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In top top news we present selected items which demonstrated superior level of their insight (and, unfortunately, to judge that is possible only in retrospect). In 2013 for Jan-May those would be people who understood that bond bubble is about to unwind (can be counted on one hand :-( ).
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Aug 30, 2015 | peakoilbarrel.com
The Saudi miscalculation has several sources. One is the negative feedback loop between oil production, GDP, and national budgets that plagues many non-Western oil producers. Their GDP and national budgets depend significantly on the revenues from their oil exports. As a result, the revenue shortfalls incentivize them to produce as much oil as possible to mitigate the shortfall.According to the IEA , daily output in June 2015 increased 3.1 million barrels over 2014, with 60 percent (1.8 million barrels) coming from OPEC. At 31.7 million barrels per day, OPEC output reached a three-year high.
This increase in output occurs with the context of a narrow global demand opportunity. Growth in demand in 2015, which the IEA forecasts to average around 1.4 million barrels per day, comes primarily from Asia and North America. In other major export markets, demand is stagnant. That has oil exporting countries, including OPEC members, Russia and others, focusing their sales on Asia, particularly China. North American demand is growing now that oil prices are low, but due to high levels of domestic production, the U.S. is no longer a growth market for oil exporters.
Each producer, therefore, is incentivized to undercut other producers directly (price per barrel) or indirectly (absorbing shipping cost or delivery risk) to win sales in Asia (or displace incumbent suppliers in other major markets). National oil producers can and are shifting the cost of the lowered prices to other sectors of the economy. The U.A.E., for example, has ended fuel subsidies, thereby essentially, increasing its budget revenues, while Saudi Arabia recently floated a $4 billion domestic bond offering to help finance its budget.
Asian customers are taking advantage of the competition. They are reducing the share of long-term contracts in favor of spot purchases. For example, as the Wall Street Journal reported , some Japanese refiners are cutting the proportion of oil purchased through long-term contracts to around 70 percent from more than 90 percent, while some South Korean refiners are reducing the proportion from 75 to 50 percent. Furthermore, several national oil companies, Venezuela's among them, are building refineries with local partners in Asia, which will use their crude.
Given this environment, it is not surprising that the revenue elasticity of production is highly sensitive, and negative. Saudi Arabia increased production by 6.8 percent in the first quarter of 2015 but saw export revenues shrink by 42 percent.
Any Saudi Victory Will Be Pyrrhic
Saudi confidence in their financial wherewithal is proving misplaced.
Their need for revenue is intensifying rather than moderating. They are fighting a multi-front war with Iran directly (in Yemen) and indirectly (in Syria, Lebanon, and Iraq). ISIS, Al Qaeda, and disaffected Shias present a significant domestic security threat. Countering external and internal threats demands increased spending (including, perhaps, a very expensive future nuclear weapons program), as does placating the fast growing male and female youth demographic, which requires substantial spending on education, training, employment, and support. Hence, the budget deficit equal to 20 percent of GDP, noted above.
Increased production does not offer a solution. Saudi Arabia doesn't have the capacity to increase production sufficiently to reduce the shortfall significantly in any meaningful timeframe. They currently do not have the spare capacity-to make up for the $291 million in export revenue lost in Q1 , 5.4 million more barrels a day would have been necessary at $53.92 a barrel. Of course, such a drastic increase in output would have driven prices even lower. It is doubtful they can increase capacity substantially even in the medium- to long term. They won't be able to spend significantly more than other major national oil companies. First, low prices reduce Aramco's cash flow and therefore its ability to fund investment. Second, the Saudi government likely will increase its draw from this cash flow to fund higher priority national security and domestic security needs.
Third, Saudi refusal to act as price guarantor undercuts the confidence foreigners need to invest in, or loan to, oil projects. What might be attractive at $75 per barrel oil isn't at $50 oil, and even less attractive if the price of oil is thoroughly unpredictable.
Fourth, in terms of political risk, Saudi Arabia with its Gulf allies, Iran, and Iraq, and the Middle East in general, is at the epicenter of global tension, turmoil, and tumult.
Fifth, its influence within OPEC, and therefore its ability to manage OPEC output and prices, is diminished . Their underestimate of the impact of their policy change on prices, their indifference vis-à-vis the financial damage to other OPEC members, and their willingness to take market share at the expense of other OPEC members undercut their credibility within OPEC (particularly since it derived from Saudi willingness to protect the interests of all members (and sometimes to endure disproportionately).While Saudi financial reserves are substantial ( circa $672 billion in May ), drawing on them is little more than a stop-gap measure. If its major competitors (Russia, Iraq, Iran, and North America) maintain or even increase output (and they have the incentive to do so), prices could stay lower far longer than the Saudis anticipated.
Saudi reserves have decreased some $65 billion since prices started to fall (in November), so ~$100 billion to ~$130 billion at an annual rate. The longer prices stay low, the faster their reserves fall, and, as reserves plummet, the greater the pressure to prioritize spending, to the disadvantage of some Saudis.
Saudi Arabia Caused The Problem, Can It Engineer A Solution?
Saudi officials apparently viewed $90 or even $80 per barrel oil for "one or two years" with equanimity. Can they maintain the composure they have displayed thus far as they incur in a single year the revenue losses they expected to take four years (at $90 oil) or two years (at $80 oil)?
And if they can't-and surely, though they are loath to admit it, they can't - can they engineer a durable increase in prices - i.e., a durable decrease in output? At first glance, it seems impossible. Daily output from Saudi Arabia (10.5 million), and its allies, UAE (2.87), Kuwait (2.8), and Qatar (.67), is roughly equal to the daily output from countries with which it is in conflict, directly or indirectly, Russia (11.2), Iran (2.88), and Iraq (3.75), and therefore have an incentive to take advantage of any unilateral Saudi output concessions.
Yet, in effect, these countries are engaged in the oil equivalent of mutually assured destruction. The sharp drop in oil revenue damages each of these countries economically and financially, while the wars they wage directly and indirectly against each other drain resources from vital domestic projects.
Moreover, given the sensitivity of prices to changes in volume, it is possible, if not likely, that holding output steady or matching a Saudi
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Apr 04, 2015 | Economist's View
Darryl FKA Ron -> pgl...
At the risk of oversimplifying might it not be as simple as stronger leanings towards IS-LM and kind are indicative of a bias towards full employment and stronger leanings towards DSGE, microfoundations, and kind are indicative of a bias towards low inflation?
IN general I consider over-simplification a fault, if and only if, it is a rigidly adhered to final position. This is to say that over-simplification is always a good starting point and never a good ending point. If in the end your problem was simple to begin with, then the simplified answer would not be OVER-simplified anyway. It is just as bad to over-complicate a simple problem as it is to over-simplify a complex problem. It is easier to build complexity on top of a simple foundation than it is to extract simplicity from a complex foundation.
A lot of the Chicago School initiative into microfoundations and DSGE may have been motivated by a desire to bind Keynes in a NAIRU straight-jacket. Even though economic policy making is largely done just one step at a time then that is still one step too much if it might violate rentier interests.
Darryl FKA Ron -> Barry...
There are two possible (but unlikely) schools of (generously attributed to as) thought for which internal consistency might take precedence over external consistency. One such school wants to consider what would be best in a perfect world full of perfect people and then just assume that is best for the real world just to let the chips fall where they may according to the faults and imperfections of the real world. The second such school is the one whose eyes just glaze over mesmerized by how over their heads they are and remain affraid to ask any question lest they appear stupid.
A more probable school of thought is that this game was created as a con and a cover for the status quo capitalist establishment to indulge themselves in their hard money and liquidity fetishes, consequences be damned.
Richard H. Serlin
Consistency sounds so good, Oh, of course we want consistency, who wouldn't?! But consistent in what way? What exactly do you mean? Consistent with reality, or consistent with people all being superhumans? Which concept is usually more useful, or more useful for the task at hand?Richard H. Serlin -> Richard H. Serlin...Essentially, they want models that are consistent with only certain things, and often because this makes their preferred ideology look far better. They want models, typically, that are consistent with everyone in the world having perfect expertise in every subject there is, from finance to medicine to engineering, perfect public information, and perfect self-discipline, and usually on top, frictionless and perfectly complete markets, often perfectly competitive too.
But a big thing to note is that perfectly consistent people means a level of perfection in expertise, public information, self-discipline, and "rationality", that's extremely at odds with how people actually are. And as a result, this can make the model extremely misleading if it's interpreted very literally (as so often it is, especially by freshwater economists), or taken as The Truth, as Paul Krugman puts it.
You get things like the equity premium "puzzle", which involves why people don't invest more in stocks when the risk-adjusted return appears to usually be so abnormally good, and this "puzzle" can only be answered with "consistency", that people are all perfectly expert in finance, with perfect information, so they must have some mysterious hidden good reason. It can't be at all that it's because 65% of people answered incorrectly when asked how many reindeer would remain if Santa had to lay off 25% of his eight reindeer ( http://richardhserlin.blogspot.com/2013/12/surveys-showing-massive-ignorance-and.html ).
Yes, these perfect optimizer consistency models can give useful insights, and help to see what is best, what we can do better, and they can, in some cases, be good as approximations. But to say they should be used only, and interpreted literally, is, well, inconsistent with optimal, rational behavior -- of the economist using them.
Of course, unless the economist using them is doing so to mislead people into supporting his libertarian/plutocratic ideology.dilbert dogbert
As an old broken down mech engineer, I wonder why all the pissing and moaning about micro foundations vs aggregation. In strength of materials equations that aggregate properties work quite well within the boundaries of the questions to be answered. We all know that at the level of crystals, materials have much complexity. Even within crystals there is deeper complexities down to the molecular levels. However, the addition of quantum mechanics adds no usable information about what materials to build a bridge with.
But, when working at the scale of the most advanced computer chips quantum mechanics is required. WTF! I guess in economics there is no quantum mechanics theories or even reliable aggregation theories.
Poor economists, doomed to argue, forever, over how many micro foundations can dance on the head of a pin.
RGC -> dilbert dogbert...
Endless discussions about how quantum effects aggregate to produce a material suitable for bridge building crowd out discussions about where and when to build bridges. And if plutocrats fund the endless discussions, we get the prominent economists we have today.
Darryl FKA Ron -> dilbert dogbert...
"...I guess in economics there is no quantum mechanics theories or even reliable aggregation theories..."
[I guess it depends upon what your acceptable confidence interval on reliability is. Most important difference that controls all the domain differences between physical science and economics is that underlying physical sciences there is a deterministic methodology for which probable error is merely a function of the inaccuracy in input metrics WHEREAS economics models are incomplete probabilistic estimating models with no ability to provide a complete system model in a full range of circumstances.
