Category: Economics

“Banality Of Evil”

That is a term that was first used by Arendt back in the early 60s at the trial of Eichmann…..

The term “banality of evil” was coined by intellectual Hannah Arendt after she observed the 1961 trial of Adolf Eichmann, the Nazi official who, from his post atop the inscrutably-named Office IV B 4, oversaw the grim logistics of funneling Jews into German concentration camps.

Arendt said she was struck to find Eichmann “neither perverted nor sadistic,” but “terrifyingly normal.” Rather than a rabid ideologue or psychopathic antisemite, Arendt found herself observing a boring bureaucrat whose diligent performance of his assigned duties was largely motivated by a mere desire for career advancement. “The deeds were monstrous, but the doer – at least the very effective one now on trial – was quite ordinary, commonplace, and neither demonic nor monstrous,” Arendt later wrote.

The term “banality of evil” was coined by intellectual Hannah Arendt after she observed the 1961 trial of Adolf Eichmann, the Nazi official who, from his post atop the inscrutably-named Office IV B 4, oversaw the grim logistics of funneling Jews into German concentration camps.

Arendt said she was struck to find Eichmann “neither perverted nor sadistic,” but “terrifyingly normal.” Rather than a rabid ideologue or psychopathic antisemite, Arendt found herself observing a boring bureaucrat whose diligent performance of his assigned duties was largely motivated by a mere desire for career advancement. “The deeds were monstrous, but the doer – at least the very effective one now on trial – was quite ordinary, commonplace, and neither demonic nor monstrous,” Arendt later wrote.

That typed….ever heard of the Office of Foreign Asset Control (OFAC)?

No?

As tourists complete their strolls to the White House from the east along Pennsylvania Avenue, they pass a relatively unremarkable, columned office building that overlooks Lafayette Square — oblivious that, behind its walls, bureaucrats are quietly inflicting poverty, illness and death on innumerable innocents around the world.

The Freedman’s Bank Building doesn’t house CIA or Department of Defense officials, but rather the US Treasury’s little-known Office of Foreign Assets Control (OFAC). Instead of orchestrating airstrikes or insurgencies, these bureaucrats impose mass suffering via economic warfare, collectively serving as the tip of the spear that is America’s ever-expanding economic sanctions regime.

https://starkrealities.substack.com/p/ofacs-banality-of-evil-small-us-agency

This group can be as lethal to innocent civilians as an airstrike….

Just thought you might like to know.

I Read, I Write, You Know

“cognito ergo  me agitare”

Is The Economy In Danger?

So you want an easy answer….then yes, Irene, it is!  It is in danger of having the same result as that of the Japanese in the 90’s.  Apparently, that is what you dicks are looking for…..the Repubs are hoping for it…for it will return them to power.  That is why they ALL want Obama to FAIL.  They may try to make it sound more noble than that, but the bottom line is they want him to fall on his face and the economy to collapse completely.

So yes Irene, you bet your scrawny ass the economy is in danger!

Joseph Stiglitz recently wrote on wsws.org:

The banking system has just been tested to see if it is adequately capitalized – a “stress” test that involved no stress – and some couldn’t pass muster. But, rather than welcoming the opportunity to recapitalize, perhaps with government help, the banks seem to prefer a Japanese-style response: we will muddle through.

“Zombie” banks – dead but still walking among the living – are, in Ed Kane’s immortal words, “gambling on resurrection.” Repeating the Savings & Loan debacle of the 1980’s. the banks are using bad accounting (they were allowed, for example, to keep impaired assets on their books without writing them down, on the fiction that they might be held to maturity and somehow turn healthy). Worse still, they are being allowed to borrow cheaply from the United States Federal Reserve, on the basis of poor collateral, and simultaneously to take risky positions.

