And whenever I write about what needs to be done to fix this—simple things like universal healthcare, which we know for a fact reduces health care costs by 1/3, because it has worked for every single other country that’s ever done it,

Great talking point now can we get the MSM or Obama to push that point in the media to create public demand?
We can frame it as a vote for National Healthcare is a vote for less taxes.

We have no mission, no vision, yet we know we are on a sinking titanic.

Hope as an emotion sure trumps terror, but seems to require no thought or substance, just reaction based in faith.

It’s time to do something… common sense should be feasible.

So because no one will do what is necessary, catastrophe will happen. What I mean by this is a severe decline in the US standard of living, probably between 20% to 40%, starting in 4 to 6 years and taking place for a decade. Might happen sooner if folks keep refusing to do what needs to be done to fix the financial crisis and stop it from turning into a worldwide Great Depression. Even before it happens, you’re going to see real wages declining for Americans while their assets collapse in price.

If this happens then the GOP will elect someone who will blame all of America’s problems on minorities and then invade foreign countries to keep the people stoked!
A Shock Doctrine Reagan/Hitler type.
Which very well might be the GOP plan.

Oh, but Ian, you’ve forgotten the mantra. We need to force PEBO to do the right thing. /s

Assuming we are going down then we will stop being the worlds reserve currency and once that happens we are toast.
What signs will precede that happening will we even get a warning?

i think that if you get to this site, read this essay, you might just conclude that this new management of the titanic is the same as the old crew.

http://www.lemetropolecafe.com…..m?pid=7543

Nailed it! Again. Ian.

Does Obama even have anything bigger than a 1/3 cut in healthcare costs every year in his stimulus plan?
I mean off the top of my head guess I think it would take years to build enough hybrids and solar/wind farms before green power could produce that kind of savings for our economy.
Roads, bridges, sewer systems do need to be fixed and long term they will give s benefit but not benefits of this size.
Granted if they are not fixed the costs will be this sized.

It will probably not be with a bang, but with a whimper. As far as the reserve currency is concern, there’s no substitute. So the USD won’t lose that role anytime soon. As for the economy, the plan seems to be to keep doing too little too late, which mean that the economy will experience small lurches in fits & starts, rather than plummeting down.

The stock market rallied on the day that Bernanke cut rates to zero, on the theory that he was really serious about getting the economy going. That was nuts because it meant that Bernanke had used up his last ammunition and could do nothing further, so matter how bad the circumstances. (Yeah, still lender of last resort, but that won’t turn the economy around.)

My point being that every time too little too late gets done, people will believe that is really great, and there will be a period of relief, until reality reemerges.

I’d definitely go with the ‘whimper’ scenario.

Yup.

I think we’re having the warning signs, if ya know what I mean.

It’s the Japanese scenario, as near as I can tell right now. Our Japanese economist at the time, a Japanese national but married to an American or Canadian (I can’t remember which), so she was bicultural, termed it “the malaise of incrementalism.” Such a non-Japanese phrase but I loved it.

I tend to go with the “big bang”, as in if Obama fails you get a Republican populist president. The only Keynesian stimulus they can do ideologically is a huge military buildout/war.

Yesterday Ian mentioned the entire amount of stimulus funding for building out our internet infrastructure is a total of 6 billion dollars, it was then I knew we were screwed with “O” plan 1.

Great so the economy won’t turn around Ian says its in the reports so who is selling or not telling Obama about the flaws in this economic plan?

Japanification seems to be the plan, I’m just not sure it’s viable in the US.

Might have to move to Canada.

Japanification?

Why do you think the Japan scenario would not be viable in the U.S.?

Oh, rapture!

Think we in Canada won’t be going down with the boat?

Won’t be far enough.

Got a space ship?

To boldly go where …

For the Canadians here, why do you hang out here so much? Because you love politics and spend an equal amount of time on Canadian blogs? U.S. more interesting than Canada? U.S. important to Canada’s future? Or some other reason? Just curious.

You produce oil America needs lots of oil to run the less successful Obama is at either getting a stimulus package or just making a stimulus package that works.
And no stimulus package works long term without reducing oil demand the better off Canada will be.
I think oil prices will spike again unless Obama brings in another Great Depression.
Or is that what we are facing?

A while back I was kicked off (”unsubscribed”) a Linux discussion list. The topic was how to get Linux in the government and the schools. I said we need one version, not the multiple versions we had and have today. That made everyone nuts. People left the list. I do not understand why to this day. The list went through a listserv which meant all my posts came as email identified as from me. If someone didn’t like what I was saying, they could delete the letter without reading it. That wasn’t good enough. I had to be banished because what I suggested went to the heart of individual freedom. There were Libertarians and nerds on the list who wanted to create their own sub routine and give it an inside joke name. They thought one, standard Linux meant the death of creativity.

The problem is illustrated by EZpass, the system used to go through highway tolls without stopping. EZpass is used in New York and New Jersey. Mass uses “Fastpass” which also takes EZpass. EZpass in New York doesn’t take Fastpass. California has its own incompatible system as does Florida. Don’t know about other states. If your interest is the convenience of the driving public, one system for all states is the way to go. If your interest is in promoting individual entrepreneurship, then everyone strives to develop their niche. If the driving public is inconvenienced, it’s too bad.

In the US we take pride in our every man (or woman) for himself, so we are not concerned about the nation generally. Our need for individual success is a product of a general mental disorder, but that is another story.

Because Japan was and is running a trade surplus and the US isn’t. The US is viable until other folks decide to cut it off. Stirling and I have discussed and he thinks neither the Europeans nor the Chinese can cut the US off before 10 to 15 years, closer to 15. I’m not convinced the US gets that long, because I’m betting, again, on the incompetence and stupidity of US policymakers.

What about cutting military spending star wars next generation weapons etc?
Can we cut enough?

You can read more about Japanification here.

Cut military spending by half, go to universal health care, and you can take that money and restructure the economy, sure.

Good question. Not sure – combination of some pretty good writing, interesting commenters, getting sucked into the storyline, importance of US to Canada (and the rest of the world), opportunity to feel mildly smug… Also I have American friends, and I regularly amaze and astonish them with my knowledge!

Why can’t they cut us off?

You go down, we go down. Also your politics, both in ideology and money, is having a corrosive effect on us. Harper comes from the US conservative tradition, not the Canadian one.

I suppose Obama is not talking about cutting military spending that much though:(

There is not enough oil here for the long term, and some of what we are producing (oil sands) will prove to be unsustainable.

We also buy American oil – it has to do with population centers and the locations of deposits and the north-south pipelines.

Well geez, that doesn’t sound so bad, Ian

‘Course them what likes their war profits mighty not like it .. . nor the insurance junkies who neec their ‘fix’ …

But hey, tough twinkies.

Because China needs US consumers. They aren’t read to ignite their own domestic consumer economy. They lend you money, you send them your industrial base.

For Europe I think it’s mostly because European leaders are overcautious and mildly incompetent (they’re better than US leaders, but that’s not a high standard). The other argument is military. International trade relies on the US navy. Now the US navy isn’t doing its job any more (see Pirates: Somalia) but there isn’t really a navy capable of doing it in its place. The combined European navy probably can’t. However they have a number of aircraft carriers coming off the line in the mid to late teens. Especially if they were to add say 3 more (one for France, one for Germany, one for the UK), they could then take over security from the US.

Also the Europeans were pretty stupid, they’re probably even more into Wall Street’s bad debt than Americans are, hard as that is to believe. They’re in a world of hurt.

The counterargument is that Europe/India/Japan can probably cobble together enough forces to get what needs to be done, done, if they really want to. Europe can say to the oilarchies “sell us oil in euros and recycle your earnings to us instead of the Americans. Everything you really need to buy, we can sell you.”

