Links 9/15/11

Dear readers, this is one of those weird nights where there is nothing much to write about. You’ll see the regulars who sent links concurred, there are fewer from them than usual. Presumably back to normal later in the day.


Landscape-wide deer management preserves woodlands BBC. Hunting season, anyone?

Amish men jailed for not displaying buggy safety signs Reuters (hat tip Buzz Potamkin)

Bankers: an anthropological study Guardian (hat tip Joe Costello)

Ferrari Proves Recession Proof as Luxury Sells Out Bloomberg (hat tip Buzz Potamkin)

United States in last-ditch effort to set up Israeli-Palestinian peace talks Guardian

Will German indecision on the euro drag the whole world down? Telegraph

Europe’s leaders battle to keep faith with euro as Greek bailout flounders Guardian

Does the Euro Have a Future? George Soros, New York Review of Books

Saving Europe with sovereign equity Steve Waldman

New York special election loss played down by White House Politico. I know someone who did canvassing in Queens, which is hard core Dem base, and said the vibe was terrible and predicted a Weprin defeat. So I’m not buying what the hackocracy is selling.

More Trial Balloons on Medicare, Medicaid, Social Security Cuts from Obama Dave Dayen, FireDogLake

The Crisis of Fiscal Imagination Dani Rodrik, Project Syndicate (hat tip Mark Thoma)

SEC Widens CDO Probe Wall Street Journal. Funny how the SEC has problems with all these Magnetar deals but never with Magnetar.

Economy Clips Factories Wall Street Journal

The Merrill Lynch and Lehman Deals, 3 Years Later New York Times (hat tip reader Crocodile Chuck)

Franklin Roosevelt on Social Security Ed Harrison

THE CURSE OF TINA Adam Curtis, BBC (hat tip reader Externality). On the origins of think tanks.

Antidote du jour:

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    1. financial matters

      Link fix,0

      An Exorbitant Burden

      Why keeping the dollar as the world’s reserve currency is a massive drag on the struggling U.S. economy

      Michael Pettis, 9/7/11

      I think Pettis is one of the best thinkers on China and trade policy.. some excerpts

      “” Purchasing excess amounts of dollars is a policy, in other words, aimed at generating trade surpluses and higher domestic employment.

      So where is the privilege in all this? Ask any economist to describe the greatest weaknesses in the U.S. economy, and almost certainly the list will include the gaping trade deficit, the low level of savings, and high levels of private and public debt. But it is foreign accumulation of U.S. dollar assets that, at best, permits these three conditions (which, by the way, really are manifestations of the same condition) and, at worst, causes them to deteriorate.

      Must foreigners fund the U.S. government?

      By buying SDRs the central banks are implicitly spreading their reserve accumulation away from dollars and into those other currencies. In doing so, any country that tries to generate large trade surpluses by accumulating reserves would be forcing the corresponding deficit not just onto the U.S. economy, but onto other countries (according to the currency’s component in the SDR). But Europe, Japan, and others have made it very clear, that they oppose these kinds of trade practices and will not allow their currencies to rise because of foreign accumulation.

      countries like China, Japan, South Korea, Russia, and perhaps even Brazil will never voluntarily give up the trade advantages of hoarding dollars. But at the very least, economists might want to clear a few things up — and let’s start by abolishing the phrase “exorbitant privilege.” “”

      1. Typing Monkey

        Thanks for fixing the link.

        I think Pettis is one of the best thinkers on China and trade policy..

        So do I–but I’m not sure if I equate thinking well to being correct. In any case, I like pondering his thoughts–if I ever met him, I’d love to buy him a lunch of dinner just to challenge his ideas in a give-and-take…

        Purchasing excess amounts of dollars is a policy, in other words, aimed at generating trade surpluses and higher domestic employment.[…]So where is the privilege in all this? Ask any economist to describe the greatest weaknesses in the U.S. economy, and almost certainly the list will include the gaping trade deficit, the low level of savings, and high levels of private and public debt.

