2:00PM Water Cooler 2/2/15

By Lambert Strether of Corrente.

Clinton launch date, conflicting views: “Never interrupt your opponent when it’s destroying itself” vs. “If [Hillary Clinton] is trying to avoid a coronation it really is a terrible way to go about it” [CNN].

“[I]f [Clinton] were to suddenly take herself out of the race in, say, two months’ time, there would be a massive sense of doom within the party” [Chris Cilizza, WaPo].

“Bernie Sanders is right to be outraged” (!) [Dana Milbank, WaPo].

Sanders faults President Obama for the current demoralization. “I think he had a moment in history to do what President Roosevelt did in 1932,” he says. “He had the opportunity to say to the American people, ‘Look, millions of people have lost jobs . . . [and] it’s because of what JP Morgan did, it’s because of what Morgan Stanley did, what Goldman Sachs did.”

This interview made the rounds, but it’s interesting to see Sanders get relatively fair treatment from Pravda on the Potomac.


Jebbie oppo: Republican front-runner remembered by classmates at Phillips Academy as a stoner who “sometimes bullied smaller students” [Boston Globe]. Well, let’s be reasonable. Who’d want a President stupid enough to bully larger students?

Principled Insurgents

Walker leads Iowa [Des Moines Register]. He sold ’em with his summit speech. Jebbie’s like fifth or something.

Walker on Syria: “I think we need to have an aggressive strategy anywhere around the world. … Ultimately, we have to be prepared to put boots on the ground [in Syria], if that’s what it takes” [Political Wire]. Then tries to put the toothpaste back in the tube: “Well, I don’t think that’s an immediate plan.” Oh, alright. (Gates chimes in.)

Rand Paul putting campaign infrastructure in place, meanwhile positioning himself as able to get things done across the aisle (!) [Wall Street Journal].

Rubio, says source at fundraiser, has “the fire in the belly” [The Hill]. But he’s so short; only 5’8″, it’s said. Too late for some lifts?

Clown Car

Graham on Syria: We’d need 10,000 “boots on the ground” to stop ISIS in Syria [The Hill]. Just doing the math, 10K boots means 5K bodies in boxes, tops. At least bodies that count, and assuming no blowback.

Rick Perry on gay rights: “I don’t think Washington, D.C., needs to be having federal legislation that, again, tries to push all of us round pegs into square holes — and round pegs into triangular holes” [New York Times]. Block that metaphor!

Mike Huckabee on gay people: “This is not just a political issue. It is a biblical issue” [CNN].

The Hill

“Obama budget would fund public works program with tax on overseas profits” [WaPo]. No, it wouldn’t, because Federal taxes don’t “fund” Federal expenditures.

Herd on the Street

“Workers have downed tools at nine US oil refineries that account for 10 per cent of domestic capacity in a dispute about pay and conditions” [FT,”Nine US oil refineries hit by strike in pay dispute”]. First, the ports, now this.

Justice still, five years later, interviewing Moody’s executives on whether they “bent criteria on how to assess structured-finance products to win business from Wall Street banks” [Bloomberg].

Eurodisney a nightmare for European investors [Reuters].

China Minsheng Bank’s shares fell almost by 6 per cent as the president of the country’s largest private lender resigned on Saturday after reports that he had been taken away to assist Chinese anti-graft investigators” [South China Morning Post].

Stats Watch

Gallup US consumer spending, January 2015: A drop expected post-Xmas, and “stronger than [estimates] in any January from 2009 to 2012” [Bloomberg]. Weisenthal: “Don’t freak out.”

Personal income and outlays, December 2014: “Moderately healthy,” actuals in consensus range [Bloomberg].

PMI manufacturing index, January 2015: Output volumes and employment are strong, but new business growth held back on export weakness, oil and gas [Bloomberg].

ISM manufacturing index, January 2015: slowest rate of monthly growth in six months. New orders slow substantially; delivery times stretch out on West Coast ports labor-related slowdown [Bloomberg].

Debt Jubilee

Thousands of Croatia’s poorest citizens will have their debts wiped out under the “Fresh Start” program. The government scheme aims to help some of the 317,000 Croatians whose bank accounts have been blocked due to their debts [WaPo]. Marc Andreessen (!): “This is probably a good idea for the US, if done randomly with different timing and criteria each time?”

