Links 8/18/10

‘No human link’ to mammoth demise BBC

United States’ North-South Achievement Gap Racial Reality Blog (hat tip reader Paul S). Wow, this is wild.

Attosecond real-time Observation of a Quantum Hole analytica-world (hat tip reader Skippy)

Report: Nearly 80 Percent of Spilled Oil Still Threatens Gulf Discovery. In other words, your government is lying to you yet again. Reader John M notes:

Most of Deepwater Horizon oil spill is still in the Gulf. There does exist a strain of bacterium that can degrade PAHs, but it is a genetically engineered species and the government has never allowed its release even though it’s almost 40 years old. The wikipedia article about the inventor ( stated that it was used in Alaska’s Prince William Sound, but I never read or heard any such thing and I’m a microbiologist/genetic engineer by training. I had heard that Dr. Chakrabarty was resigned that the bug would never be used because of government fears. He did do research on bacterial degradation of oil spills in Prince William Sound, but he was looking at alginate biosynthesis and he wasn’t using his GE patented strain that I can tell from the abstracts. This is the only blurb I’ve found that the patented bug was used on the Exxon Valdez spill; but there are no references.

Bacteria and Phytoplankton Affect the Weather George Washington

Tantalizing Clues as to Why Matter Prevails in the Universe: Surprisingly Large Matter/antimatter Asymmetry Discovered Science Daily (hat tip reader Skippy)

Google as Big Brother Columbia Journalism Review

Chalmers Johnson, Portrait of a Sagging Empire Tom Engelhardt

Stop the Catfood Commission Alan Grayson. Please sign this petition.

Critics’ Misleading Attack on “Misleading” Medicare Report Off the Charts. More proof that anything from the Peterson Foundation’s David Walker should be assumed to be untrue unless there is compelling evidence to the contrary.

Mortgage Role for U.S. Is Affirmed New York Times. Get a load of this…Bill Gross is making threats:

Mr. Gross said Pimco would not invest in bundles of mortgages that lacked government insurance unless the borrowers had made down payments of 30 percent or more.

This isn’t even credible. If other fixed income managers were to invest in Fannie/Freddie insured deals (presumably based on an assessment of risk v. yield), Pimco would follow. For competitive reasons, they couldn’t sit on the sidelines and pout.

New Attempts to Woo “Unbanked” Customers Wall Street Journal. I don’t understand this. South Africa solved this problem before 1997. Give workers who don’t have bank accounts their pay on a stored value card (a chip card, smarter than stored value cards, like gift cards, used in the US).

SEC spins judge’s words in defending Citigroup settlement Zach Goldfarb

US oil speculators fined for $100-a-barrel “vanity trade” Telegraph

Monetary policy for the 21st century Steve Waldman. Today’s must read.

Antidote du jour:

Picture 1

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  1. russell12000

    To me anyway, it seems your attack on Peterson does not actually seem to hold up to the weight of the discussion. The “controversial” comment by Peterson, seems to be a shorthand for saying that the projections wer baloney, not that it won’t go forward as enacted.

    The two parties are essentially arguing over how much (if any) savings there will be.

    It seems one of the more telling points from the Peterson side was:

    In addition, for the third consecutive year there were no independent Medicare trustees to issue a separate statement. Without them, the Obama administration was able to put forward an unjustifiably positive outlook for the Medicare program and the impact of the health care legislation. If public trustees had been in place, they could have helped ensure that a more realistic view was presented in the report, possibly including a reasonable best estimate along the lines set out in the chief actuary’s alternative.

    1. Yves Smith Post author

      Did you read the NYT op ed? Evidently not, because Walker tries to sell the case that the official report is unjustifiably optimistic, when the post I pointed to shows the dispute between the two camps is actually small. So the distortion in the op-ed is substantial, your comment to the contrary.

      In addition, we ran a long post on the wildly dishonest Peterson town hall meeting propaganda campaign, which appears to have backfired.

      Their history of exaggeration and misrepresentation on this topic is deep and wide.

      1. DownSouth

        Thanks for providing that link.

        I noticed that the Peterson brigades were out on NC in full force yesterday, parroting Peterson’s talking points ad nauseam. According to his campaign of lies and disinformation, there is this generational and racial divide surrounding social security.