        The privilege is that:

        (1) to a large extent, you get to set the de facto interest rate you pay. The rest of the world, whether they like it or not, has to pay a rate the is a function of yours.

        (2) You can always unilaterally end this relationship by defaulting (so there is a “way out”)

        Must foreigners fund the U.S. government?

        (3) I don’t believe that there is a correlation between low savings and being the country with exorbitant privilege. This is one of the points I most strongly disagree with, although I could be persuaded to change my mind.

        (4) Other countries want the trade surpluses, but they can only create them by selling what Americans want to buy. Should America decide, for example, that it will only buy things that it can’t produce and things that will count as a net investment rather than consumption, then other countries would feel obligated to orient their exports to those demands, and the US should be able to increase in strength indefinitely (at least until some counter-cyclical forces kick in).

        The problem, then, isn’t the privilege, it’s what the US has done with its privilege–basically, squander it. You could argue that no system is good enough to not squander such a position, and that may be true. But that’s not Petit’s point.

        But Europe, Japan, and others have made it very clear, that they oppose these kinds of trade practices and will not allow their currencies to rise because of foreign accumulation.

        That’s to their detriment, I believe. Increasing purchasing power is a good thing, not a bad one.

        1. financial matters

          Yes purchasing power is a good thing but it involves trade offs. China is trying to rebalance by increasing domestic purchasing power but this comes at the expense of hurting their export sector and related employment.

          I think custom taxes on imports gets a bad rap. I think countries need to try and protect domestic employment.

          I think one of Pettis’ main points is that if someone is running a surplus someone has to run a deficit. China prints renminbi as a policy to run a surplus and take dollars out of the system.

          As someone commented on this site a while back what good is it to buy cheap imported work boots if there is no work here. That still makes them relatively very expensive. A balancing act to be sure but I think we need to think of ways to deal with unemployment. Every country would have to balance how these customs would affect their own populations. I don’t know where the trade-off is but may make sense to pay $40 instead $30 for the boots and have a job..

  1. Middle Seaman

    NY special elections: I have no idea what were the condition on the ground. Obama didn’t say anything that was not accepted before by Israel. Olmert offered a 67 border plus 6% of the West Bank as the Israeli plan; that’s essentially 67 borders. The problem is that Obama has no clue how to approach the Israeli/Palestinian conflict and succeeded in aggravating many American Jews.

    It’s not what he said; it’s how he said it. Whether that caused the Democratic loss, I don’t know.

    Obama aggravates a lot of Democrats. A high union official visiting Las Vegas told me: If I were living in Vegas, I wouldn’t vote Democrats.

    1. Glen

      I see much analyzing of the NY special elections, but much less of the results in NV-2. To cut to the chase, the Dems were shellacked. I suspect the results have much less to do with Obama’s policies with regard to Israel and much more to do with the economy.

      I would be interested to see an unbiased (or even a biased) examination of the NV results. Has anybody found one?

  2. ArkansasAngie

    The Crisis of Fiscal Imagination

    “But certain fiscal decisions, and most critically the level of the fiscal deficit, can be delegated to an independent board.”

    No thank you. We don’t need another secret society making decisions about who are the winners and losers.

    And … since it’s germane … audit the Fed

  3. rd

    On FDR:

    1. Clearly stated goals and reasons for legislation.
    2. Clearly stated limitations of the legislation and reasons why.
    3. A tax increase.
    4. Congratulating Congress for a job well done.
    5. A “signing statement” that actually supports the legislation and effectively promises to administer it.

    What was this man thinking?

    He clearly did not spend enough time working with focus groups, pollsters, campaign strategists, and “expert” lobbyists. He must have left a ton of potential campaign donation money on the table. He clearly did not understand the proper role of a modern era politician.

    1. ambrit

      My Dear rd;
      A statement worthy of Oscar Wilde! “Political Propriety”: The art of buggering the electorate. “Political Propinquity”: A financial circle jerk.