YOu can design and build a bridge to your load and span requirements with alternative models for various designs with confidence and highly effective accuracy repeatedly. No ecomomic theory, model, or combination of models and theories was ever intended to be used as the blueprint for building an economy from the foundation up.
With all the formal trappings of economics the only effective usage is to decide what should be done in a given set of predetermined circumstance to reach some modest desired effect. Even that modest goal is exposed to all kinds of risks inherent in assumptions, incomplete information, externalities, and so on that can produce errors of uncertain potential bounds.
Nonetheless, well done economics can greatly reduce the risks encountered in the random walk of economics policy making. So much so is this true, that the bigger questions in macro-economics policy making is what one is willing to risk and for whom.
The arguments over internal and external consistency of models is just a convenient misdirection from what policy makers are willing to risk and whose interests they are willing to risk policy decisions for.]
Darryl FKA Ron -> Peter K....
unless you have a model which maps the real world fairly closely like quantum mechanics.
[You set a bar too high. Macro models at best will tell you what to do to move the economy in the direction that you seek to go. They do not even ocme close to the notion of a theory of everything that you have in physics, even the theory of every little thing that is provided by quantum mechanics. Physics is an empty metaphor for economics. Step one is to forgo physics envy in pursuit of understanding suitable applications and domain constraints for economics models.
THe point is to reach a decision and to understand cause and effect directions. All precision is in the past and present. The future is both imprecise and all that there is that is available to change.
For the most part an ounce of common sense and some simple narrative models are all that are essential for making those policy decisions in and of themselves. HOWEVER, nation states are not ruled by economist philosopher kings and in the process of concensus decision making by (little r)republican governments then human language is a very imprecise vehicle for communicating logic and reason with respect to the management of complex systems. OTOH, mathematics has given us a universal language for communicating logic and reason that is understood the same by everyone that really understands that language at all. Hence mathematical models were born for the economists to write down their own thinking in clear precise terms and check their own work first and then share it with others so equipped to understand the language of mathematics. Krugman has said as much many times and so has any and every economist worth their salt.]
likbez -> Syaloch...
I agree with Pgl and PeterK. Certain commenters like Darryl seem convinced that the Chicago School (if not all of econ) is driven by sinister, class-based motives to come up justifications for favoring the power elite over the masses. But based on what I've read, it seems pretty obvious that the microfoundation guys just got caught up in their fancy math and their desire to produce more elegant, internally consistent models and lost sight of the fact that their models didn't track reality.
That's completely wrong line of thinking, IMHO.
Mathematical masturbations are just a smoke screen used to conceal a simple fact that those "economists" are simply banking oligarchy stooges. Hired for the specific purpose to provide a theoretical foundation for revanschism of financial oligarchy after New Deal run into problems. Revanschism that occurred in a form of installing neoliberal ideology in the USA in exactly the same role which Marxism was installed in the USSR.
With "iron hand in velvet gloves" type of repressive apparatus to enforce it on each and every university student and thus to ensure the continues, recurrent brainwashing much like with Marxism on the USSR universities.To ensure continuation of power of "nomenklatura" in the first case and banking oligarchy in the second. Connections with reality be damned. Money does not smell.
Economic departments fifth column of neoliberal stooges is paid very good money for their service of promoting and sustaining this edifice of neoliberal propaganda. Just look at Greg Mankiw and Rubin's boys.
But the key problem with neoliberalism is that the cure is worse then disease. And here mathematical masturbations are very handy as a smoke screen to hide this simple fact.
likbez -> likbez...
Here is how Rubin's neoliberal boy Larry explained the situation to Elizabeth Warren:
"Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People - powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize other insiders."
Elizabeth Warren, A Fighting Chance
Syaloch -> likbez...
Yeah, case in point.
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Aug 21, 2015 | naked capitalism
Lambert found a short article by Richard Cook that I've embedded at the end of the post. I strongly urge you to read it in full. It discusses how complex systems are prone to catastrophic failure, how that possibility is held at bay through a combination of redundancies and ongoing vigilance, but how, due to the impractical cost of keeping all possible points of failure fully (and even identifying them all) protected, complex systems "always run in degraded mode". Think of the human body. No one is in perfect health. At a minimum, people are growing cancers all the time, virtually all of which recede for reasons not well understood.
The article contends that failures therefore are not the result of single causes. As Clive points out:
This is really a profound observation – things rarely fail in an out-the-blue, unimaginable, catastrophic way. Very often just such as in the MIT article the fault or faults in the system are tolerated. But if they get incrementally worse, then the ad-hoc fixes become the risk (i.e. the real risk isn't the original fault condition, but the application of the fixes). https://en.wikipedia.org/wiki/Windscale_fire#Wigner_energy documents how a problem of core instability was a snag, but the disaster was caused by what was done to try to fix it. The plant operators kept applying the fix in ever more extreme does until the bloody thing blew up.
But I wonder about the validity of one of the hidden assumptions of this article. There is a lack of agency in terms of who is responsible for the care and feeding of complex systems (the article eventually identifies "practitioners" but even then, that's comfortably vague). The assumption is that the parties who have influence and responsibility want to preserve the system, and have incentives to do at least an adequate job of that.
There are reasons to doubt that now. Economics has promoted ways of looking at commercial entities that encourage "practitioners" to compromise on safety measures. Mainstream economics has as a core belief that economies have a propensity to equilibrium, and that equilibrium is at full employment. That assumption has served as a wide-spread justification for encouraging businesses and governments to curtail or end pro-stability measures like regulation as unnecessary costs.
To put it more simply, the drift of both economic and business thinking has been to optimize activity for efficiency. But highly efficient systems are fragile. Formula One cars are optimized for speed and can only run one race.
Highly efficient systems also are more likely to suffer from what Richard Bookstaber called "tight coupling." A tightly coupled system in one in which events occur in a sequence that cannot be interrupted. A way to re-characterize a tightly coupled system is a complex system that has been in part re-optimized for efficiency, maybe by accident, maybe at a local level. That strips out some of the redundancies that serve as safeties to prevent positive feedback loops from having things spin out of control.
To use Bookstaber's nomenclature, as opposed to this paper's, in a tightly coupled system, measures to reduce risk directly make things worse. You need to reduce the tight coupling first.
A second way that the economic thinking has arguably increased the propensity of complex systems of all sorts to fail is by encouraging people to see themselves as atomized agents operating in markets. And that's not just an ideology; it's reflected in low attachment to institutions of all sorts, ranging from local communities to employers (yes, employers may insist on all sorts of extreme shows of fealty, but they are ready to throw anyone in the dust bin at a moment's notice). The reality of weak institutional attachments and the societal inculcation of selfish viewpoints means that more and more people regard complex systems as vehicles for personal advancement. And if they see those relationships as short-term or unstable, they don't have much reason to invest in helping to preserving the soundness of that entity. Hence the attitude called "IBY/YBG" ("I'll Be Gone, You'll Be Gone") appears to be becoming more widespread.
I've left comments open because I'd very much enjoy getting reader reactions to this article. Thanks!
James Levy August 21, 2015 at 6:35 am
So many ideas . Mike Davis argues that in the case of Los Angeles, the key to understanding the city's dysfunction is in the idea of sunk capital – every major investment leads to further investments (no matter how dumb or large) to protect the value of past investments.
Tainter argues that the energy cost (defined broadly) of maintaining the dysfunction eventually overwhelms the ability of the system to generate surpluses to meet the rising needs of maintenance.
Goldsworthy has argued powerfully and persuasively that the Roman Empire in the West was done in by a combination of shrinking revenue base and the subordination of all systemic needs to the needs of individual emperors to stay in power and therefore stay alive. Their answer was endlessly subdividing power and authority below them and using massive bribes to the bureaucrats and the military to try to keep them loyal.
In each case, some elite individual or grouping sees throwing good money after bad as necessary to keeping their power and their positions. Our current sclerotic system seems to fit this description nicely.
Jim August 21, 2015 at 8:15 am
xxx August 22, 2015 at 4:39 amI immediately thought of Tainter's "The Complex of Complex Cultures" when I starting reading this. One point that Tainter made is that collapse is not all bad. He presents evidence that the average well being of people in Italy was probably higher in the sixth century than in the fifth century as the Western Roman Empire died. Somewhat like death being necessary for biological evolution collapse may be the only solution to the problem of excessive complexity.
Praedor August 21, 2015 at 9:19 amTainter insists culture has nothing to do with collapse, and therefore refuses to consider it, but he then acknowledges that the elites in some societies were able to pull them out of a collapse trajectory. And from the inside, it sure as hell looks like culture, as in a big decay in what is considered to be acceptable conduct by our leaders, and what interests they should be serving (historically, at least the appearance of the greater good, now unabashedly their own ends) sure looks to be playing a big, and arguably the defining role, in the rapid rise of open corruption and related social and political dysfunction.
jgordon August 21, 2015 at 7:44 amThat also sounds like the EU and even Greece's extreme actions to stay in the EU.
nowhere August 21, 2015 at 12:10 pmThen I'll add my two cents: you've left out that when systems scale linearly, the amount of complexity, and points for failure, and therefore instability, that they contain scale exponentially–that is according to the analysis of James Rickards, and supported by the work of people like Joseph Tainter and Jared Diamond.
Ever complex problem that arises in a complex system is fixed with an even more complex "solution" which requires ever more energy to maintain, and eventually the inevitably growing complexity of the system causes the complex system to collapse in on itself. This process requires no malignant agency by humans, only time.
jgordon August 21, 2015 at 2:04 pmSounds a lot like JMG and catabolic collapse.
Synoia August 21, 2015 at 1:26 pmWell, he got his stuff from somewhere too.
Jim August 21, 2015 at 2:26 pmThere are no linear systems. They are all non-linear because the include a random, non-linear element – people.
Ormond Otvos August 21, 2015 at 4:37 pmLong before there were people the Earth's eco-system was highly complex and highly unstable.
JTMcPhee August 21, 2015 at 4:44 pmThe presumption that fixes increase complexity may be incorrect.
Fixes should include awareness of complexity.
That was the beauty of Freedom Club by Kaczinsky, T.
Maybe call the larger entity "meta-stable?" Astro and geo inputs seem to have been big perturbers. Lots of genera were around a very long time before naked apes set off on their romp. But then folks, even these hot, increasingly dry days, brag on their ability to anticipate, and profit from, and even cause, with enough leverage, de- stability. Good thing the macrocosms of our frail, violent, kindly, destructive bodies are blessed with the mechanisms of homeostasis.