UK Meltdown

Secret 1981 file naming Sir Peter Hayman, former high commissioner in Canada, as paedophile is released to public [Guardian]. And Maggie Thatcher was briefed.

David Hare, The Absence of War playwright: “The welfare state and the NHS, perfectly affordable when the country was desperately poor after the war are, we are told, mysteriously unaffordable now that the country is infinitely richer” [Guardian].

Hospitals that provide 75% of all NHS services refuse to sign budget deal, saying £1.7bn cuts involved will put patient care at risk [Guardian].

Health Care

“Medicare to Publish Physician-Payment Data Yearly” [Wall Street Journal].

Republicans to meet Groundhog Day on ObamaCare replacement plan, if they win King v. Burwell [Bloomberg]. Funny we never hear about what the Democrats will do. Perhaps Elizabeth Warren could introduce a single payer bill?


No-bid Motorola contract for broadband in Harris County [McClatchy].

American the Petrostate

“The Pros And Cons Of Fracking” [The Onion].

Class Warfare

Blame the upper middle class (>$100K) not the 1% [Slate]. I think we should blame them both.

“‘We may end up with a future in which a fraction of the work force would do a portfolio of things to generate an income — you could be an Uber driver, an Instacart shopper, an Airbnb host and a Taskrabbit,’ Dr. Sundararajan said” [New York Times]. You first, Perfesser!

You can earn $13K a year selling, er, fecal transplants [WaPo]. Something to add to my “portfolio of things to generate an income”!

News of the Wired

  • Punxsutawney Phil sees more winter [Daily Beast].
  • Season 5 Game of Thrones Trailer [Digg]. But no sign of Winds of Winter (except in real life).
  • The Hobbit, represented as a graph structure [Neo4j]. Geeky, but for a certain sort of geek, great stuff.
  • Climate change greatest threat to potato in thousands of years [Vice].
  • Millions of rare documents lost in Moscow library fire [ABC].
  • AP automates quarterly earnings reports using their Wordsmith platform [The Verge]. And that’s just the beginning!
  • “Mapping the Blind Spots” and uncovering secret US military bases [Another Word for It].
  • Drones now woven into Afghan rugs [The Atlantic].
  • A 3-year-old boy found a handgun in his mother’s purse and fired a single shot that wounded both his parents [Talking Points Memo]. Never mind the Darwin Award adults; what about the kid who has to live with this growing up?
  • I really love it that the California anti-vaxxers cluster in wealthy and well-educated areas. They can get treatment if (when) their kids come down with the measles, but poor and working class kids will have a harder time [Economist]. Culling the herd is best done by sociopaths, I suppose. Disneyland, indeed [New York Times]. (To be fair, I’ve got doubts on particular vaccines, like HPV and the flu. But measles and polio? Let’s get a grip. Iron lung futures, anyone?)
  • Does Tiger Woods have the yips? [Golf Digest].

* * *

Readers, feel free to contact me with (a) links, and even better (b) sources I should curate regularly, and (c) to find out how to send me images of plants. Vegetables are fine! Fungi are deemed to be honorary plants! See the previous Water Cooler (with plant) here. And here’s today’s plant (Alex):

manhattan sidestreet

In Manhattan! Certainly a cheerful sight! Anyone else from “the city” with pictures? Perhaps with some snow?

If you enjoy Water Cooler, please consider tipping and click the hat. It’s the heating season!

Talk amongst yourselves!

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


    1. Lambert Strether Post author


      Adding, impressed that you found it; I did the old “paste the title into the HREF attribute too” thing, so it must not have been easy.

      Based on the effort… I can go more techie if readers prefer; I like that stuff, but don’t want to overwhelm.

  1. AQ

    I hate to say this but why in the world would you put a concealed weapon in a purse?

    I’m thinking about how easy it is typically to steal a purse from a shopping cart or a restaurant. Heck, just lose or misplace the purse without any help because of too many in the moment distraction, not enough hands.

    ETA: And, also, because children get used to going into Mom’s purse for “treasures” or treats.

    1. lee

      My mom carried a pistol in her purse. Her job included locking up the restaurant she managed late at night. One night she was followed by a man across an empty parking lot. She stopped and turned to face him while slipping her hand into her purse. He stopped dead in is tracks, paused for a moment and walked away. Maybe Annie Oakley was right: women should know how to shoot and carry a firearm.

