I hear tell that talker Glen Beck has a book out called “Arguing With Idiots.” Who exactly are the idiots? Are they the Democrats, who have their big chance (finally)? They will build the social welfare state, even if it's upon the wreckage of the country. They think tax revenue is the engine that can run this state. But they are wrong. It's production. The essence of the social welfare state is understanding how much money you can suck out of productive people, without killing the goose that lays the golden eggs. The goose, however, is dead. We sucked it dead without ever getting our welfare state. This means that the Democrats have no ideas that will work; their ideas will finish bringing the country to its knees. The country lacks that one thing that every politician and government worker craves – money for their programs.
The Republicans, of course, are certain that unleashing the free market will generate the entrepreneurial creativity that will raise the US back up where it belongs (and where it presumably was under the sainted Ronald Reagan). That's pretty funny. We spent eight years with the G. W. Bush administration, unleashing the free market (except when we were giving some important firm a sweet heart deal). Those free marketeers sold all the crap they could invent to us cleaver 'mericans, then took the money and ran. They ran to their local Ferrari dealers with their ill gotten bonus checks in hand, they ran away under a cover of plausible deniability for any culpability in the financial disaster (“you've got nothing on me,” “you can't prove a thing,” “Geithner knew about it, so it must be OK”). You say you want to rebuild the US industrial capacity? “That smacks of industrial policy. Bad, bad, bad”
The Libertarians? Very funny. What was that? Libertarians? Did you say something?
The emergency is NOW; the people who claim to be working on our behalf in the government were clear witnesses to the building disaster. Remember – the Roman Empire didn't realize that it had fallen. The British Empire was toast a good fifteen years or more before finally realizing what had happened.
Is anyone in our government THINKING in between bouts of telling us how much they are going to do for us, and how much they are going to giver us? I know, those Harvard and Princeton guys running the government aren't the idiots. I must be one. Gotta go.
Thursday, December 31, 2009
Sunday, December 27, 2009
After Christmas One's Thoughts Turn To...?
The country is shivering under an increasingly nasty public debate. The debate has been this nasty, in fact, even nastier, in times past. But as the government's role in daily life, and the government's role in our economy, has grown, the tenor of the debate has become more critical, and potentially much more erosive. The days when a President and Congress could debate defense and tariff policy, and be done with it, are over, for better or worse.
We are apparently not printing enough funny money for some folk. Robert J. Schiller, supposedly a reputable economist, writes in the New York Times that the U.S. should consider issuing notes called “trills”. A trill would represent one trillionth of the country's GDP. The government would then pay a quarterly “dividend” equal to one trillionth of the quarterly GDP.
Mr. Shiller is a professor of economics at Yale, so I assume that he is, as my people would say, wicked smart. He considers gross domestic product to be the “national profit”. Professor Shiller suggests that there could be a brisk trade in trills, with their value rising and falling with expectations of the value of GDP. This would be one way to get government directly involved in casino gambling.
I wonder what kind of economist considers the GDP to be the national profit. It doesn't belong to the government, though the government has become a disturbingly, if not suicidally large part of the economy. If I were looking at GDP rigorously, wouldn't I see it as the country's gross receipts? Private companies (at least the ones that want to continue existing) would normally pay dividends based on profit, not gross receipts. One great exception was General Motors, which continued paying dividends even as it hemorrhaged billions of dollars. Those guys all got paid, so I guess they were wicked smart, too.
I also wonder what kind of theory of value Professor Shiller subscribes to. What do you think?
Perhaps what Professor Shiller is really saying is that there is no way out of deficit spending, without completely destroying the country, so here's a bit of flim flam to generate mega bucks, so that we don't have to rein in spending at all. Presumably, foreigners in countries with real economies will buy these things from us. They will buy them, right?
The fact that I don't see the executability of this scheme confirms my limited intelligence. I've been proven stupid before. Being a dumb sailor also made it impossible for me to understand Nobel Laureate Paul Krugman's call for more, and larger stimulus packages, in the face of trillion dollar deficits. Heck, it's not real money – it's just printed paper. No one will notice if we print some more, eh?.
