Recent Items

Links 8/24/10

Space is the final frontier for evolution, study claims BBC

Software Predicts Criminal Behavior ABC (hat tip reader John D)

Minneapolis will pay $165,000 to zombies Minneapolis Star Tribune (hat tip reader John D)

The conservative counter-revolution Martin Wolf

America Won the Cold War But Now Is Turning Into the USSR, Gerald Celente Says Tech Ticker

Two Top Investigators Leave Financial Crisis Commission Shahien Nasiripour, Huffington Post

Mortgage Fraud Is Rising, With a Twist Wall Street Journal (hat tip reader Don B)

Fiscal austerity is undermining growth – the evidence is mounting billy blog

Dealing with the Sunset of the Bush Tax Cuts (Part III in a series)–considering the ill-advisedness of favoring capital income Linda Beale

Washington Post Invents Debate Over “Free Trade” Dean Baker

Household Debt as a Percent of Disposable Income Mark Thoma

Portrait of California Foreclosures Alan White. Debunks the idea that the people losing their houses were typically profligate yuppies.

I am Superman: The Federal Reserve Board and the Neverending Crisis Chris Whalen

Thanks to those of you who came to see me last night. We had a wee logistical challenge at the outset, since the rain meant we assembled inside and thus couldn’t mingle as easily had the outdoor space been available. But my impression was that folks had a good time.

Antidote du jour:

Picture 15

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38 comments

  1. Bates

    RE: Billy Blog…

    “deficit terrorists”??? Who is BB branding with this lable? Is this a reccommendation to round up and send to Gitmo all those that would like to see responsible government? Put the savers in detention centers? There is no capital formation without savers thus no capitalism. We have seen what gov spending like there is no tomorrow will accomplish and it is where we are now! We have experienced what interest rates held too low for too long will do; Blow Serial Bubbles! OK, let’s sit by and watch the fireworks while this plays out to the end game. Get some popcorn and enjoy.

    Pure trash!!!

    1. MyLessThanPrimeBeef

      For everything there is a season.

      There are times you are awake, up and about, and times you have to rest (except in some sci-fi).

      It’s against nature to have growth all the time.

      1. MyLessThanPrimeBeef

        When the patient is sick, the best thing is for him/her to have plenty of rest and water to wash out the toxins in the body.

        It’s unethical to force more toxins into his/her body to keep him/her awake night after night.

    2. DownSouth

      One thing about you Chicago boys, you’re like all true believers in that you’re never lacking in passion.

      I suppose Frank Knight set the tone when he gave what he called his “sermon” to the American Economic Association in 1950. The core social and economic problem in Knight’s view was one of “discovery and definition of values—-a moral, not to say a religious, problem.”

      Knight doubted that there could be any possibility of the scientific management of society, Robert Nelson explains in Economics as Religion. Human reason, he believed, was a frail instrument, often corrupted by the baser elements in human nature. He thought, in contrast to the great majority of economists of his time, that the economic problem in society was in the end a religious problem. The defense of freedom—-including the opportunity to express self-interest in the market—-must rest not on a scientific demonstration but upon an adequate moral/philosophical foundation.

      For Knight that foundation lay in the central moral importance he ascribed to individual liberty. Knight had a strong libertarian strain, the beginnings of a powerful libertarian influence that continues at Chicago to the present time.

      It is without a doubt true that corruption and self-interest have crept into the holy shrine of our priestly class of economists, or the “scientist kings” as Niebuhr put it. And to counter the utopian vision of these central planners, Knight offers up another equally utopian vision, one which you have swallowed hook, line and sinker. But for most of us, corporate anarchy, nihilism and a deflationary spiral, along with its attendant social and political repercussions, are not a viable option.

      1. wunsacon

        DownSouth, be that as it may, I object to using the word “terrorist” for anyone unless that person is threatening physical violence against a (true) civilian. It’s unfair to label a debate opponent with this term.

        Hmm…lemme think of an analogy… Okay, how ’bout this: “feminazi”.

        1. DownSouth

          wunsacon,

          Thanks for pointing that out. Passions run high on both sides of this “religious” debate, no? Amazing how I was so attune to Bates’ passionate response, but blind to the equally passionate pronouncement that triggered Bates’ response.

