Market politics

[Brando]

...
We managed to buy our way out of 2008 without learning the lessons we learned from the great depression. Sooner or later we will get into a situation where we can not buy our way out. We will either recover from that after much pain or we will not. It does not seem we humans are capable of avoiding it.

All the rest of the high minded in depth analysis is spinning your wheels if you neglect the basics.

Very good/fine points. Except this last one. Usually we "buy out/help out the debtors (debt forgiveness, lower interest rates, you get the idea) This last time we didn't do that. Over 5.1 million people lost their homes. Interest rates on student loans/home loans/credit card loans/small business loans did not go down. We taxpayers (quantitative easing) bought bad/non-performing loans from the "Federal Reserve Bank Members" (top 13 banks, if I remember correctly) and put those loans onto the "Federal Reserve" balance sheet. These big banks then put the money into the stock market (and bought back their own stocks).
Wages continued to stay mostly flat. Interest paid on savings went to near zero. suggest reading
Nomi Prins books which explain in detail these "crimes".

Look up asset share or stock ownership or incomes comparing the top 1% or 10% to those down to the poor. We may be at the largest inequality in US history. IF you can buy stocks you are probably in the top 10% - good for you. The bottom 90% not so much. Anyway, Nomi Prins - look he up - she will explain the details very clearly. All of her books interesting. Former Goldman Sachs exec.

 

[Brando]

There doesn't seem to be a logical reason why this is the case? Why isn't being a legal entity enough for contract law? That's what they all are anyway, even the shell companies.

Originally corporations had a "limited life". Seems the ruling elites didn't want to see the "merchant class" accumulate wealth and compete against the "land owner" class (Kings & Lords). Since corporations can't go to jail, can't be executed, could be immortal, immune from most everything, considering/giving them human rights is absurd. It really is that simple. Starting an LLC or a corporation is a way to limit liability. A way to protect your property from your business activities.

Is this yet another sign of how far down our education system has fallen? People can't read P&L statements nor most any SEC filing and don't understand differences of margins, profits, gross/net incomes, retained earnings, assets, liabilities. Sad really.

 

[dmunjal]

Very good/fine points. Except this last one. Usually we "buy out/help out the debtors (debt forgiveness, lower interest rates, you get the idea) This last time we didn't do that. Over 5.1 million people lost their homes. Interest rates on student loans/home loans/credit card loans/small business loans did not go down. We taxpayers (quantitative easing) bought bad/non-performing loans from the "Federal Reserve Bank Members" (top 13 banks, if I remember correctly) and put those loans onto the "Federal Reserve" balance sheet. These big banks then put the money into the stock market (and bought back their own stocks).
Wages continued to stay mostly flat. Interest paid on savings went to near zero. suggest reading
Nomi Prins books which explain in detail these "crimes".

Look up asset share or stock ownership or incomes comparing the top 1% or 10% to those down to the poor. We may be at the largest inequality in US history. IF you can buy stocks you are probably in the top 10% - good for you. The bottom 90% not so much. Anyway, Nomi Prins - look he up - she will explain the details very clearly. All of her books interesting. Former Goldman Sachs exec.

Excellent points. We are going to repeat this same mistakes with the student loan bubble (or the pension bubble) when progressives expect to forgive the trillion plus in loans. The banks will be made whole and the Fed will have to print the difference. Inflation and wealth inequality are the results. That's a recipe for killing the middle class.

 

[EVNow]

The Democrats are right wing? You sure about that?

They are definitely right of the center.

BTW, this whole single axis right - left is so inane. As if people are too dumb to understand 2-axis ideology. Checkout politicalcompass.org.

 

[dmunjal]

They are definitely right of the center.

View attachment 329279

BTW, this whole single axis right - left is so inane. As if people are too dumb to understand 2-axis ideology. Checkout politicalcompass.org.

I prefer this chart.

 

[EVNow]

I prefer this chart.

But it makes little sense. It still uses a single axis and can't distinguish between social and economic.

According to them "extreme left & right" are the same. So, Gandhi & Hitler have the same ideology

The point is when you have 2 (or more) axis - it makes no sense to talk about "extreme left" or "extreme right".

 

[AudubonB]

Back to the “Where is it?” photo - my instantaneous thought was the Caracas Country Club, which I last visited in 1985. But it is equally likely to be in any number of cities in Brazil, Colombia....even “wealthy” Costa Rica.

 

[Oil4AsphaultOnly]

Originally corporations had a "limited life". Seems the ruling elites didn't want to see the "merchant class" accumulate wealth and compete against the "land owner" class (Kings & Lords). Since corporations can't go to jail, can't be executed, could be immortal, immune from most everything, considering/giving them human rights is absurd. It really is that simple. Starting an LLC or a corporation is a way to limit liability. A way to protect your property from your business activities.

