Links 7/27/11

Restraint technique could be fatal, research suggests BBC

Feds silence scientist over salmon study Vancouver Sun

Israel Erupts in Protest, Tens of Thousands Chant “Revolution” Alternet (hat tip reader Bruno)

Murdoch’s Influence Over U.K. Politics Wanes Bloomberg

Kipling’s game theory lessons for Greece John Kay, Financial Times

So This is Despair William Rivers Pitt

An Economy Destroyed CounterPunch

The President’s Address on the Debt Ceiling: An Exercise in Fantasy Joe Firestone, Corrente

Poll: Obama losing support from base Politico (hat tip Mark Ames)

Read the Reid Plan. Read the Boehner Plan. Get Back to Me. Slate. On the Reid plan, from Stuart Zechman:

I’m reading the Reid bill, and it’s not somewhat-less-evil, it’s different-evil-than-theirs.

As an example of what I mean by that, a full 36 out of 104 pages of the bill are solely devoted to selling off some public spectrum and reclaiming other spectrum for “Public Safety”. I’m not exaggerating. Literally a third of Reid’s “debt ceiling” bill is composed of terms for “Auctions of Spectrum and Spectrum Management” and “Public Safety Broadband Network.”

…in a debt ceiling bill…to supposedly prevent economic a few days from now…you can’t believe the corruption in Reid’s bill (or maybe you can). It’s outrageous.

What’s Wrong With America’s Job Engine? Wall Street Journal. Not new, but a sign that the squeeze on labor is getting more mainstream media attention.

The Left’s Last Hope: Eric Schneiderman Carries the Mantle During the Right’s Resurgence New York Observer

Can Treasury just go overdrawn at the Fed? Felix Salmon. My understanding is that Congress has to give a waiver for the Fed to do monetary operations to fund the Treasury (despite Felix’s complaints, the coin seigniorage idea is clearly legal) but that isn’t really the issue. Obama can’t reverse himself now having played up a debt crisis so he could gut Medicare and Social Security. He disabled the brakes before he got in the car.

“Sometimes nothing is a real cool hand” Warren Mosler (hat tip reader bob)

US money market funds build liquidity Financial Times

Six Challenges to Countrywide RMBS Settlement Already; Rundown Shows Pact Will Be No Easy Sell for BofA Subprime Shakeout (hat tip MBH). We missed this last week, a useful summary.

Case-Shiller: Home Prices Fell 4.5% in last 12 months Ed Harrison

Best Buy targets are stopping a debt deal Tom Ferguson, Financial Times. Today’s must read. A short-form treatment of how the “pay to play” system has changed the operation of Congress radically, and for the worse. This is also why having Elizabeth Warren run for the Senate is a terrible idea. Power is concentrated in the hands of the party leaders to a degree once unthinkable.

Antidote du jour:

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  1. attempter

    The Left’s Last Hope: Eric Schneiderman Carries the Mantle During the Right’s Resurgence

    I reckon “the Left’s” best hope is to be freed of the kind of elitists who define “hope” only in terms of desperately searching for a Leader. “Better elites!”

    This quote from the piece is far more accurate:

    Mr. Schneiderman…the last, best hope for a liberal future

    Yes indeed. Let’s hope their delusional “last, best hope” is quashed sooner rather than later.

    This quote’s fun:

    And Mr. Schneiderman was still taking stock of an office with 1,700 staffers and attorneys and hundreds of active cases inherited from his predecessor. He brought on well-regarded political types like Neal Kwatra, a labor organizer who turned the hotel workers union into a political powerhouse, and Blake Zeff, a former top aide to Hillary Rodham Clinton, and he named Harlan Levy, a partner at the white-shoe law firm of Boies, Schiller & Flexner and friend from his college days at Amherst, his principal deputy. He became a suddenly scarce presence among the Albany and New York City press corps.

    And he went around to religious and business leaders to reassure those who feared that Mario Savio was taking over as the state’s chief law enforcement officer. He spoke before the Association for a Better New York, met with Archbishop Timothy Dolan and traveled upstate to meet with energy lobbyists.

    I think it’s apropos to recall that Tom Miller himself had a honeymoon here at NC where many were looking to him as a better elite.

    Re the Fed:

    My understanding is that Congress has to give a waiver for the Fed to do monetary operations to fund the Treasury

    The Fed has done whatever it wanted from day one, whether legal or not. Same for Obama’s war in Libya, and everything else the administration has done. I’d love to see one shred of evidence that Obama, Bernanke, or anyone else cares one jot about the law or the Constitution, as opposed to whatever’s convenient for kleptocracy.

