited stock trading based on insider information not to mention promote  barriers -structural – against the types of temptations that destroyed the economy in the 1920s.

But, I digress.

Glass-Steagall sought to prohibit a single financial institution from being both a commercial bank and an investment bank – as is – Citigroup Inc.

Through its operating units - Citicorp and Citi Holdings - Citigroup provides consumers, corporations, governments and institutions with a range of products and services, including consumer banking and credit, corporate and investment banking , and, of course, wealth management.

Citigroup Inc. might as well be renamed: “Interests holding in Conflict.”

You decide.

Many thanks to deregulation , the entire field operated largely beyond the purview of traditional bank examiners. The so-called shadow banking system - comprised of non-bank financial institutions lending money – played a critical role in sub-prime mortgage lending - corallary to deregulation.

Once the housing market turned soft – as inevitable as it would have seem – mortgages began to fail, and of course investors with one choice and no confidence headed to the exits. The stocks of mortgage companies plummeted – for instance Countrywide ; banks underwriting these loans followed suit; hedge funds holding their bonds lost Billions – so on and so forth not unlike a house of cards.

Thanks to deregulation – the repeal of Glass-Steagall – confidence multipliers were largely absent.

But, why should government stimulus be necessary?

More importantly, is confidence in government possible if government isn’t lender of last resort?

Would you for  instance invest in a Certificate of Deposit if not for the Federal Deposit Insurance Corporation (FDIC) – a government entity?

Without the FDIC - hence its extended coefficients -there is no investor confidence in banks.

Without investor confidence – be it in banks or otherwise - there is no investment.

With no investment there is no growth.

Plain and simple.

With no growth, there is only one outcome: namely, depression.

Razmik B. Ekmekdjian

author/managing director

[Via http://judiciouso.wordpress.com]

Afghanistan sitting on a gold mine

The USGS estimates there are about 700 billion cubic metres of gas and 300 million tonnes of oil across several northern provinces.

KABUL — Afghanistan is sitting on a wealth of mineral reserves — perhaps the richest in the region — that offer hope for a country mired in poverty after decades of war, the mining minister says.

Significant deposits of copper, iron, gold, oil and gas, and coal — as well as precious gems such as emeralds and rubies — are largely untapped and still being mapped, Mohammad Ibrahim Adel told AFP.

And they promise prosperity for one of the world’s poorest countries, the minister said, dismissing concerns that a Taliban-led insurgency may thwart efforts to unearth this treasure.

Already in the pipeline is the exploitation of a massive copper deposit — one of the biggest in the world — about 30 kilometres (20 miles) east of Kabul.

“There has not been such a big project in the history of Afghanistan,” Adel said.

A 30-year lease for the Aynak copper mine was in November offered to the China Metallurgical Group Corporation and the contract is being finalised.

“It is estimated that the Aynak deposit has more than 11 million tonnes (of copper),” he said, citing 1960s surveys by the Soviet Union and a new study by the United States Geological Survey (USGS).

“With today’s prices, it contains an 88-billion-dollar deposit,” he said.

The mine is expected to bring the government 400 million dollars annually in fees and taxes, Adel said.

That is on top of an 800-million-dollar downpayment from the developer who has also committed to build a railway line, a power plant and a village for workers, complete with schools, clinics and roads.

About 5,000 jobs will be created and mining is expected to start in five years. “Up to 40 percent of the income will pour into our pockets,” Adel said.

The colossal Aynak project represents, however, only a fraction of Afghanistan’s unexploited resources, he said. The scale of the deposits is still being charted.

The USGS is carrying out a nationwide survey of mineral wealth and oil and gas deposits that is expected to be completed in a year, Adel said.

Studies of only 10 percent of the country have discovered abundant deposits of copper, iron, zinc, lead, gold, silver, gems, salt, marble and coal, the ministry says.

The USGS estimates there are about 700 billion cubic metres of gas and 300 million tonnes of oil across several northern provinces.

A Soviet survey estimated there are more than two billion tonnes of iron reserves, the ministry says.

One of the best known iron deposits is at Haji Gak, 90 kilometres west of Kabul.

“If everything goes as we desire, Haji Gak requires two to three billion dollars’ investment,” said the minister.

“Another 100 million to 1.5 billion dollars is needed to explore the gas and oil mines.”

The government plans to offer more projects for private sector tender next year, Adel said.

There is already some mining underway such as ad hoc emerald extraction in the Panjshir valley region northeast of Kabul, where dynamite is used to blow gems out of the ground.

And the ministry has handed two coal mines to private Afghan companies, although they lack standard equipment.

The site for the mine at Aynak, 60 km southeast of Kabul contains the world’s second-biggest unexploited copper deposit with the potential to generate revenue of $1.4 billion a year. Of greatest danger is the threat of toxic waste which has led to environmental damage around copper mines in several countries.

Reuters, Dec.12, 2007

The Aynak contract will be a model for others, with developers expected to put in basic infrastructure as Afghanistan’s power grid is weak and its transport network limited.

There is also the challenge of the insurgency, which overshadows development and has made many areas off-limits to foreign companies.

Writer and analyst Waheed Mujda warned there could be no mining in Taliban-held areas, which are mostly in the south, without the permission of the Islamic extremists.

“Any kind of agreement with Taliban will have to involve money and that money obviously would finance the insurgency in part,” Mujda told AFP.

But Adel is not concerned. “We can provide security for mining sites simply by hiring a private security company,” he said.

Most of the deposits that have been discovered are in the relatively stable north. There are, however, uranium reserves in the southern province of Helmand, one of the worst for Taliban attacks, the minister said.

The minister’s sights are firmly set on mining bringing his impoverished country a brighter future.

“In five years’ time Afghanistan will not need the world’s aid money,” he said. “In 10 years Afghanistan will be the richest country in the region.”

http://afp.google.com/article/ALeqM5iFrOtnNs42obPsi8ul_AHEXmOGzQ

With Thanks to

Kindest Regards

Hassan Saleemi

External Relations & Media Manager

City Muslims

Mobile: 07956 574066

Landline (evenings): 0208 1234264

Hassan.Saleemi@CityMuslims.org

http://www.cityMuslims.org

Kindest Regards

Hassan Saleemi

Landline (before 2pm UK time): +44/0 208 1234264

SMS Text: +44/0 7956 574066

External Relations & Media Manager

City Muslims

Hassan.Saleemi@CityMuslims.org

http://www.cityMuslims.org

[Via http://kaptainmirza.wordpress.com]

"Security" System(sic)

It appears (so far) that there is nothing wrong with the security system, but rather that SOMEONE(S) did not execute the system properly — SOMEONE didn’t change the status of this clown from “watch” to “No fly” after specific information from the father.

There was a second problem at the State Department — this guy retained his multiple-entry American visa AFTER Britain denied him any visa at all! (CLUE!)

This is further confirmation of my Theory of Gates, which states that systems are in place to stop all disasters with multiple gates. It is “five nines” likely that at least one of the gates will remain closed and stop the possibly hundreds of potential daily disasters of one sort or another — but given enough potential disasters all gates will eventually be left open at once (by SOMEONE) and a disaster happens.

No matter how good the system it is populated by bureaucrats with lifetime tenure and no advancement on merit, but on seniority.

With all due respect, the Christmas Bomber did not fail – he succeeded in spreading terror. He failed at killing people, but as a terrorist he DID spread terror.

He will cost our nation BILLIONS in extra security, he will cause millions to react by driving or taking the train rather than flying, and he will cause thousands of bureaucrats to try to divine security holes – or in finger pointing to someone else.

He will not cause one bureaucrat to lose his or her job, however, THAT terrorizes ME!

[Via http://usna1957.wordpress.com]

Gender and economics

It has become a belief of mine that economists do not know where babies come from.  In an article by Zdravka Todorova

posted over on New Deal 2.0, she addresses this concern of mine and eludes to the obvious, which is that economists use the androcentric society model that we live in blindly and without thought of consequence.

When most economists talk abut “economic agents,” they are conjuring up bodiless, genderless automatons who naturally have no biological predecessors, do not carry babies, do not give birth, and do not face questions of physical survival and human development. So it is easy for them to look at double-digit unemployment rates and deflationary pressures on wages and benefits simply as market phenomena while ignoring that such things actually threaten the physical survival of families. It is not surprising that in crises like ours, macroeconomic policies stemming from such dehumanized conceptions of the economy do not address the majority of people’s hardships — and end up being inhumane indeed.

Now, in this huge financial crisis our country is facing today, all the talk is on the future generations and the insurmountable debt that the government will have that there will be no way for the children of our children to dig their way out.  In the heat of this, we cease to remember that although the sovereign United States government  can sustain “indefinite indebtedness,” United States households cannot. According to Todorova, “For one, they are not the sovereign issuer of the currency, and second, they are not inorganic entities without a life-span. It is often forgotten that just the opposite is valid for the State, let alone that the government debt is necessarily the private sector wealth.”