As for trill$ - put me down for a bazillion of 'em, professor. I'm in.
We are apparently not printing enough funny money for some folk. Robert J. Schiller, supposedly a reputable economist, writes in the New York Times that the U.S. should consider issuing notes called “trills”. A trill would represent one trillionth of the country's GDP. The government would then pay a quarterly “dividend” equal to one trillionth of the quarterly GDP.
Mr. Shiller is a professor of economics at Yale, so I assume that he is, as my people would say, wicked smart. He considers gross domestic product to be the “national profit”. Professor Shiller suggests that there could be a brisk trade in trills, with their value rising and falling with expectations of the value of GDP. This would be one way to get government directly involved in casino gambling.
I wonder what kind of economist considers the GDP to be the national profit. It doesn't belong to the government, though the government has become a disturbingly, if not suicidally large part of the economy. If I were looking at GDP rigorously, wouldn't I see it as the country's gross receipts? Private companies (at least the ones that want to continue existing) would normally pay dividends based on profit, not gross receipts. One great exception was General Motors, which continued paying dividends even as it hemorrhaged billions of dollars. Those guys all got paid, so I guess they were wicked smart, too.
I also wonder what kind of theory of value Professor Shiller subscribes to. What do you think?
Perhaps what Professor Shiller is really saying is that there is no way out of deficit spending, without completely destroying the country, so here's a bit of flim flam to generate mega bucks, so that we don't have to rein in spending at all. Presumably, foreigners in countries with real economies will buy these things from us. They will buy them, right?
The fact that I don't see the executability of this scheme confirms my limited intelligence. I've been proven stupid before. Being a dumb sailor also made it impossible for me to understand Nobel Laureate Paul Krugman's call for more, and larger stimulus packages, in the face of trillion dollar deficits. Heck, it's not real money – it's just printed paper. No one will notice if we print some more, eh?.
As for trill$ - put me down for a bazillion of 'em, professor. I'm in.
Saturday, December 26, 2009
Hope for the Streams
Sunset this evening was just before 5PM, but the sun slipped below the tree line just around 3:15. There is that small disadvantage in living between two mountains. As the snow melts, accelerated by a day of rain, and a day of temperatures in the high fifties, the river has risen to the point where it supplies steady white noise. The ground, however, remains blanketed in white, but the white will be gone soon enough. Will the wet winter continue? Will the snowfall be frequent enough to give the local; streams the replenishment that they have been lacking since 1997? We can only hope, but the weather gives us some reason to hope.
It's Always Christmas for Investment Bankers
The title of this piece says most of what needs to be said. Gretchen Morgenson (IMO the best business reporter working in the U.S. today) reports in the New York Times, that Goldman-Sachs, that paragon of fiscal power and virtue, created bizarre and exotic securities (if I spelt out "synthetic CDO", would it mean any more to you?), which they sold to individuals and pension funds by the $billions. Goldman then bet against those securities, by short selling.
Purveyors of the popular wisdom will say that these exotic securities were, and are, a way to manage risk. They are not. They are a sure sign that Goldman was dealing in too much risk. Analysis of the recent market crash invariably offer at least a partial excuse for the creation of exotic financial instruments, such as derivatives; they say that such instruments help investment banks manage risk. There is no suggestion that there is too much risk to manage, especially in conjunction with the very instruments created to manage risk.
What is the real function of these instruments? To generate commissions and fees. Goldman created the synthetic CDOs, made a commission on every sale (in which they must have known that they were selling junk), then shorted the instruments. Why not? They'd already made their commissions. So, the commission paid when the derivative is sold is added to the gross domestic product. If the product tanks, the short makes money that's added to the GDP. But in some perverse way, the wealth that disappears when the derivative tanks is not subtracted from the GDP. Now that's "new math".
