Category Archives: Economy

‘Law Remakes U.S. Financial Landscape’

Business, Economy, Fascism, Political Economy, Regulation, Republicans

Among the 500 odd new regulations it imposes, the financial bill, all 2,300 pristine, unread pages of it, has just been passed by the Senate. As we surmised in April, and Bloomberg now confirms, the thing will,

” … create a mechanism for liquidating failing financial firms whose collapse could roil markets, a council of regulators to police firms for threats to the economic system and a consumer bureau at the Federal Reserve to monitor banks for credit-card and mortgage lending abuses. It also expands oversight of executive compensation and derivatives, contracts whose value is derived from stocks, bonds, loans, currencies and commodities.”

“Nowhere in the final bill will you see even a pretense of rolling back the endless federal incentives and mandates to extend credit, particularly mortgages, to those who cannot afford to pay their loans back,” notes Mark A. Calabria of the Cato Institute. “After all, the popular narrative insists that Wall Street fat cats must be to blame for the credit crisis. Despite the recognition that mortgages were offered to unqualified individuals and families, banks will still be required under the Dodd-Frank bill to meet government-imposed lending quotas.”

The title of this post is borrowed from the aptly titled article in the WSJ, which warns that “the legislation hands off to 10 regulatory agencies the discretion to write hundreds of new rules governing finance. Rather than the bill itself, it will be this process—accompanied by a lobbying blitz from banks—that will determine the precise contours of this new landscape … ”

The Managerial State in full force.

There were 60 YEAs and 39 NAYs.

The Republicans that must be thrown into the brier patch are Susan Collins, slow Olympia Snowe, and beefcake Scott Brown.

UPDATED: Great Depression 2.0: An Interview With Vox Day (PART II)

Debt, Economy, Federal Reserve Bank, Inflation, libertarianism, Political Economy

The “infamous Internet Superintelligence,” Vox Day, author of “The Return Of The Great Depression,” needs no introduction. My WND colleague and fellow libertarian dishes it out on the impending depression, D.C. dummies (down to their position under The Bell Curve), the U.S.’ Marx-compliant financial system, and a dark future. As always, Vox makes this glum stuff fun.

The first part of my interview, “Great Depression 2.0: An Interview With Vox Day,” is available now on WND.Com. The interview continues. The sequel will be posted on Barely a Blog on Friday evening.

Be sure not to miss your double dose of Day.

UPDATED (July 2): AS PROMISED, YOUR DOUBLE DOSE OF DAY. You’ve read the first part of my Vox Day interview on WND. Now to the sequel, exclusive to Barely A Blog:

• Ilana: To mention the Fed today as anything but a hedge against inflation is to qualify as “Worst Person in the World.” Early Americans were not nearly as baffled about what the Fed did. Comment with reference to the on-and-off attempts to eradicate this Federal Frankenstein. What good would an audit of the money mafia do?
Vox: Keith Olbermann should have stuck to sports. He has no idea what he’s talking about when it comes to economics. The Fed isn’t a hedge against inflation, it is the primary engine of inflation just as its three predecessors were. A genuine audit of the Fed will immediately end its political viability and probably its existence, which is why the Fed is fighting so desperately against the Ron Paul bill. But the end result is inevitable. The Fed can’t hide behind fictional statistics forever, as with the Soviet Union, people eventually begin to notice that they are not, in fact, wealthy and well fed.

• Ilana: My second favorite line in your book: “… the only sense in which mainstream economic theory is worthy of serious study is the sense that a flight recorder demands intense examination after an airplane crash.” (One quibble with this analogy would be that the flight recorder contains retrievable immutable truths.) What hope is there for an awakening if “mainstream economic theory” is precisely what is being seriously studied and heeded by those among us who are not reading Dick Morris?
Vox: The only hope is for economic sensibility to be restored post-crash. There are some positive signs, such as the widespread mocking of Paul Krugman’s belated warning of a “third depression” after the failure of the second stimulus. Krugman said a $600 billion stimulus package was needed, Obama got a $787 billion package through the Congress, and it failed anyhow. But the fact that these Neo-Keynesian clowns are still taken seriously and their models dominate the political discourse is an indication that a serious theoretical retooling will not happen until after the Great Depression 2.0 is well underway.

• Ilana: At first the pols conceded that what they had given us was a jobless recovery, which is a lot like a housewarming for the homeless. They’ve quit that Big Lie and are now touting all the jobs BHO has created. What’s going on? Tell us why official indices such as unemployment and GDP are not to be trusted.
Vox: Unemployment is dependent upon reducing the size of the labor force. So, if you’re out of work and aren’t jumping through the BLS hoops, you don’t count as unemployed. It’s a joke. GDP counts spending but doesn’t subtract debt, so it’s like saying that you’re rich because you maxed out your platinum Mastercard. Until the debt is paid back, you can’t properly count it as economic growth. And almost all of the GDP growth over the last 20 years has been nothing but debt growth. And now that the debt is shrinking as people and governments default, GDP will begin to contract oo.