      1. Lambert Strether Post author

        Well, I’m glad you weren’t accidentally shot, as so many children — not to mention wives and mothers — are where guns are kept in the home. Otherwise, you wouldn’t have been able to leave this comment!

      2. Yves Smith

        She never got the gun out. She scared him off with a gesture but you have no proof she would have prevailed if he kept coming.

        Police have done extensive studies on this. A gun is useless when your assailant is within 21 feet. Even a cop with his pistol holstered (as in easy to grab) can’t pull it out and aim quickly enough to do any good. That is why cops go into dangerous situations with their weapons out.

        If you are worried about personal safety, take a “self defense” course from people who really know what they are doing. And I hate to tell you, that means learning as as presumed smaller, weaker, slower person how to inflict serious trauma on the other person first. Lessons include how to gouge eyes, rupture kidneys, and break ankles and kneecaps, as well as the proper use of a knife (stabbing, not slashing).

  2. ProNewerDeal

    “To be fair, I’ve got doubts on particular vaccines, like HPV”

    Lambert, until your comment I hadn’t heard of “doubts” on the HPV vaccine. This HPV vaccine topic is a “blind spot” for me, which I do not know about (positive or negative). Could you explain your doubt &/or forward some URL links, particularly with respect to men receiving the HPV vaccine?

    PS – thanks again to NC informing on issues, often times issues that are not covered much on other media sources, the ACA “gotchas’ & arbitariness, on the “health care service provision” itself, the total patient costs, & the effect on tax paperwork, being 1 great example.

    1. Dugless

      I work in the healthcare field. While I personally don’t feel the need to get an HPV vaccine, I definitely had my daughters vaccinated. It only takes seeing a few young people (both men and women) either getting significantly disfiguring surgery or actually dying of HPV related cancer to feel that the downside risks are limited as compared to the benefits. However, this article gives a good overview of the pros/cons: http://www.webmd.com/children/vaccines/features/should-your-child-get-hpv-vaccine. Articles about increase in cancer rates: http://www.usatoday.com/story/news/nation/2013/01/07/hpv-related-cancers-surge/1810491/ or http://www.oralcancerfoundation.org/hpv/hpv-oral-cancer-facts.php

        1. LucyLulu

          HPV vaccination isn’t a clear cut decision. There are pros and cons to vaccination. You outlined some not insignificant safety concerns over the vaccination. There are also real risks to contracting HPV. Thousands of women still die from cervical cancer in the US every year. While regular Pap screening and exams can prevent these deaths, treatments of abnormal results can be painful and invasive, and require repeated interventions. Recent studies point to a link between HPV infection and squamous cell skin carcinomas. For males, there’s been an increase in mouth and throat cancers linked to HPV. HPV is incurable and the most common STD, especially prevalent among young people, with 80 million people having reported infection as of 2008, more than three times the second most prevalent chronic STD (herpes) while condoms provides insufficent coverage to provide reliable protection against transmission.

          My oldest daughter contracted HPV before Gardasil was released and went through 4 years of hell. During that time I talked to several other young women who told of similar experiences. I vaccinated her younger sister as soon as Gardisil was released without incident. Life is a risky proposition. Sometimes you pick your poison…………. and then pray you chose well.

    2. Lambert Strether Post author

      I don’t know the medical issues at all (the commenter above gives links). It’s my sense — not rigorously thought out — that the measles and polio vaccines are very well-proven and quite old; that is, they and the medical and technical systems that support them were established before The Crapification of Everything™ that began as we entered the neo-liberal dispensation in the mid-70s. So, Rick Perry + Big Pharma….

      However, I’m perfectly happy to be argued into HPV on medical grounds!

  3. ambrit

    The “Obama Infrastructure Initiative” is laughable. A 14% tax on ‘overseas’ profits, while present domestic business taxes are 35%? Someone is playing the numbers game. See also, an allied proposal to lower the business tax rate to 28% from 35% and make up the shortfall with the old “closing loopholes” gag. This is sheer out and out Republican Party boilerplate. Even when he’s trying to burnish his liberal credentials, (by proposing “liberal” policies only when he knows they don’t have a snowballs chance in H— of passing,) he comes off as Mr. Potter the banker from “It’s A Wonderful Life.”