Lack of finances affect a household’s ability to sustain itself as a unit, clearly.  The household has always provided “free” benefits to society, such as child and elderly care, care for the sick.  Since the majority of housework and care taking is done by women, it is has become an assumption that women will always be there to help out and shoulder some of the brunt, bailing us all out a bit.  This is through unpaid labor and care, and other duties that women typically perform in the household.

The question that Todorova then frames from this all is, “Do the proponents of private markets, and government deficit worriers understand that they assume there always must be somebody performing the unpaid and humane labor of love to secure the livelihoods of households in crisis? More interestingly do they understand that especially in crisis these people must be super-moms/dads/grandparents?”

Genderless macroeconomic thinking embraces this popular self-deception, and is not appropriate for real-life. Thus, knowingly (to economists) or unknowingly (to casual commentators), these families indeed are supposed to resemble the non-biological beings inhabiting the lifeless macroeconomic models. What are the consequences of moving on? For one, it is time to stop and to question the seriousness of the idea that we can get out of this crisis of social provisioning without growing government deficits. These deficits, however, need to directly address the reasons for financial hardships of living and breathing people.

[Via http://femiwhat.wordpress.com]

It's Official, Capitalism is Dying

If you don’t think capitalism is in trouble in America, you’re not paying attention.  On Monday, The Wall Street Journal added this article to it’s long running series “USA Inc. The State of Capitalism.” 

“Washington pumped $245 billion into nearly 700 banks and insurance companies and guaranteed almost $350 billion of bank debt.  It made short-term loans of more than $300 billion to blue-chip companies.  It propped up life insurers and money-market funds.  It bailed out two of the three U.S. auto makers. It lent billions trying to jump-start commercial-real-estate, small-business and credit-card lending. In two February stimulus bills enacted a year apart, the government committed $955 billion to rouse the economy.  Today the U.S. government, directly or indirectly, underwrites nine of every 10 new residential mortgages, nearly twice the percentage before the crisis. Just last week, the Treasury said it would cover an unlimited amount of losses at mortgage giants Fannie Mae and Freddie Mac through 2012.”  Read the full article below.

After the Bailouts, Washington’s the Boss | Wall Street Journal | December 28, 2009

[Via http://oninvesting.wordpress.com]

Obama give a green light and unlimited money to the two Institutions that are most responsibly for the Financial Crisis

Administration Won’t Estimate Total Losses of Fannie and Freddie

By Peter J. Wallison

December 28, 2009, 11:48 am

It’s a favorite government trick to announce bad news on a Friday afternoon, so it appears in Saturday’s paper, the least likely edition to be read. By Sunday and Monday, it’s old news. The Obama Treasury just went one better, announcing on Christmas Eve that they were uncapping the amount they believe will have to be invested in Fannie and Freddie. The Bush Treasury first estimated the government-sponsored enterprises’ (GSEs) losses at $100 billion each. The Obama administration, which has been using the GSEs to stabilize the housing market by reducing their underwriting standards, upped the ante to $200 billion each. Now the administration has thrown in the towel completely, and dropped a large lump of coal in each taxpayer’s stocking—it won’t even try to estimate the total losses of Fannie and Freddie.

This is the culmination of an unprecedented policy disaster, inflicted on the American taxpayer by congressional supporters of Fannie and Freddie who refused over many years to approve new and tougher regulations for the two GSEs. Now that many of  these folks are in charge of the House and Senate committees that deal with financial reform, they have suddenly found new respect for regulation and are trying to apply it to the entire financial system. Perhaps the American taxpayers, acting as voters in 2010, will decide that one disaster per career is all they should be allowed.

[Via http://cliftonchadwick.wordpress.com]

Why Capitalism Isn't The Enemy

You hear it all the time. I know you do, because I hear it all the time.

And no, that isn’t meant to be arrogant or self-centered or any other label. It just is.

We’ve all heard it, because it’s all over the media. It’s in books, on television screens and plastered across magazines: the continual war against capitalism.

They damn it as selfish, they spit the word out as if it were venomous.

Capitalism.

And yet, no one seems to truly know what capitalism is.

The dictionary definition goes something like this: an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth.

But the true definition would look more like this quote by Kenneth Minogue:

“Capitalism is what people do if you leave them alone.”

As a proud, self-proclaimed individualist and a libertarian, (about as far up as you can get on the Nolan chart, actually, and slightly to the right) it is this definition which sums up my feelings for economics…and just about everything else. When it comes down to it, we need to be individuals before we are anything else; you wouldn’t, for instance, be in your right mind if you had a child without knowing how to care for yourself first.

We are reasonable people here, after all.

Therefore, if you restrained from having a child to take care of until you could properly care for yourself, you wouldn’t go out and try to save the world until you knew what you were doing with your own body.

Would you?

The fact is, you don’t have to look far to find it. In the race of government vs. private operated, well…we all know who wins.

Let’s see…USPS, Social Service, Cash for Clunkers, the Fed…Even if we stray from organizations, private industries always win out.

I mean, let’s face it. Without competition, business everywhere flounders. If there’s no one to compete against (and nothing to compete for) nothing gets done.

Let’s see, if I can think up one nightmare…

Okay. Here goes.

So.

A company (let’s call it Pear) takes over everything. Everything. Cell phones, music players, laptops, desktops, and everything that goes with them.

Pear does not build its products to last.

However, this does not effect the price. The laptops will still cost about 1200 dollars per computer. This means that every few years, if  you want a new computer, it will cost 1200 dollars. And this does not include any extras you purchase for that computer. 1200 dollars for the machine itself. So, every…let’s say four…every four years or so, you’re paying 1200 dollars for a computer….and then for the extras. If you bought your first computer at age fourteen, you would have to pay for your next computer by eighteen. About the time you’d be planning to head off to college. So on top of tuition, meal plans, residency bills and book bills, you would have to fork over another 1200 dollars for a computer on which to write your papers, keep track of your grades, and communicate with friends and family far away. Now, this computer has changed minimally over the past four years. Maybe Pear updated its word processing. So writing your paper won’t be quite as time consuming as it was before. But all the other little flaws remain.

So, your (hopefully) four years of college pass smoothly. And, once again, it’s time to buy a new computer…your old one has totally kicked the bucket. Now, not having a computer isn’t an option. Assume you’re entering a work force in which you need a computer. So, you pay yet another 1200 dollars for a computer that still hasn’t changed in any real way.

That’s $3600 by the time you’re 22 just for a new computer every four years. This isn’t counting, as I said, school bills, groceries, Christmas presents for mom and dad, etc.

And this isn’t just for computers. In this imaginary little world, you’re stuck with the same issue on all fronts.

Your phone, your music player, your home computer, your laptop, gaming systems; it’s the same deal. A lot of money for a product which has not changed in years.

Now, a few years later (you’re 30 and have paid 6000 dollars total only for computers) an entrepreneur begins her own business manufacturing and selling computers. She starts out small, but the product is good: solid, basic computers that have fewer flaws than Pear’s, last longer, and cost less. As word spreads, this new business gains in size and popularity.

As would be expected, Pear all but has a heart-attack and finally (finally) they begin to make progress.

The new company matches or betters them, and the process starts again.

Now, consumers have choice. If Pear customers are no longer satisfied with Pear’s service, they can switch to the New Company or vice-versa. And then, inspired by the success of The New Company, other business begin to sprout up, offering even more competition.

Remember, these businesses are competing for you and your money. So as this competition increases, so does quality…but prices decrease. For instance, two laptops. Both are of the same quality, offer the same services, have the same features, last the same amount of time, and look very similar. The difference? One costs 1,000 dollars while another is 600.  Which one would you purchase?

So the rundown:

Government run = Bad

Monopoly = Bad

Privately owned = Good

Competition = Good

And this is all very basic. There’s far more to capitalism than this.

I’m also no expert, so feel free to call me on errors.

But, think of it this way; capitalism is the only economic system that encourages competition. And competition is the only way you’ll find companies offering good-quality products at lower prices.

So who wins, here?

You do.

Capitalism is not your enemy; it is your friend.

Up Next: Taxes.

And I promise I won’t make it boring.

I hope.

[Via http://licentialiquendi1791.wordpress.com]

The Latest Advice From the Eco-Zealots: Eat Your Pets

In their unfortunately titled book Time to Eat the Dog: The Real Guide to Sustainable Living, New Zealanders Robert and Brenda Vale — self-described specialists in sustainable living at Victoria University in Wellington — charge that the carbon paw-print of a pet dog is double that of an SUV driving 6,200 miles a year, while a pet cat has an eco claw-print slightly less than driving a Volkswagen Golf for a year. Confirming these results, John Barrett of the Stockholm Environment Institute in York, Britain, said, “Owning a dog really is quite an extravagance.” Pets’ detrimental impact on the environment is not limited to their carbon footprint, the Vales insist; if permitted to roam, predatory dogs and cats devastate wildlife (squirrels, birds, frogs) while their fecal matter spreads bacteria and disease in rivers and streams, killing aquatic life.

via Pajamas Media » The Latest Advice From the Eco-Zealots: Eat Your Pets.