Too bad our "higher" functions are not similarly gifted But that's what we get to chat about, here and in similar meta-spaces
MikeW August 21, 2015 at 7:52 am
Agree, positive density of ideas, thoughts and implications.
I wonder if the reason that humans don't appreciate the failure of complex systems is that (a) complex systems are constantly trying to correct, or cure as in your cancer example, themselves all the time until they can't at which point they collapse, (b) that things, like cancer leading to death, are not commonly viewed as a complex system failure when in fact that is what it is. Thus, while on a certain scale we do experience complex system failure on one level on a daily basis because we don't interpret it as such, and given that we are hardwired for pattern recognition, we don't address complex systems in the right ways.
This, to my mind, has to be extended to the environment and the likely disaster we are currently trying to instigate. While the system is collapsing at one level, massive species extinctions, while we have experienced record temperatures, while the experts keep warning us, etc., most people to date have experienced climate change as an inconvenience - not the early stages of systemwide failure.
Civilization collapses have been regular, albeit spaced out, occurrences. We seem to think we are immune to them happening again. Yet, it isn't hard to list the near catastrophic system failures that have occurred or are currently occurring (famines, financial markets, genocides, etc.).
And, in most systems that relate to humans with an emphasis on short term gain how does one address system failures?
Brooklin Bridge August 21, 2015 at 9:21 am
Good-For-Me-Who-Effing-Cares-If-It's-Bad-For-You-And-Everyone-Else
would be a GREAT category heading though it's perhaps a little close to "Imperial Collapse"
Whine Country August 21, 2015 at 9:52 am
To paraphrase President Bill Clinton, who I would argue was one of the major inputs that caused the catastrophic failure of our banking system (through the repeal of Glass-Steagall), it all depends on what the definition of WE is.
jrs August 21, 2015 at 10:12 pm
And all that just a 21st century version of "apres moi le deluge", which sounds very likely to be the case.
Oregoncharles August 21, 2015 at 3:55 pm
JT – just go to the Archdruid site. They link it regularly, I suppose for this purpose.
Jim August 21, 2015 at 8:42 am
Civilizational collapse is extremely common in history when one takes a long term view. I'm not sure though that I would describe it as having that much "regularity" and while internal factors are no doubt often important external factors like the Mongol Onslaught are also important. It's usually very hard to know exactly what happened since historical documentation tends to disappear in periods of collapse. In the case of Mycenae the archaeological evidence indicates a near total population decline of 99% in less than a hundred years together with an enormous cultural decline but we don't know what caused it.
As for long term considerations the further one tries to project into the future the more uncertain such projections become so that long term planning far into the future is not likely to be evolutionarily stable. Because much more information is available about present conditions than future conditions organisms are probably selected much more to optimize for the short term rather than for the largely unpredicatble long term.
Gio Bruno August 21, 2015 at 1:51 pm
it's not in question. Evolution is about responding to the immediate environment. Producing survivable offspring (which requires finding a niche). If the environment changes (Climate?) faster than the production of survivable offspring then extinction (for that specie) ensues.
Now, Homo sapien is supposedly "different" in some respects, but I don't think so.
Jim August 21, 2015 at 2:14 pm
I agree. There's nothing uniquely special about our species. Of course species can often respond to gradual change by migration. The really dangerous things are global catastrophes such as the asteroid impact at the end of the Cretaceous or whatever happened at the Permian-Triassic boundary (gamma ray burst maybe?).
Ormond Otvos August 21, 2015 at 4:46 pm
Interesting that you sit there and type on a world-spanning network batting around ideas from five thousand years ago, or yesterday, and then use your fingers to type that the human species isn't special.
Do you really think humans are unable to think about the future, like a bear hibernating, or perhaps the human mind, and its offspring, human culture and history, can't see ahead?
Why is "Learn the past, or repeat it!" such a popular saying, then?
diptherio August 21, 2015 at 9:24 am
The Iron Law of Institutions (agents act in ways that benefit themselves in the context of the institution [system], regardless of the effect those actions have on the larger system) would seem to mitigate against any attempts to correct our many, quickly failing complex social and technological systems.
jgordon August 21, 2015 at 10:40 am
This would tend to imply that attempts to organize large scale social structures is temporary at best, and largely futile. I agree. The real key is to embrace and ride the wave as it crests and callapses so its possible to manage the fall–not to try to stand against so you get knocked down and drowned. Focus your efforts on something useful instead of wasting them on a hopeless, and worthless, cause.
Jim August 21, 2015 at 2:21 pm
Civilization is obviously highly unstabe. However it should remembered that even Neolithic cultures are almost all less than 10,000 years old. So there has been little time for evolutionary adaptations to living in complex cultures (although there is evidence that the last 10,000 years has seen very rapid genetic changes in human populations). If civilization can continue indefinitely which of course is not very clear then it would be expected that evolutionary selection would produce humans much better adapted to living in complex cultures so they might become more stable in the distant future. At present mean time to collapse is probably a few hundred years.
Ormond Otvos August 21, 2015 at 4:50 pm
But perhaps you're not contemplating that too much individual freedom can destabilize society. Is that a part of your vast psychohistorical equation?
washunate August 21, 2015 at 10:34 am
Well said, but something I find intriguing is that the author isn't talking so much about civilizational collapse. The focus is more on various subsystems of civilization (transportation, energy, healthcare, etc.).
These individual components are not inherently particularly dangerous (at a systemic/civilizational level). They have been made that way by purposeful public policy choices, from allowing enormous compensation packages in healthcare to dismantling our passenger rail system to subsidizing fossil fuel energy over wind and solar to creating tax incentives that distort community development. These things are not done for efficiency. They are done to promote inequality, to allow connected insiders and technocratic gatekeepers to expropriate the productive wealth of society. Complexity isn't a byproduct; it is the mechanism of the looting. If MDs in hospital management made similar wages as home health aides, then how would they get rich off the labor of others? And if they couldn't get rich, what would be the point of managing the hospital in the first place? They're not actually trying to provide quality, affordable healthcare to all Americans.
It is that cumulative concentration of wealth and power over time which is ultimately destabilizing, producing accepted social norms and customs that lead to fragility in the face of both expected and unexpected shocks. This fragility comes from all sorts of specific consequences of that inequality, from secrecy to group think to brain drain to two-tiered justice to ignoring incompetence and negligence to protecting incumbents necessary to maintain such an unnatural order.
Linus Huber August 21, 2015 at 7:05 pm
I tend to agree with your point of view.
The problem arises with any societal order over time in that corrosive elements in the form of corruptive behavior (not principle based) by decision makers are institutionalized. I may not like Trump as a person but the fact that he seems to unravel and shake the present arrangement and serves as an indicator that the people begin to realize what game is being played, makes me like him in that specific function. There may be some truth in Thomas Jefferson's quote: "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is its natural manure." Those presently benefiting greatly from the present arrangement are fighting with all means to retain their position, whether successfully or not, we will see.
animalogic August 22, 2015 at 2:18 am
Well said, washunate. I think an argument could be run that outside economic areas, the has been a drive to de-complexity.
Non economic institutions, bodies which exist for non market/profit reasons are or have been either hollowed out, or co-opted to market purposes. Charities as vast engines of self enrichment for a chain of insiders. Community groups, defunded, or shriveled to an appendix by "market forces". The list goes on and on.
Reducing the "not-market" to the status of sliced-white-bread makes us all the more dependant on the machinated complexities of "the market" .god help us .Jay Jay August 21, 2015 at 8:00 am
Joseph Tainter's thesis, set out in "The Collapse of Complex Societies" is simple: as a civilization ages its use of energy becomes less efficient and more costly, until the Law of Diminishing Returns kicks in, generates its own momentum and the system grinds to a halt. Perhaps this article describes a late stage of that process. However, it is worth noting that, for the societies Tainter studied, the process was ineluctable. Not so for our society: we have the ability -- and the opportunity -- to switch energy sources.
Moneta August 21, 2015 at 5:48 pm
In my grandmother's youth, they did not burn wood for nothing. Splitting wood was hard work that required calories.
Today, we heat up our patios at night with gas heaters The amount of economic activity based on burning energy not related to survival is astounding.
A huge percentage of our GDP is based on economies of scale and economic efficiencies but are completely disconnected from environmental efficiencies.
This total loss is control between nature and our lifestyles will be our waterloo .
An interesting article as usual, but here is another take.
Indeed, sometimes complex systems can collapse under the weight of their own complexity (Think: credit default swaps). But sometimes there is a single simple thing that is crushing the system, and the complexity is a desperate attempt to patch things up that is eventually destroyed by brute force.
Consider a forced population explosion: the people are multiplied exponentially. This reduces per capita physical resources, tends to reduce per-capita capital, and limits the amount of time available to adapt: a rapidly growing population puts an economy on a treadmill that gets faster and faster and steeper and steeper until it takes superhuman effort just to maintain the status quo. There is a reason why, for societies without an open frontier, essentially no nation has ever become prosperous with out first moderating the fertility rate.
However, you can adapt. New technologies can be developed. New regulations written to coordinate an ever more complex system. Instead of just pumping water from a reservoir, you need networks of desalinization plants – with their own vast networks of power plants and maintenance supply chains – and recycling plans, and monitors and laws governing water use, and more efficient appliances, etc.etc.
As an extreme, consider how much effort and complexity it takes to keep a single person alive in the space station.
That's why in California cars need to be emissions tested, but in Alabama they don't – and the air is cleaner in Alabama. More people needs more controls and more exotic technology and more rules.
Eventually the whole thing starts to fall apart. But to blame complexity itself, is possibly missing the point.
Steve H. August 21, 2015 at 8:30 am
No system is ever 'the'.
Jim Haygood August 21, 2015 at 11:28 am
Two words, Steve: Soviet Union.
It's gone now. But we're rebuilding it, bigger and better.
Ormond Otvos August 21, 2015 at 4:54 pm
If, of course, bigger is better.
Facts not in evidence.
Ulysses August 21, 2015 at 8:40 am
"But because system operations are never trouble free, human practitioner adaptations to changing conditions actually create safety from moment to moment. These adaptations often amount to just the selection of a well-rehearsed routine from a store of available responses; sometimes, however, the adaptations are novel combinations or de novo creations of new approaches."
This may just be a rationalization, on my part, for having devoted so much time to historical studies– but it seems to me that historians help civilizations prevent collapse, by preserving for them the largest possible "store of available responses."
aronj August 21, 2015 at 8:41 am
Yves,
Thanks for posting this very interesting piece! As you know, I am a fan Bookstaber's concept of tight coupling. Interestingly, Bookstaber (2007) does not reference Cook's significant work on complex systems.