    Given that fact, I think all the talk about whether this or that is legal or constitutional is moot and a waste of time. We don’t have law, and we don’t have a constitution. This is a Hobbesian free-fire zone.

    1. MyLessThanPrimeBeef

      Many yearn, “Who is going to be our savior? Who is going to deliver us from our problems?”

      The thing is, the leaders don’t come cheap.

        1. nowhereman

          Why is everyone looking for someone else to do it for them. To me this is the problem. Isn’t it time we all took responsibility? Think local, act global. Take it back one step at a time.

          1. taunger

            wait – are you volunteering to take the beatings from riot police and national guard?

            that is why everyone is looking for someone else to do it – because in the end the threat of physical coercion must either controlled by the new, better elites some hope for, or accepted and invited by the masses

          2. citalopram

            @taunger – that only happens if too few show up to the party. If 500,000 people were to storm the white house or congress, they’d be able to shoot a few but not enough. If that were to happen, it would make the regime look like a totalitarian freak that it really is. The mask would be ripped off even more.

            I have no hope this will happen in my lifetime. The pessimist that I am expects the U.S. to degenerate into Columbia.

          1. MyLessThanPrimeBeef


            But my super-heroes cease to exist as soon as I stop worshipping them.

          1. Cedric Regula

            Dumb government programmers would do it. We just need Y2011K and all the automatic checks get mailed out whether we have a debt ceiling or not.

          2. MyLessThanPrimeBeef

            When someone says to me, ‘I want to be your leader,’ I usually grab my wallet and ask, ‘how much will it cost me?’

      1. lambert strether

        Parking meters, ditto.

        Probably the world is a little better with Eric S. doing his thing than otherwise; but an answer to the left’s problems? If that’s even the question? Not.

    2. citalopram


      I keep thinking to myself how the rich elite could possibly ever identify with us, the unwashed masses. Therefore, why is it we keep pretending they can ‘represent’ us? Why do we even need a representative? These people live in a different plane of existence and do not do any type of meaningful work like working-class folks do.

      Gazing across the nation, I guess this is what brainwashing looks like.

      1. attempter

        We know we don’t need representatives, political or economic. We know that people who actually work can rule themselves and manage their polities and economies far better than any elite. We know elites are wasteful and parasitic at best, and more often aggressively destructive robbers and murderers. And we know that even if they weren’t, even if they meant well, even if “trickle-down” did work, it would still be unworthy of human dignity and self-respect to be “represented”.

        Everyone knows this, but most remain fearful, cowardly, lazy, childish. They don’t want to take responsibility for themselves. They don’t want freedom and the tremendous responsibility that goes with it. So they still keep dreaming of the “better elites”.

  2. hermanas

    @”Feds silence scientist over salmon study. Vancouver Sun”
    In 1975, the discovery that (Kepone) was poisoning the James River leading to the closure of fishing for a year, politicians heard about it and National Science Foundation funding for Chesapeake Bay Institute was cut.
    Healthcare costs are industry profits.

  3. Anonymous

    ‘Why Do We Need Big Banks?,’ Charles Morris, Politico

    Choice Quote:

    That brings us to the dangerous part. Banks in trouble start pouring on the risks. Exchange Traded Funds were a useful recent innovation, because they allowed investors to invest in indexes — like the Standard & Poors 500 — and trade it like a stock. But financial houses are now pumping out hundreds of new ETFs, many of them highly leveraged, tracking obscure indexes, and often tracking them badly. Inevitably, a lot of investors will get badly burned.

    For several years, commodity traders have been accused of purposely running up oil, corn and metals prices. While there seems little doubt that traders added to the momentum during price bubbles, wise heads pointed out that banks aren’t storage companies. The only way to force a rise in a commodity’s price is to hoard it — which requires huge amounts of storage.

    Well, guess what? For the past year, banks like Goldman, Morgan Stanley and Bank of America Merrill Lynch have been buying up commodity storage capacity. They couldn’t have any evil purposes in mind, could they?

    1. psychohistorian

      Move on now. There is nothing to see here. Just a bunch of folk with tin foil hats.

      Should this make me more comfortable or less comfortable having a checking account at BofA?

  4. Ignim Brites

    Whatever mark Schneiderman might look to make investigating the mortgage securities operations of Wall Street will be overshadowed by his leadership role in undermining DOMA. Necessarily he will have to lose the defense of the constitutionality of laws against polygamy (does he really want to be the face of the case for the moral inferiority of Sharia marriages) and finally will have to lead in preparing the legal case for New York secession after the next election. “Men make their own history, but they do not make it as they please…” Marx, 18th Brumaire. That is in fact the best hope for the left.