Dog actually tastes pretty good.  This might be an effort I can get behind.

[Via http://inzax.us]

Greece to borrow about £48 bln in 2010 | Reuters

Well, the Greeks have a budget now…

ATHENS (Reuters) – Greece will borrow about 54 billion euros ($77 billion) next year to plug fiscal shortfalls and refinance debt, the country’s deputy finance minister said on Thursday.

“Borrowing needs in 2010 will be lower than those in 2009 and will reach about 54 billion euros,” Deputy Finance Minister Philippos Sachinidis told Imerisia financial newspaper in an interview.

via Greece to borrow about £48 bln in 2010 | Reuters.

But the question is will it be good enough. From another Reuters article, we find out the new budget is looking to cut borrowing from 12.7% of GDP to 9.1% of GDP. A 360bp cut in the deficit is pretty sizable in one year. But I wonder what they expect GDP to be in the new year. In any event, here’s what they assume about government spending and revenues:

Despite an economic slump, the government expects ordinary budget revenues to increase by 9 percent next year. Spending before debt service payments is seen shrinking by 3.8 percent.

Many analysts believe the budget targets are attainable but provide no guarantee for fiscal restraint in subsequent years as they rely on one-off measures such as a windfall corporate tax and a crackdown on tax evasion.

Frankly, this is unrealistic. This tells me the government has an upward bias in their GDP projections because revenues (i.e. taxes) are projected to increase. The one-time windfall tax and increased tax receipts via tax evasion crackdowns will, in all likelihood,  yield worse results than they expect. So aside from a lot of fresh revenue via these two programs, there are only two ways their projected revenues can increase: 1) lower tax rates or leave them as they are and assume the increase in GDP in other sectors of the economy lift government revenues (rising tides lifting all boats), or 2) you raise the tax rate in a falling economy. I don’t know for sure what their approach was, but if I was a politician trying to keep votes and assuage the concerns of outsiders that we had our debt under control, I’d project GDP growth would be strong enough to make those forecasts.

Now having said that, I’ll bet dollars to donuts if you back tested the forecasts in years past to actual experience, you’d see the projections they probably baked into the budget were, well, half-baked at best. I’m not going to accuse them of putting out faulty forecasts and telling people what they want to hear rather than what they need to hear, it’s already been admitted by the government that they have a corruption problem and numbers they produced before were faulty.

But let’s get back to their projections. Given that I suspect the GDP and budget numbers are too rosy, I suspect the Greeks will be playing a game of catch-up this coming year. As GDP, in all likelihood, gets revised lower, the government will have to ratchet down spending to meet their estimates and stay on budget. Because as I see it, this has the potential to become a fiscal death spiral. The Greek government, in an effort to keep their sovereign debt rating in the investment grade space, cutting back on government spending, chasing lower GDP figures the entire way down. Because at this point, if they want nations and other to buy their debt they need to defend the country’s debt rating and they may have reached the point where their backs are against the wall.

Intervention via Berlin and Brussels would look bad. Defaulting would look bad. Fiscal restraint by the Greek government probably provides the best option, but it’s not pain-free.

But as far as the markets, Brussels, the ECB and others on the continent are concerned, we’re beyond pain-free options at this point.

[Via http://professorpinch.wordpress.com]

Dear Mr. President:

I don’t know if you get to read incoming e-mail. I doubt it, as I know the value of your time in running the country and still finding some room for your wife, children and dog. However, I would like to offer you a couple of points from my not-so-unique position as an unemployed American with two college degrees who worked on your campaign steadily for many months last year… and who is now getting more and more disappointed in your progress, or lack thereof.

“Progress” is the key word here. The expectation of so many of us who walked from door to door or sealed and sent mailing pieces or stood at intersections waving signs instead of going home to our families in the evening was that your Presidency, tied with the majorities for the Democratic Party in both Houses of Congress, would bring us out of the fiscal slurry that the Bush Administration had sunk our lower extremities in. Oh, I know you have made accomplishments… that somehow you and Bernanke saved us from a Depression with a fairly hideous Recession, that you started a process to close Gitmo and began making buddies again with the rest of the world. I know all of that.

What I can’t understand is why, after the huge effort you put into the election campaign making us all convinced you were a Progressive Hope for all of us, you have really become a mostly talk and let others do the action kind of guy. I speak specifically about Rahm Emanuel, who seems to really run the domestic policies that are fed out to the Congress,  about Tim Geithner and the rest financial service types who made sure their industry was protected first while your small voters, who could not commit the millions in campaign bucks that you seem all too willing to sell us off for, cut down on their grocery shopping and debated the best way to come up with their kids’ tuition over mortgage payments, and about the Military’s need to keep us involved in the most unnecessary confrontation anyone could imagine, making our international debt so huge that even words don’t describe it.

I can’t understand why the Health Care deals where made with the Pharmaceutical companies and the lobbyists from the Insurance industry, and the Liebermans and Nelsons and  other bought and paid for types, and not with the cast majority of people who elected you…people who once thought there was a chance at a single-payer solution to Health Care and who continued to think they would still get an advantage with the now vanished Public Option.

We thought you wanted to change things.

Instead, you have worked yourself into a sticky and overgrown corner where just getting out is nearly impossible. While it is possible that you might reevaluate the situation before the Fall and the 2010 Congressional elections start and get into the fray yourself (and, frankly, tell your current policy wonks to listen to the people who elected you OR ELSE), the reality seems to be that all the changes we had hoped for have been sidelined by the most controllable of uncontrollable things.

I hope you had a chance to watch, or listen to, or at least read a transcript of Bill Moyers’ Journal from the 18th of the month (and one that had not been edited by your staff to remove the highlights that they are most involved in). If not, I think you should note that the first half of the program is something is something that you should pay close attention to. It’s called “Is Washington For Sale?” and it features some very clear words from Matt Taibbi of Rolling Stone and Economist Robert Kuttner. You can see it on line at http://www.pbs.org/moyers/journal/12182009/watch.html, if you are able to get on line. I hope you can. Hell, you’re the President. Call PBS and ask them to send you a DVD!

It is so important that you become aware of what the community of Americans, who gave the government to you and the Congress not so long ago, think. All our futures are tied together, but you have your hand on the knot.

Regards,

Bill Tchakirides

Shepherdstown, WV

[Via http://underthelobsterscope.wordpress.com]

An Anatomy Lesson

If  you are around my age you remember the commercial where an narrator would hold up an egg and say “This is your brain” and then he’d crack it open on a pan (which you shouldn’t do by the way-always crack it on a flat surface to avoid getting shell in the egg) and put it in a sizzling hot pan, “And this is your brain on drugs” showing the fried egg.

Well, the 2009 Model:

The Human Brain

<>

Your Brain on Liberal Socialism

A Mind is a terrible thing to waste.

Continue Fighting. It’s is a Nobel Cause.

WP: Sen. Ben Nelson (D-Neb.) reserved the right to vote against the conference “if there are material changes,” and Sen. Mary Landrieu (D-La.) told C-SPAN the “Cadillac” tax would have to be a part of any final package she votes for. Both Nelson and Landrieu won hundreds of millions of dollars in the Senate bill for their states, which Republicans and even some Democrats derided as unfair to other states’ taxpayers

Translation: Show Me da Money! Bribe Me again Big Boy.

“You have got this divide, this polarization in America,” said Senator Olympia J. Snowe of Maine, the only Republican in recent weeks to seriously consider supporting the health bill. “People become risk-averse, politically risk-averse. There is no incentive to reach across the divide and appeal to a broader inclination. It looks like pragmatism is a political cop-out; compromise is certainly viewed that way.”(NYT)

So stay Tuned. It ain’t over ’till it’s over.

No matter what the Liberal Media says.

“I don’t see this as 60 Democrats versus 40 Republicans,” he said. “I see it as 60 leaders who stood up to insurance companies and stood up for working families all across America.”(MSNBC)

Give us all HELL, Harry.

“This notion that somehow this health care bill that’s emerging should be grudgingly accepted by Democrats as half a loaf” is wrong, Obama said. “This is 95 percent of the loaf.” (CNN)

Kind of like : (BarackObama.com-campaign promise) “Cut taxes for 95 percent of workers and their families with a tax cut of $500 for workers or $1,000 for working couples”

Both are baking lies.

I think he really meant back in the campaign that their would by 95% Taxes, or is that 95 NEW taxes, I forget which…

[Via http://indyfromaz.wordpress.com]

Components of GDP

Were you able to answer the question that I closed my last blog with? Well if you were paying attention to what you were reading, you would have instantly said that the difference between Nominal GDP and Real GDP is inflation. If you did then you are correct! Remember, price change IS inflation.

