I'm leaving the opening sentence but by monthly percentages we see spending increase much more than income and it's true for all of 2011. That's why the dramatic opener to sum up the situation.
We overviewed China buying up oil futures, oil supply earlier but haven't seen how much of a factor they are in this run up. My impression is this run is speculators (at least 15%, but I suspect much higher).
Good point from 'pelham' that the current Great Recession, for example, shouldn't be compared to the 2011 tsunami and Fukushima Daiishi events -- but 'pelham' begs several questions. Namely, the great question of economic cycles, the question of sustainability of the WTO 'final solution' of the human problem, the question of resource depletion coupled with unsustainable population growth.
Japan has had a 'white swan' long-term economic crisis (or decline) for two decades now, and within that decline Japan has experienced a Black Swan. I don't think that Numerian missed the distinction between predictable and Black Swan crises -- rather was asking how USA might do if we happen to experience some Black Swan event such as climate-related crop failure, perhaps in the middle of an approaching or continuing 'White Swan' economic decline (related to weakening of the USD).
IMO, comparisons of Japan and USA are fraught with problems, beginning with enormous cultural differences. The economies of both nations have been impacted by China's export successes in the context of the rise of global neo-merantilism, but in very different ways. Japan pioneered neo-mercantilist policy, preparing the way for China, whereas USA ... well ... what can we say? USA is pioneering the political economics of national dissolution by any other name?
While Japan's tsunami qualifies as a black swan, economic crises in general are more like white swans. They come swimming gracefully along with remarkable regularity, with only the severity and precise timing a smidgen unpredictable. In other words, crisis isn't a bug, it's a feature.
My impression is that MNCs have been making a killing since the 1960s or earlier through aggressive international labor arbitrage. If they ever did any thinking about this stuff, there was no thinking involved ... more like just 'Keep on doing that highly profitable thing, it'll never stop'. It's the same as when a fishery is fished out, when the water table runs dry, when Peak Oil arrives, when the clear-cut has left nothing more to cut ...
And even now, following EP, what do we see all the time? MNCs hoping for yet greater profits through labor arbitrage.
Humans are just like any other resource in today's world of finance capitalism -- expendable. And the way to increase corporate profits and get a big bonus is .... exploit that resource!
Here's a clue for you: "This country borders both Iran and China." Doo, doo, doo, doo. "Ooooo, oooo, Alex, I've got it ... uhh ... What is Afghanistan?"
Back when the Afganistan thing first started up (2001-2002), we heard about some supposed North-South pipeline through Afghanistan. That was code for the real deal, which was an East-West pipeline (and power grid) connecting Iran directly with China via Afghanistan. This deal already is seen as "dispensing with Big Oil." (See, below quote from Asia Times.) When China finally gets into Afghanistan, that will be the capstone in an already existing huge integrated gas (as well as an integrated electrical power grid) connecting all of Central Asia, including Iran, with China.
Excerpted for review purposes from Asia Times Online (8 January 2010)
'Russia, China, Iran redraw energy map' (by M K Bhadrakumar)
The inauguration of the Dauletabad-Sarakhs-Khangiran pipeline on Wednesday connecting Iran's northern Caspian region with Turkmenistan's vast gas field may go unnoticed amid the Western media cacophony that it is "apocalypse now" for the Islamic regime in Tehran.
The event sends strong messages for regional security. Within the space of three weeks, Turkmenistan has committed its entire gas exports to China, Russia and Iran. It has no urgent need of the pipelines that the United States and the European Union have been advancing. ....
The 182-kilometer Turkmen-Iranian pipeline starts modestly with the pumping of 8 billion cubic meters (bcm) of Turkmen gas. But its annual capacity is 20bcm, and that would meet the energy requirements of Iran's Caspian region and enable Tehran to free its own gas production in the southern fields for export. The mutual interest is perfect: Ashgabat gets an assured market next door; northern Iran can consume without fear of winter shortages; Tehran can generate more surplus for exports; Turkmenistan can seek transportation routes to the world market via Iran; and Iran can aspire to take advantage of its excellent geographical location as a hub for the Turkmen exports.
We are witnessing a new pattern of energy cooperation at the regional level that dispenses with Big Oil. Russia traditionally takes the lead. China and Iran follow the example. Russia, Iran and Turkmenistan hold respectively the world's largest, second-largest and fourth-largest gas reserves. And China will be consumer par excellence in this century. The matter is of profound consequence to the US global strategy.