  4. Jim Haygood

    ‘Social security, like every other government retirement scheme, is not a general government program, it is a government provided pension program. To claim otherwise is to ignore 70 years of history.’ — Ed Harrison

    Frank Roosevelt and the System itself tirelessly promoted this myth. But when push came to shove in 1960, the Supreme Court ruled differently in Flemming v. Nestor. This quote is from the SSA’s own website:

    There has been a temptation throughout the program’s history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way that deprives a contributor of a promised future benefit.

    Congress clearly had no such limitation in mind when crafting the law. Section 1104 of the 1935 Act, entitled “RESERVATION OF POWER,” specifically said: “The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress.” Even so, some have thought that this reservation was in some way unconstitutional. This is the issue finally settled by Flemming v. Nestor.

    In this 1960 Supreme Court decision Nestor’s denial of benefits was upheld even though he had contributed to the program for 19 years and was already receiving benefits. He appealed the termination arguing, among other claims, that promised Social Security benefits were a contract and that Congress could not renege on that contract. In its ruling, the Court rejected this argument and established the principle that entitlement to Social Security benefits is not a contractual right.

    This is what’s so deplorable about politicized pension plans. If you buy an annuity from an insurer and the insurer reneges on the terms, you can enforce your contract in court.

    But if Congress changes the rules on retirement age, COLAs, etc. in an unfavorable manner (which is exactly what it is doing), your ‘remedy’ is to try to elect a more sympathetic Congressional majority.

    Good luck with that! Life is too short, I say. Recognize that the only protection for your Social Security benefits is ‘honor among thieves.’ And the thieves is getting pretty desperate these days …

    1. rd

      The dramatic changes in people’s pensions when their firms go bankrupt indicate that the private pensions are also uncertain.

      Also, annuities are not made whole if an insurer goes bankrupt.

      Life is just full of uncertainties.

      1. aet

        Governments of nations tend to last longer than privately owned financial entities.

        That’s why lending to them pays less interest.

        Minimum pensions, indeed incomes, ought to be paid by the State to all citizens.

        Places that have lots of natural resources ALWAYS do this.

        1. aet

          That is, those places where natural resources exist in abundance, in substantially greater amounts than is required for the mere sustenance of the local populations – such as the “potlatch societies” of the of the North American Pacific Northwest region once enjoyed, kinda like Saudi Arabia is now.

          Places that have more than people need.

          These are the places which point the way as to how to deal with a production surplus.

          Then again, one may choose to monetarily deflate instead, I suppose.

          “Destroy present demand in order to save the value of future production”? Is that an option for dealing with situations where people have too much too easily; for those who are too good at producing too much, for stability of pricing to take hold in an economy?

          1. aet

            Pardon my random musings as to deflation and falling prices!

            As to binding Sovereign states to contracts: never, if they do not consent to be so bound.

            The world is bound to itself by more than mere contracts as they are defined by Anglo-Saxon law.

        2. Jim Haygood

          Ol’ Walter Wriston of Citibank (sort of a Seventies version of our Uncle Warren Buffett, but not nearly as smart) famously claimed that ‘sovereigns don’t default.’ But Rogoff and Reinhart beg to differ: they found hundreds of examples of sovereign default over the centuries.

          Governments indeed soldier on, but their financial obligations often get shed along the way. This is particularly true for schemes such as Social Security, with a structurally defective design.

          No one in 1935 imagined that population growth would ever slow, or that life expectancy would rise toward 80, making the age-cohort pyramid top-heavy. Assuming permanent expansion of workers and wages inadvertently incorporated a Ponzi element into the scheme … while failing to incorporate equities (which weren’t regarded as investment grade back then) disastrously depressed the trust fund’s return.

          These structural defects could be fixed, but not while the U.S. remains in ideological gridlock.

          1. curlydan

            Oh, who could have known? The lament of the surprised, but as has been shown throughout these past few years, some almost always know.

            In fact, in 1983 when the last major SS reform was implemented, the demographic and life expectancy projections were pretty much spot on. It’s the increasing income inequality which wasn’t projected well. In 1983, FICA taxes covered 90% of income. Today, because of high increases in income among the rich and declining incomes among the less wealthy, FICA only covers about 82%-83% of income–that’s where the miss was and that’s just one more reason to raise the FICA cap more aggressively from $106K.

