Monthly Archives: August 2013

Wheels Falling Off the Imperial Reality-Creating Machine

By Lambert Strether of Corrente.

One of the most famous quotes from the era of Bush the Younger came from Ron Suskind in his (October) 2004 article, “Faith, Certainty and the Presidency of George W. Bush”:

In the summer of 2002, after I had written an article in Esquire that the White House didn’t like about Bush’s former communications director, Karen Hughes, I had a meeting with a senior adviser to Bush. He expressed the White House’s displeasure, and then he told me something that at the time I didn’t fully comprehend — but which I now believe gets to the very heart of the Bush presidency.

The aide said that guys like me were ”in what we call the reality-based community,” which he defined as people who ”believe that solutions emerge from your judicious study of discernible reality.” I nodded and murmured something about enlightenment principles and empiricism. He cut me off. ”That’s not the way the world really works anymore,” he continued. ”We’re an empire now, [now?] and when we act, we create our own reality. And while you’re studying that reality — judiciously, as you will — we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors . . . and you, all of you, will be left to just study what we do.”

Joseph Goebbels would be proud. No, Joseph Goebbels would be awed. And, back in 2004, what was, pre-Obama, regarded as the left blogosphere, bloggers rose en masse to claim the mantle “proud member of the reality-based community.” We know how that worked out. But a little over a decade on, we can ask the question: Was Bush’s “senior advisor” right? Do we, as imperialists, create our own reality? I’d argue that the current Syrian fiasco shows that the answer is No.


Dan Kervick: Hyper-Endogeneity

By Dan Kervick, who does research in decision theory and analytic metaphysics. Originally posted at New Economic Perspectives.

Some people believe in endogenous money. They believe we live in a monetary system is which money is generated and extinguished as part of the ordinary flow of everyday economic activity. The economy tends to generate the money it needs in order to satisfy the exchange desires and saving preferences of participants in the economy, and to extinguish the money it doesn’t need.

The endogenous money picture is in some considerable tension with the idea that the monetary system is controlled by the government. The alternative exogenous money picture holds that the issuance and destruction of money is a task reserved for government alone, and that the total amount of money present in the economy is therefore a government policy choice.


ObamaCare Staggers Toward the October 1 Finish Line (2)

By Lambert Strether of Corrente.

Perhaps this will be a useful metaphor to explain how ObamaCare really works:

Imagine you walk into a hospital seeking health care: Perhaps for something major, like heart failure, or something minor, like a broken arm. You sign in at the front desk and explain your situation to the nurse on duty. In response, they reach under the desk and pull out an extraordinary contraption: A combination, it seems, of a miniature steam engine, the Wheel of Fortune, a cuckoo-clock, and a football scoreboard. There’s a crank on the side of it, which the nurse, having rolled up their sleeves, turns vigorously with one arm, while feeding lumps of coal into the steam engine’s firebox with the other. Clutching your chest (or your arm) you notice two doors behind the desk. They have signs which read: Special Limited Facilities, and Service Grand Royale. The cranking stops: The steam engine emits three shrill whistles: The Wheel of Fortune judders to a halt at $500: you hear “Cuckoo, cuckoo”: and see (in lights) 42. The nurse notes these results, consults a large three-ring binder, and points you to the door marked Special Limited Facilities. Or perhaps it’s your lucky day, and Service Grand Royale is yours, all yours!


Gaius Publius: Deep State — Is the Upper Echelon of the Intelligence Community Running America?

Gaius focuses on the question of the degree to which the military-surveillance complex is already calling the shots in the US. While he uses the current sanitized formulation, “deep state,” I wish he and others in the opposition would use a more accurate, if perhaps less tidy, turn of phrase, like “slow motion military coup.”


Bill Black: Zero Prosecutions of Elite Banksters is Too Many for the Wall Street Journal

Yves here. Although Bill Black’s post starts with how the Republicans have linked their attacks on the IRS to a broad-brush effort to depict any and all government oversight as an evil plot to destroy the profitability of upstanding businesses, he includes how the Clinton-Gore “Reinvent Government” initiative set out to cripple the IRS, and how that has hurt enforcement generally. Readers may recall one example discussed regularly on this blog: how the IRS refused to penalize clear violations of REMIC (Real Estate Mortgage Investment Conduit) rules that resulted from the failure to convey borrower notes to securitization trusts as stipulated in the 1986 Tax Reform Act.

In general, as tax maven Lee Sheppard has pointed out, the US does little in the way of tax law enforcement. As if you believe in the broken glass theory of lawbreaking (that failing to prosecute minor violations of the law, like petty vandalism, broadcasts that policing is lax, which encourages more serious crimes), it’s not hard to see that having a barely-on-the-job IRS would tell the moneyed classes that they can push the envelope in other areas and probably get away with it there too.


David Dayen: Regulatory Apparatus To Provide Full Employment For Chroniclers of Future Bailouts, as Useless Mortgage Origination Rules Introduced

There’s no way to possibly count the various ways in which Dodd-Frank rules have been watered down, even from their already waterlogged original intent. But we got another example of it yesterday, the product of a corrupt bargain between the mortgage industry and so-called “progressive” housing groups.


Wolf Richter: German Election Finally Gets Messy: “Euro Is More Than A Currency” And Greece “Shouldn’t Have Been Allowed In”

No debacle is allowed to interfere with Chancellor Angela Merkel’s efforts to hang on to her job, and any debacles get swept under the rug at least until after the elections on September 22. Every time uppity opposition voices stir up some controversy, it’s brushed off, denied, ridiculed, or minimized – and it has worked admirably well so far.

Even Edward Snowden’s revelations day after day in Der Spiegel – which had received copies of documents detailing German involvement in NSA spying activities, among other sins – were successfully shuffled off. Though the discussion continues to be heated, it is, like in the US, a bi-partisan debacle, compromising political figures from both sides. The scandal is spreading and festering, but apparently without political fallout.


Jayati Ghosh: None of the Experts Saw India’s Debt Bubble Coming. Sound Familiar?

So now India is the latest casualty among emerging economies. Over the past 10 days, the rupee has slid to its lowest-ever rate, and the Indian economy may well be on the verge of a full-blown currency crisis. In this febrile situation, it is open season for rumours and pessimistic predictions, which then become self-fulfilling.

This means that even if there is a slight market rally, investors quickly work themselves into even more gloom. Each hurriedly announced policy measure (raising duties on gold imports, some controls on capital outflows, liberalising rules for capital inflows and so on) has had the opposite of the desired effect. Everything the government does seems to be too little, too late – or even counterproductive.


David Dayen: Fast Food, Retail Worker Strikes Actually Honor King Legacy

The March on Washington’s 50th anniversary resulted in two commemorative events, including the one Saturday with comments by Eric Holder and Nancy Pelosi, and the one yesterday with a speech by President Obama. Needless to say this is a bit of an inversion of the original message of a March ON rather than WITH Washington. So I would say that the major tribute this week to the legacy of that march, a march for jobs and freedom, is actually today’s national retail worker strike for a higher wage, which takes what had been a one-off model and expanded it. Events are expected in 35 cities, maybe more. And where the initial events were just with fast-food workers at places like McDonald’s and Wendy’s, apparently workers at retailers like Macy’s are involved in some cities.


David Dayen: Could the White House Want to Confirm Larry Summers With Republican Votes?

By David Dayen, a lapsed blogger, now a freelance writer based in Los Angeles, CA. Follow him on Twitter @ddayen If we’re to believe the thin sourcing from CNBC’s John Harwood, sometime in the next few weeks, Larry Summers will be announced as the nominee to become the next Federal Reserve chair. As I mentioned […]