Sun Tzu is often paraphrased as advising that the best victory is without firing a single shot (or dropping a single bomb). E.g., Paul Chappell (West Point graduate) cites to Sun Tsu, as follows:
The most powerful thing, truly, is to win a war without firing a single shot. Sun Tzu once said, “winning a hundred victories in a hundred battles is not the pinnacle of excellence; defeating your enemy without bloodshed is the pinnacle of excellence.”
Another translation puts it this way: "For to win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the acme of skill." ----------------- Sun Tzu: Art of War, Chapter 3, translation from en.wikiquote.org/wiki/Sun_Tzu
This Sun Tzu insight was famously illustrated in the non-fight on the boat out to the island in the Bruce Lee classic, 'Enter the Dragon', when Lee makes a fool out of a minor character who bullies a member of the boat's crew.
Other gems of wisdom from Sun Tzu that could serve the Pentagon and the American public well to study --
"It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle." (Sun Tzu, ibid.)
"What is essential in war is victory, not prolonged operations." (Ibid., Chapter 2)
"In the practical art of war, the best thing of all is to take the enemy's country whole and intact; to shatter and destroy it is not so good." (Ibid., Chapter 3)
Some portions of the U.S. military have deeply considered the truths of the Sun Tzu philosophy. For the most part, however, we are stuck in the doctrine of air power, with its corollary doctrine of MAD. Inanely, much of our political leadership still believes that our primary 'potential adversary' is the Soviet Union ... and that China poses no strategic-military threat whatsoever, since the Communist Party has gone capitalist.
It's pretty clear the Chinese are nationalistic, yet Academia welcomes foreign nationals into sensitive research labs with almost no security and background checks pop up fraud of credentials in a huge percentage of foreign nationals.
While MNCs refuse to recognize loyalty to a nation, other countries sure as hell are.
That said, this overview is on cybersecurity, they don't need to hire anyone, they are breaking into networks, putting in malware into chips, components (something we've railed about for years, beyond stupid to offshore outsource HW/firmware manufacturing overseas on sensitive COTS)....
Point is they are just simply breaking into networks and I must say, on this site, just fighting good old fashioned spam and attacks sometimes comes down to chasing down one IP address is one log, from thousands of entries and putting an absolute top level block. In other words, tools available to systems to block out and identify hacking attempts to me are still very crude.
That said, this report to explain it better, is saying Chinese hackers are targeting say the CTO of security at Fortune 500 corporation x. They fire off emails that look like they came from internal, or are directly related to business. The link or embedded info in the email loads up malware, bots, to search through the internal documents, servers and extracts out sensitive information, designs, code, firmware. Or puts a keystroke logger or a remote desktop image capture and so on to capture designs that have taken years and years to create.
Which also shows not only do these corporations not realize the value of their U.S. engineers, designers, they also do not seem to realize, beyond patent war games, the value of their own intellectual property. They should know, better than anyone, if someone dominates the market with a "stolen" design, the damage is done and profits lost vastly outweigh whatever compensation a court would order later.
Come on, this was so predictable as to be laughable that anyone in the world is shocked. Of course US companies and the government are "shocked, shocked I tell you."
Hmmm, let me see, let them move all their R & D and manufacturing facilities overseas in countries that had no particular allegiance to the US ever (and in some cases fought us - e.g., Vietnam, PRC in Korea, etc.). And for the operations that remain in the US, let them bring in millions of H-1B visa applicants from India, the PRC, and other countries that, again, owe us no allegiance ever. Meanwhile, let them claim that they simply cannot find any qualified Americans who actually owe their allegiance to America who can fill these roles (even thought there are literally millions of Americans who have PhDs, BSs, are veterans, engineers that literally built rockets, missile defense systems, supercomputers, etc., etc.). And then, let them spread their lies in the media so that the unemployed Americans can be deemed "idiots," "lazy," etc. Finally, when the secrets are stolen and the US has just wasted raw talents and billions of dollars and years of research weakening our nation while multinationals and our enemies got richer and stronger, they can blame everyone else but ridiculous short-sighted MNC policies and the policies of their puppets in state capitals and DC. Is that what we're talking about here? Yeah, no one could have seen that coming - except for those people with an IQ over 80 (but that would exclude corporate boardrooms and politicians). This country was sold out - it's that simple. The average, intelligent, hardworking American owes these folks and their minions nothing ever again.
are the techniques, literally they are targeting individuals, more like classic fraud coming out of Nigeria, but with low technology, i.e. phishing emails that look like, sound like something one would see every day associated with their work.
