Links May Day 2013

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Skeletons Found Under Parking Lot In Scotland May Belong To Medieval Knight Huffington Post (Carol B)

How relationship contracts are growing in popularity: ‘Sex twice a week and I agree to stay under 120lbs’ Mail Online (Lambert). Wow, I thought a relationship meant you were into the person, not just certain well defined behaviors. I mean, why not just hire an escort?

These Amazon Products Are No Joke, But the Online Reviews Are Wall Street Journal. The MSM catches up with a leisure activity of Richard Smith (finding bizarre products, particularly with suitably wacky reviews)

Does antimatter fall up? Experiment could provide the answer ars technica

Conservative US shoppers turned off by eco-friendly lightbulbs, study finds Guardian (John L)

Steady stream of space debris rains down on Earth PBS. Always something to worry about!

People may welcome talking tissue boxes and other smart objects PhysOrg. Not moi! I recall over 20 years when someone at the MIT told me how his belt buckle could talk to his fridge. I don’t want my devices having conversations among themselves or with me.

Bangladesh collapse toll passes 400 BBC

Bangladesh Factory Owner Faces Asset Seizure, Europe Warns Bloomberg

Sherpas who attacked Everest climbers angry at ‘luxury adventurers’ Telegraph (Lambert)

China Manufacturing Gauge Falls in Sign of Further Slowdown Bloomberg

Australian farm bubble? MacroBusiness

Oz manufacturing PMI signals full blown crisis MacroBusiness

Eurozone jobless rate hits new high Guardian

France is ‘Europe’s biggest problem child’ Telegraph

Germany will think twice before saving France next time Ambrose Evans-Pritchard, Telegraph

Greeks stage anti-austerity strike BBC

Why the Baltic states are no model Martin Wolf, Financial Times

Obama vows Guantánamo closure as strike worsens Guardian

Actually Obama, Your Health Care Law Will Not Stop Medical Bankruptcy Jon Walker (Carol B)

On Congressional Kayfabe Michael Brick, Harper’s (mookie). NC readers had this one FIRST, and it was duly amplified by Lambert. Grr.

Government Seeks Broader Power For Wiretapping Americans On Facebook And Google DSWright, Firedoglake (Carol B)

Report: Dzhokhar Tsarnaev’s repeated requests for a lawyer were ignored Glenn Greenwald

2-Year-Old Girl Shot to Death by Her 5-Year-Old Brother Gawker

Fired LAPD officers seek reviews of their cases in wake of Dorner rampage Guardian (Lambert)

Hacking Oakland’s Budget East Bay Express (mookie)

Survey Shows Fracking Communities Suffer from Stress Due to Fear of Exploitation OilPrice

The US Food Aid Debate: Major Reform on the Horizon? Triple Crisis

Why did Reddit get the wrong guy? (Or: the Wisdom of Crowds vs. the Madness of Mobs) Noah Smith. I find the assumption that Reddit types should have been able to find the Boston Marathon perps a bit strange. 1. The images of so-called Suspect 1 weren’t great; 2. They could have been disguising themselves (fake noses, say?) 3. They could have been the sort of anti-social youth we are all warned about that don’t use Facebook.

High-Speed Traders Exploit Loophole Wall Street Journal

Citizen Hearing on Disclosure. No, not on the Trans-Pacific Partnership or the disposition matrix….but on UFOs.

Here We Go Again – Builders Hold Lotteries for Right to Buy a House Michael Shedlock

The Geographic Distribution of the Mortgage Interest Deduction Pew

Time for Some Publicly-Owned Banks Counterpunch

Fed weighs tighter cap on bank leverage Financial Times

The Lethal Lemons on the Road to Bangladesh Bill Black, New Economic Perspectives

The Debt We Shouldn’t Pay Robert Kuttner, New York Review of Books. Mookie: “NYRB finally gets around to reviewing Graeber’s Debt.”

The Myth of the Manufacturing ‘Renaissance’ WSJ Economics Blog

The Question of Socialism (and Beyond!) is About to Open Up in These United States Gar Alperovitz, Dangerousminds (mookie)

Antidote du jour (furzy mouse):


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  1. Juneau

    Re: when sherpas attack!
    I am feeling judgmental today. The arrogance of the climbers towards these sherpas is mind boggling. If you read Jon Krakauer (Into Thin Air) you know that sherpas routinely die while guiding people on these adventures thanks to the stupidity and arrogance of inexperienced and reckless adventurers. I think it is time they fought back. Good for them.

      1. diptherio

        In Nepal, foreigners trekking without local guides are viewed with great disdain, even if it is not realized by the average tourist. They are viewed as rich outsiders who want to come and take advantage of what this poor little country has to offer without making a contribution to the local economy. The trekking permit money doesn’t make it to the villages, so if climbers don’t use guides the villagers get all of the externalities with none of the benefits.

        When traveling in the third world, do the right thing: hire a local guide!

    1. diptherio

      On my first trip to Nepal, in 2001, I spent a few days in a guesthouse in Jiri, the head of the Everest trail. One night I ended up sharing a spliff with one of the employees out on the balcony. He also worked as a climbing guide, when he could find a client. Our conversation soon turned philosophical.

      “Why,” he asked me, “do you foreigners need to go to the top of the mountain? Why can you not just look, like we do. You foreigners think death is a game. Death is not a game for me. I go up the mountain to feed my family, why you foreigners want to go up the mountain? You tell me that.”

      I had no reply, as I was going no closer to the peak of Everest than the patio at the Jiri guesthouse. I thought it was all pretty dumb too. He then told me about guiding tourists who had all the latest technical gear, but didn’t even bother to notice that their guides were wearing dilapidated boots and raggedy jackets.

      At that same guesthouse, a group of Irish stayed for the night. In the morning they wanted to set off down the trail, but they first needed to get small change, since all they had were thousand rupee notes. Then manager took their money and went all over the village, basically running the whole place out of small bills for these people. When he brought their money back, converted from useless thousand rupee notes to usable small bills they thanked him and set off on their way. The manager and I walked along in front of them, for a half mile or so, to show them the way.

      They didn’t offer the manager a tip for his services; nothing but a “thank you.”

      “I could have taken their money and gone to Namchhe Bazaar for two weeks and they could have done nothing about it!” he ranted to me. “Those ungrateful ma chigni, they have no idea what they are doing, where they are!”

      I’ve got dozens of stories like this…

      1. g

        great story… keep em coming if you have the time… my cousins went to nepal in 2000, but they were backpacking and visiting monasteries… the monasteries were run/owned? by indian and tibetan carpetbaggers i believe… anyway… i remember them telling me similar tales about the poverty juxtaposed with european and american hipsters(i guess they would qualify as well)

        1. MyLessThanPrimeBeef

          I think of at least 4 levels of soaking in a culture:

          1. going to an ethnic restaurant nearest to you
          2. being a tourist
          3. a traveler
          4. going native.

          One can volunteer to help in another county, but when one can always be evacuated in a crisis, while the natives are not afforded that option, one can’t really appreciate the local perspective.

          It always makes me wonder, when a reporter goes into a famine stricken area or a war zone, where people are dying of hunger/violence, and he/she goes about reporting (or maybe even helping out behind the camera, stepping beyond the objectivity of his/her profession), but at the end, he/she is fed and goes back to the comfort of his/her home country.

          Maybe that’s why I stopped travelling many years ago. When I have time someday, I will pick a place and stay there for a while (a year minimum, I assume), living and coping like a native.

          1. Chauncey Gardiner

            Thanks, Prime. Hit No. 1 on your list by going to my local Himalayan restaurant today that is owned and operated by a Sherpa and his wife. Passed along a printed copy of the article to his wife as he wasn’t in (Thanks for the link, Lambert).

            He’s involved in leading groups on climbs around the world, so it will be interesting to hear his perspective.

          2. craazyman

            You can lay on nail bed and flaggelate yourself with spiked iron chains.

            I’ve never done it, so I don’t know if it brings enlightenment or just pain.

