May the source be with you, but remember the KISS principle ;-)
Financial Sector Induced Systemic Instability of Economy
While I believe in usefulness of capital markets, it is clear that they are double edge sword and
that banks "in a long run" tend to behave like
Mr. Capone may have something to say about danger of banks :-).That means that growth of
financial sector represents a direct threat to the stability of the society. Positive feedback loops
creates one financial crisis after another with the increasing magnitude leading up to a collapse of
financial system like happened in 1927 and 2008.
"Minsky's financial instability hypothesis depends critically on what amounts to a sociological
insight. People change their minds about taking risks. They don't make a one-time rational
judgment about debt use and stock market exposure and stick to it. Instead, they change their
minds over time. And history is quite clear about how they change their minds. The
longer the good times endure, the more people begin to see wisdom in risky strategies."
The Cost of Capitalism: Understanding Market Mayhem and Stabilizing our
Economic Future, by Robert Barbera
The flaw with Capitalism is that it creates its own positive feedback loop, snowballing to
the point where the accumulation of wealth and power hurts people — eventually even those at the
top of the food chain. ”
Banks are a clear case of market failure and their employees at the senior level have
basically become the biggest bank robbers of all time. As for basing pay on current revenues
and not profits over extended periods of time, then that is a clear case of market failure --
The banksters have been able to sell the “talent” myth to justify their outsized pay
because they are the only ones able to deliver the type of GDP growth the U.S. economy needs in
the short term, even if that kills the U.S. economy in the long term. You’ll be gone, I’ll be
Unfortunately, many countries go broke pursuing war, if not financially, then morally (are
the two different? – this post suggests otherwise).
I occurs to me that the U.S. is also in
that flock; interventions justified by grand cause built on fallacy, the alpha and omega of failure.
Is the financial apparatchik (or Nomenklatura, a term I like which, as many from the Soviet era,
succinctly describes aspects of our situation today) fated also to the trash heap, despite the
best efforts of the Man of the hour, Ben Bernanke?
Financialization is a Damocles sword hanging over the neoliberal society
While I believe in usefulness of capital markets, it is clear that they are double edge sword and
that banks "in a long run" tend to behave like
Mr. Capone may have something to say about danger of banks :-).That means that growth of financial
sector represents a direct threat to the stability of the society (Keynesianism
and the Great Recession )
Without adult supervision, as it were, a financial sector that was already inherently unstable
went wild. When the subprime assets were found to be toxic since they were based on mortgages on
which borrowers had defaulted, highly indebted or leveraged banks that had bought these now
valueless securities had little equity to repay their creditors or depositors who now came after
them. This quickly led to their bankruptcy, as in the case of Lehman Brothers, or to their being
bailed out by government, as was the case with most of the biggest banks. The finance sector
froze up, resulting in a recession—a big one—in the real economy.
Neoliberal revolution, or, as Simon Johnson called it after "quite coup" (Atlantic),
brought political power to the financial oligarchy deposed after the New Deal. Deregulation
naturally followed, with especially big role played by corrupt Clinton administration. Positive feedback loops creates one financial crisis after another with the
increasing magnitude. "Saving and loans" crisis followed by dot-com crisis of 2000, which in
turn followed by the collapse of financial system in 2008, which looks somewhat similar to what
happened in 1927. No prominent financial honcho, who was instrumental in creating "subprime
crisis" was jailed. Most remained filthy rich.
Unless the society puts severe limits on their actions like was done during New Deal,
financial firms successfully
subvert the regulation mechanisms and take the society hostage. But periodic purges with relocation
of the most active promoters of "freedom for banks" (aka free market fundamentalism) under the smoke
screen of "free market" promotion does not solve the problem of positive feedback loops that banks create
by mere existence. That's difficult to do while neoliberal ideology and related neoclassical economy
dominates the society thinking (via brainwashing), with universities playing especially negative
role -- most of economics departments are captured by neoliberals who censor any heretics. So year
after year brainwashing students enter the society without understanding real dangers that
neoliberalism brought for them. Including lack of meaningful employment opportunities.
Of course, most of high level officers of leading finance institutions which caused the crisis of
2008-2009 as a psychological type are as close to gangsters as one can get. But there is
something in their actions that does not depend on individual traits (although many of them
definitely can be classified as psychopaths), and is more related to their social position.
This situation is somewhat similar to Bolsheviks coup d'état of 1917 which resulted in capturing
Russia by this ideological sect. And in this sense quite coupe of 1980 is also irreversible in
the same sense as Bolsheviks revolution was irreversible: the "occupation" of the country by a
fanatical sect lasts until the population rejects the ideology with its (now apparent) utopian
Bolshevism which lasted
75 years, spend in such zombie state the last two decades (if we assume 1991 as the year of death of
Bolshevism, its ideology was dead much earlier -- the grave flaws in it were visible from late 60th,
if not after the WWII). But only when their ideology was destroyed both by inability to raise the standard of living
of the population and by the growing neoliberal ideology as an alternative (and a new, more powerful then Marxism high-demand
cult) Bolsheviks started to lose the grip on their power in the country. As a result Bolsheviks lost the power
only in 1991, or more correctly switched camps and privatized the country. If not inaptness of their
last General Secretary, they probably could last more. In any case after the ideology collapsed, the
USSR disintegrated (or more correctly turn by national elites, each of which wanted their peace of
The sad truth is that the mere growth of financial sector creates additional positive feedback loops
and increases structural instability within both the financial sector itself and the society at large.
Dynamic systems with strong positive feedback loops not compensated by negative feedback loops are unstable.
As a result banks and other financial institution periodically generate a deep, devastating crisis.
This is the meaning of famous Hyman Minsky phrase "stability is destabilizing".
In other words, financial apparatchiks (or Financial Nomenklatura, a term from the Soviet era, which
succinctly describes aspects of our situation today) drive the country off the cliff because they do
not have any countervailing forces, by the strength of their political influence and unsaturable
greed. Although the following
analogy in weaker then analogy with dynamic systems with positive feedback loops, outsized financial
sector can be viewed in biological terms as cancer.
known medically as a malignantneoplasm, is a broad group of
diseases involving unregulated
cell growth. In cancer,
cells divide and grow
uncontrollably, forming malignant tumors, and invading nearby parts of the body. The cancer may also
spread to more distant parts
of the body through the lymphatic system
or bloodstream. Not all tumors
are cancerous; benign tumors
do not invade neighboring tissues and do not spread throughout the body. There are over 200 different
known cancers that affect humans.
Like certain types of cancer they depend of weakening "tumor suppressor genes" (via "Quiet
coup" mechanism of acquiring dominant political power) which allow then to engage in uncontrolled growth, destroying
healthy cells (and first of all local manufacturing).
The other suspicion is the unchecked financialization always goes too far and the last N
percent of financial activity absorbs much more resources (especially intellectual resources) and
creates more potential instability than its additional efficiency-benefits (often zero or negative) can justify. It is hard
to imagine that a Hedge Fund Operator of the Year does anything that is even remotely socially useful to justify his
enormous (and lightly taxed) compensation. It is pure wealth redistribution up based on political domination
of financial oligarchy. Significant vulnerabilities within the shadow banking system and
derivatives are plain vanilla socially destructive. Yet they persist due to inevitable political power
grab by financial oligarchy (Quiet coup).
Again, I would like to stress that this problem of the oversized financial sector which produces
one devastating crisis after another
is closely related to the problem of a positive feedback loops. And the society in which banks are given
free hand inevitably degrades into "socialism for banks" or "casino
capitalism" -- a type of
neoliberalism with huge
inequality and huge criminality of top banking officers.
Whether we can do without private banks is unclear, but there is sound evidence that unlike growth
of manufacturing, private financial sector growth is dangerous for the society health and perverts society
goals. Like cult groups the financial world does a terrific job of "shunning" the principled individuals
and suppressing dissent (by capturing and cultivating neoliberal stooges in all major university
departments and press),
so self-destructing tendencies after they arise can't be stopped within the framework of
neoliberalism. In a way financial
firm is like sociopath inevitable produces its trail of victims (and sociopaths might be useful in battles exactly due
to the qualities such as ability to remain cool in dangerous situation, that make them dangerous in the normal course of events).
This tendency of society with unregulated or lightly regulated financial sector toward self-destruction
was first formulated as "Minsky instability hypothesis" --
and outstanding intellectual achievement of American economic Hyman Minsky (September 23, 1919 –
October 24, 1996). Who BTW was pretty much underappreciated (if not suppressed) during his lifetime because his views
were different from orthodox (and false) neoclassic economic theory which dominates US universities,
Like flat Earth theory was enforce by Catholic church before, it is fiercely enforced by an army of well paid neoliberal economics, those
Jesuits of modern era. Who prosecute heretics who question flat Earth theory even more efficiently then
their medieval counterparts; the only difference is that they do not burn the literally, only
Former Washington University in St. Louis economics professor Hyman P. Minsky had predicted the
Great Recession decades before it happened. Hyman Minsky was a real student of the Great
Depression, while Bernanke who widely is viewed as a scholar who studied the Great Depression, in
reality was a charlatan, who just tried to explain the Great Depression from the positions of
neo-classical economy. That's a big difference.
Minsky instability hypothesis ("stability is destabilizing" under capitalism) that emerged from
his analysis of the Great Depression was based on intellectual heritage of three great thinkers in
economics (my presentation is partially based on an outstanding lecture by Steve Keen Lecture 6 on Minsky, Financial
Instability, the Great Depression & the Global Financial Crisis). We can talk about
three source of influence, there authors writing of which touched the same subject from similar
positions and were the base of Hyman Minsky great advance in understanding of mechanics of
development of financial crisis under capitalism and the critical role of financial system in it
(neoclassical economics ignores the existence of financial system in its analysis):
Minsky didn't follow the conventional version of Marxism . And it was dangerous for him to
do so due to McCarthysm. Even mentioning of Marx might lead to strakism fromthe academy those years.
McCarthy and his followers in academy did not understand the difference between Marx great analysis
of capitalism and his utopian vision of the future. Impliedly this witch hunt helped to establish
hegemony of neoclassical economy in economic departments in the USA.
While Minsky did not cited Marx in his writings and did use Marx's Labor Theory of Value his
thinking was definitely influenced by Marx’s critique of finance. We now know that he read and
admired the Capital. And that not accidental due to the fact that his parents were Mensheviks -- a
suppressed after Bolshevik revolution more moderate wing of Russian Social Democratic Party that
rejected the idea of launching the socialist revolution in Russia -- in their opinion Russia
needed first to became a capitalist country and get rid of remnants of feudalism. They escaped from
Soviet Russia when Mensheviks started to be prosecuted by Bolsheviks.
And probably the main influence on Minsky was not Marx's discussion of finance in Volume I of Capital
with a "commodity" model of money, but critical remarks scattered in Volumes II & III
(which were not edited by Marx by compiled posthumously by Engels), where he was really critical of
big banks as well as Marx's earlier works (Grundrisse,
Theories of Surplus Value) where Marx was scathing about finance:
"A high rate of interest can also indicate, as it did in 1857, that the country is undermined
by the roving cavaliers of credit who can afford to pay a high interest because they pay it out
of other people's pocket* (whereby, however, they help to determine the rate of interest
for all) and meanwhile they live in grand style on anticipated profits.
The second source on which Minsky based his insights was Irving Fisher. Irving Fisher’s
reputation destroyed by wrong predictions on stock market prices. In aftermath, developed theory to
explain the crash and published it in his book "The Debt Deflation Theory of Great
Depressions". His main points are:
Neoclassical theory assumed equilibrium but any real world equilibrium will be short-lived
"New disturbances are, humanly speaking, sure to occur, so that, in actual fact, any
variable is almost always above or below the ideal equilibrium."
Theoretically... there must be—over-or under-production, over- or under-consumption,..., and
over or under everything else.
It is as absurd to assume that, for any long period of time, the variables in the economic
organization, or any part of them, will "stay put," in perfect equilibrium, as to assume that the
Atlantic Ocean can ever be without a wave." (1933:339)
According to Fisher two key disequilibrium forces that push economic into the next economic
crisis are debt and subsequent deflation
The "two dominant factors" which cause depressions are "over-indebtedness to start with and
deflation following soon after"
"Thus over-investment and over-speculation are often important; but they would have far less
serious results were they not conducted with borrowed money.
That is, over-indebtedness may lend importance to over-investment or to over-speculation. The
same is true as to over-confidence.
I fancy that over-confidence seldom does any great harm except when, as, and if, it beguiles
its victims into debt." (Fisher 1933: 341; emphasis added!)
A chain reaction when overconfidence leads to over-indebtedness: Debt liquidation leads to
Joseph Schumpeter was Joseph Schumpeter has more positive view of capitalism than the other two. He authored the theory
of creative destruction as a path by which capitalism achieves higher and higher productivity.
He capitalism as necessarily unstable, but for him this was a positive feature --
instability of capitalism the source of its creativity. His view of capitalism was highly dynamic
and somewhat resembles the view of Marx (who also thought that capitalism destroys all previous
order and create a new one):
Entrepreneurs profit by disrupting "equilibrium" of system
Finance plays essential role here by enabling entrepreneurs
To Schumpeter, entrepreneurs are people with good ideas but no money
To turn ideas into disruptive products or processes they resort to borrowing from banks
Boom caused by investment phase of entrepreneurs. New entrepreneurs undermine old or rival
products. Successful entrepreneurs repay debt, reducing money supply
In this sense the success (boom) carry the seeds of the subsequet bust because with the
success of "pioneers" draw other into thi same market and banks are more willing to finance them
seeing the success of pioneers. But when too many similar products are financed and hit the
market they create the glut and entrepreneurs who ere late to the party are unable to pay the
debts and go bankrupt desire the fact that might have superiors products (but not superior
enough). Slump caused when excessive products hit the market and there are not enough buyers.
Debt deflation follows.
Unlike Marx, who thought that the periodic crisis of overproduction is the source of
instability (as well as gradual absolute impoverishment of workers), Minsky assumed that the
key source of that instability of capitalist system is connected with the cycles of business
borrowing and fractional bank lending, when "good times" lead to excessive borrowing leading to high
leverage and overproduction and thus to eventual debt crisis (The
Alternative To Neoliberalism ):
Minsky on capitalism:
He followed Marx stating that "capitalism is inherently flawed, being prone to booms, crises
This instability is due to characteristics the financial system must possess and will
inevitably acquire, if it is to be consistent with full-blown capitalism.
Such a financial system will be capable of both generating signals that induce an accelerating
desire to invest and of financing that accelerating investment." (Minsky 1969b: 224)
“The natural starting place for analyzing the relation between debt and income is to take
an economy with a cyclical past that is now doing well.
The inherited debt reflects the history of the economy, which includes a period in the not
too distant past in which the economy did not do well.
Acceptable liability structures are based upon some margin of safety so that expected cash
flows, even in periods when the economy is not doing well, will cover contractual debt payments.
As the period over which the economy does well lengthens, two things become evident in board
rooms. Existing debts are easily validated and units that were heavily in debt prospered; it paid
to lever." (65)
It becomes apparent that the margins of safety built into debt structures were too great.
ans should be reduced...
As a result, over a period in which the economy does well, views about acceptable debt
structure change. In the dealmaking that goes on between banks, investment bankers, and businessmen,
the acceptable amount of debt to use in financing various types of activity and positions increases.
This increase in the weight of debt financing raises the market pnce of capital assets and
increases investment. As this continues the economy is transformed into a boom economy... ” (65)
This transforms a period of tranquil growth into a period of speculative excess
“Stable growth is inconsistent with the manner in which investment is determined in an economy
in which debt-financed ownership of capital assets exists, and the extent to which such debt financing
can be carried is market determined.
It follows that the fundamental instability of a capitalist economy is upward.
The tendency to transform doing well into a speculative investment boom is the basic instability
in a capitalist economy." (65)
The idea of Minsky moment is related to the fact that the fractional reserve banking periodically
causes credit collapse when the leveraged credit expansion goes into reverse. And mainstream economists
do not want to talk about the fact that increasing confidence breeds increased leverage. So financial
stability breeds instability and subsequent financial crisis. All actions to guarantee a market rise,
ultimately guarantee it's destruction because greed will always take advantage of a "sure thing" and
push it beyond reasonable boundaries. In other words, marker players are no rational and assume
that it would be foolish not to maximize leverage in a market which is going up. So the fractional
reserve banking mechanisms ultimately and ironically lead to over lending and guarantee the subsequent
crisis and the market's destruction. Stability breed instability.