    1. NotTimothyGeithner

      Obama is worried about his legacy, and he is a do nothing thug. ACA is a growing embarrassment, and very apparent, he has little knowledge of policy. Obama wants to be popular, and to counter the criticism of Team Blue’s last election effort, O is going to have nice sounding ideas with just enough details to soothe anxious Obots. He can’t pass anything, and so he will try to paint the GOP as obstructionist.

      1. Lambert Strether Post author

        Obama doesn’t give two sh*ts about his legacy. He does care about his future career, whether in broadcasting or finance, and he cares about funding for his gilded pleasure dome Presidential Library. I imagine this is all a head fake left to neuter the left with yet another bait and switch operation.

    2. jgordon

      Funnier still was what he was planning to spend it on. Roads and bridges? What a way to squander the remaining resources of our society. Unfortunately roads aren’t nearly as beautiful or permanent as the Great Works that previous collapsing civilizations invested the last of their resources in as they were going down. So we won’t even have a decent moment to commemorate our passing, unlike the Mayans or Eastern Islanders.

      1. Kurt Sperry

        You can still travel south out of Rome on the original Appian way (it’s a bit bumpy, but still in use). Roman bridges *still* dot Europe, some of them are even quite beautiful to my eyes.

  4. Anon

    Re: Winds of Winter

    The more time that passes, the more I see him going the way of Frank Herbert (i.e. he passes on, we get no real resolution and the end result ends up worse than had he lived). Based on the sneak peek chapters he posted on his blog, he doesn’t seem as if he’s written himself into a corner with some characters. Hey, at least we have that World of Ice and Fire book to hold us over, right?

    1. Carolinian

      The HBO producers are going to finish it for him if he doesn’t come across. HBO has a lot at stake with this huge hit. I thought the last of the books was not as good anyway. Perhaps someone else needs to step in with ideas.

      1. Jessica

        Under current copyright law, it would be very difficult for anyone else to step in, even if necessary.
        Look at Lucas and Star Wars.
        I would prefer a system in which anyone who extends a world, characters, plot you have created has to pay you a fair amount, but you do not have the right to stop them from doing so. Particularly once a work has become so widespread that it is a part of the culture, for example many Disney characters or Tolkien’s Middle Earth.

        1. Carolinian

          You misunderstand. Martin is one of the producers of the HBO series. If others step in it would certainly be with his approval. I believe that has already been agreed to according to the coverage I’ve read.

    2. NotTimothyGeithner


      If you read through this, I think you can see why George Martin might have a problem besides having two middle names. In short, he knows Gollum has to be involved in the destruction of the One Ring, but he has way too many characters to move using his established universe and too many characters with unsatisfying endings or more accurately no resolutions if this blog is correct.

  5. diptherio

    This may be of interest to the techies among us:
    Cooperatives’ Uber Moment

    …the machine has become line manager, while the consumer has become empowered by the machine to have the final signoff, irrespective of their expertise. This fits within a ‘customer is always right’ sort of business, but less so in one full of drunk people arguing with taxi drivers about the quickest way home.

    Putting aside such a disempowerment of the worker to the benefit of the consumer – we live under capitalism after all—the more concerning aspect is the massive empowerment of the machine in the process. Ultimately the software is answerable only to the management of Uber – not to the workers or even the consumers—i.e. the software is not answerable to any humans who are directly involved in each transaction.[…]

    Cooperatives offer a further benefit unique to this culture shift of empowered machines. If software is to become the worker’s direct line-manager, then by letting the worker in turn be the machine’s line-manager a positive feedback loop can be created where bugs, injustices and problems within the software can be ironed out—in a humane, worker- and person-centric way.

    1. Mel

      David Graeber seems to have a slim new volume of essays about bureaucracy, which for me also means operation according to formal rules which could be automated. This cited article seems OK, but must be dealing with more co-op politics than I’m familiar with. A software system is not necessarily that hard to writeand deploy, given a will to order what it’s going to do and see the work through.

  6. OpenThePodBayDoorsHAL

    Hilary (retch) Rand (burp) Jeb (snort) Ted (hack) Chris (belch) Marco (gas)…I’m running out of bio-functions to describe how I feel about the menu of midgets, charlatans, and fascists vying for our nation’s top job. Makes me long for the days of W when at least we could pretend there was opposition to the corporo-fascist Permanent War Free-Money-For-Wall-Street, let’s-squeeze-the-poor-some-more agenda.