          2. Binky the Bear

            Not true but contains several popular fallacies.
            See Altman, Nancy, 2005, The Battle for Social Security: From FDR’s Vision To Bush’s Gamble

            If you’re interested.

      1. serf smith

        Nah, the government wouldn’t let a big insurance co. go bankrupt– not while the insurance companies own the government.

    2. CaitlinO

      “it is a government provided pension program.”

      Actually, last time I looked at a pay stub Social Security looked to me like an Employer/Employee provided penson program.

    3. doom

      No, social security’s not a contractual right, it’s a human right under UDHR Articles 22 and 25, binding on the state as customary international law. So you have to set up a human rights body in accordance with the Paris Principles, to review the Supreme Court’s derelictions of state duties. And you have to accede to the CESCR to provide independent review of how the state meets its obligations to its people. To counter this bipartisan attack on the state’s minimal duties, people have to go over the heads of our kleptocratic government to an international source of legitimacy and governance standards. Not gonna lift a finger for a candidate that doesn’t acknowledge these legal requirements, and the dire need for them.

    4. john c. halasz

      Social Security is not a retirement savings program, but social insurance: i.e. it’s mostly a universal annuitization scheme. No private market set-up would provide annuities for the entire population, let alone at such a low transaction cost and with such high returns. And, yes, private annuities can fail to be paid, when the insurance company goes bankrupt and goes into run-off. Which can’t happen with SSI in at all the same way. (Aside from being an automatic stabilizer in the business cycle).

  5. dearieme

    “Hunting season, anyone?” The fact is that large parts of Britain which hardly saw a deer fifty years ago are now swarming with the bloody things. As a leading botanical historian says, “Eat bambi!” But in the densely populated parts of England I don’t much fancy lots of people wandering around shooting at deer with rifles. Deer stalking on the Scottish moors is a good business, but doesn’t kill enough of the animals to do much good.

    P.S. The Forces of Progress recently made deer hunting on Exmoor illegal because the Wrong Sort of People enjoyed it.

      1. liberal

        since big cats prey on people who think they have the right to wander anywhere unharmed, that won’t work.

        1. Dave of Maryland

          England is an island. There will be cats (lions, tigers, bears, oh my!) if and when they import them. The British were quite proud, centuries ago, when they had eradicated the last of them.

          1. CaitlinO

            Since they were so pleased to have ridden themselves of lions, it always struck me as odd that lions show up in so many of their royal standards. Of course, dragons show up a lot, too.

        2. ambrit

          Well folks;
          The top predators for ungulates are generally: Humans, Felines, and Canines. One group has socially restrictrd its’ predation. The second is nearly extinct on the island. The third group, the Canines, is waiting for ‘breakout conditions’ to arise. Wolves roaming the Highlands, can’t you just see it.

    1. alex

      “I don’t much fancy lots of people wandering around shooting at deer with rifles”

      On densely populated Long Island, USA, that problem is solved by only allowing bow hunting.

      Even in less densely populated, but not completely unpopulated, parts of the US, hunting is often limited to shotguns, which have a much shorter range than rifles.

      1. dearieme

        I like the cats suggestion: could we genetically modify tigers until they hunt deer and only deer? That must be the answer, and will save the tiger for posterity. Or would lions be better?

        1. ambrit

          Blessed Liberal;
          I wonder if the Great Lakes States still have an ‘atlatl’ hunting season? Now that’s hunting!

    2. scraping_by

      “I don’t much fancy lots of people wandering around shooting at deer with rifles.”

      Around here, we take care of our suburban deer with black powder rifles. Range of maybe 100 yards, not really lethal past fifty. Yearly hunt along the wilderness parks at the edge of town.

      Also, the BBC could make them a gourmet item in the cooking show. Create an economic incentive to poach.

    1. wunsacon

      Yes, jobs are becoming obsolete. We will invent true AI by 2030. A few seconds later, the AI programmers will be obsolete, too.