I think Clarke is probably right about this and the real story is this has been going on, as you point out, for 25 years yet administration after administration does nothing. While Iran, N. Korea make the news as the current global threats, cyber threats clearly are doing the most damage to the U.S.
And if the espionage isn't enough, the Chinese have infiltrated our infrastructure with malware: power plants, water works, dams, etc. They won't have to declare war on us. They're already winning, and they could cripple us by pushing a button.
Clarke is likely right about this, just as he was right about nearly everything. (I have to admit shamefully that I doubted him until raw facts proved him right....)
China doesn't do Pearl Harbors. Never did. China always overwhelms by sheer numbers, and they were already overwhelming our industries and research facilities 25 years ago. This is very old news.
You hit the nail on the head on what the Fed should be doing. I imagine breaking up TBTF, reinstating Glass-Steagall would have more effect on jobs, hires than anything. If banks were taken off of their "free money", which they just sit on, forced to put it back in the domestic economy.
Fantastic summary of the status of Ben (who I think is miles above Greenspan).
And certainly no Volcker. Both of these chairmen kept an iron grip on the board and the FOMC. Most votes were unanimous and it would have been considered traitorous for a majority to vote against the Chairman. They were also powerful public figures and certainly represented the face of the Federal Reserve to the public. The institution throughout their time held a mystique, and the Fed Chairman was often described in the press as the second most powerful man in the US behind the President.
Bernanke has a much harder public relations task in this depression. Since he has chosen policy actions that stretch the mandate and traditional authority of the Fed - he has even encroached on Congressional prerogatives by lending vast amounts of money as if he were the Treasury - he is on the defensive in front of Congress and within his own board. Unprecedented actions by the Fed evoke unprecedented criticisms as well. On the other hand, Congress can't complain if the Fed is buying up over 50% of the debt they have issued, allowing them to issue more.
That's why Bernanke has gone on his public relations offensive, also unprecedented. Like the Pope or the Queen of England, the Fed Chairman needs to be somewhat aloof if the mystique is going to continue. You don't want the public to get too familiar with the institution, and the Fed certainly doesn't want too much light shown on their operations. The Atlantic monthly article that describes Bernanke as The Hero who saved the global financial system is just the sort of publicity he wants. It washes away all the anxiety over his decisions, some of which may have been technically a violation of the Fed charter.
The problem is that a significant number of analysts, specialists and various experts on the Fed aren't buying the hagiography. We already went through that with Bob Woodward's book on Greenspan, The Maestro, and people just aren't going to be fooled once again. The Fed has more power than ever before, but wants the same old lack of accountability for its actions. Bernanke has never owned up to Greenspan's failures in blowing bubbles (of course Bernanke is doing the same thing himself), and he has never admitted that the Fed was a failure in its regulatory oversight role. For that matter - it still is. It's deliberately ignoring the disaster brewing with student loans, the terrible credit standards being used in the auto loan business, and the hidden losses on bank balance sheets (with HELOCs for example). It's as if the Fed has no sense as to how credit risk in a bank should be managed and controlled. No one has learned anything from the 00's failures.
This is certainly odd coming from an institution that now has much more regulatory powers under Dodd-Frank than ever before. It was the big winner in the reallocation of regulatory authorities among the Fed, OCC, CFTC, SEC, etc. What Bernanke should be doing is addressing the problems caused by TBTF banks. That would require the Fed to reorient its policy and deliberations to focus almost entirely on the economy and the welfare of ordinary people,.recognizing that the TBTF banks are a detriment to the economy, and not the drivers of the economy as they are today. The Fed should even voluntarily give up its oversight duties to some competent third party not captive of the finance industry (in other words, not the OCC). The TBTF banks need to be broken up into regional players, with investment banking activities stripped away as we had under Glass-Steagall. Volcker's right in that respect - if the TBTF banks want to speculate (and this includes Goldman and Morgan which are still structured as investment/brokerage firms despite their bank status) - then such speculation should be done in entities with no access to the Fed and no ability to count on the taxpayers to bail them out. That is the only way discipline is going to return to the trading world. Then the Fed can go back to being stewards for the economy, and not first and foremost for the banking system.