But I don’t think the Europeans have the guts.

The stupidity of not having east-west pipelines still astounds me. Our elites are determined to be a dependency.

Without getting into the weeds, I’d agree with Stirling on this one. May not be as long as 10 years, but a long time because there is no substitute currency for the USD. The euro is the next candidate, but the EU is not in good shape either, and is too cumbersome to take a leadership role in international affairs. And it is hard to see how the EU would become a world power anytime soon. So it’s the UDS by default, unless the U.S. performs much worse than every other economy, and that seems unlikely, given the international contagion links.

It’s a very long way from Alberta to Ontario and Quebec – that would be one hell of a pipeline.

You may both be right. I’m certainly not, well, certain, on this. I do know the trendlines are all bad and no one is doing what needs to be done to properly reverse them.

The wimps what ‘lead’ us are univerasally available, the world over.

Boy, wait ’til some ’strong man’ gets a whiff of this …

The future just looks rosier and rosier.

This ain’t snark.

There are longer ones in the world. Dependency on the US is not wise, either economically or politically.

Nailed it! Again. Ian. (2nd edition of comment, used appropriately, both times)

Agreed – under the present circumstances, dependency is looking more and more dangerous.

Is there enough volume in Canada to make an east-west route at all economical?

OT

Did Libby get pardoned?

If only I could see things as clearly as some here, but I can’t.

Now, I admit that I don’t have an advanced degree in economics, but I have circled the economic block several times. On each loop around the block I have learned a bit and on occasion surrounded a few nickels.

My experience suggests that very little, if anything, is certain.

Great post. It says what needs to be said. We have been dithering in the face of this crisis for 18 months. We have blown a couple of trillion on it. And it all was so easily avoidable in the first place. We do not have endless chances. Bush has blown his. Obama is in the process of frittering away his. I agree at some point something has got to give and unless we start facing up to what we need to face up to, it is not going to be pretty.

So we must let more banks fail? I’m ok with that but how about we nationlize the banks would that work?

Have heard nothing yet about pardons…

What!

Ian, thank you for this post. Watching “progressives” mindlessly fall into the cult of personality around their idealized leader in just the same way the 28% we’ve derided fell into the Bushie c.o.p. sucked away my last hope for America’s future.

I won’t be able to emigrate before CA’s implosion accelerates February 1, but I hope to be able to get out well before the end of Obama’s sole term. I’m very conflicted about exercising the occupational privilege that allows that emigration when most other Americans don’t have that luxury. I also know I’m pretty useless in health care “systems” once they lose the funds required to provide medications, much less other services.

I hope those who remain in America have more success in halting the slide towards economic and then ecospherical collapse than I have done. I’m increasingly convinced that whatever my friends in PSR / Earth First! and I may have achieved, it was too little and too late.

Ónen i-Estel Edain, ú-chebin estel anim

Did economic reasons validate the construction of the transcanadian railroad? Or was it built for some other reason?

Ónen i-Estel Edain, ú-chebin estel anim

?

Would cutting Military spending to 5% more than what Russia or China spends what ever is greater be enough?
I think we can sell that politically to the American people. If we get Obama on board making speeches and do a huge MSM campaign.

Political reasons were certainly a large part of it – securing territory and linking all parts of the country. I would have to look this up, but I believe there were concerns at the time of the west joining the US. Powerfully symbolic at the time.

Belize or Australia if not Canada are on my list.

“..then I quite seriously, sadly, and with utmost sincerity suggest that you either start learning how to survive in a societal meltdown..” OK, Ian, since none of us is going to have much in the way of control over what happens now, let’s talk a little bit about this issue. How DOES one survive in a societal meltdown? Are we talking stocking up on guns and ammo? Socking away a years’ worth of food? Converting all cash to gold?

Got to go deal with ‘domestic’ policies, but I leave the economy in good hands.

Be good to each other.

As a friend told me today, talking about human beings and the human condidtion, just like we’re doing, “Each other is all we got”.

And time is all we really have to ’spend’ …

Hasta Lumbago!

With your medical specialty, and shortages of mental health professionals, you should have a lot of choice in where you decide to go.

How much new revenue can Obama get if the States start taxing Pot FDR legalized and taxed beer. Getting the states financially sound would help stimulate the economy and it could save California.

‘I gave Hope to the Dúnedain, I have kept no hope for myself.’

I’ve felt for a very long time that the U.S. is a prisoner of it’s mythology and it’s bankrupt conservative philosophy. The health care fix and the stimulus package will likely be merely half-assed solutions that will ultimately fail because Americans have been programed to fear and loath “socialized medicine” and strong government intervention. I’m just glad that I have dual citizenship and can return to my ancestral lands where they aren’t prisoners to myth and hubris.

I gave Hope to the Dúnedain, I have kept no hope for myself.

Portugal is looking good these days and apparently quite easy to get into.

Continued alarm, concern and general dissatisfaction with the cost and benefits of the recent approach to the financial panic have produced proposals for something that I am unfamiliar with: a ‘bad bank’. The idea is to form a government sponsored bank that will hold all the bad assets. Has this ever been tried before.

My view is that there are some big problems with any approach that tries to save the financial industry by buying or quaranteening bad or toxic assets:
1) complete opacity and poorly understood systemic risk created by current system means that we do not know what the bad or toxic assets are,
2) the worth of any derivative securities (whether ones based on mortgages or risk of default) are unknown until the real asset market settles,
3) absent reform, the financial system may creat more opaque toxic assets and more systemic risk as fast as the government authorties clean up the mess, which finally means that,
4) real asset markets may not settle in timely or reasonably stable fashoin with existing fianancial system.

Many good economists have nailed the situation, including celebrity prize winning dudes like Krugman and Stiglitz: the economy made a lot of bad loans based on inflated asset values. The expected cash flows are either massively never arriving or will be massively delayed. Need to get the real assets markets stabilized, figure out who has the bad loans, figure out who is insolvent and among those who are insolvent, who is worth saving and who is not (’who’ means banks and financial firms, mostly).

So, we return to, the ‘Swedish’ model. Need to find a new name, since it is not inherently Swedish, or even Northern Scando-Nordic European, but I guess the Swedish real estate bubble is the most famous and and recent example.

Text from a WaPo article that vaguely describes the ‘bad bank’ idea below.
I only excerpt the last couple of paragraphs that summarize the “Swedish” appraoch:

In Sweden, which experienced its own real estate bubble, help came at a heavy price. Banks had to sell the assets at a loss and surrender stock to the government. Bondholders were protected, but shareholders lost all of their money.

The government, meanwhile, was forced to nationalize two of the largest banks. It then split each of those banks into two pieces, creating a pair of bad banks to hold troubled loans. The remnant “good” banks were then merged into a single company, which was privatized.

In all, Sweden spent about $4.5 billion on the bailout and eventually recovered about $1.7 billion from asset sales, or about 38 percent of the original cost…

[Some economists] also find support in the example of Japan [as an example of what U.S. is doing wrong? Not sure exactly what that means.] , where regulators allowed banks to struggle under piles of bad debt for years, which curtailed new lending and allowed the economy to stagnate … intervention came only after a recession that lasted through most of the 1990s, a period now commonly referred to as “the lost decade.”

http://www.washingtonpost.com/…..67_pf.html

story found via Talkingpointsmemo:
http://www.talkingpointsmemo.c…..things.php

I was guessing it was political reasons. My point is that we shouldn’t think of everything from the POV of economics. For example, in the U.S., I have thought for at least a decade (i.e., when oil prices were low and seemed likely to remain low for a long time, which now seems likely again) that the U.S. should work toward energy independence because depending on oil producing autocrats was a foreign policy problem. (That was also before global warming hit the headlines.) It would not have been justifiable economically, but it would have in the broader interest of the U.S.