          Robert Nelson in Economics as Religion compares Samuelson to the Catholic Church and the Chicago School to the Protestant reformation. So is billyblog the counterreformation? If so, maybe we can find a historical precedent for all the passion and zealotry in this:

          In 1516 Erasmus had written his “Education of a Christian Prince” to train the prince destined to be the greatest emperor in Europe since Charlemagne. This moment was in a sense the culmination of this project for the transformation of Europe from above. A ruling class of Christian humanists gradually spreading the fruits of an education in philosophy of Christ would, he believed, create a new European order. However, with the appearance of Luther, the schism in the church, and the outbreak of the Peasants’ Rebellion, he saw his hopes for a peaceful reformation of the Christianity and Christendom dissolve before his eyes. As a result of his quarrel with Luther, Erasmus fell into a pessimism from which he never entirely recovered. His pessimism was justified. Humanism would continue to exercise an important influence on intellectuals and on some members of the upper classes, but as an agent of social change it had been surpassed by the religious passions unleashed first by the Reformation and then a few years later by the Counter-reformation. These passions reached a much broader population than humanism and moved them in more immediate and more violent ways.
          –Michael Allen Gillespie, The Theological Origins of Modernity

        2. attempter

          Many definitions of terrorism, including mine, would include using any propaganda method to spread irrational terror amidst the populace.

          Those who first artificially engineered a Depression; and then who insist as we sink into this Depression that the great threat we face isn’t permanent mass unemployment but rather the deficit they themselves ran up and continue to run up with bailouts, wars, Pentagon budgets, tax cuts for the worthless parasitic rich, and corporate welfare in general; and who spread this deficit terror precisely in order to cover up their own crimes, to justify further robbery via “austerity”, and to shoot down precisely the kinds of job creation measures which could do so much to help real people….

          They qualify not only as terrorists but as among the most vile criminals in all of history.

      2. MyLessThanPrimeBeef

        In Zen, there is a saying that Zen is nothing more than chopping wood and carrying water.

        So, the Zen School of Economics is this – where you are tired, you sleep and when you’re hungry, you eat. You can do it even in Chicago.

  2. Ina Deaver

    Re: the Crisis Commission –

    Having its work end in a December after a November midterm was particularly moronic. Have none of the people who formed this any idea how politics works? Regardless of whether the Dems lose power in either house, there will undoubtedly be a shake up in who is elected – some members (and their personal and committee staff) will be on the job hunt as of around 8:00 am on the Wednesday after the midterms. Many will be on the job hunt earlier, depending on what their poll data say. On what planet can any person who is employed on the Hill, or wants to be, wait until mid-December of this year to start looking? That’s insanity.

    Each Executive Agency likewise has its flows in and out for projects and employment. It wouldn’t surprise me if there are problems in the Commission – it may have been tasked with looking for the truth and then told to bury it. But my guess is that it is just a more boring and less prestigious job than people expected.

  3. Ignim Brites

    Conservative counter-revolution undermining growth? Martin Wolf’s argument is completely spurious since it does not take into account the impact of the Reagan / Thatcher reorientation on China, India, Korea, Brazil, etc.

    1. Richard Kline

      Said putative impact: zero. Seriously 0.

      Wolf’s piece was surprisingly good. He qualified the utility of GDP in an honest way, and pointed out, accurately, that the presumed superior performance of the economy in the US was, at the least, grossly distorted by debt, and speculative deployment of capital away from capital-intensive productive enterprises. One of the best short articles I’ve read from anyone recently.

  4. craazyman

    Not sure why the Financial Crisis Inquiry Commission has to have that huge committee and all staff to cut to the chase and simplify it all to one page that anyone can understand.

    This is all it really is:

    1. Navel gazing academics invent dumbed down flashy math formulas that measure risk in psychospace but not reality

    2. Flashy pyschospace formulas invade impressionable student minds and spread like virus

    3. Students become pyschospace formula evangelists and occupy Wall Street upon MBA graduation like rats occupy New York alleys

    4. Pyschospace formulas help fuel 2 decade credit bubble like beer fuels sweaty drunks in all night dive bar beer and jello shot bash.

    5. Bubble wealth enriches sweaty drunks beyond belief. Drunks invade Washington and take over country.

    6. Bubble pops when psychospace hits reality wall. Desperate Fed serves last round of jello shots with beer chasers to staggering pyschospace formula junkie zombies.