That means that fractional reserve banking based economic system with private players (aka capitalism)
is inherently unstable. And first of all because fractional reserve banking is debt based. In
order to have growth it must create debt. Eventually the pyramid of debt crushes and crisis hit. When
the credit expansion fuels asset price bubbles, the dangers for the financial sector and the real economy
are substantial because this way the credit boom bubble is inflated which eventually burst. The damage
done to the economy by the bursting of credit boom bubbles is significant and long lasting.
«When credit growth fuels asset price bubbles, the dangers for the financial sector and
the real economy are much more substantial.»
So M Minsky 50 years ago and M Pettis 15 years ago (in his "The volatility machine") had it
right? Who could have imagined! :-)
«In the past decades, central banks typically have taken a hands-off approach to asset
price bubbles and credit booms.»
If only! They have been feeding credit-based asset price bubbles by at the same time weakening
regulations to push up allowed capital-leverage ratios, and boosting the quantity of credit as
high as possible, but specifically most for leveraged speculation on assets, by allowing vast-overvaluations
on those assets.
Central banks have worked hard in most Anglo-American countries to redistribute income and
wealth from "inflationary" worker incomes to "non-inflationary" rentier incomes via hyper-subsidizing
with endless cheap credit the excesses of financial speculation in driving up asset prices.
John Kay in his January 5 2010 FT column very aptly explained the systemic instability of financial
The credit crunch of 2007-08 was the third phase of a larger and longer financial crisis. The
first phase was the emerging market defaults of the 1990s. The second was the new economy boom and
bust at the turn of the century. The third was the collapse of markets for structured debt products,
which had grown so rapidly in the five years up to 2007.
The manifestation of the problem in each phase was different – first emerging markets, then
stock markets, then debt. But the mechanics were essentially the same. Financial institutions
identified a genuine economic change – the assimilation of some poor countries into the global economy,
the opportunities offered to business by new information technology, and the development of opportunities
to manage risk and maturity mismatch more effectively through markets. Competition to sell
products led to wild exaggeration of the pace and scope of these trends. The resulting herd enthusiasm
led to mispricing – particularly in asset markets, which yielded large, and largely illusory, profits,
of which a substantial fraction was paid to employees.
Eventually, at the end of each phase, reality impinged. The activities that once seemed so profitable
– funding the financial systems of emerging economies, promoting start-up internet businesses, trading
in structured debt products – turned out, in fact, to have been a source of losses. Lenders had to
make write-offs, most of the new economy stocks proved valueless and many structured products became
unmarketable. Governments, and particularly the US government, reacted on each occasion by
pumping money into the financial system in the hope of staving off wider collapse, with some degree
of success. At the end of each phase, regulators and financial institutions declared that
lessons had been learnt. While measures were implemented which, if they had been introduced five
years earlier, might have prevented the most recent crisis from taking the particular form it did,
these responses addressed the particular problem that had just occurred, rather than the underlying
generic problems of skewed incentives and dysfunctional institutional structures.
The public support of markets provided on each occasion the fuel needed to stoke the next crisis.
Each boom and bust is larger than the last. Since the alleviating action is also larger, the pattern
is one of cycles of increasing amplitude.
I do not know what the epicenter of the next crisis will be, except that it is unlikely to involve
structured debt products. I do know that unless human nature changes or there is fundamental change
in the structure of the financial services industry – equally improbable – there will be another
manifestation once again based on naive extrapolation and collective magical thinking. The recent
crisis taxed to the full – the word tax is used deliberately – the resources of world governments
and their citizens. Even if there is will to respond to the next crisis, the capacity to do so may
not be there.
The citizens of that most placid of countries, Iceland, now backed by their president, have found
a characteristically polite and restrained way of disputing an obligation to stump up large sums
of cash to pay for the arrogance and greed of other people. They are right. We should listen to them
before the same message is conveyed in much more violent form, in another place and at another time.
But it seems unlikely that we will.
We made a mistake in the closing decades of the 20th century. We removed restrictions that
had imposed functional separation on financial institutions. This led to businesses riddled
with conflicts of interest and culture, controlled by warring groups of their own senior employees.
The scale of resources such businesses commanded enabled them to wield influence to create a – for
them – virtuous circle of growing economic and political power. That mistake will not be easily remedied,
and that is why I view the new decade with great apprehension. In the name of free markets, we created
a monster that threatens to destroy the very free markets we extol.
While Hyman Minsky was the first clearly formulate the financial instability hypothesis, Keynes
also understood this dynamic pretty well. He postulated that a world with a large financial
sector and an excessive emphasis on the production of investment products creates instability both in
terms of output and prices. In other words it automatically tends to generate credit and asset bubbles.
The key driver is the fact that financial professionals generally risk other people’s money and due
to this fact have asymmetrical incentives:
They get big rewards when bets go right
They don’t have to pay when bets go wrong.
This asymmetry is not a new observation of this systemic problem. Andrew Jackson noted it in much
more polemic way long ago:
“Gentlemen, I have had men watching you for a long time and I am convinced that you have used
the funds of the bank to speculate in the breadstuffs of the country.When you won,
you divided the profits amongst you, and when you lost, you charged it to the bank. You tell
me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families.
That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand
families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out,
and by the grace of the Eternal God, will rout you out.”
This asymmetrical incentives ensure that the financial system is structurally biased toward
taking on more risk than what should be taken. In other words it naturally tend to slide to
the casino model, the with omnipresent reckless gambling as the primary and the most profitable mode
of operation while an opportunities last. The only way to counter this is to throw sand into the
wheels of financial mechanism: enforce strict regulations, limit money supplies and periodically
jail too enthusiastic bankers. The latter is as important or even more important as the other two because
bankers tend to abuse "limited liability" status like no other sector.
Asset inflation over the past 10 years and the subsequent catastrophe incurred is a way classic behavior
of dynamic system with strong positive feedback loop. Such behavior does not depends of personalities
of bankers or policymakers, but is an immanent property of this class of dynamic systems. And the main
driving force here was deregulation. So its important that new regulation has safety feature which make
removal of it more complicated and requiring bigger majority like is the case with constitutional issues.
Another fact was the fact that due to perverted incentives, accounting in the banks
was fraudulent from the very beginning and it was fraudulent on purpose. Essentially accounting
in banks automatically become as bad as law enforcement permits. This is a classic case of control fraud
and from prevention standpoint is make sense to establish huge penalties for auditors, which might hurt
healthy institutions but help to ensure that the most fraudulent institution lose these bank charter
before affecting the whole system. With the anti-regulatory zeal of Bush II administration the
level of auditing became too superficial, almost non-existent. I remember perverted dances with
Sarbanes–Oxley when it
was clear from the very beginning that the real goal is not to strengthen accounting but to earn fees
and to create as much profitable red tape as possible, in perfect Soviet bureaucracy style.
Deregulation also increases systemic risk by influencing the real goals of financial
organizations. At some point of deregulation process the goal of higher remuneration for the top brass
becomes self-sustainable trend and replaces all other goals of the financial organization. This
is the essence of Martin Taylor’s, the former chief executive of Barclays, article
- Innumerate bankers were ripe for a reckoning in the Financial Times (Dec 15, 2009), which is worth
reading in its entirety:
City people have always been paid well relative to others, but megabonuses are quite new.
From my own experience, in the mid-1990s no more than four or five employees of Barclays’ then
investment bank were paid more than £1m, and no one got near £2m. Around the turn of the
millennium across the market things began to take off, and accelerated rapidly – after a pause in
2001-03 – so that exceptionally high remuneration, not just individually, but in total, was paid
out between 2004 and 2007.
Observers of financial services saw unbelievable prosperity and apparently immense value
added. Yet two years later the whole industry was bankrupt. A simple reason underlies this:
any industry that pays out in cash colossal accounting profits that are largely imaginary will go
bust quickly. Not only has the industry – and by extension societies that depend on it – been
spending money that is no longer there, it has been giving away money that it only imagined it had
in the first place. Worse, it seems to want to do it all again.
What were the sources of this imaginary wealth?
First, spreads on credit that took no account of default probabilities (bankers have been
doing this for centuries, but not on this scale).
Second, unrealised mark-to-market profits on the trading book, especially in illiquid instruments.
Third, profits conjured up by taking the net present value of streams of income stretching
into the future, on derivative issuance for example.
In the last two of these the bank was not receiving any income, merely “booking revenues”.
How could they pay this non-existent wealth out in cash to their employees? Because they had
no measure of cash flow to tell them they were idiots, and because everyone else was doing it.
Paying out 50 per cent of revenues to staff had become the rule, even when the “revenues”
did not actually consist of money.
In the next phase instability is amplified by the way governments and central banks respond to crises
caused by credit bubble: the state has powerful means to end a recession, but the policies it uses give
rise to the next phase of instability, the next bubble…. When money is virtually free – or, at least,
at 0.5 per cent – traders feel stupid if they don’t leverage up to the hilt. Thus previous bubble and
crash become a dress rehearsal for the next.
Resulting self-sustaining "boom-bust" cycle is very close how electronic systems with positive feedback
loop behave and cannot be explained by neo-classical macroeconomic models. Like with electronic
devices the financial institution in this mode are unable to provide the services that are needed.
Modern finance, he argued, was far from the stabilizing force that mainstream economics portrayed:
rather, it was a system that created the illusion of stability while simultaneously creating the
conditions for an inevitable and dramatic collapse.
...our whole financial system contains
the seeds of its own destruction. “Instability,” he wrote, “is an inherent and inescapable flaw of
Minsky’s vision might have been dark, but he was not a fatalist; he believed it was possible to
craft policies that could blunt the collateral damage caused by financial crises. But with a growing
number of economists eager to declare the recession over, and the crisis itself apparently behind
us, these policies may prove as discomforting as the theories that prompted them in the first place.
Indeed, as economists re-embrace Minsky’s prophetic insights, it is far from clear that they’re ready
to reckon with the full implications of what he saw.
And he understood the roots of the current credit bubble much better that neoclassical economists like
As people forget that failure is a possibility, a “euphoric economy” eventually develops, fueled
by the rise of far riskier borrowers - what [Minsky] called speculative borrowers,
those whose income would cover interest payments but not the principal; and those he called
“Ponzi borrowers,” those whose income could cover neither, and could only pay their bills
by borrowing still further.
As these latter categories grew, the overall economy would shift from a conservative but profitable
environment to a much more freewheeling system dominated by players whose survival depended not on
sound business plans, but on borrowed money and freely available credit.
Minsky’s financial instability hypothesis suggests that when optimism is high and ample
funds are available for investment, investors tend to migrate from the safe hedge end of the Minsky
spectrum to the risky speculative and Ponzi end. Indeed, in the current crisis, investors tried to raise
returns by increasing leverage and switching to financing via short-term—sometimes overnight— borrowing
late to learn?):
In the church of Friedman, inflation was the ol' devil tempting the good folk; the 1980s seemed
to prove that, let loose, it would cause untold havoc on the populace. But, as Barbera notes:
The last five major global cyclical events were the early 1990s recession - largely occasioned
by the US Savings & Loan crisis, the collapse of Japan Inc after the stock market crash of 1990,
the Asian crisis of the mid-1990s, the fabulous technology boom/bust cycle at the turn of the
millennium, and the unprecedented rise and then collapse for US residential real estate in 2007-2008.
All five episodes delivered recessions, either global or regional. In no case was there a significant
prior acceleration of wages and general prices. In each case, an investment boom and an associated
asset market ran to improbable heights and then collapsed. From 1945 to 1985, there was no recession
caused by the instability of investment prompted by financial speculation - and since 1985 there
has been no recession that has not been caused by these factors.
Thus, meet the devil in Minsky's paradise - "an investment boom and an associated asset market [that]
ran to improbable heights and then collapsed".
According the Barbera, "Minsky's financial instability hypothesis depends critically on what amounts
to a sociological insight. People change their minds about taking risks. They don't make a one-time
rational judgment about debt use and stock market exposure and stick to it. Instead, they change
their minds over time. And history is quite clear about how they change their minds. The longer the
good times endure, the more people begin to see wisdom in risky strategies."
Current economy state can be called following Paul McCulley a "stable disequilibrium" very similar
to a state a sand pile. All this pile of stocks, debt instruments, derivatives, credit
default swaps and God know corresponds to a pile of sand that is on the verse of losing stability.
Each financial player works hard to maximize their own personal outcome but the "invisible hand" effect
in adding sand to the pile that is increasing systemic instability. According to Minsky, the longer
such situation continues the more likely and violent an "avalanche".
The late Hunt Taylor wrote, in 2006:
"Let us start with what we know. First, these markets look nothing like anything I've ever encountered
before. Their stunning complexity, the staggering number of tradable instruments and their interconnectedness,
the light-speed at which information moves, the degree to which the movement of one instrument triggers
nonlinear reactions along chains of related derivatives, and the requisite level of mathematics necessary
to price them speak to the reality that we are now sailing in uncharted waters.
"... I've had 30-plus years of learning experiences in markets, all of which tell me that
technology and telecommunications will not do away with human greed and ignorance. I think
we will drive the car faster and faster until something bad happens. And I think it will come, like
a comet, from that part of the night sky where we least expect it."
Banking was once a dangerous profession. In Britain, for instance, bankers faced
“unlimited liability”--that is, if you ran a bank, and the bank couldn’t repay depositors or other
creditors, those people had the right to confiscate all your personal assets and income until you
repaid. It wasn’t until the second half of the nineteenth century that Britain established
limited liability for bank owners. From that point on, British bankers no longer assumed
much financial risk themselves.
In the United States, there was great experimentation with banking during the 1800s, but those
involved in the enterprise typically made a substantial commitment of their own capital. For
example, there was a well-established tradition of “double liability,” in which stockholders were
responsible for twice the original value of their shares in a bank. This encouraged stockholders
to carefully monitor bank executives and employees. And, in turn, it placed a lot of pressure on
those who managed banks. If they fared poorly, they typically faced personal and professional ruin.
The idea that a bank executive would retain wealth and social status in the event of a self-induced
calamity would have struck everyone--including bank executives themselves--as ludicrous.
Enter, in the early part of the twentieth century, the Federal Reserve. The Fed was founded in
1913, but discussion about whether to create a central bank had swirled for years. “No one can carefully
study the experience of the other great commercial nations,” argued Republican Senator Nelson Aldrich
in an influential 1909 speech, “without being convinced that disastrous results of recurring financial
crises have been successfully prevented by a proper organization of capital and by the adoption of
wise methods of banking and of currency”--in other words, a central bank. In November 1910, Aldrich
and a small group of top financiers met on an isolated island off the coast of Georgia. There, they
hammered out a draft plan to create a strong central bank that would be owned by banks themselves.
What these bankers essentially wanted was a bailout mechanism for the aftermath of speculative
crashes -- something more durable than J.P. Morgan, who saved the day in the Panic of 1907
but couldn’t be counted on to live forever. While they sought informal government backing and substantial
government financial support for their new venture, the bankers also wanted it to remain free of
government interference, oversight, or control.
Another destabilizing fact is so called myth of invisible hand which is closely related to the myth
about market self-regulation. The misunderstood argument of Adam Smith , the founder of modern
economics, that free markets led to efficient outcomes, “as if by an invisible hand” has played a central
role in these debates: it suggested that we could, by and large, rely on markets without government
intervention. About "invisible hand" deification, see
The Invisible Hand, Trumped by Darwin - NYTimes.com.
The moment in the financial system when the quantity of debt turns into quality and produces yet
another financial crisis is called Minsky moment. In other words the “Minsky moment” is the time
when an unsustainable financial boom turns into uncontrollable collapse of financial markets (aka
financial crash). The existence of Minsky moments is one of the most important counterargument against
financial market self-regulation. It also expose free market fundamentalists such as "former
Maestro" Greenspan as charlatans. Greenspan actually implicitly admitted that he is and that it was
he, who was the "machinist" who helped to bring the USA economic train off the rails in 2008
via deregulation and dismantling the New Deal installed safeguards.
Here how it is explained by Stephen Mihm in
Boston Globe in 2009
in the after math of 2008 financial crisis:
“Minsky” was shorthand for Hyman Minsky, an American macroeconomist who died over a decade
ago. He predicted almost exactly the kind of meltdown that recently hammered the global
economy. He believed in capitalism, but also believed it had almost a genetic weakness.
Modern finance, he argued, was far from the stabilizing force that mainstream economics
portrayed: rather, it was a system that created the illusion of stability while simultaneously
creating the conditions for an inevitable and dramatic collapse.