The US and the Chinese are in a toxic co dependent relationship. China, however, is using this to raise the living standard of its people and can easily drop the USA and focus its economy inward more while continuing to supply the entire world with product.

The USA on the other hand has offshored its industrial base and it produces little except bombs and Boeings which is not produced elsewhere. Airbus will and can compete with Boeing so that monopoly won’t play. Wall Street liked to drive the world’s economy but that one is DOA.

We have our agriculture which makes us pretty much OK food wise, but we need to devise a self sufficient and sustainable economy. The growth deal cannot work with the world turning in and the oil coming to and end. What does a sustainable no growth economy look like?

We need to be discussing that. No growth seems to mean no wealth creation and less class stratification. Does it mean and end to “innovation”? International travel and vacations? Will it be local and gloomy?

thank you ian, we need a wake up call.

btw:

To see what a precipitous decline in standard of living is like, read up on Russia’s history in the 90’s. A lot of people will die of starvation, of cold, of heat, of lack of medical help and from violence.

there’s new paper in the current lancet on the correlation between privatization and mortality in russia and east european countries during the ’90s. i’ll put together some notes on it later tonight or tomorrow if folks are interested. probably especially important because of summers’ role. btw, did anyone else catch summers this morning on face the nation?

World Fish harvests are probably being impacted by burning coal full of Mercury. How soon can the world go green? How long before the oceans clean up and fishing harvests increase?
Long term we need more food and that will help the economy.

Very well said – especially about being a prisoner of its own mythology – I think of it as being a victim of it’s own propaganda, but yours sounds nicer.

Do they have a lot of English speakers and work for them? I suck at foreign languages.

Makes sense.

In the countryside I believe there is limited English but the urban and tourist areas are different.

I like it but is Obama interested?

My late husband, Jewish, whose family left Germany after Krystallnacht, thought that if your net worth was above a certain amount, you ought to have 5% or so in gold. When I asked him why, he cited precautions wrt low-probability, high-consequence events like the holocaust. He planned to buy Kruggerands. When I asked what he thought he could do with them, he cited having funds to move, if necessary, but also for life’s necessity like buying bread. I told him if that’s what he thought, he should by tenths of Kruggerands, because he certainly wouldn’t want to pay for a loaf of bread with a full ounce of gold. He bought about a quarter of the total purchase in tenths. (I sold them sometime after his death, but not anywhere near today’s gold price.)

Anyhow, it’s one way to think about what to do.

I don’t know whether the U.S. has a ‘death wish’ I do think that the radical reactionary (I refuse to call it ‘conservative’) swing in the dominant public philosophy, and especially after the end of the Cold War, dominent opinion in the US as been following an economic philosophy that is a fantasy.

A lot of the wasteful, inefficient, impotent, and risky policy initiatives we have seen over the last year are a product of people who simply cannot believe their fantasy ultra free market economic theories do not work in the real world, especially in financial and insurance markets.

Question is, how much damage and failure we have to endure until more level headed and practical thinking has some voice in policy making.

Thanks will look into it.

Some are holding his feet to the fire. Some are holding their fire to see what he actually does once he is the POTUS. Many had gone with him because the alternative was such a horror. Some took him at his word – Change we can believe in.

One think he seems to be doing is trying to blunt criticism from the right side by enlisting them on his team. If… and that is a big if… he cant get the right to enact more progressive policies because they are on board as the manager and have a vested interest in success, it might work. He certainly is not staking out a progressive position and declaring – Our turn to give our views a try – what Bush did while calling himself a uniter.

The uniter thing seems to run through presidents. W hid under that to be a right wing ideologue. O has yet to advance real policies. Let’s wait a bit longer and keep watching closely.

I missed Summers. Did he say anything new or different?

Actually the Russians did and would do better in catastrophic collapse of their respective societies because the USA citizens have much further to fall. Russian had not advanced all that much in the Soviet era. They’ll go back to the farms and horses. Americans? hahahaha

I think if very likely that we have not seen the whole of the economic stimulus plan yet either.

Thank you so much for this post, Ian.
I am getting frantic with what I see coming, what I’ve already seen, in fact.

I think the problem is here we DO have to throw the baby out with the bathwater and start anew. No more of the same old same old. No fixes and repairs. This is uncharted waters – a new economic paradigm – absent wealth as a motivation and a goal.

Note that I mentioned two distinct ideas.

One is the ‘bad bank’ idea that I have never heard of before, and which the WaPo article tries to (but IMHO fails) to explain.

The second is the “Swedish” model, which is what Krugman, Stiglitz, JK Galbraith have been recommending. And as I mentioned in a comment a day or so ago, I even heard an Charlies Rose interview with the moderate conservative (and sometimes I think an ideologially influenced one) Martin Feldstein in substantial agreement.

It was interesting to hear Feldstein. He elaborated on his idea that increased ‘military spending’ would be good fiscal stimulus. From what he said, at least half of that would be a de facto government subsidized techical education and training program for short term recruits. I was thinking What the…?). Why not just fund HS programs, community colleges and 4-year state colleges, which have done most of that in post-WWII? I figured that was Feldstein’s ideology influencing his thinking somehow. He just cannot bring himself to advocate increased civilian government discretionary spending. But I am not sure. But, in terms of the basic economics, he is saying things similar to Stiglitz and Krugman.

Yesterday, the DH, my son and I went to the movies to see “Defiance” and all I could think about through that entire thing was the scene fairly close to the beginning where a whole group of Jews from a town are rescued and they line up and are asked, “What can you do?” The first guy in line, an elderly man, says he’s a watchmaker and Daniel Craig’s character hands him a broken rifle and asks him if he can fix it which he does. We’ve never experienced a ’societal meltdown’ – I’m thinking of what skills people are going to need to have to survive under those circumstances – the ability to hunt, to shoot a gun in order to get food and defend one’s family? Are we going to be facing basically a huge crime wave? Because if we are, then all of this intellectualizing is sort of moot.

Australia is going though problems that are almost just as bad as ours, because the former prime minister Howard was Bush’s other poodle. Central America is too entangled – try South America. I think it was McClatchy that ran a sory recently about how South America is poised to weather this storm better than most other regions. Great produce, social networks getting better and better, and have been distancing themselves from the IMF, WTO, and U.S. influence in general.

Please forgive the pedantry, but it’s interesting that Tolkien would do that. Dunedin (Dùn Èideann) is the Scots Gaelic name for Edinburgh. (It’s also a city in NZ and one in Florida too, spring training home to the Toronto Blue Jays.) A dun is a fort.

Well said, Margot.

Thanks Ian.. Keep this conversation with your honest posts alive please.

When will the slackers who have repeatedly been driving this bus into a ditch gonna be sent back to school for some re education and let someone else try some NEW.

There is the problem of fixing what we have or abandoning it and going for something radically new. I think the conventional wisdom is we can jumpstart and tweak the old one and get it going again. No one inside the beltway is even asking “What do we do when all these stim plans do nothing?” What’s next?

I missed Summers. Did he say anything new or different?

i left you an epu’ed reply on the sunday talking heads thread. here is the cut-n-paste:

paraphrasing from memory (so don’t quote me on this):

a big part of this is psychology. people need to have confidence.

a new leader w/ a new clear plan will give them confidence and stop the vicious cycle of people spending less, which means some others earn less and then they spend less.

we will focus, not on the banks, but the needs of the economy and the economy needs credit. our focus will be on credit.

credit.

confidence.

