TNR Blames And Credits JK Galbraith For Contemporary Financier Fascism

It would be nice if liberals could make up their mind.

The New Republic's Tim Noah here traces TARP, Dodd-Frank and ultimately the general state of regulatory capture (Stigler) of the government by the banks to John Kenneth Galbraith's vision in his 1967 The New Industrial State:

Galbraith (who died in 2006) argued that big U.S. corporations had become immune to competition. Any effort to break them up into smaller companies would neither succeed nor—given the complex challenges of a modern economy—be especially desirable. Better to keep them in harness through a partnership with government. “Planning,” Galbraith wrote (in a sentence you could probably get arrested for writing today), “must replace the market.”

Galbraith was writing about manufacturing giants like General Motors and U.S. Steel. These seemed indestructible at the time, but of course they would soon prove all too susceptible to competition from abroad. Still, Galbraith’s vision of the regulatory state comes pretty close to describing today’s relationship between the federal government and a different oligopoly: the Big Six megabanks. ...

When the 2008 financial crisis hit, the feds went into Galbraithian planning mode. They bailed out the banks through the Troubled Asset Relief Program (TARP), arranged mergers, and, through the Dodd-Frank bill, required big banks to prepare “living wills” showing how they would dismantle themselves in orderly fashion should the need arise. ...

Conservatives were wrong to oppose the government’s bank rescue . . ..

For conservatives who feel queasy advocating the breakup of private enterprises, MIT’s Johnson offers this consolation: Remember George Stigler. Stigler, a conservative economist who died in 1991, won the Nobel for a theory that basically said Galbraith’s partnership approach didn’t work because of “regulatory capture,” i.e., the various ways corporations tame their minders—for example, by maintaining a revolving door between industry and government. Rather than try to control powerful corporations, Stigler thought government should use antitrust law to break them up and let competition rein them in.

What's wrong with this analysis is that banking is not a private enterprise and hasn't been since 1913. The then new partnership of banking with government in 1913 failed in less than 20 years, requiring Glass-Steagall in 1933, which was reactionary liberalism at work. And what we have just witnessed is an instant replay of that debacle, only in faster motion. The Gramm-Leach-Bliley Act of 1999 overturning Glass-Steagall took only 9 years to blow up. But unlike Glass-Steagall, the grotesque of interventions in the wake of this latest panic has done nothing to demarcate clearly the public vs. the private in banking, and consequently keeps the public, and the country, at risk while insuring advantage to those closest to the printing presses at the Treasury. Money goes to money, as they say out in the sticks.

It's not much solace that liberalism's fingerprints have been and continue to be all over the inception and development of financier fascism in the United States. There don't seem to be any conservatives smart enough to understand the advantage it presents to them, and to the country. Or maybe it's just that they've been captured, too.

Sarah Palin Remains A Vulgarian

At CPAC, reported here:

Palin also regaled listeners with a look into Christmas at the Palins. (Palin is set to pen a holiday book later this year.) She said her husband, Todd, got her a metal gun rack for the back of a four-wheeler, and she gave him a rifle. “He’s got the rifle, I got the rack,” she said.

NR called the speech "sprawling", as in "she lay sprawled on the bed, legs spread out".

Republicans, Esp. Mitt Romney, Still Don't Understand There Is No "End" In Politics

Here's Mitt Romney at CPAC, saying "in the end" we'll win:

"Each of us in own way is going to have to step up and meet our responsibility. I'm sorry I won't be your President, but it will be [as] your coworker and I [will] work shoulder-to-shoulder along side you. You see in the end we'll win. We will win for the same reasons we have won before . . .." 

Oh really. If we won before then why do we need to win again? We must have lost somewhere along the way if we have to win again. This is the mistaken thinking of politicians and the people who follow them, that political victories are somehow permanent, especially if we get the right people in there, meaning "us" as opposed to "them".

What it betrays, depending on the source, could be any number of things including narcissism and hubris, but perhaps in this case we see an ideological frame of mind as opposed to a conservative one, the kind of mind which imagines, or at least sells, a better future which unfortunately never arrives because it cannot arrive, due to the minor detail that the future like the present will be populated by the same flawed individuals as ourselves.