            I have a theory though. :)

  2. Jenn

    Re:2-Year-Old Girl Shot to Death by Her 5-Year-Old Brother

    I think it’s great that naked capitalism has taken it upon itself to act as a repository for gun accidents involving small children, puppies and other heart-tugging emotional cute small creatures.

    Keep that up Yves, Lambert, etc. This kind of emotional news works much better to convince people it is in their best interest to give up their guns than any sort of even-handed and practical information.

    People are WAY too stupid to use factual arguments in their decision to let the government take their guns away from them. Even if given all the facts, most progressives and conservatives won’t come to the correct solution on their own. That is that the government’s job is to protect them, and they are ill-equipped and not trained to do this for themselves.

    Most people if allowed to use their own firearms to protects themselves will just end up shooting babies, themselves, other innocent people or just generally go on rampages, killing everything in sight – we all know this.

    Even if things like the below happen all the time, we must never create links to it – people may wrongly get the idea that guns can be used for things other than terrible accidents and massacres. DO NOT SHOW THIS EVER, PLEASE!!

    Armed bystander stops stabbing outside school

    1. Lambert Strether

      There is no problem with guns that cannot be solved with more guns. If that five year old had a gun, and had been trained how to use it, he would be alive today.

      1. optimader

        I didn’t read the article, how did the 2yo pick the trigger lock the parent had on the gun?

        1. Procopius

          You misunderstood the headline. It was the five-year-old that shot the two-year-old, using “his own” gun. The parents gave the kid his own .22 rifle (apparently it’s a special, small size, model). After the last time he was taken shooting, it was left standing in a corner of the room, with a shell still in the chamber (I don’t know how large the magazine is — 30 rounds?). So apparently, for no particular reason, the kid picked “his” gun up, pointed it at his sister, and pulled the trigger. Whoops! The sheriff’s office says it’s going to be ruled an accident. A “tragic” accident. I admit I couldn’t think of any punishment worse for the parents than the loss of their child (well, it would be really inappropriate to burn them at the stake or boil them in oil).

      2. fresno dan

        The only thing that stops a bad man with a pressure cooker is a good man with a pressure cooker.
        They can have my pressure cookers when they pry them out of my cold dead scalded hands…

        1. MyLessThanPrimeBeef

          Your contrary point is correct – your pressure cooker won’t stop the other guy’s pressure cooker.

          It also shows gun control doesn’t help in that case of a pressure cooker attack.

          1. optimader

            RE: Boston, four things I would be interested in knowing are:
            1.) why the Cape Cod Police have an armored personnel carrier available to loan to Boston

            2.) where the two suspects acquired their (handguns?), assuming they accounted for at least a few of the over 200 rounds fired in the nighttime the shootout.

            3.) how in the wide world of Police firearms training, over 200 rounds could have been fired without anyone getting killed until one of the suspects basically stood up to commit suicide

            4.) where did all the bullets go

      3. bobw

        Guns don’t kill people, bullets kill people. Support national bullet registration.

      1. MyLessThanPrimeBeef

        Hopefully, everyone, that means both individuals and the state, knows how much we can accomplish without guns.

        Perhaps more links to the latter might balance the picture a little bit.

        The other day, there was a link about some people’s lives being worth more. It could be contrasting the 0.01% and the 99.99% or it could also be about highlighting our relative attention to domestic fatalities compared with say, Afghan kids getting maimed/bombed to smithereens.

    2. derringer dicks

      Why should I give a crap about your guns? So far they and you are totally useless to ameliorate the real problem of all the connected criminals who are above the law: war criminals, torturers, criminal aggressors, top-echelon bankers who steal billions by fraud and extortion, oilmen who poison a coast. The law won’t touch em. It’s up to you patriots and freedom fighters. But all you do is whine. So what do I care if they take your guns? They’re worth jack shit to me.

      1. wunsacon

        Exactly how I feel. These gun nuts are asleep at their posts as enemy tanks roll by, dreaming all the while of how brave they’ll be one day…

    3. Binky Bear

      Fortunately for you there is a billions of dollars industry rife with lobbyists and propaganda mongers to help you maintain the fantasy Clint Eastwood used to depict in his older films before he got soft and philosophical and started talking to furniture.
      That’s why so many people die needlessly in mass stabbings. Oh wait they don’t.

    4. more guns all the time

      Yes, you liberals here are way too sentimental.

      This is just an inefficient Darwin award process.

      All these “gun accidents” among family members are eliminating gun enthusiasts from the gene pool. So you should not only welcome these shootings, but hurry them along by allowing gun lovers to have as many as possible. The careful, responsbile ones like hunters will live and the rest will sort themselves out over time.

  3. Skeptic

    Sherpas who attacked Everest climbers angry at ‘luxury adventurers’

    Besides Sherpas, there are lots of other people in the World who are treated like peons and gofers. And some of them may actually resent it and retaliate.

    So, personally, if I were one of the Elite and Entitled I would certainly want to be sure that anyone who could retaliate, would not because they were well treated, well paid and provided for. Of course, the problem is that this runs entirely counter to the concept of being Elite, that is being able to Lord it over and treat people like trash.

    One must wonder if the Quant Risk Managers are working on this perplexing problem.

    1. squasha

      Nah, if you were one of the elite and entitled you’d regularly hold sniping sessions with your Quality comrades about the tragic lack of good & grateful help these days. Likely the heads of said sherpas are still rolling down that great mountain, it isn’t a fantastic metaphor for corporate rule for nothing. What’s remarkable throughout history isn’t so much elite fear of potentially inevitable uprisings, as how precious few uprisings ever happened.

    2. Brindle

      Standing atop Everest, shouting “I’m King Of The Wooouurld” is on the the “to do” list of increasing numbers of elites.

      —“”Everest attracts money. There are luxurious base camps, even at camp two and people are paying an awful lot of money to be here and they are carrying up these huge luxury tents.

      They’re angry at this financial gap on their mountain. These commercial trips are based on a lot of luxury and getting you up the mountain and a lot of these Western clients don’t even know what the names of their Sherpas are.
      They carry up their sleeping bags and by the time they get there a cup of tea, sleeping bag and tent are already waiting,” he said.”—

      1. optimader

        why not just stop being an adventure travel Sherpa rather than attacking free climbers unrelated to their source of angst (and revenue)? What am I missing?

        1. petridish

          Question 1: “Prolly” the same reason those garment workers chose to work in that imploding factory in Bangladesh–they’re bad choosers.

          Question 2: Everything.

          1. optimader

            Question 1: “Prolly” the same reason those garment workers chose to work in that imploding factory in Bangladesh–they’re bad choosers.

            Clearly you are a student of the GWB school of non sequitur analogy and retribution!

            First establish the false equivalency of highly trained mountaineering experts being equal to unskilled garment workers. They are all just exploited swarthy 3rd world people, right?

            Then it logically follows by low expectations that it is appropriate for professional mountain guides to en-mass attack (apparently w/ intent to kill) a small group of non-commercially affiliated independent free climbers (that ironically represent the true historical nature of the sport)rather than those that are apparently the actual source of the attackers angst!
            After all, attacking the unpleasant, spoiled and affluent western clientele(that are dropping >$100k/person) risks undermining the local economic model!

            I think I understand now :o)

            Gee, I wonder if this uncivilized approach grievance redress can be scaled up to the food service profession in the US? If you are professional waiter-staff at an exclusive restaurant confronted with the normal stream of obnoxious patrons, why just take a break en-mass, grab some kitchen, walk over to McDonald’s and pick out a couple schlubs eating their McRat sandwich and attack them!

            Hmm, perhaps a more PC approach would be for the Nepalese to suspend all commercial Everest climbing expeditions –clearly they are a source of antagonism and hard feelings, right?


          2. lambert strether

            Yeah, if the Nepalese don’t like it why don’t they just move? If the mountaineering skills turn out not to be totally portable, they can always go to work in a call center or sumpin.