        This from your link:

        Support for Social Security is found in virtually all segments of the American population. The opinion that “too little” is being spent on Social Security is shared by majorities of Republicans, Democrats, and Independents; by majorities of men as well as women; by whites as well as African Americans or Latinos; by people with a lot of formal education as well as people with little. Most important, support is very strong among young (age 18-29) Americans, fully 63% of whom told the most recent GSS that we are spending “too little” on Social Security. The supposed generation gap on Social Security is mostly a myth. There is no intergenerational war between “greedy geezers” and the young.

        1. JTFaraday

          Yeah, but what young people ideally want and what young people think will actually happen are two different things.

          That’s why it’s so important to keep the Obamatots attached to their guy–who will fulfill their predictions– and disparage the left perfectionists, who might try to take a shot at some other outcome.

          1. Rex

            “That’s why it’s so important to keep the Obamatots attached to their guy–who will fulfill their predictions– and disparage the left perfectionists, who might try to take a shot at some other outcome.”

            I read that paragraph several times and I still have no idea what it might mean. Is it some kind of coded message that I might understand if I had a Glenn Beck decoder ring?

          2. attempter

            I read that paragraph several times and I still have no idea what it might mean. Is it some kind of coded message that I might understand if I had a Glenn Beck decoder ring?

            No, but any kind of public interest decoder ring would work just fine.

            It means that Obama wants to gut Social Security; that one of the Big Lies is that SS (already paid for by the people, an account receivable by us) is somehow fiscally unsustainable while bailouts, wars, and the Pentagon are just fine; that the Obama cultists are precisely the delusional younger people the system needs to convince of this Big Lie; and so Obama’s job is to keep them ignorant and compliant, to keep them from demanding what should be our clear demand at every point:

            Not one cent of cuts for we the people until we’ve completely cut all corporate welfare, including all bailouts and war spending.

      2. russell12000

        My quote was from the NYT piece, so obviously I did read the NYT piece.

        I did not think the Op Ed piece addressed the main points. It spoke of the one year delay. But I don’t think that that is what the Peterson case really is. Peterson says that any savings are really unknown, but that there is no independant trustee.

        he further went on to say: To his credit, Richard S. Foster, the chief actuary for Medicare and Medicaid services, has made his own position clear. He issued the equivalent of an “adverse opinion” regarding the trustees’ health care cost assumptions, cautioning readers about the current report’s projections. Mr. Foster concluded that “the financial projections shown in this report for Medicare do not represent a reasonable expectation for actual program operations in either the short range … or the long range.”

  2. attempter

    Re the Bailout via GSEs:

    The Obama administration has been barraged with ideas for reworking the government’s role in housing finance, spanning the spectrum from guaranteeing all mortgage loans to eliminating all federal subsidies for homeownership.
    Treasury Secretary Timothy F. Geithner, speaking Tuesday at a conference to discuss the possibilities, made clear that the administration was not pondering such radical kinds of surgery as it develops a proposal it hopes to unveil in January.

    Of course, “guaranteeing all mortgage loans”, what the piece calls a “radical” extreme, is in fact exactly what we have and what the NYT wants to help perpetuate. (All loans are either explicitly guaranteed or receive the implicit Too Big To Fail guarantee.) So now they’re reaching the realm of de jure lies of fact itself, and not just of truth.

    Re Waldman:

    I like these statements of truth, how we don’t need the finance sector and we never need to squeeze wages, how on the contrary the government sovereign in its own currency is always free to act directly for the public good. And how arguements to the contrary are simply lies on behalf of the bank parasites.

    (I also love the way every incarnation of this pitch drives those who are financially or emotionally invested in kleptocracy to ever greater heights of distraction and incoherency.)

    Direct public payments would be structurally the same thing as what we now have, direct corporate welfare payments. The same thing, but with the monumental difference that they would be fair and just (since it’s only the producers who produce society’s wealth; the parasites produce nothing but only steal and vandalize), far more efficient, would actually spur production and creativity, would lead to wage growth (so that this alleged funny money would actually have far more of a real economic basis than the funny money now monopolized by a worthless plutocrat fungus), would let us purge ourselves of all the ugliness and evil of bank bailouts, insurance bailouts, wars, weapons spending, and all corporate welfare, and would flourish in the form of social stability, less stress, greater leisure, and human happiness.

    All that stands in the way of this are a few wretched criminals……

    1. Tao Jonesing

      I enjoyed the Waldman post, too.