Forbes has a map of dominant media. Generally I never quote Forbes, but this shows which media dominates which region.
Consider these open threads. I notice people are commenting on the site's Facebook page. We have Facebook going as a courtesy, some people live on Facebook and want to stay. The problem is people are commenting on Facebook and not the main site.
I'll never go to Facebook because I'm way too busy with the EP itself, writing and so on.
I fear the material is so "heavy" most are just reading, so this is a reminder, any of the series are open threads. You can put whatever's on your mind, it doesn't have to have a calculation in it! ;)
"This looks like a research project. I have a hard time believing MBSes trump good old fashioned stable job, income for residential anything. If you find someone who has done some analysis on derivatives pimping vs. actual real demand, please post up a link or something. I'll keep this in mind to see what I can number crunch up but getting to classes of MBSes, I'm not sure where to go digging for that to be honest." -- Robert Oak
Gorsh! Me come up with research? I've just been trying to read the minds of Fed governors -- like Tarullo, when he talks about increasing aggregate demand. Sure, "aggregate demand" is a great rationale for some Fed actions, but it's looking more and more like the concept is based on pre-globalization economic theory and experience. Yeah, that's a research project, alright!
I suppose that, based on Numerian's observation about 'vulture funds', somebody out there is being paid the big bucks to sort our asset classes of MBSes. Like Numerian says, the TBTF banks don't have enough experts to figure it out!
I give up on trying to figure out how derivative pimping results in a construction boom or even in an increase in aggregate demand ... instead, I would say that I agree with Rankin that aggregate demand can do little without consideration of the need for redistribution of income across economic groups. But, of course, that's a taboo subject in today's oxygen-starved political environment.
It's astounding that there are currently only four commissioners (members of the Board of Governors) -- Bernanke, Yellen, Tarullo, Raskin. Three (of seven) seats are vacant and will remain so at least until 2013. Undoubtedly, the political point of this is that whereas the FOMC would otherwise consist of 12 members, it currently consists of 9. The result is 5-4 control, where the 5 are appointed by shareholders (banks) and the public members (from the Board of Governors) form a minority. (It appears to be an objective of the Republican Party to assure that bank-appointed members dominate the FOMC.) Thus, the Fed is not unlike the SCOTUS these days.
Why all the talk about Bernanke as though he has ever been any kind of king of the Fed in the way that the Chairs of old -- Greenspan, for example -- were? Bernanke is like Obama: what he has had going for him is that his opponents don't have a clue any more than he does, and they can't agree among themselves on much of anything.
Is this situation ever discussed in mainstream media or even in the financial news media -- even on the boring Sunday afternoon shows? I doubt it. As far as John Q. Public is concerned, FED = BERNANKE.
Of course, what is obvious to every thinking person is that something more is needed than Fed policy or Fed action -- changes much more fundamental in the way of monetary/financial/economic/tax policies of the USA. Until many more Americans get to the point of recognizing the need for fundamental reform legislation, the spotlight on Bernanke is really counter-productive -- a distraction. Ron Paul and his talk about ending the Fed -- that's just the tip of an iceberg. The iceberg is the global banking scam and the increasingly contradictory realities of the WTO world-system. Meanwhile, the Titanic drives on through the waves!
The point is well made that empirical evidence of any correlation linking new construction activity to MBS values/yield almost certainly doesn't exist. That's just barking up the wrong tree.
On the other hand, when Numerian points to 'vulture funds', there is maybe a perverse kind of evidence there. The 'vulture funds' get into the picture by way of the 'interest-starved' environment and other influences, such as those pointed out by Frank T, in comment titled 'Lenders of Last Resort' (at the 'Magic Money' article) about how liquidity is stalled by insistence of banks on fees and interest charges. Now Numerian fills in more details in comment above 'There is a feeble attempt to revive the MBS market'. From Numerian's comment --
The Fed and the TBTF banks have been able to issue asset-backed securities for some classes, such as credit cards. In an interest-rate starved market, some investors have been querying what the yield might be on new issues of mortgage-backed securities. I don't see, though, how the industry is going to get around overall investor reluctance to participate in a market that was so obviously flawed legally and structurally, against the interest of the investors. It's hard to see banks, for example, putting in the effort to register thousands of mortgages with county recorders of deeds every time one of these securities is resold in a secondary market. The banks barely have enough staff, and certainly very few experts, to review the existing backlog of distressed securities.