Marxists like Obama think that way, and so do too many religious people. And too many Republicans to be legitimately called conservatives, which is a main reason Romney did not appeal as a clear alternative.

CPAC clapped anyway.

Inflation In The 1970s, Illustrated

In the 1950s Woody Hayes taught the football offense known as "three yards and a cloud of dust".

By 1973 my line coach, Fritz Goettel, who passed away in July 1993, insisted on five.

The Banks Rule America And Blaspheme Against Capitalism

In "Bankistan Vanquishes America" here Barry Ritholtz rages against the criminal enterprise under which we live, with a rash of supporting links. Under Clinton, Bush and Obama, its grip has only gotten tighter.

From the conclusion:

On the other side lay the bank apologists, corrupted politicians, and crony capitalists. They advocate the Big Lie of the financial crisis. They choose to ignore the facts and data that disprove their narrative. They continue to push the lies that the bailouts were a good investment. (They weren’t). They work against the Bipartisan consensus that the giant banks should be broken up. They ignore the many former bank CEOs who call for the break up of “Too Big to Fail” banks. They mandated that GSEs were banned from Lobbying, but they made sure that the big banks retained their influence peddling and hold on Washington DC.

They no longer represent the voters of their districts, but instead are the elected representatives of Bankistan.

And unless we do something — and soon — they will vanquish America.

Things haven't changed much since 1819 when the revolutionary paper of fictitious capital resulted in fraudulent bankruptcies on the backs of real capital, real property and commerce (think of today's zero interest rates returning nothing to retirees, collapse in the value of housing long purchased honestly, and moribund GDP and zero velocity money punishing millions with unemployment):

The enormous abuses of the banking system are not only prostrating our commerce, but producing revolution of property, which without more wisdom than we possess, will be much greater than were produced by the revolutionary paper. That too had the merit of purchasing our liberties, while the present trash has only furnished aliment to usurers and swindlers. The banks themselves were doing business on capitals, three fourths of which were fictitious: and, to extend their profit they furnished fictitious capital to every man, who having nothing and disliking the labours of the plough, chose rather to call himself a merchant to set up a house of 5000. D. a year expence, to dash into every species of mercantile gambling, and if that ended as gambling generally does, a fraudulent bankruptcy was an ultimate resource of retirement and competence. This fictitious capital probably of 100. millions of Dollars, is now to be lost, & to fall on some body; it must take on those who have property to meet it, & probably on the less cautious part, who, not aware of the impending catastrophe have suffered themselves to contract, or to be in debt, and must now sacrifice their property of a value many times the amount of their debt. We have been truly sowing the wind, and are now reaping the whirlwind. If the present crisis should end in the annihilation of these pennyless & ephemeral interlopers only, and reduce our commerce to the measure of our own wants and surplus productions, it will be a benefit in the end. But how to effect this, and give time to real capital, and the holders of real property, to back out of their entanglements by degrees requires more knolege of Political economy than we possess. I believe it might be done, but I despair of it’s being done. The eyes of our citizens are not yet sufficiently open to the true cause of our distresses. They ascribe them to every thing but their true cause, the banking system; a system, which, if it could do good in any form, is yet so certain of leading to abuse, as to be utterly incompatible with the public safety and prosperity. At present all is confusion, uncertainty and panic.

-- Thomas Jefferson

No President In Post War Has Made More People Suffer Jobless Longer Than Obama

One Stupid Thing That Really Is George Bush's Fault

Daylight saving time starting three weeks early:

The Energy Policy Act of 2005 (Pub.L. 109–58) is a bill passed by the United States Congress on July 29, 2005, and signed into law by President George W. Bush on August 8, 2005, at Sandia National Laboratories in Albuquerque, New Mexico. The act, described by proponents as an attempt to combat growing energy problems, changed US energy policy by providing tax incentives and loan guarantees for energy production of various types. ...

The bill amends the Uniform Time Act of 1966 by changing the start and end dates of daylight saving time, beginning in 2007. Clocks were set ahead one hour on the second Sunday of March (March 11, 2007) instead of on the first Sunday of April (April 1, 2007). Clocks were set back one hour on the first Sunday in November (November 4, 2007), rather than on the last Sunday of October (October 28, 2007).