In other words, the one person who foresaw the crisis also believed that our whole financial system
contains the seeds of its own destruction. “Instability,” he wrote, “is an inherent and inescapable
flaw of capitalism.”
Minsky believed it was possible to craft policies that could blunt the collateral damage caused
by financial crises. As economists re-embrace Minsky’s prophetic insights, it is far from clear that
they’re ready to reckon with the full implications of what he saw.
Minsky theory was not well received due to powerful orthodoxy, born in the years after World War
II, known as the neoclassical synthesis. The older belief in a self-regulating, self-stabilizing
free market had selectively absorbed a few insights from John Maynard Keynes, the great economist
of the 1930s who wrote extensively of the ways that capitalism might fail to maintain full employment.
Most economists still believed that free-market capitalism was a fundamentally stable basis for an
economy, though thanks to Keynes, some now acknowledged that government might under certain circumstances
play a role in keeping the economy - and employment - on an even keel.
Economists like Paul Samuelson became the public face of the new establishment; he and others
at a handful of top universities became deeply influential in Washington. In theory, Minsky could
have been an academic star in this new establishment: Like Samuelson, he earned his doctorate in
economics at Harvard University, where he studied with legendary Austrian economist Joseph Schumpeter,
as well as future Nobel laureate Wassily Leontief.
But Minsky was cut from different cloth than many of the other big names. The descendent of immigrants
from Minsk, in modern-day Belarus, Minsky was a red-diaper baby, the son of Menshevik socialists.
While most economists spent the 1950s and 1960s toiling over mathematical models, Minsky pursued
research on poverty, hardly the hottest subfield of economics. With long, wild, white hair, Minsky
was closer to the counterculture than to mainstream economics. He was, recalls the economist L. Randall
Wray, a former student, a “character.”
So while his colleagues from graduate school went on to win Nobel prizes and rise to the top of
academia, Minsky languished. He drifted from Brown to Berkeley and eventually to Washington University.
Indeed, many economists weren’t even aware of his work. One assessment of Minsky published in 1997
simply noted that his “work has not had a major influence in the macroeconomic discussions of the
last thirty years.”
Yet he was busy. In addition to poverty, Minsky began to delve into the field of finance, which
despite its seeming importance had no place in the theories formulated by Samuelson and others. He
also began to ask a simple, if disturbing question: “Can ‘it’ happen again?” - where “it” was, like
Harry Potter’s nemesis Voldemort, the thing that could not be named: the Great Depression.
In his writings, Minsky looked to his intellectual hero, Keynes, arguably the greatest economist
of the 20th century. But where most economists drew a single, simplistic lesson from Keynes - that
government could step in and micromanage the economy, smooth out the business cycle, and keep things
on an even keel - Minsky had no interest in what he and a handful of other dissident economists came
to call “bastard Keynesianism.”
Instead, Minsky drew his own, far darker, lessons from Keynes’s landmark writings, which dealt
not only with the problem of unemployment, but with money and banking. Although Keynes had never
stated this explicitly, Minsky argued that Keynes’s collective work amounted to a powerful argument
that capitalism was by its very nature unstable and prone to collapse. Far from trending toward some
magical state of equilibrium, capitalism would inevitably do the opposite. It would lurch over a
This insight bore the stamp of his advisor Joseph Schumpeter, the noted Austrian economist now
famous for documenting capitalism’s ceaseless process of “creative destruction.” But Minsky spent
more time thinking about destruction than creation. In doing so, he formulated an intriguing theory:
not only was capitalism prone to collapse, he argued, it was precisely its periods of economic stability
that would set the stage for monumental crises.
Minsky called his idea the “Financial Instability Hypothesis.” In the wake of a depression, he
noted, financial institutions are extraordinarily conservative, as are businesses. With the borrowers
and the lenders who fuel the economy all steering clear of high-risk deals, things go smoothly: loans
are almost always paid on time, businesses generally succeed, and everyone does well. That success,
however, inevitably encourages borrowers and lenders to take on more risk in the reasonable hope
of making more money. As Minsky observed, “Success breeds a disregard of the possibility of failure.”
As people forget that failure is a possibility, a “euphoric economy” eventually develops, fueled
by the rise of far riskier borrowers - what he called speculative borrowers, those whose income would
cover interest payments but not the principal; and those he called “Ponzi borrowers,” those whose
income could cover neither, and could only pay their bills by borrowing still further. As these latter
categories grew, the overall economy would shift from a conservative but profitable environment to
a much more freewheeling system dominated by players whose survival depended not on sound business
plans, but on borrowed money and freely available credit.
Once that kind of economy had developed, any panic could wreck the market. The failure of a single
firm, for example, or the revelation of a staggering fraud could trigger fear and a sudden, economy-wide
attempt to shed debt. This watershed moment - what was later dubbed the “Minsky moment” - would create
an environment deeply inhospitable to all borrowers. The speculators and Ponzi borrowers would collapse
first, as they lost access to the credit they needed to survive. Even the more stable players might
find themselves unable to pay their debt without selling off assets; their forced sales would send
asset prices spiraling downward, and inevitably, the entire rickety financial edifice would start
to collapse. Businesses would falter, and the crisis would spill over to the “real” economy that
depended on the now-collapsing financial system.
From the 1960s onward, Minsky elaborated on this hypothesis. At the time he believed that this
shift was already underway: postwar stability, financial innovation, and the receding memory of the
Great Depression were gradually setting the stage for a crisis of epic proportions. Most of what
he had to say fell on deaf ears. The 1960s were an era of solid growth, and although the economic
stagnation of the 1970s was a blow to mainstream neo-Keynesian economics, it did not send policymakers
scurrying to Minsky. Instead, a new free market fundamentalism took root: government was the problem,
not the solution.
Moreover, the new dogma coincided with a remarkable era of stability. The period from the late
1980s onward has been dubbed the “Great Moderation,” a time of shallow recessions and great resilience
among most major industrial economies. Things had never been more stable. The likelihood that “it”
could happen again now seemed laughable.
Yet throughout this period, the financial system - not the economy, but finance as an industry
- was growing by leaps and bounds. Minsky spent the last years of his life, in the early 1990s, warning
of the dangers of securitization and other forms of financial innovation, but few economists listened.
Nor did they pay attention to consumers’ and companies’ growing dependence on debt, and the growing
use of leverage within the financial system.
By the end of the 20th century, the financial system that Minsky had warned about had materialized,
complete with speculative borrowers, Ponzi borrowers, and precious few of the conservative borrowers
who were the bedrock of a truly stable economy. Over decades, we really had forgotten the meaning
of risk. When storied financial firms started to fall, sending shockwaves through the “real” economy,
his predictions started to look a lot like a road map.
“This wasn’t a Minsky moment,” explains Randall Wray. “It was a Minsky half-century.”
Minsky is now all the rage. A year ago, an influential Financial Times columnist confided to readers
that rereading Minsky’s 1986 “masterpiece” - “Stabilizing an Unstable Economy” - “helped clear my
mind on this crisis.” Others joined the chorus. Earlier this year, two economic heavyweights - Paul
Krugman and Brad DeLong - both tipped their hats to him in public forums. Indeed, the Nobel Prize-winning
Krugman titled one of the Robbins lectures at the London School of Economics “The Night They Re-read
Today most economists, it’s safe to say, are probably reading Minsky for the first time, trying
to fit his unconventional insights into the theoretical scaffolding of their profession. If Minsky
were alive today, he would no doubt applaud this belated acknowledgment, even if it has come at a
terrible cost. As he once wryly observed, “There is nothing wrong with macroeconomics that another
depression [won’t] cure.”
But does Minsky’s work offer us any practical help? If capitalism is inherently self-destructive
and unstable - never mind that it produces inequality and unemployment, as Keynes had observed -
After spending his life warning of the perils of the complacency that comes with stability - and
having it fall on deaf ears - Minsky was understandably pessimistic about the ability to short-circuit
the tragic cycle of boom and bust. But he did believe that much could be done to ameliorate the damage.
To prevent the Minsky moment from becoming a national calamity, part of his solution (which was
shared with other economists) was to have the Federal Reserve - what he liked to call the “Big Bank”
- step into the breach and act as a lender of last resort to firms under siege. By throwing lines
of liquidity to foundering firms, the Federal Reserve could break the cycle and stabilize the financial
system. It failed to do so during the Great Depression, when it stood by and let a banking crisis
spiral out of control. This time, under the leadership of Ben Bernanke - like Minsky, a scholar of
the Depression - it took a very different approach, becoming a lender of last resort to everything
from hedge funds to investment banks to money market funds.
Minsky’s other solution, however, was considerably more radical and less palatable politically.
The preferred mainstream tactic for pulling the economy out of a crisis was - and is - based on the
Keynesian notion of “priming the pump” by sending money that will employ lots of high-skilled, unionized
labor - by building a new high-speed train line, for example.
Minsky, however, argued for a “bubble-up” approach, sending money to the poor and unskilled
first. The government - or what he liked to call “Big Government” - should become the “employer of
last resort,” he said, offering a job to anyone who wanted one at a set minimum wage. It
would be paid to workers who would supply child care, clean streets, and provide services that would
give taxpayers a visible return on their dollars. In being available to everyone, it would be even
more ambitious than the New Deal, sharply reducing the welfare rolls by guaranteeing a job for anyone
who was able to work. Such a program would not only help the poor and unskilled, he believed, but
would put a floor beneath everyone else’s wages too, preventing salaries of more skilled workers
from falling too precipitously, and sending benefits up the socioeconomic ladder.
While economists may be acknowledging some of Minsky’s points on financial instability, it’s safe
to say that even liberal policymakers are still a long way from thinking about such an expanded role
for the American government. If nothing else, an expensive full-employment program would veer far
too close to socialism for the comfort of politicians. For his part, Wray thinks that the critics
are apt to misunderstand Minsky. “He saw these ideas as perfectly consistent with capitalism,” says
Wray. “They would make capitalism better.”
But not perfect. Indeed, if there’s anything to be drawn from Minsky’s collected work, it’s that
perfection, like stability and equilibrium, are mirages. Minsky did not share his profession’s quaint
belief that everything could be reduced to a tidy model, or a pat theory. His was a kind of existential
economics: capitalism, like life itself, is difficult, even tragic. “There is no simple answer to
the problems of our capitalism,” wrote Minsky. “There is no solution that can be transformed into
a catchy phrase and carried on banners.”
It’s a sentiment that may limit the extent to which Minsky becomes part of any new orthodoxy.
But that’s probably how he would have preferred it, believes liberal economist James Galbraith. “I
think he would resist being domesticated,” says Galbraith. “He spent his career in professional isolation.”
The positive feedback loop in inherent the environment dominated by large transnationals
which funnel their excess cash into the financial system to speculate on asset appreciation.
As analysis in "The
Endless Crisis" suggests ( updating the classic 1960s analysis of the U.S. economy given by Paul
Sweezy and Paul Baran in "Monopoly Capital.") that the global economy is controlled by large
oligopolistic firms. Which boost their profits by lowering their costs and suppressing wages(on global
scale), using computerization, automation and relocating production to cheap-labor countries such
as China. Wage suppression in turn created permanent weak global demand. Which in turn dry
ups investment opportunities in expansion of existing manufacturing facilities. That forces transnationals
to funnel their excess cash into the financial system to speculate on asset appreciation. As
a result we have "permanent recession" punctuated by boom and bust cycles in financial markets.
Nature of leverage is such that it always represent a positive feedback loop. And leverage
is the essence of
banking operations. In the absence of negative control loops in a form of regulation,
purges, exiles, etc, financial system eventually loses stability which demonstrate itself in financial
crisis. Deep financial crisis often are followed by stagnation and can turn into social crisis.
The economy finds itself in a "stagnation-financialization trap" in which the only way to stimulate
growth is through the financialization process which leads to the next bubble and the next financial
crisis. Policy makers in Western countries are ready and willing to lead the world off this
cliff: "Restoring the conditions for finance-led expansion has now become the immediate object of
economic policy in the face of a persistently stagnation-prone real economy."(Foster and McChesney,
p 47). The authors add, "Not only have financial crises become endemic, they have also been growing
in scale and global impact." (Foster and McChesney, 43)
It is very difficult to gain a greater understanding of the broad social forces at play that
are shaping the financial sector, but self-destructing tendencies of the latter can be established
beyond reasonable doubt. And the problem here is not with people, although, again, I would
like to stress that a lot of financial actors are as close to psychopaths/sociopaths as one
can get. But people are better then institutions as Prince Kropotkin once remarked. The problem
is with reshaping of institutions via weakening of regulations (up to the total absence of thereof).
Regulations represent genome that guides growth and proliferation of organizational entities much
like cells in human organism. Bad genome creates cancer cells that kills the host. This
analogy with financial sector converting into cancer under a weak regulatory regime is less superficial
that one might think from the first sight. Some see the cycle in which financial sector undermines
economy the following way:
Boost Phase of Credit Expansion. Banks became dominant political force and start to
dictate the government policy.
Deregulation. Banks create for the themselves the "most favorable entity" regime including
access to government funds and taxation. Here revolving door greatly helps (see
Corruption of Regulators)
Overextended Credit Expansion and Over Capacity (dot-com bubble)
Growing Malinvestment ( there are no alternatives and one burst bubble is simply replaced
by the next. For example, dot-com bubble with the housing bubble in the case of the USA)
Impaired Debt and Policy Decisions, such as bailout of TBTF at taxpayer expense and
great cost for the economy. Please note that at this point banks have total political control,
so they essentially bail themselves out at the expense of the society.
Stalled Consumption due to shrinking of middle class and high structural unemployment.
The growing bills are passed on plebs. Cheap Money are Offered as the only Panacea Available.
Shrinking Loans and another round of Bank Speculation, this time in natural resources.
Search for Yield from Shrinking Pool of Productive Assets. Increasingly speculative
investments with high risk
Stagnation - Over-indebted economy, massive overcapacity with limited growth.
The growth of nationalism and protectionism (ref. 1920's -> 1930's). Military Keynesianism.
Oligarchy don't hesitate to sacrifice millions of plebeians in the subsequent wars that always
In financial markets, socially-responsible, rational behavior isn’t optimal. That makes
reckless, self and society endangering behavior not a deviation, but a norm. That makes finance a
close relative to organized crime. In this respect Jefferson famous quote "I believe that banking
institutions are more dangerous to our liberties than standing armies" is really prophetic.
Instability is an immanent feature of dynamic systems with positive feedback loops. Financial
sector introduces a dangerous positive feedback loop into economy precipitating bubbles and subsequent
crisis. Despite artful packaging, the banking industry game is very simple, namely, they
take outsized, leveraged risks and when they work out, pay themselves handsome rewards, and when
they don’t, dump them on the taxpayer. That's why asJohn Kenneth Galbraith aptly noted "Finance
is the Achilles' heel of capitalism." While there are multiple levels and multiple meaning
on each level of this statement, instability of dynamic systems with positive feedback
loops is a fundamental property of such systems and it cannot be changed by any superficial
measures not related to the strength of feedback loop.The "inherently procyclical"
nature of the financial systemimplies thatthat perceptions of value and risk develop in parallel. Bankers always suffer from a blindness
to future dangers that are intrinsic to the system because that stand in a way of getting outsized
profits. The better the economy is doing, the higher the ratings issued by the rating agencies,
the laxer the guidelines for approving credit, the easier it becomes to borrow money and the greater
the willingness to assume risk.
Wall Street execs have been whining for two years that to reduce pay incentives and bonuses
would cost the firms their best talent. The government’s response should be YES! That’s precisely
the idea. Finance was once a means to an end: the growth of the real economy. Banking once served
industry and services. Now finance has become the end, and the real economy is subservient
to financial services (it’s no surprise that after the crisis, over-the-counter derivatives
trading quickly climbed back up to more than $600 trillion). “At some point in our recent past,
finance lost contact with its raison d’être,” European Central Bank chief Jean Claude Trichet
said earlier this year. “Finance developed a life of its own…Finance became self-referential.”
Computers brought innovations into financial markets, but at the same time greatly strengthened
and enhanced positive feedback loops inherent in financial sector. In other words
they make financial players much more dangerous for society then before. Our present system
could not exist without Web-based brokers, indexes, CDO’s, tranches, MERS, high speed trading. Computers
also have allowed dramatic increase of complexity, which often is used to hide the most dangerous
and the most reckless behavior of financial players. Computers are become an integral part of the
feedback and add gain (amplification) to the loop. The gain from computers is not bad by itself but
the trend to remove all controls or attenuations while adding this gain is bound to cause instability.