…….

me: could have been a bush flunky talking about how we create out own reality by convincing the people to believe a lie.

my disgust at this moment is very great.

the transcript may be up now, but i haven’t gone to look for it yet.

Watching “progressives” mindlessly fall into the cult of personality around their idealized leader in just the same way the 28% we’ve derided fell into the Bushie c.o.p. sucked away my last hope for America’s future.

at least for our lifetimes, i expect america’s future is tied to much of the world’s future.

Just a curiosity but Larry Summers was one of Feldstein’s doctoral students.

Ponzi schemes are all about heard mentality and “psychology” – that’s what makes people trade their shares. They create reality don’t they?

Thanks again Ian. A few more I could add that we just have to think about adding to your universal single payer health care and cuts in military spending are.

1. Link immigration to future citizenship, no entry into a servant class system.
2. A return to progressive taxation. No more not way the ceo pays a smaller % than the assistant
3. All americans are in the reserve and if we go to war then all peoples of appropriate age called up no exception. Immediate wage and price controls instituted with mandated war profiteering oversite board. We will have a republican, no make that facist gov. war if we dont.
4. Hate to say this one, but need a more nationalist view of the economy so that the buisness not helping the US and sending jobs, skills other things overseas pay the price to play in this playground.

Sorry I dont think this will be like Japan. Japan and China were not set up as sustainable based on themselves, but on a one way trade system with us. As I have said before, the model only works if the US worker can buy their stuff. When the free trade, I make money and deals not anything, I dont need to pay the “help” enough but to just eat crowd finally killed the goose the house of cards has finally started. Americans have bought the quick buck over hard work and the future. We need to build for the next generation, not for the quick buck. I am with you, I hope PEBO turns it around, but time is shorter than we think. If he fails I think we are looking at a good possibility of Facism if the corps get a half of a chance.

What I found surprizing about the joint interview with Feldstein and Stiglitz was that Feldstein seemed to also share concern that decade long public and private borrowing and consumption binge had severely distorted the US economy. This is the problem of ’so, exactly what is the US economy set up to do anymore, other than borrow money from overseas so we can sell each other houses’? Or put in another way, exactly what will the US economy produce, after the panic and recession is over. Krugman seems to still think of this moslty as a long bad U-shaped recession problem, and usual post-WWII estimates of needed fiscal stimulus falling short. Galbraith and Stiglitz think of it, more accurately I think, as a major problem of structural adjustment, due to decade of dysfunctional capital markets.

Anyway, if I remember correctly, Feldstein was not talking about more guns and more cannon fodder for more wars, he emphasized increasing social productivity and skill building. I found his thinking a bit odd in terms of implementation, but in substantial agreement with Stiglitz in terms of basic economics. Lemme see if I can find the interview. Nope. well I will look some more and hopefully provide a link.

i’m not so sure. those closest to the margin may be at most risk

Here we go. See if you agree with my interpretation, if you have 30 minutes to spare. I only listened to it once, early yesterday morning.

A conversation about Obama’s economic stimulus package
with Martin Feldstein and Joseph Stiglitz
in Current Affairs
on Tuesday, January 6, 2009

http://www.charlierose.com/view/interview/9899

I think there is a good bit of evidence that the Europeans have a lot of US toxic waste on their balance sheets. And they seemed to love them some Bernie Madoff. Banco Santander, Bank Medici, German and French financiers. Irish banks, Icelandic banks, anyone?

I don’t know about Summers’ ‘academic pedigree’.

I am very very biased, but I think it only matters who taught them how to do applied statistics!

Thanks.

BTW, you’ve got mail.

You teach a bunch of folks skills in machinery, medicine, engineering, or any other skill of making something, reward them and they will suceed.

you cannot just wish something can happen, have to have a vision. Space travel, green transportation, urban and suburban planning. We have to decide if we live in the 21 century or the 19. Its just to big to do as one person, company.

And please do away with the corporations rights as a person. Regulate and oversee.

oh shoot! that reminds me, i forgot to reopen my email client.

thanks!

In the current political environment he is probably wise to not announce really big changes to the status quo before he actually has the reins of power. Let’s see what he actually does.
There are a lot of really freaked out wingnuts out there who are buying guns. They need to have it broken to them slowly. Some of them actually believe he is a Muslim who will force conversion and take away guns.
He and his advisors are smart and non ideological. Changes can be made to budgets in summer or fall as the past year has shown. He needs to clean the wingnuts from the Federal bureaucracy or he will be thwarted every step of the way.
The people who own our health care denial system will fight tooth and nail to keep their cash cow alive. The cow need to be killed stealthily, slowly and with a great amount of intelligence.
My guess is that the plane landing on the Hudson is the metaphor for Obama’s America. Plane destroyed, trip delayed or ended, everyone makes it thru alive and they had a crew that knew what it was doing. We need a little time to get that crew in place.

Here’s Summers’ wiki.

An interesting tidbit:

Born in New Haven, Connecticut, on November 30, 1954, Summers is the son of two economists, Robert Summers and Anita Summers, who are both professors at the University of Pennsylvania, as well as the nephew of two Nobel laureates in economics: Paul Samuelson (sibling of Robert Summers, who, following an older brother’s example, changed the family name from Samuelson to Summers) and Kenneth Arrow (Anita Summers’s brother).

They need to have it broken to them slowly. Some of them actually believe he is a Muslim who will force conversion and take away guns.

These are the same people who think that every Muslim has a gun (that’s trained on us)? Pshaw, I should not expect consistency.

Listening to the interveiw with Feldstein and Stiglitz to refresh my memory. Feldstein also wants to fix mortgage market first, though he will not go as far as Stiglitz in terms of making banks and financial firms taking a big hit, but Feldstein does not seem to be advocating a McCain style mortgage refinance give-away to corporations. Still, he cannot bring himself to hold large corps to account the way Stiglitz is willing to.

I wrote an oxdown diary about that time which mentioned the Stiglitz appearance on Charlie Rose. I folded what Stiglitz had to say into the idea that we have been running off the paper economy. The meltdown showed us the dangers of that. We need a new industrial policy to re-invigorate the real economy. This is what Stiglitz was also saying. When the stimulus is done, its effects cease not long after. We need to use the stimulus to transition to a new economy. Otherwise when the stimulus is done, we will find ourselves back about where we are now, but a lot deeper in debt.

Feldstein is a hack and a whore. (I have my personal story of a work-related interchange with him 30 years ago.) He’s pretty religiously a supply-sider, but will say anything that he thinks will get him ahead in current circumstances. Some of it, like fixing the mortgage market, but only by helping the lenders, spans both sides nicely, because most listeners don’t figure out that there’s no help for home owners.

I didn’t know that.

In terms of pedigree, I think Stiglitz is Paul Samuelson’s prize PhD student. Stiglitz’ intellectual journey has taken him away from what Samuelson self-tyled ‘radical centrism’ Samuelson can always be counted to come down in the middle, at least after he got past middle age.

Except I heard an interview with Paul Samuelson over Christmas, and Samuelson is very down and damning on them unregulated securities markets. He called them a ‘Frankenstein’s monster’ that we have created. And Samuelson admitted that he and some of his students had a hand in creating the basic ideas.

Right you are, we have to get rid of this paper economy where we make nothing but deals and paper. We have to make something, tv, radios, airplanes, trains, and things we need and then want.

We also need to get off of faith based education and back to facts and looking at smart people presenting ideas and having a real conversation about direction. From Reagan on we were sold the plan that we could have guns, butter and lower taxes all at once.

I think it only matters who taught them how to do applied statistics!

hadn’t thought about that. question – don’t econ majors learn all the math for systems not at equilibrium – diff EQ, feed back control – that kind of thing?

