Links 12/6/11

Dear readers, I’m really sorry re the lack of my own posts today. I have a ton of competing demands over the next two weeks (some of which are site admin related). Things should get better later this week.

Eight Ferraris Crash at ‘Gathering of Narcissists’ Bloomberg

Oil’s Growing Thirst for Water Wall Street Journal. Potable water is our most limited resource.

Senator Uses FCC Nomination Process To Question National Wireless Network Slashdot (hat tip reader bob)

No, It’s Not The Welfare State Paul Krugman

Italy wins the Oscar MacroBusiness

Fed may give loans to IMF to help euro zone: paper Reuters (hat tip reader anon48)

What Can Save the Euro? Joseph Stiglitz, Project Syndicate

Eurozone crisis: Britain’s companies prepare for life after the single currency Guardian (hat tip reader 1 SK)

China and Europe Credit Writedowns

How do we know that China is overinvesting? Michael Pettis. Late to this, which is still very much worth reading.

Western dreams and Egypt’s reality Gideon Rachman, Financial Times

Democrats Dare Not “Abandon” the White Working Class RealClearPolitics (hat tip reader Pat Caddell)

The Wonky Liberal David Brooks, New York Times (hat tip reader Scott). Funny how Brooks describes a center right winger but keeps insisting Obama is a liberal. Of course, if you just add the “neo” he’d be correct.

Civil Liberties Oversight Board Still Dormant Secrecy News (hat tip reader bob)

How Freedom Group Became the Big Shot New York Times (hat tip reader bob). Somehow missed this, but if Cerberus screws up the gun industry as much as it has the coated paper industry, this might be the best thing that ever happened in the way of gun control.

75 Years in Prison For Videotaping Police YouTube (hat tip reader 1 SK)

N.Y.C. Police Maligned Paradegoers on Facebook New York Times

UNC director says data supports Occupy Our Homes dismay Housing Wire (hat tip MBH)

Ron Paul Defends The 99 Percent: ‘It’s A Very Healthy Movement’ ThinkProgress (hat tip reader 1 SK)

Categorizing Those Unemployed by the Recession Caused by the Financial Crisis Jesse

Corzine Rebuffed Internal Warnings at MF Global Wall Street Journal

Former staff sue Corzine over MF collapse Financial Times

Three more notaries charged in Nevada robo-signing scandal Housing Wire

Johnston: Income Inequality Increases as Bank Regulation, Prosecutions Decrease Angry Bear (hat tip reader Psychohistorian). This is compelling. But could the causality still be the reverse, that as the rich get richer, they buy less constraints on themselves?

Antidote du jour:

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  1. Foppe

    And, just to make everyone’s day, see this article in the FT (h/t Felix):

    Ms Merkel agreed that private sector bondholders would not be asked to bear some of the losses in any future sovereign debt restructuring, as she had insisted this year in the case of Greece’s second bail-out. However, future eurozone bonds will still include collective action clauses providing for potential voluntary rescheduling of private debt.

    Ms Merkel said it was imperative to show that Europe was a “safe place to invest”.

    1. Fraud Guy

      So now we’ve gone from local cities, counties, and states cutting off their tax revenues to attract “investment” and jobs to entire countries pimping themselves out?


      1. psychohistorian

        Its a race to the bottom with blinders on. There are not now, nor in the future going to be enough jobs for all those willing and able.

        We either redefine human contribution and support by society entirely or engage in a sick form of global genocide that would warm the cockles of the Libertarian heart (if they had one).

        1. MyLessThanPrimeBeef

          I didn’t know Libertarians are that bad.

          Perhaps the English language is the one to blame.

          1. Francois T

            The Libertarian ideology goes against 2 million years of facts that Evolution clearly marked for all of us to see. In a word, human specie has been that successful for one imperative reason: we collaborate.

            Sure, we go to war against each other; we can be cruel and all that jazz.

            But the bottom line is irrefutable; humans are successful when they collaborate with each other. Libertarians do not believe in collaboration unless a myriad of conditions are met first.

            Sorry, but 2 million years of History wins hands down against a quarter-ass baked ideology pushed by a 20th century horrible writer which only accomplishment was to make believe she was a deep intellectual.

          2. SidFinster

            I think it was Ursula K. LeGuin who remarked that while women are capable of great cruelty, “only men [males] and ants make war” in the sense of being able to cooperate and organize that aggression.

            Not sure how true that is.

      2. Jim Sterling

        I wonder how clever the Irish will feel about having been the first to slash their taxes in the name of attracting corporations, when they realize the Germans can undercut them any day of the week. They lose the revenue, and then don’t even attract the corporations.

    2. F. Beard

      Ms Merkel said it was imperative to show that Europe was a “safe place to invest”.

      What Europe needs to be is a safe place for real capital such as talent and skills; money it can and should create itself.

      People endlessly confuse real capital with money – to the delight of the bankers, I would bet.

    3. Fraud Guy

      I am also reminded of the cow in “The Restaurant At the End of the Universe”, which was bred to enjoy spending its entire life preparing itself to be eaten, and to kill itself, also.

      When the fatted calf is lining itself up for the slaughterhouse, who needs Judas goats?

    1. 1whoknu

      Nice try, but not good enough. One little detail not mentioned, the Central Banks are run by the bankers. Why would they redirect the masses in upon themselves.