Before reading this article, I considered the most preventable accidents involve a sequence of events uninterrupted by human intelligence. This needs to be modified by Cook's points 8, 9. 10 and 12.
In using the aircraft landing in the New York river as an example of interrupting a sequence of events, the inevitable accident occurred but no lives were lost. Thus the human intervention was made possible by the unknowable probability of coupling the cause with a possible alternative landing site. A number of aircraft accidents involve failed attempts to find a possible landing site, even though Cook's point #12 was in play.
Thanks for the post!!!!!
Brooklin Bridge August 21, 2015 at 8:47 am
A possible issue with or a misunderstanding of #7. Catastrophic failure can be made up of small failures that tend to follow a critical path or multiple critical paths. While a single point of origin for catastrophic failure may rarely if ever occur in a complex system, it is possible and likely in such a system to have collections of small failures that occur or tend to occur in specific sequences of order. Population explosion (as TG points out) would be a good example of a failure in a complex social system that is part of a critical path to catastrophic failure.
Such sequences, characterized by orders of precedence, are more likely in tightly coupled systems (which as Yves points out can be any system pushed to the max). The point is, they can be identified and isolated at least in situations where a complex system is not being misused or pushed to it's limits or created due to human corruption where such sequences of likelihood may be viewed or baked into the system (such as by propaganda->ideology) as features and not bugs.
Spring Texan August 21, 2015 at 8:53 am
I agree completely that maximum efficiency comes with horrible costs. When hospitals are staffed so that people are normally busy every minute, patients routinely suffer more as often no one has time to treat them like a human being, and when things deviate from the routine, people have injuries and deaths. Same is true in other contexts.
washunate August 21, 2015 at 10:40 am
Agreed, but that's not caused by efficiency. That's caused by inequality. Healthcare has huge dispariaties in wages and working conditions. The point of keeping things tightly staffed is to allow big bucks for the top doctors and administrators.
susan the other August 21, 2015 at 2:55 pm
Yes. When one efficiency conflicts with and destroys another efficiency. Eq. Your mother juggled a job and a family and ran around in turbo mode but she dropped everything when her kids were in trouble. That is an example of an efficiency that can juggle contradictions and still not fail.
JTMcPhee August 21, 2015 at 11:38 am
Might this nurse observe that in hospitals, there isn't and can't be a "routine" to deviate from, no matter how fondly "managers" wish to try to make it and how happy they may be to take advantage of the decent, empathic impulses of many nurses and/or the need to work to eat of those that are just doing a job. Hence the kindly (sic) practice of "calling nurses off" or sending them home if "the census is down," which always runs aground against a sudden influx of billable bodies or medical crises that the residual staff is expected to just somehow cope with caring for or at least processing, until the idiot frictions in the staffing machinery add a few more person-hours of labor to the mix. The larger the institution, the greater the magnitude and impact (pain, and dead or sicker patients and staff too) of the "excursions from the norm."
It's all about the ruling decisions on what are deemed (as valued by where the money goes) appropriate outcomes of the micro-political economy In the absence of an organizing principle that values decency and stability and sustainability rather than upward wealth transfer.
Will August 21, 2015 at 8:54 am
I'll join the choir recommending Tainter as a critical source for anybody interested in this stuff.
IBG/YBG is a new concept for me, with at least one famous antecedent. "Après moi, le déluge."
diptherio August 21, 2015 at 9:17 am
The author presents the best-case scenario for complex systems: one in which the practitioners involved are actually concerned with maintaining system integrity. However, as Yves points out, that is far from being case in many of our most complex systems.
For instance, the Silvertip pipeline spill near Billings, MT a few years ago may indeed have been a case of multiple causes leading to unforeseen/unforeseeable failure of an oil pipeline as it crossed the Yellowstone river. However, the failure was made immeasurably worse due to the fact that Exxon had failed to supply that pump-station with a safety manual, so when the alarms started going off the guy in the station had to call around to a bunch of people to figure out what was going on. So while it's possible that the failure would have occurred no matter what, the failure of the management to implement even the most basic of safety procedures made the failure much worse than it otherwise would have been.
And this is a point that the oil company apologists are all too keen to obscure. The argument gets trotted out with some regularity that because these oil/gas transmission systems are so complex, some accidents and mishaps are bound to occur. This is true–but it is also true that the incentives of the capitalist system ensure that there will be more and worse accidents than necessary, as the agents involved in maintaining the system pursue their own personal interests which often conflict with the interests of system stability and safety.
Complex systems have their own built-in instabilities, as the author points out; but we've added a system of un-accountability and irresponsibility on top of our complex systems which ensures that failures will occur more often and with greater fall-out than the best-case scenario imagined by the author.
Brooklin Bridge August 21, 2015 at 9:42 am
As Yves pointed out, there is a lack of agency in the article. A corrupt society will tend to generate corrupt systems just as it tends to generate corrupt technology and corrupt ideology. For instance, we get lots of little cars driving themselves about, profitably to the ideology of consumption, but also with an invisible thumb of control, rather than a useful system of public transportation. We get "abstenence only" population explosion because "groath" rather than any rational assessment of obvious future catastrophe.
washunate August 21, 2015 at 10:06 am
Right on. The primary issue of our time is a failure of management. Complexity is an excuse more often than an explanatory variable.
abynormal August 21, 2015 at 3:28 pm
abynormal
August 21, 2015 at 2:46 pmAm I the only hearing 9″Nails, March of the Pigs
Aug. 21, 2015 1:54 a.m. ET
A Carlyle Group LP hedge fund that anticipated a sudden currency-policy shift in China gained roughly $100 million in two days last week, a sign of how some bearish bets on the world's second-largest economy are starting to pay off.
http://www.wsj.com/articles/hedge-fund-gains-100-million-in-two-days-on-bearish-china-bet-1440136499?mod=e2twoink oink is the sound of system fail
Oregoncharles August 21, 2015 at 3:40 pm
A very important principle:
All systems have a failure rate, including people. We don't get to live in a world where we don't need to lock our doors and banks don't need vaults. (If you find it, be sure to radio back.)
The article is about how we deal with that failure rate. Pointing out that there are failures misses the point.
cnchal August 21, 2015 at 5:05 pm
. . .but it is also true that the incentives of the capitalist system ensure that there will be more and worse accidents than necessary, as the agents involved in maintaining the system pursue their own personal interests which often conflict with the interests of system stability and safety.
How true. A Chinese city exploded. Talk about a black swan. I wonder what the next disaster will be?
hemeantwell August 21, 2015 at 9:32 am
After a skimmy read of the post and reading James' lead-off comment re emperors (Brooklin Bridge comment re misuse is somewhat resonant) it seems to me that a distinguishing feature of systems is not being addressed and therefore being treated as though it's irrelevant.
What about the mandate for a system to have an overarching, empowered regulatory agent, one that could presumably learn from the reflections contained in this post? In much of what is posted here at NC writers give due emphasis to the absence/failure of a range of regulatory functions relevant to this stage of capitalism. These run from SEC corruption to the uncontrolled movement of massive amount of questionably valuable value in off the books transactions between banks, hedge funds etc. This system intentionally has a deliberately weakened control/monitoring function, ideologically rationalized as freedom but practically justified as maximizing accumulation possibilities for the powerful. It is self-lobotomizing, a condition exacerbated by national economic territories (to some degree). I'm not going to now jump up with 3 cheers for socialism as capable of resolving problems posed by capitalism. But, to stay closer to the level of abstraction of the article, doesn't the distinction between distributed opacity + unregulated concentrations of power vs. transparency + some kind of central governing authority matter? Maybe my Enlightenment hubris is riding high after the morning coffee, but this is a kind of self-awareness that assumes its range is limited, even as it posits that limit. Hegel was all over this, which isn't to say he resolved the conundrum, but it's not even identified here.
Ormond Otvos August 21, 2015 at 5:06 pm
Think of Trump as the pimple finally coming to a head: he's making the greed so obvious, and pissing off so many people that some useful regulation might occur.
Another thought about world social collapse: if such a thing is likely, (and I'm sure the PTB know if it is, judging from the reports from the Pentagon about how Global Warming being a national security concern) wouldn't it be a good idea to have a huge ability to overpower the rest of the world?
We might be the only nation that survives as a nation, and we might actually have an Empire of the World, previously unattainable. Maybe SkyNet is really USANet. It wouldn't require any real change in the national majority of creepy grabby people.
Jim August 21, 2015 at 9:43 am
Government bureaucrats and politicians pursue their own interests just as businessmen do. Pollution was much worst in the non-capitalist Soviet Union, East Germany and Eastern Europe than it was in the Capitalist West. Chernobyl happened under socialism not capitalism. The present system in China, although not exactly "socialism", certainly involves a massively powerful govenment but a glance at the current news shows that massive governmental power does not necessarily prevent accidents. The agency problem is not unique to or worse in capitalism than in other systems.
Holly August 21, 2015 at 9:51 am
I'd throw in the theory of cognitive dissonance as an integral part of the failure of complex systems. (Example Tarvis and Aronon's recent book: Mistakes Were Made (But Not by me))
We are more apt to justify bad decisions, with bizarre stories, than to accept our own errors (or mistakes of people important to us). It explains (but doesn't make it easier to accept) the complete disconnect between accepted facts and fanciful justifications people use to support their ideas/organization/behavior.
craazymann August 21, 2015 at 10:03 am
I think this one suffers "Metaphysical Foo Foo Syndrome" MFFS. That means use of words to reference realities that are inherently ill-defined and often unobservable leading to untestable theories and deeply personal approaches to epistemological reasoning.
just what is a 'complex system"? A system implies a boundary - there are things part of the system and things outside the system. That's a hard concept to identify - just where the system ends and something else begins. So when 'the system' breaks down, it's hard to tell with any degree of testable objectivity whether the breakdown resulted from "the system" or from something outside the system and the rest was just "an accident that could have happened to anybody'"
maybe the idea is; '"if something breaks down at the worst possible time and in a way that fkks everything up, then it must have been a complex system". But it could also have been a simple system that ran into bad luck. Consider your toilet. Maybe you put too much toilet paper in it, and it clogged. Then it overflowed and ran out into your hallway with your shit everywhere. Then you realized you had an expensive Chinese rug on the floor. oh no! That was bad. you were gonna put tthat rug away as soon as you had a chance to admire it unrolled. Why did you do that? Big fckk up. But it wasn't a complex system. It was just one of those things.
susan the other August 21, 2015 at 12:14 pm
thanks for that, I think
Gio Bruno August 21, 2015 at 2:27 pm
Actually, it was a system too complex for this individual. S(He) became convinced the plumbing would work as it had previously. But doo to poor maintenance, too much paper, or a stiff BM the "system" didn't work properly. There must have been opportunity to notice something anomalous, but appropriate oversight wasn't applied.