Well, yes, I think there are some issues…

I tend to take people at face value when they give analysis. Need to keep an open mind to see whether they just saying what they have to say in order to retain credibility (that is, committed to ideological contamination in their analysis) or whether their thinking has changed due to reality therapy on their theories.

But, yes, I think one is advised to examine whatever Feldstein says very carefully. I think some of his past analysis has been heavily influence by ideology.

I think Stiglitz underwent a conversion when he was at the World Bank. He spoke to New York Assoc of Business Economists when he was Clinton’s head of CEA. He was full of hubris and certainty then. He seems to be an entirely different man now.

A different, and better, man now.

good for samuelson. that kind of re-evaluation and taking responsibility is good to see.

More like overfishing.
Catch too many fish, pretty soon all the old, large fish that were doing most of the reproducing are gone, then the smaller younger ones disappear.
Then you’re out of fish.

Part of my reaction to economists is due to my strategy of argumentation. You always want to win converts, and try to influence people to do good, not bad, with their powers. So, I will grab onto anything sensible and sound that anyone says. Then hold them to that standard if they try to backtrack in the future.

Feldstein was also a member of the Group of 30 which backed the deregulation of derivatives.

Interesting. My approach to what people say is quite different.

I disagree a bit about Stiglitz. His conversion started when he did practical research and consulting work in undeveloped countries. He saw some of the same odd phenomena that could not be explained by standard neoclassical theories in settings where standard excuses did not apply. So, he saw same strange labor market phenomena in Kenya, that in the US is blamed on labor regulations and minimum wage. But there were zero labor marekt regulations and no minimum wage. So, why did he see the same odd things that contradicted standard theory.

He discusses this at leangth someplace or other. I will look and try to post, but it is very wonky, though readible for anyone willing to skip the technobabble.

Heh. See, Stiglitz has changed. Feldstein not so much.

That’s interesting & makes sense. I didn’t know when he converted, but noticed he seemed quite different after his WB stint.

But I think it is true that the fur started to fly when Stiglitz started to apply his theories (which I believe he thinks is where the scientific evidence leads, rather than originally ideologiccal) in contexts that hit sensitive areas for those in power.

I was just looking that up. He became a member of th Group of 30 in 2003 and that was a decade after the group’s work to deregulate derivatives. So my bad.

Oh well, close enough. *g*

Imagine flying in the face of power. Tsk tsk.

stiglitz has talked about some of the fights he had with treasury when he was at CEA (Trips comes to mind). and also about what was for him a traumatic experience wrt to ethopia soon after joining WB. my impression is that while stiglitz was a reformer, “not a team player” and saw things earlier than many others (he wrote a paper in early ’90s against the securitization of mortgages) it was his time in government and after that radicalized him.

he doesn’t come across as a humble guy – but so what? he was right about a lot of stuff and got shat on for it. i wonder if he feels a little bit like a DFH who was both right and ignored.

Yeah, I can tolerate hubris if the person has a lot of evidence. The incident I witnessed though, was something he could not be certain about. (It related to the often disputed and never got right by economists, about what “full employment” was. I asked him why he thought his model was better, and he said something like: because we know better.)

Responses to your two comments above.

1) Everything is always in equilbrium for applied economists. Standard economics that you will see discussed in public has no positive or welfare theory for out of equilibrium behavior, at all. Economists who deal with differential equations and such, usually have to assume that the economy is always in market equilibrium over any feasible time path that is a solution to their diffyQ equations. Everyone understands that there are some conceptual problems with this approach!

2) Samuelson and derivatives. I don’t think he needed to be converted, and I think some of his needling comments were directed at some of his students, at least one of which won the Nobel Mem. Prize for economics, who did take things too far. I think one difference between economists who have useful and interesting things to say about reality, and those that do not, is that the former understand that economic theory is a crude cartoon of reality. It is not comparable at all to physics, or genetics, or even climatology or meteorology, or even psychology. The theories are almost metaphors.

As one example, all markets in economic theory are modeled as formal exchanges, with lots of formal assumptions that you see real world formal , say, stock exchanges markets struggling to actually implement in the real world when they try to make a nice well behaved market mechanism that works like theory said it does.

One big assumption that many ultra free market economists make is that all real world markets, left free of governement interference, would be found to work like theory says, if only we had enough information.

I think Paul Sameulson never made that kind of mistake, and never would have advocated, for example, a free unregulated unsupervised insurance market like we saw with the credit default swaps. I think some of his students did make that mistake.

NONE of these people are humble. Some commenter here said that Stiglitz was the ultimate in intellectual hubris. I do not doubt that.

Samuelson on Obama’s ‘choices’ … “He can’t control long-term entitlement spending unless he curbs health care, which accounts for a quarter of the budget.”

No single-payer on that horizon.

And …

No mention of cutting the ‘entitlements’ in the MIC, naturally …

I wouldn’t get too fuzzy-warm about Samuelson, selise (unless I missed your snarkeration).

Everything is always in equilbrium for applied economists

Do you mean theoretical economists, not applied? I’ve never met an applied economist who thinks that everything is always in equilibrium. All the interesting issues are when that is not true.

Erm … wrong Samuelson, no doubt.

duh …

at one point i was looking (not very hard and i haven’t followed up) for a list of members of the group of thirty by year so i could correlate member names with reports. do you have such a source?

Well, don’t get too warm and fuzzy about any of these analysts.

i think Samuelson has gotten a fetish about being the reasonable centrist since he passed middle age. He is hung up on the economic dilemma of balancing economic sticks and carrots so that people in advanced economies put in a good days work, etc.

But, the dude is like 80 years old.

The same thing happened to Milton Friedman. The younger Friedman was much more moderate than the old dude. And he won his prize for work in macroeconomics that was essentially Keynesian. His aggreagate monetarist theories of economimc stabilization emprically flopped, as he himself admitted. And his very sloppy ultra free market micro economic welfare economic stuff he said in old age was much more extreme than his thinking and public statements early in his career.

Standard economics that you will see discussed in public has no positive or welfare theory for out of equilibrium behavior, at all. Economists who deal with differential equations and such, usually have to assume that the economy is always in market equilibrium over any feasible time path that is a solution to their diffyQ equations. Everyone understands that there are some conceptual problems with this approach!

oh. my. fucking. god.

this explains a lot.

wow. i’m seriously stunned.

I share your frustration about the constant reiterating of “it isn’t feasible”. For example, heath care….

To “do it”, we need to forge an agreement (among major payers of health insurance- state governments; federal government; large employers; labor unions), to pay an amount equal to current health insurers charges to the medicare and medicaid programs. Setting up tax rates to shift the collection and administration of health care payments can happen within a year or so, but the initial change can be generated by the agreement I suggest. It will cost no one more than this group is already paying, and within a year, federal legislation will be able to allocate this cost spread among all Americans. The amount of money collected from workers will fund the additional costs to medicaid and medicare because these are the Americans who are healthy and use less heathcare. And workers paying in to this new health care payment system will know that even if they become unable to work, they will continue to have access to the health care they have paying for, with out using, for years. Which is not how the current system works. When you stop working and can’t pay for your insurance, you loose the coverage you always paid for but rarely needed. Insurance payment through employment is a very clever scheme, since most people who work and pay for health insurance are the youngest and healthiest people in America. When they cease to be young and healthy, they often cease to work and become unable to pay for their health insurance.

The need for increased administration of federal and state medical programs will provide work to people laid off from the insurance industry.

Well, I think every *sensible* economist understands that everything is not in equilibrium.

But, the problem is that it is the only theory we have, and you have to work with the theory you have, not the one you would like to have.