  2. ZeroInMyOnes

    Regarding the relationship between income inequality and bank regulation, now we know that when they say ‘Shrink government…’, the rest of that sentence is: ‘so I can get away with more.’

    On a different blog yesterday, one commenter made some sports analogies, asking what the game of American football would look like if there were no refs. Well now we can see what that situation did to the game of Capitalism in this country: It is not a fair, or even safe, game any more.

  3. craazyman

    When narcissists gather together, do any of them even notice? Maybe that explains the crash. ah ahahahah ahhahahhahahahah

    1. Stephen Nightingale

      I was hoping the Japanese word for ‘narcissist’ would be something chunky to get your mouth round. Sadly, it’s just a Katana phoneticization of the English: ‘narusisto’ or the diminutive ‘naru-chan’. There isn’t even a good Kanji (on-yomi) compound for it.

      1. aet

        You guys sure you’re not confounding “narcissist” with “egotist”?

        Because there IS a difference.

        The former see ONLY themselves. While the latter misjudge their true relation to others – but they DO see others well enough – and sometimes accurately, too – well enough to feel a need to over-rate themselves in and by comparison.

        Narcissists really do not care about what others think of them, or how they compare – indeed, they don’t really care if others even exist at all! They only see themselves.

        Egotists drive Ferraris and such, because they seek to convince other people to clearly see by that demonstration what they themselves see – that they are better than those other people.

        While narcissists – well, they just don’t see other people at all. There’s no comparison to others going on.

        Egotists are capable of doing much good in the world, while narcissists aren’t.

        Egotism needs others – narcissists don’t.

        1. MyLessThanPrimeBeef

          Only a true solipsist needs no others.

          An egotist can be so egotistical that he sees everyone as an egotist but himself.

          An overbearing moralist see everyone as immoral but himself.

        2. EH

          I’m guessing you’re not a psychologist. The terms you use do have established and specific meanings, you know.

      2. propertius

        it’s just a Katana phoneticization of the English

        Sounds like it could be a tachi painful to me.

    1. Praedor

      US police forces, countrywide, need to be demilitarized. Towards that end:

      1. NO assault weapons for cops unless issued for specific situations. Only SWAT can regularly hold assault weapons and SWAT ONLY used for true live-or-death situations.

      2. Use of tasers, pepper spray, and batons must be treated the same as use of a firearm, and investigated the same way. (tasers and pepper spray cans must have an indicator that shows whether used or not, how many times, etc, and batons must be equipped with accelerometers to detect use).

      3. Officers, regardless of circumstances, are placed on UNPAID leave for a period no less than one week for ANY and ALL weapon use/discharges (including batons, pepper spray, etc). Every discharge of a weapon cuts the amount of their allowed pension benefits by 1% regardless of whether the discharge is ruled just or not.

      4. Investigations of weapons use/discharges to be conducted by disinterested 3rd party with no connection to the police forces or anyone serving therein.

      5. Only after an investigation clears the officer(s) of excessive use of force/improper use of force do they get reimbursed for HALF the unpaid leave period (there must be a disincentive for ANY use of ANY weapon by police.

      6. Police brutality rulings MUST see the officer(s) IN JAIL for a long period and FOREVER barred from any public service position of any kind ever again. They must also be barred from EVER working for the government even if employed by a private company with a government contract.

      7. Police forces with unusually high civil rights abuse complaints filed must place tracking ankle bracelets on ALL its police officers so their whereabouts can be tracked at all times for a period of 1 year from the period of the high civil rights abuse complaints.

      1. EH

        Every discharge of a weapon cuts the amount of their allowed pension benefits by 1% regardless of whether the discharge is ruled just or not.

        Yeah, this is as far as I got.

        1. Praedor

          We can also drop number 7 above and replace it with: 7. The Chief of Police and the Police Commissioner loses his/her job and any/all benefits if their department experiences unusually high civil rights abuses.

          1. aletheia33

            darn, i really liked the ankle bracelets.
            they should also be stopped and frisked, both when driving and walking, and subjected to full-body searches, and supervised urine drug tests, without advanced notice, frequently, as a routine condition of ongoing training.

            you can get a release from undergoing this ongoing “practice”, for one year only, by winning a 90% majority vote of approval from the members of the community where you do your policing.

  4. Cilly

    Regarding regulation/equality:

    “But could the causality still be the reverse, that as the rich get richer, they buy less constraints on themselves?”

    Or a feedback loop with causality both ways …

      1. aet

        Using money to “buy fewer constraints”?

        Is that like “throwing money at a problem”?

        Or is that like donating money to a Church so that prayers will then be said for your soul to be forgiven and free?

        If you want to keep church and state separate, it’s best not to make money your religion.

  5. Stephen Nightingale

    The country’s lobbyist elite are missing a trick with the ramping up of European austerity. This austerity will surely drive the European educated to flee overseas in search of “a better life”. A good time for the US to expand the H1 visa program, flood the job market, and give students with $30K of debt something new to stiffen their resolve. Should provide interesting rant-fodder for the usual radio suspects: do they rant about the flood of immigrants? Or do they rant about the indigent students whingeing about their entitlement to decent jobs?