      1. F. Beard

        We will invent true AI by 2030. wunsacon

        Nope. AI is always 50 years away. That would be 2061 currently. Next year it will be 2062 and so forth.

        A few seconds later, the AI programmers will be obsolete, too. wunsacon

        I doubt it. Creativity cannot be programmed and if the AI was made to emulate humans then it would have the same problems humans do too, imo.

        But by all means we should keep trying. The more humans try to create AI, the more special we realize we are.

        1. liberal

          “AI is always 50 years away.”

          Agreed. The claim that AI is just around the corner is by now a worn out joke.

        2. Graveltongue

          Mr. Beard, creativity cannot be programmed? And apparently man will pass out when he travels at speeds exceeding 20 mph, the Earth is the centre of the Universe and entirely flat.

      2. Toby

        I suspect wunsacon is being sarcastic.

        But the debate following from Graveltongue’s link misses the point entirely. Technological unemployment has next to nothing to do with creativity, nor need it be anywhere close to 100% to be meaningful. Furthermore, we do not need full AI to automate pretty much all grunt work and repetitive non-creative labour you can imagine. Narrow AI is already doing that, and has been for decades.

        No, technological unemployment is an opportunity to redefine why and how humans are useful to society. In a system set up to be happy with steady-state growth conditions the economy will have less importance that other aspects of society, and human creativity will come to the fore (even though there will indeed be AI creativity one day — or perhaps already; a novel was written by software in the 80s, music has been composed by software, and there are other examples too). However, the reward mechanism of higher pay for the creative and cooperative tasks remaining for humans hands is not functional in this area. See Dan Pink for the negative results of motivating such work with monetary rewards.

        Work will of course always be with us, but the waged labour system in operation today is already way out of date. The linked-to article seeks to initiate a broad discussion of this extremely important topic.

      3. Graveltongue

        True AI, whether around the corner or in the next 50 years, is not the centre of the jobless universe. It amazes me how some people still think this is just another stage in the evolution of the jobs market, just like the transition from the agricultural to the industrial revolution. READ the article, at no point does Rushkoff mention AI, you blinkered halfwits.
        Ask yourself these very simple questions; what is the purpose of human ingenuity? Is it to make more work for ourselves or less? What do you think efficiency means? Employing more people to produce less or is it to produce as much as possible and to maximize profit using as small a work force as is HUMANLY POSSIBLE!
        Open your minds and read the article, don’t just scan the title and dismiss.

  6. Billions for me, None for you

    Ferraris for me, austerity, unemployment and poverty for you. Thanks Americans and keep voting Obama!

    1. Binky the Bear

      And President McCain would never have let that happen, right?
      Maybe President Bachmann Perry Overdrive will fix everything.

  7. Norman

    The only thing in life that is guaranteed, is that you are going to die. How it comes about, well, sometimes you make the choice, other times the Government does. Of course, no one is immune, but ego’s do get in the way, the same as with spoiled bullies. But it’s a sad day in the human chain, when the children turn on their own parents and pull the plug, not out of any compassion, but from a selfish moment to please their ego, in the belief that they curry favor from other humans when doing so. So be it today, hopefully, out of the ashes, the “Phoenix” will rise.

  8. Jessica

    If Greece is dropped out of the Euro zone, the danger is that the markets then turn on the next weakest and work their way up the line.
    But if Germany leaves the Euro zone on its own, isn’t there a danger that the markets immediately turn on the entire rest of the Euro zone? Especially since the financially stronger remaining nations, such as Finland and the Netherlands, would leave right behind Germany. If only to avoid being pulled down with the peripheral nations.
    Maybe the best that would be possible now would be to negotiate an end to the Euro that does the least damage to the EU itself.