        2. Keenan

          This incident seems similar to a labor union jurisdictional dispute:

          Ueli Steck tried to help calm the situation by offering to help fix the lines up to Camp 3 but this only made matters worse. Simone Moro then joined the team and the lead climber turned on him wielding his ice axe in his direction. Simone swore at the lead climber as is the natural reaction when faced with this aggression. No amount of talking would calm the lead Sherpa down and as a final act of defiance he ordered his whole team of 17 Sherpas off the Lhotse Face and back to Camp 2. There was no reason to descend off the mountain because of the three climbers. They had not touched or interfered with the Sherpa’s work. To help smooth things over Ueli Steck fixed a further 260m of rope to Camp 3.

  4. craazyman

    -escorts are ridiculously expensive. better to get get it for free. If you pay each other exactly the same amount, does that contribute to GDP?

    -not much point in posting UFO links except for nervous laughs. You don’t have a clue and never will. stick to money. :)

    -antimatter falls sideways, if you look at it sideways, it falls up if you look at it from the top.

    -the madness of mobs. why is anyone confused.

    -some people call it space debris, other people call it projectiles. somebody out there hates us.

    -Germany/France/Eurozone, the more one reads, the more confused one gets. eventually it all just disappears in your head.

    -Is Richard Smith the dude who persuaded me to buy the banana slicer? Thanks. I still can’t figure out if it works from the top or the side, so it sits in the drawer and I use the knife.

    1. Valissa

      Airliner ‘had narrow miss with UFO’

      And for hardcore UFO conspiracy fans this lengthy and fascinating post…
      Update: The Dulce Underground Base
      The Dulce Wars & the 1979 Firefight

      Phil Schneider, supposedly one of three people who survived the 1979 Dulce firefight between the large Greys, US intelligence and military at the Dulce underground base, was found dead on January 1996, due to what was said to be an execution style murder. He was found dead in his apartment with a piano wire wrapped around his neck. According to some sources, it appeared that he repeatedly suffered torture before he was finally killed.

      Binge drinking Tudor style! Even in the 16th century there were worries about boozing

      No, you can’t call your baby Lucifer: New Zealand releases list of banned names
      Lucifer cannot be born in New Zealand. And there’s no place for Christ or a Messiah either. In New Zealand, parents have to run by the government any name they want to bestow on their baby. And each year, there’s a bevy of unusual ones too bizarre to pass the taste test. …
      As the agency put it, acceptable names must not cause offense to a reasonable person, not be unreasonably long and should not resemble an official title and rank.

      I wonder how many New Zealanders are purposefully tweaking the authorities with their naming proposals.

  5. Andrew Watts

    Aww cute animal pictures.

    RE: Germany will think twice before saving France next time

    Uh-oh. The marriage of convenience between Germany and France looks like it’s in trouble. This relationship worked in the past as long as the French were the senior partner. Germany isn’t likely to give ground now based on it’s economic considerations. To do so could possibly risk the integrity of the German banking system. While the French won’t bulge simply as a matter of pride and perhaps even political principle.

    It’s interesting to note that unlike their European counter-parts the French socialists haven’t sold out. A strong and significant faction of the French socialists adheres quite strongly to it’s anti-capitalist roots. These unreconstructed socialists are unlikely to adhere to neoliberalism or it’s lite variety.

  6. Jim Haygood

    Based on the NYRB review linked above, David Graeber’s book Debt sounds quite intriguing. ‘There’s a Torrent for that,’ as copyright criminals say. But reviewer Robert Kuttner makes an absolute hash of things. Consider this howler:

    Despite a controlled bond market whose investors suffered negative returns of -3 to -4 percent, the years between 1945 and 1980 were the era of the greatest boom ever.

    These findings defy a core precept of conservative economics, the premise that economic growth requires financial investors to be richly rewarded, an idea disparaged by critics as trickle-down economics.

    WTF? The U.S. bond market was indeed ‘controlled’ from 1942 to 1951, with long Treasuries pegged at 2.5% yield. That ended with the Treasury-Fed accord of 1951, an event so momentous that in the bowels of the Eccles Building it’s still spoken of in reverential terms as simply ‘the Accord.’

    So Kuttner has misplaced the ending of bond market control by only, oh, 29 years.This serves to completely destroy his thesis, along with the fact that another class of financial investors — stock holders — were richly rewarded during the great postwar bull market which breathed its last on 11 Jan 1973.

    Which brings up another issue: characterizing the grim Seventies as a part of the ‘greatest boom ever’ is an absolute laugh to anyone who was there. How can Kuttner, whose wardrobe consisted exclusively of green polyester leisure suits at the time, get it so wrong?

    Journos posing as economists — don’t try this @ home, kids!

    1. thump

      I found Kuttner’s article somewhat interesting, but it did not have much to do with Graeber’s book. The book is far more substantial, complete, nuanced, reflective, original, etc., than you would ever guess from that “review”.

    1. optimader

      People have just been dying there longer than here, so there are fewer places to put the fully depreciated Englanders…It is actually a rather smallerish island as countries go..

  7. Brindle

    Nice, although a little to breezy, article on the new Interior Secretary, Sally Jewell.
    This might be one of Obama’s few good appointments, Salazar certainly was terrible.

    —“And when she went to open an account at a local bank branch near her new home in the Dupont Circle area of Washington, the clerk asked where she was employed.

    “The Interior Department,” Ms. Jewell replied.

    “What’s your position there?” the clerk asked.

    “Secretary,” Ms. Jewell answered. The clerk just nodded.—

    1. JohnL

      Friends of mine who own a gym club needed a loan when they built some 20 years ago. Kept getting turned down. Until they found a loan officer at WaMu (I think) who understood their business and gave them a loan. Her name was Sally Jewell.

      Today the gym is successful and the owners are very active in the local lending community helping other small businesses. Sometimes debt can be good.

  8. dolleymadison

    Lambert – Re: your Code as law meme:

    New York state court denied double jeopardy claims by former Goldman programmer Sergey Aleynikov, who beat federal charges of stealing the bank’s computer trading code, only to be indicted by state authorities…

    If the Feds let him off…what dog does NY State have in the fight? Hmmm…

  9. dolleymadison

    Hey I have an idea – let’s securitize those ‘relationship contracts”

    1. optimader

      I must be hungry.. I look at your name and I want to eat you, that goes for less than primeBeefy too, but she’ll need to be brined..

  10. Intel Agent

    Re: Relationship Contracts

    You seem surprised Yves – that surprises me. Relationships have been economic transactions throughout our history – never mind the ideological notions of “love” and “a relationship for its own sake”. I’m glad relationships are becoming more explicit in their terms – why beat around the bush? Just one of those things that proves our species is still in the infancy stage with a severe case of denial; you can call it what you want but it’s as much of a financial trade as anything else (with monopoly built in as well). Must be the only case of purchasing a consumer good (which is what most women market themselves as) and paying through the nose at the end of its useful life, where trading up for a newer model is somehow immoral, as if we have property rights over another person.

    We trade biological needs for financial ones and can always be relied upon to take the easy way out – at the age of 30, I’m already as cynical as anyone on this earth. The only thing that keeps me sane is the one true “relationship” I have with a partner who is equal in all respects – the ideal.

    1. JEHR

      And does “she” agree with your relationship as “a financial trade. . .(with monopoly built in as well).” Lucky you!

      1. Intel Agent

        JEHR – I mentioned that my relationship with her is NOT a financial trade in any way (she is my equal every way, including education and finances). She takes as much offense to the pretense/cognitive dissonance of transactions masquerading as relationships as I do.

        1. LucyLulu

          Pray please tell how you managed to become so exceptionally evolved?

          Fortunately for us more common folk, most men are still interested in paying (and then paying some more, and yet more again) for their mates. True happiness can be found in an overflowing jewelry box.


    2. Cletus

      Marriage, which as we all know (according to the right wing), is the basis of our entire culture, is the weakest form contract on the books — even though it is typically entered into with as many witnesses as the parties can afford.

      I’ll bet these contracts are deemed unenforceable.

    3. spooz

      They can become more explicit in terms, whether those terms can be held up in court is another matter:
      from the mailonline link:

      “If they tie the knot, things become a bit more complicated. Technically lifestyle clauses can be included in prenups, though experts warn that having too many could lead to it being invalidated.
      ‘If someone wants a sex schedule, two times a week, or three times a week, I can’t take that agreement into a courtroom and ask that it be enforced,’ Carrozza explained.”