Oregoncharles August 21, 2015 at 3:29 pm
You mean the BM was too tightly coupled?
craazyman August 21, 2015 at 4:22 pm
It coould happen to anybody after enough pizza and red wine
people weren't meant to be efficient. paper towels and duct tape can somettmes help
This ocurred to me: The entire 1960s music revolution would't have happened if anybody had to be efficient about hanging out and jamming. You really have to lay around and do nothing if you want to achieve great things. You need many opportunities to fail and learn before the genius flies. That's why tightly coupled systems are self-defeating. Because they wipe too many people out before they've had a chance to figure out the universe.
JustAnObserver August 21, 2015 at 3:01 pm
Excellent example of tight coupling: Toilet -> Floor -> Hallway -> $$$ Rug
Fix: Apply Break coupling procedure #1: Shut toilet door.
Then: Procedure #2 Jam inexpensive old towels in gap at the bottom.As with all such measures this buys the most important thing of all – time. In this case to get the $$$Rug out of the way.
IIRC one of Bookstaber's points was that that, in the extreme, tight coupling allows problems to propagate through the system so fast and so widely that we have no chance to mitigate before they escalate to disaster.
washunate August 21, 2015 at 10:03 am
To put it more simply, the drift of both economic and business thinking has been to optimize activity for efficiency.
I think that's an interesting framework. I would say effeciency is achieving the goal in the most effective manner possible. Perhaps that's measured in energy, perhaps labor, perhaps currency units, but whatever the unit of measure, you are minimizing that input cost.
What our economics and business thinking (and most importantly, political thinking) has primarily been doing, I would say, is not optimizing for efficiency. Rather, they are changing the goal being optimized. The will to power has replaced efficiency as the actual outcome.
Unchecked theft, looting, predation, is not efficient. Complexity and its associated secrecy is used to hide the inefficiency, to justify and promote that which would not otherwise stand scrutiny in the light of day.
BigEd August 21, 2015 at 10:11 am
What nonsense. All around us 'complex systems' (airliners, pipelines, coal mines, space stations, etc.) have become steadily LESS prone to failure/disaster over the decades. We are near the stage where the only remaining danger in air travel is human error. We will soon see driverless cars & trucks, and you can be sure accident rates will decline as the human element is taken out of their operation.
tegnost August 21, 2015 at 12:23 pm
see fukushima, lithium batteries spontaneously catching fire, financial engineering leading to collapse unless vast energy is invested in them to re stabilize Driverless cars and trucks are not that soon, tech buddies say ten years I say malarkey based on several points made in the article, while as brooklyn bridge points out public transit languishes, and washunate points out that trains and other more efficient means of locomotion are starved while more complex methods have more energy thrown at them which could be better applied elsewhere. I think you're missing the point by saying look at all our complex systems, they work fine and then you ramble off a list of things with high failure potential and say look they haven't broken yet, while things that have broken and don't support your view are left out. By this mechanism safety protocols are eroded (that accident you keep avoiding hasn't happened, which means you're being too cautious so your efficiency can be enhanced by not worrying about it until it happens then you can fix it but as pointed out above tightly coupled systems can't react fast enough at which point we all have to hear the whocoodanode justification )
susan the other August 21, 2015 at 12:34 pm
And the new points of failure will be what?
susan the other August 21, 2015 at 3:00 pm
So here's a question. What is the failure heirarchy. And why don't those crucial nodes of failsafe protect the system. Could it be that we don't know what they are?
Moneta August 22, 2015 at 8:09 am
While 90% of people were producing food a few decades ago, I think a large percentage will be producing energy in a few decades right now we are still propping up our golf courses and avoiding investing in pipelines and refineries. We are still exploiting the assets of the 50s and 60s to live our hyper material lives. Those investments are what gave us a few decades of consumerism.
Now everyone wants government to spend on infra without even knowing what needs to go and what needs to stay. Maybe half of Californians need to get out of there and forget about building more infra there just a thought.
America still has a frontier ethos how in the world can the right investments in infra be made with a collection of such values?
We're going to get city after city imploding. More workers producing energy and less leisure over the next few decades. That's what breakdown is going to look like.
Moneta August 22, 2015 at 8:22 am
Flying might get safer and safer while we get more and more cities imploding.
Just like statues on Easter Island were getting increasingly elaborate as trees were disappearing.
ian August 21, 2015 at 4:02 pm
What you say is true, but only if you have a sufficient number of failures to learn from. A lot of planes had to crash for air travel to be as safe as it is today.
wm.annis August 21, 2015 at 10:19 am
I am surprised to see no reference to John Gall's General Systematics in this discussion, an entire study of systems and how they misbehave. I tend to read it from the standpoint of managing a complex IT infrastructure, but his work starts from human systems (organizations).
The work is organized around aphorisms - Systems tend to oppose their own proper function - The real world is what it is reported to the system - but one or two from this paper should be added to that repertoire. Point 7 seems especially important. From Gall, I have come to especially appreciate the Fail-Safe Theorem: "when a Fail-Safe system fails, it fails by failing to fail safe."
flora August 21, 2015 at 10:32 am
Instead of writing something long and rambling about complex systems being aggregates of smaller, discrete systems, each depending on a functioning and accurate information processing/feedback (not IT) system to maintain its coherence; and upon equally well functioning feedback systems between the parts and the whole - instead of that I'll quote a poem.
" Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold; "-Yates, "The Second Coming"
flora August 21, 2015 at 10:46 am
erm make that "Yeats", as in W.B.
Steve H. August 21, 2015 at 11:03 am
So, naturalists observe, a flea
Has smaller fleas that on him prey;
And these have smaller still to bite 'em,
And so proceed ad infinitum.– Swift
LifelongLib August 21, 2015 at 7:38 pm
IIRC in Robert A. Heinlein's "The Puppet Masters" there's a different version:
Big fleas have little fleas
Upon their backs to bite 'em,
And little fleas have lesser fleas
And so, ad infinitum.Since the story is about humans being parasitized and controlled by alien "slugs" that sit on their backs, and the slugs in turn being destroyed by an epidemic disease started by the surviving humans, the verse has a macabre appropriateness.
LifelongLib August 21, 2015 at 10:14 pm
Original reply got eaten, so I hope not double post. Robert A. Heinlein's (and others?) version:
Big fleas have little fleas
Upon their backs to bite 'em
And little fleas have lesser fleas
And so ad infinitum!Lambert Strether August 21, 2015 at 10:26 pm
The order Siphonoptera .
Oregoncharles August 21, 2015 at 10:59 pm
"And what rough beast, its hour come round at last,
slouches toward Bethlehem to be born?"I can't leave that poem without its ending – especially as it becomes ever more relevant.
Oldeguy August 21, 2015 at 11:02 am
Terrific post- just the sort of thing that has made me a NC fan for years.
I'm a bit surprised that the commentators ( thus far ) have not referred to the Financial Crisis of 2008 and the ensuing Great Recession as being an excellent example of Cook's failure analysis.Bethany McLean and Joe Nocera's
All The Devils Are Here www.amazon.com/All-Devils-Are-Here-Financial/dp/159184438X/
describes beautifully how the erosion of the protective mechanisms in the U.S. financial system, no single one of which would have of itself been deadly in its absence ( Cook's Point 3 ) combined to produce the Perfect Storm.
It brought to mind Garett Hardin's The Tragedy Of The Commons https://en.wikipedia.org/wiki/Tragedy_of_the_commons . While the explosive growth of debt ( and therefore risk ) obviously jeopardized the entire system, it was very much within the narrow self interest of individual players to keep the growth ( and therefore the danger ) increasing.
Ormond Otvos August 21, 2015 at 5:14 pm
Bingo. Failure of the culture to properly train its members. Not so much a lack of morality as a failure to point out that when the temple falls, it falls on Samson.
The next big fix is to use the US military to wall off our entire country, maybe include Canada (language is important in alliances) during the Interregnum.
Why is no one mentioning the Foundation Trilogy and Hari Seldon here?
Deloss August 21, 2015 at 11:29 am
My only personal experience with the crash of a complex, tightly-coupled system was the crash of the trading floor of a very big stock exchange in the early part of this century. The developers were in the computer room, telling the operators NOT to roll back to the previous release, and the operators ignored them and did so anyway. Crash!
In Claus Jensen's fascinating account of the Challenger disaster, NO DOWNLINK, he describes how the managers overrode the engineers' warnings not to fly under existing weather conditions. We all know the result.
Human error was the final cause in both cases.
Now we are undergoing the terrible phenomenon of global warming, which everybody but Republicans, candidates and elected, seems to understand is real and catastrophic. The Republicans have a majority in Congress, and refuse–for ideological and monetary reasons–to admit that the problem exists. I think this is another unfolding disaster that we can ascribe to human error.
Ormond Otvos August 21, 2015 at 5:17 pm
"Human error" needs unpacking here. In this discussion, it's become a Deus ex Humanitas. Humans do what they do because their cultural experiences impel them to do so. Human plus culture is not the same as human. That's why capitalism doesn't work in a selfish society.
Oldeguy August 21, 2015 at 5:52 pm
" capitalism doesn't work in a selfish society "
Very true, not nearly so widely realized as it should be, and the Irony of Ironies .BayesianGame August 21, 2015 at 11:48 am
But highly efficient systems are fragile. Formula One cars are optimized for speed and can only run one race.
Another problem with obsessing about (productive or technical) efficiency is that it usually means a narrow focus on the most measured or measurable inputs and outputs, to the detriment of less measurable but no less important aspects. Wages are easier to measure than the costs of turnover, including changes in morale, loss of knowledge and skill, and regard for the organization vs. regard for the individual. You want low cost fish? Well, it might be caught by slaves. Squeeze the measurable margins, and the hidden margins will move.
Donw August 21, 2015 at 3:18 pm
You hint at a couple fallacies.
1) Measuring what is easy instead of what is important.
2) Measuring many things and then optimizing all of them optimizes the whole.Then, have some linear thinker try to optimize those in a complex system (like any organization involving humans) with multiple hidden and delayed feedback loops, and the result will certainly be unexpected. Whether for good or ill is going to be fairly unpredictable unless someone has actually looked for the feedback loops.