So, you have to do the theory and statistics assuming equilibrium, and then wave your hands when you try to apply what you find to the real world.

Some economists really do think that everything is always in equilibrium. It is called the ‘tight equilibrium Chicago school’. That is more extreme free market than the original Friedman-Stigler Chicago school.

I think wesgpc is an academic economist. The policy sorts and the business economists (the talking heads like I used to be on cable business channels) are not that way at all.

Actually, there is a rigorous approach to out of equilibrium behavior in analyzing macroeconomics, but it requires advanced diffyQ, the statistics are difficult, and there is almost never enough data to implement it, and most economists have never heard of it.

So, believe me, people have tried to make a more realistic theory. But bad things have happened to the attempt -either too many special assumptions are required and you cannot get a critical mass of economists to accept it, -it doesn’t produce even the pretty poor predictive performance of standard approaches, -or it is too hard for anyone but ultra nerds, and almost never enough data to implement it.

I am an applied econometrician who works in predictive models mostly. I am a humble statistician.

Well, I think every *sensible* economist understands that everything is not in equilibrium.

not an economist (obvious, i know).

but i wouldn’t think much of anything outside a lab experiment is in equilibrium.

engineers do process control (especially chem eng). would any of their tools be applicable to the kinds of problems economists work on?

it’s the equilibrium thing that has me freaked.

p.s. i know you’re cool. *g*

selise, if you can come up with an out of equilibrium approach that works, you will go down IN CAPS, in famous big time intellectual history!

What application for econometrics? Macro or micro. I started my career with Prof. Otto Eckstein at Harvard helping him put together his macro econometric model. In my lifetime, I have run so many regressions that I am out of degrees of freedom.

It was during that stint as a research assistant that I ran into Feldstein’s cavalier attitude toward research. He was doing the financial sector equations, so he could learn something about that part of the economy. Wasn’t an area he came in knowing much about. When I discovered errors in his data, he wasn’t the slightest bit interested.

The problem is, it’s not 1932 yet, and the Senate is dominated by a bipartisan conservative coalition. Regardless of what you or I want–regardless of what he wants–Obama has to move with discretion. We can only hope he will prove skillful enough to implement the necessary reforms.

Whyfor is the world’s wealthiest, most powerful democracy beholden to the hope of a good king?

So all, as Kettl would have it (;~D) is complexity piled on complexity …

And the ‘unseen hand’ has its thumb on the scales …

And there ain’t diddly that can be done about it?

We’s stuck with the economic system(social ‘institution’-’game’) we has got and that’s the end of it?

Jeez, wespec, ya see any way that we might wanna rethink any of this?

Thanks for writing this Ian.

I absolute agree with you that we’re looking at a severe decline in quality of living.

But I don’t knowhow we avoid it, in any case. First, because climate change is going to start demanding real changes, so quickly that even IF we had a functional political system, we’d have to adjust too quickly.

But also because there are 3 billion people in teh world whose quality of living is way less than 40% less than ours, and there’s no reason to expect that China or India (in particular) will sustain that for long. yet they can’t replace us–the carrying capacity for the world simply will not let even the Chinese middle class (equal to the size of the US’ entire population) begin to acquire the toys we’ve got. The global economic system is–and necessarily is–winding down, because at some point you couldn’t keep building out on the strength of US consumers.

To me the big question is do the Cheneyites succeed in turning the globe into a neofeudal society, or do we reset about 50 years? The latter is going to be horrible, but in the end actually pretty good. THe former is just Mad Max.

Very very micro, in health care, clinical medicine, and public health. Stuff like, if a randomized controlled trial says this or that thingy is a good classification algorithm for finding a certain kind of patient who can benefit from therapy, who does that work in the real world in terms of outcome and money. That is mostly practical work, with is both academic and real world.

You ain’t innerested in a new and “improved” Dark Age, Marcy?

Well I’m with you on that.

I’d prefer a renaissance, meownself, but folks just don’t seem to have the vision to embrace such a notion.

Maybe in a couple of hundred years, whatever lifeforms remain resident here on paradise will forget we even passed by. or through. or whatever.

selise,

current members of the Group of 30: http://www.group30.org/members.htm

Emeritus members: http://www.group30.org/emeritus.htm

Past members: http://www.group30.org/pastmembers.htm

Dates of membership aren’t given. I suppose it might be able to reconstruct if one had access to Who’s Who are something.

So our collected experience with economics is quite different.

There have been some interesting public episodes. He blamed his research assistant once for a ‘mistake’ in something he did on social security, and then he claimed he found an offsetting mitake the preserved the original conclusions. (you involved in that?).

There are different crowds in economics and statistics with different ideas about what is OK and what is not. I saw a famous guy giving a seminar in my grad program who blamed a problem on his research assistant -ouch, did that famous dude get dissed and ridiculed “Well, maybe your research assistant should give the talk, if that’s the one who actually KNOWS what was done!”

oh man, what v little i knew from a prior life is long forgotten (although i do find it informing my intuition all the time). the kind of process control i’m thinking of would be, i’m guessing, something suitable for a phd thesis.

if you are in academia, may i suggest you wander over to the chem e dept and ask who works on control systems? i may be out to lunch (not the first time), but i see the possibility of a beautiful collaboration.

I have done consulting work in more your type of field, and I did not like it much. Though, I made a ton of money real quick that came in handy for grad school and job market entry. In financial consulting, I hung with the technogeeks who solved problems for stock and derivatives exchanges who ran into trouble with their contracts.

thanks hugh. probably the only thing to do is go name by name and look in wiki or something.

Don’t know why, but I find that vision oddly comforting.

So, how would an economist model a ball in a bowl?

Displace from the center, and a restoring force brings it back; OK, it overshoots, but something frictionlike leads to a settling.

Displace too far, though, or pulse with too much force, and the ball leaves the realm of the restoring force, namely, the bowl, and goes rolling across the table and falls to the floor.

Why this dependence on math that makes you assume that bowls lack brims?

I mean, it’s kind of why God made computers, isn’t it? Numerical models and such?

I used to know a lot of control theory, and am having to remember and relearn some of it now for time series analysis work I am doing.

It doesn’t help much with some unique conceptual problems in economics -the kind of thing Keynes talked about when he said you make money by not knowing stuff, but being able to guess what others think you think they think you think they think stuff. Standard control theories do not help much with rational expectations and herding behavior, which from what we have seen recently, is important.

No, I had long moved on by the time the social security debacle occurred. Glad you brought it up though, as I was trying to reconstruct it from memory but had not been able to dredge it out of my back mental file drawer. It was another really good example of what a hack Feldstein is.

Even with the meltdown and potential depression, we are already in the era of Peak Energy. Global warming adds stress to the system but mostly for those in developing countries. Richer countries have a better shot at adapting.

I have wished for a while now that there was somewhere I could work with people to do projections based on economic level, population, energy, food, water, and other resources to figure out what the carrying capacity of the planet is under various scenarios.

thanks. i might have guessed that if it was easy to do, it would have been done. well, except for all the counter evidence we’ve seen…. *g*

Heh. The financial engineers, who now have a bad name on Wall St. But that will change, as the new wave of financial engineers develop the next new thing and fool everyone once again.

This might be a repost, but…

No, very easy to make models consistent with standard assumptions that result in chaotic motion or near chaotic motion.

I have to go, but anyone who knows some math, should check out Donald Saari’s work. He has done groundbreaking work in funny stuff that can happen with markets, social decision making, and voting.

Check out especially his recent book ‘Decisions and elections’ I am reading ‘Deposing Dictators and Demystifying Voting Paradoxes’ now.

http://math.uci.edu/~dsaari/

Saari is a very very good mathematician who likes to make things as simple as possible. From him you can get references to other people doing interesing work. chekc out some of the great papers he has posted on his homepage too.