Republican Sen. Rob Portman Of Ohio Flips On Same Sex Marriage

As reported by The Associated Press, here:

Portman said his views on gay marriage began changing in 2011 when his son, Will, then a freshman at Yale University, told his parents he was gay and that it wasn't a choice but "part of who he was." Portman said he and his wife, Jane, were very surprised but also supportive. ... Portman told reporters Thursday that his previous views on marriage were rooted in his Methodist faith.

Portman voted for DOMA in 1996 as representative from Ohio's 2nd Congressional District, and was elected to the Senate in 2010 with Tea Party support.

Portman's wife, who used to work for Democrat Tom Daschle, flipped to the Republican Party when Portman agreed to flip to the Methodist Church.

There's a whole lotta flippin' goin' on, especially toward the voters. If Sen. Portman had an integrity, he'd resign.

How The Mujahideen Fight Against Drones

How the Mujahideen fight against drones, according to The Associated Press, here:

1 – It is possible to know the intention and the mission of the drone by using the Russian-made “sky grabber” device to infiltrate the drone’s waves and the frequencies. The device is available in the market for $2,595 and the one who operates it should be a computer-know-how.

2 – Using devices that broadcast frequencies or pack of frequencies to disconnect the contacts and confuse the frequencies used to control the drone. The Mujahideen have had successful experiments using the Russian-made “Racal.”

3 – Spreading the reflective pieces of glass on a car or on the roof of the building.

4 – Placing a group of skilled snipers to hunt the drone, especially the reconnaissance ones because they fly low, about six kilometers or less.

5 – Jamming of and confusing of electronic communication using the ordinary water-lifting dynamo fitted with a 30-meter copper pole.

6 – Jamming of and confusing of electronic communication using old equipment and keeping them 24-hour running because of their strong frequencies and it is possible using simple ideas of deception of equipment to attract the electronic waves devices similar to that used by the Yugoslav army when they used the microwave (oven) in attracting and confusing the NATO missiles fitted with electromagnetic searching devices.

7 – Using general confusion methods and not to use permanent headquarters.

8 – Discovering the presence of a drone through well-placed reconnaissance networks and to warn all the formations to halt any movement in the area.

9 – To hide from being directly or indirectly spotted, especially at night.

10 – To hide under thick trees because they are the best cover against the planes.

11 – To stay in places unlit by the sun such as the shadows of the buildings or the trees.

12 – Maintain complete silence of all wireless contacts.

13 – Disembark of vehicles and keep away from them especially when being chased or during combat.

14 – To deceive the drone by entering places of multiple entrances and exits.

15 – Using underground shelters because the missiles fired by these planes are usually of the fragmented anti-personnel and not anti-buildings type.

16 – To avoid gathering in open areas and in urgent cases, use building of multiple doors or exits.

17 – Forming anti-spies groups to look for spies and agents.

18 – Formation of fake gatherings such as using dolls and statutes to be placed outside false ditches to mislead the enemy.

19 – When discovering that a drone is after a car, leave the car immediately and everyone should go in different direction because the planes are unable to get after everyone.

20 – Using natural barricades like forests and caves when there is an urgent need for training or gathering.

21 – In frequently targeted areas, use smoke as cover by burning tires.

22 – As for the leaders or those sought after, they should not use communications equipment because the enemy usually keeps a voice tag through which they can identify the speaking person and then locate him.



When The Drones Come After Us, Here's What We're Facing

The missile is about $70K a pop, and a little shorter than yours truly, and considerably thinner.

Michigan And Tennessee To Fly Armed Reaper Drones, Based Elsewhere

Michigan and Tennessee are not going to get C-130 cargo aircraft missions, but armed Reaper drone missions, according to a widely circulated AP story. The way the story is worded is alarming because it makes it seem that the traditional support functions of the bases are being transformed into offensive operations.