What does seem to be happening, though, is vulture funds are scouting out some of these distressed securities in the hopes of buying them cheaply.
This is a terrible thing to say, but if vulture funds are looking for MBSes to buy on the cheap, seeing opportunities created by inefficiencies of banks .... is that like a positive sign that residential values have, after all, bottomed out?
I added a brand new clip from Funnie or Die, at the top, on the Goldman Sachs Muppets reference.
It goes with the other muppets and is screamingly funny! Remember, when we first covered this story, we used muppets as the image placeholder, illustration.
Folks, the SMC and FMN are basically just for regulars. These are collections of funnies but beyond "editor's choice" and the snark always created at the top, none of this is original material. Both are also a series, just putting together all of the screamingly funny related to economics since finding people with a sense of humor on econ is hard to come by! That's unlike the original articles which go out to Google news and are original (often) research.
I'm leaving the opening sentence but by monthly percentages we see spending increase much more than income and it's true for all of 2011. That's why the dramatic opener to sum up the situation.
We overviewed China buying up oil futures, oil supply earlier but haven't seen how much of a factor they are in this run up. My impression is this run is speculators (at least 15%, but I suspect much higher).
This overview is from 2009, China's quest for oil.
I thought there was a huge oil pipeline scheduled to run through Afghanistan.
Good point from 'pelham' that the current Great Recession, for example, shouldn't be compared to the 2011 tsunami and Fukushima Daiishi events -- but 'pelham' begs several questions. Namely, the great question of economic cycles, the question of sustainability of the WTO 'final solution' of the human problem, the question of resource depletion coupled with unsustainable population growth.
Japan has had a 'white swan' long-term economic crisis (or decline) for two decades now, and within that decline Japan has experienced a Black Swan. I don't think that Numerian missed the distinction between predictable and Black Swan crises -- rather was asking how USA might do if we happen to experience some Black Swan event such as climate-related crop failure, perhaps in the middle of an approaching or continuing 'White Swan' economic decline (related to weakening of the USD).
IMO, comparisons of Japan and USA are fraught with problems, beginning with enormous cultural differences. The economies of both nations have been impacted by China's export successes in the context of the rise of global neo-merantilism, but in very different ways. Japan pioneered neo-mercantilist policy, preparing the way for China, whereas USA ... well ... what can we say? USA is pioneering the political economics of national dissolution by any other name?
While Japan's tsunami qualifies as a black swan, economic crises in general are more like white swans. They come swimming gracefully along with remarkable regularity, with only the severity and precise timing a smidgen unpredictable. In other words, crisis isn't a bug, it's a feature.
My impression is that MNCs have been making a killing since the 1960s or earlier through aggressive international labor arbitrage. If they ever did any thinking about this stuff, there was no thinking involved ... more like just 'Keep on doing that highly profitable thing, it'll never stop'. It's the same as when a fishery is fished out, when the water table runs dry, when Peak Oil arrives, when the clear-cut has left nothing more to cut ...
And even now, following EP, what do we see all the time? MNCs hoping for yet greater profits through labor arbitrage.
Humans are just like any other resource in today's world of finance capitalism -- expendable. And the way to increase corporate profits and get a big bonus is .... exploit that resource!
Here's a clue for you: "This country borders both Iran and China." Doo, doo, doo, doo. "Ooooo, oooo, Alex, I've got it ... uhh ... What is Afghanistan?"
Back when the Afganistan thing first started up (2001-2002), we heard about some supposed North-South pipeline through Afghanistan. That was code for the real deal, which was an East-West pipeline (and power grid) connecting Iran directly with China via Afghanistan. This deal already is seen as "dispensing with Big Oil." (See, below quote from Asia Times.) When China finally gets into Afghanistan, that will be the capstone in an already existing huge integrated gas (as well as an integrated electrical power grid) connecting all of Central Asia, including Iran, with China.