Is this yet another sign of how far down our education system has fallen? People can't read P&L statements nor most any SEC filing and don't understand differences of margins, profits, gross/net incomes, retained earnings, assets, liabilities. Sad really.

I don't see how your reply answers my question? But corporations can be executed. Once you take away their assets (including trademarks), they'll cease to exist. New corporations with the same people and structure will at least have different assets, like clones made from someone's DNA (not the same person despite having everything match).

 

[lolachampcar]

Very good/fine points. Except this last one. Usually we "buy out/help out the debtors (debt forgiveness, lower interest rates, you get the idea) This last time we didn't do that. Over 5.1 million people lost their homes. Interest rates on student loans/home loans/credit card loans/small business loans did not go down. We taxpayers (quantitative easing) bought bad/non-performing loans from the "Federal Reserve Bank Members" (top 13 banks, if I remember correctly) and put those loans onto the "Federal Reserve" balance sheet. These big banks then put the money into the stock market (and bought back their own stocks).
Wages continued to stay mostly flat. Interest paid on savings went to near zero. suggest reading
Nomi Prins books which explain in detail these "crimes".

Look up asset share or stock ownership or incomes comparing the top 1% or 10% to those down to the poor. We may be at the largest inequality in US history. IF you can buy stocks you are probably in the top 10% - good for you. The bottom 90% not so much. Anyway, Nomi Prins - look he up - she will explain the details very clearly. All of her books interesting. Former Goldman Sachs exec.

I was looking at the practical effect of Paulson's work in 2008. We poured a bunch of money in the banks so people thought they were solvent and did not run on them. I was close to pulling and, if I was close, you can bet a lot of others were. In effect, we bought our way out of a depression. We are now back to making a lot of the same mistakes. Sure, there was pain in the housing market and the points you make on wages and such are accurate. That said, can you imagine what it would have been like if we tried the Great Depression all over again. I do not know first hand but I was raised by a dust bowl Okie and he made sure I understood if not felt it.

 

[dmunjal]

I was looking at the practical effect of Paulson's work in 2008. We poured a bunch of money in the banks so people thought they were solvent and did not run on them. I was close to pulling and, if I was close, you can bet a lot of others were. In effect, we bought our way out of a depression. We are now back to making a lot of the same mistakes. Sure, there was pain in the housing market and the points you make on wages and such are accurate. That said, can you imagine what it would have been like if we tried the Great Depression all over again. I do not know first hand but I was raised by a dust bowl Okie and he made sure I understood if not felt it.

There was no way out of the 2008 financial crisis without some pain. The point is who should feel that pain. The bankers got bailed out and really weren't effected at all. The taxpayers took the hit and the Fed was forced to print $4T and lower interest rates to zero for 8 years to save the economy from depression as you said. But the side effects of that decision, IMO, are worse. The result was an asset bubble which only benefited the 1% and raised prices for the 99%. Of course, wages never recovered either.

In hindsight, I would have taken the depression and a purge of the banking sector. The nation would be better off today and might not have ever elected someone like Trump.

 

[neroden]

Not the first time you've posted that, Rob. But Venezuela is a bit of an extreme example. I find the Scandinavian model better.

Venezuela's primary problem is lead poisoning. The current violence and chaos in Venezeula was actually predicted by Rick Nevin based on the history of leaded gasoline usage in the country. They had massively high amounts of lead in their gasoline and used massive amounts of gasoline... roughly 20 years ago.

Turns out you can predict the violent crime rate based on the lead exposure 20 years earlier -- i.e. babies with high early-childhood lead exposure grow up to be more violent when they're in their 20s. Very reliable. Best social science work I've ever seen.

 

[neroden]

Yes I have a question: is this supposed to show a capitalist country on the left (big houses, nice swimming pools) and a socialist country on the right (poor housing, crowded)? Is it San Diego/Tijuana?

Nope. The slums are strictly capitalist.

What "capitalism" has become is basically a money-based aristocracy. "Capitalism" as in "Those with the capital rule like aristocratic lords over the peasants". Nothing to do with free markets.

 

[wdolson]

Haven't had a chance to answer the other things from yesterday. We have had company this weekend...

Venezuela's primary problem is lead poisoning. The current violence and chaos in Venezeula was actually predicted by Rick Nevin based on the history of leaded gasoline usage in the country. They had massively high amounts of lead in their gasoline and used massive amounts of gasoline... roughly 20 years ago.

Turns out you can predict the violent crime rate based on the lead exposure 20 years earlier -- i.e. babies with high early-childhood lead exposure grow up to be more violent when they're in their 20s. Very reliable. Best social science work I've ever seen.