IsabelPS August 21, 2015 at 1:02 pm
Very good.
It's nice to see well spelled out a couple of intuitions I've had for a long time. For example, that we are going in the wrong direction when we try to streamline instead of following the path of biology: redundancies, "dirtiness" and, of course, the king of mechanisms, negative feedback (am I wrong in thinking that the main failure of finance, as opposed to economy, is that it has inbuilt positive feedback instead of negative?). And yes, my professional experience has taught me that when things go really wrong it was never just one mistake, it is a cluster of those.
downunderer August 22, 2015 at 3:52 am
Yes, as you hint here, and I would make forcefully explicit: COMPLEX vs NOT-COMPLEX is a false dichotomy that is misleading from the start.
We ourselves, and all the organisms we must interact with in order to stay alive, are individually among the most complex systems that we know of. And the interactions of all of us that add up to Gaia are yet more complex. And still it moves.
Natural selection built the necessary stability features into our bodily complexity. We even have a word for it: homeostasis. Based on negative feedback loops that can keep the balancing act going. And our bodies are vastly more complex than our societies.
Society's problem right now is not complexity per se, but the exploitation of complexity by system components that want to hog the resources and to hell with the whole, quite exactly parallel to the behavior of cancer cells in our bodies when regulatory systems fail.
In our society's case, it is the intelligent teamwork of the stupidly selfish that has destroyed the regulatory systems. Instead of negative feedback keeping deviations from optimum within tolerable limits, we now have positive feedback so obvious it is trite: the rich get richer.
We not only don't need to de-complexify, we don't dare to. We really need to foster the intelligent teamwork that our society is capable of, or we will fail to survive challenges like climate change and the need to sensibly control the population. The alternative is to let natural selection do the job for us, using the old reliable four horsemen.
We are unlikely to change our own evolved selfishness, and probably shouldn't. But we need to control the monsters that we have created within our society. These monsters have all the selfishness of a human at his worst, plus several natural large advantages, including size, longevity, and the ability to metamorphose and regenerate. And as powerful as they already were, they have recently been granted all the legal rights of human citizens, without appropriate negative feedback controls. Everyone here will already know what I'm talking about, so I'll stop.
Peter Pan August 21, 2015 at 1:18 pm
Formula One cars are optimized for speed and can only run one race.
Actually I believe F1 has rules regarding the number of changes that can be made to a car during the season. This is typically four or five changes (replacements or rebuilds), so a F1 car has to be able to run more than one race or otherwise face penalties.
jo6pac August 21, 2015 at 1:41 pm
Yes, F-1 allows four power planets per-season it has been up dated lately to 5. There isn't anything in the air or ground as complex as a F-1 car power planet. The cars are feeding 30 or more engineers at the track and back home normal in England millions of bit of info per second and no micro-soft is not used but very complex programs watching every system in the car. A pit stop in F-1 is 2.7 seconds anything above 3.5 and your not trying hard enough.
Honda who pride themselves in Engineering has struggled in power planet design this year and admit they have but have put more engineers on the case. The beginning of this Tech engine design the big teams hired over 100 more engineers to solve the problems. Ferrari throw out the first design and did a total rebuild and it working.
This is how the world of F-1 has moved into other designs, long but a fun read.
http://www.wired.com/2015/08/mclaren-applied-technologies-f1/I'm sure those in F-1 system designs would look at stories like this and would come to the conclusion that these nice people are the gate keepers and not the future. Yes, I'm a long time fan of F-1. Then again what do I know.
The sad thing in F-1 the gate keepers are the owners CVC.
Brooklin Bridge August 21, 2015 at 3:25 pm
Interesting comment! One has to wonder why every complex system can't be treated as the be-all. Damn the torpedos. Spare no expense! Maybe if we just admitted we are all doing absolutely nothing but going around in a big circle at an ever increasing speed, we could get a near perfect complex system to help us along.
Ormond Otvos August 21, 2015 at 5:21 pm
If the human race were as important as auto racing, maybe. But we know that's not true ;->
jo6pac August 21, 2015 at 5:51 pm
In the link it's the humans of McLaren that make all the decisions on the car and the race on hand. The link is about humans working together either in real race time or designing out problems created by others.
Marsha August 21, 2015 at 1:19 pm
Globalization factors in maximizing the impact of Murphy's Law:
- Meltdown potential of a globalized 'too big to fail' financial system associated with trade imbalances and international capital flows, and boom and bust impact of volatile "hot money".
- Environmental damage associated with inefficiency of excessive long long supply chains seeking cheap commodities and dirty polluting manufacturing zones.
- Military vulnerability of same long tightly coupled 'just in time" supply chains across vast oceans, war zones, choke points that are very easy to attack and nearly impossible to defend.
- Consumer product safety threat of manufacturing somewhere offshore out of sight out of mind outside the jurisdiction of the domestic regulatory system.
- Geographic concentration and contagion of risk of all kinds – fragile pattern of horizontal integration – manufacturing in China, finance in New York and London, industrialized mono culture agriculture lacking biodiversity (Iowa feeds the world). If all the bulbs on the Christmas tree are wired in series, it takes only one to fail and they all go out.
Globalization is not a weather event, not a thermodynamic process of atoms and molecules, not a principle of Newtonian physics, not water running downhill, but a hyper aggressive top down policy agenda by power hungry politicians and reckless bean counter economists. An agenda hell bent on creating a tightly coupled globally integrated unstable house of cards with a proven capacity for catastrophic (trade) imbalance, global financial meltdown, contagion of bad debt, susceptibility to physical threats of all kinds.
Synoia August 21, 2015 at 1:23 pm
Any complex system contains non-linear feedback. Management presumes it is their skill that keeps the system working over some limited range, where the behavior approximates linear. Outside those limits, the system can fail catastrophically. What is perceived as operating or management skill is either because the system is kept in "safe" limits, or just happenstance. See chaos theory.
Operators or engineers controlling or modifying the system are providing feedback. Feedback can push the system past "safe" limits. Once past safe limits, the system can fail catastrophically Such failure happen very quickly, and are always "a surprise".
Synoia August 21, 2015 at 1:43 pm
All complex system contain non-linear feedback, and all appear manageable over a small rage of operation, under specific conditions.
These are the systems' safe working limits, and sometimes the limits are known, but in many case the safe working limits are unknown (See Stock Markets).
All systems with non-linear feedback can and will fail, catastrophically.
All predicted by Chaos Theory. Best mathematical filed applicable to the real world of systems.
So I'll repeat. All complex system will fail when operating outside safe limits, change in the system, management induced and stimulus induced, can and will redefine those limits, with spectacular results.
We hope and pray system will remain within safe limits, but greed and complacency lead us humans to test those limits (loosen the controls), or enable greater levels of feedback (increase volumes of transactions). See Crash of 2007, following repeal of Glass-Stegal, etc.
Brooklin Bridge August 21, 2015 at 4:05 pm
It's Ronnie Ray Gun. He redefined it as, "Safe for me but not for thee." Who says you can't isolate the root?
Synoia August 21, 2015 at 5:25 pm
Ronnie Ray Gun was the classic example of a Manager.
Where one can only say: "Forgive them Father, for they know not what they do"
Oregoncharles August 21, 2015 at 2:54 pm
Three quite different thoughts:
First, I don't think the use of "practitioner" is an evasion of agency. Instead, it reflects the very high level of generality inherent in systems theory. The pitfall is that generality is very close to vagueness. However, the piece does contain an argument against the importance of agency; it argues that the system is more important than the individual practitioners, that since catastrophic failures have multiple causes, individual agency is unimportant. That might not apply to practitioners with overall responsibility or who intentionally wrecked the system; there's a naive assumption that everyone's doing their best. I think the author would argue that control fraud is also a system failure, that there are supposed to be safeguards against malicious operators. Bill Black would probably agree. (Note that I dropped off the high level of generality to a particular example.)
Second, this appears to defy the truism from ecology that more complex systems are more stable. I think that's because ecologies generally are not tightly coupled. There are not only many parts but many pathways (and no "practitioners"). So "coupling" is a key concept not much dealt with in the article. It's about HUMAN systems, even though the concept should apply more widely than that.
Third, Yves mentioned the economists' use of "equilibrium." This keeps coming up; the way the word is used seems to me to badly need definition. It comes from chemistry, where it's used to calculate the production from a reaction. The ideal case is a closed system: for instance, the production of ammonia from nitrogen and hydrogen in a closed pressure chamber. You can calculate the proportion of ammonia produced from the temperature and pressure of the vessel. It's a fairly fast reaction, so time isn't a big factor.
The Earth is not a closed system, nor are economies. Life is driven by the flow of energy from the Sun (and various other factors, like the steady rain of material from space). In open systems, "equilibrium" is a constantly moving target. In principle, you could calculate the results at any given condition , given long enough for the many reactions to finish. It's as if the potential equilibrium drives the process (actually, the inputs do).
Not only is the target moving, but the whole system is chaotic in the sense that it's highly dependent on variables we can't really measure, like people, so the outcomes aren't actually predictable. That doesn't really mean you can't use the concept of equilibrium, but it has to be used very carefully. Unfortunately, most economists are pretty ignorant of physical science, so ignorant they insistently defy the laws of thermodynamics ("groaf"), so there's a lot of magical thinking going on. It's really ideology, so the misuse of "equilibrium" is just one aspect of the system failure.
Synoia August 21, 2015 at 5:34 pm
Really?
"equilibrium from chemistry, where it's used to calculate the production from a reaction"
That is certainly a definition in one scientific field.
There is another definition from physics.
When all the forces that act upon an object are balanced, then the object is said to be in a state of equilibrium.
However objects on a table are considered in equilibrium, until one considers an earthquake.
The condition for an equilibrium need to be carefully defined, and there are few cases, if any, of equilibrium "under all conditions."
nat scientist August 21, 2015 at 7:42 pm
Equilibrium ceases when Chemistry breaks out, dear Physicist.
Synoia August 21, 2015 at 10:19 pm
Equilibrium ceases when Chemistry breaks out
This is only a subset.
Oregoncharles August 21, 2015 at 10:56 pm
I avoided physics, being not so very mathematical, so learned the chemistry version – but I do think it's the one the economists are thinking of.
What I neglected to say: it's an analogy, hence potentially useful but never literally true – especially since there's no actual stopping point, like your table.