Excerpted for review purposes from Asia Times Online (8 January 2010)
Sun Tzu is often paraphrased as advising that the best victory is without firing a single shot (or dropping a single bomb). E.g., Paul Chappell (West Point graduate) cites to Sun Tsu, as follows:
Another translation puts it this way: "For to win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the acme of skill." ----------------- Sun Tzu: Art of War, Chapter 3, translation from
en.wikiquote.org/wiki/Sun_Tzu
This Sun Tzu insight was famously illustrated in the non-fight on the boat out to the island in the Bruce Lee classic, 'Enter the Dragon', when Lee makes a fool out of a minor character who bullies a member of the boat's crew.
Other gems of wisdom from Sun Tzu that could serve the Pentagon and the American public well to study --
"It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle." (Sun Tzu, ibid.)
"What is essential in war is victory, not prolonged operations." (Ibid., Chapter 2)
"In the practical art of war, the best thing of all is to take the enemy's country whole and intact; to shatter and destroy it is not so good." (Ibid., Chapter 3)
Some portions of the U.S. military have deeply considered the truths of the Sun Tzu philosophy. For the most part, however, we are stuck in the doctrine of air power, with its corollary doctrine of MAD. Inanely, much of our political leadership still believes that our primary 'potential adversary' is the Soviet Union ... and that China poses no strategic-military threat whatsoever, since the Communist Party has gone capitalist.
It's pretty clear the Chinese are nationalistic, yet Academia welcomes foreign nationals into sensitive research labs with almost no security and background checks pop up fraud of credentials in a huge percentage of foreign nationals.
While MNCs refuse to recognize loyalty to a nation, other countries sure as hell are.
That said, this overview is on cybersecurity, they don't need to hire anyone, they are breaking into networks, putting in malware into chips, components (something we've railed about for years, beyond stupid to offshore outsource HW/firmware manufacturing overseas on sensitive COTS)....
Point is they are just simply breaking into networks and I must say, on this site, just fighting good old fashioned spam and attacks sometimes comes down to chasing down one IP address is one log, from thousands of entries and putting an absolute top level block. In other words, tools available to systems to block out and identify hacking attempts to me are still very crude.
That said, this report to explain it better, is saying Chinese hackers are targeting say the CTO of security at Fortune 500 corporation x. They fire off emails that look like they came from internal, or are directly related to business. The link or embedded info in the email loads up malware, bots, to search through the internal documents, servers and extracts out sensitive information, designs, code, firmware. Or puts a keystroke logger or a remote desktop image capture and so on to capture designs that have taken years and years to create.
Which also shows not only do these corporations not realize the value of their U.S. engineers, designers, they also do not seem to realize, beyond patent war games, the value of their own intellectual property. They should know, better than anyone, if someone dominates the market with a "stolen" design, the damage is done and profits lost vastly outweigh whatever compensation a court would order later.
Come on, this was so predictable as to be laughable that anyone in the world is shocked. Of course US companies and the government are "shocked, shocked I tell you."
Hmmm, let me see, let them move all their R & D and manufacturing facilities overseas in countries that had no particular allegiance to the US ever (and in some cases fought us - e.g., Vietnam, PRC in Korea, etc.). And for the operations that remain in the US, let them bring in millions of H-1B visa applicants from India, the PRC, and other countries that, again, owe us no allegiance ever. Meanwhile, let them claim that they simply cannot find any qualified Americans who actually owe their allegiance to America who can fill these roles (even thought there are literally millions of Americans who have PhDs, BSs, are veterans, engineers that literally built rockets, missile defense systems, supercomputers, etc., etc.). And then, let them spread their lies in the media so that the unemployed Americans can be deemed "idiots," "lazy," etc. Finally, when the secrets are stolen and the US has just wasted raw talents and billions of dollars and years of research weakening our nation while multinationals and our enemies got richer and stronger, they can blame everyone else but ridiculous short-sighted MNC policies and the policies of their puppets in state capitals and DC. Is that what we're talking about here? Yeah, no one could have seen that coming - except for those people with an IQ over 80 (but that would exclude corporate boardrooms and politicians). This country was sold out - it's that simple. The average, intelligent, hardworking American owes these folks and their minions nothing ever again.
are the techniques, literally they are targeting individuals, more like classic fraud coming out of Nigeria, but with low technology, i.e. phishing emails that look like, sound like something one would see every day associated with their work.
I think Clarke is probably right about this and the real story is this has been going on, as you point out, for 25 years yet administration after administration does nothing. While Iran, N. Korea make the news as the current global threats, cyber threats clearly are doing the most damage to the U.S.