Now, GDP, which ever kind it may be, clearly is not the same over time. Moreover, the rate of change in GDP is neither constant over time. This makes it important for a business man or woman to know how GDP has changed so they can take appropriate actions that will keep their businesses going. However, to stay ahead of the game, business people must know how to make predictions. They must understand what causes sudden changes in GDP, and from knowing what causes these changes, they should be able to predict what turn the economy will take before it happens.

What do they look for? What causes changes in Nominal GDP, Real GDP, and Per Capita GDP? There are  four components that do and they are as follows:

1. Consumption: purchases of goods and services made by households, including purchases of nondurable goods, durable goods, and service.
2. Investment: goods that are purchased for future use, including fixed business investments, fixed residential investments, and inventory investments.
3. Government Purchases: goods and services bought by the federal government.
4. Net Exports: the difference between Imports and Exports being made by a country as a whole.

When added together, these components equal Nominal GDP. Then of course, from Nominal GDP we derive Real GDP and the Per Capita GDP. Considering that these four components are equal to GDP, can you now think of another possible name for GDP? If you have taken an introductory macro economics class at some point, then you would know that adding all four components give you output. So another name for GDP would be output. The famous equation that displays this relationship is …

Y=C+I+G+NX

Output=Consumption+Investments+Government Spending+Net Exports

In the posts following this one, the effects of each of these components will be discussed.

[Via http://monicashiwratan.wordpress.com]

Pentagon: Private Contractors Too Expensive

From the Washington Post:

The Defense Department estimates it will save an average of $44,000 a year for every contractor it replaces with full-time federal personnel to perform critical defense jobs, according to the House-Senate conference report on the fiscal 2010 defense appropriation bill.

The measure, which passed Congress on Saturday, contains $5 billion to hire replacements for contractors currently performing what have been termed “inherently government functions” both at home and abroad. Those functions include a wide range of activities, from supervising other contractors who provide guard services at forward operating bases, to providing oversight of aid projects overseas.

Stories like this give the lie to the Conservative Doctrine that the private sector can always do things more cheaply and efficiently than the government.  Sometime it can.  And sometimes, it just ain’t true.

[Via http://dunningrb.wordpress.com]

The Process of Passing Health Care - Megan McArdle

The Process of Passing Health Care – Megan McArdle.

This highlights the audacity of the Obamacare bill. 

Right now I pay approximately 300 dollars a month for health care.  This figure represents my portion.  The employer pays the rest.  With a predicted 192-90 percent increase (what is that $270-600?) it will have a huge impact on my ability to inject money into the economy.

Most families simply will not be able to absorb this kind of increases expense. 

So what to do?  Drop your health insurance?  Why not.  Part of the reason the bill is so expensive (and screwed up) is that it requires health insurance companies to pick up people with pre-existing conditions.  With this in mind, you can sign up for your insurance at any time after you have become sick and drop it when you recover.  Hmmmm….I am sure it can’t be that easy to screw the system.  Look for people to try and find a way out of this.  Like I said, most will be unable to bear the burden of the increased expense.

For our purposes, we are already looking for ways to game the system.  We know most of our members will be crushed by the increase in premiums.  Thankfully, we are exempt from the Cadillac tax.  Most reading this our not.  Look for an additional couple of hundred dollars a month on top of your increased premiums.

Fear mongering?  No.  All of this is in the bill. 

Good luck America…see you on the other side.

[Via http://inzax.us]

Redistributionists

I don’t think that liberals deny that they want redistributionist policies — although they may dislike the word.

It is a bit harsh, because it is blunt. They probably prefer something like “helping the less fortunate,” which certainly sounds nice until you realize that it is not they who they want to “help the less fortunate” — it is you they have elected to do so.

The liberals are willing to do their part (or at least they say they are), but as collectivists they like company, specifically YOUR company — and if you will not join them in their charity…well, they will force you through government to do so.

Actually, they don’t want your company so much as your money. They consider you well beneath their enlightened station and dislike your company, just read their remarks on this Blog.

Most of them hate Christianity, but will use a third party (a party with the monopoly on automatic weapons) to enforce “Christian Charity.” (They of course will not EVER use that phrase, just use that charitable concept.)

Not Socialism…just edging toward or marching toward socialism (small “s”).

Europeans are more easily broken to the yoke than are Americans.

At least some Americans. We are just hours away from a night that 2,500 REAL Americans, one-third of whom had no shoes and all of whom were starved and suffering dysentery, trudged all night through a Nor’easter snow storm – leaving blood-red streaks in the snow to attack those Europeans in their barracks at dawn and win the Revolutionary War.

But there were pro-Europeans in America then as well as now.

[Via http://usna1957.wordpress.com]

Blog: Check out Fears of Sovereign Debt Default Enter the Forex Fray

Forex Blog has an article by Adam Kritzer entitled Fears of Sovereign Debt Default Enter the Forex Fray. Adam’s article focuses on Government debt as a percentage of GDP, and in particular contrasts the high debt as a percentage of GDP for the developed states with that of the fiscally conservative developing nations (which developing nations, one might say, have already learned their lessons on debt).

[Via http://sovins.wordpress.com]

The Deadweight Loss of Economic Theory and the True Meaning of Christmas

It’s Christmas time, and that can only mean one thing at the Economist: Time to run a story on the Deadweight Loss of Christmas*. What, you might ask, is the deadweight loss of Christmas? In general, a deadweight loss refers to “the difference between the satisfaction a person gets when she spends a dollar on herself and when a well-meaning benefactor spends that dollar on a present for her.” (From the Economist story.) Deadweight loss as a concept is often applied to taxes, but also can cover situations involving externalities or monopolies (see wikipedia, as usual).

Ok, so far so good, now on to Christmas. Each year, millions of people give millions of other people presents. And each year, a few well-meaning economists go on a rant about it. Because gifts are often things that recipients would not buy for themselves, gifts are seen as creating a deadweight loss – the dollars spent on the gift are smaller than the presumed benefit. “Inefficient!” they cry. “Pareto Sub-optimal!” they protest. Just give money! Christmas should be like a giant derivative swap – many gifts would cancel out, leaving some marginal redistribution from the old to the young, and richer relatives to poorer ones.

But what are economists missing? Well, for one, they are missing the utility of the giving of the gift to the giver. That is, the joy each of us gets (or doesn’t get) from shopping for our friends and family, and finding something that they like. For two, economists miss the potential to give gifts that a recipient could not buy – admittedly, a small number of cases for adult to adult gifts, but still significant. Any gift brought back from a vacation, or created by hand, seems like it ought to not produce a deadweight loss. So, at a minimum, the economists (and their media popularizers, e.g. The Economist) should be a bit more specific, based – giving store-bought, generic gifts to people you don’t know very well produces a deadweight loss over and above giving money (and assuming that the utility of the giving is low, which is plausible, since this is, by assumption, a generic gift bought at a store for someone you don’t know well). Third, the usual sociological concern: economists miss the way that gifts reinforce social ties. To translate for the economists, gift giving may produce a positive externality by creating and strengthening social networks, which in turn produce positive economic (and non-economic) outcomes (think “social capital”, James Coleman-style).

So, to reiterate: stop being Grinches, economists! Enjoy the season! Of course, being a secular Jew, I might have a slightly biased perspective on the whole situation, having received exactly 2 Hanukkah gifts and 1 Christmas gift, all of which were great. Apparently, this is not typical – most gifts do resemble the sort that economists criticize, and most people give and get an awful lot of them. Even so, benefits 1 and 3 might still apply. And anyway, that some gifts are worse than others would be a great finding, one that might help Christians find the true meaning of Christmas (which is, after all, the worship of society). Or, to summarize: give a meaningful gift to anyone you receive joy from so giving, give gifts that are creative and unique, and give gifts to friends and family you want to stay connected to, and your gifts will not produce any deadweight loss.

(Note: This whole analysis is premised on what I think is are reasonable, but perhaps worthy of testing, assumptions: the giving a gift of cash does not usually produce the same kinds or magnitude of benefits for the giver and that gifts of cash do not reinforce social bonds the same way as more thoughtful, but less econonmically theorized!, gifts.)

* To be fair, a second Economist story (hoisted from their own archives) is a bit more nuanced, and makes some of the same points I do (with an additional emphasis on the way that gifts have an added value by the virtue of being gifts). Their punchline? “The lesson, then, for gift-givers? Try hard to guess the preferences of each person on your list and then choose a gift that will have a high sentimental value. As economists have studied hard to tell you, it’s the thought that counts.”

[Via http://asociologist.wordpress.com]

Interface - A journal for and about social movements

INTERFACE – A JOURNAL FOR AND ABOUT SOCIAL MOVEMENTS

Interface – A Journal For and About Social Movements

Call for papers – Issue 3: CRISES, SOCIAL MOVEMENTS AND REVOLUTIONARY TRANSFORMATIONS

Interface is a new journal produced twice yearly by activists and academics around the world in response to the development and increased visibility of social movements in the last few years – and the immense amount of knowledge generated in this process. This knowledge is created across the globe, and in many contexts and a variety of ways, and it constitutes an incredibly valuable resource for the further development of social movements. Interface responds to this need, as a tool to help our movements learn from each other’s struggles, by developing analyses and knowledge that allow lessons to be learned from specific movement processes and experiences and translated into a form useful for other movements.