Greenspan made his name working out the Social Security reform back in I think 1983. We should have known then his career would not end well.

Nothing particularly wrong or radical about Greenspan’s work on social security back then. All he did was raise taxes to extend the fiscal longevity of the program.

Final word… you only have to know HS and general education requirement college algebra and geometry to get started with Saari’s work. Especially ‘Decisions and Elections’ that covers weird problems with standard approach to markets, social decision making, elections, and even practical decision problems that arise in, say, engineering (multiple design teams working on a ship or airplane design). And if you are a ultra nerd, like me, that application to statistical paradoxes are also cool.

But just a couple of intuitive math weirdnesses explain many of the problems with getting a practical economic theory that works both on paper (is logically coherent) and the real world.

thanks for the link.

Is one of the problems that some inputs are assumed to be disallowed, even if they’d work?

Over the past couple of months I’ve looked at articles telling me of the hundreds of billions in bailout money thrown nobody knows where, and I keep coming back to my initial take on the problem: pay off everybody’s mortgages and then the debt isn’t toxic.

I still don’t see in theory why that wouldn’t work. And at present I don’t see that it would be more expensive. In fact, I think it would be dirt-cheap in comparison. Plus, you’d know where the money had gone. So lots of people got lucky, lots of little people — is that a crime? Compared to what is happening now?

There must be a model out there that has that input. What happened when it was run? Or is the idea of giving money to “little people” simply disallowed?

Nothing particularly wrong or radical about Greenspan’s work on social security back then. All he did was raise taxes to extend the fiscal longevity of the program.

strongly disagree.

regressive tax increase that made the tax structure as a whole more regressive. of course what made it really obnoxious on his part was supporting bush’s tax cuts.

Here’s the link to Saari’s book on elections.

He built in the surpluses which were nothing more than a backdoor tax on the lower and middle classes. They were spent like ordinary revenue. The commitment to fund shortfalls between 2017 and 2040 could have been made without them. The total of these is in the trillions and represents most of the government held part of the national debt. If you take these into account the national debt is closer to $6 trillion instead of $10 trillion.

Fair enough. But it worked well, including not being oppressive in a macroeconomic sense, for a couple of decades. Hard to criticize a policy that worked to the intended end for so long with no visible negative side effects.

I’m guessing you’ve already heard of these folks, but worldwatch, rocky mountain institute, and etc group all seem to look at that topic from various angles.

Also agree with selise about the overall regressivity of the SS tax hikes as well.

Off for some refreshment, possibly of an alcoholic nature. Will return upstairs.

Thanks for the links

My pleasure. Any of those groups would be lucky to have you!

i don’t think i agree that it worked well – although i don’t know the impact number wise so maybe this is all wrong – imo one of our problems is that the divide between the haves and have nots is too great because it creates perceived divergent interests and it concentrates political power with a few.

just seems to me that this is one of the things that has contributed to our very disfunctional political system.

later… thanks for the conversation. lots of food for thought tonight.

Thanks to Ian and all for the enlightening post and informed commentary.

My take is that our economy is at its most basic level a political system which is fundamentally about control of our productive resources and governmental power. The ‘free market’ and elections don’t have too much to do with either. Our dominant economic theory is a facade designed to give legitimacy to the plunder.

Look how quickly GWB and Paulson jettisoned theory and demanded trillions of public dollars to bail out their oligarch buddies.

Where are BMs tax returns?

Bernie Madoff will not be taken to open trial any any Federal agency. Any BM public trial will risk exposing the Internal Revenue Service as a great scam on the common wage earner, pandering to the corporate rich, the privileged sheleters and trust/foundation schemes.
BM’s scheme had no “profits” to tax. He had no direct income over many years from the estimated $50 Billion, taking only the broker commissions [standard or other amounts?] from trading the funds, by which he lived an opulent and jet-set lifestyle. And the commissions were likely laundered through a BM company, not to him directly.
BM “owned” planes, boats, limosines,mansions, real estate, etc., but most likely [1] indirectly as perks from companies [who pay no tax on “business expenses”] or [2] under his control by being owned by family/friends/associates or [3] owned via offshore and similar dodges immune to the IRS taxation or reporting.

BM WAS TOO BIG FOR THE IRS TO TOUCH.

Of course, the Securities and Exchange Commisssion knew of the scandal and the awesome backfire should they expose it. So they could not honestly investigate without demonstrating their own complicity in creating such financial schemes via deliberate loopholes.

As to the anatomy of loopholes…
Who writes the laws? Who writes the rules? Who decides what gets investigated? and when? and who? Who decides when to enforce the rules? and by whom? To whom do the staffs the SEC owe their jobs?.
The answer is..the rich and powerful leaders of the financial-class and their accomplices. Insiders rule at the SEC, NY Stock Exchange, Nasdaq, etc

BM operated within the deliberate loopholes created by the makers and enablers of finance games.

There is only one remedy. It is a familiar idea long suppressed. It is not a Dept. of Justice or system of justice, judges, lawyers, accountant, trials, juries or police… all those entities have been made purposely confusing and riddled with pay-to-play.

The only remedy I know is mastering and applying the simple idea and definition of justice as fairness. Seek justice. Only justice.

The finance-games crowd are allowed to be “self-regulating” because they write the nonsense laws and rules of their own games so that outsiders are hopelessly confused and thus ineffective. For example, who understood that “Credit Default Swaps” were named such for the exact purpose of escaping regulations governing the insurance industry? CDSs masquerade as insurance…what’s to worry, these bonds are 100% insured by the Great Fiji Island Assurance Society [which my sister-in-law operates in a 1-room shack in Bangladesh].
They want no effective oversight by outsiders…and there in none.

BM is a Finance-game insider. He was untouchable until he was forced to give-up because his schemes collapsed.

His game was exposed years ago. Many top managers in banking and investment firms knew to avoid dealing with him, but they dared not act to “self-regulate” their industry because BM was untouchable. He could continue to play his game. There was no effort to stop his fraud because he was an insider. Any action to stop him would expose the other insiders who practised their own brands of financial flim-flam.

Where did the money go? How could $50 Billion disappear?
In a Ponzi-type game, money is given to a con-man who promises to invest and pay attractive returns or interest to the giver…but secretly the money is not invested and there are no profits from actual investments to pay interest to the giver. The con keeps and uses the money for personal benefit, at the same time using some of it to “pay” interest to the giver, so the giver enjoys success and does not take his money out of the game. BM was “paying” about 16% “interest” to fund managers who recruited the givers, and the fund managers passed on 12% to the givers. BM, himself, meanwhile made full use of the remaining giver-money.

Note that when a giver stays in the game, he continues to get his 12% on the original money…even after 10 or 20 years! And even more if he re-”invests” the 12% payouts. Well, at 16% per year, after only 4 years or so, the con has used up all the original money just as “payouts”. So he must recruit more and more givers to hand over their money for him to “invest” so the money-in stays ahead of the money-out…because if it doesn’t the con cannot payout “interest” and the givers will ask for their money back[redemptions].Alas, after participating about 12 years, a con has already paid out 200% of the giver’s original money, without the con making any profits from the pretended “investing”.

Meanwhile, the givers believe their money is still there working and earning the “interest”. It isn’t there. But the con’s “account books” and “statements” show all the monies are there and invested…in BS’s case, all $50 Billion… which is only the ghost of all accumulated monies given to the con from the very beginning 20 or 30 years ago [plus any re-”invested” payouts; and less any redemptions by givers withdrawing from the game]. Now at end-of-game, the con confesses that maybe $200-300 million actually remains. The con disbursed the money, purely at whim, to subsidise his opulent lifestyle and who knows what else. What price to buy a public official ?