    1. Jim Haygood

      ‘[I]f [Clinton] were to suddenly take herself out of the race in, say, two months’ time, there would be a massive sense of doom within the party.’

      No wonder the D party is headed for near-certain defeat. After all, only once in the postwar period has one party held the White House for three terms (R party, 1981-1992).

      To overcome the long odds against the standard 8-year alternation, the D party needs to take a leaf from consumer marketing. ‘New’ is one of ten magic words that sells products. Whereas Hillary is ‘yesterday’s news.’

      Hillary stepping out of the way would make room for dozens of fresh faces in the D party who could actually overcome the disadvantage of the party’s relative unpopularity now. Viewing this opportunity as ‘doom’ just shows how hopelessly lost the D party is.

      Better to go down to certain defeat with the conventional choice, than to risk victory with an unconventional one!

      1. Carolinian

        Here here. Worth remembering that HIllary was the inevitable candidate in 2008 as well….until she wasn’t.

      2. neo-realist

        If Hillary knew she wasn’t going to run, she would have let the DNC know a long time ago. We also would have seen Governor’s Patrick and Cuomo in the process of prepping if that was the case. With Hillary running and sucking up all the corporate dollars, its not worth the bother for any serious opposition.

      3. MikeNY

        Reminds me of that old saw, “Better to fail conventionally than to succeed unconventionally.”

        That’s where we are. Oy.

  7. Horatio Parker

    This interview made the rounds, but it’s interesting to see Sanders get relatively fair treatment from Pravda on the Potomac.

    I wouldn’t read too much into that. They’ve got to try and make a horse race somehow. Not to mention the GOP would rather run against Sanders than Hillary any day.

    1. edmondo

      Oh please, of course they treated Bernie nicely – he’s everyone’s favorite socialist. Has anyone else figured out why one Tea Party senator can bring the government to its knees but Bernie stand up, makes a few speeches and then goes along and then he votes the corporate party line along with the rest of them.

      Bernie’s speeches are just like peeing your pants if you are wearing a blue suit.- no one notices but it sure feels good when its happening.

  8. LifelongLib

    At one point in the article, the “blame the upper middle class” writer describes himself as a conservative, and laments that the umc doesn’t mind raising taxes on the rich as well as those less well-off than itself. I think this is another bit of the campaign to discourage the non-wealthy from understanding and using the power of government to benefit themselves, although admittedly these particular non-wealthy are already better off than most of us.

  9. Vatch

    Regarding the comment on the link:

    “Obama budget would fund public works program with tax on overseas profits” [WaPo]. No, it wouldn’t, because Federal taxes don’t “fund” Federal expenditures.

    I don’t understand. If you are saying that federal taxes don’t have to fund federal expenditures, because a sovereign government can create money, that make sense. Or if you are saying that federal taxes don’t fully fund federal expenditures, that also seems to match what is currently happening. But it seems clear to me that some federal expenditures are funded by taxes, even though this does not have to be so.

    What have I misunderstood?

    1. ifthethunderdontgetya™³²®©

      I took it to mean that Federal taxes go into a pool that is used to (partially, when we’re operating at a deficit) fund all the things we spend money on.

      So the WaPo could have just as easily written “Obama budget would fund overseas wars for corporate profits with tax on overseas profits.”

    2. LifelongLib

      A monetarily-sovereign government creates money in the amount that it spends, and destroys money in the amount that it taxes.They are two separate activities. The ability to spend does not depend upon taxes in any way.

      1. Vatch

        I think you are describing a theoretical situation that could exist, but which actually does not.

        In our system, banks create money by making loans and money is destroyed when the loans are paid back.

        1. Code Name D

          That’s the claim made by the establishment, but that doesn’t make it true. MMT argues that by definition money can only be created by the state and makes falsifiable claims that reinforce this argument.

          If the banks truly create the money supply, then why is it that austerity policy are so ruinous for economic growth? Why is it that QE fail to counter deflationary pressures as it is intended? Real-world observations are simply not consistent with what I have heard referred to as a “fractional-credit” monetary system, while is consistent with MMT which defined fiat-base money.

          That is not to say I have all the answers. I have raised this very question my self regarding MMT’s explanation regarding credit and debt based systems and have argued that these unanswered questions do pose a problem for MMT. (I think I used the term “rips the head off of MMT”.) I argue that this is more fundamental regarding the very definition of what money is, and that the current definition is not self consistent. And when you start with nonsense, you end up with nonsense.