We welcome contributions by movement participants and academics who are developing movement-relevant theory and research. Our goal is to include material that can be used in a range of ways by movements – in terms of its content, its language, its purpose and its form. We are seeking work in a range of different formats, such as conventional articles, review essays, facilitated discussions and interviews, action notes, teaching notes, key documents and analysis, book reviews – and beyond. Both activist and academic peers review research contributions, and other material is sympathetically edited by peers. The editorial process generally will be geared towards assisting authors to find ways of expressing their understanding, so that we all can be heard across geographical, social and political distances.

Our third issue, to be published in May 2010, will have space for general articles on all aspects of understanding social movements, as well as a special themed section on crises, social movements and revolutionary transformations.

CRISES, SOCIAL MOVEMENTS AND REVOLUTIONARY TRANSFORMATIONS

“In every country the process is different, although the content is the same. And the content is the crisis of the ruling class’s hegemony, which occurs either because the ruling class has failed in some major political undertaking, for which it has requested, or forcibly extracted, the consent of broad masses … or because huge masses … have passed suddenly from a state of political passivity to a certain activity, and put forward demands which taken together, albeit not organically formulated, add up to a revolution. A “crisis of authority” is spoken of: this is precisely the crisis of hegemony, or general crisis of the state”

So wrote the Italian revolutionary Antonio Gramsci from behind the walls of Mussolini’s prison, in his famous notes on “State and Civil Society”. His words aptly describe the trajectory of crises in modern history – these are periods when the wheels of economic growth and expansion grind to a halt, when traditional political loyalties melt away, and, crucially, when ruling classes find themselves confronted with popular movements that no longer accept the terms of their rule, and that seek to create alternative social orders.

The clashes between elite projects and popular movements that are at the heart of any “crisis of hegemony” generate thoroughgoing processes of economic, social and political change – these may be reforms that bear the imprint of popular demands, and they may also be changes that reflect the implementation of elite designs. Most importantly, however, crises are typically also those moments when social movements and subaltern groups are able to push the limits of what they previously thought it was possible to achieve in terms of effecting progressive change – it is this dynamic which lies at the heart of revolutionary transformations.

Gramsci himself witnessed, organised within and wrote during the breakdown of liberal capitalism and bourgeois democracy in the 1910s through to the 1930s. This was a conjuncture when tendencies towards stagnation in capitalist accumulation generated the horrors of the First World War and the Great Depression. Movements of workers and colonized peoples threatened the rule of capital and empires, old and new, and elites turned to repressive strategies like fascism in an attempt to secure the continuation of their dominance.

Today social movements are once again having to do their organizing and mobilizing work in the context of economic crisis, one that is arguably of similar proportions to that witnessed by Gramsci, and a political crisis that runs just as deep. The current crisis emerged from the collapse of the US housing market, revealing an intricate web of unsustainable debt and “toxic assets” whose tentacles reached every corner of the global economy. More than just a destruction of “fictitious capital”, the crisis has propelled a breakdown of world industrial production and trade, driving millions of working families to the brink and beyond. And, far from being a one-off, this crisis is the latest and worst in a series of collapses starting with the stock market crash of 1987, the chronic stagnation of the once all-powerful Japanese economy, the Asian financial meltdown of 1997 and the bursting of the dot.com bubble.

The current conjuncture throws into question the fundamentals of the neoliberal project that has been pursued by global elites and transnational institutions over the past three decades. Taking aim at reversing the victories won by popular movements in the aftermath of the Second World War, neoliberalism transferred wealth from popular classes to global elites on a grand scale. The neoliberal project of privatizing the public sector and commodifying public goods, rolling back the welfare states, promoting tax cuts for the rich, manipulating economic crises in the global South and deregulating the world’s financial markets continued unabated through the 1980s and 1990s.

As presaged by Gramsci, neoliberal policies have whittled away the material concessions that underpinned social consensus. Ours is a conjuncture in which global political elites have failed in an undertaking for which they sought popular consent, and as a consequence, popular masses have passed from political passivity to a certain activity.

Since the middle of the 1990s, we have seen the development of large-scale popular movements in several parts of the globe, along with a series of revolutionary situations or transformations in various countries, as well as unprecedented levels of international coordination and alliance-building between movements and direct challenges not only to national but to global power structures. The first stirrings of this activity were in the rise of the Zapatistas in Mexico, the water wars in Bolivia, and the protests on the streets of Seattle. On a global scale we saw dissent explode in the form of opposition to the wars waged by the US on Afghanistan and Iraq. In terms of sheer numbers, the mobilisation of against the latter invasion was the largest political protest ever undertaken, leading the New York Times to call the anti-war movement the world’s “second superpower”.

Each country has had its own movements, and a particular character to how they have moved against the neoliberal project. And for some time many have observed that these campaigns, initiatives and movements are not isolated occurrences, but part of a wider global movement for justice in the face of the neoliberal project. An explosion of analysis looking at these events and movements has occurred in the academic world, matched only by extensive argument and debate within the movements themselves.

In this issue of Interface, we encourage submissions that explore the relationship between crises, social movements and revolutionary transformations in general and the character of the current crisis and how social movements across different regions have related and responded to it in particular. Some of the questions we want to explore are as follows:

- What are the characteristics of the current economic and political crisis, what roles do social movements – from above and below – play in its dynamics, and how does it compare to the political economy of previous cycles of crises and struggle?

- What has been the role played by social movements in moments of crisis in modern history, and what lessons can contemporary popular movements learn from these experiences?

- What kinds of qualitative/quantitative shift in popular mobilisation we might expect to see in a “revolutionary wave”?

- Are crises – and in particular our current crisis – characterized by substantial competitions between different kinds of movements from below? How does such a dynamic affect the capacity to effect radical change?

- What goals do social movements set themselves in context of crisis and what kinds of movement are theoretically or historically capable of bringing about a transformed society?

- What are the criteria of success that activists operate with in terms of the forms of change social movements can achieve in the current conjuncture?

- Is revolutionary transformation a feasible option at present? Is revolution a goal among contemporary social movements?

- What are the characteristic features of elite deployment of coercive strategies when their hegemony is unravelling?

- How have global elites responded to the current crisis in terms of resort to coercion and consent? Have neoliberal elites been successful in trying to reestablish their legitimacy and delegitimizing opponents?

- Are we witnessing any bids for hegemony from elite groups outside the domain of Atlantic neoliberalism?

- How is coercion in its various forms impacting on contemporary social movements and the politics of global justice?

The deadline for contributions for the third issue is January 1, 2010.

Please contact the appropriate editor if you are thinking of submitting an article. You can access the journal and get further details at: http://www.interfacejournal.net/.

Interface is programmatically multilingual: at present we can accept and review submissions in Afrikaans, Catalan, Croatian, Danish, English, French, German, Hungarian, Italian, Maltese, Norwegian, Portuguese, Romanian, Russian, Serbian, Spanish, Swedish, Turkish and Zulu. We are also willing to try and find suitable referees for submissions in other languages, but cannot guarantee that at this point.

We are also very much looking for activists or academics interested in becoming part of Interface, particularly with the African, South Asian, Spanish-speaking Latin American, East and Central European, Mediterranean, Oceanian and North American groups.

Editorial contacts

Interface is not a traditional, centralised journal with a single key editor! Because we are a global journal, and movements (and their relationships to academia) are organised so differently in different parts of the world, the basic structure of the journal is as a network of regional or linguistically-defined groups, each of which organises its own editorial processes and tries to find an appropriate way of working with its own local realities. Articles and queries should go to the contact person listed below for the relevant region:

Movements in Africa: Please submit papers in Zulu, Afrikaans or English to Richard Pithouse indianocean77@gmail.com; in English to Mammo Muchie mammo@ihis.aau.dk; and in Portuguese to Ana Margarida Esteves anamargarida.esteves@gmail.com.

Movements in the Arab world: Please submit papers in Arabic or English to Rana Barakat barakat.rana@gmail.com or Abdul-Rahim al-Shaikh aalshaikh@birzeit.edu; or in Arabic, English, German or Hebrew to Magid Shihade mshihade@gmail.com.

Movements in Central and South America: Please submit papers in Spanish to Sara Motta saracatherinem@googlemail.com or Adriana Causa acausa@gmail.com and in Portuguese to Ana Margarida Esteves anamargarida.esteves@gmail.com.

Movements in Eastern Europe: Please submit papers in Croatian, English, German, Hungarian, Latvian, Romanian, Russian, Serbian or Turkish to Steffen Böhm steffen@essex.ac.uk or Andrejs Berdnikovs aberdnikovs@gmail.com.