A Cadillac, Michigan, source here reproduces the story and mentions a munitions dump going in at Battle Creek in addition to the command and control facility to operate drones, but an mlive.com story here says the drones themselves will be based overseas. Nevertheless, it appears that the Battle Creek base is preparing for a future when there will be offensive drone launch, recovery and support:

"The base is also working toward ... the Launch and Recovery aspect of the RPA [remotely piloted aircraft], a regional munitions storage area, and a Cyber Command mission. "

It is said that the MQ-9 reaper has an effective range of almost 3,700 miles and can operate at up to 50,000 ft. and for as long as 42 hours straight.

Why has President Obama been reluctant to disavow the use of drones on American soil? Maybe it's because that's what he's been planning for all along.

Rush Limbaugh, Shill For Florida Sugar?

What a joke. Rush Limbaugh just accused the regime of trying to interfere in the "free market" in sugar, to drive up the price. Like we've got a free market now. Obama hates sugar like he hates oil and just wants to make it more expensive to use, you know, because liberals hate fat people, but the fact is sugar would be cheaper than it is today if Florida producers weren't protected with tariffs, quotas and price supports.

Americans pay more for sugar already because it's NOT a free market.

Rush once said Donald Trump wasn't a conservative because Trump advocates tariffs against the Chinese.

Given the choice between Trump who's for tariffs and says so, and Limbaugh who's for them but says he isn't, the choice is clear.

236K New Jobs Last Month, Or 100K?

The government report that 236,000 jobs were added last month comes from a long controversial model. An actual private count, as reported here, has a number nearly 58% lower than that:

For all the optimism of the government's report Friday, there were other weaknesses in the data.

More than 100,000 of the new positions came through the Labor Department's Birth/Death Model, which approximates the number of positions created through new business creation and failure.

The Job Openings and Labor Turnover Survey, also from the government, showed a net of 145,000 new positions filled, which is at or just below the level associated with bringing down the unemployment rate.

Market research firm TrimTabs said its independent count, which relies on income tax withholdings, showed just 100,000 new jobs.

"The U.S. economy is not as strong as the conventional wisdom believes." said TrimTabs CEO David Santschi.

Think Mish Will Correct This Blooper?

The deeper I dig the smellier it gets

Seen here:

In "real" (CPI-adjusted) terms, 50% of households are no better off than they were in 1988. Let's dig a litter deeper.

The Gas Hydrates Revolution Will Dwarf The One In Shale Oil/Gas

And the desperate Japanese are leading the way to its successful recovery within 5 years.

So says Ambrose Evans-Pritchard for the UK Telegraph, here:

'The immediate discoveries in Japan's Eastern Tankai Trough are thought to hold 40 trillion cubic feet of methane, equal to eleven years gas imports. The company described the gas as "burnable ice", saying the trick is free it from a crystaline cage of water molecules by lowering the pressure. Tokyo hopes to bring the gas to market on a commercial scale within five years.'

The stuff is all over the world, especially along coastlines of continents, deep, deep down, in quantities double the known fossil fuel varieties.

The future is bright!

Follow the link for more charts and discussion.

Depression In Real Retail Sales Finally Ends, Beats Old 2006 High

The old high in Dec. 2006 was $180.016 billion. The depression low was $155.927 billion in March 2009, a decline of 13.4% in inflation adjusted retail sales. The new real gain in monthly retail sales, however, is barely $350 million, with an "m".

It remains to be seen if the new higher level of real retail sales can be sustained with increased payroll taxes factored in, presumably taking money out of retail circulation. Velocity of M2 and MZM were already at historic lows in Q4 2012 in the post-war period at the temporary lower payroll tax rate.

Gasoline prices were last consistently below $3.00 a gallon in 2010 and since then have averaged about $3.50 a gallon. At roughly 10% of total retail, sudden spikes in gasoline prices can produce expenditure on gasoline which represents a phantom increase to sales, and also mask the fact that miles-traveled remain in depression, a more concrete, so to speak, decline in velocity caused chiefly by enduring low employment by historical measures.

Update, 4-15-13: While the above graph shows real retail, that is, retail level adjusted for inflation, I have found a better representation of reality by Doug Short, reproduced and referenced here, which also adjusts for population growth and removes gasoline because it is really a form of taxation which obscures the underlying level of true retail activity. Bottom line: real retail is actually still about 8% off the 2005 high measured the same way.