Let's review the bidding. When Mr. Timothy Geithner was head of the NY Fed, his job became one of trying to keep the financial system going, but it wasn't his job to know about the toxic bombs stewing in the financial pot. Of course, now that all those bankers and brokers have made their millions at age 35 (or whatever), now that Mr. Geithner is Secretary of the Treasury, he promises to pay attention. What in hell was he doing in those wood paneled digs of his in NY, when he was "Head" of the NY Fed, and why is he now in the cabinet. He may be way smarter than I am, but I'll bet I could have seen the train wreck coming long before he apparently did. All I had to do was read the NY Times business section. Was he too busy arranging all those catered lunches? The Democrats have proven themselves to be as moronic as the Republicans at picking men who can be part of the solution, or, even better, good stewards up front.
Let us be disgusted.
Purveyors of the popular wisdom will say that these exotic securities were, and are, a way to manage risk. They are not. They are a sure sign that Goldman was dealing in too much risk. Analysis of the recent market crash invariably offer at least a partial excuse for the creation of exotic financial instruments, such as derivatives; they say that such instruments help investment banks manage risk. There is no suggestion that there is too much risk to manage, especially in conjunction with the very instruments created to manage risk.
What is the real function of these instruments? To generate commissions and fees. Goldman created the synthetic CDOs, made a commission on every sale (in which they must have known that they were selling junk), then shorted the instruments. Why not? They'd already made their commissions. So, the commission paid when the derivative is sold is added to the gross domestic product. If the product tanks, the short makes money that's added to the GDP. But in some perverse way, the wealth that disappears when the derivative tanks is not subtracted from the GDP. Now that's "new math".
Let's review the bidding. When Mr. Timothy Geithner was head of the NY Fed, his job became one of trying to keep the financial system going, but it wasn't his job to know about the toxic bombs stewing in the financial pot. Of course, now that all those bankers and brokers have made their millions at age 35 (or whatever), now that Mr. Geithner is Secretary of the Treasury, he promises to pay attention. What in hell was he doing in those wood paneled digs of his in NY, when he was "Head" of the NY Fed, and why is he now in the cabinet. He may be way smarter than I am, but I'll bet I could have seen the train wreck coming long before he apparently did. All I had to do was read the NY Times business section. Was he too busy arranging all those catered lunches? The Democrats have proven themselves to be as moronic as the Republicans at picking men who can be part of the solution, or, even better, good stewards up front.
Let us be disgusted.
Thursday, December 17, 2009
A Meditation On The Winter Solstice - 2009
The US Naval Observatory states that the period between the first week in December and the first week in January could well be called the "dark days" for the mid-northern latitudes.1 At our latitude, the earliest sunset occurs around 8 December, and the latest sunrise occurs around 5 January. The solstice itself occurs tomorrow, just after noon.
The winter solstice has loomed large in nearly every civilization Even if a culture attached comparatively little religious significance to it, there was generally a mathematical or astronomical interest. This is natural. As the fall harvest time gives way to a cooler, less gentle period, those things within the art of the possible begin to shrink. To the human psyche, the land itself seems to die back, as if it knows that the reduced supply of light is insufficient for lush growth.
The ancients had myths to explain this, and to reassure themselves that, sooner or later, the retreat into darkness would stop, and a return to a gentler time would begin. There is little evidence to support fixing any particular date to the birth of Jesus, but the convention of adopting 25 December gives Christians a reason for high optimism in the bleak mid winter, as well. This convention merely linked Jesus' nativity with a long succession of birth/rebirth myths. I shall leave it to you to separate myth from fact in your own minds, and your own traditions. The facts, however, are bleak – many of us will awaken in the dark, and not return home at days end until darkness has returned. It might be that darkness is not actually a “thing”, but simply the absence of visible light energy. Nevertheless, at this time of year there is so little light that darkness may seem to be a tangible thing, rather than just a condition. Where I live, the sun's path is below the tree line. If those trees were evergreens, we'd have no direct sunlight at all. It has been said that in the far northern latitudes, where darkness is a principal attribute of this season, the suicide rate rises significantly due to the lack of light, though proving cause and effect can be tricky.
We are a modern people. If we set aside our myths, believed or merely cherished, what might we make of the present time of the year, and what is to come?