Movements in North America: Please submit papers in English to Ray Sin raysin@ku.edu or Lesley Wood ljwood@yorku.ca.

Movements in South Asia: Please submit papers in English to Alf Nilsen alfgunvald@gmail.com . We are currently looking for another regional editor to work with Alf.

Movements in Southeast Asia and Oceania: Please submit papers in English to Elizabeth Humphrys lizhumphrys@gmail.com, in Spanish to Cristina Flesher Fominaya flesherfomi@gmail.com and in Portuguese to Ana Margarida Esteves anamargarida.esteves@gmail.com.

Movements in Western Europe:

Please submit papers:

* in English to Cristina Flesher Fominaya flesherfomi@gmail.com or Laurence Cox laurence.cox@nuim.ie or

* in French or Italian to Laurence Cox laurence.cox@nuim.ie or

* in German to Steffen Böhm steffen@essex.ac.uk or Laurence Cox laurence.cox@nuim.ie

* in Portuguese to Ana Margarida Esteves anamargarida.esteves@gmail.com

* in Spanish to Cristina Flesher Fominaya flesherfomi@gmail.com

* We can also accept papers in Catalan, Maltese and Norwegian: please contact Laurence Cox laurence.cox@nuim.ie in relation to these.

Transnational Movements:

Please submit papers in English, Dutch, French and Spanish or with special reference to labour or social forums, to Peter Waterman pwaterma@gmail.com; in English, with special reference to dialogue-based movements, to Richard Moore rkm@quaylargo.com; in Arabic, English, German or Hebrew to Magid Shihade mshihade@gmail.com; or in English, French, Italian or German to Laurence Cox laurence.cox@nuim.ie.

Book reviews: In English: please contact Aileen O’Carroll Aileen.OCarroll@nuim.ie.

Movements in Central Asia and East Asia: We are hoping to expand our intellectual and linguistic capacity to include these areas, but at present do not have sufficient editorial expertise to review papers on movements in these regions. Expressions of interest from potential regional editors, willing to help assemble a regional subgroup of academics and activists to review papers on movements in any of these regions, are very welcome.

Posted here by Glenn Rikowski

The Flow of Ideas: http://www.flowideas.co.uk

[Via http://rikowski.wordpress.com]

Unmanageable Management?

Noam Scheiber recently delved into a sadly unplumbed line of economic inquiry in his latest piece in The New Republic.  He asks what economic strength America still possesses in the wake of the rise of the business school-trained manager.  Knowing many friends in this industry, and having come to this conclusion upon wondering where America’s “competitive advantage” currently exists, I found the article particularly poignant and accurate. The problem is that our competitive advantage is now reduced to American managers’ ability to squeeze out accumulated profits, leverage assets, and cook the books. Our economic focus has shifted from long-term growth and empire to short-term profitability by any means necessary.

By the 1980s, the conglomerate boom was reversing itself. Investors began seizing control of overgrown public companies and breaking them up. But this task was, if anything, even more dependent on fluency in financial abstractions. The leveraged-buyout boom produced a whole generation of finance tycoons—the Michael Milkens of the world—whose ability to value corporate assets was far more important than their ability to run them.

The new managerial class tended to neglect process innovation because it was hard to justify in a quarterly earnings report, where metrics like “return on investment” reigned supreme.

Our entrepreneurial spirit is still strong in the digital world, I hope.  But one might note that the success stories of these industries typically only grow into empires by remaining largely private and immune to the pressures imposed by public shareholders (e.g., Google, Facebook, Twitter), while most of the failures are those that raised public capital and attention and tried to do maximize profit without building the necessary infrastructure to stay ahead of the razor-sharp competitive curve imposed by the pace of technological advancement.  Of course, the conventional wisdom of capitalism is that such shareholders are forces for good in corporate management, keeping check on managers’ tendency to extract from the corporation.  But when one looks back to the older style of management, the managers all grew from being experts at understanding the core products being offered by the institutions they stewarded.  Today’s managers are admittedly more “competitive” in that their expertise lies in understanding finance and how to create temporary or perceived profitability, which is really all a diversified shareholder can be expected to demand from management.

Harvard business professor Rakesh Khurana, with whom I discussed these questions at length, observes that most of GM’s top executives in recent decades hailed from a finance rather than an operations background. (Outgoing GM CEO Fritz Henderson and his failed predecessor, Rick Wagoner, both worked their way up from the company’s vaunted Treasurer’s office.) But these executives were frequently numb to the sorts of innovations that enable high-quality production at low cost. As Khurana quips, “That’s how you end up with GM rather than Toyota.”

Again, capitalism left alone to its natural ends displays a tendency to over-leverage itself.  I hope I am wrong about this idea, but now what do we do with that wisdom?

[Via http://newprint.wordpress.com]

Copenhagen Comes Home to Roost

The old saying of “the chickens come home to roost” means the consequences of poorly made decisions must now be experienced. For many years the American way has been for one generation to put their consequences off onto the next one. It hasn’t mattered if this was high taxes, faulty or dangerous products, or stupid lifestyle choices, the buy now pay later consumer mentality has permeated every aspect of our existence.

When I analyzed Copenhagen in yesterday’s blog post, the following articles had yet to appear in the British press. However, given what had already been hinted at, I already felt that America had been given yet another “play ball or else” speech by a bloc of foreign powers which included China and its allies. I need to strongly emphasize that it does not matter who the public President of the USA is right now –despite the posturing in the domestic media, the situation we face does not hinge on the D or R behind the person’s name. This situation had built up under the leadership of many presidents and their respective patrons under America’s broken two-party system.

During the many years of the public leaders of US government and business spouting that America and China were building a symbiotic economic relationship, America has been sold out on a promissory note to China and other foreign governments. Given that this note to our economy and thereby the funding of our government and consumer lifestyle is now held by foreign factions, they are now increasing their demands on America’s domestic factions for concessions on other areas across the global game board. If the demands are not met in a civil manner via acquiescence (in a public and humiliating nature recently), then painful pressure can be applied by use of proxies.

Despite US domestic articles applauding Obama on health care reform (this is used to distract and/or placate the citizens inside this country), public evidence of the political pressure applied to America by foreign powers can be seen in these two articles.

http://www.telegraph.co.uk/earth/copenhagen-climate-change-confe/6845952/Barack-Obama-denies-accusations-that-he-crashed-secret-Chinese-climate-change-talks.html

Barack Obama denies accusations that he ‘crashed’ secret Chinese climate change talks

….

They portrayed the President as pulling negotiations back from the brink of collapse on a day that veered between chaos and farce.

Aides said that by standing up to the Chinese on the make-and-break issue of transparency, he helped force a deal, however flimsy.

….

The President was desperate not to return to Washington empty-handed after his risky one-day dash to Denmark.

But his aides were forced to deny that Mr Obama “crashed” a meeting of the Chinese, Indian, South African and Brazilian leaders when he walked in unexpectedly on the gathering.

The US delegation was caught unawares by the session taking place behind its back involving the Chinese and their allies. Officials acknowledged that they had been frantically trying to keep track of other presidents and premiers.

Mr Obama thought he was on his way to a one-to-one meeting with Wen Jiabao, the Chinese premier, who had earlier snubbed him by skipping a session of world leaders.

But just before he entered the room, he was told that the other three leaders there too. “Good,” he told aides and strode in with the words “Are you ready for me?” The Americans were particularly taken aback by the presence of Manmohan, the Indian premier, as they were told he had already headed to the airport.

“I think there was no doubt there was some surprise that we were going to join the bigger meeting,” said a top Obama aide.

It was during the 80-minute meeting with the other four that the final details were hammered out.

….

A senior US official said: “The President said to staff, I don’t want to mess around with this anymore, I want to just talk with Premier Wen”.

But the Americans were told that Mr Wen had left for his hotel and Mr Singh had already headed to the airport. The day meanwhile seemed destined for deadlock Mr Obama returned to the meeting with Gordon Brown and other European leaders.

Obama aides said that he courted support from the others present for pushing ahead with a deal, even without the backing of China and possibly India, South Africa and Brazil which shared some of Beijing’s concerns.

The White House argued that it was this approach that created the leverage that persuaded the four to have “make one more run at this” “The senior official said: “I think that’s why people stowed their luggage in their overhead bins and decided to come back [from the airport] to the negotiating table.”

….

By the time [Obama] woke up in a snowbound Washington, the so-called “Copenhagen Accord” that he had brokered the previous evening was already unraveling.

There was nothing “secret” about the scheduling of this meeting. However, there was a surprise in store for Obama when he discovered he was meeting with a bloc instead of a single nation. Despite the posturing prior to the meeting and the domestic spin about its success, the US came away alone with nothing and China left showing the world it now intends to take the reins as the preeminent global power.

http://www.timesonline.co.uk/tol/news/environment/article6962879.ece

December 20, 2009

Barack Obama’s climate deal unravels at last moment

The United Nations climate change conference ended in recrimination yesterday without reaching a clear deal on emissions targets.