      1. MyLessThanPrimeBeef

        It reminds one of how kings used to find their queens.

        I will have your Aragon and you can have my Castile.

    4. Doug Terpstra

      Yeah, what’s love got to do with it anyway? In the Randian worldview (we’re soaking in it), relationships, including sexual “intimacy” and propagation, are strictly fluid transactional arrangements, nothing more than power plays which enthrone the solitary ego in “virtuous” selfishness — the idolatry of the (false) separate, heroic self that moves so easily into plutolatry, the worship of wealth. This is Liberatarian bliss, the objectivist’s utopia — with absoutely no room for sticky sentimentality, solidarity, equality, self-sacrifice, affection, or the dreaded affliction called love, especially disinterested love. Shudder!

      1. AbyNormal

        H/T sirDoug.

        The meeting of two personalities is like the contact of two chemical substances: if there is any reaction, both are transformed. jung

    5. Yves Smith Post author

      Wow, is THAT ahistorical.

      MARRIAGE is often about property among the propertied classes. RELATIONSHIPS are a different matter. And historically, in MARRIAGE, no one would think about imposing maintenance conditions on one partner beyond fidelity. The traditional vows are “In sickness and in health,” etc.

      Even in societies that have arranged marriages (India and China) the families often (often, not always, like any society, there are good parents and negligent parents) consider the interests of the children and seek to make matches that will make them both happy. And one Indian I know who was happily married via an arranged match said that both the prospective bride and groom were allowed to say no, but there was also an understanding that they couldn’t say “no” too many times.

      1. Intel Agent

        Um, no.

        In conservative societies like India, even in the most urban parts like Bombay, most marriages are arranged as transactions. Since you rely on anecdotes, I have more than a couple myself, including a pretty female doctor who got married to a trust fund baby and two trust fund babies who were simply told that they will be marrying each other within a month (I have lived in India for quite a while and these were personal acquaintances whose weddings I attended). The point of maintenance is well-established through the maintenance/alimony laws – vows aren’t laws though. We break promises all the time and are not particularly faithful either. That I find the whole concept of marriage antiquated and unnecessary is besides the point of course.

        As far as relationships go, when we first arrived (humans that is), men were expected to go out and find food, build shelter etc. which females couldn’t due to sexual dimorphism. That’s where the concept of SAHW originated – food and shelter was money back then. The concept of relationships as trades has always been in our social fabric – or are you denying this? The online dating study by Columbia (I’m not sure but google it) demonstrated that women who are not attracted to a certain race (OT but interesting) can be attracted with more money. I think this is a self-evident point looking at any society.

        Have we progressed since those regressive times? Not fast enough IMO due to the patriarchial society structure as well as women’s reluctance to take the shortcut to what money can bring. I truly admire women like my partner who take the long and hard path to success. I am not, for a minute, suggesting that men who look at beauty alone in relationships are any less superficial than gold-diggers(although that is a biological phenomenon, unlike the obsession with the green). But most het relationships are not “real” in the true sense, which would probably be a friendship with sex. In that sense, most relationships are bound to die as soon as a women’a looks fade and/or the male loses his money. We created this construct and I don’t really know about causality in this case as I haven’t studied this much, but to deny this is to live like the cons – in a state of perpetual denial trying to fit theories into evidence rather than vice versa.

      2. Yves Smith Post author

        You’ve now shifted ground considerably.

        “Relationships are economic transactions” was your original assertion, to which you have offered no proof. The most binding relationships are KINSHIP relationship, to family, and then to a broader tribe. Are you seriously going to try to tell me a parent-child or a sibling relationship is an economic transaction?

        This projection of economics into family relationship is really distorted. Go read Robert Heilbroner’s Beyond the Veil of Economics. He mentioned in passing how (as recently as the late 1980s) the idea of using economics to discuss familial relationships was off beam (as in “of course everyone understands this is outside economics”).

        Economics is a human construct. Your position is tantamount to “pair bonding is an economic activity.” Seriously? So by your argument, pair bonding in animals, cetaceans, and birds is also “economic” since the mother tends the young and the male gets her food. C’mon!

        I said marriage was often about property among families that have property. The fact that families who have property would negotiate about that in a marriage doesn’t obviate that it is also in the family’s interest to see the marriage work on a personal level. You’d see that even in Victorian and Edwardian England, where upper middle class parents would discuss how much income they’d provide their prospective son-in-laws before the knot was tied.

        Relationships are characterized by ongoing negotiation and give an take. A contract is a static, although it might be amended. It is beyond me how you can see one as fitting neatly with the other. In Japan, which is an intensely relationship oriented society, the idea of contracts is alien. I could not get my Japanese clients to understand that the contract was the deal (the minority that has spent enough time in the West got it but even they’d have trouble getting “domestic” Japanese to wrap their minds around it). They are used to loose understandings and ongoing negotiation as events unfold.

        Pre-nups are really “pre-divorce” agreements. The fact that they are being extended into new types of relationship agreements looks to be a sign of how incapable or unwilling people are to deal with the give and take of real relationships. They are a sign of rising narcissism and a sense of entitlement.

        1. AbyNormal

          Bravo Yves!
          agree relationship contracts are self defeating.
          commitment through life’s surprises and frailties is what strengthens survival…not a signature based on an alternative ‘if things don’t workout’.

          a mournful sign of the times, for sure

        2. Intel Agent

          [You’ve now shifted ground considerably.]

          Have I? I thought we were still on the topic of relationships as contracts and male-female relationships in particular since that was the point of the article you posted.

          [“Relationships are economic transactions” was your original assertion, to which you have offered no proof.]

          I thought that was a self-evident truth that a cursory look around society (both current and past) would have revealed. It’s a bit difficult to measure utility empirically, but I’ll try to look at BLS stats in a bit (this isn’t my FT job, after all).

          [The most binding relationships are KINSHIP relationship, to family, and then to a broader tribe. Are you seriously going to try to tell me a parent-child or a sibling relationship is an economic transaction?]

          I thought we were discussing male-female relationships outside the family, since that was the point of the article. Apologies for not clarifying that earlier.

          [This projection of economics into family relationship is really distorted. Go read Robert Heilbroner’s Beyond the Veil of Economics. He mentioned in passing how (as recently as the late 1980s) the idea of using economics to discuss familial relationships was off beam (as in “of course everyone understands this is outside economics”).]

          Um, of course it’s difficult as I mentioned before, that’s pretty obvious. Why you would refer me to an obscure economist who only mentioned this subject “in passing” puzzles me. Some work on marriage specifically (since that is a type of the relationship being discussed) has been done by Gary Becker and Lena Edlund. I don’t see why people would not act in their economic self-interest; they always do, don’t they? Or is Occam’s Razor an outdated concept these days?

          [Economics is a human construct.]

          Based on evidence – it’s called a science, after all. It’s not perfect but to call it a human construct woould have Keynes rolling over in his grave. Relationship arrangements ARE human constructs.

          [Your position is tantamount to “pair bonding is an economic activity.” Seriously? So by your argument, pair bonding in animals, cetaceans, and birds is also “economic” since the mother tends the young and the male gets her food. C’mon!]

          I might think that apart from our own, other species don’t have an opportunity to overcome the handicap of sexual dimorphism to gather economic resources (food in their case). Also, aren’t most animal species (including our two closest relatives) promiscuous/polygynous? And don’t males have a habit of abandoning their young? From our own evolutionary standpoint, pair bonding might’ve made sense in the past when the male wanted to ensure that he did not squander resources on someone else’s child and females wanted security in terms of access to resources. I haven’t seen any studies where pair bonding was proven to be absolutely necessary to a child’s development vis-a-vis single parenting – do you happen to have any such studies?(genuinely asking, not trying to be a smart alec)

          [I said marriage was often about property among families that have property. The fact that families who have property would negotiate about that in a marriage doesn’t obviate that it is also in the family’s interest to see the marriage work on a personal level. You’d see that even in Victorian and Edwardian England, where upper middle class parents would discuss how much income they’d provide their prospective son-in-laws before the knot was tied.]