Interesting. I had noticed in the US that the big drop in the violent crime rate also correlated with around the 20th anniversary of Roe v Wade in the US (Supreme Court decision that made abortion legal in the US for those non-Americans here). But it was about 20 years after the US started using unleaded gas too.

 

[neroden]

Scandinavia doesn't have socialism.

The production and distribution of goods and services is overwhelmingly in the private sector.

No, it's not. About half is in the private sector, according to most reputable estimates. Everything from roads and railroads to medical care and education (these are clearly goods and services) are in the public sector.

Scandinavia is capitalism with a cradle to grave welfare state attached.

If you're going to say that a cradle to grave welfare state isn't socialism, you literally don't know what socialism is. The "socialist program" of the Labor Party in the UK from day one has been a cradle to grave welfare state funded by expropriating the property of the rich through taxation... and that's Scandanavian socialism.


Perhaps you are thinking of communism, not socialism? It was communism which claimed that it was necessary to "seize the means of production", not socialism.

I agree that Scandanavia is extremely capitalist; it is also extremely socialist. They aren't opposites.

Protected by the US Armed Forces.

Nonsense. Sweden would never stoop to that; they can defend themselves.

Funded by Capitalism.

In a sense, that's the point. For a good society, you use capitalism to generate wealth, and then you use socialism to redistribute the wealth so that you increase everyone's *quality of life* rather than having all the wealth turn into a hoard in the palace of the Emperor.

 

[neroden]

I haven't time to view the entire video, the way he starts by going back in time to set the stage resonates with my understanding. I think we've been an imperialistic power for a long time, whether demonstrated by what happened to the original inhabitants of the Continent, aboriginal here and in Hawaii, and with the Mexican-American War, or what he labels the economic imperialism which William Appleman Williams dates to the Open Door Notes leading up to the Spanish-American War.

US colonial imperialism dates at least to the War of 1812. Most people don't know about this because it's mystified heavily in history classes to hide our shame. The War of 1812 was basically over whether US squatters would be allowed to steal land from Native Americans west of the Appalachians. Of course, the British, who were allied with the Native nations, said no, as did the Native nations, of course The coastal trading ports opposed this blatant, unprincipled, imperialist behavior, but those who wanted to colonize the west (both the ordinary squatters and those Southern plantation owners who wanted to build more slave plantations) ere all in favor. You have to read stuff like _Lies My Teacher Told Me_ by James Loewen (an actual history professor) in order to learn about this.

 

[neroden]

Haven't had a chance to answer the other things from yesterday. We have had company this weekend...



Interesting. I had noticed in the US that the big drop in the violent crime rate also correlated with around the 20th anniversary of Roe v Wade in the US (Supreme Court decision that made abortion legal in the US for those non-Americans here). But it was about 20 years after the US started using unleaded gas too.

The lead-crime correlation can be found in dozens of countries (which all got rid of leaded gas at different times); you can find it for leaded paint and leaded pipes too; you can find geographical correlations at the neighborhood level. On top of that, we actually know the causation method -- we know what part of the brain is damaged by early lead exposure, and we know why damage there should cause violent outbursts.

It is THE most solidly proven thing I have EVER seen in the social sciences, which usually have pretty weak results. This result is strong.

Rick Nevin
Kevin Drum has done a bunch of articles about it too. It's also not just Rick Nevin's work, there are several other people who've published peer-reviewed papers about specific examples.

 

[neroden]

There was no way out of the 2008 financial crisis without some pain. The point is who should feel that pain. The bankers got bailed out and really weren't effected at all. The taxpayers took the hit and the Fed was forced to print $4T and lower interest rates to zero for 8 years to save the economy from depression as you said. But the side effects of that decision, IMO, are worse. The result was an asset bubble which only benefited the 1% and raised prices for the 99%. Of course, wages never recovered either.

In hindsight, I would have taken the depression and a purge of the banking sector. The nation would be better off today and might not have ever elected someone like Trump.

The correct solution is actually well known.
(1) REALLY print money. Not this Fed nonsense, which is all "loans". US Notes.
(2) Transfer that money directly to the general population: bail out the homeowners, the renters, the people in general. Not to the banks.
(3) Have a "bank holiday", figure out which banks are solvent, reopen the solvent ones and liquidate the others; this gets the payments system up and running. FDR did this.
(4) Pay off retail deposit holders up to the FDIC limits -- and you probably have to do it for money market funds, given the situation -- and burn anyone with larger deposits, and burn anyone holding bank bonds.

It's point 2 which is crucial. All the printed money was mailed to bankers to enrich the 0.1%. This was incorrect.