Every downturn comes to an end. The question is how long and deep this downturn will be. In spite of some spring sprouts, we should prepare for another dark winter: it’s time for Plan B in bank restructuring and another dose of Keynesian medicine.

as usual the help is always for Wall Street….Main Street is struggling and dying….no one seems to care, especially Wall Street and Washington…their survival is all that matters.

Workers Beware!

The measures announced Monday confirm once again that the Obama administration is a government of, by and for the financial elite which exerts a stranglehold over the economy and controls the entire political establishment.

The investment bankers represented by Obama are using the economic crisis as an opportunity to fundamentally restructure class relations in America. Culminating a three-decade offensive against working people, they are destroying whatever remains of the gains made by previous generations of workers so as to intensify the exploitation of the working class.

The attack on auto workers will become the spearhead for similar attacks against workers throughout the country and internationally, in every sector of the economy. Wage cuts, layoffs and cuts in benefits and social programs will be implemented across the board. The Obama administration has already made clear that it is targeting basic entitlement programs such as Social Security, Medicare and Medicaid.

After the auto companies received government loans last year, the UAW promoted the lie that the Obama administration would take a pro-worker position and the union bureaucracy enthusiastically backed his campaign. This, just as every other policy of the union, has proven to be a trap and betrayal of the workers’ interests.

The War of the Collars is approaching……which side of the line will you stand?

Here Is A Thought

When did identity theft become a big problem?  Could it have been around 2000 or 2001?  Why do you ask, Professor?

Back in the days of all the arguing about the Gramm-Leach-Bliley Act of 1999 and then the Financial Services Modernization Act of 2000, which by the way, could be traced back as the beginning of the economic crisis, because of its deregul;ation of the finance industry, which in turn allowed all the credit trading and as we have been told was the “culprit” in the present economic situation.

But there was another argument in the opposition to these two pieces of legislation….it was the fact that the personal information of consumers was not adequately protected.  All the supporters of the Act assured the people that the Act was not going to effect consumers in anyway, but rather make it easier for the people to have access to loans to better their lives.

In a report written by the Electronic Privacy Information Center:

Consumers have no right under the GLBA to stop sharing of NPI among affiliates. An affiliate is any company that controls, is controlled by, or is under common control with another company. The individual consumer has absolutely no control over this kind of “corporate family” trading of personal information.

There are several exemptions under the GLBA that can permit information sharing over the consumer’s objection. For instance, if a financial institution wishes to engage the services of a separate company, they can transfer personal information to that company by arguing that the information is necessary to the services that the company will perform. A financial institution can transfer information to a marketing or sales company to sell new products (different stocks) or jointly offered products (co-sponsored credit cards). Once this unaffiliated third party has your personal information, they can share it with their own “corporate family.” However, they themselves cannot likewise transfer the information to further companies through this exemption.

Last year, identity theft cost the consumer billions upon billions, and it has been steadily on the rise since the enacting of the FSMA of 2000.

Sen. Dorgan of North Dakota said the the Act would put the US economy in peril in 10 years and so far …HE WAS RIGHT.  And consumer institutions were concerned that the people’s privacy was not protected in the ACT….so far…THEY WERE RIGHT!

So far the FSMA,  started in the Clinton Admin,  has been nothing but sorrow for the people of the US.  It helped make the economic crisis….it did not protect the consumer……and it definitely help turn the American consumer into an incurable credit addict…….it was a lose…lose…lose….piece of legislation that made millionaires into billionaires and the middle class into the homeless.

We can all be proud of Washington……(btw, that is sarcasm)

What To Do? Economically That Is!

There are about as many opinions as a/holes in Washington on how to solve the economic crisis in the US.  There are the Keynesians, the Austrians, are the most talked about in these days of turmoil.

Keynes argued that the solution to depression was to stimulate the economy (“inducement to invest”) through some combination of two approaches: a reduction in interest rates, and government investment in infrastructure. Investment by government injects income, which results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth. The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment.

And then there is the Austrian school of economics.