  6. dearieme

    Eight red Ferraris driving down a road,
    Eight red Ferraris driving down a road,
    And if one red Ferrari should be driven by Mr Toad,
    There’d be seven red Ferraris driving down a road.

    Seven red Ferraris driving down a road,

  7. dearieme

    There were five on the bed,
    And the little one said,
    “Roll over, roll over”,
    So they all rolled over and the one fell out.

    There were four on the bed,

    1. MyLessThanPrimeBeef

      And one fell out…

      That would be the lowest tranche of this cat-CDO. You get the most affectin with this tranche, but unfortunately, it’s the first to go.

  8. Sock Puppet

    Krugman’s chart of government spending as a percentage of GDP omits the US: Nominally 40%.
    This would put the US at the low end of the spectrum. BUT the other countries get their heathcare in there. Government here spends 10% of GDP on healthcare, with another 7% spent outside government. Add the 7% and the total burden of govt spending + heathcare is 47% of GDP. Same as Germany. More than the UK. We are more socialist than half of Europe!
    The US peacetime number has increased consistently. Except under Clinton.

  9. deeringothamnus

    A comment if I may on the water biz. It offers an interesting insight into the economy as a whole, as follows from the punch-line to the below:

    One way to help the problem in Texas is desalination of their brackish ground water, and recycling of their waste water as a means to increase and better utilize what they have. It so happens there are only a few technologies that have ever been developed to do this. It also so happens that there are a couple new ones in the offing. I won’t go into that. Suffice it to say that, valuations for a start up company in this field are orders of magnitude below that of a social networking company, like Facebook. Water applies to every industry and everyone, and water purification implies industrial processes and manufactured products that employ people. Facebook sells ads, and employs how many?, generates what wealth? I won’t say more, and hope others would like to comment on what this means.

    1. PunchnRun

      “Water applies to every industry and everyone, and water purification implies industrial processes and manufactured products that employ people. Facebook sells ads, and employs how many?, generates what wealth?”

      Not to contradict the implication, I think it is an important point. But I expect that even wildly innovative Internet services leverage existing infrastructure, while innovative industrial processes imply new infrastructure. That changes the ROI picture. Of course there is also the allure of hitting the lottery via IPO.

    2. Praedor

      New rules: Anyone and everyone working in the oil/gas/coal extraction/refining business must be REQUIRED to drink/use wastewater from their operations for all biological and hygiene requirements.

      Execs from any/all of the above-mentioned industries are REQUIRED to live within 10 miles downwind of their primary operations, or the next heaviest emitter site, whichever is higher.

    3. Aquifer

      Looks like you have to be a subscriber to read the article …
      But in any case, it would seem clear to me that trading water for gas is a fools mission …

      You don’t know the worth of water until the well runs dry …

  10. k

    “Somehow missed this, but if Cerberus screws up the gun industry as much as it has the coated paper industry, this might be the best thing that ever happened in the way of gun control.”

    Are you saying you’re pro gun control? As much as I like this blog I may have to stop visiting.

    1. TunoInCA

      That’s ridiculous. I’m an ardent supporter of the right to own/carry guns, but I get my info where I can. If I stopped reading every blog whose creator held views I opposed, I’d get to read no blogs.

    2. Praedor

      Are you saying your are anti-gun control? Really? Anyone and everyone should have a gun or 5? NO controls whatsoever? Zero?

      If you don’t say, “Yes, zero controls on guns!” then you are pro-gun control.

    3. ambrit

      Dear k;
      If everyone were the same, it’d be a totaltarians wet dream. As les Ranes say, “Vive le difference!”

    4. k

      What I am saying is that I don’t trust “prohibition” logic that says that removing the symptom will solve the problem. It hasn’t worked for alcohol, it is not working for drugs, and has not worked for guns. I am anti-violence and anti-crime, but not anti-guns.

      Another way to look at it is disempowering the majority for the sake of the privileged minority. This is what this blog is fighting against in the sphere of finance and economics, but not in matters of personal safety and individual choice?

      1. F. Beard

        What I am saying is that I don’t trust “prohibition” logic that says that removing the symptom will solve the problem. k


      2. Anonymous Jones

        Of course, “prohibition” doesn’t work with murder either.

        People still murder each other.

        Just because “prohibition” doesn’t completely stop something does not mean I cannot prefer that society attempt to regulate that activity.

        I’m fine with the government prohibiting murder and circumscribing gun ownership.

        I’d prefer them to not to go the prohibition route with drugs and prostitution (though as with all businesses, regulations against fraud and deception are encouraged).

        Choosing which regulations (including “prohibition”) to apply to which problems is neither inconsistent or undesirable. It does, however, appear to be too complicated for people who can only see black and white in the world. Alas.

        1. k

          I’d rather resources spent on covering the symptom be spent on solving the root cause. When someone suggests the opposite, I start to question everything else they propose.

          1. F. Beard

            When someone suggests the opposite, I start to question everything else they propose. k

            Wise words. The alcohol Prohibitionists thought they were doing God’s work. But what about this:

            Give strong drink to him who is perishing,
            And wine to him whose life is bitter.
            Let him drink and forget his poverty
            And remember his trouble no more.
            Open your mouth for the mute,
            For the rights of all the unfortunate.
            Open your mouth, judge righteously,
            And defend the rights of the afflicted and needy.
            Proverbs 31:6-9 New American Standard Bible (NASB) [bold added]

    5. K Ackermann

      First, how could you take the statement as pro gun control?