      What I particularly liked about the proposal is that, as a practical matter, it short circuits Friedmanist monetary policy and Keynesian fiscal policy together in a way that is more just than Friedmanist monetary policy alone and better able to respond in real time than Keynesian fiscal policy, which currently requires that new laws be passed and, therefore, is lagged by politics.

      Still, I wish we’d stop pretending that the only levers that we can pull to properly modulate inflation and employment are monetary policy and fiscal policy. The single biggest cause of inflation and bubbles is speculation fueled by fractional reserve lending. Why not just outlaw that and be done with it?

      1. attempter

        Yes indeed. As much as I’ve thought about it and listened to the nonsense in defense of it, I can’t see any reason at all for speculation to legally exist as any kind of enforceable contract. It produces nothing. Let’s get rid of it. All we need is one big bucket law.

        And to reiterate on the direct money flow from the government: Today it flows directly to all the worst, non- productive criminal parasites, and in such vast amounts. The fiscal terrorists with their “inflation” bogeyman somehow never worry about the fact that MMT’s not even proposing to do anything new as far as printing money, only to redirect that money flow away from the parasites and to the actual producers.

        As for the parasites, I think we can create plenty of rope-making jobs right there.

        1. Cynthia

          Yes, attempter, and after the workers get done making the rope, they can hang the parasites with it. Then they can take pride in the fact that being dual-purpose workers has done wonders for their company’s bottom line.

        2. Tao Jonesing

          One can argue that all investment in future production is “speculative” in that the demand for what is to be produced is uncertain and the effort could go bust.

          I don’t buy that in the sense that investing in the means of production has its own benefits (employing people, purchasing goods and services, etc.), so fractional reserve lending makes sense for this very minor type of “speculation” (Marx’s M-C-M’).

          Pure speculation (Marx’s M-M’, examples of which include “investing” in the stock market, the bond market and the derivatives market) has no economic benefit that I can see. That being said, I have no problem with lending to speculators if the loans are 100% backed by reserves (which really means the creditor transfers existing funds to the debtor instead of creating those funds out of thin air). I imagine that the interest would generally be so prohibitive that pure speculators could not lever up that much.

          So I guess that means I’m okay with pure speculators creating leverage using debt as long as that leverage is not created on top of existing leverage. I guess that means the derivatives market has to go, though.

          1. attempter

            Pure speculation (Marx’s M-M’, examples of which include “investing” in the stock market, the bond market and the derivatives market) has no economic benefit that I can see. That being said, I have no problem with lending to speculators if the loans are 100% backed by reserves (which really means the creditor transfers existing funds to the debtor instead of creating those funds out of thin air). I imagine that the interest would generally be so prohibitive that pure speculators could not lever up that much.

            So I guess that means I’m okay with pure speculators creating leverage using debt as long as that leverage is not created on top of existing leverage. I guess that means the derivatives market has to go, though.

            Why? Some strange (mis)notion of “liberty”? Since it’s both worthless and destructive, it shouldn’t be tolerated.

            We don’t have this same rational/moral cognitive problem where it comes to drunk driving, which is an almost exact parallel (except that drunk driving is far less destructive).

            Other than the money invoved for a handful of criminals, what’s the difference? Of course, the money is the difference. It’s why many are paid to defend this version of drunk driving, and the rest are intimidated about demanding what obviously should be done. They’re scared of the money, or actually in awe of it.

  3. anon48

    @$100 a barrel vanity trade.

    From the CFTC- “The levy is intended to send a clear message that the regulator is intent on finding and fining those individuals and companies which were responsible for pushing oil to $147-a-barrel by July 2008.”

    The level of price manipulation was for $.25. What a joke! If this is the best that the CFTC can come up with after two years of investigations it no longer deserves to exist.

    This would have been like the New Orleans Police Department, two years after the devastation of Hurricane Katrina and all of the consequent looting and trashing of that city, announcing with great fanfare that they had made their first arrest- someone who knocked over a rubbish container and spilled trash all over the street.

    1. Hugh

      I went to look up this old link. It is a 2006 report on excessive speculation in oil markets going back to 2004.

      Someone passed the link to me when I was writing on this in 2007. It echoed (or I echoed it) what my own analysis of the data was showing. If the CFTC can’t find a ton of stuff on this, they aren’t looking, but then SEC, CFTC, all the agencies involved with the BP blowout, the Obama Administration regulators are really not that much different than their Bush era counterparts.