          There it is again, the introduction of economics in relationships (even if it is again anecdotal and not data driven). The concept of dowry in places like India was necessary to the relationship itself, even with arranged marriages? Or was it the case that these were transactions?

          [Relationships are characterized by ongoing negotiation and give an take. A contract is a static, although it might be amended. It is beyond me how you can see one as fitting neatly with the other.]

          If you consider other relationships such as parent-child/platonic friends, they don’t have any obligations/vows/contracts. You don’t see a friend suing another for half his wealth because the latter promised to be BFF, and such relationships don’t expect fidelity.

          In most male-female relationships, the contract and relationship are equivalent. I meant an implied contract of sex for money, not a legal one. Apologies if that wasn’t obvious. The legal aspect applies only to money today through alimony; you could never apply a legal contract enforcing sex. You could even get a divorce settlement on grounds of infidelity, even though the latter activity isn’t illegal, as though one person has rights over another’s body – isn’t that a preventive contract in itself? But that doesn’t change the fact that most people are driven by money. If there are financial parasites on Wall Street, there are financial parasites in relationships too.

          [Pre-nups are really “pre-divorce” agreements. The fact that they are being extended into new types of relationship agreements looks to be a sign of how incapable or unwilling people are to deal with the give and take of real relationships. They are a sign of rising narcissism and a sense of entitlement.]

          The rise of prenups and assorted agreements merely proves that males (and some females) are worried about forking over half of their wealth due to divorce; current laws create preverse incentives. This would prove my conjecture – males want to ensure that they get sex without giving up too much of their wealth.

          BTW, isn’t alimony a form of entitlement as well? Perhaps women who are “accustomed to a certain lifestyle” from daddy/hubby should’ve spent time on education/training with the resources they had. Raisng children does have social value but to what extent? A lifetime of comfort/luxury? It doesn’t even have to be marriage – there’s the “Sugar Daddy” relationship now which is pretty explicit about what is being exchanged. I have no moral quandary about such sex-for-money arrangements but they are all different faces of the same person. It has always existed and perhaps always will – prostitution is the oldest profession after all. The fact that such arrangements take on convoluted forms doesn’t change the essence.

          Have a good night – I’ll get some stats on income/gender/marital status/work hours when I get the time.

          1. borkman

            Please, please Lambert, ban this guy.

            Tendendious and self important and doesn’t address the points squarely, despite the form of doing so.

            Not worth rebutting in detail, but for instance, calling Heilbroner “obscure” and ignoring the point (that Heilbroner’s remark was an accurate reflection of the temper of the discipline) alone says IA is either disingenuous or far less knowledgeable than he thinks he is. Becker trying to cast family relations in economic terms was novel and illlustartes precisely the problem Yves was raising. This guy’s ambit must begin and end with the Chicago school.

          2. lambert strether

            @brkmn Sheesh, people keep asking me to ban this or that prolix loud mouth. Where’d I get a reputation for being a brutal enforcer instead of the mild-mannered INTJ that I actually am?!

  11. Andrea

    on: Germany accuses France of being ‘Europe’s biggest problem child’

    Superficial meldings and coalitions work a bit – everyone ignores them – when things are going well, and both parties may cheer in a fake, ersatz way.

    The Euro, a currency, was supposed to fix antagonism in the core of the EU, join the economic power houses and profiteers, e.g. between France and Germany.

    I didn’t see any French teens learning German or Germans acting out anything other than tourism. These are two extremely different cultures, and hate and rivalry run deep.

    One place I go still calls Germans by an extremely racist name. They don’t know any Germans at all, they only remember that Uncle Jean was deported, Alice was tortured and raped, Granpa Francois fought to the death. Long memories.

    > “French industry is increasingly losing its competitiveness. The relocation of companies abroad continues. Profitability is meagre.”

    Is a blanket statement that is ridiculous. Any superficial glance at French Exports etc. will alert. And what, btw, is competitiveness? A terribly complex issue.

    > “France has the “second lowest annual working time” in the European Union.”

    (probably not true, see e.g. Spain, but anyway.) French employees are also, according to stats, more productive than any others. Comprehensible, as they enter the work place late, are super trained, work hard, and leave it early. Days off, vacation time, etc. are not germane to a country’s ‘productivity’. Unless one is attached to workers as servants and slaves, sweating on the job, pretending to be doing it, so 7/7 is better that 5/7.

    > “While its “tax and social security burden” is the highest in the eurozone.”

    Not true, see Scandinavia, generally admired and praised. Biz tax is high in F, except for the biggies who escape it with tax dodges. Tax on lower middle households is low in comparison even to the US, CH, or Spain.

    And so what? Ppl in what are called ‘democracies’ have the right to decide to invest together in training teachers, docs, bio-tech experts, building infrastructure, etc.

    These are neoliberal knee-jerk talking points, right on point for the Anglo press.

    As for the comparisons re. unemployment, they are nonsense, as it is hidden in many places by all kinds of fudging, cheating on numbers, and tallying different ways of dealing with it. (Interns are ‘employed’ for ex. even when not paid. France has low stats here because of counting only certain categories, shunting young ppl to unpaid work and training programs, further education, social aid, etc. )

    > “While France clings to its totemic 35-hour working week…”

    The 35-hour week is a reality only for some factory workers and part-time ppl. Which the author certainly knows.


  12. rich

    How Wall Street Defanged Dodd-Frank

    By Sunday, an industry lawyer named Annette Nazareth—a former top official at the Securities and Exchange Commission whose firm counts JPMorgan Chase and Goldman Sachs among its clients—had already sent off a heavily annotated copy of the 848-page bill to colleagues at her old agency. According to a congressional staffer whose boss was a key architect of Dodd-Frank, Nazareth is one of two “generals” running the campaign to undo the bill. The other is Eugene Scalia, a fearsome litigator and son of the Supreme Court justice.

    Even so, those numbers don’t begin to capture the army of people being paid exorbitant sums to beat back reform. “The lobbyists are just the point of the spear,” said Ed Mierzwinski, director of consumer programs for the US Public Interest Research Group (PIRG). “There are also the regulatory lawyers, the research staffs, the PR people and all those loyal think tank supporters shilling for the banks.”

    Dodd-Frank’s Achilles’ heel is that it leaves the tough work of writing the actual regulations to existing federal agencies like the Federal Reserve and the Securities and Exchange Commission, which had failed so miserably at protecting the public interest in the run-up to the 2008 crash, as well as to backwater independent agencies like the Commodity Futures Trading Commission (CFTC), which was tasked with regulating a derivatives market that played a central role in the collapse of the global economy.

    The story of how Wall Street lobbyists worked the halls of Congress, blocking the appointment of Elizabeth Warren, Obama’s first choice to head the CFPB, or pushing bills aimed at defanging Dodd-Frank, is fairly well-known by now. But it was the stealthy work of battalions of regulatory lawyers, who descended on the private offices of regulators deep inside the bureaucracy, that has proven more crucial to the industry’s effort to pick off pieces of Dodd-Frank. There, a kind of ground war has been going on for almost three years, with the regulators waging hand-to-hand combat to defend every clause and comma in Dodd-Frank, and the lawyers fighting to insert any loophole they can to protect their clients’ extraordinary profits. This is how the miracle that was the making of Dodd-Frank—hailed as the most comprehensive financial reform since the 1930s—became a slow-moving horror movie called “The Unmaking of Dodd-Frank”: a perfect case study of the ways an industry with nearly unlimited resources can avoid a set of tough-minded reforms it doesn’t like.

    1. Jackrabbit

      They actually used Dodd-Frank to strengthen TBTF.

      Regulation is now much less transparent and the new FSOC (Financial Stability Oversight Council), comprised of the Treasury Secretary and the Heads of various (mostly captured) regulators is very suspect.