          But let’s cut the guys a little slack. MMT is relatively new with serious research only just getting started. It’s not fair to expect them to have all the answers out of the gate. That kind of thinking is how we got into this fix in the first place. Regardless, we are no longer sailing charted waters.

          1. Vatch

            I don’t have the answers either, but I’ll try a couple:

            If the banks truly create the money supply, then why is it that austerity policy are so ruinous for economic growth?

            In austerity policy, don’t the loans dry up? Banks aren’t able to make very many loans, so the money supply is reduced. Austerity creates recessions.

            Why is it that QE fail to counter deflationary pressures as it is intended?

            Quantitative easing reduces the cost of loans (interest), so banks could make more loans. But if they choose not to make the loans, it really doesn’t matter what the rate of interest is. There’s also the problem of shadow banking and the shadow economy. Quantitative easing might increase the circulation of money in the shadow economy of haute finance, which benefits rich bankers and people with sizable stock portfolios, but much of that money may fail to circulate into the real economy. That’s where real products are made and sold, so if the money doesn’t get there, the real world will experience deflation.

            These are just my guesses.

            1. Code Name D

              Banks want to create loans because that is how they create a profit. Business will want to continually invest in new production because that is how they turn a profit. And why taxes are said to be so destructive because it interferes with the profit motive.

              As I said, I am skeptical with the very definition of money itself. For example, if QE creates new money that isn’t circulating in the economy, then I must ask if it’s really money at all. As money is said to be a store of wealth, and if QE creates money in the banks that do nothing, then I am forced to ask what wealth is? And if money is wealth, than can you by extension create wealth from thin air, just as you can with money? And if you can – than what is it that you created? Especially if it’s intangible.

              For example, you said that money is created through lending, IE the credit process. The problem with this is with what do you pay the loans back with? If lending is the process by which money is created, then I can never discharge a lone in a macro-economic system without creating a new loan else where in the system. Its’ robbing Peter to pay Paul by taking Peter’s IOUs that he has already written to Paul. And when I thrown in profits and interest, the money supply, by definition, must grow in order to sustain its own debt/creation. And you can only expand that money supply through more barrowing.

              Here is a better analogy. Let’s say Larry, Moe, and Curly are walking down the street one day when Curly discovers a dollar bill on the street. Feeling left out, Larry and Moe want to barrow the money from Curly. But there is only one dollar.

              So Moe writes Curly an IOU for $1, and Curly gives Moe the dollar. Larry then writes Moe an IOU for $1 in exchange for Moe’s dollar. Then Curly then barrows the dollar back from Larry with Moe’s IOU and get’s his dollar back.

              In total, there is only $1 between the three of them. But they have a total of $3 dollars if they include the $2 in IOUs that were just written.

              It gets even worse if I add interest.

              Curly finds a dollar. Moe gives Curly an IOU for $1 and dime for a total of $1.10 and a dead line to pay it back before the end of the hour. Larry barrows the dollar from Moe, but Moe need a dime in order to pay back his IOU, so he charges another dime, $1.20. Curly to get his dollar back has to hand over Moe’s $1.10 IOU plus an IOU of his own for two dimes so that Larry can make his dime back to pay Moe.

              We have a credit supply of $3.30. But at the end of the hour, they can only pay the money back by a fresh round of barrowing. After a few days of this, they may have a few hundred dollars in credit, but still only have $1 between them.

              As long as all three of them are ready to take on more debt, than their “wealth” can continue to grow. It’s when they try to pay their debt down the system brakes down.

              1. Foy

                Businesses will only borrow to invest in production if they believe they have demand (buyers) for the extra goods that will be produced. If there is little or no demand then no point taking out a loan regardless of the interest rate. So QE driving down interest rates doesn’t necessarily translate to increased lending for business production investment, which is one reason why it failed, especially on the job creation side. There’s still very little new demand and so no one is taking out investment loans (other than for buying non productive/speculative assets like property, shares etc) and the QE reserves just sit on banks balance sheets not doing much. Cutting taxes wont cause a business to to take out a new loan if there is no demand for additional goods. But prospective new additional sales will, ask any small business owner. The question is how can that demand be created in a recession which is what MMT addresses through government spending on things like infrastructure.