      Second, even if it was, you would be willing to cut off a supply of valuable information because of a single view advocated by the owner that you did not agree with?

      Why not just disagree, and maybe even tell why?

      Here… I’ll start, and I’m a liberal. I have grain on my property to feed my animals. Grain attracts rodents. I can’t use poison for many reasons, and traps are dangerous to my dogs and cats. Instead, I use a .22 rifle, or better yet, I let my grandkids have a little fun. My gun is a tool – it’s not a way of life.

  11. Jess

    Re White Working Class.

    The mere use of this phrase is startling. It has been hilarious in the San Francisco Bay Area to watch the media, the Democratic Party and all their apparatchiks skirt the use of this 13th floor term and concept for the last 30 years or so.

    “Blue-collar whites are more likely than their upscale white counterparts to”…”suffer the hemorrhaging of blue-collar industrial jobs, and compete with illegal immigrants for low-wage employment.”

    What the preceding quote ignores either through elitist ignorance or deliberate obfuscation is skilled service jobs
    in the trades. The Union carpenter, painter, stonemason, welder, electrician, dry-waller, mechanic, or his non-union but well compensated equivalent has seen their livelihood
    shattered first by the tsunami of illegals and lately by the Depression.

    It’s a zero sum game when it comes to wages and
    jobs for the skilled trades. There are only so many jobs available. Low wages drive out high wages.

    Every day we get cards inserted into our mailbox. “[Insert Hispanic name here] Landscaping Service. Painter, concrete work,childcare, housecleaning…” followed by a cell phone number. Sometimes they come to the door and knock. All are
    nice folks, although real communication is impossible because of language and cultural differences.

    Hire most contractors with all the paperwork and a great reputation and you get quality foremen and all the bells and whistles and of course the high prices. However, their sub-contrators usually hire illegals who work weekends, holidays, nights when they can get away with it and they do it for slightly more than minimum wage and usually do poor work, gladly redone because the labor is so poorly compensated.

    Slaves are expensive. You have to house them, feed them, provide medical care and take responsibility for their children. The Democratic Welfare state and the defacto policy of opening the floodgates from Central America makes all those burdens unnecessary for the employer.

    In this environment the White Working Class is reduced to
    “competing” for peon wages if they can even get a job on a
    Spanish speaking crew. These folks are usually not educated in the four year degree sense, although a union journeyman’s training in real things of real practical
    value puts most academic learning to shame. It’s not just Whites either. Black and Hispanic citizens are impoverished by illegals. Often Hispanic citizens are the most affected because of the loss of their recent gains though naturalization and hard work in the first generation. i.e.
    “Half of Hispanics approve of Obama today; three in four once did.” Hispanics suffered the most loss of wealth to Wall Street recently.

    The Democratic Party’s sweeping blather fest about “immigrant families” and “human rights” is patently transparent to White Working Class people who are being driven into the arms of the GOP by it. Occupy Wall Street
    for all its cosmopolitanism has never produced one sign declaring “White men against Wall Street”.

    There is a latent torrent of progressiveness just waiting in the wings, see the growth of the authentic original Tea Party. If the Democrats were to reach out to Whites and
    to stop pretending that they do not exist, they might win more races.

    1. MyLessThanPrimeBeef

      We in this country don’t pay for any umployement benefits to, say, an unemployed worker in Portugal.

      Where is the compassion?

      If he shows up here somehow illegally, we accept him and work him and his family into the system; otherwise, we are not empathizing with a fellow human being in need.

      It’s like, if we don’t see the problem, it doesn’t exit.

      1. Jess

        Yourlessthanprimelogic is dubious.

        How do we “work the illegal into the system?”

        Most illegals work for cash, the majority of which gets sent out of the country back home to the village from whence they came. So much for money circulating in the local economy.

        What little they do spend gets sent to Bentonville or New York City or the Vatican.

        Agree that much money is pumped into the system by those that receive paychecks and never collect the social security or unemployment. However, the social costs they inflict on our society far outweigh those stranded deductions. And yes, I do know that Wall Street has cost us far, far more. That’s not what the original article is about.

        1. MyLessThanPrimeBeef

          I don’t know about the logic, but I am certain my writing was dubious.

          I know because I did it on purpose.

    2. Pat

      It is profit-hungry businesses that caused Hispanic displacement of white working class jobs.
      Businesses want cheap buildings. So they will hire non-union building contractors. Or building contractors (all residential, some commercial) will hire non-union workers and subcontractors to increase their own profits.
      And same with gardening and maintenance jobs.

      People want cheap stuff, and businesses want bigger profits. Nobody cares who makes stuff, and quality is not a big concern. So you can’t blame the illegals for taking jobs that used to go to whites.

      The Republicans are not any better on the emigration issue than the Democrats are. But the Republicans are bigger hypocrites – privately they encourage illegal emigration because businesses want it, but publicly they complain about it constantly.
      So if white working class are abandoning the Democrats, they do so mainly because they are dumb enough to believe the rhetoric of the Republicans (the Thomas Frank – “What’s the Matter With Kansas” syndrome).