Weirdly, *George W Bush* actually proposed something more sensible when he mailed $300 checks to everyone in the country. Doing something like that on a much larger scale would have been the *correct* solution.

 

[Brando]

I was looking at the practical effect of Paulson's work in 2008. We poured a bunch of money in the banks so people thought they were solvent and did not run on them. I was close to pulling and, if I was close, you can bet a lot of others were. In effect, we bought our way out of a depression. We are now back to making a lot of the same mistakes. Sure, there was pain in the housing market and the points you make on wages and such are accurate. That said, can you imagine what it would have been like if we tried the Great Depression all over again. I do not know first hand but I was raised by a dust bowl Okie and he made sure I understood if not felt it.

5.1 million lost homes - pain in the housing market - very funny, yes?

I was looking at the practical effect of Paulson's work in 2008. We poured a bunch of money in the banks so people thought they were solvent and did not run on them. I was close to pulling and, if I was close, you can bet a lot of others were. In effect, we bought our way out of a depression. We are now back to making a lot of the same mistakes. Sure, there was pain in the housing market and the points you make on wages and such are accurate. That said, can you imagine what it would have been like if we tried the Great Depression all over again. I do not know first hand but I was raised by a dust bowl Okie and he made sure I understood if not felt it.

suggest Nomi Prins books - you can decide which ones to read.

 

[Brando]

US colonial imperialism dates at least to the War of 1812. Most people don't know about this because it's mystified heavily in history classes to hide our shame. The War of 1812 was basically over whether US squatters would be allowed to steal land from Native Americans west of the Appalachians. Of course, the British, who were allied with the Native nations, said no, as did the Native nations, of course The coastal trading ports opposed this blatant, unprincipled, imperialist behavior, but those who wanted to colonize the west (both the ordinary squatters and those Southern plantation owners who wanted to build more slave plantations) ere all in favor. You have to read stuff like _Lies My Teacher Told Me_ by James Loewen (an actual history professor) in order to learn about this.

economics/money/laws/contracts - are all "games" created by people/men
The rules we make up and change at will - you are just not part of the group that makes and enforces the rules. Which explains why how people think things work or how they work now are often out of sync.
Bankers no longer go to jail. Did they stop fraud? Do they charge "fair interest rates". Do they no longer launder money? Is there a revolving door of government regulators/law makers & banks? I need not tell you the answers. Keating 5 - Savings & Loan crisis - about 1500 went to jail and many know nothing about it. Economy is a MAN MADE what should we call it? GAME? Doesn't seem right to call something that has such an impact on quality of life a game, does it? It isn't a science as the "rules/laws/bank policies can easily be changed - it isn't any natural force.

 

[dmunjal]

The correct solution is actually well known.
(1) REALLY print money. Not this Fed nonsense, which is all "loans". US Notes.
(2) Transfer that money directly to the general population: bail out the homeowners, the renters, the people in general. Not to the banks.
(3) Have a "bank holiday", figure out which banks are solvent, reopen the solvent ones and liquidate the others; this gets the payments system up and running. FDR did this.
(4) Pay off retail deposit holders up to the FDIC limits -- and you probably have to do it for money market funds, given the situation -- and burn anyone with larger deposits, and burn anyone holding bank bonds.

It's point 2 which is crucial. All the printed money was mailed to bankers to enrich the 0.1%. This was incorrect.

Weirdly, *George W Bush* actually proposed something more sensible when he mailed $300 checks to everyone in the country. Doing something like that on a much larger scale would have been the *correct* solution.

This approach definitely screws the banking sector.

The correct solution is actually well known.
(1) REALLY print money. Not this Fed nonsense, which is all "loans". US Notes.
(2) Transfer that money directly to the general population: bail out the homeowners, the renters, the people in general. Not to the banks.
(3) Have a "bank holiday", figure out which banks are solvent, reopen the solvent ones and liquidate the others; this gets the payments system up and running. FDR did this.
(4) Pay off retail deposit holders up to the FDIC limits -- and you probably have to do it for money market funds, given the situation -- and burn anyone with larger deposits, and burn anyone holding bank bonds.

It's point 2 which is crucial. All the printed money was mailed to bankers to enrich the 0.1%. This was incorrect.

Weirdly, *George W Bush* actually proposed something more sensible when he mailed $300 checks to everyone in the country. Doing something like that on a much larger scale would have been the *correct* solution.

There is no such thing as a free lunch. Free money causes inflation. If you give it to the rich, they buy stocks and real estate which creates an asset bubble. If you give it to the 99%, it causes consumer inflation. Mostly in food, energy, and other commodities.

I still would take your solution over what ended up happening. Lesser of two evils.