John Merryman August 21, 2015 at 3:09 pm
There is much simpler way to look at it, in terms of natural cycles, because the alternative is that at the other extreme, a happy medium is also a flatline on the big heart monitor. So the bigger it builds, the more tension and pressure accumulates. The issue then becomes as to how to leverage the consequences. As they say, a crisis should never be wasted. At its heart, there are two issues, economic overuse of resources and a financial medium in which the rent extraction has overwhelmed its benefits. These actually serve as some sort of balance, in that we are in the process of an economic heart attack, due to the clogging of this monetary circulation system, that will seriously slow economic momentum.
The need then is to reformulate how these relationships function, in order to direct and locate our economic activities within the planetary resources. One idea to take into consideration being that money functions as a social contract, though we treat it as a commodity. So recognizing it is not property to be collected, rather contracts exchanged, then there wouldn't be the logic of basing the entire economy around the creation and accumulation of notational value, to the detriment of actual value. Treating money as a public utility seems like socialism, but it is just an understanding of how it functions. Like a voucher system, simply creating excess notes to keep everyone happy is really, really stupid, big picture wise.
Obviously some parts of the system need more than others, but not simply for ego gratification. Like a truck needs more road than a car, but an expensive car only needs as much road as an economy car. The brain needs more blood than the feet, but it doesn't want the feet rotting off due to poor circulation either.
So basically, yes, complex systems are finite, but we need to recognize and address the particular issues of the system in question.Bob Stapp August 21, 2015 at 5:30 pm
Perhaps in a too-quick scan of the comments, I overlooked any mention of Nassim Nicholas Taleb's book, Antifragile. If so, my apologies. If not, it's a serious omission from this discussion.
Local to Oakland August 21, 2015 at 6:34 pm
Thank you for this.
I first wondered about something related to this theme when I first heard about just in time sourcing of inventory. (Now also staff.) I wondered then whether this was possible because we (middle and upper class US citizens) had been shielded from war and other catastrophic events. We can plan based on everything going right because most of us don't know in our gut that things can always go wrong.
I'm genX, but 3 out of 4 of my grandparents were born during or just after WWI. Their generation built for redundancy, safety, stability. Our generation, well. We take risks and I'm not sure the decision makers have a clue that any of it can bite them.
Jeremy Grimm August 22, 2015 at 4:23 pm
The just-in-time supply of components for manufacturing was described in Barry Lynn's book "Cornered" and identified as creating extreme fragility in the American production system. There have already been natural disasters that shutdown American automobile production in our recent past.
Everything going right wasn't part of the thinking that went into just-in-time parts. Everything going right - long enough - to steal away market share on price-point was the thinking. Decision makers don't worry about any of this biting them. Passing the blame down and golden parachutes assure that.
flora August 21, 2015 at 7:44 pm
This is really a very good paper. My direct comments are:
point 2: yes. provided the safety shields are not discarded for bad reasons like expedience or ignorance or avarice. See Glass-Steagall Act, for example.
point 4: yes. true of all dynamic systems.
point 7: 'root cause' is not the same as 'key factors'. ( And here the doctor's sensitivity to malpractice suits may be guiding his language.) It is important to determine key factors in order to devise better safety shields for the system. Think airplane black boxes and the 1932 Pecora Commission after the 1929 stock market crash.
Jay M August 21, 2015 at 9:01 pm
It's easy, complexity became too complex. And I can't read the small print. We are devolving into a world of happy people with gardens full of flowers that they live in on their cell phones.
Ancaeus August 22, 2015 at 5:22 am
There are a number of counter-examples; engineered and natural systems with a high degree of complexity that are inherently stable and fault-tolerant, nonetheless.
1. Subsumption architecture is a method of controlling robots, invented by Rodney Brooks in the 1980s. This scheme is modeled on the way the nervous systems of animals work. In particular, the parts of the robot exist in a hierarchy of subsystems, e.g., foot, leg, torso, etc. Each of these subsystems is autonomously controlled. Each of the subsystems can override the autonomous control of its constituent subsystems. So, the leg controller can directly control the leg muscle, and can override the foot subsystem. This method of control was remarkably successful at producing walking robots which were not sensitive to unevenness of the surface. In other words, the were not brittle in the sense of Dr. Cook. Of course, subsumption architecture is not a panacea. But it is a demonstrated way to produce very complex engineered systems consisting of many interacting parts that are very stable.
2. The inverted pendulum Suppose you wanted to build a device to balance a pencil on its point. You could imagine a sensor to detect the angle of the pencil, an actuator to move the balance point, and a controller to link the two in a feedback loop. Indeed, this is, very roughly, how a Segway remains upright. However, there is a simpler way to do it, without a sensor or a feedback controller. It turns out that if your device just moves the balance point sinusoidaly (e.g., in a small circle) and if the size of the circle and the rate are within certain ranges, then the pencil will be stable. This is a well-known consequence of the Mathieu equation. The lesson here is that stability (i.e., safety) can be inherent in systems for subtle reasons that defy a straightforward fault/response feedback.
3. Emergent behavior of swarms Large numbers of very simple agents interacting with one another can sometimes exhibit complex, even "intelligent" behavior. Ants are a good example. Each ant has only simple behavior. However, the entire ant colony can act in complex and effective ways that would be hard to predict from the individual ant behaviors. A typical ant colony is highly resistant to disturbances in spite of the primitiveness of its constituent ants.
4. Another example is the mammalian immune system that uses negative selection as one mechanism to avoid attacking the organism itself. Immature B cells are generated in large numbers at random, each one with receptors for specifically configured antigens. During maturation, if they encounter a matching antigen (likely a protein of the organism) then the B cell either dies, or is inactivated. At maturity, what is left is a highly redundant cohort of B cells that only recognize (and neutralize) foreign antigens.
Well, these are just a few examples of systems that exhibit stability (or fault-tolerance) that defies the kind of Cartesian analysis in Dr. Cook's article.
Marsha August 22, 2015 at 11:42 am
Glass-Steagall Act: interactions between unrelated functionality is something to be avoided. Auto recall: honking the horn could stall the engine by shorting out the ignition system. Simple fix is is a bit of insulation.
ADA software language: Former DOD standard for large scale safety critical software development: encapsulation, data hiding, strong typing of data, minimization of dependencies between parts to minimize impact of fixes and changes. Has safety critical software gone the way of the Glass-Steagall Act? Now it is buffer overflows, security holes, and internet protocol in hardware control "critical infrastructure" that can blow things up.
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May 07, 2015 | jessescrossroadscafe.blogspot.com
"The power and influence of the financial sector threatens a continuation of the regulatory capture that contributed to the financial crisis. Financial firms, too often, have significant say in the appointment of high regulatory officials.The tendency of some former government officials to obtain highly lucrative positions in the financial sector after leaving government may well act as an inducement to those remaining in government to serve the interest of the financial sector rather than those of the public."
Brooksley Born, Finance & Society Conference, May 5, 2015
The Western Banks are all over these markets, from commodities to equities. They are creating huge amounts of money debt, and providing it to the financial industry as top down stimulus. What results is little aggregate or 'organic' growth and a series of paper asset bubbles. They should be ashamed but they are too busy plundering to feel any twinge of conscience. They are like a herd of swine, racing for the abyss.I had to chuckle when the pampered princesses and giggling jackals were talking about the jobs report tomorrow, and said that the ideal situation would be 'a strong jobs number with no wage growth,' a true 'goldilocks' scenario.
I have given up any expectation of reform from within. There will have to be some eye-opening incidents to shake the complacency of the fortunate few.
Non-Farm Payrolls tomorrow.
Have a pleasant evening.
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The National Interest
The rise of technologies such as 3-D printing and advanced robotics means that the next few decades for Asia's economies will not be as easy or promising as the previous five.
OWEN HARRIES, the first editor, together with Robert Tucker, of The National Interest, once reminded me that experts-economists, strategists, business leaders and academics alike-tend to be relentless followers of intellectual fashion, and the learned, as Harold Rosenberg famously put it, a "herd of independent minds." Nowhere is this observation more apparent than in the prediction that we are already into the second decade of what will inevitably be an "Asian Century"-a widely held but rarely examined view that Asia's continued economic rise will decisively shift global power from the Atlantic to the western Pacific Ocean.
No doubt the numbers appear quite compelling. In 1960, East Asia accounted for a mere 14 percent of global GDP; today that figure is about 27 percent. If linear trends continue, the region could account for about 36 percent of global GDP by 2030 and over half of all output by the middle of the century. As if symbolic of a handover of economic preeminence, China, which only accounted for about 5 percent of global GDP in 1960, will likely surpass the United States as the largest economy in the world over the next decade. If past record is an indicator of future performance, then the "Asian Century" prediction is close to a sure thing.
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Jun 19, 2015 | jessescrossroadscafe.blogspot.com
This video below may help one to understand some of the seemingly obtuse demands from the Troika with regard to Greece.
The video is a bit dated, but the debt scheme it describes remains largely unchanged. The primary development has been the creation of an experiment called the European Union and the character of the targets. One might also look to the wars of 'preventative intervention' and 'colour revolutions' that raise up puppet regimes for examples of more contemporary economic spoliation. From largely small and Third World countries, the candidates for debt peonage have become the smaller amongst the developed Western countries, the most vulnerable on the periphery. And even the domestic populations of the monetary powers, the US, Germany, and the UK, are now feeling the sting of financialisation, debt imposition through crises, and austerity. What used to only take place in South America and Africa has now taken place in Jefferson County Alabama. Corrupt officials burden taxpayers with unsustainable amounts of debt for unproductive, grossly overpriced projects.
It would be wrong in these instances to blame the whole country, the whole government, or all corporations, except perhaps for sleepwalking, and sometimes willfully, towards the abyss. For the most part a relatively small band of scheming and devious fellows abuse and corrupt every form of government and organization and law in order to achieve their private ambitions, often using various forms of intimidation and reward. It is an old, old story. And then there is the mass looting enable by the most recent financial crisis and Bank bailouts. If the people will not take on the chains of debt willingly, you impose them indirectly, while giving the funds to your cronies who will use them against the very people who are bearing the burdens, while lecturing them on moral values and thrift. It is an exceptionally diabolical con game.
The TPP and TTIP are integral initiatives in this effort of extending financial obligations, debt, and control. You might ask yourself why the House Republicans, who have fought the current President at every turn, blocking nominees and even stages many mock votes to repeatedly denounce a healthcare plan that originated in their own think tank and first implemented by their own presidential candidate, are suddenly championing that President's highest profile legislation, and against the opposition of his own party? The next step, after Greece is subdued, will be to extend that model to other, larger countries. And to redouble the austerity at home under cover of the next financial crisis by eliminating cash as a safe haven, and to begin the steady stream of digital 'bailing-in.'