      And another thing – the labor unions in the building trades have shot themselves in the foot. Union wage rates are about three times non-union wage rates. And this in jobs that generally do not require a lot of skills or experience. Would you rather have one worker or three for the same price?
      I like the concept of labor unions in theory but in practice many unions function as mini-cartels.

      1. Jess

        Agreed on every point. However the original article is about the Democratic Party and their positions and its relationship to the White Working Class.

        If our local Democratic Party did something, anything, to
        acknowledge the White Working Class and their plight, it would harvest a lot of votes.

        Instead we get the gay marriage, transgender rights and
        open open borders mariachi band playing at every Democratic event and they wonder why there is so little registration and support of the enemies of the Working Class?

    3. EH

      The Union carpenter, painter, stonemason, welder, electrician, dry-waller, mechanic, or his non-union but well compensated equivalent has seen their livelihood
      shattered first by the tsunami of illegals and lately by the Depression.

      Uh huh, and who hired this “tsunami of illegals?” Why don’t they bear mention in your screed?

      1. bill

        One other point you all fail to mention is the fact that most contractors cant find an American younger than about thirty to teach a trade to. Dont believe me? Call a contractor of any sort in your community and ask him the last time he hired a white worker under thirty who lasted more than a year. Bother that, ask him the last time he hired one who showed up on time, sober, and able to work an eight hour shift uninterrupted.
        The wage offered doesnt increase responses by younger than thirty white applicants. They simply do not want the work. If you dont believe me, call and ask a contractor in your area.

        1. Cal

          There are plenty of union journeymen who cannot find work in the San Francisco Bay Area. I don’t know about your circumstances but around here there is no shortage of Americans or illegals. Guess who is doing the work?

          Also, why can’t dedicated contractors start guys out as apprentices and train them?

          I suggest that all read the stories at this site if you are not familiar with it. Heart wrenching and tragic.

  12. Cal

    Esteemed commentators,

    Before I assign this to my class to read, I’d like to know if these numbers are correct?

    “We really need about $18 trillion/year in GDP just to maintain our middle class based economy. Under Bush this was achieved with 14 trillion in actual GDP plus another 4 trillion a year in new consumer debt for an effective $18 trillion GDP. Currently this debt is being de-leveraged (either paid down or defaulted on) at about 2 trillion a year. So instead of an $18 trillion economy we now have a 14 trillion minus 2 trillion or a $12 trillion economy. This is what has created 14 million permanently unemployed people.”


    1. MyLessThanPrimeBeef

      I don’t know.

      But if you spend $14 of your own money and another $4 borrowed, your total speding is $18.

      And if you have the ability to spend $14 now, but have to put $2 aside, your total spending $12.

      From $18 to $12, that’s 1/3 off.

      Is today’s GDP 33% of the peak?

      1. Praedor

        Who can possibly know? GDP is a bogus and fudged number, just like the unemployment number is, just like the current inflation measure is, just like measures of “productivity” are. It is ALL fudged and made-up variables are added/multiplied in to make the numbers sound better than they otherwise would be.

  13. The Heretic

    Response to Michal Pettis article

    I have some responses to Mr Pettis article. He said the folowing:

    “Electric cars?

    My problem with Chinese investment in the electric car industry had nothing to do with my superior knowledge of the prospects for the industry (I have none).  It had mostly to do with my basic instinct that risky high-technology ventures are not best funded and directed by companies, industries and policymakers who are historically weak in the technology sector, especially when they have no shareholder or budget constraints and have almost unlimited access to heavily-subsidized capital.  This seemed to me a recipe for wasted investment.”

    I have a couple of objectios to this paragraph. First of all, how did countries like Japan or Korea develop a strong technology sector? By spending the money and devoting the human and Capitol resources to the initiative…then they became strong in the ‘technology sector’. It is legitate to ask, does China have a technical base to start development? I would argue that China does have the a good technical foundation; any nation that can develop their own fighter jets and satellites and satellite smashing missiles, does have the technical know how and the abiltiy to do an electric car, (which is technologically simple in comparison to the other technologies).
    Will developing new ‘cutting edge’ technology be expensive , and technically risky?  Certainly, hence only the government or a goverment backed consortium could hope to succeed in developing the technology. But benefits of developing a difficult technology has numerous potential future spinoff benefits and also the benefits the ‘technological developmmt ability’ of the nation; just as the Space Race to the moon and the initial development of the Internet had very little initial commercial value, but the vendors in hindsight are enormous. The only danger of government spending is if it is not accompanied by managerial discipline and honesty; a large scale spending program can become a source of high demand and price inflation in the economy and an opportuntity for price goiging among well placed elites. 

    1. Ransome

      List noted in the 1800’s that a nation must invest in technology. He used the heat engine (steam engine) as an example. The initial investment is expensive but the national payback is enormous. You can’t let development be based on capitalism (ROI). The initial transnational railroads frequently went bankrupt because the debt dwarfed the ability to build the business. Only when the government bought the debt and delayed the payback period were railroads secure. Capitalism is a tool that needs controls, directives and assistance. Capitalists should not be running the government based on ROI.