Commentary Magazine Defends Reagan's Liberalism

Peter Wehner, here:

"[I]magine the Norquist and Shirley standard being applied to Reagan in the 1970s. If Jeb Bush’s comments unleashed heated attacks, even given his sterling anti-tax record, think about what Reagan’s support for unprecedented tax increases–including higher taxes on top rates, sales taxes, bank and corporate taxes, and the inheritance tax–would have elicited. The Gipper would have been accused of being a RINO, a pseudo-conservative, unprincipled, and a member of the loathsome Establishment. Fortunately for Reagan (and for America) the temptation to turn conservatism into a rigid ideology was not as strong then than it is now."

Let's face it.

Reagan was a Democrat in recovery who brought a substantial number of Democrats in recovery to the Republican Party, where they met fellow liberals with whom they could forge an alliance around the liberalism bequeathed to them by Wilson and FDR, without the communist fellow traveling. Conservatives got pushed to the side, or taken for a ride.

Reagan defended the welfare state but on a scaled back basis with emphasis on less reliance on government and lower income taxes. The New Deal was not scaled back, nor was The Great Society. Even the ramped up Cold War to defeat the Soviets was interventionist and therefore arguably anti-conservative in its basic impulse. The resulting glorification of the US military would horrify the founders who feared them as instruments of tyranny in the hands of an American Caesar.

And now here we are with an enlarged welfare state in OBAMACARE, and actually having a public kerfuffle about an administration which resisted abjuring the use of said military on American soil to snuff out people it and it alone decides are a threat. You know, like gun owners. Are we really supposed to be charmed by the likes of the Krauthammers of the world who insist what Obama has been doing is entirely consistent with the model of Abraham Lincoln who put fellow Americans Confederates to death based on a private interpretation of the constitution?

Nothing's changed, except for the worse. His truth keeps marching on.

Another Observer Notices The Broken Link Between The Monetary Base And Markets

Kopin Tan, who otherwise believes the Fed has been juicing markets, for Barron's, here:

"[W]hile the Fed tripled its balance sheet, not all that money gushed through to the real economy—one reason why inflation is just 2%—as banks funneled the money to mend their balance sheets, corporations hoarded cash, and Americans paid off loans and saved more.

"Between 1960 and 1999, ratcheting up the supply of money often directly lifted stock prices. In the 1970s, for instance, stocks' annual returns were 70% correlated to the growth in money supply. But that link has recently broken down: year-over-year growth in money supply slowed in 2009 and 2012, but stocks rallied in both of those years."

John Hussman Warns Correlation Is Not Causation

Here in "Two Myths and a Legend":

'This first myth is embodied in statements like “since 2009, there has been an 85% correlation between the monetary base and the S&P 500” – not recognizing that the correlation of any two data series will be nearly perfect if they are both rising diagonally. As I noted last week, since 2009 there has also been 94% correlation between the price of beer in Iceland and the S&P 500. Alas, the correlation between the monetary base and the S&P 500 has been only 9% since 2000, and ditto for the price of beer in Iceland (though beer prices and the monetary base have been correlated 99% since then). Correlation is only an interesting statistic if two series show an overlap in their cyclical ups and downs. ...

'In the case of quantitative easing, much of what we observe as “causality” actually runs the wrong way. Market declines cause QE in the first place, and the result is a partial recovery of those declines.'

Depression In Oil Consumption Continued In 2012 At 18.56 million Barrels Per Day

US Petroleum Consumption '80-'11, eia.gov

Reuters had the story here on Feb. 27:

Oil demand for the year was at 18.56 million bpd, down 2.08 percent compared with 2011, with petroleum use falling in every month in 2012 except May.

Consumption in 2011 was 18.95 million bpd according to the Energy Information Administration, here.

Peak consumption was in 2005 at 20.8 million bpd, so 2012 is still 10.8% off the high reached eight years ago.

Consumption in 2012 is almost equivalent to consumption in 1997 when it stood at 18.6 million bpd.

The decline in 2008 to 17.06 million bpd represented a decline in petroleum consumption of a whopping 18%.