After a stormy session in Copenhagen, in which a vociferous anti-American minority brought the talks close to collapse, most countries agreed simply to “take note” of a watered-down agreement brokered by President Barack Obama and supported by Britain.

….

The deal was denounced when put early yesterday to a plenary session of the conference after Obama and other heads of state had flown home.

Delegates from Sudan, Nicaragua, Cuba, Venezuela and Bolivia — who form an anti-American front — led the attack.

And, like I did yesterday, here’s a supposedly unconnected event from the Middle East:

http://www.newsobserver.com/news/nation_world/story/249050.html

U.S. praises Iraq for standing up to Iran

Published Sun, Dec 20, 2009 02:00 AM

BAGHDAD — Iraq deployed security forces Saturday near a remote oil well seized by Iran, officials said, and its government pressed Tehran to withdraw its forces from the area along their disputed southern border.

U.S. officials applauded Iraq for standing its ground against Iran – an uneasy ally that analysts said was aiming to remind its neighbor of its economic and political pull in its takeover of the oil well Thursday. The site is located in one of the largest oil fields in Iraq and has about 1.5 billion barrels in reserves.

The standoff was a dramatic display of the occasionally tense relations between the two oil-rich nations that fought an eight-year war in the 1980s but now share common ground in Shiite-led governments.

….

The oil field, parts of which both countries claim, is located about 200 miles southeast of Baghdad. It was unclear how many troops were involved.

U.S. officials, already worried about Iran’s growing influence in the region, praised what they described as Baghdad’s quick but measured response to the dispute.

“It does speak to the overall view here that they are not going to be pushed around by Iran,” U.S. Ambassador to Iraq Christopher Hill said.

And by extension does this mean that the US won’t be pushed around by China? I have great respect for the Chinese people, but the “relationship” our leaders have had over the last 20+ years has not been one of long term benefit to the average American citizen. I can only hope at this point that the leaders of some of America’s domestic factions are now seriously reevaluating this relationship. Of course, this won’t be due to the loss of US jobs and the impoverishment of Americans over this past year and in those to come, but rather the threat of losing their position of power which will spur this soul-searching. In my opinion, this may be the best American citizens can hope for at this point until the elite get some red blood injected into their families and produce better leaders.

If this change does not happen in the so-called upper ranks, then you should expect to see a symbolic public event in the next few years as America completely concedes its sovereignty and becomes a tributary state to China. In the meantime the transfer of wealth is already taking place. If the transfer doesn’t continue and the public presentation of a symbolic Bunga mas doesn’t happen, then the escalation of hostilities commences.

[Via http://gardenserf.wordpress.com]

More On Holiday Shopping

Best Buy (NYSE: BBY) came out with its latest retail results and they weren’t pretty:

NEW YORK (MarketWatch) — Boosted by U.S. holiday shoppers buying items from laptop computers to so-called smart phones, Best Buy Co. said Tuesday its third-quarter profit more than quadrupled as the retailer raised its forecast for the full fiscal year.

However, the stronger demand came at a price. Shares of the largest U.S. electronics chain (BBY) saw their biggest decline in more than a year, trading down 8.4% in late afternoon trading, as the company said strong sales of less profitable laptop computers and lower-priced flat-panel televisions are expected to lead to lower-than-expected fourth-quarter gross margin, a measure of profit that tracks percentage of sales left after minus the cost of goods sold.

Pressure from Wal-Mart (NYSE: WMT), Amazon.com (NASDAQ: AMZN) and Costco (NASDAQ: COST) were cited, and frankly I think there’s a lot to that. After all, we just got our new computer from Costco after we saw we could get a new computer with 25″ HDMI-ready monitor, 8GB of RAM and a 750GB hard drive for about $900. Anyone else would have charged over $1,000 for the same configuration, so we saved some money, for sure.

But to look at the sector, I’m starting to toy around with Google Domestic Trends and Google Insights for Search. The idea, according to Google, is that search engine activity would act as a ‘tell’ on sector performance. So I looked at Google’s Computers & Electronics Index here.

The normal index shows there was a spike at Black Friday, but has fallen since then. Looking at the historic data, we can expect to see the index pick up again the day after Christmas through the day after New Year’s when it should start its double black diamond descent.

But search activity is lower this year than it was last year, and last year’s was lower than it was in ‘06 & ‘07. If there are fewer searches for the item, it probably means there is less interest in it. And if search activity is a significant factor in sector analysis (some statistical experiments need to be run to test this), it leads me to believe the margin compression will mostly be coming from having too much inventory.

Best Buy’s margin story is one that is going to be commonplace as we move forward: overcapacity. They have too many stores, which are too big, that are carrying too much inventory.

And so the margins get cut, which pushes EPS lower. So from a fundamental analysis perspective, the stock most likely has one way to go and it isn’t going to be up.

[Via http://professorpinch.wordpress.com]

Obama's Big Whopper--"The largest deficit reduction plan in a decade."--Delusional Deceitful Democrats--Massive Tax Increases and Economy Wrecker--Health Care Bill If Passed Is Unconstitutional!

 

Senator Ben Nelson Caves to Obamacare

 Health Care, How to Cut Costs Without Congress

 

Judge Andrew Napolitano – Health Care Bill Passed by Congress UNCONSTITUTIONAL – Part 1 of 2

 

How to Control Health-Care Costs

 

 

Senate Dems reach 60 vote threshold on health bill  By DAVID ESPO AND RICARDO ALONSO-ZALDIVAR (AP)

“…Nelson, D-Neb., said Saturday he made his decision after winning fresh concessions to limit the availability of abortions in insurance sold in newly created exchanges, as well as tens of million in federal Medicaid funds for his home state.

“I know this is hard for some of my colleagues to accept and I appreciate their right to disagree,” he said at a news conference in the Capitol, referring to the abortion issue. “But I would not have voted for this bill without these provisions.”

He also noted he had successfully fended off attempts to provide for a government-run insurance option to compete with private insurers.

The Congressional Budget Office estimated the revised measure would lower deficits by $132 billion over a decade, with the possibility of much higher reductions in the subsequent decade.

At the White House, Obama cited those numbers in hailing the legislation as “the largest deficit reduction plan in a decade.” In a brief statement, the president also said the country is “on the cusp of making health care reform a reality.”

http://news.yahoo.com/s/ap/20091219/ap_on_bi_ge/us_health_care_overhaul

The only way to control health care costs is to increase competition in the health insurance and provider markets and empower individuals to chose affordable, portable, and individual insurance plans that meet their needs.

Markets work, government monopolies do not.

Medicare is going broke and doctor refuse to see Mediaid patents.

The Federal Government refuses to pay their bills.

Government health care will lead to even higher medical costs.

The American people will revolt over this bill once they learn what is in it.

The will be day of reckoning.

Thank you progressive radical socialists of the Democrat Party for committing political suicide.

In six years you will be a very small party.

“It is one of the saddest spectacles of our time to see a great democratic movement support a policy which must lead to the destruction of democracy and which meanwhile can benefit only a minority of the masses who support it. Yet it is this support from the Left of the tendencies toward monopoly which make them irresistable and the prospects of the future so dark. So long as labor continues to assist in the destruction of the only order under which at least some degree of independence and freedom has been secured to every worker, there is indeed little hope for the future. The labor leader who now proclaim so loudly that they have “done once and for all with the mad competitive system” are proclaiming the doom of the freedom of the individual. …”

~Friedrich A. Hayek, The Road to Serfdom, Chaper XIII, The Totalitarians In Our Midst, page 199.

