Saturday, October 8, 2011

Saturday Stew

If you're reading this in the morning, juevos rancheros or a big breakfast burrito smothered in green chile sauce probably sounds better than stew, but I couldn't figure out how to fit that in the title.

Anyhoo, here are some interesting and enlightening links I ran across this past week.

Monetarism, not Capitalism, is the Culprit
At some point in their history, the largest banks on Wall Street may have participated in a marginally capitalist system, but it has not been that way since at least the early 1990's (the transformation began in the 1960's). What the financial system has become today is one of monetarism, not capitalism. This is an entirely profound distinction that needs to be fully appreciated to unlock both long-term economic growth and a denouement for the now-monetized economy.
Go read the whole thing to understand how unhinged banking has wrecked the economy.

Elections are won in the middle
The "middle" is broadly defined as the moderate middle, independents, or whatever you want to call them.  That is where elections are won.  David Paul Kuhn Explains…
There are twice as many conservatives in America as liberals. Yet the emboldened conservative base can take Republicans only to roughly 40 percent of the electorate. And it’s the final 10 yards that counts in American politics.
Has China Peaked?  Can We bounce back?

Dismal democrats like Tom Friedman and Peter Orzag who sing commucrapitalist China's praises should be ignored. They sap our national will, and their wealth and over-education blind them to the fact that America’s unique strength lies in free people pursuing individual dreams in the free marketplace.

Joel Kotkin restores some sanity. He considers an ascendent China of the near future boldly asserting itself, but reassures Orzag, "Comfortably ensconced at bailed-out Citigroup," and “one-party autocracy” fanboy Friedman that this outcome is not inevitable.
Arguably our biggest advantage lies in the very thing our upper echelons increasingly disdain — our messy multicultural democracy and our addiction to the rule of law. “The secret of U.S. success is neither Wall Street or Silicon Valley but its long-surviving rule of law and the system behind it,”
Liu Yazhou, a Chinese two-star general, recently said. “The American system…is designed by genius and for the operation of the stupid.” (Kotkin - China's Fat Years)
A Rare burst of honesty from Government…

Sen. Jeff Sessions (R-Ala.) and Sen. Olympia Snowe (R-Maine) are sponsoring the Honest Budget Act.

Even if this does not pass, it is still refreshing to hear someone in government admit that the budget process is fundamentally dishonest.

Have a great weekend!


Ducky's here said...

The monetarist article was interesting. I've felt that the financial system has become divorced from productive economic activity for a while now. Managing the issue is a real problem since many are making massive amounts of money for essentially wagering.
And if you are honest, Silverfiddle, you have to admit that the mainstream right defends that group and is loathe to even tax them.
The likes of Eric Cantor see them as key economic drivers.

The Honest Budget Act? When Obummer put the Afghan and Iraqi fiascoes on the books instead of financing the stupidity with supplementals, the first thing the right wing did was start whining about the deficit. To his credit, Obummer did try to make it more trasparent and they won't make that mistake again thanks to the Baggers.

Elections are won in the middle. That's why a nutlog like Bachmann, Perry or L'il Ricky Retardo is going nowhere with a diverse electorate.

Silverfiddle said...


Minus the mordant editorial embroidery, I essentially agree with you. Snider is right.

Mainstream right? How about mainstream politicians? Banking and Finance have as many dems in their pockets as repubs, and this is the bipartisan problem.

I also did give Obama credit for putting those expenditures on-budget, although he did it not for fiscal sanity reasons, but for political reasons.

Elections are won in the middle

It's also why Obama will not have a cakewalk like last time. The middle suffers under no gauzy fantasy-driven illusions this time.

98ZJUSMC said...

Liu Yazhou, a Chinese two-star general, recently said. “The American system…is designed by genius and for the operation of the stupid.” (Kotkin - China's Fat Years)

I guess Gen. Yazhou is a fan of "The Caine Mutiny".

Lt. Tom Keefer: "(...)about the Caine is, she was designed by geniuses to be run by idiots."

Anonymous said...

The Snider article is spot-on. Thanks for the link.

98ZJUSMC said...

Yep. Very good article.

Finntann said...

"Elections are won in the middle".

That may very well be true, so long as the middle gets up off their derrier and votes.

My perspective is that while elections may be won in the middle, the candidates seem to leak out from around the edges.

The right fields fiscally conservative, socially conservative candidates and the left fields big government, socially liberal candidates. Although to be fair, lately the right has done no more than pay lip service to fiscal conservatism.

Just look at say, Gary Johnson, fiscally conservative, socially liberal, and he gets pretty much ignored.

As far as titles... how about the Big Breakfast News Burrito? You can have that with spicy red socialist sauce, green environmental chiles, and a side of blue conservative pancakes.

Oh and don't forget a big centrist cup of joe.


Silverfiddle said...