  4. DownSouth

    Re: “Report: Nearly 80 Percent of Spilled Oil Still Threatens Gulf”

    There’s also this from CNN:

    Scientists: Toxic organisms, oil found on Gulf floor

    “This whole concept of submerged oil and the application of dispersants in the subsurface and what are the impacts that it could have, have changed the paradigm of what an oil spill is from a 2-dimensional surface disaster to a 3-dimensional catastrophe,” said David Hollander, a chemical oceanographer and one of the lead scientists on the recent USF mission.

    For the BP shills, it’s been full court press, including here on NC.

    You gotta love some of the comments.

    In the world of lies and disinformation inhabited by BP, rogue federal agencies like NOAA (Department of Commerce) and MMS and Fish and Wildlife Service (Department of the Interior), and their hordes of shills who show up here on NC, those like George Washington who try to interject some evidence and truth into the debate get branded as “cranks” and “conspiracy theorists” who operate in some “parallel universe.”

  5. NS

    Totally adore this photo Yves. Your antidote du jour is a wonderful contrast to the superiority of humans cooking chaos and destruction as the main course on the menu, which includes eating our young. That dish will be served until it is no longer tasty and profitable. Wonder when or if it will ever happen. If history is any guide…never. Man doesn’t learn very well despite all emphasis of our sophistication in creating complex systems economic and otherwise. The myopia and hubris is stunning.

    Carpe Diem.

      1. dsawy

        The bottom dog appears to be a Tibetan Mastiff, one of the last primitive breeds of dogs left.

        Most people can’t handle a dog as hard and as large at the Tibetan, or the derivative breeds like the Kuvasz or Great Pyr, so you don’t see many of them.

        I’d reckon that dog is 28 inches tall (at the withers) and runs probably 110+ lbs under that fur.

  6. Adam

    OMG!!! I want to die everytime I read one of these stories (New Attempts to Woo “Unbanked” Customers). I’ve been working on an “Underserved” project for my FI for 3 years now. FI’s just can’t get beyond the checking account. It’s a disease that infects almost every employee and even the regulators – this idea that everyone MUST HAVE a checking account. Ugh!!! If an FI wants to serve a so called underserved person they need to start to offer them products that are a good match for their lives – and a checking account for the most part DOES NOT fill that space!

    1. NS

      Agree Adam and what about banking being about a service, a utilitarian service-not hot drama day and night and lifestyles of the rich, famous while siphoning off wealth from productive endeavors of the underclass. This is what I meant by eating our young. Banking needs to get BORING again. Is money safer in your hands or in a bank? What banks once provided was a safe place to put money so robbery would not wipe you out in early simplistic terms; but, its at the core of their utility. Obviously, banks do not want or need our capital, its beyond stinky. Its time to starve these beasts.

      The GLBA and CFMA were watersheds in policy which let the sharks out in a historic and global feeding frenzy. The sharks have eaten the entire school of fish. Now what?

      1. Rex

        I am with you on wanting to see the banks pruned back to something like what they once were.

        I first noticed the creeping disease with my credit cards around the late 80’s – early 90’s. My card account kept being eaten by bigger and bigger banks, with new onerous changes to my terms each time. I was fortunate enough to be able to flee from these mega-scum and find ways to get access to cards away from these crooks.

        I was just thinking about the sci-fi movies of the 50’s – 60’s, like Creature From the Black Lagoon or Godzilla. They were feeding our paranoia about nuclear energy, cold war, and making a deal with science, but it seems now those gigantic mutant monsters were a pretty good model for what we see from the current financial services. Have we tried attacking the banksters with fire, ice or electricity? I seem to recall that one or another of those formulas worked on mutant spiders and blobs. Fences, reason, and even bullets — not so much. Maybe we need to rethink what weapons are needed in this battle for the survival of life as we knew it.

  7. Stephanie

    Regarding the differences in Northern & Southern “achievement”, I am dying to know what the definition of a “significant figure” is, and which of them actually came from Wisconsin (I forwarded this to a Badger-state friend of mine, who helpfully pointed out the “achievement district” in WI was south of Hwy 8, which I guess is supposed to be significant).

      1. paper mac

        Yeah, I have to say, this was not a well chosen link. The data are completely worthless (“significant figures” rather than any of a dozen measures of academic/intellectual performance or achievement), and citing Charles Murray is always a good way to inform your readership that you actually don’t know anything about biology..