      1. Maximilien

        The immediate death of a speculative boom not only has the disadvantage of being immediate but of identifying the executioner.
        —–Galbraith, The Great Crash 1929

  9. Jim Haygood

    Concerted intervention announced:

    FRANKFURT (MarketWatch) — Along with other central banks, the European Central Bank will undertake new operations to provide U.S. dollar liquidity. The operations will be conducted in coordination with the U.S. Federal Reserve, the Bank of England, Bank of Japan, and the Swiss National Bank. The operations will be conducted in addition to the ECB’s ongoing weekly seven-day dollar operations announced in May 2010. The move comes amid worries about dollar-funding tensions in market amid the turmoil related to the euro zone’s sovereign debt crisis.

    This is no cure for Greek insolvency. But it’s a whopping great Band-Aid … and liquidity-meter markets are gonna crank higher.

    1. Typing Monkey

      This is no cure for Greek insolvency. But it’s a whopping great Band-Aid … and liquidity-meter markets are gonna crank higher.

      TED spread seems to indicate otherwise.

      Actually, it seems to indicate a liquidity squeeze is coming up.

    1. ambrit

      Is wordpres under a Denial of Service attack? I tried making the above link and my computer froze up. I had to shut down and re boot. Anyone else get a similar response?

  10. jonny appleseed

    got kids? be careful

    Tempest in a Juice Box: Dr. Oz vs FDA
    by Mary Rothschild | Sep 15, 2011
    In an unusual rebuttal to a popular TV doctor, the U.S. Food and Drug Administration Wednesday took on Dr. Mehmet Oz over arsenic in apple juice.
    Just not face to face.

    A few hours before The Dr. Oz Show aired to an afternoon audience, the FDA released copies of correspondence it had sent to the show’s producers, and posted several information pieces online (one is reposted on this site), all disputing the show’s conclusions about the safety of most commercial brand apple juice.
    But agency officials declined Dr. Oz’s invitation to answer questions before a studio audience, and the doctor capitalized on their absence in making his points to angry parents.

  11. Externality

    Two interesting articles on Russia Today:

    “Californian [sic] bureaucrats using taxpayers’ money to praise themselves”
    (A California water district hired a PR firm to create a phony newspaper with fake reporters to write flattering officials about district officials. The News Hawk Review, as it was called, was then indexed on Google as an actual newspaper.)


    “One dollar house gets foreclosed; 101-year-old granny gets evicted”

    Such was the case recently with Linda Hatchel and her 1895 Victorian home outside of Chicago. She purchased the house when it was up for demolition for a single dollar over 20 years ago, but spent $50,000 alone on moving it a distance of only 1.5 miles. She gutted the home and restored it herself, eventually taking out a second mortgage to pay for her renovations. She’s been able to make her payments ever since, but a bout with cancer has left her with medical bills coming before housing payments. Now after failing to make her final payment, the banks are bugging her to pay up.

    I had one year left on my mortgage, and it would have been paid off,” she tells an NBC affiliate from Chicago. “I wanted to live here for as long as possible,” she says, so Hatchel managed to empty out the countless antiques from the home to make that final payment. More than 20 years after buying the house for the price of a few games of Pac Man, Hatchel found herself jobless thanks to a banking job gone bad and a diagnosis with cancer. Now as she scrounges for change in an attempt to make her payments, the one-dollar house of a lifetime might be going back to the demolition block.

    Only a few hundred miles away in Detroit, Texana Hollis, age 101, was evicted from her home this week. In Hollis’ case, she actually owned her home and had managed to make all of her payments after spending nearly 60 years in the house. In 2003, however, her son asked her to sign it over to a reverse-mortgage company for $32,000 to help with home repairs, but now that the centenarian is unable to make ends meet, the bank has kicked her to the curb. On Monday night, Hollis found herself homeless and in need of help, only to be admitted into an emergency room for severe anxiety and disorientation.

  12. Hugh

    There have been about a 100 last ditch US efforts at resolution of the Israeli-Palestinian conflict. The first paragraph gives the reason for this one

    The United States, Europe and the Middle East quartet are engaged in a last-ditch effort to set up a fresh round of Israeli-Palestinian peace talks in an attempt to head off a major diplomatic embarrassment over the looming Palestinian request for recognition of statehood at the UN.