    7. Sober savers forced to clean up puke while rich zombies sleep it off.

  5. laughlinlover

    Where were you last night? I searched the Cafe Centro – including its beer area. The only large group I saw was in the dining area. I didn’t approach it since your invite said to grab a beer or coffee. THis group was into serious dining.
    Saw no flash mob and no host blogger surrounded by admirers.
    If you were there it would have helped if you had identified yourself. Even an orange tie or ballcap would have been sufficient.
    Do you live on Long Island and were caught up in the LIRR debacle?

    1. Yves Smith Post author

      Um, we were that large group, and they had put menus out to try to get us to eat, but only a few people had a nosh, the rest of us were drinking. I had left my card with the maitre d’, but I was afraid there’d be some missed signals with us having to use the dining section.

      Really sorry this proved to be a wild goose chase for you.

  6. Voltron

    I enjoyed “Yves dropping” on the conversation last night a Cafe Centro. It was loud in there but Yves’ E. F. Hutton moment came when she said that legal action at the state level would grind foreclosures to a halt in 9-24 months. I’m sure she’s right, but I think the effect will be a continuation of extend and pretend by different means, i.e., by being “forced” to delay foreclosure, the banks can maintain their fictional balance sheets longer and delay prompt corrective action by the FDIC.

  7. Stephanie

    Re: Minneapolis Will Pay $165,000 to Zombies

    I’ve never been prouder to be a citizen of St. Paul.

  8. greg

    I must say this blog has really dropped in quality since it let political bias dominate analysis. In the link above that supposedly “debunks” overreach the data mentioned show over half the foreclosures involve refi cash outs. The writer then states they were taken out to maintain a middle class lifestyle. So, nothing is debunked, the author just spins it in a way they like. Maybe the people involved had an inflated idea of whet middle class lifestyle should include relative to others with similar incomes? That would still be overreach in my book. We need to assume some sense of entitlement to eliminate the overreach argument, and I am not willing to do so. And, what does being hispanic have to do with anything? Am I immediately supposed to be more sympathetic for some reason? Why would that be?

    This blog has become Dkos economics. I like Dkos and was a very early member there, but they put some seriously eye-rolling spin on stuff sometimes because they want ALL things to fit an ideological worldview in a messy world. More and more Nakedcapitalism feels the same way.

    But thanks for the great stuff pre-collapse and best of luck with the blog and the book!

  9. Hugh

    Antidote du jour = real tiger
    FCIC = paper tiger

    The idea that the Angelides commission was going to be a new Pecora commission was laughable from the outset. Angelides is no Pecora. He would not have been chosen to be a member of the commission, let alone head it, if he had been.

    The comparison between the US today and the old USSR has been making the rounds. The more apt one would be between the US and the Yeltsin period with its bands of looting oligarchs.

    The Wolf piece uses some unhelpful graphs (they are based on the flawed metric of the GDP) to come around to state the obvious. We were in a big bubble that pumped up GDP and post-bubble our GDP based growth rate is not going to look so good.

  10. emca

    Posters beware!!

    This meta-story from the LA Times:
    http://www.latimes.com/news/nationworld/nation/la-na-blogger-suits-20100823,0,5604043.story?track=rss

    Bloggers who besmirch another reputation are liable for their legal infidelities:

    “In western Pennsylvania, a judge recently ruled a community website must identify the Internet address of individuals who posted comments calling a township official a “jerk” who put money from the taxpayers in “his pocket.” The official also owned a used car dealership, and one commenter called his cars “junk.” The official sued for defamation, saying the comments were false and damaged his reputation.”

    Would would-be critics need to prove;
    a. the objects in question were indeed junk?
    B. the seller is a unrequited jerk?

    And don’t think being ‘anonymous’ will help.

    “Last month, the U.S. 9th Circuit Court of Appeals upheld a Nevada judge’s order requiring the disclosure of the identity of three people accused of conducting an “Internet smear campaign via anonymous postings” against Quixtar, the successor to the well-known Amway Corp.”

    And from Kimberley Isbell, a lawyer for the Citizen Media Law Project at Harvard University:
    “There’s a false sense of safety on the Internet…If you think you can be anonymous, you may not exercise the same judgment”

    Don’t know about anyone else, but I’m going to be careful what I say around here.