Related Posts On Pronk Palisades Health Care Progressive Radical Socialist Programs–Unconstitutional–UnAmerican–Time To Defend The Constitution

Senator Coburn Educates The Educated Fools aka Progressive Radical Socialists Who Cannot Write, Read, Or Understand The Health Care Bill or Competitive Markets! Senator Coburn Educates The Educated Fools aka Progressive Radical Socialists Who Cannot Write, Read, Or Understand The Health Care Bill or Competitive Markets! Senator Tom Coburn Makes The Progressive Radical Socialists Read Their Socialized Medicine Amendment to Health Care Bill!–Three Cheers–Kill The Bill! Progressive Radical Socialist Health Care Plan Written In Prison By Convicted ACORN Felon Richard Creamer! Obama’s Trick On The American People: Health Insurance Reform=Huge Hikes in Taxes and Premiums for Health Insurance and Massive Medicare Funding and Payment Reimbursement Cuts–Congressional Coercion–It’s Alive! Second Opinion: Doctors Speak Up On Proposed Health Care Reform–And A Third Texas Opinion!–Videos American Citizens Want Jobs and Criminal Alien Removal, Not Criminal Alien Census and Health Care! Illegal Aliens Can Buy Health Insurance Plans–No ID Needed:–Demand Criminal Alien Removal and Deportation! Congressman Paul Ryan–Townhall Meeting–Health Care Reform and The Patients Choice Act–Videos The Arrogance of President Obama: Hectoring Habitual Liar Broom Budget Busting Bums: Replace The Entire Congress–Tea Party Express and Patriots–United We Stand! Public Option = Government Option = Pathway to Single Payer = Single Payer = Socialized Medicine = Blue Pill = Poison Pill Obama: First We Kill The Babies, Then We Kill The Elderly, Then We Kill The Veterans–Your Life, Your Choices–Your Time Is Up! This Joker Is A Lost Cause: Keeping President Obama Honest on Health Care–Let’s But A Smile On That Face–Staying Alive Fact 1. Federal Government Health Insurance Is Compulsory–Kill The Bill–H.R. 3200 Patient Empowerment: Health Savings Accounts–High Deductible Catastrophic Health Insurance–Affordable, Portable, Fair, Individual Health Care Plan–Consumer Driven Health Care Reform! The Dangers Of A Single Payer Health Care System: Ronald Reagan On Socialized Medicine and Friedrich A. Hayek On State Monopoly The American People Believe The Government Public Option Plan Is The Path To The Single Payer Government Plan–Socialized Medicine–Obama Caught Lying To The American People! The American People Confront Obama’s Red Shirts (ACORN) and Purple Shirts (SEIU)–Bullhorns and Beatings Over Obama Care! The Obama Depression Has Arrived: 15,000,000 to 25,000,000 Unemployed Americans–Stimulus Package and Bailouts A Failure–400,000 Leave Labor Force In July! Obama’s Marching Orders For His Red Shirts (ACORN), Purple Shirts (SEIU) and Black Shirts (New Panther Party)–Progressive Radical Socialists Health Care Resources Republican Health Care Reform: The Patients’ Choice Act Medical Doctor and Senator Tom Coburn On Health Care–Videos The Senate Doctors Show–Videos Obama’s Waterloo– Government Compulsory Single Payer Socialized Medicine!–Videos President Obama’s Plan of Massive Deficit Spending Is Destroying The US Economy–The American People Say Stop Socialism BS Now! The Bum’s Rush of The American People: The Totally Irresponsible Democratic Party Health Care Bill and Obama’s Big Lie Exposed Chairman Obama’s Progressive Radical Socialist Health Care Bill Kills Individual Private Health Care Insurance–Join The Second American Revolution! The Obama Big Lie and Inconvenient Truth About Health Care–The Public Option Trojan Horse–Leads To A Single Payor Goverment Monopoly of Health Care and The Bankruptcy of USA! The Obama Public Option Poison Pill For A Government Health Care Monopoly–Single Payer System–Betting Your Life and Paying Though The Nose Government Bureaucracy: Organizational Chart of The House Democrats’ Health Plan Dr. Robert W. Christensen–Videos John Stossel–Sick In America–Videos

[Via http://raymondpronk.wordpress.com]

When the economy stumbles, universities act more like businesses

When money is flowing universities can afford to bloat departments that don’t typically produce high earning graduates. As things stand now, money is not flowing.

Tamar Lewin of the New York Times writes:

According to the Modern Language Association’s forecast of job listings, released Thursday, faculty positions will decline 37 percent, the biggest drop since the group began tracking its job listings 35 years ago.

The association expects about 900 English language and literature positions to be filled over the next year, a 35 percent decline from the previous year; it projects about 750 foreign-language jobs, a 39 percent drop from the year before. Typically, 1,000 to 2,000 positions have been advertised each year in each category.

To make matters worse, the share of tenure-track jobs available has been shrinking. Tenure-track positions for assistant professors made up 53 percent of the English jobs advertised and 48.5 percent of those in foreign languages. From 1997 until recently, the group said, 55 percent to 65 percent of the advertised positions were tenure-track jobs. And since part-time adjunct positions are less likely than those for tenure-track jobs to be listed with the language association, the overall share of faculty members being hired for tenure-track jobs is probably smaller than the survey indicates.

[Via http://freemarketmojo.wordpress.com]

The Five Points of Economic Calvinism

David Hall and Matthew Burton summarize their research on Calvin’s economics in five points. Here they are, from page 214 of Calvin and Commerce: Transforming Power of Calvinism in Market Economies (Calvin 500). These points will either pique your interest in the book itself, or ensure that you will not buy it.

1. The inequality of wealth is an enduring dynamic and must be accepted. In other words, classlessness will not be reached in this life; nor did God intend for it to be reached. Differences in income and status will persist. In whatever station of life we find ourselves, a spirit of contentment, diligence, and thankfulness should prevail.

2. God made us to be creators, developers, and entrepreneurs. In the opening chapters of Scripture, Calvin and others have seen both the abundance of creation and the call to shape, tame, and order it. Man, made in God’s image, is designed to work and create.

3. Because of sin, accountability and incentives will always be needed. Selfishness will counteract good if we are not properly motivated. One way to motivate is to offer wages and incentives, and human beings are not above needing such a stimulus. Conversely, accountability, including the withholding of benefits if counterproductive behavior occurs, must be designed and expected.

4. Personal freedom (or non-interference from outside hierarchies) is necessary for business to thrive. If overlords must be satisfied, then feudalism will occur. The freer the markets, the more personal freedom fuels development. The sovereign God may be trusted to use such markets as means for his providence.

5. Profit is commended in order to provide more for others. A charity ethic, which seeks to use profits philanthropically, derives from the best Calvinism.

SDG,

Ezra and the Farmer

[Via http://calebcangelosi.wordpress.com]

Global Economic Crisis: In Need of a Theory?

The US housing bubble, the packaging of questionable loans and resulting credit crunch had to originate somewhere, one would think.  Surely, it couldn’t be a matter of “Surprise, surprise!”  One day everything was motoring along smoothly, tickers were ticking as they should, capital was marching effortessly across the globe, as require, and then the next…. its ’financial armageddon’.  I mean really.

On the Hunt for a Theory with Dan Ariely

So, in an effort to ignore expert analysis and hysterical media commentary, the hunt began for a theory, which may explain what classical economists with their reliance on rational market forces did not see this coming. 

The first book to be read was Dan Ariely’s, Predictably Irrational.  Ariely is a behavioural economist at Duke University in the US.   The title was the main drawcard.  Already, he seemed to be on to something.  If even the reactions to the GFC back in January were irrational with the classical economists doing the theoretical splits, anything that pinpointed the disorder in the title seemed a place to start. 

Basically, Ariely says, people are in the main irrational and this irrationality is pervasive.  According to the author, we don’t automatically don a hat of sensibility when making financial decisions.  So, the idea of the human being as a creature of advanced analytical ability, careful consideration and an outstanding capacity for logic was dead.  Ariely killed it.  Thank you very much. 

Human Beings are Irrational, Even the Really, Really Smart Ones

Books like Predictably Irrational and the behavioural economists who write them, such as Ariely, must really get up the nose of those who place faith in the notion that all markets, including the property market, will right themselves before too much damage is done.  Hell-bent on the theory that there will only be a small proportion of people who buy houses they may not be able to afford; that prices will have a natural and sensible ceiling and basically humans aren’t stupid, it now made sense that those apparently in the know were gob-smacked. 

A False Premise

When you think about it, if the theory is flawed, it follows that all actions and means of monitoring which were derived from said ‘theory’ would carry the same flaw.  In short, while everybody was looking the other way, bad stuff happened.  It’s a bit like parenting.  Parents are permanently shocked by their children’s shenannigans  when usually everyone else can see it coming!  And while on the subject of parenting, the next book in the hunt for a viable theory has a bit to say about that.  Stay tuned.

[Via http://thenonfictionreview.wordpress.com]

Democrats' Blues Grow Deeper in New Poll

“Less than a year after Inauguration Day, support for the Democratic Party continues to slump, amid a difficult economy and a wave of public discontent, according to a new Wall Street Journal/NBC News poll.  The findings underscored how dramatically the political landscape has changed during the Obama administration’s first year.”  Read the full article below.

Democrats’ Blues Grow Deeper in New Poll | Wall Street Journal | December 17, 2009

[Via http://oninvesting.wordpress.com]

Open Yale courses

I heard about Open Yale courses as a result of a blogger mentioning a course Econ 252 Financial Markets taught by Prof. Robert Shiller.

I got to know Prof. Shiller from his book “Irrational Exuberance” (in 2000) and the Case-Shiller index.

Many financial analysts and reporters love to share their hind-sight in explaining to us why things happen afterwards. Prof. Shiller is the rare type that twice manage to warn us of troubles to come.

There are 26 lectures in total. You can watch the lecture video or listen to the lecture mp3. For me, lectures and audio books great ways to pass time when I am driving or shovelling snow.

You can find more Open Yale courses. If you find something interesting, please share them in the comment.

[Via http://kempton.wordpress.com]