    1. aet

      Still quoting Marx and dismissing Islamic cultural traditions, I see. Bully for you! Bully!!

      1. aet

        OTOH, polygamy does have a very long tradition in the west, but the “lesser concubines” aren’t given the same status as the primus inter pares…

        “Charlemagne had twenty (20) children over the course of his life with eight of his ten known wives or concubines


        Legalized polygamy simply gives some people who otherwise must be mere “mistresses” or “concubines” legal rights.

        What would be “morally wrong” with that legal recognition?

          1. aet

            Delphic, that response.

            Numbers? In some places, maybe.

            It depends on what people are accustomed to, I guess: and examining those customs is but very reluctantly undertaken.

          2. MyLessThanPrimeBeef

            Numbers as, for example, in a society with 52% male and 48% female, in the reproductive active age groups, allowing polygamy will further deny some men, mostly poor, a chance at marriage.

            In a country like China, where there are already more men than women, to allow rich men to have multiple wives or concubines is immoral.

            Instead, polyandry should be considered by the Chinese. Tibet is a good place to, literally, look up to for them.

            In a society with, for another example, 62% female and 38% male in certain age groups, maybe after a horrible war, not allowing polygamy seems a cruel and unusual punishment for those women, unless the occupying victors bring along their lonely, single soliders.

        1. ambrit

          Oh Heavens;
          Looks like a convention of ‘population managers.’
          What oh what will the poor ‘test subjects’ think about all this? If you accept polygamy, you must accept polyandry also. Otherwise you degenerate back into that old fashioned ‘male chauvanist’ piggery.

  5. Jesse

    “This is also why having Elizabeth Warren run for the Senate is a terrible idea.”

    Liz is not an object. I think she is going to make up her own mind on this one, and her judgement is probably going to be well-informed.

    1. Yves Smith Post author

      I’ve made that point privately. Nevertheless, liberal groups are trying to draft her and even raising money. Nuts and presumptuous.

  6. DocG

    Thanks for the link to the actual debt ceiling plans offered by Reid and Boehner. Very interesting. You don’t have to read very far to see how incredibly complex and convoluted these plans are. And yet we are supposedly in crisis mode, with a decision needed yesterday?

    What can they be thinking? As I see it there is really only one realistic option, yet no one seems to be considering it — the option I’ve been writing about for the last few days on my blog. Just simply vote the thing up or down. Vote to either raise the debt limit and save the world from catastrophe (for the time being, anyhow), or vote against it and watch the cookie crumble into dust (which it’s going to do anyhow, sooner or later).

    1. Jesse

      “Never waste a crisis” and especially a somewhat artificial one.

      And this is yet again another reason why serious campaign reform is the sine qua non.

      1. Dave of Maryland

        “serious campaign reform” has been a sop for the last 30 years. Ain’t gonna happen, not without some other, underlying reform. We have instead gone in exactly the opposite direction.

      2. KFritz

        The Supreme Court has insured that there won’t be campaign finance reform by enshrining the campaign finance = free speech canard. Politicians elected in the pay for play environment will NEVER enact reform legislation, as demonstrated in 1993 when Clinton advocated for but didn’t insist on reform and the Democratic spoke in favor of it and let it die in a stunning display of ‘Wink, wink, not, nod.’ The fraudulent elections of 2000 and 2004 allowed Bush to select Supreme Court justices who’d never rule for reform. The results await. To quote someone or the other, “We’re all screwed.”

      1. ambrit

        Yeah yer rite Mr Strether. Wasn’t it ol’ Doc Johnson who opined that; “Patriot Actism is the last refuge of a scoundrel?”

  7. Leviathan

    On the broken jobs machine piece, my take. Corporations are now all behaving like China. That is, they’re all mercantilists who want to “export” more than they import, then sit on their piles of cash to jimmy up stock prices and justify bonuses. Someone else can hire Americans.

    Was a time when this was unthinkable because a) workers were seen as human beings, b) management felt American, c) global capital flows did not yet exist, d) unions protected jobs, e) government and business were not at war or in bed (the only two options now).

    There is no putting the genii back in the bottle, but we need to find ways to increase pressure on companies to increase hiring HERE. Companies could be scored based on such factors as the ratio of profits made in country against investment in/number of new jobs sourced here. Low scoring companies could attract hostile attention (protestors at board meetings, boycotts, pressure on govt agencies not to give contracts, etc.). High scoring companies could garner positive actions.