HFT seems to me one of the more obvious and stupid examples.
Complexity and luck of transparency are central to financial services firm rent seeking.
Those opportunities dramatically increases with computerization of finance and invention of complex
financial instruments. It is interesting that other industries can be allowed to teeter and
fall - steel, railroads, automobiles - but banks are considered sacrosanct. If they are, then
they should be public utilities, but good luck with this idea in captured Congress.
Megabanks automatically become an instrument for acquiring and keeping political influence
for its management ("silent coup"). Financial sector became viewed by the elite as a
solution to stagnation of industrial production and the way to fend of international competitors
playing of the US role of suppliers of global currency. As a result financial sector became a formidable
political force. Like senator Durbin put it:
And the banks -- hard to believe in a time when we're facing a banking crisis that many of
the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the
That compensates their inefficiency in internal market. Investment banks understand pretty well
that the best investment with highest return is an investment in political capital.
Saving oversized banks, however, may ruin a country’s public finances (Gros
and Micossi 2008). Take the example of Ireland; this country provided extensive financial
support to its large banks and subsequently had to seek financial assistance from the EU and the
IMF in 2010. The public finance risks posed by systemically large banks suggest that such banks
should be reduced in size.
Further evidence against big banks can be found from studies on banking technologies. Berger
and Mester (1997) estimate the returns to scale in US banking using data from the 1990s, to find
that a bank’s optimal size, consistent with lowest average costs, would be for a bank with around
$25 billion in assets. Amel et al. (2004) similarly report that commercial banks in North
America with assets in excess of $50 billion have higher operating costs than smaller banks. These
findings together suggest that today’s large banks, with assets in some instances exceeding $
1 trillion, are well beyond the technologically optimal scale.
Flawed incentives. The relationship between the rating agencies and big banks is a perfect
case study of flawed incentives and positive feedback loop within financial sector. Agencies
were unduly influenced (aka "were puppets of") by the institutions whose products they were grading.
Financial markets never play a purely passive role; they seek a political role and always
try to actively affect so-called fundamentals they are supposed to reflect. Their lobbying
efforts and regulatory capture are part of positive feedback loop that increases risks and
instability of the financial system. They tend to convert economy into what is using analogy
with military industrial complex can be called the crony capitalist financial-regulatory complex.That means that the necessary contraction of hypertrophied financial sector requires difficult
political changes which captured political establishment is unable to pursue on their own, so changes
often come packaged with violence. As Soros stated:
"These two functions that financial markets perform work in opposite directions. In
the passive or cognitive function, the fundamentals are supposed to determine market prices. In
the active or manipulative function market, prices find ways of influencing the fundamentals.
When both functions operate at the same time, they interfere with each other. The supposedly independent
variable of one function is the dependent variable of the other, so that neither function has
a truly independent variable. As a result, neither market prices nor the underlying reality is
fully determined. Both suffer from an element of uncertainty that cannot be quantified.
I call the interaction between the two functions reflexivity. Frank Knight recognized
and explicated this element of unquantifiable uncertainty in a book published in 1921,
but the Efficient Market Hypothesis and Rational Expectation Theory have deliberately ignored
it. That is what made them so misleading."
The Fiat-based currencies has additional built-in instability risks in comparison with gold
based currencies. This is not to say that gold based currencies are better. But the
ability of the US to run record current-account deficits over the past several decades is one such
effect, the effect impossible in gold standard currency environment and the US political elite (Republican
and Democrats alike) became increasingly comfortable with overconsumption. (The
World’s Financial System Has Become Unstable):
Leading Bush administration officials used to talk of the US current-account deficit being
a “gift” to the outside world. But, honestly, the US has been overconsuming – living far beyond
its means – for the past decade. The idea that tax cuts would lead to productivity gains and would
pay for themselves (and fix the budget) has proved entirely illusory. ...
[T]he net flow of capital is from emerging markets to the US – this is what it means to have
current-account surpluses in emerging markets and a deficit in the US. But the gross flow of capital
is from emerging market to emerging market, through big banks now implicitly backed by the state
in both the US and Europe. From the perspective of international investors, banks that are “too
big to fail” are the perfect places to park their reserves – as long as the sovereign in question
remains solvent. But what will these banks do with the funds?
When a similar issued emerged in the 1970’s – the so-called “recycling of oil surpluses” –
banks in Western financial centers extended loans to Latin America, communist Poland, and communist
Romania. That was not a good idea, as it led to a massive (for the time) debt crisis in 1982.
We are now heading for something similar, but on a larger scale. The banks and other financial
players have every incentive to load up on risk as we head into the cycle; they get the upside
(Wall Street compensation this year is set to break records again) and the downside goes to taxpayers.
Financial deregulation logically leads to over-trading and under-investment creating bubbles
and converting the economy into casino capitalism. The recent the ‘flash crash’ as a clear example
of the bubble and subsequent fragility such over-trading can create. Excessive trading in securities
increases instability of the economic system and creates perverted incentives for many economic actors.
The effect is similar to how drugs and alcohol chemically alter the personality, increasing the value
of instant gratification. As Hyman Minsky noted:
“In a world of businessmen and financial intermediaries who aggressively seek profit, innovators
will always outpace regulators; the authorities cannot prevent changes in the structure of portfolios
from occurring. What they can do is keep the asset-equity ratio of banks within bounds by setting
equity-absorption ratios for various types of assets. If the authorities constrain banks and are
aware of the activities of fringe banks and other financial institutions, they are in a better
position to attenuate the disruptive expansionary tendencies of our economy.”
-- Hyman Minsky, 1986
Growth of inequality connected with emergence of hypertrophied financial sector is another
positive feedback loop. Outsized pay in financial sector attracts talent and this talent
is used for destructive (or at least non-constructive) purposes. This is the situation similar to
the poor countries problem with mafia. What is so destabilizing isn’t just the high guaranteed pay
if you can break in (even though that is a huge part of it) but the allure of obscene sums of money
if you can make it to the top.
The share of US national income going to the top 1 per cent of the income distribution has risen
from 15 to 25 per cent over the past decade, mostly because of the growth in size and profitability
of the financial sector. This payments to the top percentile is a tax paid by the population (similar
to what population paid to royalty and church in middle ages) as a whole for the questionable
benefits of living in the casino capitalism economy. While the key to growth of inequality was financial
sector it also complemented by several additional trends:
Dramatic increase of renumeration of top management in all types of companies : by
increasing number of sociopath in higher echelons of financial institutions and second by destroying
morale of the firm which makes reckless moves more probable.
Due to regulatory capture. Concentrated wealth makes it easier to buy deregulation
to free itself up even more. At the same time concentrated wealth of financial sector finds fewer
productive investment outlets and naturally migrates into destructive speculation, including creating
huge speculative global capital flows. A positive feedback loop in which increase of income inequality
increase "financization" of the economy looks like:
Increase of income inequality ->
Inadequate effective demand in non-financial economy ->
Inadequate investment opportunities in non-financial economy ->
Investments flowing into parasitic financial “creativity”...
Regulatory capture, especially complete capture of the Fed (with NY Fed widely considered
to be a branch of Goldman Sachs) and SEC nullifies enforcement and creates another positive
feedback loop. "Revolving doors" provide an excellent opportunity to buy influence without overt
corruption. One recent example is Peter Orzag accepting position in Citi (Why
Citigroup) And that means that while on the job ambitious people might try to avoid to aggravate
banks. But without strong regulatory oversight banks very quickly convert themselves into wonder
machines that provides astronomic returns to brass and selected employees, high returns to
creditors, while at the end of each cycle causing huge losses to taxpayers. Banks must keep up
with their competitors, and if one does some wonder trick with somebody else money, they all must
do it to stay in business. That is why regulation is so vital in this highly competitive sector.
One cannot be virtuous as a commercial entity with obligations to shareholders and customers under
brothel rules. That why Greenspan
as an apostle of deregulation was so destructive for the US economy. This is another positive feedback
loop that feeds on itself. In search of profits which became more scares as financization takes life
out of real economy, financial firms are prone to subvert safeguards and endanger the very society
in which they operate ("financial terrorism effect". Wealth permits financial sector
to remove "sand in the wheels": vital for stability negative feedback loops in form of regulation
and, what is actually more important, strict law enforcement of existing regulations. Here
is a quote from Yves Smith post
Should the Fed Be Independent-
But there has been another thread mixed in with this: resentment at the Fed salvaging the banking
industry, with contingent and real costs, in the form of higher inflation, per
Alford’s and Leijonhufvud’s analysis. Now that many of those actions may indeed have been
the best among a set of bad choices (although I suspect economic historians will conclude the
Fed cut rates too far too fast). However, the big issue is that they involved consequences of
such magnitude that they should not have been left to the Fed. I was amazed, and was not alone,
when Congress did not dress down the Fed in its hearings on the Bear rescue for the central bank’s
unauthorized encroachment into fiscal action (ie., if any of the $29 billion in liabilities assumed
by the Fed in that rescue comes a cropper, the cost comes from the public purse). So the frustration
isn’t merely about outcomes, it’s about process, about the sense of disenfranchisement. And that
will only get worse as this crisis grinds along.
The proliferation of speculative side bets in the form of naked credit default swaps and other
derivatives can have significant negative effects on economic fundamentals such as the terms of financing,
the patterns of project selection, and the incidence of corporate and sovereign default. The
existence of zero-sum side bets on default has major economic repercussions. It has strangulating
effect starving real economy of funds as investors who are optimistic about particular company or
state instead of funding it sell protection. This diverts their capital away from potential borrowers
and channels it into collateral to support speculative positions. Naked CDSs are insurance policies
bought against some other persons property. Such as, I buy a policy against your house. Insurance
companies do not write such policies because I might decide to burn your house down. But even if
we assume that there will be no intentional damage to other’s property, we still are encouraging
diverting of funds. See
Guest Post Economic consequences of speculative side bets – The case of naked CDS « naked capitalism.
They also can create artificial demand. Conservative analyses indicates that in the peak years of
2006 and early 2007, Magnetar’s program drove the demand
for roughly 35% of subprime bonds. That fact refutes the claim that all derivatives, futures,
options and swaps are zero sum game: one person loss is another person gain.
By its nature investment banking is constantly tempted to move into grey zone and then slide
into criminal behavior. There is a profound similarity between investment bankers
and hedge funds "Masters of the Universe" and hackers. Investment bankers play a similar role in
financial system as hackers play in computer networks: they are engaged in systemic effort to undermine
existing laws and security controls. But there one important difference: investment bankers are often
obscenely rich and can buy themselves freedom after being caught. That's why criminal law should
consider financial sector crimes similar to the organized crime. "Algorithmic Terrorism”
( HFT) is one example (Nanex
- Market Crop Circle Of The Day). Nobody went to jail (yet). When you see the kind of losses
we have seen on AAA rated securities for example it is almost certainly there was there was some
kind of fraud involved. In fact growth of investment banking tend to be accompanied by large scale
fraud so this would not be unusual.
Tremendous political power that finance sector acquired due to outsized profits is channeled
toward lobbing that is socially and economically disruptive. Externalities produced by
unregulated banking sector are dangerous for society, but at the same time political power of the
financial sector created a lock in which prevents any meaningful correction. Classic Greek Tragedy
necessary follows. Regulators – and their superiors in the legislative and executive branches
– were captured both intellectually and via implicit form of corruption known as revolving doors.
"To a surprising degree, economic misfortune has correlated with low top marginal tax rates. The
top marginal tax rate at the time of the 1929 crash was 24%. After his election, Roosevelt promptly
raised it to 63% and then to 94%, and one could easily make the case that it was this rise, rather
than financial regulation, that played the primary — though certainly not the only — role in curbing
abuses by attacking greed at its source, without, by the way, damaging the economy. Roosevelt essentially
taxed away big money."
Disincentivizing greed - Page 3 - Los Angeles Times
For financial sector stability is destabilizing. Minsky financial instability hypothesis
can be simplified to the general statement that in any economy with large financial sectorstability is destabilizing as financial firms try to exploit the stable regime to extract
additional profit by increasing leverage and making excessively risky bets which serves as a tax
on real economy, strangulating it and creating the necessity for even more risky bets and higher
leverage. In the latter case large firms also implicitly transfer their risks to larger society (via
The cost of financial intermediation is ultimately a tax on commerce.Outsized,
predatory financial services sector poses real danger to viable businesses, to business expansion,
and to general economic productivity. Large part of activity of financial sector, especially
connected with securitized products, futures, options and derivatives is parasitic: "Banks tend to
make profits – or more accurately, extract rents – out of all proportion to any contribution they
make to the wider economy." Excessive rents weaken the real economy similar to cases
when parasite weakens the host (The
Banking Oligarchy Must Be Restrained For a Recovery to Be Sustained ). In addition to the
overhang of unindicted and undeclared fraud which is widespread due to regulatory capture, distorting
the clearing of the markets, an oversized financial sector essentially make the sum of government
tax and Wall street tax a real drag on the economy. The percentage of financial sector profits to
corporate profits recently peaked at 41%. This suggests that the scope of parasitic financial activity
is a real killer for the economy.
Weakly regulated banks tend to become classic cases of market failure and their employees
at the senior level have basically become the biggest bank robbers of all time. This tremendous
transfer of wealth is inherent in growth of financial sector. The best way to rob bank is to own
Academia serves as the Fifth column of the financial sector. The financial system can
brainwash society via control of corrupt academia in classic Lysenkoism scenario. Here is relevant
quote from The Quiet
Wall Street’s seductive power extended even (or especially) to finance and economics
professors, historically confined to the cramped offices of universities and the pursuit of Nobel
Prizes. As mathematical finance became more and more essential to practical finance, professors
increasingly took positions as consultants or partners at financial institutions. Myron Scholes
and Robert Merton, Nobel laureates both, were perhaps the most famous; they took board seats at
the hedge fund Long-Term Capital Management in 1994, before the fund famously flamed out at the
end of the decade. But many others beat similar paths. This migration gave the stamp of academic
legitimacy (and the intimidating aura of intellectual rigor) to the burgeoning world of high finance.
Reaganomics (and later Rubonomics) confused ends with means... As Stiglitz noted,
. ... a financial sector is a means to a more productive economy, not an end in itself. (Financial
a better measure of well-being). Attempt to convert the USA into new Switzerland on the
strength of dollar as a reserve currency was doomed from the beginning due to the country size constrains.
Highly leveraged economies are prone to deep and prolong crisis. "The lesson of history,
then, is that even as institutions and policy makers improve there will always be a temptation to
stretch the limits. ... If there is one common theme to the vast range of crises ... it is that excessive
debt accumulation, whether it be by the government, banks, corporations, or consumers, often poses
greater systemic risks than it seems during a boom. ... Highly indebted governments, banks, or corporations
can seem to be merrily rolling along for an extended period, when bang -- confidence collapses, lenders
disappear and a crisis hits. ... Highly leveraged economies ... seldom survive forever ... history
does point to warnings signs that policy makers can look to access risk -- if only they do not become
too drunk with their credit bubble-fueled success and say, as their predecessors have for centuries,
'This time is different' Carmen Reinhart and Kenneth Rogoff (cited from
The first thing to understand is that attempt to weaken positive feedback looks via regulation, approach
that can be called “regulation as a Swiss knife” does not work without law enforcement and criminal
liability for bankers, as there is an obvious problem of corruption of regulators. In this sense the
mechanism of purges might be the only one that realistically can work.
In other words it’s unclear who and how can prevents the capture of regulators as financial sector
by definition has means to undermine any such efforts. One way this influence work is via lobbing for
appointment of pro-financial sector people in key positions. If such "finance-sector-selected" Fed chairman
does not like part of Fed mandate related to regulation it can simply ignore it as long as he is sure
that he will be reappointed. That happened with Greenspan. After such process started it became
irreversible and only after a significant, dramatic shock to the system any meaningful changes can be
instituted and as soon as the lessons are forgotten work on undermining them resumes.
In essence, the Fed is a political organization and Fed Chairman is as close to a real vice-president
of the USA as one can get. As such Fed Chairman serves the elite which rules that country, whether
you call them financial oligarchy or some other name. Actually Fed Chairman is the most powerful unelected
official in the USA. If you compare this position to the role of the Chairman of the Politburo
in the USSR you’ll might find some interesting similarities.
In other words it is impossible to prevent appointment of another Greenspan by another Reagan without
changes in political power balance. And the transition to banana republic that follows such appointment
is irreversible even if the next administration water boards former Fed Chairman to help him to write
his memoirs. That means that you need to far-reaching reform of political system to be able to
regulate financial industry and you need to understand that the measures adopted need vigilant protection
as soon as the current crisis is a distant history.