• Ilana: I know who the “Zulus” are; I’m from that part of the world. You lost me with “Whisky Zulu.” Explain.
Vox: It’s just my personal reference to Weimar and Zimbabwe, two famous cases of hyperinflation. The Whisky Zulu scenario I consider is the hyperinflationary one that many inflationists favor. It’s a credible scenario anticipated by many very smart people, but I believe events are demonstrating that the debt-deflation scenario is the one that is playing out instead.

• Ilana: I agree with you that “the Great Depression 2.0 will be worse than its predecessor.” Debt. Consumption. Credit. Have at it (p. 211).
Vox: It’s pretty simple. I give 10 reasons in the book, but two should suffice for here. First, the amount of outstanding US debt to GDP is proportionately greater. It hit a peak of 287% in 1933, and 375% in 2009. Second, stimulus plans that extended and exacerbated the Great Depression were limited to the USA. This time around, Europe, Japan, and China have been actively engaged in their own stimulus packages as well, so the economic blowback is going to be much larger on a global level than it was in the Thirties. Except for Germany, which had its own particular issues related to losing WWI and the strictures imposed by the Treaty of Versailles, the problems faced by Europe did not rise to the level of a “Great Depression” because Europe’s leaders didn’t make it worse by listening to the Keynesians as Hoover and Roosevelt did.

• Ilana: It’s befitting that we end with perhaps the most important right in a free society. My favorite line in your book: “… one should always be deeply skeptical of any economic theory which … serves as a justification to allow one man to dispose of the property of another.” Private property has become a dirty word in an increasingly collectivist America. Not even Rand Paul, in his valiant defense of “private businesses” vis-à-vis the Civil Rights Act, could bring himself to speak to the sanctity of private property. People are comfortable alluding to “freedom of association” but not to what a man owns. Your thoughts with a view to what lies ahead.
Vox: Government can’t fix what government has broken. All of the desperate attempts to “fix” the global economy according to Neo-Keynesian and Monetarist principles are going to fail, state, local, and even national governments are going to default on their debts, and it’s going to be a very difficult road ahead for the next two decades. There will probably be a major war or two as well, as usually happens in times of large-scale economic contraction. But it is a second Great Depression, it’s not the Ragnarok. This isn’t a Democratic problem or a Republican problem and although the politicians will do their best to take partisan advantage of the situation, it is a structural crisis that cannot end until the structure collapses and is replaced with a more economically realistic one. Needless to say ownership—self-ownership, property ownership—will not fare well.

Soros Muscles Merkel

Debt, Economy, EU, Europe, Federal Reserve Bank

Germany’s Chancellor Angela Merkel (a former East German physicist) has refused to heed the hedonist B. Hussein Obama (an agitator from Chicago) who is urging her to print and inflate her country’s currency to Weimar-Republic levels.

“Financier- philanthropist” George Soros—also an all-round radical and BHO surrogate—has stepped in to muscle Merkel implying, writes Amity Shlaes, that,

“Germany should look to the U.S., where President Barack Obama has spent vigorously and Federal Reserve Chairman Ben Bernanke has created money for the greater good. Soros, the tutor again, underscored that Germany clearly “does not know what it is doing.”

There are reasons for the meddling:

Beyond Merkel’s personal memory there is the German national memory of the 1920s hyperinflation. That resulted from the decision of a desperate Weimar Republic to inflate its way out of war debts. That hyperinflation so punished middle-class savings and so weakened the 1920s economy that the average German became more susceptible to maniacs like Adolf Hitler and the communists.
Pressure on Germany from Soros, and for that matter, from the Obama administration, makes it harder for Merkel or other European leaders to heed their own sound instincts. Soros’s pressure also obscures a desirable policy path for Germany, one in which it practices fiscal discipline and growth creation so well that other euro nations emulate it.

Read Shlaes’ analysis.

Reminder: They’re Republikeynesians

Debt, Economy, Federal Reserve Bank, Inflation, Political Economy, Republicans

Carl Rove on “Hannity” paraphrased: The Democrats’ stimulus was all stupid spending, there was nothing stimulating about it.

The premise of this stupid refrain, repeated again and again by GOPiers, is that there is a smart, economically stimulating way for the state to spend money to stimulate the economy.

Each and every Republikeynesian heard on cable will refute not the idea that government is able to create jobs out of funds it forcibly removes from the private economy or by printing paper in the basement of the Fed. The beef the likes of the incredibly dim Dana Parino, Newt, Dick, Carl et. al., will invariably voice is: The Dems didn’t apply the stolen funds the way one ought to have; the way we would have.

“How much to hand-out; who to hand it to; which hand-out makes the best use of taxpayer money … that’s the depth of the ‘philosophical’ to-be-or-not-to-be among Republikeynsians.”—ILANA (December 5, 2008)

Just thought thought I ought to remind you that they are all rotten Republikeynesians.