Why did the game end? Why did he confess?

The game ended when, during the recent market losses and drop in value of nearly all kinds of assets and liquidity crisis, some givers who needed more cash decided to withdraw their money from the funds who had given it over to BM to invest. Since BM did not have money to cover the redemptions , even though his “account books” claimed it was all there, he could not return the monies shown in the giver’s statements of account and was exposed as a fraud. Game-over for BM.

All the TAXES paid to the IRS based on any distributed “profits” are probably recoverable bythe givers.
All the taxes never paid on the part of $50 Billion that was spent/consumed by BM are probably lost and, as usual, the taxpayers always make-up for any taxes not collected or forgiven or other forms of “tax breaks”. As long as taxes are levied to meet budget spending, any “tax breaks” must be offset by proportionally higher taxes on those who do pay. [Who writes these laws permitting tax breaks and tax-free Municipal bonds, etc?]

BM can expose the “modern” banking, bond and equities business as flim-flam.

BM can give the lie to the SEC, Treasury and the FedReserve as just an old-boy network of confidence-games; Wizards of Oz behind their curtains of
we-know-best-for-you propaganda.

BM will not go to public trial. Plea-bargain, maybe. There is and will be desperate damage-control by the financial gamemakers.

Thank you, BM, for your demonstration of “Behind all big money is big crime”.

Seek justice. Only justice.

Ian, sadly I agree with you 1000%.
My friends ask me how I was so right and how did I know things were gonna come undone when they did and cascade like they have. I just look at them and ask how long they think they’d be able to survive by paying for everything with money they’d made themselves before others realized there was nothing behind the money.

No one believes me when i tell them this isn’t over by a long shot. They listen to CNBC talking heads and traders with smiles on their faces who say this will level off sometime next year.

Not for the majority of Americans it won’t.

Well, fern, it is the least we can do, perhaps.

To graciously be forgotten, as soon as is reasonably possible.

We might even come to remain as an enigma to those sentient beings that might, one day, happen upon our ‘remains’, should any venture here before the sun goes nova …

Or, possibly, our sentient visitors might find it drearily common, thus relieving us of any conceit of ‘exceptionalism’ whatever.

While it is often said that ‘why?’ is the question our sentiency compells us to ask, giving impetus to our curiousity, from which all our collective ‘achievements’ ultimately must arise, we have yet to address the question sufficiently towards ourselves.

We have looked outward, through the eyes of a creature just out of the trees … we have learned that fire may burn us but also keep us warm.

We have observed the seasons and grasped the significance of seeds …

We have fashioned tools, from miroliths cunningly arranged to cut grasses to complex machines that can fly through the air.

We have begun to perceive the magnitude of universe, if only to realize that we can’t really perceive such awesome distance and time and pulsation …

We can enter the physical structure of the human heart, almost nonchalantly, and watch, in great detail, the firing of neurons deep in our brains.

Truly, we are a most remarkable creature, a featherless biped …
seemingly unique in our world, separate and apart, so we imagine, by virtue of our intellect and reason and speech.

And now, we may contemplate the end-time of our species, not becuase of an asteroid, or an alien attack, or some catalclysmic natural event … but through our own efforts …

We skirted (so far) an atomic ‘winter’ …

But other unpaid bills are beginning to come ‘due’ …

The climate IS changing, and it is utter rot to claim we’ve had no hand in this ‘reality’.

By now it must be understood that we have used our ‘resources’ extensively, but for decades it has been recognized that we need to use them intensively and with great care …

For too long a time, we, especially here, in America have known that we must change, change our behaviors, change our expectations, and change our comfortable conceits, but we have chosen not to change, we have chosen to pretend.

We pretend that other people are ‘different’ and not like us, we profess to not understand why others should have any reason to dislike us or mistrust us …

We pretend that everything is fine while we have watched our economic base dismantled and shipped to some other part of the world, we watched people who had developed well-honed skills, that are still necessary, be told to get an ‘education’ to prepare for a new world order where they and the skills were of no value …

In short, we have pretended, as we sold ourselves out, to ourselves and others, that everything was fine, that we must move forward into the brave new global jungle and rush to the bottom to ‘compete’ with everybody else, everywhere to do ‘it’ as cheaply as possible, and then again, even more cheaply, that we were all ’stakeholders’ in this brave conflation of freedom and free enterprise, of democracy and ever-cheaper goods, becuase, of course it is a ‘consumer’ society in which we live.

So we dreamed that we lived to consume …

We must be out of our trees.

I don’t think distro makes a bit of difference and I think your argument is specious because of that. I’m typing this on eeebuntu (netbook remix) because this laptop happens to be a mini. My full-sized laptop is an older model and I use Puppy Linux on that because it is crappy hardware and low memory. My desktop has Mandriva on it, although I’ve tried Redhat, Fedora, Ubuntu, SuSe, and a bunch of others–I just like Mandriva a little better because of the way Mandriva orgainized the KDE desktop and Draktools. But, they all work essentially the same whether the desktop is Gnome or KDE. Pick any distro and it will probably work, as long as your hardware is supported. Obviously I can switch seamlessly between Gnome and KDE. No offense meant, but why can’t you?

What is the point of the variety? You obviously like fooling around. One Linux permits you to fool around to your heart’s content, like some people soup up Honda Civics. Most people don’t want to switch seamlessly between Gnome and KDE. They want to plug in a computer and use it the way they plug in a television set. We manage, but why have several browsers so that web site construction gets more complicated by having to accomodate all of them?

Marshal McLuhan said technology shapes society. I think he’s right and I thing electronic technology is utopian in that it deals in abundance, not scarcity. It makes as many identical files as desired. Also, as the New Yorker cartoon showing dogs at a computer with the caption “On the internet, no one knows you’re a dog,” it is egalitarian. One Linux will not limit anyone’s creativity and will make it easier for the great majority of us who are not creative in this area. BTW I believe it essential that we move from Windows to Linux for a variety of reasons, but it won’t work without standards. Standards are the one big lesson to be learned from Bill Gates.

You aren’t listening to what I said. I prefer Mandriva and KDE to Gnome. Mandriva will function on my netbook but it does not offer tabs, etc. that eeebuntu netbook remix has available. Eeebuntu is designed specifically for my netbook and it works perfectly–exactly the way I want it out of the box (except I use wicd as my wifi manager).

None of the ”large” distros will run worth a darn on a P233 with 128 megs, but Puppy is fine on that laptop.

I’m using different tools for different situations. One size simply cannot fit every situation and that is why Linux is so varied. Yes, a single distro (Vista, anyone?) would be easier for the masses, but that solution will not cut it for everybody. I’m not going to buy new hardware just so that I can run a modern distro when I have perfectly good hardware that will serve.

As for browsers, I’ve standardized on Firefox, as has almost everyone else running Linux (there are a few hardcore Opera users and Opera does work better on that old laptop). If websites would write their code to the web standards and stop using MS-only API’s the problems you are talking about would go away. That is not the fault of the browsers.

It is true hardware matters. You need different operating systems for watches or cell phones than for desktops but yes, it is the masses I’m talking about. It is also true hardware changes over time. There should be backward compatibility. 32 bit operating systems should work on 64 bit machines with a general upgrade for Linux to make the best use of 64 bits. We may reach a point where we have standard machines that take standard upgrades, but we are far from there at this juncture. If you want Linux to be the standard in wide use, and I believe it important to take that step before we sink even deeper into Microsoft, you must consider the masses. Like it or not, they are all that matter. Linux now is the stuff of hobbies. It’s time to get serious.