And if the espionage isn't enough, the Chinese have infiltrated our infrastructure with malware: power plants, water works, dams, etc. They won't have to declare war on us. They're already winning, and they could cripple us by pushing a button.
Clarke is likely right about this, just as he was right about nearly everything. (I have to admit shamefully that I doubted him until raw facts proved him right....)
China doesn't do Pearl Harbors. Never did. China always overwhelms by sheer numbers, and they were already overwhelming our industries and research facilities 25 years ago. This is very old news.
You hit the nail on the head on what the Fed should be doing. I imagine breaking up TBTF, reinstating Glass-Steagall would have more effect on jobs, hires than anything. If banks were taken off of their "free money", which they just sit on, forced to put it back in the domestic economy.
Fantastic summary of the status of Ben (who I think is miles above Greenspan).
And certainly no Volcker. Both of these chairmen kept an iron grip on the board and the FOMC. Most votes were unanimous and it would have been considered traitorous for a majority to vote against the Chairman. They were also powerful public figures and certainly represented the face of the Federal Reserve to the public. The institution throughout their time held a mystique, and the Fed Chairman was often described in the press as the second most powerful man in the US behind the President.
Bernanke has a much harder public relations task in this depression. Since he has chosen policy actions that stretch the mandate and traditional authority of the Fed - he has even encroached on Congressional prerogatives by lending vast amounts of money as if he were the Treasury - he is on the defensive in front of Congress and within his own board. Unprecedented actions by the Fed evoke unprecedented criticisms as well. On the other hand, Congress can't complain if the Fed is buying up over 50% of the debt they have issued, allowing them to issue more.
That's why Bernanke has gone on his public relations offensive, also unprecedented. Like the Pope or the Queen of England, the Fed Chairman needs to be somewhat aloof if the mystique is going to continue. You don't want the public to get too familiar with the institution, and the Fed certainly doesn't want too much light shown on their operations. The Atlantic monthly article that describes Bernanke as The Hero who saved the global financial system is just the sort of publicity he wants. It washes away all the anxiety over his decisions, some of which may have been technically a violation of the Fed charter.
The problem is that a significant number of analysts, specialists and various experts on the Fed aren't buying the hagiography. We already went through that with Bob Woodward's book on Greenspan, The Maestro, and people just aren't going to be fooled once again. The Fed has more power than ever before, but wants the same old lack of accountability for its actions. Bernanke has never owned up to Greenspan's failures in blowing bubbles (of course Bernanke is doing the same thing himself), and he has never admitted that the Fed was a failure in its regulatory oversight role. For that matter - it still is. It's deliberately ignoring the disaster brewing with student loans, the terrible credit standards being used in the auto loan business, and the hidden losses on bank balance sheets (with HELOCs for example). It's as if the Fed has no sense as to how credit risk in a bank should be managed and controlled. No one has learned anything from the 00's failures.
This is certainly odd coming from an institution that now has much more regulatory powers under Dodd-Frank than ever before. It was the big winner in the reallocation of regulatory authorities among the Fed, OCC, CFTC, SEC, etc. What Bernanke should be doing is addressing the problems caused by TBTF banks. That would require the Fed to reorient its policy and deliberations to focus almost entirely on the economy and the welfare of ordinary people,.recognizing that the TBTF banks are a detriment to the economy, and not the drivers of the economy as they are today. The Fed should even voluntarily give up its oversight duties to some competent third party not captive of the finance industry (in other words, not the OCC). The TBTF banks need to be broken up into regional players, with investment banking activities stripped away as we had under Glass-Steagall. Volcker's right in that respect - if the TBTF banks want to speculate (and this includes Goldman and Morgan which are still structured as investment/brokerage firms despite their bank status) - then such speculation should be done in entities with no access to the Fed and no ability to count on the taxpayers to bail them out. That is the only way discipline is going to return to the trading world. Then the Fed can go back to being stewards for the economy, and not first and foremost for the banking system.
Forbes has a map of dominant media. Generally I never quote Forbes, but this shows which media dominates which region.
Consider these open threads. I notice people are commenting on the site's Facebook page. We have Facebook going as a courtesy, some people live on Facebook and want to stay. The problem is people are commenting on Facebook and not the main site.
I'll never go to Facebook because I'm way too busy with the EP itself, writing and so on.