      Ostensibly meant to protect the taxpayer, in actual operation it seems likely to shield TBTF firms by essentially taking decisions related to TBTF away from any individual regulator.

      TBT Fail = TBT Jail = TBT Regulate = TBT Manage

    2. Doug Terpstra

      “No matter how cynical you get, it’s impossible to keep up.” – Lily Tomlin

      This perverse system is impervious to external forces; internal collapse is the only path to reform.

  13. Bev

    about state banks…better to have a debt free, interest free money to help the most people, businesses, and nations.

    quoting article below:

    Historical experience has taught us what we need to do:

    1. Put the Federal Reserve System into the U.S. Treasury.

    2. Stop the banking system creating any part of the money supply.

    3. Create new money as needed by spending it on public infrastructure, including human infrastructure, e.g. education and health care

    Why Promoting States to do Banking is a Distraction and Diversion

    Dear Friends,

    As you know the states are in terrible financial condition, cutting back on necessary programs, laying off people and raising taxes. This has been the case for several years, and thanks to the banking crisis has reached horrific levels in some states. This is the time – an opportunity to push for real reform, such as the American Monetary Act. But instead, ill advised suggestions have recently been circulated on the internet that the states go into the banking business to solve or lessen this problem. The American Monetary Institute concludes that these suggestions, though they may be for well meaning purposes, are bad ideas for a lot of reasons as described below. People involved in real monetary reform understand that the private creation of money through what amounts to a fractional reserve accounting system is at the heart of the monetary problem which has plagued humanity and has now brought down the world economy. That vicious system by which money is created in our society must be reformed, not imitated. But there is no reform whatever in the proposal for states to enter the banking business.

    It would also distract lawmakers from facing the facts about the national reforms that are needed to solve this crisis and institute a money system grounded in justice, which will operate to promote the general welfare. It would even sanction and endorse the present fractional reserve banking system, the source of the problem. That system requires condemnation and structural reform, not endorsements! We now have a blog at the end of this article below, so that you may record and post your reactions to Mr. Walton’s research. To view an analysis of the flawed idea behind this fractional reserve system, see Jamie Walton’s review of the Web of Debt.

    Stephen Zarlenga
    Director, AMI

    Why States Going into the Banking Business Would be a Distraction, not a Solution to their Fiscal Problem

    by Jamie Walton, AMI researcher

    “We may not be able to stop them, but we can join them. We the people need to play the bankers’ game ourselves.”1 – that was written by one of the promoters of the notion that the state governments should go into the fractional reserve banking business to beat Wall Street at its own game and solve their fiscal problems.

    What an insult to humanity! How about a dose of morality and common sense. Isn’t that like saying: “We’re victims of organized financial crime, so lets join the criminals!”

    Trying to beat Wall Street at its own game is obviously not the answer. As Albert Einstein once said, “We can’t solve problems by using the same kind of thinking we used when we created them.”

    Forty-eight States currently have budget deficits and many are sharply cutting services to try to close ‘fiscal’ gaps opening up to an average 24% by 2010.

    Some attention has recently been given to the idea that State governments can get out of their fiscal problems by setting up their own banks. This is mainly a distraction away from genuine reform of the system, as encapsulated in the proposed draft American Monetary Act (more about that below).

    The argument being put forward is that State governments can increase their revenues without increasing taxes by collecting profits from State-run banks. The proposal suggests that State governments go into the banking business and “fan” their deposits into 10 or 12 times as much in loans, using ‘fractional reserve’ or ‘capital adequacy’ rules, to cover fiscal gaps with bank profits.

    This is a foolish suggestion, for several reasons.

    1. You don’t solve a problem with more of the problem.

    This scheme for states to go into the banking business would only ‘serve to protect’ the status quo. The ‘proposal’ completely fails to confront the main problem identified by all serious monetary reforms: ‘fractional reserve’ banking. Instead, it actually endorses and sanctions this vicious and destructive process, by suggesting that State governments engage in it – it’s immoral!

    2. What the promoters describe is not how banking operates.

    No single bank can multiply its deposits by 10 or 12 times in loans, they can only make loans (or purchases of securities, e.g. bonds) up against 90-95% of their deposits; these loans create new deposits, which, when spent, are most likely transferred to other banks; then receiving banks can again make new loans up to 90-95% of their deposits, and so on. This ‘process’ is repeated indefinitely, in ever-decreasing increments, and the effect over time is that the banking system as a whole multiplies those initial deposits by 10 or 12 times. The only reason some progressives might be considering this proposal is they don’t understand how fractional reserves work.

    This process is carried on at great cost to the community as a whole, because every new loan (or new security purchase) is additional interest-bearing debt.

    As presently operated, banks can be viewed as debt factories; they primarily create debt and only create the bulk of our money supply as a debt byproduct. Banks make profits and stay in business by putting the community as a whole into more debt than it can repay in any given time. This results in a net claim against the community going into the future. While some profits are paid to shareholders as dividends, this is only a small percentage of the debt created. If a bank was State-owned, the ‘shareholders’ would nominally be the people of the community, but any profits would still be based on the indebtedness of the community. That’s the inevitable outcome, no matter who owns a bank, because the same rules apply to all banks in the banking system.

    But; the question is not who should be the beneficiaries of perpetual claims against the community, the question is should anyone be the beneficiaries of perpetual claims against the community – why place ourselves forever on a treadmill just to have what we’ve already got? It makes no sense.

    3. The problem is being misidentified as interest, when the problem is debt.

    Proponents of the scheme are alleging that interest collected by “private” banks is kept out of circulation and is therefore not available to repay loans the bank have made. But this is not true. Most, if not all, interest re-enters the system in some way at some time (e.g. as expenses, dividends, investments, etc.). This is not the problem. The problem is almost all of our money is created with a debt attached; it is ‘borrowed into existence’ from banks, who create it when we have to borrow it.

    As our economy grows, we need new money, but almost all of the new money is presently created with interest-bearing debt, so almost every new dollar has more than a dollar owing on it – so it has to ‘earn’ more than a dollar and pay it all back to banks (who never had it in the first place). Who owns and runs any particular bank makes little or no difference because the debt-based money-creating banking system will still own and run us, on a treadmill.

    Money doesn’t have to be created like this; coins aren’t, they’re just created as money, with no debt attached; when they’re issued, it’s revenue for the U.S. government, saving taxpayers $$$. All money can be created this way. And; if we don’t start with any debt, then we don’t start with any interest either.

    With that in mind, let’s look again at the States’ fiscal crisis.

    State governments receive money from the community for the provision of public services and the support of volunteer services. These are generally things that are needed in the community which aren’t commercial in nature, they’re not the types of things that it’s either possible or desirable to make a profit on (e.g. rape crisis centers, battered women’s refuges, assisted housing for people with physical/mental impairments, respite care for caregivers, etc.).

    Non-commercial services needed in the community couldn’t exist without being paid for straight out, because providers can’t borrow and then generate income to repay loans, that’s not how they work (if they could do that, they’d be doing it already) – they need money that doesn’t have to be paid back.

    Diverting public resources away from desperately needed services toward a commercial venture would only make things worse. The effect on the ground could lead to the commercialization of services intended for the relief of poverty, disability, pain, suffering and misery; by forcing service providers to also be profit makers (e.g. commercialized prisons); or reverting to relying on the whims of charity. If neither of these ‘choices’ worked-out (which history shows, they generally don’t), the community services essential for any viably functioning civil society might disappear altogether, and then “there goes the neighborhood” – social disintegration is a slippery slope, for everyone.

    This is a very serious situation – it’s no time to be playing games.

    In addition to these defining moral questions, there are also some more technical reasons why they won’t automatically work as suggested.