Several other source of financial instability were pointed out by others:
The logic of markets gets extended to “fictitious commodities” – land, labor, and money.Polanyi (1944) famously zeroed in on the way that the logic of markets gets extended to
“fictitious commodities” – land, labor, and money – and the way that society reacts defensively
to that illegitimate extension. Today, arguably, it is the logic of finance that has been so extended,
turning everything it touches into an asset with a speculative price.
Excessive accumulations of financial wealth – “other people’s money” – tend to undermine democratic
political forms.Brandeis (1914) thought that excessive accumulations of financial
wealth – “other people’s money” – tend to undermine democratic political forms (among other
problems). Today, arguably TBTF financial institution threaten democracy.
There are some outstanding lectures and presentation on YouTube on this topic. Among them:
"... " The spokesperson also added depending on the vehicle's configuration , Model 3 wait times are currently 1 to 3 months", but spokeshuman did not explain why no base models will ever be produced. ..."
"... " Tesla ditched reservations and opened up Model 3 sales to anyone for a $2,500 deposit." that's because reservations are refundable....as long as the cash holds out, sales deposits apparently not. ..."
When Tesla finally met its Model 3 production run rate target, astute investors and analysts
pointed out the use of the word "factory gated" in the company's press release: "Not only did
we factory gate 5000 Model 3's , but we also achieved the S & X production target for a
combined 7000 vehicle week!" Musk wrote in an email to his staff that week.
It was a term that Tesla hadn't used before.
Now, thanks to a couple of sleuths on Twitter, we may have just found out what the term
means. Twitter Tesla sleuth @ISpyTSLA, with the help of others, has been trying to figure out
exactly where all these vehicles are winding up. @ISpyTSLA found that it appears that
"thousands" of vehicles are being stored "in a field" 500 E Louise Ave, Lathrop, CA 95330.
But why stash the cars there? Is it to optimize net working capital and give investors - and
auditors - the impression of more liquidity than is actually available?
Surely this will, or should, be one of the "boring" questions asked on the company's
conference, if PricewaterhouseCoopers doesn't ask first.
Meanwhile, Tesla already had to fend off a downgrade from Needham this morning, who warned
that Model 3 refunds were moving faster than deposits, something we documented
here over a month ago .
"Based on our checks, refunds are outpacing deposits as cancellations accelerate," wrote
analyst Rajvindra Gill in the note Thursday. "The reasons are varied: extended wait times,
the expiration of the $7,500 credit, and unavailability of the $35k base model."
"In August '17, TSLA cited a refund rate of 12%. Almost a year later, we believe it has
doubled and outpaced deposits. Model 3 wait times are currently 4-12 months and with base
model not available until mid-2019, consumers could wait until 2020," Gill added.
There probably aren't any batteries in them. These cars are in various states of technical
completeness. Processes that were too time-consuming and parts that were not readily
available were skipped in order to complete their ridiculous publicity stunt. No one likely
knows the missing bits for any given car so they are junk. This is what happens when you are
able to do what you're doing because of lots of "other-people's money". 4th turning bitchez,
gross waste and abuse. All the big manufacturers are doing it, why shouldn't Tesla?
Elon Musk manufactures here in the USA. Most American car manufacturers, other than Ford, took bigly bailout money from American
taxpayers and then set up shop in racially homogenous, cheap-labor countries in China &
Latin America. Ford went straight to Mexico, bypassing the bailout cash.
"Profitable" American car manufacturers still do some production in the USA, mostly hiring
groups of young temps. They pay the youthful, blue-collar temp workers more than most
white-collar temp jobs around here offer.
About 5 years ago, a local car manufacturer was paying temps $17 per hour, as opposed to
the typical $10 per hour offered to white-collar non-college-grad office workers or $12 per
hour for white-collar college-grad office workers. I recently saw an article, suggesting that
the same American car manufacturer is now paying young temps even more, quite a bit more.
The article was adorned with a photo of an aging union worker, but no explanation was
provided about how this system really works, with the young temps hired to do the bulk of the
physically demanding labor. Due to senority, a small group of old union workers avoid that
work, doing the cushier tasks.
The liberal agenda pusher who wrote the article, sticking a photo on it with an especially
aged union worker, was probably promoting the faulty idea that America needs more immigration
to fill those jobs due to an aging population, when, in fact, the young Millennial generation
is BIGGER than the aging Boomer generation.
Furthermore, American citizens often get on lists to fill those high-paying temp jobs in
car manufacturing. Applicants often have six-month waiting periods due to the massive number
of job seekers, chasing those rare, high-paying TEMPORARY jobs.
Much like state jobs, US citizens must wait to get a good-paying temp job with those car
manufacturers, and if the person who wrote the article had talked to temps who actually
worked those jobs, s/he would know it. But it might not matter; advocates of mass-scale
immigration gonna advocate.
Tne Media helped establish Musk as a cult figure. Reality is catching up with a false god, that is what's happening. At what point will Musk throw a kool aid party for MuskCar employees under the tent.
No its not what other car manufacturers do if they have so many orders to fill? only car
manufacturers forward producing and estimating demand need store them but most adjust
manufacturing levels to avoid it now as its expensive to store, and even non registered
vehicles decline in value and are subject to damage.
Tesla with back orders should have no need at all to store cars, with such a professed
backlog, so the fact they have is highly suspicious.
It might suggest to some analysts that the vehicles are not completed not safe or
something else is awry.
It doesn't even look like "thousands" of cars to me. A quick drone flyover would clear
this question up. And sure, this is what all car manufacturers do. Transshipment, rework, whatever. I mean,
what else would you do? Put a tent over them? Everything about Tesla is stupid, and I'm enjoying their failure. But stories like this
give credence to Musk's paranoid assertions that the world is out to destroy him.
Back in the old days of software we called it 'shipping bricks'. The new version of the
software wasn't ready, but we booked orders, so we slapped labels on blank disks, but em in
boxes with manuals and sent em out. Customer called a few days later when the software was
ready, and we said, 'oh sorry, must have gotten a defective one, we are fed exing a new disk
in the mail.
These may look like Teslas, but they didn't pass tests or are unsellable for some reason,
so they count them as 'gated inventory' Same thing
The increase in TSLA market cap more than covered the few thousand "cars" Tesla needs to
hide that will never actually be sold, well until Elon called a hero a pedophile.
This is how the great publicly traded con economy works. You aren't producing product to
sell, you are only manufacturing a story to sell stock. Since stock based compensation makes
you a billionaire even if your company loses billions of dollars, what incentive is there to
turn a profit?
You end up with more scams than productive corporations. If there was no stock market,
Walmart would exist, but Amazon would not. Walmart is profitable in the billions of dollars,
Amazon is not. Bezos could not be worth $150billion without the scam of publicly traded
shares because it would take a few thousand years to pay out $150billion to Bezos from
Meanwhile Walmart could pay a few executives $1 billion per year and have plenty of profit
left. Why is one company worth $250 billion, less than half revenue and the other near $850
billion with less than $200 billion in revenue?
Not only Tesla is "storing" cars. All the majors appear to be doing the same. I live near
Flint MI and you would NOT BELIEVE the number of lot's, fields, and empty spaces in the area
that are FULL of late model vehicles. I suspect most are lease returns that are being kept
out of the market to keep prices elevated. I have a 21 year old pick up truck. It is paid
for. I would buy a newer truck but they are way too expensive. We have a newer SUV, also paid
for. When the "big 3" decide to sell some of those lease returns at a reasonable price I MAY
look at buying one. I WILL NOT BUY ONE for the prices they want. I just purchased a nice home
for less than $40K so why would I buy a depreciating asset for the same amount?
Tesla delayed some deliveries until July, probably so that they could reach 200K cars sold
this quarter and have the $7500 tax credit until Q4. But now that they've sold 200K, it makes
no sense to hang onto them unless they don't have a buyer. Maybe that's why they opened the
Model 3 builder site to everyone? Could it really be that they've run through all of the
Model 3 preorders because most people who signed up to buy a $35K car aren't interested in
paying $49K minimum as it is now?
This is a reasonable interpretation. Best case for Musk. In islolation (lol) it doesn't
But even so, he has higher inventory control costs. His labor costs have proven higher
too. Down the line these cars have no dealer network to service or repair them, and to
provide it is [would cost] billions.
Yea and the Tesla tards are all gaga over the 30% profit margin the 3 will bring as
indicated by those that tear down and analyze the vehicle. We're all gonna be rich when Tesla
stock hits 10,000 by the end of the year. Booya. What you delusional Musk lovers should do is
learn the difference between GROSS PROFIT, which is that touted 30%, and NET PROFIT. Gross
profit only includes the direct costs to produce the car, materials and labor, but does not
include selling, general, and administrative which will consume that 30% "profit" and then
some. General expenses such as warranty work, electricity, paying engineers and secretaries
and other non direct manufacturing personnel such as material handlers and plant cleanup and
trash disposal and maintenance people etc, "free charging", R&D, interest on the debt,
sales offices, etc etc. In the past your boy could brag about the cash pile on hand most of
which was accumulated for PR purposes by delaying payment to suppliers.
Not since "Who Killed the Electric Car" have so many with axes to grind began fueling this
bazaar anti-Tesla barrage. Musk is part of "those who do" while "those that can't" SHIT ALL
OVER EVERYBODY who can.
Behind this is a hedge fund with a heavy short position, oil industry think tanks, and
just plain shits parading on some fucking adolescent thing called "Twitter".
Have you dumb asses looked at the quantities of warehoused traditional cars by all other
manufacturers? Youtube it if you don't believe. As to you haters and inflammatory dickheads,
it's time to stop whacking it and eat the fucking cracker.
You really are delusional. "Who Killed the Electric Car' is nothing but a hit piece on GM.
GM killed their own electric not the electric industry like idiots want to believe. Their car
although state of the art at the time had little range with the old tech batteries that were
available at the time and would have been extremely expensive to build as it had no parts in
common with other vehicles in their line. Plus at the time there was absolutely no public
demand for electrics. The current flurry of electrics coming on the market is not because of
Tesla, as you cult members want to believe, but from the hugely funded enviros pushing for
the elimination of all ICE cars. In Germany and a few other countries they have passed or are
in the process of legislating no new ICE cars to be sold by a certain date, anywhere from
2025 to 2030 depending on country, and all ICE cars off the road by 2050 or other dates
depending on country.
Recently there was a complete fiction hit piece that oil companies outspend enviros by 10
to 1 on lobbying. Enviro organizations such as Sierra Club, World Wildlife Fund, Greenpeace,
Tom Steyer and other billionaires, and other enviro groups spend most of their budgets, which
is in the billions, on lobbying. Under Obama his EPA pursued a "sue and settle" policy to
encourage enviro groups to sue the EPA which would settle quickly as a way to get funds into
the enviros pockets. Not to mention the hundreds of billions given to enviros by governments
around the world. The Obama EPA refused to release to Congress the science on which their
rulings were made because most of that "science" was bullshit written by enviro activists.
The EPA advisors were all enviro activists. When Trump put Pruitt in charge of the EPA you
clowns claimed he was anti science when he shit canned the activist old boy network and set
up debates from all sides. Under Pruitt they took money destined for activists and used it
clean up real pollution in Superfund sites which the Obama EPA ignored.
The other manufacturers can afford to warehouse cars as they make real profits. They also
have to buy "pollution permits" to sell their cars in Commiefornia, which ends up in Tesla's
pockets even though they pollute worse the ICE though not directly. As it is your boy is no
different than the other manufacturers yet, except for ZH and other sites willing to print
the truth, the general media, especially tech sites, can't get enough of licking Musk's balls
and stroking his ego by wrongly calling him a genius who is going to change the world. Every
single market your boy is in from Powerwalls to solar panels to cars there is experienced and
well funded competition but yet the delusional refuse to believe it. His factory of the
future, which was going to change the way cars are built, was a huge failure as in many
procedures humans are better than robots which is why other car companies still employ
humans. Your boy who was going to change the way cars are sold is opening dealerships. Plus
Tesla is opening large numbers of repair shops contrary to the belief of many Tesla fanbois
that Tesla's run forever without any repairs.
Boy did I scratch off your scab! Feeling accused? BTW cut back on "enviro-whatever" ok,
'cus it really sounds stupid. Your writing is dense, machine like, staid, crystalized, like a
walking dead pedantic. Your reality is your own, there in your hermit crab shell, I wish you
a constant stream of nutritional plankton, return to your place on the coral wreath.
Production does not always mean demand. In today's' ideology, production pays the rent, as
long as the feds keep bailing you out. For years there have been photos of new car
graveyards. It gives the charts something good to say.
"We produced 7,000 cars this week" gives the illusion of high demand for product, while not
indicating who the buyers are. Part of the Sales illusion.
Yeah, well if you actually DO proper research you'll find that only iron and steel rust.
Aluminum corrodes, forms a thin layer of oxidized aluminum over its surface which does
protect further surface corrosion. However, in a salt environment, even a teeny little bit of
salt and water, like say salt found in desert areas, will cause severe corrosion where the
aluminum turns to dust. If it rains in Lathrop followed by lots of wind, any and all
unprotected aluminum WILL turn to dust and that right quick if left that way. Ask any Navy or
Marine Corps pilot or any Navy or Marine Corps aircraft maintenance person whose served at
sea and flew or worked on any number of aircraft. So thanks for the "they do not rust"
warning so that "someone" could do Proper Research or Proof Reading. Good tip.
Globalization is not a one-dimensional phenomenon, and some of its aspects are still intact.
Hollywood dominance, Internet, English language dominance, West technological dominance, will
not reverse any time soon.
What is under attack by Trump, Brexit, etc. is neoliberal globalization, and, especially
financial globalization, free movement of labor and outsourcing of manufacturing and services
Neoliberal globalization was also based on the dollar as world reserve currency (and oil
trading in dollars exclusively). But this role of dollar recently is under attack due to the
rise of China. Several "anti-dollar" blocks emerged.
Trump tariffs are also anathema for "classic neoliberalism" and essentially convert
"classic neoliberalism" into "national neoliberalism" on the state level. BTW it looks like
Russia switched to "national neoliberalism" earlier than the USA. No surprise that Trump
feels some affinity to Putin ;-)
Attacks against free labor movement also on the rise and this is another nail in the
coffin of classic neoliberalism. In several countries, including the USA the neoliberal elite
(especially financial elite after 2008, despite that no banksters were killed by crowds) does
not feel safe given animosity caused by the promotion of immigration and resorts of
conversion of the state into national security state and neo-McCarthyism to suppress
I think those attacks will continue, immigration will be curtailed, and "classic
neoliberalism" will be transformed into something different. Not necessarily better.
Several trends are also connected with the gradual slipping of the power of the USA as the
chief enforcer of the neoliberal globalization. Which is partially happened due to the
stupidity and arrogance of the USA neoliberal elite and neocons.
Another factor in play is the total, catastrophic loss of power of neoliberal propaganda
-- people started asking questions, and neoliberal myths no longer hold any spell on
population (or at least much less spell). The success of Bernie Sanders during the last
election (DNC was forced to resort to dirty tricks to derail him) is one indication of this
trend. This "collapse of ideology" spells great troubles for the USA, as previously it spells
great troubles for the USSR.
"Trumpism" as I understand it tried to patch the situation by two major strategies:
(1) splitting Russia from China
(2) Attempt to acquire dominant position in regions rick in hydrocarbons (Iraq, Iran,
Libya, Venezuela, etc)
But so far the decline of neoliberalism looks like Irreversible. It never fully recovered
from the deep crisis of 2008 and there is no light at the end of the tunnel.
Another powerful factor that works against neoliberal globalization is the end of cheap
oil. How it will play out is unclear, Much depends whether we will have a Seneca cliff in oil
production or not. And if yes, how soon.
This is the end of classic neoliberalism, no question about it, and the collapse of
neoliberal globalization is just one aspect of it
"... There are many modern myths. One of them is about the events of 1989 as being the culmination of a grand historical struggle for freedom and liberty. Nothing could be farther from the truth. For years prior to 1989 the West through a combination of both legal business and criminal activity had interpenetrated the Communist elites with lucrative deals and promises of all kinds. ..."
Why, man, he doth bestride the narrow world
Like a Colossus, and we petty men
Walk under his huge legs and peep about
To find ourselves dishonorable graves.