    1. Jim Haygood

      The study admits on its face that it isn’t corrected for population density. Even if that were done, some urban clustering probably would be seen. New York is prominent in the arts, publishing, and media, and so naturally would be overrepresented if ‘significant figures’ were defined by achievement in those fields.

      Whereas, if one mapped ‘significant’ bluegrass musicians, petroleum geologists, and mineral geologists, the hot spots would tip more toward Appalachia, Texas-Oklahoma, and the mountain West, respectively.

      Peter Hall’s wonderful book, Cities in Civilization, explains how major urban centers in every country tend to attract more than their share of talented people — though the limelight eventually dims and moves elsewhere.

      Everything is cyclical, including superpowers’ ‘moment in the sun.’ An empire which doesn’t pay for itself is a one-way ticket to stagnation and decay. Sound like any country we know?

  8. MyLessThanPrimeBeef

    About the collidiing protons they used in matter/anti matter asymmetry expirements, I hope they measured the proton size accurately.

    There was a report last month that we had the size wrong all along.

  9. craazyman

    The north/south achievment gap can be easily explained by phrenology. The hotter sun creates bumps on the head that interfere with logical thinking and language, which is why southern rednecks all sound like morons and carry firearms even though there’s nobody really to shoot except each other. If you wear a hat, it solves the problem. These theories were all scientifically proved by significant persons from New York, who went on to make history. ;-)

    1. Jim Haygood

      Heh, heh! And then there us hat-wearing southern rednecks on the streets of New York, sans firearms (damned liberal gun-grabbers!).

      Wait and see.

      1. Rex

        Yeah, Crazyman’s proposition is badly flawed.

        How can you be a moronic southern redneck and not have some kind of hat? A flavor of “cowboy” hat or a baseball cap with a reference to some kind of motorized device or moto-sport, or hunting-shooting-fishing is pretty much part of the uniform. And could there be a tea party without some kind of crazy hat?

        Tin-foil hats?

        Crazyman’s proposition that hats could help is clearly crazy, if not backwards.

  10. Roger Bigod

    The piece about regional differences depends on the definition of “significant figure”, which is subject to the remote possibility of subjective bias by Mr. Murray.

    I remember standing in a bookstore line the day his treatise on race and IQ went on sale. It was mobbed by people who didn’t looke like bookstore types. Ahead of me was a late-30’s guy in blue collar duds with his boy taking in the unfamiliar scene. It was kind of sad. I wanted to shake him and tell him to save his money and get something special for his son.

    There’s something to the thesis about “significant figures”, but to understand it you have to review the 3 waves of Southern immigration. The first was the great bulk of settlers in the 17th and early 18th Cent, who were middle-class from the south of England. The gentry didn’t participate. It was the same gene pool that produced the Puritans (who were concentrated in SE England, mixed with some Danish invaders), but without some of the communal culture. Around the time of the English Civil War, there was an influx of gentry into VA and MD, encouraged by Gov Berkeley of VA. Besides producing political leaders (the Virginia Dynasty), they had a high level of written output, an impressive amount of which is still read (Madison’s part of the Federalist Papers, Wm Byrd’s diaries, the Declaration, Marbury). The controversial group were from the Borderlands in the 18th Century. For 500 years they had resisted government by the English and Scots. They instinctively hated authority, including intellectual authority. Religious dissidents signed a Covenant, some with their blood. To commemorate this they wore a red cloth around the neck. Hmmm.

    Fisher’s Albion’s Seed covers the second two. The early English who migrated to mountainous regions tended to absorb Borderlands culture, and it’s difficult to find cultural features that differ from the input to the other colonies. Webb’s book on the Rednecks is good, although I disagree on a few points.

    Another point to remember is that tobacco (the cash crop of VA) and cotton are labor-intensive. That imposes social hierarchy — owners, overseers and workers (indentured servants, later slaves). It also leaves no time for off-season activities like education.

    The interpretation of Murray’s survey depends on your view of life. If it’s a individual sport in which rewards go justly to high test scores, he’s identified the Elect. If it’s a team sport league, the winner is the culture of East Anglia with it’s emphasis on community projects, education, social order and respect for law. Without taking sides, I will comment that it’s easier to sell books that reassure people of their genetic superiority.

  11. Ina Deaver

    The north/south achievement gap quite possibly comes down to the importance of who you know rather than what you know. If the “significant figures” have anything like the proclivities of normal folks, they prefer people like themselves when they pick people to socialize with, hire, train, and promote.