      1. i on the ball patriot

        Consider the source, losing circulation to bloggers, LA Slimes benefits from fear mongering when bloggers are silent. The judge in the article was from western pennsylvania, land of the crooked judges that put juveniles in jail for kick backs from the prisons.

        Screw the crooked scum bags all, yes be careful, but speak the truth and don’t let these deceptive pricks intimidate you.

        Deception is the strongest political force on the planet.

          1. i on the ball patriot

            My bad. Thanks for the correction. I remembered it incorrectly as Western Pennsylvania.

            Western Pennsylvania Child Care was in on the scam …

            Excerpt;

            “Pennsylvania Child Care and Western Pennsylvania Child Care also stood to make tens of millions of dollars from the scheme, the plea document said.”

            http://www.causecast.org/news_items/7954-corrupt-judges-paid-to-detain-youths-in-private-jails

            Does not change my opinion one iota. This is super thin ‘Justus’ for the severity of the crime. I am usually against the death penalty, but the people of Pennsylvania should hang these bastards.

            Deception is the strongest political force on the planet.

  11. emca

    This is slightly off topic, but in line with Tech Ticker article about political parties being equal (in regulatory mis-application):

    If you thought Goldman Sachs close relationship with government was an exception to the current state of the state, then think again:

    http://www.huffingtonpost.com/john-robbins/is-your-favorite-ice-crea_b_686629.html

    The gist of the article concerns one Michael R. Taylor, the FDA’s Deputy Commissioner of Policy from 1991-1994 and questions Mr. Taylor’s ‘unbiased’ role in the FDA vs. rBGH. Of note:

    “Prior to holding that position (Deputy Commissioner), he was an attorney at King & Spaulding, Monsanto’s law firm, where he presided over the firm’s “food and drug law” practice. After the decision was made which gave the green light to rBGH, he left the FDA and resumed working directly for Monsanto, as vice president and chief lobbyist.”

    Mr. Taylor has now return to FDA as Deputy Commissar of Foods, under which undoubtedly cows will further be ladened with rBGH productivity enhancements to the profit of a hapless public blissfully unaware that such treatments are banned in Europe, Japan, Australia and Canada.

    Kind of Hank Paulson redux, or something.

  12. emca

    This is slightly off topic, but in line with Tech Ticker article about political parties being equal (in regulatory mis-application):

    If you thought Goldman Sachs close relationship with government was an exception to the current state of the state, then think again:

    http://www.huffingtonpost.com/john-robbins/is-your-favorite-ice-crea_b_686629.html

    The gist of the article concerns one Michael R. Taylor, the FDA’s Deputy Commissioner of Policy from 1991-1994 and questions Mr. Taylor’s ‘unbiased’ role in the FDA vs. rBGH. Of note:

    “Prior to holding that position (Deputy Commissioner), he was an attorney at King & Spaulding, Monsanto’s law firm, where he presided over the firm’s “food and drug law” practice. After the decision was made which gave the green light to rBGH, he left the FDA and resumed working directly for Monsanto, as vice president and chief lobbyist.”

    Mr. Taylor has now return to FDA as Deputy Commissar of Foods, under which undoubtedly cows will further be ladened with rBGH productivity enhancements to the profit of a hapless public blissfully unaware that such treatments are banned in Europe, Japan, Australia and Canada.

    Kind of Hank Paulson redux, or something.

  13. Jim

    Hey greg,

    My guess is that the final resolution to this accelerating financial/economic/cultural crisis will only be solved by quite unconventional thinking and doing.

    Naked Capitalism needs as many unconventional thinkers as possible. Times like these desperately call for intense debate and discussion.

    I urge you to keep contributing your 2cents.

  14. rd

    This is potentially big news about the oil spill: http://www.usatoday.com/tech/science/2010-08-24-oil-microbe_N.htm

    A species of bacteria that eats oil without significantly depleting oxygen has potentially huge ramifications for the environmental remediation industry. For non-recalcitrant compounds like petroleum components, including PAHs, the delivery of adequate oxygen, as well as some nutrients, into a plume is often a lot of work with numerous ways of doing including air sparging, oxygeneating compounds introduced into wells, etc. It could potentially have significant benfit for on-shore applications at underground spills, like gas stations and refineries, as well as off-shore oil spills.

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