  14. G Booth

    Yves, you may get your wish about guns and the Freedom Group. I’m a firearms enthusiast (“gun nut” to you), and it’s been pretty clear Cerberus’ management has had an impact. Among my fellow gun nuts there’s been a lot of comment in the past year or so about growing problems and poor quality control in products from Freedom Group manufacturers. I honestly wonder how Cerberus makes its money; it must be purely transactional or a result of financial engineering, since where actually managing a business is concerned they seem to have a remarkable talent for f*****g things up.

    Re: when narcissists collide. I’m also a “car nut”, and its a widely held opinion among enthusiasts that there’s a demonstrable inverse relationship between wealth and skill where Ferraris, Lamborghinis, and other excessively overpriced exotica are concerned. Just because one has the ability to afford a Ferrari Enzo, it does not follow that one has the ability to drive it competently or skillfully.

    1. G Booth

      I almost forgot to mention, the head of the Freedom Group is – wait for it – Bob Nardelli.

      Why not? After all, he did such a great job on Home Depot and Chrysler.

      It’ll be interesting to see how Cerberus extracts itself from this one. As a recent article at put it:

      “Bottom line: “If the ACR wins [the Army’s rifle contract competition] and becomes the next Army carbine the company will have a guaranteed revenue stream for the next 20 years. Consumers, LEO enforcement and foreign militaries would all want to own the same gun used by the troops. I suspect the Freedom Group would then resume efforts to go public.” And if they don’t . . .

      The Freedom Group includes Remington, Bushmaster Firearms, DPMS/Panther Arms, Marlin, H&R, The Parker Gun, EOTAC, Mountain Khakis, Advanced Armament Corp., Dakota Arms and Barnes Bullets. It’s the brainchild of Cerberus Capital Management, strip-and-flip specialists who know a thing or two about cutting the fat out of production-heavy industries.

      To that end, Cerberus worships the gods of Six Sigma, a system designed to improve quality while driving down costs. Yes, well, the Freedom Group’s firearms-related companies are suffering from product overlap, worrying quality control problems and most concerning of all, a tendency to commit cultural genocide on its acquisitions (R.I.P. Marlin).

      The man who drove Home Depot into the dirt and guided Chrysler and its captive lender into multiple billions in taxpayer bailouts now helms the Freedom Group. Former GE suit Bob Nardelli may not be the first name on the short list to run a gunglomerate, but he’s no fool. He’ll get paid millions no matter what. Again. Still.

      Meanwhile, expect Cerberus to use all its powerful Washington connections to secure the Army’s nod for the ACR. If they don’t, it’s only a matter of time before the whole thing falls apart. Expect the Freedom Group to get sold off, piece by piece. ‘Cause no one in their right mind would try to find “synergy” by agglomerating such a disparate and discreet farrago of firearms brands.

      I reckon the only reason The Freedom Group still exists is that most of the brands sheltering under the Cerberus corporate umbrella are worth less than they were before they were put under central management—despite the relatively healthy market for guns and gun gear. Bargain-minded corporate rescuers stand by.”

    2. Ransome

      Brandeis noted that you can’t have two masters when a bank runs a business, they have different and conflicting goals. The bank wins every decision and the business loses.

      He included a quote from a lawyer that said upon signing a document, the entire US steel industry has been put into the hands of people that know nothing about it.

  15. Walter Wit Man

    I wonder how many liberals will acknowledge that Ron Paul has given greater rhetorical support to the Occupy movement than any major Democrat. It’s a curious fact.

    Even Elizabeth Warren hedged her support for the Occupy protests by first claiming they must follow the law (which is impossible to do if one is committing civil disobedience by camping or marching, etc.–which also subjects one to anti terror suspicions per the PATRIOT Act). No other major Democrat has given such unconditional support for Occupy as far as I’m aware.

    Plus, I haven’t heard any major complaints about the “anti” terror police state being used to crush occupy from any major Democrats.

    1. Anonymous Jones

      How many times does the Broken Clock Theory have to be discussed before it sinks in???

      I’m sure many psychotically deranged people at one point in their lives want to eat a steak, just like I sometimes want to eat a steak. That doesn’t make me, by itself, psychotically deranged.

      I’m sure many people who believe that Jesus Christ is the Son of God at one point in their lives want to help the less fortunate, just like I sometimes want to help the less fortunate. That doesn’t make me, by itself, idiotic enough to devote my life to some preposterous belief about some average human’s divinity.

      The most polite term for Ron Paul is delusional. Sorry, but that’s the deal. I would love to stop foreign wars, but his thoughts on the economy and how fraud would somehow magically diminish with fewer regulations are completely delusional.

      A broken clock is right twice a day, by coincidence. I’m sure Ron Paul has non-delusional beliefs. That does not mean all his beliefs are not delusional.

      1. Slim

        And the broken clock theory applies equally to voting for one of two parties. I’m voting for Paul in the primary and in the general either Obama or Paul.

        1. Lidia

          Despite the fact that he wants to do away with secular government and turn things over to religious judges?

          From the Thanksgiving “Family Forum” debate:

          We have weighed too much government. We should go in other directions. Before you know it the next step — what if the next step is, “Wouldn’t it be wonderful if the United Nations defined marriage?”

          I don’t want to go that way, I want to go back down… all the way to the family and the Church — believe me it would be a happier and more peaceful world if we went in that direction, rather than asking the government and asking the King to solve all these problems… we need the family to deal with it.