    Everyone criticized GE and Immelt for chairing Obama’s jobs council (rightly so). But without a way to compare how bad GE is compared to other corporations in terms of American job creation, there were no consequences for Obama, Immelt or GE. Just this week GE moved an xray imaging unit to China from Ohio. Sure, the jobs in Ohio are still there–for now. Check back in 5 years. But there will be no new ones there at a time when the area must need them badly. Screw GE. Screw every corporation sitting on a cash pile now worried that it might not be 100% safe in t-bills. It’s a cash pile, asshole. Why should it be safe anywhere? Invest in your country. Grow the pie. We are not the enemy. Are you?

    1. Chester Genghis

      Yes! Corporations –and the grifters that run them–are the enemy! The average tenure of a corporate CEO is well under 5 years. It may even be under 2 years. With salary, bonus, & stock options they have every interest in goosing short term profits and denying long term investments.

      But WE are also the enemy. We’ve been cowed into submission and duped into thinking our fate depends on the goodwill of the CEOs and “entrepreneurs” who are systematically outsourcing our jobs.

      We’ve been duped into thinking we’re the problem; that we don’t consume enough, that we’re greedy parasites for expecting a modest social security check in retirement, that we can’t find a job because we’re not educated enough… (I saw an interview with a recently laid-off NASA engineer in which he talked about “getting his education level up” so he could find a job –a friggin’ ROCKET SCIENTIST talking about being under-educated!!)… when we should be taking to the streets.

  8. Max424

    I’ve only gone through three links (Salmon, Despair, $ Destroyed) and I’m completely worn out psychically.

    Good job, Yves.

  9. john

    This debt ceiling charade is fun to watch. Obama knows that raising taxes will never pass the House, so he tosses in various things that make him look center right. He also gets to say, “I tried to compromise, to be an adult, and they still wanted more.” He also knows his base will forget it by next November. Nicely played, sir.

  10. Valissa

    re: Ferguson article… great article, terrible title. The word ‘debt’ is in the title, but nowhere in the article. You’d almost think the FT didn’t want anyone to read it (plus it’s a subscription site and you have to know get to it via Google just to read it). Wonder if any MSM site would be brave enough to break this pay-to-play story?

  11. VietnamVet

    Unfunded Wars. Trillions of bad bets on Bank Books. Instead of ending the wars or taking a haircut on the debt, the Elites are pushing Austerity and Entitlement cuts.

    Israel, Greece, Egypt Erupting in Protest.

    Neo-Liberals, Neo-Conservatives, and Corporate Media sure cannot connect the dots.

  12. KnotRP

    > Poll: Obama losing support from base Politico (hat tip Mark Ames)

    This ground has been covered previously:

    The republicans drove the economy into an oceanic trench.
    The democrats are stripping the economy for parts.
    [Glen added] When the republicans get their turn again,
    they will come back and shoot it full of holes
    then stuff a rag down the fuel tank and set it on fire.

  13. MyLessThanPrimeBeef

    Please respect’s ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email to buy additional rights or use this link to reference the article –

    You might resolve not to enter such an auction. Perhaps, but if everyone takes that sensible line a dollar bill will be there for the taking. Shubik proposed the paradox as a problem to which game theory offered no solution. You may by now have resolved not to mix socially with economists – if you had not made that decision already. And that is exactly the right answer. Avoid situations that mimic the structure of this game.

    However, this is not so easy. The essence of Shubik’s problem is that it always seems worthwhile to offer a small amount to avert a larger loss


    From the Kipling’s game theory link.

    Really? That’s why we should avoid economists, because they can come up with a paradox as a problem to which game theory offers no solution?

    If you really want to learn the lesson of taking a small loss to avert a larger one, try chess. Give up a pawn so you don’t lose a knight or a queen. No paradoxes needed. No need to make simple things complicated as ‘smart people’ very much like to do. That’s the real reason why we should avoid economists.

    1. Jim

      I would be willing to bet that many of the EuroCrats who have decided to embark on bailout after bailout are pretty good chess players. Yet, they continue to put off the inevitable.

      1. MyLessThanPrimeBeef

        I think their problme is they stop playing chess, spending their time, instead, on making up paradoxes.

          1. MyLessThanPrimeBeef

            The more one studies Economics,, the less one knows.

            What is the name for that paradox?

          2. Valissa

            It does need an official name! I was over at Wikipedia reading about paradoxes but none of them seemed to quite fit this situation.

            We need a naming competition. I’m sure the clever people here could come up with some good suggestions on that ;-)

          3. ambrit

            Mz V;
            This less than clever folk humbly suggests: The Law of Inverse Return. (A little bit like the doctrine of the “Eternal Return,” which certain anti-public groups have enshrined as a dual purpose Economic/Societal Theorem.)