                Code name D, your comment “its robbing Peter to pay Paul” is exactly the problem with the current financial system and causes the boom bust cycle. It requires exponential growth to stay alive, new debt covers interest and repayments on the old debt until the hamster wheel stops turning when banks get lax with credit worthiness checks, and then bankruptcies etc then occur because there is insufficient money around for interest and capital repayments. And that’s why austerity fails and causes a continuous contraction as we have seen in Greece etc, until something is changed. An input of new money must come in at some point or a much lower equilibrium reached (ie lower wages and higher unemployment level) to reverse things. MMT says that input of vertical money (ie Govt spending per commenter Reslez below) would create demand and stop the contraction, which will work if the resources are available – sovereign govts are resource constrained, not financially constrained.

                This is why the financial system fails when exponential economic growth (3% per year anyone?) fails. But exponential growth requires exponential energy inputs. I find it interesting that the global demand seems to keep hitting a wall when oil prices hit around $110-$140 per barrel. Energy gets too expensive for the globalised economy, demand drops off, growth stalls, companies stop taking out new loans and a recession hits again. Every barrel is getting ever more expensive to extract.

                I think the role of energy in economic growth is very underestimated and is going to become an ever bigger problem in the future. It’s a catch 22 – oil prices get too high to maintain required exponential growth for the financial system, but ever increasing oil prices are required to continue oil extraction (critical the globalised trade). Sooner or later an irresistable force (exponential economic growth) is going to meet an immovable object (finite resources in the form of liquid energy and key commodities) and the financial system is going to be in big, big trouble. And as much as I’m all for renewables I’m not sure they cover the uses of oil in the timeframe required (checkout Gail Tveberg at http://www.OurFiniteWorld.com for more on this).

                Mmmm that got a bit long…got carried away there, sorry about that…

              2. Vatch

                Just a quick reply. You point out some problems with our current monetary system (or with my impression of our monetary system). For example: the impossibility that every borrower can completely pay back a loan. I agree with you! I wasn’t defending our current monetary system. I was just trying to provide a short description of it. It’s a mess.

        2. reslez

          MMT clarifies this by referring to bank loans as “horizontal money” as opposed to “vertical money” issued by the sovereign. When a loan (horizontal money) is paid back it extinguishes the money created by the loan. Vertical money does not behave in this way. This has been discussed many times by MMT which has roots in functional finance and is not new at all. Abba Lerner wrote much of his important work in the 40s.

  10. DJG

    Maybe we could call it corvée, which sounds sort of French and thrilling:
    “These services are successful because they are tapping into people’s available time more efficiently,” Dr. Sundararajan said. “You could say that people are monetizing their own downtime.”
    Or maybe Arun Sundararajan is not so subtly letting his own cultural biases slip: Bringing India’s caste system to the U.S.A.

    1. ambrit

      Surely you jest. Given our harkening back to the Cold War period, we should call it ‘subbotnik.’ Then, as opposed to corvee, we can add an element of selfless sacrifice for the betterment of rentier kind to the formula. (In reality, we can all then imagine we are lower management, who get screwed this way all of the time. Our bonus? Imagining we are important to the system and valued by it.)

  11. DJG

    Many of the links above join into a theme of word salad, so while we are on the degradation of the English language, I will point out that “boots on the ground” is a vile expression used by vile people who can’t even perceive a soldier is much more than expendable footware.

    1. ambrit

      Hmmm… “…a theme of word salad…” Er, “recipe of word salad,” or “hint of a whiff of word salad,” or “partaking of the quality of a rubric of word salad,” or “boots grounded into the bowl of a word salad,” might suffice. Any orders that send people into harms way without a defensible reason are the utterances of vile people.
      That’s why old men make poor ‘official’ soldiers. They have learned to ask questions, and usually expect reasonable answers.

  12. Blurtman

    Actually there was a window during the McCain-Obama debates where either candidate could have taken the position that Senator Sanders laments not being taken regarding the banks. If memory serves, Obama came out in support of the banks first, giving McCain a golden opportunity to win votes, which of course he did not take. And so we again have two bankster fellators running for president. I am writing in William K. Black again.

    1. DCDC

      My recollection is that McCain flirted with the idea of coming out against the banks and then got called to DC for a talking to, which ended that idea and any chance he had to be president along with it (not that that’s some huge loss, although I’m not sure it would’ve been demonstrably worse than what we’ve gotten, we’re living in a “pick your poison” election environment, IMO).