          And we can take our message and learn something from the Old Testament, how there was such a strong emphasis on the Patriarchal society and the disputes settled by judges rather than looking for Big Government.

          An obvious religious nut, Paul is a “libertarian” for 50% of the population only.

      2. Asymmetric Bob

        Gore Vidal: “I have been saying for the last thousand years that the United States has only one party—the property party. It’s the party of big corporations, the party of money. It has two right wings; one is Democrat and the other is Republican.”

        And how many thousands of years will it take before this sinks in?

        1. Ransome

          The Corporate Property Party and the Propertarians have an interesting legacy. Hoppe makes no secret of his eugenic views. Eugenics was mainstream in the 1900’s, including Irving Fisher, the economist, with his Life Extension Institute catering to insurance companies, and later, even Keynes. The early eugenicists based their research on traits, not necessarily races, although a collection of traits may define a race. The wealthy embraced Spencer’s survival of the fittest and Darwin’s natural selection theories.

          The wealthy defined themselves as eugenically superior and having the trait of self-denial. Self-denial was code for sex hygiene which was partial code for the poor marry young and breed like rabbits, guaranteeing they remain in poverty and allowing the proliferation of traits of mental weakness, wantonness, incest or criminality. Actually, the poor married young to get out of the crushing poverty of the family, economic support of a pair, or they were forced out.

          The paradox is that the wealthy had few children and they frequently farmed them out as they were growing. With wealth and eugenic beliefs, why didn’t they have enormous families to perpetuate their superior genes? They appeared to resent children. Are the wealthy defective? Sociopaths? Selfish? The Propertarians say little about the family and the Corporate Property Party refuses to acknowledge any responsibility for society, preferring to build their own private schools, etc. Are Propertarians the ones that shoot the wife and kids because they are unhappy with a divorce settlement or the ex-wife’s new boyfriend or the parents or the visitation schedule? This should be studied.

          Speaking of breeding like rabbits, my mother told me that the Boomers are a result of government planning. She got free medical care, free delivery and free one year followup. The government wanted to restore the workforce after the War. Dad got college and others got trade school training.

      3. Walter Wit Man

        So based on your reply, the answer to my question is that the Democrats will not in fact acknowledge the fact that Ron Paul is providing more rhetorical support for Occupy than the Democrats are. Instead, they will launch into an ad hominem attack on him.

        Nice. That’s all Democrats have I guess.

        I’m not a libertarian btw, but a leftist. I’m not particularly propping up Ron Paul as much as I’m pointing out the abysmal failures the Democrats are.

        But I can see why Ron Paul works as such a great diversion for progressives.

    2. Jessica

      I hereby acknowledge and note this. The silence of the Democratic Party as a whole concerning the militarist and brutal tactics used indiscriminately by police against occupations has been deafening.
      The blog (not mine)
      addresses this matter humorously.

  16. Valissa

    Cuomo Strikes Deal to Raise Taxes on the Wealthiest

    The state’s current income tax rates are relatively flat, taxing any individuals who earn $20,000 or more, as well as couples who earn $40,000 or more and file joint tax returns, at the same 6.85 percent rate.

    For the last three years, individuals who earned more than $200,000 a year, and couples who earned more than $300,000, have also been subjected to a tax surcharge called a “millionaires’ tax.”

    Under the proposal announced Tuesday, for married couples filing jointly, income from $40,000 to $150,000 would be taxed at 6.45 percent; from $150,000 to $300,000 at 6.65 percent; from $300,000 to $2 million at 6.85 percent, and over $2 million at 8.82 percent.

    Changing the tax rates and brackets would allow the state to replace some, but not all, of the revenue to be lost when the so-called millionaires’ tax expires on Dec. 31.

    1. MyLessThanPrimeBeef

      Why is it $200k for individuals and $300k, and not $400K, for married couples filing jointly?

        1. MyLessThanPrimeBeef

          My guess is that the real message here is the government wants (or tries to encourage) the husbands to work only part time and stay home & cook/house clean…let’s give those now-available hours to unemployed singles.

    2. Yves Smith Post author

      A whole .4% more for the tippy top bracket? And this is progressive? I mean, technically, yes, but please….

  17. Hugh

    On “Democrats Dare Not “Abandon” the White Working Class”, in what province of lalaland does the author live? The Democrats are every bit as corporatist in their outlook and allegiances as the Republicans. It’s not just that Democrats abandoned the white working class. They have abandoned and betrayed all the groups that formed their base. Democrats and Republicans work for the 1%. This article is just noise and propaganda to make it seem like we still have a functioning and representative political process. We don’t.

    A potential snag with the Fed giving money to the IMF so that it can transfer it to European banks is that it is likely to come under a lot of fire from Republicans in an election year. And we have to realize that this is on top of the Fed already subsidizing European banks via its dollar swaps program. I can see not just Ron Paul making a big deal about this but quite a few other Republicans as well.

    As for Stiglitz, he actually doesn’t say what will save the euro, just that what is happening now won’t.

    1. Hugh

      Thanks but lordy what a steaming load.

      1) The Fed only provided data after December 2007, that is after the housing bubble burst.