If the days were to continue to grow shorter, we would be faced with the end of human existence, but as time appears to rest upon this fulcrum of seasonal change that is the winter solstice, with the sun at its southern most declination, mechanics begins to bring the sun back in our direction, and with it comes more light each day. The change is not slow for long; we quickly perceive the increase in light, and the reaction is inevitable. The mid winter myths are stories of birth, death, and rebirth. We know that this return of longer days is not the result of the rebirth of a deity – it's just orbital mechanics, and yet, as we gain light every day, it's hard to not feel a spiritual connection with what is happening. If the return of more hours of light suggests a rebirth, it also enables it. Certain optimistic, and hardy souls use the increasing light to sprout what they hope will be the early spring harvest.
As we consider these literal and mythical properties, we might also consider the imagery of light. Sometimes, when we speak of those in darkness, we are speaking of brothers and sisters who are in ignorance or oppression. For those in such darkness, the solstice has no impact. They may only be brought from the darkness into light through the proactive intervention of their brothers and sisters in humanity Those who reach out to bring their brothers and sisters from darkness to light might be said to be experiencing a rebirth of sorts. When we give something of ours away to someone who needs it, that thing that we have given increases in value. When that thing that we give is truly ours – our time, our expertise, our understanding – then we re-create ourselves as a more valuable entity.
The winter solstice has loomed large in nearly every civilization Even if a culture attached comparatively little religious significance to it, there was generally a mathematical or astronomical interest. This is natural. As the fall harvest time gives way to a cooler, less gentle period, those things within the art of the possible begin to shrink. To the human psyche, the land itself seems to die back, as if it knows that the reduced supply of light is insufficient for lush growth.
The ancients had myths to explain this, and to reassure themselves that, sooner or later, the retreat into darkness would stop, and a return to a gentler time would begin. There is little evidence to support fixing any particular date to the birth of Jesus, but the convention of adopting 25 December gives Christians a reason for high optimism in the bleak mid winter, as well. This convention merely linked Jesus' nativity with a long succession of birth/rebirth myths. I shall leave it to you to separate myth from fact in your own minds, and your own traditions. The facts, however, are bleak – many of us will awaken in the dark, and not return home at days end until darkness has returned. It might be that darkness is not actually a “thing”, but simply the absence of visible light energy. Nevertheless, at this time of year there is so little light that darkness may seem to be a tangible thing, rather than just a condition. Where I live, the sun's path is below the tree line. If those trees were evergreens, we'd have no direct sunlight at all. It has been said that in the far northern latitudes, where darkness is a principal attribute of this season, the suicide rate rises significantly due to the lack of light, though proving cause and effect can be tricky.
We are a modern people. If we set aside our myths, believed or merely cherished, what might we make of the present time of the year, and what is to come?
If the days were to continue to grow shorter, we would be faced with the end of human existence, but as time appears to rest upon this fulcrum of seasonal change that is the winter solstice, with the sun at its southern most declination, mechanics begins to bring the sun back in our direction, and with it comes more light each day. The change is not slow for long; we quickly perceive the increase in light, and the reaction is inevitable. The mid winter myths are stories of birth, death, and rebirth. We know that this return of longer days is not the result of the rebirth of a deity – it's just orbital mechanics, and yet, as we gain light every day, it's hard to not feel a spiritual connection with what is happening. If the return of more hours of light suggests a rebirth, it also enables it. Certain optimistic, and hardy souls use the increasing light to sprout what they hope will be the early spring harvest.
As we consider these literal and mythical properties, we might also consider the imagery of light. Sometimes, when we speak of those in darkness, we are speaking of brothers and sisters who are in ignorance or oppression. For those in such darkness, the solstice has no impact. They may only be brought from the darkness into light through the proactive intervention of their brothers and sisters in humanity Those who reach out to bring their brothers and sisters from darkness to light might be said to be experiencing a rebirth of sorts. When we give something of ours away to someone who needs it, that thing that we have given increases in value. When that thing that we give is truly ours – our time, our expertise, our understanding – then we re-create ourselves as a more valuable entity.