-- Shakespeare, "Julius Caesar"
There are many modern myths. One of them is about the events of 1989 as being the
culmination of a grand historical struggle for freedom and liberty. Nothing could be farther from the truth. For years prior to 1989 the West through a combination of both legal business and criminal
activity had interpenetrated the Communist elites with lucrative deals and promises of all
This situation was even more pronounced in "non-aligned" Yugoslavia who for years had
maintained CIA and American and West European business contacts.
In effect, the "cold war" witnessed a rapid convergence between the economic and power
interests of both Western and Communist elites.
The "Communists" (in name only of course) quickly realized the economic benefits available
to them through at times open at times clandestine cooperation with Western business/criminal
Eventually, Communist elites realized that they had an unprecedented economic opportunity on
their hands: state privatization made possible, in part, with active Western participation.
For them, "Freedom" meant the freedom to get rich beyond their wildest dreams.
And the 1990's were just that. A paradise for thieving on an unimaginable scale all under
the rubric of the rebirth of "capitalism and freedom".
The true outcome of that decade was that the old communist elites not only retained their
social and political power behind the scenes; they also were able to enrich themselves beyond
anything the communist dictatorships could ever hope to offer them in the past.
Yes, the price was to give up imperial, national, and ideological ambitions. But it was a
very small price to pay; since the East European elites had ceased to believe in any of those
things years earlier.
The only firm belief they still held was the economic betterment of themselves and their
families through the acquisition by any means of as many asset classes as possible. In effect,
they became the mirror image of their "enemy" the "imperialist capitalist West".
This was not a case of historical dialectics but historical convergence. What appeared as a
world divided was actually a world waiting to be made whole through the basest of criminal
But being clever thieves they knew how to hide themselves and their doings behind
superficially morally impeccable figures such as Vaclav Havel and Lech Wałęsa, to
name just a few. These "dissidents" would be the faces they would use to make a good part of
the world believe that 1989 was a narrative of freedom and not outright pubic theft which it
Yes, people in the east, even in Russia, are freer now than they were. But it should never
be forgotten that the events of 1989/1990 were not even remotely about those revolutionary
It was about something much more mundane and sordid. It was about greed. It was about the
maintenance of power. And finally it was about money.
How deep has the Western nexus of power and wealth gone into the heart of the East? So far
indeed that one can easily question to what extent a country like Russia is truly a "national"
state anymore and rather just a territory open to exploitation by both local and global
For that matter, we can ask the same question about the USA.
As the Snowden documents and David Sanger's great new book and other books make plain, and
as U.S. officials are wont to brag, the U.S. intelligence services break into computers and
computer networks abroad at an astounding rate, certainly on a greater scale than any other
intelligence service in the world. Every one of these intrusions in another country violates
that country's criminal laws prohibiting unauthorized computer access and damage, no less
than the Russian violations of U.S. laws outlined in Mueller's indictment...
It is no response to say that the United States doesn't meddle in foreign elections,
because it has in the past - at least as recently as Bill Clinton's intervention in the
Russian presidential election of 1996 and possibly as recently as the Hillary Clinton State
Department's alleged intervention in Russia's 2011 legislative elections .
And during the Cold War the United States intervened in numerous foreign elections, more
than twice as often as the Soviet Union.
Intelligence history expert Loch Johnson told Scott Shane that the 2016 Russia electoral
interference is "the cyber-age version of standard United States practice for decades,
whenever American officials were worried about a foreign vote."
The CIA's former chief of Russia operations, Steven L. Hall, told Shane: "If you ask an
intelligence officer, did the Russians break the rules or do something bizarre, the answer is
no, not at all." Hall added that "the United States 'absolutely' has carried out such
election influence operations historically, and I hope we keep doing it."
Nothing gets the phony "Resistance," corporate media and neocons more hysterical than when
Trump isn't belligerent enough while meeting with foreign leaders abroad. While the pearl
clutching was intense during the North Korea summit, the reoccurring, systematic outrage
spectacle was taken to entirely new levels of stupidity and hyperbole during yesterday's
meeting with Putin in Finland.
The clown parade really got going after compulsive liar and former head of the CIA under
Barack Obama, John Brennan, accused Trump of treason on Twitter -- which resistance drones
dutifully retweeted, liked and permanently enshrined within the gospel of Russiagate.
Some people hate Trump so intensely they're willing to take the word of a professional liar
and manipulator as scripture.
In fact, Brennan is so uniquely skilled at the dark art of deception, Trevor Timm, executive
direction of the Freedom of the Press foundation described him in the following manner in a
must read 2014
"this is the type of spy who apologizes even though he's not sorry, who lies because he
doesn't like to tell the truth." The article also refers to him as "the most talented liar in
This is the sort of hero the phony "resistance" is rallying around. No thank you.
It wasn't just Brennan, of course. The mental disorder colloquially known as Trump
Derangement Syndrome is widely distributed throughout society at this point. Baseless
accusations of treason were thrown around casually by all sorts of TDS sufferers, including
sitting members of Congress. To see the extent of the disease, take a look at the show put on
by Democratic Congressman from Washington state, Rep. Adam Smith.
"At every turn of his trip to Europe, President Trump has followed a script that parallels
Moscow's plan to weaken and divide America's allies and partners and undermine democratic
values. There is an extensive factual record suggesting that President Trump's campaign and
the Russians conspired to influence our election for President Trump," Smith, a top Democrat
on the House Armed Services Committee, said in an official
"Now Trump is trying to cover it up. There is no sugar coating this. It is hard to see
President Trump siding with Vladimir Putin over our own intelligence community and our
criminal investigators as anything other than treason."
Those are some serious accusations. He must surely have a strong argument to support such
proclamations, right? Wrong. Turns out it was all show, pure politics.
In an interview with The Seattle Times, Smith expanded on his "treason" comment, saying
Trump legally did not commit treason but has committed other impeachable offenses.
"Treason might have been a little bit of hyperbole," Smith
told The Seattle Times . "There is no question in my mind that the United States has the
need to begin an impeachment investigation."
It says a lot that the resistance itself doesn't even believe its own nonsense. They're just
using hyperbolic and dangerous language to make people crazy and feed more TDS.
Here's yet another example of a wild-eyed Democratic Congressman sounding utterly
bloodthirsty and unhinged. Rep. Steve Cohen of Tennessee is openly saying the U.S. is at war
"No question about it," Cohen told Hill.TV's Buck Sexton and Krystal Ball on "Rising" when
asked whether the Russian hacking and propaganda effort constituted an act of war.
"It was a foreign interference with our basic Democratic values. The underpinnings of
Democratic society is elections, and free elections, and they invaded our country," he
Cohen went on to say that the U.S. should have countered with a cyber attack on
"A cyber attack that made Russian society valueless. They could have gone into Russian
banks, Russian government. Our cyber abilities are such that we could have attacked them with
a cyber attack that would have crippled Russia," he said.
This is a very sick individual.
While the above is incredibly twisted, it's become increasingly clear that Russiagate has
become something akin to a religion. It's adherents have become so attached to the story that
Trump's "wholly in the pocket of Putin," they're increasingly lobbing serious and baseless
accusations against people who fail to acquiesce to their dogma.
I was a victim of this back in November 2016 when
I was falsely slandered in The Washington Post's ludicrous and now infamous PropOrNot
More recently, we've seen MSNBC pundit Malcom Nance (ex-military/intelligence) call Glenn
Greenwald a Russian agent (without evidence of course), followed by "journalist" David Corn
calling Rand Paul a "traitor" for stating indisputable facts .
Calling someone a traitor for stating obvious facts that threaten the hysteria you're trying
to cultivate is a prime example of how this whole thing has turned into some creepy D.C.
establishment religion. If these people have such a solid case and the facts are on their side,
there's no need to resort to such demented craziness. It does nothing other than promote
societal insanity and push the unconvinced away.
It's because of stuff like this that we're no longer able to have a real conversation about
anything in this country (many Trump cheerleaders employ the same tactics) . This is a deadly
thing for any society and will be explored in Part 2.
* * *
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NOTE: Because "NATO" these days is little more than a box of spare parts out of which
Washington assembles "coalitions of the willing" , it's
easier for me to write "NATO" than "Washington plus/minus these or those minions".
Home Secretary Sajid Javid has called on Russia to explain "exactly what has gone on"
after two people were exposed to the Novichok nerve agent in Wiltshire. (
The Russian state could put this wrong right. They could tell us what happened. What they
did. And fill in some of the significant gaps that we are trying to pursue. We have said they
can come and tell us what happened. I'm waiting for the phone call from the Russian state.
The offer is there. They are the ones who could fill in all the clues to keep people safe. (
UK security minister Ben Wallace )
Leaving aside their egregious flouting of the elemental principle of English justice, note
that they're uttering this logical idiocy: Russia must have done it because it hasn't proved it
didn't . Note also, in Javid's speech, the amusing suggestion that Russia keeps changing its
story; but to fit into the official British story "novichok" must be an instantly lethal
slow acting poison which dissipates quickly but lasts for months .
This is an attempt to manipulate our perception of reality . In a previous
essay I discussed NATO's projection of its own actions onto Russia. In this piece I want to
discuss another psychological manipulation – gaslighting .
The expression comes from the movie Gaslight in which the villain
manipulates her reality to convince his wife that she is insane. Doubt the official Skripal
story and it is you – you "Russian troll" – who is imagining things. Only Russian
trolls would question Litvinenko's deathbed accusation written in perfect English handed to us
by a Berezovskiy flunky; or the shootdown of MH17; or the invasion of Ukraine; or the cyber
attack on Estonia. Only a Russian troll would observe that the fabulously expensive NATO
intelligence agencies apparently get their information from Bellingcat. Argumentum ad trollem
count the troll accusations here or admire the
clever anticipatory use of the technique there .
This is classic gaslighting – I'm telling the truth, you're the crazy one.
The Skripals were poisoned by an incredibly deadly nerve agent that left them with no
visible symptoms for hours but not so deadly that it killed them; at least not at Easter; nor
the policeman; a nerve agent that could only have been made in Russia although its recipe was
published in the
open media ; that poison having been administered on a doorknob that each had to have
touched at the exact same minute that no one else touched; a nerve agent so deadly that they
only bothered to clean up the sites 51 days later. And so on: a different story every day. But
your mind must be controlled by Putin if you smell a falsehood at any point. And, now we have
it all over again: apparently
the fiendishly clever Russian assassins smeared the doorknob and then, rather than getting out
of town ASAP, sauntered over into a park to toss the container . (Remember the fiendishly
clever Russian assassins who spread polonium everywhere?)
They use what is near and dear to you as ammunition.
Russians cheat at the sports you follow, scatter nerve agents and radioactive material in
places you could be in, sneak into the voting booth with you, blow up airplanes you might be on
and tear up the " very
fabric of our democracy ." Your favourite actor tells you " we are at war with Russia ".
NATO exerts a continual pressure for unanimity. Again, the Skripal story is a good example:
London accused Russia and, "
in solidarity ", Russian diplomats were expelled all over the world. Allies took its word
for it. Now the doubts:
in Germany especially . Sanctions must be imposed on Russia because we must be in
solidarity with Kiev.
"Solidarity" on migrants . " Solidarity " is
perhaps the greatest virtue in NATOland. We will hear more pleas for solidarity as NATO dies : when mere
"solidarity" is the only reason left; there's no reason left.
I said it the last time: the USSR did lots of things in its time – influencing,
fiddling elections, fake news, gaslighting and so on. But, in those days the Communist Party
was the " leading and guiding
force " but today it's the opposition .
Things have changed in Moscow, but NATO rolls on.
Some hope, though.
While many people are still taken in by the gaslighters, there are hopeful signs. Once upon
a time Internet versions of the mass media allowed comments. Gradually, one by one, they shut
down their comments sections because of "trolls", "fake news" and offended "standards" but
really because of disagreement. Perhaps the most famous case is that of the Guardian:
an entire website , has been created by
people whose comments were rejected because they violated "community standards". I always read
the comments in the Daily Mail, especially the best rated, and on the Skripal stories, the
comments are very sceptical indeed of the official story.
For example .
This is rather encouraging: for gaslighting really to work, the gaslighter either has to be
in such a position of power that he can completely control the victim's surroundings or in such
a position of authority that the victim cannot imagine doubting what he says. Those days are
This two part, excellent documentary on Russia in the 90's is all about VVP
and Major Russian Jewish Oligarch Boris Berezovsky. Boris took over the
Kremlin. Boris shot himself in the foot, but wound up saving Russia when
he picked Putin to succeed alchoholic Yeltsin. Putin took the country back.
Larry Summers, Harvard Jew American oligarch led the rape and looting
The Rise of Putin and The Fall of The Russian-Jewish Oligarchs (1/2)
After the collapse of the USSR, under Yeltsin, a large handful of
'oligarchs' grew immensely wealthy by buying Russian assets on the cheap.
This was part of a privitization drive largely overseen by American
The oligarchs were mostly Jews. The chief economic advisors were largely
Responding to my thanks for granting me the audience at such a hectic
time, Boris Abramovich commented with a faint smile: "You would be writing
the book in any case ..."
I understood that my visit was somewhat imposed on him so I got right to
"Boris Abramovich, the real reason for writing this book is this. As you
probably know there is a television show called 'The Puppets.' Puppets of
Yeltsin, Yastrzhembsky, Chernomyrdin, Kulikov, and others perform. But the
main puppeteer is behind the scenes -- his name is Shenderovich. And in
real life there are Yeltsin, Kiriyenko, Fedorov, Stepashin and the others.
But the main puppeteer has a long Jewish name: Berezovsky-Gusinsky-
Smolensky-Khodorkovsky, and so on.
"This is to say that for the first time in a thousand years, since the
first Jews settled in Russia, we hold the real power in this country. I
want to ask you straight out: How do you intend to use it? What do you
intend to do in this country? Cast it into the chaos of poverty or raise it
from the mud? Do you understand that a chance like this comes only once in
a thousand years? Do you understand your responsibility to our [Jewish]
people for your actions?"
Boris Abramovich responded with some difficulty: "Of course, as you see,
financial power is in Jewish hands, but we have never looked at this from
the point of view of historical responsibility."
Putin stopped the fire sale, essentially by dividing the oligarchs,
leveraging some against others.
Browder was heavily involved in the looting. He is heavy in distributing
anti-Russian propaganda in a heavily Jewish controlled media, and he was all
in for Clinton.
And he wants Trump impeached
(I recommend reading the
article below if you read just 1 link)
Most readers will identify Bill Broder with Hermitage Capital, but few
will recall that the investment firm was also funded by one Beny Steimetz,
the Israeli oligarch and financier just arrested (August 14) by Israeli and
Swiss anti-corruption officials for widescale fraud and money laundering.
The Russia privatization shark who was once Israel's richest man is a
subject for another report. I only bring him up here to point at two facets
of this war on Putin. First, the Jewish connection in all this is something
that just needs to come out. Secondly, the ring of profiteers bent on
Putin's demise all have gigantic skeletons in their wardrobes. A story
citing one Putin hater, when investigated, always leads to ten more. This
is no coincidence.
Back to Browder, his Hermitage was at one time was the largest foreign
portfolio investor in Russia. That was before Vladimir Putin put a stop to
the rape of Russia's legacy and the theft of her assets. This is undeniable
fact, and even the lowliest of Russian peasants know it by now. Browder, a
Chicago Jew, set out to profit from Russian privatization after Yeltsin,
but was thwarted like other sharks when Putin's hammer fell on other
mafiosos. RICO suits, libel cases, tax evasion charges, and ties to some of
the seediest characters in world finance highlight the man who pushed the
now famous Magnitsky Act into US foreign policy play. It's no coincidence
that Browder has emerged as a central player in the ongoing investigation
of Russian interference in the 2016 elections. The privateer who made
billions off Russia privatization turned into a human rights activist, and
now he's bent on seeing Donald Trump impeached!
Terrific post I Am Jack. And also thank you for emphasising the unholy
convergence of vested interests in Putin Russia demonization - the Jewish
bankers raping Rusdia in the 90s on a scale not seen since the Mongols
hordes, and Western oligarchs seeing a chance to become even more insanely
wealthy (hence the London, Wall St, Pentagon, Fed, DC, Brussels etc
Putin is an extraordinary and immensely intelligent and
brave individual who divided and knee-capped the world mafia. THIS is why
he is demonised, not because he is some evil Tsar of Mordor. That being
said he hasn't done it alone - the people of Russia made huge mistakes by
allowing communism in, and economic genocide in the 1990s was wilful
influcted upon them, but their resilience is extraordinary.
I hope they are all watching their backs. Putin if all people stated
that he is careful about cornering rats with now way out, so i have a
feeling that things are going to get unpredictable ...