      2) It only released data for the “audit” from the special programs, not its regular ones which were used after the meltdown

      3) It released this information only after it was forced to do so by Congress, and it successfully lobbied for the audit to be as limited in scope as possible

      4) The Fed has always maintained the hypocritical line that it was forthcoming at the same time that it continues to refuse to release the details about how much money was going to whom for what. Note the weasely use of “weekly”, “average” figures, etc.

      5) The letter talks about the quality of collateral that was posted, but we all know that most of this was overrated and, in fact, dreck.

      6) My own reading of the GAO audit indicates that the Fed engaged in some $28.2 trillion of activity in the special programs. The letter gavils that much of this was double counting, that is that many loans were rolled over, but it was the Fed which failed to disclose which loans were rolled over for how long.

      7) The line that the Fed made money on the special programs can not be known until all the special programs have been unwound, but even this deliberately misses the point that loaning money at less than penalty rates was effectively a subsidy for the banks. And no, driving interest rates down and then lending at or just over them is not a penalty. Why, for instance, was the Fed not demanding and getting terms like those that Warren Buffett was able to obtain?

      8) The letter simply lies about the solvency of American banks. They were insolvent then. They are insolvent now. Just because they were allowed to cook their books does not magically render them solvent.

      All in all this is a reprise of the Fed’s standard defense. On the one hand, it alleges that it was fully forthcoming and, on the other, it blames its critics for their faulty conclusions although these are based on the (incomplete) data the Fed provided. The shorter form of the Fed argument is and remains: Fuck you.

      1. kravitz

        And of course, Bloomberg has responded, point by point, to Bernanke and LaFedde….

        “While Bernanke’s letter and an accompanying four-page staff memo posted on the Fed’s website didn’t mention any news organizations by name, Bloomberg News has published a series of articles this year examining the bailout. The latest, “Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress,” appeared Nov. 28.”

        Why can’t we all just get crooks in jail and get along?

  18. Hugh

    Parenthetically to the Cerberus story, any ideas on when someone is going to point out that Romney while at Bain Capital made his millions trashing American companies and killing off lots of jobs?

  19. Benedict@Large

    RE: Fed may give loans to IMF to help euro zone: paper

    It was obvious back in June that this was coming just as soon as the IMF dropped its “preferred” status on debt repayments from new loans to the PIIGS. There was no other way for Obama to directly pay off the European banks without the general public knowing.

    Bankers: draining funds from taxpayers courtesy of finance ministers (June 21, 2011) –
    Debtors hail changes to EU rescue fund (June 20, 2011) –

  20. scraping_by

    But could the causality still be the reverse, that as the rich get richer, they buy less constraints on themselves?

    I see it as cyclical. In the past 40 years, they’ve bought lightened restraints by propaganda, legal decisions, and bribery. They’ve used the lightened restraints to make more money in ways that are underhanded, unproductive, and downright destructive. They can then buy more ideology, more lawyers and judges, and more officeholders. And on and on down the road.

    Kudos to Occupy in recognizing we need to spoke the wheel.

  21. Francois T

    Ms Merkel said it was imperative to show that Europe was a “safe place to invest”.

    O M F G !!

    Hasn’t this Teuton inept gilipollas learned anything? She equate “safe place to invest” with “whatever the hell you do, however stupid and wrong your bets are,we, the governments shall bail you out.”

    Is she INSANE?

  22. kravitz

    Martha Coakley, Massachusetts AG, has asked Sen. Tim Johnson to investigate Ally/GMAC. h/t StopForeclosureFraud.

    She mentions Ally’s bailout too. Ouch. Main points…

    “First, Ally conducted foreclosures on mortgages in Massachusetts when it was not the holder of the mortgage.”

    “Second, the Complaint alleges that Ally and the other banks used false documentation in the foreclosure process…”

    “Third, the Complaint discusses how Ally and the other banks deceived and misrepresented to borrowers the process, requirements, and availability of loan modifications.”

    “The federal government should not tolerate Ally’s serious misconduct and instead should hold them accountable for unlawful actions taken against borrowers.”

  23. skippy

    Up date for crazzyman and co.

    Fashion Police Strip Occupy Protester in Public.

    Police in Melbourne Australia strip a female Occupy Movement protester because they didn’t like her fashion statement.
    Fashion police strip peaceful protester

    So Melbourne Australia really has fashion police?

    According to the Australian Government Department of Foreign Affairs and Trade website “Melbourne lays claim to being Australia’s fashion capital, hosting the L’Oréal Fashion Festival every March”, however, the Melbourne police force seems to be unaware of that fact.

    Somehow the police took issue with a woman wearing a tent dress/costume and decided that it was better to leave her wearing nothing but her underwear in public than be covered in something that could be purchased at a camping or fishing gear store.


    1. psychohistorian


      I sent the original link around to a few mates including some who have relatives in Aussie land. I was sorry to see this story take such an ugly turn. Guess its shows how global the political repression is going to be…….

  24. Lambert Strether

    RealClearPolitics is late to the party. The Ds already abandoned the working class, white or not. That’s what the “bitter,” “cling to” D 2008 primaries were all about. See Kossack fundraiser Chris Bowers for the classic expression of this view, in near real time. (The same class of career “progressives” are attempting to co-opt and destroy Occupy today. Shocker, I know.)

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