    My bold. This isn’t about peace but well deserved embarrassment. The two state solution died back in 1995 with the death of Rabin at the hands of a Jewish extremist. Netanyahu proceeded to dismantle Oslo. Sharon made apartheid official policy with his wall of separation. Various prime ministers of all parties have sliced and diced the West Bank into a bunch of mini-bantustans. The truth is that what’s left of the Occupied Territories isn’t viable. The Israelis themselves have created a situation where the only fair solution is a bi-national state. Otherwise it’s just continued apartheid and oppression. In any case, whenever you hear that somebody is pushing a peace plan based on a two state solution, forget about it. It’s dead from the outset. Facts and decisions on the ground moved beyond it 15 years ago.

  13. Don Levit

    Jim Haygood’s quotes from Fleming v Nestor regarding entitlement to Social Security is not a contractual right is spot on.
    Jim, I have enjoyed your objective comments, providing reputable governmental excerpts and links to back your statements.

    The FASAB is the accounting advisor for the federal government.
    Regarding CaitlinO’s opinion that Social Security is an employer/employee provided pension program, the FASAB disagrees.
    In a paper entitled “Accounting for Social Insurance, Revised:”
    Page 85 “Social insurance is not an employee benefit. The accounting methods for employee retirement benefits reflect the fact that employees voluntarily exchange lower wages during their working years to receive certain future benefits. Such an exchange does not occur with social insurance benefits.
    Page 87 A nonexchange transaction arises when one party receives value without directly giving or promising value in return. In regards to social insurance benefits the federal government gives value to beneficiaries WITHOUT RECEIVING VALUE IN RETURN. The fact that benefits paid are not based on the amount of taxes paid confirms the nonexchange nature of social insurance.”
    Click on Exposure Drafts and Documents for Comment.
    Don Levit

    1. F. Beard

      I tell you what: Instead of sacrificing the old people for the banks how about we sacrifice the banks for all of us?

      1) Put banks out of the counterfeiting business by forbidding any further “credit” creation. Genuine loans of existing money could still be made.

      2) Send monthly and equal bailout checks to the entire population including savers equal in total to all private credit paid off the previous month. Continue till all private credit is paid off.

      With the above we end up with genuine lending institutions and a debt-free population. The economy would recover quickly with no significant price inflation risk. As for government debt, it should be paid off as it comes due with new fiat. All future deficit spending would be funded the same way, with new fiat.

      3) Implement fundamental reform in private money creation to end all government involvement after the bailout.

      Oops! There goes an easy living for the counterfeiting and usury class. Boo Hoo!

  14. K Ackermann

    It’s stunning how dumb Israel is, more so the US going along.

    I would’ve thought the path was clearly lit: instead of dropping bombs on the Palestinians… drop potato chips, leather recliners, and digital cable TV’s on their heads and turn them into a bunch of fat, lazy consumers. It worked to perfection in the US.

    1. Typing Monkey

      Yves posted the link from the original source, but it’s worth the read.

      To resolve a crisis in which the impossible becomes possible it is necessary to think about the unthinkable. To start with, it is imperative to prepare for the possibility of default and defection from the eurozone in the case of Greece, Portugal, and perhaps Ireland.

      No, the “unthinkable” is that the Germans decide that the Euro is not worth their continued financial support and decide to withdraw back to the D-mark. Then the rest of the parasites can figure out how to live within their means instead of blaming the Germans for all their ills.*

      But Soros has thought about this too:

      The euro exists and the assets and liabilities of the financial system are so intermingled on the basis of a common currency that a breakdown of the euro would cause a meltdown beyond the capacity of the authorities to contain. The longer it takes for the German public to realize this, the heavier the price they and the rest of the world will have to pay.

      I disagree–rather, the longer the world continues with this bizarre emperor-has-no-clothes charade** that the Euro (or the USD or GBP, for that matter) is viable when its member countries simply rack up staggering piles of debt in order to give citizens things they can’t afford, the heavier the price the rest of the world will have to pay.