    1. No bank’s an island – they’re all in it together.

    A bank can only lend out what it can expect to receive back, not only from its borrowers in the long term, but also from all other banks through the clearing process in the very short term, i.e. usually overnight. Even if a State-run bank could attract other banks to have accounts with it and/or require its employees and suppliers to have accounts with it, the other banks would have to call in their loans by 10 or 12 times the amounts transferred (so there’d be no net gain in loans available). Of course, at some stage, all of its depositors would need to spend their money with people having accounts at other banks, so sooner or later its reserves would drain back to other banks and it would then have to call in its loans by 10 or 12 times as much. In any case, no bank can lend more than the prevailing level of lending of all other banks; every bank has to move in step with every other bank, otherwise it would soon sustain an adverse net balance through the clearing process and drain all its reserves to the other banks. It’s a complete error that any bank can just go ahead and multiply it’s ‘reserves’ or ‘capital’ by 10 or 12 times in loans. If the other banks aren’t lending, a State-run bank wouldn’t be able to lend either.

    2. Don’t be fooled by what’s happening in a low-population State.

    North Dakota has about 700,000 people, a strong community spirit based on farming in difficult conditions, and significant oil revenues. The model being presented is the Bank of North Dakota, which provides support services to some other banks in its area.2 But this arrangement won’t automatically translate to other States, as the banks in other States may not wish to engage in it, and requiring them to could be very unpopular. This could lead to significant risks to taxpayers. In 1931, the Government Savings Bank of New South Wales (a federated State of Australia), at that time the 2nd largest savings bank in the British Empire, was closed down by a run caused by a series of ‘scare’ stories put out in the media as part of a ‘political’ attack.3 If a similar action were possible against a State-run bank today, taxpayers might be called upon to pay for the aftermath (e.g. the Bank of North Dakota is not FDIC-insured(!), and is instead guaranteed by the State Government itself).

    3. The promised golden goose may prove to be a noose.

    What may look like a boost for taxpayers could end up being a ball-and-chain. For instance; where are States already in deficit going to get the money to set up a bank? As the President of the Bank of North Dakota, Eric Hardmeyer, explains (in the article cited above), to avoid a drain on existing deposits from other banks, and the consequent contraction in loans, a State government would probably have to issue bonds to raise the capital needed to set up a State-run bank.4 Yet more debt bondage at a time like this may be more than the State’s taxpayers can bear. In any case, a new bank would be as much of a burden on the community as any other bank. We would have the ridiculous situation of the people, as taxpayers, being put further into debt to build a debt factory to put the people, as the community, even further into debt.

    4. States shouldn’t gamble taxpayer’s money on risky business.

    The actual balances of State government bank accounts aren’t huge, and they don’t grow, because they’re always being spent – that’s what they’re for. The actual profit margins banks make on their funds under management are generally modest, so any returns from a relatively small loan portfolio, after deducting operating expenses and re-investment in the business, wouldn’t be anywhere near the amount required to fix the current fiscal shortfalls of the State governments. For example, in recent years the Bank of North Dakota has transferred between about a third to a half of its net income to the State coffers; ~$25 million in 2007, ~$20 million in 2008.5 The total budget for the State Government for the 2007-2009 fiscal period is $6.5 billion.6 A State law requires the bank to pay $60 million to the general fund over the same period – a contribution of less than 1% to the State budget. Meanwhile, State governments face average budget shortfalls of 24% for 2010 – so the numbers just don’t stack up.7 Weighing the pros and cons; relatively low potential returns compared to potential high risks (e.g. the concerted aggressive actions of other banks); it’s not a very good bet.

    5. States would be better-off using their clout with the banks.

    A more prudent course of action would be for State governments to negotiate more favorable contracts for their banking business with one or more banks. This would involve much less cost and trouble (e.g. recruiting competent staff and administering a new enterprise) than trying to set up a bank, especially when public services are being cut. The banks need those deposits – they’ll do anything to keep them (even if they don’t like to admit it).

    6. We don’t need any more diversions.

    We citizens have only so much energy and time to devote to changing our world for the better. Diverting good people into nonsense condemns us to continue suffering unnecessarily. This time of crisis must be used for real reform, not diversions.

    So what is the solution?

    It’s the monetary system which must be changed to end the fiscal crisis, and State governments cannot do this – it’s a matter for the Federal Government.

    Under present constitutional and legal conventions, the only institutions that can create money without debt are national treasuries and/or central banks. State governments within a federal nation cannot do this – the problem can only be solved at the national level.

    Proposals promoting anything else would require a constitutional amendment, which is not necessary.

    There are some additional specious arguments being made within these promotions claiming that the U.S. Constitution (Article I, Section 8, Clause 5) does not authorize the U.S. Congress to issue non-coin money, so implying that it authorizes the States (or the people) to issue non-coin money.8 It most certainly does not. As Robert G. Natelson, in the Harvard Journal of Law and Public Policy, exhaustively and authoritatively determined, the term “coin” (with a lower-case “c”) means to create money in any form, whereas the term “Coin” (with an upper-case “C”) means coins.9

    There’s also a lot of misinterpretations in these same arguments regarding the term “Bills of Credit” in the U.S. Constitution (Article I, Section 10, Clause 1) and “bills of credit” in other contexts, and the terms “Tender” and “Coin” (again). These misinterpretations lead to some ridiculous assertions like stating that: “The States violate the [U.S.] Constitution every day … to pay their debts … since gold and silver coins are no longer in general circulation.”10

    All of these spurious ‘ideas’ only serve as distractions during a time of crisis.

    We have a big problem in our economy and society today: too much debt. Banking cannot solve this problem because banking produces debt, which is the problem. It’s incredible that even now the delusion of borrowing ourselves out of debt is still seen as a solution, by anyone, let alone so-called reformers. We’re in a deep hole because we listened to cheerleaders yelling “keep on digging” without thinking. We cannot afford to keep doing this any more.

    Proposing to get governments involved in banking is the complete opposite of a solution, because it keeps the problem in place.

    As American Monetary Institute Chapter Leader, Dick Distelhorst, says:

    “We don’t want to put the government into the banking business – we want to get the banks out of the money creation business!”

    The correct solution to the crisis was presented in Stephen Zarlenga’s speech at the U.S. Treasury in December, 2003, titled “Solution to the States’ fiscal crisis” (read it at That solution has become the proposed American Monetary Act. In California, Governor Schwarzenegger has had a copy of The Lost Science of Money (the historical research which led to the solution) on his bookshelves since the spring of 2004.

    Historical experience has taught us what we need to do:

    1. Put the Federal Reserve System into the U.S. Treasury.

    2. Stop the banking system creating any part of the money supply.

    3. Create new money as needed by spending it on public infrastructure, including human infrastructure, e.g. education and health care.

    These 3 elements must all be done together, and are all in draft legislative form as the proposed American Monetary Act [In September 2011, Congressman Dennis Kucinich introduced the National Emergency Employment Defense (NEED) Act, HR 2990, into Congress. View details here].

    The correct action is for Congress to fulfil its constitutional responsibilities to furnish the nation with its money by making the American Monetary Act law.

    The correct action for the States is to insist on this Federal action!

    Genuine monetary reform is the solution to the nation’s fiscal problems, and that can only be achieved at the national level.

    1. F. Beard

      2. Stop the banking system creating any part of the money supply. Bev

      Actually banks and anyone else should be allowed to create purely private money – money that can ONLY be used for private debts, not government ones – assuming someone in the private sector will voluntarily accept it. As for government, it MUST have a monopoly on money for government debts though its fiat could be voluntarily accepted for private debts too.

      The battle over who gets to create money is ancient and was solved, in principle, by Matthew 22:16-22 (“Render to Caesar …”). Caesar is to be paid ONLY with Caesar’s money but that does not mean that we must pay each other with Caesar’s money, though it is a legitimate option.

      1. F. Beard

        Needless to say, the government-backed banking cartel does not create purely private money but is, in fact, engaged in legal counterfeiting.

          1. F. Beard

            Credit creation cheats the poor in favor of the so-called “credit worthy” even if government is in charge.

    1. Ed S.

      And in most history textbooks (if mentioned at all anymore), the Gompers quotation was edited to:

      What does labor want? More, More, More.

  14. lambert strether

    On kayfabe, this is not a Grr! but a Yay! So far as I can tell, if the NC comment threads aren’t ground zero for the term, they’re certainly the place where it began serious propagation — and kayfabe has now leaped from an econoblog to larger mainstream political writing. Since kayfabe is such a keen analytical tool, that’s a great thing! It’s not a matter of credit but outcomes….