Thanks for the title ideas. I may just use that next week...

MathewK said...

That general is right, just too bad that the willfully dumb and malicious are in charge of what they do not deserve.

Anonymous said...


11 Facts You Need To Know About The Nation’s Biggest Banks

By Pat Garofalo  
The Occupy Wall Street protests that began in New York City more than three weeks ago have now spread across the country. The choice of Wall Street as the focal point for the protests — as even Federal Reserve Chairman Ben Bernanke said — makes sense due to the big bank malfeasance that led to the Great Recession.

While the Dodd-Frank financial reform law did a lot to ensure that a repeat of the 2008 financial crisis won’t occur — through regulation of derivatives, a new consumer protection agency, and new powers for the government to dismantle failing banks — the biggest banks still have a firm grip on the financial system, even more so than before the 2008 financial crisis. Here are eleven facts that you need to know about the nation’s biggest banks:

– Bank profits are highest since before the recession…:

According to the Federal Deposit Insurance Corp., bank profits in the first quarter of this year were “the best for the industry since the $36.8 billion earned in the second quarter of 2007.” JP Morgan Chase is currently pulling in record profits .

– …even as the banks plan thousands of layoffs:

Banks, including Bank of America, Barclays, Goldman Sachs, and Credit Suisse, are planning to lay off tens of thousands of workers.

– Banks make nearly one-third of total corporate profits:

The financial sector accounts for about 30 percent of total corporate profits, which is actually down from before the financial crisis, when they made closer to 40 percent.

– Since 2008, the biggest banks have gotten bigger:

Due to the failure of small competitors and mergers facilitated during the 2008 crisis, the nation’s biggest banks — including Bank of America, JP Morgan Chase, and Wells Fargo — are now bigger than they were pre-recession. Pre-crisis, the four biggest banks held 32 percent of total deposits; now they hold nearly 40 percent.

– The four biggest banks issue 50 percent of mortgages and 66 percent of credit cards:

Bank of America, JP Morgan Chase, Wells Fargo and Citigroup issue one out of every two mortgages and nearly two out of every three credit cards in America.

– The 10 biggest banks hold 60 percent of bank assets:

In the 1980s, the 10 biggest banks controlled 22 percent of total bank assets. Today, they control 60 percent.

– The six biggest banks hold assets equal to 63 percent of the country’s GDP:

In 1995, the six biggest banks in the country held assets equal to about 17 percent of the country’s Gross Domestic Product. Now their assets equal 63 percent of GDP.

Submitted by Freethinke


Anonymous said...


– The five biggest banks hold 95 percent of derivatives:

Nearly the entire market in derivatives — the credit instruments that helped blow up some of the nation’s biggest banks as well as mega-insurer AIG — is dominated by just five firms: JP Morgan Chase, Goldman Sachs, Bank of America, Citibank, and Wells Fargo.

– Banks cost households nearly $20 trillion in wealth:

Almost $20 trillion in wealth was destroyed by the Great Recession, and total family wealth is still down “$12.8 trillion (in 2011 dollars) from June 2007 — its last peak.”

– Big banks don’t lend to small businesses:

The New Rules Project notes that the country’s 20 biggest banks “devote only 18 percent of their commercial loan portfolios to small business.”

– Big banks paid 5,000 bonuses of at least $1 million in 2008:

According to the New York Attorney General’s office, “nine of the financial firms that were among the largest recipients of federal bailout money paid about 5,000 of their traders and bankers bonuses of more than $1 million apiece for 2008.”

In the last few decades, regulations on the biggest banks have been systematically eliminated, while those banks engineered more and more ways to both rip off customers and turn ever-more complex trading instruments into ever-higher profits. It makes perfect sense, then, that a movement calling for an economy that works for everyone would center its efforts on an industry that exemplifies the opposite.

Submitted by Freethinke

Anonymous said...

SUGGESTION: I think it would be very useful -- as well as engaging -- to have a discussion -- or a series of discussions -- that define and explore economic terms that most of us look at and throw around, but may not fully understand:

Feudalism, Mercantilism, Capitalism, Communism, Socialism and Fascism come easily to mind. I know very little about these things from an historical perspective. If we could eliminate mordant sarcasm, condescension, pejorative characterization of one another and other forms of insult direct and oblique, it would be nice.

What I'd like is some good objective information imparted impersonally as to the definition and historic interrelationship of these economic systems.

We use such terms as Crony Capitalism and The Corporate State as though everyone already knows -- or ought to know -- what these terms mean. I'm not clear yet about it.

If someone would be kind enough to inform us without calling anyone a moron, a fucking idiot, a dumbass or a shithead, I'd appreciate it very much, and I rather think others might too.

Thank you.

~ FreeThinke

Anonymous said...

FYI: Two videos of Herman Cain sparring masterfully with the odious Lawrence O'Donnell posted at GeeeeeZ are well worth 20 minutes of your time.