I did post about 3 months back that Browder and the trillion
dollar rape Russia in the 1990s , the Money Plane etc are the key
to understand current events, Putin and what is being covered up
now, in my opinion, but unfortunately it doesn't seem to get
I'd not seen the AP reporters question that triggered this before. It looks like the
reporter was trying to embarrass both Putin and Trump but wound up getting his ass, Clinton's
ass, and the asses of the intelligence community handed to him instead.
too right. If I remember correctly, it was in the context of Putin saying Russia is open
to have FBI guys come to question the 12 GRU guys indicted (no proof yet) by Mueller.
In return, he then said Russia would like to ask a few questions to the US officials
believed to have HELPED Browder funnel $400K to Clinton and probably avoid paying tax on 1.5
billion in Russia AND the US...
Browder has to be on top of the US wanted list in the not too distant future or there
really is no fuckin justice.
+50 Overbet. I posted before i read yours. I have tired of trying to convince people that
90s Russia and the thefts then and subsequent covering of crimes is STILL the key to
understanding the Deep States obsession and fear of Putin and Russia. Soros, Clinton's,
Chubias, the FED's off the books money printing, London money laundering , EU buying the
stolen movables etc - they are all there. Browder's animus is also driving much behind the
scenes with 'Russiagate'. Look people - you will see. Putin certainly didn't pluck that lying
idiot's name randomly.
I urge people to at least read the 90s chapter in the Killing of William Browder (free
online PDF) to begin to understand what is going on now.
The appendix on Jacob Rothschild alone and Yukos makes it worth the read. But if you read
nothing else, read the chapters on Browder's interrogation and Russia in the 1990s - easy
reads and give a great introduction to this orgy of psycopathy and mendacity. They are all
Russophobia feeds considerable part of official Washington
(including monstrous intelligence agencies) and lion share of think tanks. As Upton Sinclair
quipped: "It is difficult to get a man to understand something, when his salary depends on his
not understanding it."
"... Russophobia is a 24/7 industry, and all concerned, including its media vassals, remain absolutely livid with the "disgraceful" Trump-Putin presser. Trump has "colluded with Russia." How could the President of the United States promote "moral equivalence" with a "world-class thug"? ..."
"... As if this was not enough, Trump doubles down invoking the Democratic National Committee (DNC) server. "I really do want to see the server. Where is the server? I want to know. Where is the server and what is the server saying?" ..."
"... Trump was unfazed. He knows that the DNC computer hard-drives -- the source of an alleged "hacking" -- simply "disappeared" while in the custody of US intel, FBI included. He knows the bandwidth necessary for file transfer was much larger than a hack might have managed in the time allowed. It was a leak, a download into a flash-drive. ..."
"... Additionally, Putin knows that Mueller knows he will never be able to drag 12 Russian intelligence agents into a US courtroom. So the -- debunked -- indictment, announced only three days before Helsinki, was nothing more than a pre-emptive, judicial hand grenade. ..."
"... No wonder John Brennan, a former CIA director under the Obama administration, is fuming. "Donald Trump's press conference performance in Helsinki rises to exceed the threshold of 'high crimes and misdemeanors.' It was nothing short of treasonous. Not only were Trump's comments imbecilic, he is wholly in the pocket of Putin." ..."
"... No "grand bargain" on Iran seems to be in the cards. The top adviser to Ayatollah Khamenei, Ali Akbar Velayati, was in Moscow last week. The Moscow-Tehran entente cordiale seems unbreakable. In parallel, as Asia Times has learned, Bashar al-Assad has told Moscow he might even agree to Iran leaving Syria, but Israel would have to return the occupied Golan Heights. So, the status quo remains. ..."
"... Putin did mention both presidents discussed the Iran nuclear deal or Joint Comprehensive Plan Of Action and essentially they, strongly, agree to disagree. US Secretary of State Mike Pompeo and Treasury Secretary Steven Mnuchin have written a letter formally rejecting an appeal for carve-outs in finance, energy and healthcare by Germany, France and the UK. A maximum economic blockade remains the name of the game. Putin may have impressed on Trump the possible dire consequences of a US oil embargo on Iran, and even the (far-fetched) scenario of Tehran blocking the Strait of Hormuz. ..."
US President stirs up a hornet's nest with his press conference alongside his Russian
counterpart, but it seems that no 'grand bargain' was struck on Syria, and on Iran they appear
to strongly disagree
"The Cold War is a thing of the past." By the time President Putin said as much during
preliminary remarks at his joint press conference with President Trump in Helsinki, it was
clear this would not stand. Not after so much investment by American conservatives in Cold War
Russophobia is a 24/7 industry, and all concerned, including its media vassals, remain
absolutely livid with the "disgraceful" Trump-Putin presser. Trump has "colluded with Russia."
How could the President of the United States promote "moral equivalence" with a "world-class
Multiple opportunities for apoplectic outrage were in order.
Trump: "Our relationship has never been worse than it is now. However, that changed. As of
about four hours ago."
Putin: "The United States could be more decisive in nudging Ukrainian leadership."
Trump: "There was no collusion I beat Hillary Clinton easily."
Putin: "We should be guided by facts. Can you name a single fact that would definitively
prove collusion? This is nonsense."
Then, the clincher : the Russian president calls [Special Counsel] Robert Mueller's 'bluff',
offering to interrogate the Russians indicted for alleged election meddling in the US if
Mueller makes an official request to Moscow. But in exchange, Russia would expect the US to
question Americans on whether Moscow should face charges for illegal actions.
Trump hits it out of the park when asked whether he believes US intelligence, which
concluded that Russia did meddle in the election, or Putin, who strongly denies it.
"President Putin says it's not Russia. I don't see any reason why it would be."
As if this was not enough, Trump doubles down invoking the Democratic National Committee
(DNC) server. "I really do want to see the server. Where is the server? I want to know. Where
is the server and what is the server saying?"
It was inevitable that a strategically crucial summit between the Russian and American
presidencies would be hijacked by the dementia of the US news cycle.
Trump was unfazed. He knows that the DNC computer hard-drives -- the source of an alleged
"hacking" -- simply "disappeared" while in the custody of US intel, FBI included. He knows the
bandwidth necessary for file transfer was much larger than a hack might have managed in the
time allowed. It was a leak, a download into a flash-drive.
No wonder John Brennan, a former CIA director under the Obama administration, is
fuming. "Donald Trump's press conference performance in Helsinki rises to exceed the
threshold of 'high crimes and misdemeanors.' It was nothing short of treasonous. Not only were
Trump's comments imbecilic, he is wholly in the pocket of Putin."
How Syria and Ukraine are
However, there are reasons to expect at least minimal progress on three fronts in Helsinki :
a solution for the Syria tragedy, an effort to limit nuclear weapons and save the Intermediate-range Nuclear Forces
treaty signed in 1987 by Reagan and Gorbachev, and a positive drive to normalize US-Russia
relations, away from Cold War 2.0.
Trump knew he had nothing to offer Putin to negotiate on Syria. The Syrian Arab Army (SAA)
now controls virtually 90% of national territory. Russia is firmly established in the Eastern
Mediterranean, especially after signing a 49-year agreement with Damascus.
Even considering careful mentions of Israel on both sides, Putin certainly did not agree to
force Iran out of Syria.
No "grand bargain" on Iran seems to be in the cards. The top adviser to Ayatollah Khamenei,
Ali Akbar Velayati, was in Moscow last week. The Moscow-Tehran entente cordiale seems
unbreakable. In parallel, as Asia Times has learned, Bashar al-Assad has told Moscow he might
even agree to Iran leaving Syria, but Israel would have to return the occupied Golan Heights.
So, the status quo remains.
Putin did mention both presidents discussed the Iran nuclear deal or Joint Comprehensive
Plan Of Action and essentially they, strongly, agree to disagree. US Secretary of State Mike
Pompeo and Treasury Secretary Steven Mnuchin have written a letter formally rejecting an appeal
for carve-outs in finance, energy and healthcare by Germany, France and the UK. A maximum
economic blockade remains the name of the game. Putin may have impressed on Trump the possible
dire consequences of a US oil embargo on Iran, and even the (far-fetched) scenario of Tehran
blocking the Strait of Hormuz.
Judging by what both presidents said, and what has been leaked so far, Trump may not have
offered an explicit US recognition of Crimea for Russia, or an easing of Ukraine-linked
It's reasonable to picture a very delicate ballet in terms of what they really discussed in
relation to Ukraine. Once again, the only thing Trump could offer on Ukraine is an easing of
sanctions. But for Russia the stakes are much higher.
Putin clearly sees Southwest Asia and Central and Eastern Europe as totally integrated. The
Black Sea basin is where Russia intersects with Ukraine, Turkey, Eastern Europe and the
Caucasus. Or, historically, where the former Russian, Ottoman and Habsburg empires
A Greater Black Sea implies the geopolitical convergence of what's happening in both Syria
and Ukraine. That's why for the Kremlin only an overall package matters. It's not by accident
that Washington identified these two nodes -- destabilizing Damascus and turning the tables in
Kiev -- to cause problems for Moscow.
Putin sees a stable Syria and a stable Ukraine as essential to ease his burden in dealing
with the Balkans and the Baltics. We're back once again to that classic geopolitical staple,
the Intermarium ("between the seas"). That's the ultra-contested rimland from Estonia in the
north to Bulgaria in the south -- and to the Caucasus in the east. Once, that used to frame the
clash between Germany and Russia. Now, that frames the clash between the US and Russia.
In a fascinating echo of the summit in Helsinki, Western strategists do lose their sleep
gaming on Russia being able to "Finlandize" this whole rimland.
And that brings us, inevitably, to what could be termed The German Question. What is Putin's
ultimate goal: a quite close business and strategic relationship with Germany (German business
is in favor)? Or some sort of entente cordiale with the US? EU diplomats in Brussels are openly
discussing that underneath all the thunder and lightning, this is the holy of the
Take a walk on the wild side
The now notorious key takeaway from a Trump interview at his golf club in Turnberry,
Scotland, before Helsinki, may offer some clues.
"Well, I think we have a lot of foes. I think the European Union is a foe, what they do to
us in trade. Now, you wouldn't think of the European Union, but they're a foe. Russia is a
foe in certain respects. China is a foe economically, certainly they are a foe. But that
doesn't mean they are bad. It doesn't mean anything. It means that they are competitive."
Putin certainly knows it. But even Trump, while not being a Clausewitzian strategist, may
have had an intuition that the post-WWII liberal order, built by a hegemonic US and bent on
permanent US military hegemony over the Eurasian landmass while subduing a vassal Europe, is
While Trump firebombs this United States of Europe as an "unfair" competitor of the US, it's
essential to remember that it was the White House that asked for the Helsinki summit, not the
Trump treats the EU with undisguised disdain. He would love nothing better than for the EU
to dissolve. His Arab "partners" can be easily controlled by fear. He has all but declared
economic war on China and is on tariff overdrive -- even as the IMF warns that the global
economy runs the risk of losing around $500 billion in the process. And he faces the ultimate
intractable, the China-Russia-Iran axis of Eurasian integration, which simply won't go
So, talking to "world-class thug" Putin -- in usual suspect terminology -- is a must. A
divide-and-rule here, a deal there -- who knows what some hustling will bring? To paraphrase
Lou Reed, New Trump City "is the place where they say "Hey babe, take a walk on the wild
During the Helsinki presser, Putin, fresh from Russia's spectacular World Cup soft power PR
coup, passed a football to Trump. The US president said he would give it to his son, Barron,
and passed the ball to First Lady Melania. Well, the ball is now in Melania's court.
Comey and Senator Warner
basically are calling for a coup because of the FALSE claim that it is
'treason' to doubt the IC.
Honestly, it's past joking about. The rabid dogs are now snarling in
our front yard. Circling the house.
But it wasn't the Intelligence Community that said 'Russia hacked the
DNC'... a play that was about getting you to ignore the CONTENT of
Hillary/DNC emails. (Thus the quip 'Russia rigged our elections by exposing
how our elections are rigged.').
It was Brennan and Clapper and a dozen 'handpicked' analysts from just 3
agencies. Even then the NSA boys only said 'moderate confidence' which is
analyst speak for 'we have no real evidence.' The CIA and FBI analysts,
relying on the DNC-linked CrowdStrike analysis of a server they never
examined, said 'high confidence' which means 'we can't prove this but we
totally believe it was Russia's government because wouldn't it be just like
those aggressive Russkis?'
Trump needs to order a full intelligence agency review of
Someone lose to him needs to scream this
into his ear.
Listen boys, that covers Trump from all directions. A full intelligence
agency review no matter what it says helps him. MOREOVER, as part of that,
any serious IC assessment of CLAPPER'S report will show that it was
contrived. Political. Not how such assessments are normally done.
So even if it's conclusions ended up being correct... the report itself
would be exposed as complete bullshit. Which points one to Clapper, and
Brennan... and Obama.
Hey listen, playtime is over. Comey and Brennan and the neocons and
media are basically using Trump's very reasonable doubt as 'treason' and
have turned the rhetoric up to 11. They are suggesting a coup based on
Deep State/Dem/MIC lies. This is intolerable and we may be at a point
where sending the Marines to CIA headquarters to take documents and arrest
some folks is in order. What would the media do - go nuts?
Why didn't Clapper invite DIA to the party?
If its military (SO/SF) versus the spooks - guess who wins?
The CIA is for the most part a collection of drig and guns mafias. They
operate outside the law with unlimited funding. Squeeze that funding -
grab some of their operators off the fucking street and interrogate
You have Senator Cohen actually suggesting a coup because Trump doubts
the IC which Schumer said has many ways to 'get you.'
REPORTER AP: President Trump you first. Just now President
Putin denied having anything to do with the election interference in
2016. Every U.S. intelligence agency has concluded that Russia did...
So, this is a lie. It's the 'all intel agencies' lie even the NY
Times at least at one loint admitted was a lie.
This is super important.
It was a dozen or so 'handpicked analysts' - NOT a full IC review.
Now why wouldnt Obama, Brennan and Clapper want a full, actual Intel
And Clapper had final edit power. I mean its a fucking joke and the
complete lack of MSM scrutiny of the problems tells me the media is
truly, no kidding, captured by interests who can completely suppress
basic journalism (I know there's long been *bias* - this is deliberately
not reporting on a highly unusual intel assessment by a guy who hates
Trump relying on a private firm founded by a guy who hates Putin which
has extensive ties to the DNC.
It really isnt a Red Team Blue Team thing and you don't have to like
Trump. This is about whether a small group of spooks with ties to one
party and effective media cobtrol get to undo an election to pursue war
in Ukraine and Syria and to justify ever more spending by acting
aggressively toward Russia along its borders then framing every response
as 'Russian aggression.'
We are in an incredibly dangerous time eith senators and former fbi
and cia heads more or less openly calling for a coup because Trump
doubts Brennan/Clapper's horseshit report.
I know I repeat myself. I have to. I'm very alarmed by this stuff.
needs to order a full IC assessment of Clapper's report and of Russian
alleged **hacking** ASAP.
(the clickbait stuff is so silly
its frankly not worth addressing right now).
Secret Service should also detain and question Cohen and Comey over
their remarks. Trump needs to flex a little muscle now with people
I'd not seen the AP reporters question that triggered this before. It
looks like the reporter was trying to embarrass both Putin and Trump
but wound up getting his ass, Clinton's ass, and the asses of the
intelligence community handed to him instead.
too right. If I remember correctly, it was in the context of Putin
saying Russia is open to have FBI guys come to question the 12 GRU
guys indicted (no proof yet) by Mueller.
In return, he then said
Russia would like to ask a few questions to the US officials
believed to have HELPED Browder funnel 400 mill to Clinton and
probably avoid paying tax on 1.5 billion in Russia AND the US...
Browder has to be on top of the US wanted list in the not too
distant future or there really is no fuckin justice.
Everyone messes with everyone in their elections around the world. My first
question is why is the media on both sides still pounding the American
public with the "Russia did it" bullhorn. What exactly does Russia gain ?
They're 9 times smaller than NATO. China has the most to gain.
Ukrainians were working with Hillary against Trump. The Deep State has the
ability to make every act of espionage look like Russia did it. The DNC
didn't turn over their server to the FBI. The Awan server disappeared too.
Something smells terrible, like Kankles Huma hole.
jesus they can accuse you of being a putin puppet if you don't...
and how do you defend yourself.. "how dare you insult every branch of
our intelligence agencies"( and the lying james clapper!!!! )how dare
Hey Groot, I think these countries hack and spy on each other 24/7.