    1. JohnL

      “There is no limit to what can be accomplished if it doesn’t matter who gets the credit.”

      Ralph Waldo Emerson

      1. MyLessThanPrimeBeef

        That’s a nice quote.

        Sometimes, well, often, one is tempted to desire the world to recognize one’s ideas/deeds.

        1. lambert strether

          Well, being myself almost completely without ego [pause for hysterical laughter]. Let me start that again–

          Certainly in my experience propagating memes (before memes got confused cute images made a la I Can Has Cheezburger?) if one insists on credit, then the memes don’t propagate. It’s good to keep the history straight, because if we don’t who will, but we can’t be trailing after every writer of like mind on the Intertubes saying “I invented that! I invented that!” We’re talking topics of conversation here, not scholarly labors or works of art.

          1. MyLessThanPrimeBeef

            The sad fact is if one can be without ego once in a long while, it’s a great deed.

          2. MyLessThanPrimeBeef

            I should also point out the not-so-sad-fact that it was only a sad fact because ego got in there.

            Without ego, it’s not a sad fact.

            On the other hand, when one is totally without ego, it matters not if one writes it’s a sad fact or just a fact.

          3. Montanamaven

            Well I think it’s nice of you Lamb to share the history of kayfabe . I’m still trying to find out where the commenter known as “4” on Ian welsh’s sight came up with it. He used it very casually. I check in at Ian’s site, but that commenter hasn’t posted again that I can tell.
            But, yes, that is why I chose “maven” as a moniker. If I find something juicy, I want to share. And share especially with a connector/maven like you who can really get the word out, so to speak. Congrats on mainstreaming kayfabe!

  15. run75441

    Apparently, a little know fact about the PPACA, there are caps on out of pocket expenses precisely to prevent bankruptcy.

    “The Affordable Care Act initially sets the level of these new caps by referencing an existing definition—the annual out-of-pocket spending limits for high-deductible health plans that are associated with Health Savings Accounts (HSAs). If these caps went into effect in 2011, they would be $5,950 for individuals and $11,900 for families.”

    1. LucyLulu

      Hopefully the ACA tightens up the out-of-pocket spending caps found in private insurance policies, which are not be confused with the limits on what you might have to pay OOP for medical expenses. Insurers designate some expenses as exempt from applying towards the caps.

  16. Valissa

    A 3-fer from The Onion…

    New Study Finds Nothing That Will Actually Convince You To Change Your Lifestyle So Just Forget It,32259/

    ‘Loud, Desperate Need For Approval’ Leads Tony Nominations,32261/

    Parents Seize Creative Control Of 3rd-Grade Art Project,32272/

    Hey Lambert, no rush… but I have a comment stuck in moderation from this morning. In the meantime, it’s back out to the garden to continuing slaying dandelions and digging up other invasive plants… some of which are flowers I quite like but have just gone too far.

  17. looselyhuman

    What’s with having to be “anti-social” to not want to be on facebook? There are all sorts of valid reasons for that, including having political views that you wouldn’t want known by potential/current employers, etc. The expectation that we either become open books on the internet, or are suspected terrorists is disturbing.

    1. diane

      It certainly is disturbing.

      I thought Yves was being sarcastic, as it doesn’t look like she has a FaceFiend page, and I don’t see any FaceFiend icon on her site.

      1. Yves Smith Post author

        Not having a Facebook account is considered a sign of maladjustment among prospective employers of young people.

        1. diane

          I agree, I noticed the ugly commentary on some other sites, like Slate, about youth not using facebook being anti-social. I was just noting that I didn’t think you necessarily agreed with that consensus, as you don’t appear to be a fan and don’t have any links to facebook on your site.

        2. looselyhuman

          So the choice is suspicion of dangerous maladjustment or knowledge of anti-neoliberal tendencies (aka communist sympathy). Awesome.

    2. Optimader

      A Facebook page is like having a bad tattoo — an irrevokable change that at best will not fulfill your expe tation and at worst will be a basisi for prejudice against you. LinkIn is the commercial analog that at least might have an economic justificTion if managed, but still is an irrevokable surrender of personal information… Its forever baby!

  18. AbyNormal

    Dem resolution warns climate change could push women to ‘transactional sex’

    Several House Democrats are calling on Congress to recognize that climate change is hurting women more than men, and could even drive poor women to “transactional sex” for survival.

    The resolution, from Rep. Barbara Lee (D-Calif.) and a dozen other Democrats, says the results of climate change include drought and reduced agricultural output. It says these changes can be particularly harmful for women.

    “[F]ood insecure women with limited socioeconomic resources may be vulnerable to situations such as sex work, transactional sex, and early marriage that put them at risk for HIV, STIs, unplanned pregnancy, and poor reproductive health,” it says.

    (climate over their torture economic policies…i call bullsheet)

  19. Klassy!

    Re: Amazon reviews. I have no intention of purchasing anything from Amazon, but I am grateful to the many (seious)reviewers of books and to those who write those funny reviews. It makes me happy that someone will take a few minutes from their day to write something that makes me laugh. I’m all in favor of non productive (as defined by TPTB) pursuits.
    I would be sad if I was to find out the writers were seeking to monetize their work. Kind of like finding out Santa Claus isn’t real.

    1. just me

      11,500 Amazon thumbs up!

      Nearly 11,500 people found helpful this three-star review of the Images Scientific Instruments Uranium Ore sample: “I purchased this product 4.47 billion years ago and when I opened it today, it was half empty.”


  20. Jeff N

    my conservative mother hates CFL bulbs,
    and whines about “cash for clunkers” because
    1) she doesn’t care about the environmental benefit, and
    2) her clunker (and I can confirm it was a clunker) didn’t qualify.

  21. Kurt Sperry

    “Now whether she was better roasted, boyled or carbonado’d [barbecued], I know not, but of such a dish as powdered wife I never heard of,” added the famed settler John Smith. “This was that time, which still to this day we called the starving time; it were too vile to say, and scarce to be beleeved, what we endured.”,0,3674642.story

    Is it still too soon for the Donner Kebab joke?

    1. John L

      In a restaurant with another couple I like to give my name as Donner. “Donner, party of four”

  22. Ottawan

    Don’t know if it’s been mentioned here, but there was a very recent wildcat strike by jailers and sheriffs (court officers/bailiffs) in Alberta that may peak the curiosity of some NC readers.

    Story is that all of the jailers at a new remand centre walked off their job after a couple of jailers were suspended following their formal complaints regarding workplace safety issues. Soon thereafter, wildcat strikes ensued at all the remand facilities of the province. A while later, the sheriffs shut down the courthouses by walking out.

    The Mounties were called in to staff the affected facilities.

    Reaction from the AB government was predictably aggressive. The jailers’ union now owes about $350,000 in fines, but apparently the government is now listening. The jailers are headed back to work.

  23. Shutter

    Just a note re one of the commenters on this blog who passed away April 14. He greatly enjoyed this place, learning often and commenting occasionally and always loved seeing the animals. He was a lucky companion of two cats in Marin County CA who were well loved and are well provided for in his will.

    We’ll miss him — he valued his privacy and of course we’ll respect that in not revealing his NC name but know that he truly enjoyed your company.

  24. RanDomino

    “Barack Obama vowed to take action to close the controversial prison camp at Guantánamo Bay”

    Which should pretty much annihilate the argument that there’s nothing he can do to close it.

  25. Chris Engel

    “They could have been the sort of anti-social youth we are all warned about that don’t use Facebook.”

    LOL who is warned about anti-social youth not using Facebook?

    I’m puzzled by this comment.

    As a not-anti-social youth who was an early adopter of Facebook (when it was only open to universities) and who dropped the service years later, I resent the implication that people who don’t use Facebook are somehow dangerous or weird.

    1. Yves Smith Post author

      You gotta read the news!

      Employers now routinely ask prospective hires for FB account passwords. Saying you don’t have one is widely seen as a sign that you are antisocial or otherwise warped.

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