Austrian Economics is a school of economics that emphasizes the spontaneous organizing power of the price mechanism, holds that the complexity of subjective human choices makes mathematical modelling of the evolving market extremely difficult (or impossible) and therefore advocates a laissez faire approach to the economy. Austrian School economists advocate the enforcement of voluntary contractual agreements between economic agents, but otherwise the smallest imposition of coercive force (especially government-imposed) on commercial transactions.

There are the two approaches that are being considered in the nation’s capital.  There are many adherents to these schools, but which will be the savior of the nation’s economy?

To me the Austrian school sounds like more deregulation and that is one of the main causes that let the economy get so out of control.  I will agree that the government cannot spend its way into a sound economy, but having no control over the beast of greed will not do it either.

Trillion Dollar Bank Plan

WTF?

President Obama said today that his economic team is “very confident” that the administration’s newest effort to stabilize banks — a mix of public and private funds that could total $1 trillion — will help to free up credit.

The plan aims to remove so-called toxic assets — many of them bad mortgage investments — from the banks’ balance sheets through a private-public partnership. The program will rely heavily on private investors, such as hedge funds and private-equity firms, to buy up $500 billion to $1 trillion of assets with the government providing incentives such as low interest loans and sharing in both the risk and possible profits. The plan announcement jolted stocks on Wall Street, with the Dow Jones industrial average rallying nearly 500 points, or 6.8 percent, to 7785.86 — the fifth biggest point gain in history.

The new program will use between $75 billion-$100 billion of Treasury funds from the Troubled Asset Relief Program and leverage $500 billion with the potential to expand to $1 trillion of private purchasing power with financing from the Federal Reserve System and the Federal Deposit Insurance Corp.

Using the Fed and the FDIC, the government will leverage private capital by co-investing with the private sector. If the private sector has financing provided by the government, buying these assets becomes a more attractive option.

Second, the administration wants the market, not the government, to set the price for these assets.

Third, the private sector will invest alongside the taxpayer on an equal basis, so both parties share the downside risk and upside potential.

To accomplish this, the treasury will partner with the FDIC in a program where banks can bring assets they want to sell to the FDIC. The FDIC will provide leverage, then the assets will be sold in the market, where private market participants will bid on them, thereby setting the price. Then the government can co-invest with the private sector to buy pools of toxic assets and clean up the banks’ balance sheets.

Okay, I really hate to be a downer right now, but this sounds very similar to the program that Paulson came up with and was called the TARP.  Few though that it would work then, and some do not see this working now……wait see.

Will US Have a “Lost Decade”?

If you have been watching the economic drama unfolding in this country then you have heard terms like “Lost Decade” and “Zombie Banks”.  But just what is meant by all this?  Let us look at the 1990’s in Japan.  A little knowledge of history can go a long way at preventing a totally wasted period in American economic activity.

Beginning in 1991, Japan experienced a financial crisis that has been documented and studied by many. Japan’s crisis was triggered by a real estate and equity price bubble followed by a collapse of equity and real estate prices. But unlike the examples I cited above, Japanese policymakers met the crisis with prolonged denial and then, when conditions forced recognition of the severity of the problem, very halting steps to address it. Banks were not forced to recognize the condition of their balance sheets and were encouraged to continue lending to firms that were themselves unprofitable. Anil Kashyap labels these “zombie firms.”

Zombie banks continued to direct capital to zombie firms. This charade continued for more than a decade, with the result that the once-powerful Japanese economy was completely stagnant for that period. The government’s main response was to dramatically increase spending on infrastructure and frantically try to get Japanese households to save less and consume more. The resulting “lost decade” of economic growth cost Japan more than 20% of GDP.

Does any of this sound familiar? Can you connect the dots? As we wring our hands about getting more involved in the financial sector and saving the jobs in the auto sector, and as we watch the many inefficient industries line up for help, it behooves us to ask: Which of these are zombies? If there is one lesson that seems to leap out at us, it is that, however great the short-term costs, the costs of keeping zombies alive is much greater. With stopgap measures in place, designed as much to sustain the zombie illusion as anything else, it becomes harder and harder for legislators to tap into the political will for painful but essential remedies.