    2. Valissa


      1. Economists are armed and dangerous: “Watch out for our invisible hands.”
      2. Economists can supply it on demand.
      3. You can talk about money without every having to make any.
      4. You get to say “trickle down” with a straight face.
      5. Mick Jagger and Arnold Schwarzenegger both studied economics and look how they turned out.
      6. When you are in the unemployment line, at least you will know why you are there.
      7. If you rearrange the letters in “ECONOMICS”, you get “COMIC NOSE”.
      8. Although ethics teaches that virtue is its own reward, in economics we get taught that reward is its own virtue.
      9. When you get drunk, you can tell everyone that you are just researching the law of diminishing marginal utility.
      10. When you call 1-900-LUV-ECON and get Kandi Keynes, you will have something to talk about.

          1. ambrit

            Too true, the mixing of genetic material is indeed much like gambling. Only, on these tables, the house loses every time.

  14. Cedric Regula

    File: Boehnergeddon – Pillowtalk

    S&P denies it is a rating agency when questioned by lawmakers.

    Markets crappy today on crappy economy.

    Congress hard at work. Vote coming tommorrow.

    Remy: Raise The Debt Ceiling Rap


    Raise da debt ceiling!
    Raise da debt ceiling!
    Raise da debt ceiling!
    Raise da debt ceiling!

    14 trillion in debt
    but yo we ain’t got no qualms
    droppin $100 bills
    and million dollar bombs

    spending money we don’t have
    that’s the name of the game
    they call me cumulo nimbus
    because you KNOW I make it rain

    bail out all kind of cars
    got all kind of whips
    ladies ask me how I get em
    I tell em STIMULUS

    Social Security surplus?
    Oh, guess what? it’s gone
    I got my hands on everything
    like Dominique Strauss Kahn

    ain’t got no Medicare trust fund
    son, that’s just absurd
    spending every single penny that
    we see, son, have you heard?

    ain’t got no moral objections
    ain’t got kind of complaints
    ain’t got no quantitative
    statutory budget restraints


    Yo, we up in the Fed
    and we living in style
    Spending lots of money
    while we sipping crystal

    still making it rain
    and yeah it be so pleasing
    wait, not making it rain–
    we be “Quantitative Easing!”

    QE1, QE2
    QE4, QE3
    Dropping IOU’s
    in every fund that I see

    printing the cash
    inflating the monies
    callin up China
    “a-yo we straight out of 20’s!”

    in the club
    we be louding out
    while to the market, yeah
    we be crowding out

    on the beach getting tan
    and sipping Corona
    we got a monetary plan–
    and it involves a lot of toner…


    So if you look at the chart
    and examine the trend
    we borrow 40 cents of every
    single dollar we spend

    and non-discretionary spending
    increases every day
    do you have a comment for Committee?

    Mr. Speaker, Mr. Speaker
    would you beam me up?
    A Congressperson cutting spending?
    Couldn’t dream me up

    We’re gonna default
    if we follow this road!
    I should have thought of this
    14 trillion dollars ago!

    I’m the king of the links
    I’m a menace at tennis
    I’m sticking spinnaz on my rims
    picking winnaz in business

    if you’re looking for some cash
    it’s about to get heavy
    I got some big ol’ piles of money
    and guess what–they shovel ready

      1. MyLessThanPrimeBeef

        For every vote for Boehnergeddon, you get one for Debterdaemmerung.

        It appears to be neck to neck. Too close to call right now.

      2. ambrit

        Oh Muse;
        What about the view from atop Mt Olympus? (Where Oracle is not traded.) Where our Brave New World is being tested and kneaded, adding a pungent ferment to the dough.

          1. ambrit

            Mz Valissa;
            Could it be? No, surely not. Wall Street as the new Omphalos?
            By the Way, it’s quite appropriate for U Texas to be the source of the earliest known reference to a ‘trickle down’ theory I’ve ever seen. (Is the Zeus myth coterminous with the Pharoah ‘fertilizing’ the Nile rite?)

  15. Francois T

    Re: Israel erupts in protests.

    This is exactly what would happen here with a GOP президент (president) in 2013.

    One more reason to boot Obysmal outta DC.

    1. ambrit

      Yep, too true. I’d love to see “Obama at Colonus.” Wiki it and you come up with that great line: “Oh Boehner, dear friend, only the gods can never age, the gods can never die. All else in the world almighty Time obliterates…”
      See also the history of Athens at the end of the authors (Sophocles) life. Who will be our Thirty Tyrants?

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