      1. Jerry Denim

        I don’t remember that at all. I do remember immediately post-Lehman/crash seeing an addled and confused McCain being asked what his reponse to the financial crisis would be as President and he uttered some clueless sound-bite bunk about supporting the ideas of Reagan and Milton Friedman. I couldn’t believe that was the best he could come up with given the obvious role of deregulation and financialization otherwise known as the Republican’s zeal for “free markets”. Meanwhile silver-tongued Barry was vibing the national mood perfectly with beautiful but empty speeches like this from spring ’08 during the run-up to the crisis. http://www.nytimes.com/2008/03/27/us/politics/27text-obama.html?pagewanted=print

    2. NotTimothyGeithner

      The election was over after the Mid-Atlantic primaries. Maybe four or five people care about what is said in debates.

      McCain already trashed his reputation with his loyal stance towards Dubya. No one would have believed McCain if he had come out against the banks.

      1. Blurtman

        By CBSNEWSCBSSeptember 4, 2008, 3:19 PM
        CBS Poll: McCain, Obama Tied
        “The presidential race between Barack Obama and John McCain is now even at 42 percent, according to a new CBS News poll conducted Monday-Wednesday of this week. Twelve percent are undecided according to the poll, and one percent said they wouldn’t vote.”

        The debates were held in September and October 2008, BTW.

        1. Lambert Strether Post author

          Yes. NotTimothyGeithner has it wrong. It was amazing to see the Greatest Orator of Our Time fail, week after week, to put McCain — McCain! — away. What tipped the scales was Lehman; Obama — I assume because of residual good will on the Democrat’s balance sheet from the New Deal*, that made people think the Democrats were “better on the economy” — began to pull away then and only then.

          NOTE * Now thorougly dissipated by the Democrat’s miserable performance.

  13. tongorad

    ” (A) work force (that) would do a portfolio of things to generate an income”…if that’s not a working model of a third world economy, what is? And you gotta love the pretentious and out of touch word choice, “portfolio.” What kind of sick fuck would refer to three shitty jobs as a “portfolio?”
    The next step I suppose is for every family member to contribute to the “portfolio.” As in, “Johnny, you can’t go to school anymore because you have to help Grandpa sell fruit by the side of the road, and in the evening lend a hand with your sister’s food stall at the night market.”

  14. Carolinian

    Winston Churchill, white supremacist.


    A typical example of the Churchill method was the use of terror, mutilation (ripping off mens’ testicles), and rape as a weapon to suppress a Kenyan uprising against British tyranny in the 1950s.

    Decades later, in 2012, The Independent reports, the UK finally “admitt[ed] Kenyans were tortured and sexually abused by colonial forces”.

    Kenyans were “beaten, castrated and sexually assaulted”.

    Churchill’s Empire, making Darth Vader’s look like a hippie drum circle, ran “concentration camps” where suspects were tortured and sterilized, such as by being “publicly castrated with a pair of pliers normally used on cattle” – a fitting tactic given Churchill considered his human prey to be “beastly” “savages”.

    Also used poison gas against the Iraqis. One could go on.

    1. Jim Haygood

      Pliers? Good thing we have drones now for ‘surgical strikes’!

      Plus Obama doing it proves it’s not racist.

  15. Bart Fargo

    Re: Uber’s Business Model Could Change Your Work
    (from Class Warfare section)
    I find it encouraging that Farhad Manjoo, the author of that piece, called out Prof. Sundararajan’s drivel by noting that “monetizing downtime” sounds like “a hellish vision of the future of work”. But by nevertheless concluding that companies like Uber are poised to be the job providers/income boosters of the future, he (and Robert Reich) gloss over the fact that Uber is a major investor in driverless cars, and that Amazon is a major investor in machine learning that would eliminate the need for humans to perform many tasks farmed out by its Mechanical Turk service. For these businesses, employing human beings with precarious short-term contracts is merely a stopgap measure until the technology advances to the point where such services can be completely automated. So by earning profits for these companies, laborers are slowly but literally putting themselves out of a job. They also don’t mention the redesign of TaskRabbit that has taken away from Rabbits a great deal of job choice and flexibility, elements which are supposed to be the main perks of such work. To say the rise of these companies “isn’t necessarily much of a cause for celebration” is one of the biggest understatements of the decade.

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