It's hard not feel the dawning of affection, admiration and possible gratitude for Mr. Cain after seeing him make short work of O'Donnell, who vainly imagined he had Mr. Cain against the ropes and wound up getting KO'd, himself.

~ FreeThinke

Ducky's here said...

Well, Silverfiddle, I agree that Dems are far from innocent although they aren't the prime movers right now.

His role is grossly overstated but Chris Dodd certainly showed what a toad he is after the 2008 election.

Yeah, it's all broke down.

Ducky's here said...

I notice that one of your favorite blogs revels in "the irrelevancy of the left" yet you accept that change happens in the middle.

Well for that to happen we need a healthy left AND right.

We have neither.

Ducky's here said...

We use such terms as Crony Capitalism and The Corporate State as though everyone already knows -- or ought to know -- what these terms mean. I'm not clear yet about it.

Well Freethinker, I'm partial to Joseph Schumpeter's, "Capitalism, Socialism and Democracy". Then read Hayek and Galbraith.

Schumpeter offers a definition of Democratic Socialism. Accept it or not but it's a thoughtful analysis.

Silverfiddle said...

It's not change happens in the middle, it's where elections are won.

It seems we are all in agreement that we must define our terms.

Anonymous said...

Thank you, Ducky. I just read the Wiki article on Schumpeter. I intrigued and did not repel me in the least. I'd like to learn more. You did not know this, but it's been physically impossible for me to read print books for the past ten years. The computer with its ability to enlarge type as one chooses is anther matter.

You've had harsh things to say about Alan Greenspan. I've never felt much confidence in AG, myself, but I was surprised to learn that AG was a student of Schumpeter at Harvard. I suppose you knew that?

Good to learn my longing for the gold standard is well founded. The Keynesians and "social activist" types who want to believe in Government as God dislike the gold standard, because it inhibits their ability to refashion society at will with unlimited doses of FIAT currency. It does seem to me we are suffering unmercifully from policies that favor FIAT money right now.

I was also gratified to learn that Schumpeter does not appear to have been "agenda driven" but merely set down his theories as an honest, carefully reasoned prediction of the role corrupting influences and innate flaws were likely to play in bringing an end to Capitalism.

Very sadly I found myself agreeing with what the small article told of his analysis.

Personally, I believe that all phenomena are subject to a life cycle that guarantees that all phenomena will end. They usually end, however, with the birth of Something Else.

I'm very much afraid people of my vintage are coming very lose to the end of "our" era. The shadows looming on the horizon down look reassuring to me, but fortunately for me I won't be here much longer. It's the forty-year-olds and their children who seem slated for hard times and possibly tragedy.

~ FreeThinke

PS: I did read Thorstein Veblen's The Theory of the Leisure Class 20-25 years ago, and have to say I found him ineffably and insufferably dreary. - FT

Silverfiddle said...

@ FreeThinke: If we could eliminate mordant sarcasm, condescension, pejorative characterization of one another and other forms of insult direct and oblique, it would be nice.

Oh, come on! It would be extremely boring as well.

But seriously, I'm surprised Ducky recommended Schumpeter. He posted the theory of "Creative destruction." And Hayek! Hayek!

Did someone hijack your keyboard, Ducky?

And FreeThinke, when I called Ducky a Marxist awhile back, I was calling him an adherent to the economic theory of Karl Marx. I was not accusing him of the rude, bloody, dictatorial communism that destroyed half a world trying to implement Marx's theories.

Marx saw the misery and abuse of the European industrial revolution and wrote his famous book. His observations were accurate, but I disagree with his conclusions.

Ducky's here said...

Frethinker, have you tried an iPad or Kindle?

Anonymous said...

Have I tried a Kindle or an iPad?

NOT YET. I would need a friendly -- and very patient -- tutor to help me learn the ropes.

Good suggestion, Ducky. Thank you. It will come. I have a feeling I'll find one under the tree this Christmas.


SilverFiddle, Ducky and I have encountered one another for years and years at various sites. Even though he does his level best to present himself primarily as an irritant and an alien, I see through the act. If I understand rightly, he has a low threshold of tolerance for fervid displays of chauvinism -- i.e. the mindless counterfeit passion exhibited by followers who have never thought through the implications and ramifications of aims and objectives their leaders have set for them.

I do wonder why, however, that even when I occasionally support something he's said, he seems not to notice, and prefers playing the adversary role?

But then, I see the abrasive, combative approach used too frequently on both sides of the Great Divide these days. Lobbing grenades from behind the barricades does become tiresome after the novelty wears off, and frankly I can't see that it accomplishes anything of value.

~ FreeThinke

Bd said...

OWS vrs. Tea Party:

Silverfiddle said...

Bd: I do hope you realize that was produced propaganda piece and not a real news interview.