    I am from Texas, and I am capable of hiding my accent when speaking, because people appear to naturally assume I’m a moron hick when I use it. I’m the same phi beta kappa person, but I’m perceived and treated very differently depending on whether I trot out the accent.

    I’d say it is unlikely to be inherent superiority of New Yorkers involved in the patterns identified. It’s merely that class structure (and discrimination) in the US is particularly insidious. I wonder how many of those “significant persons” were women? Black? Native American? Physically disabled? Plenty of people of great ability are never built out because our society fails to recognize the opportunity.

    1. doom

      Interesting. That article made me ask myself, objectively as I could, It’s easy for me to view Dalits and Tuaregs as excluded, so how come I don’t see cavalier/cracker culture that way too? I came around to thinking that Southern culture is not subordinate but oppositional. By various means over time, the South arrogated a disproportionate amount of power in the legislature. Then too it’s not like the culture really just wants liberté egalité fraternité:
      You clearly got your critical thinking skills, but do you think that’s the path of least resistance down there? Do you think it’s an open society?

      1. Ina Deaver

        What I have noticed about the types of people who settled in the “territories” overall is that they were more interested in doing than thinking. There is a certain amount of self-selection involved in taking the whole family, getting in a wagon with what’s left of your possessions, and taking off to live where the nearest neighbor will be 25 miles away, the floor will be dirt (and possibly the walls and roof), and the nearest library will be 200 miles away. Those tended to be people who thought sitting around reading or thinking was slothful. Also there is an acceptance of risk that is lacking in the average scholarly mien (wicked grin here). There just has to be a residue of that in the people who populate at least the Western half of the South.

        However, the migration patterns within the United States have been incredibly one-sided for the past decade – I wonder if that residue will continue? And sure, getting a fantastic education may not be the path of least resistance, but I find that makes the people who seek it out people who really want to learn.

        And I wonder about the “significant figures:” Van Kliburn was from Fort Worth – did he merit a dot? Did you know that Julian Schnabel, while born in NY, lived his childhood in Brownsville, Texas? Trust me, that is a little South of nowhere. I just wonder about the arbitrary nature of deciding where a person is “from” and whether they count.

        But I guarantee you that there is prejudice on the East Coast against persons from the South. If truth be told, it’s reciprocated. ;) I’m just tired of people looking for genetic reasons for things where well-known sociological reasons would suffice. Especially when it is well understood that high IQ, for example, is something of a genetic accident that can turn up anywhere. And also in light of the fact that a high IQ is but one tool towards becoming a “significant person:” you also need opportunity and a certain amount of luck.

        1. Roger Bigod

          You’re describing the Borderlands character. People who feel uncomfortable with rules and authority, physically courageous, tolerant of risk. They had the greatest economic inequality of the early groups, but didn’t mind rich people as long as they didn’t give themselves airs. But they were resentful of any displays of rank, intellectual or religious. If they get any higher education, it’s more likely to be in engineering or medicine than pure science. (They’re suckers for denialism of evolution and global warming.)

          Not to put down Cliburn or Schnabel, but the creators of jazz, blues and country music were arguably more significant figures in world civilization.

          Cliburn was born in Shreveort and studied with a locally famous teacher, Nina Wideman, before heading off to Julliard. I think the family lived in East Texas for part of his childhood.

          After he set up his Competition, he was at a cocktail party in Dallas when a Dallas matron strolled up to him a with that Dallas matron purr said “Mr. Cliburn, we all wonder why you set up your contest in Fort Worth and not Dallas.” He took a reflective sip of his coctail and replied “Because Fort Worth is paid for.”

          1. Ina Deaver

            But see, I don’t know that I am describing the “Borderlands character.” The people that I’m talking about did indeed prefer to be left alone, but more accurately had a tolerance for being left alone. They could manage without human interaction, and were very willing to sacrifice in order to potentially get ahead. If they made it, they became the authorities in many places. I don’t see a distrust of authority so much as a huge, driving ambition.

            But you do point out another problem with “significant figures” that I had difficulty articulating: it’s somewhat difficult to identify “significant figures” in something like the blues. There are many truly great musicians who may have moved the ball, but blues and jazz are collaborative art forms in a real sense. Does that mean that there aren’t “significant figures?” I picked Schnabel and Cliburn (and misspelled his name, even) just off the top of my head because those are lone pursuits, and they have some easily recognizable feathers in their caps. And their success is entirely identified with somewhere else.