So far all the government is doing is looking like the same thing Japan did…throw money at institutions that are already dead.  I think the American people are starting to realize the fact that these institutions are dead and it is time to let them be buried.  It is costing way too much to keep practicing the “voodoo” of economics trying to secure something that cannot be.

What A Difference A TALF Makes

What the hell is a TALF?

TALF is Term Asset-Backed Securities Loan Facility (TALF).  It is Bailout #2, which consequently will not be tapped from our pockets rather from printing of more money, is known by some as the consumer bailout, and also a refocused plan to more-so help financial markets dealing with consumer asset-backed securities like auto loans, credit-card debt, and student loans. The new consumer program will allocate $200 billion by the Federal Reserve to security holders of consumer backed debt, essentially doing this will insure the debt if a borrower defaults. And backing the backers, the Treasury department will provide $20 billion from the $700 billion from bailout #1 funds to safeguard losses the Federal Reserve will incur.

Basically, a pool of cash to be used to assist car loans, home loans, etc.  This is a lame attempt to try and create demand.  The problem with this plan is what good is a pool of cash when so many are unemplyed?  These people will will not qualify for a home loan or a car loan….so what is the TALF for?

Just another attempt to save Wall Street.  The people are suffering and the answer to that is more cash to help the business biggies survive.

Hurry! Save The Banks!

Since the very beginning of the economic crisis and then the bailout process it has been about saving the banks, because “they are too big too fail”.  Dollar after dollar has been thrown at the banks in question and what has it accompliushed?  A damn fine question!

The Congress and all concerned are throwing this money at the banks with the hopes that it will prop up their bottom line so that they will once again start loaning money.  In essence they are trying to improve the bank’s liquidity.

Good one, guys!  But answer this–what good is liquidity if there is NO demand?  Why would banks loan to companies if no one is buying their product?

Let us take it further.  There is NO demand!  Until demand can be created banks will NOT loan money to anyone.  The only economic activity right now is between banks, because they are too big too fail.  The banks are being saved—they are NOT saving jobs–They are NOT creating jobs–they are NOT loaning–they are doing nothing.  Wait!  That is a lie!  They are investing overseas and Citi made a profit.

Profit?  Does that mean the government can expect a check?  Doubtful!

One more time!  If demand cannot be created, then liquidity means squat!

We Do Not Want Your Money

That is what several governors have told the Federal government, most of them in the South and Repubs, but why would a governor not want stimulus money to help his/her state?  Well, some say that it would put a strain on their budgets in the future.  Or maybe it is the red tape involved.  Or maybe it is because it is coming from a Democratic pres.

There has not been a definitive answer to why they do not need or want the cash…but with a little reading and research there could be an answer…..

The buzz grows surrounding the possibility of a second massive economic stimulus package, President Obama and Vice President Biden warned state officials yesterday to spend their shares of the approved $787 billion wisely – or else.

“If we see money being misspent, we’re going to put a stop to it,” Obama said at a daylong White House conference on the recovery package.

With that one statement it could explain the hesitancy of the governors to accept the cash.  It must be spent for the good of the state…not put in some “general fund” to be pissed away like so many other funds that some of the states receive.

Could it be that the governors are afraid of the word “transparency”?

I did find one thing that caught my attention.

Some state officials expressed confusion about what role they will play in passing on stimulus money to cities and towns and what reporting requirements they’ll face. They also complained that there has been a lack of communication about projects that have been announced.

This is a good possibliity, especially in my state of Mississippi, where we have the absolute worst system of record checking….another good way to piss money away …if no one can check where it goes…..

These governors are NOT acting in the best interests of their states and its people.  They are playing politics…in a tiome when politics should be the furtherest thing from their minds.