      Of course, the G7 countries no doubt already know this, and are likely going to keep borrowing from countries that are stupid enough to continue lending to them until they just decide to default. And I guess it makes sense (that’s what I would do, anyway)–just call it a black swan, shrug your shoulders, say that nobody could ever figure out that double-digit percentage deficits or debt/GDP ratios above 100% would lead to 30yr interest rates above 3%, and let the next generation figure out how to deal with the fallout.

      And, inevitably, once this happens we’re going to get to the old yell that the young “owe them”, just like the West is yelling that the Asians “owe them” and the EU countries are claiming that the Germans “owe them”.

      * (Funny how none of them thanked the Germans for the easy credit they got over the last one and a half decades, though…)

      **(does anybody **really** believe that this is sustainable or even solvable??)

  15. craazyman

    The financial newz is way to confuzing these days. Can somebody summarize it in 9 or 10 well-written paragraphs that might be a work of genius analysis? I can’t. Looks like it’s either something Ms. Merkel will decide or have decided for her. Ya never no if the man (or woman) makes history, or if history makes them, like a puppet of something massive and invisible and barely perceptible by all but the most sensitive and unbalanced personalities.

  16. Stan

    Re: SEC & Magnetar story

    I approached the compliance head of the SEC in Chicago after a presentation they made about one year ago and expressed my interest in prosecuting securities fraud cases and inquiring whether there were any openings in enforcement div in chicago. I went on to mention Magnetar in the hopes of sparking a discussion (after all magnetar is in evanston) and the SEC head became visibly uncomfortable. I thanked them for their time. What was more telling was their effusively conciliatory tone to the room of mostly securities def bar reflecting that while true they’ve been given new areas of oversight and new mandate from obama and dodd-frank that they made it clear that was an unfunded mandate, they had no resources for additional hiring and that they were just beginning to attempt to acquire a handful of individuals who had the experience and/or sophistication to understand the complexity of deals like CDO’s. They gave off the strong tone that they had neither the expertise, manpower nor the inclination to prosecute securities cases. They just wanted to get along. It was informative.

  17. Valissa

    re: Bankers: an anthropological study

    Great article and a wonderful research project idea. Went over to his banking blog to read the first set of interviews… very interesting.

    I bought the book “Liquidated: An Ethnography of Wall Street” by anthropologist Karen Ho, but haven’t read it yet (it’s received good reviews). Planning to get to it after I read Graeber’s book, which is next on my list. Have enjoyed the Graeber posts here and hope to see more of them!

    1. ambrit

      Dear Steve;
      As someone else observed a few days ago, why hold the demonstration on a Saturday? That makes it of symbolic value at best. A Monday would be more effective, and seduce a few market players into taking a ‘long weekend.’ Hit them where it hurts, and that sure ain’t in their sense of morality or conscience.

  18. Typing Monkey


    In the 1910s, we expanded health and safety standards, established the Federal Reserve, and (unlike today) quickly lifted the limitations on civil liberties enacted during World War I.

    In the ‘20s, we pioneered jazz, widespread radio use, motion pictures and the managerial approaches still used by modern business.

    In the ‘30s, amid the Great Depression, we built much of the infrastructure we still use — including, most likely, the roads you drove on today and the schools where you dropped off your children.

    In the ‘40s, we not only emerged as the preeminent power in the world but also helped develop radar, antibiotics and nuclear energy.

    In the ‘50s, we built the interstate highway system, cured polio and used the government to help people own their own homes.

    In the ‘60s, we went to the moon, made great strides toward racial equality, directed federal money toward better education and opened our borders to many more non-Europeans.

    In the ‘70s, we moved toward gender equality, began dramatic advances in medical research and started cleaning up the environment.

    In the ‘80s, we strengthened Social Security, reformed the tax code and fixed the immigration system (at least temporarily), while peacefully winding down the Cold War.

    In the ‘90s, we balanced the budget, reformed welfare and watched the Internet — a government creation — transform our world.

    And the past 10 years? Shoes off in the airport. Bruising unemployment. Slipping from first to 12th in college graduation. Even classic loser decades, like the 1930s and 1970s, were more productive than the oughts.

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