            The whole thing just makes me wonder how we fail to value things that don’t meet certain criteria, when that may not at all map with what makes a real change in the world.

    2. Jim Haygood

      They’s an old saying, Ina, which you probably know:

      Never ask a man where he was born. If he was born in Texas, he’ll tell ya so. And if he wasn’t, you don’t want to embarrass him.

      Yee haw! *doffs hat and takes another toke*

      1. Ina Deaver

        Yeah, I thought when I wrote that I’m from Texas “Damn – sounds like I’m bragging.” LOL

        Jim, my friend, there is another saying: The devil owns two pieces of property, Hell and Texas. He lives in Hell – he rents out Texas. ;)

        I’m a lifelong fan of A/C. And now I live on the East Coast.

  12. traderjoe

    RE: Social Security and the Cat Food Commission –

    Can someone give me a compelling argument about why SS IS sustainable in its current form? When it was designed, the life expectancy was close to the age of when you started getting benefits. Now life expectancy is 10-15 years beyond, plus the spouse life expectancy. In addition, the baby boom generational bulge meant that more current workers covered retirees (new ‘investors’ pay for ‘old’ investors). Now as the baby boomers retire, vastly fewer workers will cover retirees. The SS system will be in net withdrawal this year (supposedly going back to positive next). [Unfortunately, the SS trust fund has been used a political piggy bank for years. In a sense, there is no ‘money’ in there, it’s already been spent by the government.]

    I understand the MMT argument that we can print money/create credit as much as we want (with the constraint being inflation) but that doesn’t address the purchasing power impact of creating more credit, as the cost of living would go up.

    I really want to understand the argument – how is SS currently sustainable?

    1. Glen

      Better yet, since SS is designed and run like almost ANY insurance scam – I mean scheme – please explain how any insurance is not a Ponzi scheme.

      P.S. And please compare and contrast with how the US government is bailing out Wall St, supposedly a “free market”, to the current amount of 9.1 trillion US taxpayer dollars (with an estimated maximum potential bailout of $23.7 trillion) over the last year or so, with the spooky, scary 75 year long term debt of only a paltry 7 trillion US taxpayer dollars.

      1. DownSouth

        Just think about it.

        The $9.1 trillion we’ve already spent bailing out the banksters, invested at a reasonable interest rate like 6%, would earn $546 billion per year.

        In 2010 we will spend $715 billion on social security.

        So the $9.1 trillion we spent bailing out the banksters would fund more than 3/4 of the cost of social security–in perpetuity.

        If the bailout ends up costing $23.7 trillion, the interest on that amount would entirely fund social secuity spending, plus give every social security recipient a 66% increase in benefits, in perpetuity.

      2. DownSouth

        Another way to look at it is to take the $9.1 trillion we’ve spent bailing out the banksters so far and divide that by the $715 billion we spend on social security. That $9.1 trillion would pay social security benefits at 2010 levels for 13 years.

        $23.7 trillion would fund social secrity at 2010 levels for the next 33 years.

      3. traderjoe

        @Glen – I agree the bailout of the banksters was criminal. I agree most insurance policies are ponzi schemes…

        @DownSouth – I agree the banksters bailout was ludicrous.

  13. aliena

    “So if solvency is a non-issue, what are the issues? Inflation, for one. Perhaps future spending will drive up future prices. Fine! How much? What are the projections? No one has even attempted this exercise. Well, it is about time they did, so decisions can be made on the relevant facts.
    The other issue is how much GDP we want seniors to consume. If we want them to consume more, we can award them larger checks, and vice versa. And we can do this in any year. Yes, it is that simple. It is purely a political question and not one of “finance.””

    Social Security: Another Case of Innocent Fraud?

    “Transfers of this kind are also indefinitely sustainable — in fact there can intrinsically be no problem of sustainability with transfer programs. Apart from their effect on individual security, a true transfer program uses (by definition) no net economic resources.
    The only potential macroeconomic danger from “excessive” transfers is that the transfer function may be badly managed, leading to excessive total demand and to inflation. But there is no risk of this so long as the financial crisis remains uncured. Under present conditions Social Security and Medicare are bulwarks for stabilizing a total demand that would otherwise be highly deficient.”