Saturday, December 12, 2009
Committing National Suicide
According to the Times of London, the Swiss government is planning to crack down on what appears to be an epidemic of suicide tourism. I'm not familiar with the situation, but I suppose people from less enlightened countries, in need of ending their lives, can visit the alpine paradise to get the deed done.
We in the United States, however, needn't worry about raising the air fare from our shrunken pocketbooks. We are in the midst of committing national suicide right here at home. I know, know, people have been predicting the end of American civilization as we know it since the New Deal, perhaps even since the Wilson administration. This time the doomsayers maybe on to something.
The nail in the coffin will be our enormous national debt. While the current debt has been with us for decades, it got really serious during the Reagan administration. At this point, it began quickly climbing to $200, then above $300 million. The prosperity enjoyed during much of the Reagan Administration gave the impression that, while budget deficits might be a bad thing, their elimination need not be a proiority. The Carter era inflation had been “tamed”, crippling interest rates had been brought down; as far as most observers could see, the major down side of the Reagan era was the low rate of return for investors, due to the depressed interest rates.
Given the current administration's projections of trillion dollar deficits into the near term future, it's hard to believe that we were ever worried about those puny $300 billion dollar IOUs. That's part of the problem; no matter how high we have run up the deficit each year, we've been able to get away with it. Congress blames the executive, the execuitive blames Congress (unless they are of the same party). The fact is that there is so little political consensus in the country that only a budget busting deficit, that fills nevery one's rice bowl, is passable through both houses of Congress.
This time, however, things are different. To use a phrase from the old Soviet dialectict, the correlation of forces is working against us. While the situaion has been developing for some time, we are now rapidly slipping into a position of extreme financial vulnerability within the international community.
Although industrial strength peacetime budget deficits date back to the 1950s, suicidal national behavior dates from the late 1970s, as we began de-industrialiazion, beginning with the auto and steel industries. Early de-industruialiaztion was to the benefit of Japan, but the pace increased rapidly with the rise of Red Chinese state sponsored capitalism.
Where will this take us? I don't know, but I do know that there really is a limit to how far we can drop. We might not notice for a while yet, but the sudden stop should be startling. Who will be less happy at bt6hat point, the government, or the remainder of the population? Watch this space.
We in the United States, however, needn't worry about raising the air fare from our shrunken pocketbooks. We are in the midst of committing national suicide right here at home. I know, know, people have been predicting the end of American civilization as we know it since the New Deal, perhaps even since the Wilson administration. This time the doomsayers maybe on to something.
The nail in the coffin will be our enormous national debt. While the current debt has been with us for decades, it got really serious during the Reagan administration. At this point, it began quickly climbing to $200, then above $300 million. The prosperity enjoyed during much of the Reagan Administration gave the impression that, while budget deficits might be a bad thing, their elimination need not be a proiority. The Carter era inflation had been “tamed”, crippling interest rates had been brought down; as far as most observers could see, the major down side of the Reagan era was the low rate of return for investors, due to the depressed interest rates.
Given the current administration's projections of trillion dollar deficits into the near term future, it's hard to believe that we were ever worried about those puny $300 billion dollar IOUs. That's part of the problem; no matter how high we have run up the deficit each year, we've been able to get away with it. Congress blames the executive, the execuitive blames Congress (unless they are of the same party). The fact is that there is so little political consensus in the country that only a budget busting deficit, that fills nevery one's rice bowl, is passable through both houses of Congress.
This time, however, things are different. To use a phrase from the old Soviet dialectict, the correlation of forces is working against us. While the situaion has been developing for some time, we are now rapidly slipping into a position of extreme financial vulnerability within the international community.
Although industrial strength peacetime budget deficits date back to the 1950s, suicidal national behavior dates from the late 1970s, as we began de-industrialiazion, beginning with the auto and steel industries. Early de-industruialiaztion was to the benefit of Japan, but the pace increased rapidly with the rise of Red Chinese state sponsored capitalism.
Where will this take us? I don't know, but I do know that there really is a limit to how far we can drop. We might not notice for a while yet, but the sudden stop should be startling. Who will be less happy at bt6hat point, the government, or the remainder of the population? Watch this space.
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