It's bullshit. They appoint a special prosecutor and with the
exceptions of the BS Flynn and Manafort charges the only others he's
charged are non-americans. Nothing about the elephant in the room, the
billion dollar + money laundering schemes and treason of the
Obama/Clinton and their lackeys.
Mish - Six Questions: (1) Is this a trial or a witch hunt? (2) Do we need to see the evidence or do we believe known liars? (3)
Is Trump guilty of treason? Before we even see proof Putin was involved? (4) Is the CIA incapable of fabricating evidence? (5) Even
if Russia interfered in the election, why should anyone have expected otherwise? (6) Has everyone forgotten the US lies on WMDs already?
"... Sending lethal arms to Ukraine, bordering Russia, is a really serious adverse action against the interest of the Russian government. Bombing the Assad regime is, as well. Denouncing one of the most critical projects that the Russian government has, which is the pipeline to sell huge amounts of gas and oil to Germany, is, as well. ..."
"... The United States funds oppositional groups inside Russia. The United States sent advisers and all kinds of operatives to try and elect Boris Yeltsin in the mid-1990s, because they perceived, accurately, that he was a drunk who would serve the interests of the United States more than other candidates who might have won. The United States interferes in Russian politics, and they interfere in their cyber systems, and they invade their email systems, and they invade all kinds of communications all the time. And so, to treat this as though it's some kind of aberrational event, I think, is really kind of naive ..."
"... And so, I would certainly hope that we are not at the point, which I think we seem to be at, where we are now back to believing that when the CIA makes statements and assertions and accusations, or when prosecutors make statements and assertions and accusations, unaccompanied by evidence that we can actually evaluate, that we're simply going to believe those accusations on faith, especially when the accusations come from George W. Bush's former FBI Director Robert Mueller, who repeatedly lied to Congress about Iraq and a whole variety of other issues. So, I think there we need some skepticism. ..."
For example, reader Brian stated " There is zero doubt now that Putin stole the election
from Hillary. So much so that she MUST be given the nomination again in 2020. All potential
challengers must step aside. To refuse her the 2020 nomination would be evidence of traitorous
activities with Putin."'
I congratulated Brian for brilliant sarcasm but he piled on. It now seems he was
serious. Mainstream media, the Left an the Right were in general condemnation. Numerous cries of treason emerged from the Left and the Right (see the above link)
It Happened - No Trial Necessary
A friend I highly respect commented " There is simply no question that they did it. You can
legitimately claim that it's not important or that there has been no tie to Trump shown. On the
Russians' side, they can say, screw off, we were pursuing our interests. But you can't take the
view it did not happen. It happened. "
There is a question who did it. Indictments are just that, not proof.
The US fabricated evidence to start the Vietnam war and the US fabricated WMD talk on the
second war in Iraq. US intelligence had no idea the Berlin Wall was about to fall. The US
meddled in Russia supporting a drunk named Yeltsin because we erroneously thought we could
They Are All Liars
It's a mystery why anyone would believe these proven liars. That does not mean I believe
Putin either. They are all capable liars. Let's step back from the absurd points of view to reality.
The US tries to influence elections in other countries and has a history of assisting the
forcible overthrow of governments we don't like.
All of the above are massive disasters of US meddling. They are all actions of war,
non-declared, and illegal. I cannot and do not condone such actions even if they were legal.
911 and ISIS resulted from US meddling. The migration crisis in the EU is a direct
consequence of US meddling. The Iranian revolution was a direct consequence of US meddling.Now we are pissing and moaning that Russia spent a few million dollars on Tweets to steal
the election. Please be serious.
Let's assume for one second the DNC hack was Russia-based. Is there a reason to not be thankful for evidence that Hillary conspired to deny Bernie
Sanders the nomination? Pity Hillary? We are supposed to pity Hillary? The outrage from the Right is amazing. It's pretty obvious Senator John McCain wanted her to win. Neither faced a war or military
intervention they disapproved of.
Let's move on to a common sense position from Glenn Greenwald at the Intercept.
GLENN GREENWALD : In 2007, during the Democratic presidential debate, Barack Obama
was asked whether he would meet with the leaders of North Korea, Cuba, Venezuela, Syria and
Iran without preconditions. He said he would. Hillary Clinton said she wouldn't, because it
would be used as a propaganda tool for repressive dictators. And liberals celebrated Obama. It
was one of his greatest moments and one of the things that I think helped him to win the
Democratic nomination, based on the theory that it's always better to meet with leaders, even
if they're repressive, than to isolate them or to ignore them. In 1987, when President Reagan
decided that he wanted to meet with Soviet leaders, the far right took out ads against him that
sounded very much just like what we just heard from Joe, accusing him of being a useful idiot
to Soviet and Kremlin propaganda, of legitimizing Russian aggression and domestic repression at
GLENN GREENWALD : It is true that Putin is an authoritarian and is domestically repressive.
That's true of many of the closest allies of the United States, as well, who are even far more
repressive, including ones that fund most of the think tanks in D.C., such as the United Arab
Emirates or Saudi Arabia. And I think the most important issue is the one that we just heard,
which is that 90 percent of the world's nuclear weapons are in the hands of two countries --
the United States and Russia -- and having them speak and get along is much better than having
them isolate one another and increase the risk of not just intentional conflict, but
misperception and miscommunication, as well.
JOE CIRINCIONE : Right. Let's be clear. Glenn, there's nothing wrong with meeting. I
agree with you. Leaders should meet, and we should be negotiating with our foes, with those
people we disagree with. We're better off when we do that. And the kind of attacks you saw on
Barack Obama were absolutely uncalled for, and you're right to condemn those.
JOE CIRINCIONE : What I'm worried about is this president meeting with this leader
of Russia and what they're going to do. That's what's so wrong about this summit coming now,
when you have Donald Trump, who just attacked the NATO alliance, who calls our European allies
foes, who turns a blind eye to what his director of national intelligence called the warning
lights that are blinking red. About what? About Russian interference in our elections. So you
just had a leader of Russia, Putin, a skilled tactician, a skilled strategist, interfere in a
U.S. election. To what? To help elect Donald Trump.
GLENN GREENWALD : I think this kind of rhetoric is so unbelievably unhinged, the idea that
the phishing links sent to John Podesta and the Democratic National Committee are the greatest
threat to American democracy in decades. People are now talking about it as though it's on par
with 9/11 or Pearl Harbor, that the lights are blinking red, in terms of the threat level. This
is lunacy, this kind of talk. I spent years reading through the most top-secret documents of
the NSA, and I can tell you that not only do they send phishing links to Russian agencies of
every type continuously on a daily basis, but do far more aggressive interference in the
cybersecurity of every single country than Russia is accused of having done during the 2016
election. To characterize this as some kind of grave existential threat to American democracy
is exactly the kind of rhetoric that we heard throughout the Bush-Cheney administration about
what al-Qaeda was like .
JOE CIRINCIONE : Why does Donald Trump feel that he has to meet alone with Putin? What is
going on there? I mean, that -- when Ronald Reagan met with Gorbachev at Reykjavik, at least he
had George Shultz with him. The two of them, you know, were meeting with Gorbachev and his
foreign minister at the time. This is -- it's deeply disturbing. It makes you feel that Trump
is hiding something, that he is either trying to make a deal with Putin, reporting something to
Putin. I tell you, I know U.S. intelligence officials -- I'm probably going right into Glenn's
wheelhouse here. But U.S. intelligence officials are concerned about what Donald Trump might be
revealing to the Russian leader, the way he revealed classified information to the Russian
foreign minister when he met privately with him in the Oval Office at the beginning of his
term. No, I don't like it one bit.
GLENN GREENWALD : I continue to be incredibly frustrated by the claim that we hear over and
over, and that we just heard from Joe, that Donald Trump does everything that Vladimir Putin
wants, and that if he were a paid agent of the Russian government, there'd be -- he would be
doing nothing different. I just went through the entire list of actions that Donald Trump has
taken and statements that he has made that are legitimately adverse to the interest of the
Russian government, that Barack Obama specifically refused to do, despite bipartisan demands
that he do them, exactly because he didn't want to provoke more tensions between the United
States and Russia.
Sending lethal arms to Ukraine, bordering Russia, is a really serious
adverse action against the interest of the Russian government. Bombing the Assad regime is, as
well. Denouncing one of the most critical projects that the Russian government has, which is
the pipeline to sell huge amounts of gas and oil to Germany, is, as well.
So is expelling
Russian diplomats and imposing serious sanctions on oligarchs that are close to the Putin
regime. You can go down the list, over and over and over, in the 18 months that he's been in
office, and see all the things that Donald Trump has done that is adverse, in serious ways, to
the interests of Vladimir Putin, including ones that President Obama refused to do. So, this
film, this movie fairytale, that I know is really exciting -- it's like international intrigue
and blackmail, like the Russians have something over Trump; it's like a Manchurian candidate;
it's from like the 1970s thrillers that we all watched -- is inane -- you know, with all due
respect to Joe. I mean, it's -- but it's in the climate, because it's so contrary to what it is
that we're seeing. Now, this idea of meeting alone with Vladimir Putin, the only way that you
would find that concerning is if you believed all that.
JOE CIRINCIONE : So, Trump knew that this indictment was coming down, before he went to
Europe, and still he never says a word about it. What he does is continue his attacks on our
alliances, i.e. he continues his attacks on our free press, he continues his attacks on FBI
agents who were just doing their job, and supports this 10-hour show hearing that the House of
Representatives had. It's really unbelievable that Trump is doing these things and never says
one word about it. He still has not said a word about those indictments.
GLENN GREENWALD : That's because the reality is -- and I don't know if Donald Trump knows
this or doesn't know this, has stumbled into the truth or what -- but the reality is that what
the Russians did in 2016 is absolutely not aberrational or unusual in any way. The United --
I'm sorry to say this, but it's absolutely true. The United States and Russia have been
interfering in one another's domestic politics for since at least the end of World War II, to
say nothing of what they do in far more extreme ways to the internal politics of other
countries. Noam Chomsky was on this very program several months ago, and he talked about how
the entire world is laughing at this indignation from the United States -- "How dare you
interfere in our democracy!" -- when the United States not only has continuously in the past
done, but continues to do far more extreme interference in the internal politics of all kinds
of countries, including Russia .
GLENN GREENWALD : The United States funds oppositional groups inside Russia. The United
States sent advisers and all kinds of operatives to try and elect Boris Yeltsin in the
mid-1990s, because they perceived, accurately, that he was a drunk who would serve the
interests of the United States more than other candidates who might have won. The United States
interferes in Russian politics, and they interfere in their cyber systems, and they invade
their email systems, and they invade all kinds of communications all the time. And so, to treat
this as though it's some kind of aberrational event, I think, is really kind of naive .
GLENN GREENWALD : It wasn't just Hillary Clinton in 2016 who lost this election. The entire
Democratic Party has collapsed as a national political force over the last decade. They've lost
control of the Senate and of the House and of multiple statehouses and governorships. They're
decimated as a national political force. And the reason is exactly what Joe said. They become
the party of international globalization. They're associated with Silicon Valley and Wall
Street billionaires and corporate interests, and have almost no connection to the working
class. And that is a much harder conversation to have about why the Democrats have lost
elections than just blaming a foreign villain and saying it's because Vladimir Putin ran some
fake Facebook ads and did some phishing emails. And I think that until we put this in
perspective, about what Russia did in 2016 and the reality that the U.S. does that sort of
thing all the time to Russia and so many other countries, we're going to just not have the
conversation that we need to be having about what these international institutions, that are so
sacred -- NATO and free trade and international trade organizations -- have done to people all
over the world, and the reason they're turning to demagogues and right-wing extremists because
of what these institutions have done to them. That's the conversation we need to be having, but
we're not having, because we're evading it by blaming everything on Vladimir Putin. And that,
to me, is even more dangerous for our long-term prospects than this belligerence that's in the
air about how we ought to look at Moscow.
Indictments and First Year Law
Mish : I now wish to return to a statement my friend made regarding the idea " No question
Russia did it ".
From Glenn Greenwald
As far as the indictments from Mueller are concerned, it's certainly the most specific
accounting yet that we've gotten of what the U.S. government claims the Russian government did
in 2016. But it's extremely important to remember what every first-year law student will tell
you, which is that an indictment is nothing more than the assertions of a prosecutor
unaccompanied by evidence. The evidence won't be presented until a trial or until Robert
Mueller actually issues a report to Congress.
And so, I would certainly hope that we are not at
the point, which I think we seem to be at, where we are now back to believing that when the CIA
makes statements and assertions and accusations, or when prosecutors make statements and
assertions and accusations, unaccompanied by evidence that we can actually evaluate, that we're
simply going to believe those accusations on faith, especially when the accusations come from
George W. Bush's former FBI Director Robert Mueller, who repeatedly lied to Congress about Iraq
and a whole variety of other issues. So, I think there we need some skepticism.
But even if the
Russians did everything that Robert Mueller claims in that indictment that they did, in the
scheme of what the U.S. and the Russians do to one another and other countries, I think to say
that this is somehow something that we should treat as a grave threat, that should mean that we
don't talk to them or that we treat them as an enemy, is really irrational and really quite
Mish - Six Questions
Is this a trial or a witch hunt?
Do we need to see the evidence or do we believe known liars?
Is Trump guilty of treason? Before we even see proof Putin was involved?
Is the CIA incapable of fabricating evidence?
Even if Russia interfered in the election, why should anyone have expected
Has everyone forgotten the US lies on WMDs already?
Irrational and Dangerous
I don't know about you, but I have no reason to believe known liars and hypocrites. I
disagree with Trump all the time, in fact, more often than not. The amount of venom on Trump
over this is staggering. Adding a missing word, I stand by my previous statement: " Nearly
every political action that generates this much complete nonsense and hysteria from the Left
and Right is worthy of immense praise."
If you disagree please provide examples. The only two I can come up with are Pearl Harbor
and 911. In both, the US was directly attacked. For rebuttal purposes I offer Vietnam, Syria,
Iraq, Russia, Iran, WWI, treatment of Japanese-American citizens in WWII, and McCarthyism.
Greenwald accurately assesses the situation as "really irrational and really quite dangerous."
Indeed. And if indictments and accusations were crimes, we wouldn't need a jury.
If the DNC servers were hacked, they are evidence, where is the fucking evidence now? At the bottom of the Hudson River with
concrete shoes that's where! Where are the Anwan servers, Podesta's, Wieners....where are Hillary's emails?
Fuck this is getting out of hand. All of the top spooks in the alphabet agencies are complicit, DOJ too, right up to the skinny
faggot in the rainbow house!
Getting close to the time for some real fucking justice in America!
Sic Semper Tyrannis
Here is an update to the map I posted yesterday about where not to be, not sure I agree one way or the other, you decide:
Even if it were found to be true that Russia (and not Seth Rich) was the source of the info that revealed to the American people
(and the world) that the DNC conspired to rig its own primary election, my response would be one of gratitude for shining a light
on the cockroaches.
Russian hack? hahaha, as if. Everybody knows it was an inside job. That sort of thing with all the emails is inside -> Seth
Rich is a good place to look.
BESIDES! LET'S NOT FORGET ABOUT THE CONTENT OF THOSE EMAILS!!!
This guy in the article above that says Hellary "must" be given the nomination because Russia 'hacked' the election. Great!
I'll be very happy to see that nasty bitch go down a second time, based on the substance of her twisted, hypocritical, and consummately
***It is a tale, full of sound and fury, told by idiots, signifying nothing***
how can we be expected to take any of this shit seriously?
-- avowed globalist-communists opposed to any nation's sovereignty, repulsed at the faintest wiff of patriotism scolding us
for our lack of patriotism?
-- political parties, intelligence agencies, the media and much of the judiciary attempting to undermine the democratic process
for over a year and a half, delegitamize a Presidency, vilify half the nation, stoke the flames of enmity...now they kvetch about
no, langley, we do not trust you. no, media, your agitprop has no currency.
of all the reasons for hillary's defeat, no one ever mentions the fact that she campaigned on a platform of war...WWIII, no
less. starting in May/June of 2016, cankles started pounding the war drums. in a scenario so stale and overused as to threadbare,
the left initiated the process of demonizing russia and russians.
Trump supporters are not only pro-American, they/we are anti-war. forever spinning in a manic and frenzied swirl of hysterics,
the left often loses sight of this...but as much is to be expected, in that the left doesn't think, they instead parrot the tropes
fed to them on a daily basis, forever unable to assemble