I fear the material is so "heavy" most are just reading, so this is a reminder, any of the series are open threads. You can put whatever's on your mind, it doesn't have to have a calculation in it! ;)
"This looks like a research project. I have a hard time believing MBSes trump good old fashioned stable job, income for residential anything. If you find someone who has done some analysis on derivatives pimping vs. actual real demand, please post up a link or something. I'll keep this in mind to see what I can number crunch up but getting to classes of MBSes, I'm not sure where to go digging for that to be honest." -- Robert Oak
Gorsh! Me come up with research? I've just been trying to read the minds of Fed governors -- like Tarullo, when he talks about increasing aggregate demand. Sure, "aggregate demand" is a great rationale for some Fed actions, but it's looking more and more like the concept is based on pre-globalization economic theory and experience. Yeah, that's a research project, alright!
I suppose that, based on Numerian's observation about 'vulture funds', somebody out there is being paid the big bucks to sort our asset classes of MBSes. Like Numerian says, the TBTF banks don't have enough experts to figure it out!
All I can come up with is the Sarah Bloom Rankin video linked here at EP back last July (FMN, 1 July 2011) -- Friday Movie Night - Income Inequality Negatively Impacts Economic Growth
I give up on trying to figure out how derivative pimping results in a construction boom or even in an increase in aggregate demand ... instead, I would say that I agree with Rankin that aggregate demand can do little without consideration of the need for redistribution of income across economic groups. But, of course, that's a taboo subject in today's oxygen-starved political environment.
It's astounding that there are currently only four commissioners (members of the Board of Governors) -- Bernanke, Yellen, Tarullo, Raskin. Three (of seven) seats are vacant and will remain so at least until 2013. Undoubtedly, the political point of this is that whereas the FOMC would otherwise consist of 12 members, it currently consists of 9. The result is 5-4 control, where the 5 are appointed by shareholders (banks) and the public members (from the Board of Governors) form a minority. (It appears to be an objective of the Republican Party to assure that bank-appointed members dominate the FOMC.) Thus, the Fed is not unlike the SCOTUS these days.
Why all the talk about Bernanke as though he has ever been any kind of king of the Fed in the way that the Chairs of old -- Greenspan, for example -- were? Bernanke is like Obama: what he has had going for him is that his opponents don't have a clue any more than he does, and they can't agree among themselves on much of anything.
Is this situation ever discussed in mainstream media or even in the financial news media -- even on the boring Sunday afternoon shows? I doubt it. As far as John Q. Public is concerned, FED = BERNANKE.
Of course, what is obvious to every thinking person is that something more is needed than Fed policy or Fed action -- changes much more fundamental in the way of monetary/financial/economic/tax policies of the USA. Until many more Americans get to the point of recognizing the need for fundamental reform legislation, the spotlight on Bernanke is really counter-productive -- a distraction. Ron Paul and his talk about ending the Fed -- that's just the tip of an iceberg. The iceberg is the global banking scam and the increasingly contradictory realities of the WTO world-system. Meanwhile, the Titanic drives on through the waves!
The point is well made that empirical evidence of any correlation linking new construction activity to MBS values/yield almost certainly doesn't exist. That's just barking up the wrong tree.
On the other hand, when Numerian points to 'vulture funds', there is maybe a perverse kind of evidence there. The 'vulture funds' get into the picture by way of the 'interest-starved' environment and other influences, such as those pointed out by Frank T, in comment titled 'Lenders of Last Resort' (at the 'Magic Money' article) about how liquidity is stalled by insistence of banks on fees and interest charges. Now Numerian fills in more details in comment above 'There is a feeble attempt to revive the MBS market'. From Numerian's comment --
This is a terrible thing to say, but if vulture funds are looking for MBSes to buy on the cheap, seeing opportunities created by inefficiencies of banks .... is that like a positive sign that residential values have, after all, bottomed out?
I added a brand new clip from Funnie or Die, at the top, on the Goldman Sachs Muppets reference.
It goes with the other muppets and is screamingly funny! Remember, when we first covered this story, we used muppets as the image placeholder, illustration.
Folks, the SMC and FMN are basically just for regulars. These are collections of funnies but beyond "editor's choice" and the snark always created at the top, none of this is original material. Both are also a series, just putting together all of the screamingly funny related to economics since finding people with a sense of humor on econ is hard to come by! That's unlike the original articles which go out to Google news and are original (often) research.
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