    Why the Fiscal Commission Does Not Serve the American People

    “National social security systems can never become insolvent if the government has sovereignty in its own currency. Further, the pursuit of budget surpluses as a means of accumulating ‘future public spending capacity’ undermines the capacity of the economy to provide the resources that may be necessary in the future to provide real goods and services of a particular composition desirable to an ageing population. ”

    Social security insolvency 101

    Social Security is a transfer program, it’s not a monetary problem.
    When Social Security was created, people were less productive than they are today.
    A lot of thing are done by machines anyway and could sustain a lot of people even if they are not productive (example: We are producing now food for 9 billions humans).
    The question is: will we have enough resources to share with the elders that spent all their life producing?

    1. traderjoe

      @Aliena – I agree that countries cannot become ‘insolvent’ if they can create their own currency/credit. But, as you mention, inflation is the constraint. I don’t think projecting inflation rates is possible, because inflation is created – in a sense – through confidence (or lack thereof) in the system. Simply creating credit/money to make payments would be inflationary, thereby at least defeating some of the purpose of the credit/money creation.

      So a transfer system is a net-net issue. Take payments from one party and give to another. What if the first party reduces its labor/productivity in order to minimize their taxes/contributions? Then simply create credit/money to make up the difference? But then the inflation takes away the purchasing power of everyone?

      And are there limits to growth in the MMT system? Are resources finite? Yes, we are more productive now, but there labor participation rate has declined significantly. How does that impact total productivity of rate x participation?

      I appreciate the response (that I think was aimed at my question). So yes a political question…not a solvency question, but part of my point was that the promises have been created/inflated over time – and now are covered by fewer workers.

      1. aliena

        “There are also those that claim that quantitative easing will expose the economy to uncontrollable inflation. This is just harking back to the old and flawed Monetarist doctrine based on the so-called Quantity Theory of Money.

        This theory has no application in a modern monetary economy and proponents of it have to explain why economies with huge excess capacity to produce (idle capital and high proportions of unused labour) cannot expand production when the orders for goods and services increase.
        Should quantitative easing actually stimulate spending then the depressed economies will likely respond by increasing output not prices.”

        Quantitative easing 101

        “Economists usually want economic growth. Can we have infinite growth and a sustainable future in a finite world?

        The short answer is no. The potential for economic growth has to be balanced against the constraints imposed by the natural environment, by the availability of productive inputs, and our sense of social equity.
        Mainstream economics is deeply flawed in this regard. It considers there is an infinite trade-off between ecology and growth. However, it fails to understand that the natural environment is a living system and can die unexpectedly if overused.
        Mainstream economics in general only considers things to be valuable if they can be priced in the private marketplace. Social benefits and costs are difficult to quantify because there is no market for them.

        How do you define “sustainability”?

        Sustainability is where:
        (a) Everyone can find enough work with decent pay and conditions. This should be a primary responsibility of the Australian Government.
        (b) All those who genuinely cannot work are provided a decent standard of living through government support.
        (c) Governments ensure first-class education and health systems are accessible for all, irrespective of wealth and income.
        (d) The footprint of production is balanced against the requirements of nature.
        (e) Permaculture principles guide commercial and urban farming.”

        Recent interviews – crisis, green jobs …

    2. Rex

      Please stop pouring MMT concepts into the Social Security debate stream.

      The whole meme of the political “debate” requires all the sheeple to hear references to government finances in terms that sound like balancing their own bank account. They can relate to that.

      Complications like sovereignty or the deflation-inflation continuum just cause most people to put their fingers in their ears and go la-la-la-la.

      Please stop polluting the political fairy tale story with too-true truthyness.

  14. Jason

    Aliena, I wouldn’t believe the inflation projections any more than I do projections for the Dow in 2025 (or 2011 for that matter!) Like traderjoe I understand the MMT answer to the sustainability of spending and deficits but I can’t ignore the fact that prices have risen many hundreds of percent over the decades and most MMT advocates want to ignore this.

  15. Jon H

    “Give workers who don’t have bank accounts their pay on a stored value card (a chip card, smarter than stored value cards, like gift cards, used in the US).”

    Isn’t that how some states do welfare-type benefits?

    And haven’t there been problems with excessive fees and other overhead on those accounts?

    1. Yves Smith Post author

      That isn’t inherent to the product, it reflects the crappy deals the states cut. In South Africa, very low income workers are paid this way, the banks don’t take a big cut because the real costs of providing this service are very low and the government doesn’t allow them to take much margin. This is a regulatory failure, extrinsic to the product.

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