This is why these corporatists and statists hate gold and silver, by the way. And why it is at the focal point of a currency war. It provides a counterweight to their monetary power. It speaks unpleasant truths. It is a safe haven and alternative, along with other attempts to supplant the IMF and the World Bank, for the rest of the world. So when you say, the Philippines deserved it, Iceland deserved it, Ireland deserved it, Africa deserves it, Jefferson County deserved it, Detroit deserved it, and now Greece deserves it, just keep in mind that some day soon they will be saying that you deserve it, because you stood by and did nothing.
Because when they are done with all the others, for whom do you think they come next? If you wish to see injustice stopped, if you wish to live up to the pledge of 'never again,' then you must stand for your fellows who are vulnerable. The economic hitmen have honed their skills among the poor and relatively defenseless, and have been coming closer to home in search of new hunting grounds and fatter spoils.
There is nothing 'new' or 'modern' about this. This is as old as Babylon, and evil as sin. It is the power of darkness of the world, and of spiritual wickedness in high places. The only difference is that it is not happening in the past or in a book, it is happening here and now.
"Economic powers continue to justify the current global system where priority tends to be given to speculation and the pursuit of financial gain. As a result, whatever is fragile, like the environment, is defenseless before the interests of the deified market, which becomes the only rule." Francis I, Laudato Si
https://www.youtube.com/watch?v=p7gxkgssngU
You may also find some information about the contemporary applications of these methods in The IMF's 'Tough Choices' On Greece by Jamie Galbraith.
"Plunderers of the world, when nothing remains on the lands to which they have laid waste by wanton thievery, they search out across the seas. The wealth of another region excites their greed; and if it is weak, their lust for power as well. Nothing from the rising to the setting of the sun is enough for them. Among all others only they are compelled to attack the poor as well as the rich. Robbery, rape, and slaughter they falsely call empire; and where they make a desert, they call it peace."
Tacitus, Agricola Posted by Jesse at 11:46 AM Email This BlogThis! Share to Twitter Share to Facebook Share to Pinterest
Category: currency war, debt peonage, debt slavery, neo-colonialism, new world order
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jessescrossroadscafe.blogspot.com
"He who dictates and formulates the words and phrases we use, he who is master of the press and radio, is master of the mind. Repeat mechanically your assumptions and suggestions, diminish the opportunity for communicating dissent and opposition. This is the formula for political conditioning of the masses.The big lie and monotonously repeated nonsense have more emotional appeal in a cold war than logic and reason.
The continual intrusion into our minds of the hammering noises of arguments and propaganda can lead to two kinds of reactions. It may lead to apathy and indifference, the I-dont-care reaction, or to a more intensified desire to study and to understand. Unfortunately, the first reaction is the more popular one. Confusing a targeted audience is one of the necessary ingredients for effective mind control."
Joost Meerloo, The Rape of the Mind
There is going to be another financial crisis within the next two years, and it will be global, and it may be much more consequential than the other two or three we have seen since the Fed embarked on this course of its long and checkered career.
It is also avoidable, and in their quiet, private moments the really good economists can see it coming. Why don't they say anything? Ennui of the bureaucrat, entropy of an inability to change, and the credibility trap of failed ideologies in a failing empire.
They did not get to where they are by 'rocking the boat.' And so they will be quiet, unless they see some advantage in it for them, most ordinarily in a pay for say.
Not so for the financiers and their minions. They will not be quiet, alas. The more badly they behave, the louder they seem to become.
They are short term, and almost infantile in the self-centered reasoning. Although a child is limited by lack of faculty and experience, the speculator is hampered by vanity, a self-imposed lack of human development, and an almost obsessive preoccupation with drinking, favorite objects, and teats.
They see something and they want it, they know only what they can feel in the desire of the moment, morally they are undeveloped, and when they make a mess they cry loudly, until an adult comes to clean it up for them. But unlike a child they have no gratitude, no sense of their own dependency, or natural affection for others.
Have a pleasant evening
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The Guardian
cgoodwood 19 Sep 2015 11:40Do not contradict the memories of all the old teabaggers who desperately need the myth of Saint Ronnie to justify their Greed is Good declining mentality and years.
When Reagan cut-and-ran on Lebanon he showed rare discretion. A lot of the puffery stuff was B-Movie grade, but there was a lot of cross-the-aisle ventures, too.
He was a politician. The current GOP is just a bunch of white Fundie bullies, actually and metaphorically (e.g., Carson).
Zepp -> thedono 19 Sep 2015 11:37
Well, compared to Cruz, or Santorum, or Huckabee, he's a moderate. Of course, compared to the right people, you can describe Mussolini or Khruschev as moderates...
mastermisanthrope 19 Sep 2015 11:37
Lifelong shill
LostintheUS -> William J Rood 19 Sep 2015 11:36
Reagan underwent a political conversion when Nancy broke up his marriage with Jane Wyman and married him.
LostintheUS 19 Sep 2015 11:33
Here is the Reagan administration in a five second video clip:
https://www.youtube.com/watch?v=NR3RqMMIwD4LostintheUS -> inchoateruffian 19 Sep 2015 11:32
Here is the video clip where Don Regan (former CEO of Merrill Lynch) tells PRESIDENT Reagan to "speed it up".
RightSaid -> ID3732233 19 Sep 2015 11:31
The cold war ended while Reagan was president, but he did not win the cold war. His rhetoric and strategy was wishful thinking - there's no way he could have had the definitive intelligence about the entire military-political-economic that would have justified the confidence he projected. He merely lucked out, significantly damaging the US economy by trying (and luckily succeeding) to out-militarize the soviets.
pretzelattack -> kattw 19 Sep 2015 11:31
both clinton and obama have showed a willingness to "reform social security". try naked capitalism, there are probably a number of articles in the archives.
LostintheUS -> piethein 19 Sep 2015 11:29
And that the emergency room federally funded program that saved his life was soon after defunded...by him.
LostintheUS -> pretzelattack 19 Sep 2015 11:28
Many of us saw through him...I noted the senility during his speeches during his first campaign...as did many people I knew.
pretzelattack -> 4Queeen4country 19 Sep 2015 11:27
thatcher said of reagan "bit of a dim bulb..."
Jim Loftus 19 Sep 2015 11:26
Dementia masquerading as politics.
But you can't say anything negative about Saint Ronald!Peter Davis -> Peter Davis 19 Sep 2015 11:22
I believe Reagan also is responsible for creating the Hollywood notion in American politics and political thinking that life works just like a movie--with good guys and bad guys. And all one needs is a gun and you can save the world. That sort of delusional thinking has been at the heart of the modern GOP ever since.
loljahlol -> ID3732233 19 Sep 2015 11:21
Reagan did not end the Cold War. Brezhnev rule solidified the Soviet death. Their corrupt, inefficient form of capitalism could not compete with the globalization of Western capitalism.
John78745 19 Sep 2015 11:21
There's not much nuance to Reagan. He was a coward, a bully and a loser. He got hundreds of U.S. Marines killed then he ran from the terrorists in Beirut and on the Archille Lauro personally creating the seeds of the morass of terrorists we now live with. He fostered the republican traditions of sending U.S. jobs overseas at the expense of U.S. taxpayers and of invading helpless, hapless nations, a tradition so adeptly followed by Bush I & II. He also promised that there would never be a need for another amnesty.
I guess it's true that he talked mean to the Russians, broke unions, and helped make the military industrial complex into the insatiable war machine that it is today. Remember murderous Iran-Contra (a real) scandal where he and his minions worked in secret without congressional authorization to overthrow a democratically elected government while conspiring to supply arms to the dastardly Iranians!
We could also say that he bravely fought to save the U.S. from socialized medicine and to expunge the tradition of free tuition for California students. Whatta hero!
thankgodimanatheist 19 Sep 2015 11:19
Reagan, the acting President, was the worst President since WWII until the Cheney/Bush debacle.
Most of the problems we face today can be directly traced to his voodoo economics, huge deficit spending, deregulation, and in retrospect disastrous foreign policies.
LostintheUS 19 Sep 2015 11:17"these days everyone seems to love Ronald."
Absolutely, not true. The farther along we go in time, the more Americans realize the damage this man and his backers did to America and the world. The inversion of the tax tables, the undoing of union laws, the polarization of Americans against each other so the plutocrats had no real opposition and on and on. His camp stole the election in 1980 through making a back door deal with the Iranian government to hold onto the American hostages until the election when Jimmy Carter had negotiated an end to the hostage crisis, which was the undoing of Jimmy Carter's administration.
"Behind Carter's back, the Reagan campaign worked out a deal with the leader of Iran's radical faction - Supreme Leader Ayatollah Khomeini - to keep the hostages in captivity until after the 1980 Presidential election." This is, unquestionably, treason. http://www.truth-out.org/opinion/item/20287-without-reagans-treason-iran-would-not-be-a-problem
No, Reagan marks the downward turn for our country and has resulted in the economic and social mess we still have not clawed our way back out of. No, Reagan is no hero, he is an American nemesis and a traitor. Reagan raised taxes three times while slashing the tax rate of the super rich...starting the downward spiral of the middle-class and the funneling of money toward the 1%. Thus his reputation as a "tax cutter", yeah, if you were a multi-millionaire.
Check this out for a synopsis of the damage: http://www.dailykos.com/story/2011/02/10/942453/-How-Ronald-Reagan-s-Policies-Destroyed-the-United-States#
namora -> nogapsallowed 19 Sep 2015 11:15
Never thought of Reagan as the first Shrub but it fits. I wonder if future pundits will sing the Dub's praises as well. I think I'm gonna be sick for a bit.
kattw -> namora 19 Sep 2015 11:10
Pretzel is maybe talking about the 'strengthen SS' bandwagon? Perhaps? Not entirely sure myself, but yeah - one of the major democrat platform planks is that SS should NOT be privatized, and that if people want to invest in stocks, they can do that on their own. The whole point of SS is to be a mattress full of cash that is NOT vulnerable to the vagaries of the market, and will always have some cash in it to be used as needed.
SS would be totally secure, too, if congress would stop robbing it for other projects, or pay back all they've borrowed. As it is, I wish *I* was as broke as republicans claim SS is - I wouldn't mind having a few billion in the bank.
William J Rood 19 Sep 2015 11:08
Reagan was former president of the Screen Actors' Guild. Obviously, he thought unions for highly educated workers were great. Meatpackers? Not so much.
RealSoothsayer 19 Sep 2015 11:04
This article does not mention the fact that in his last couple of years as President at least, his mental state had seriously deteriorated. He could not remember his own policies, names, etc. CBS' Leslie Stahl should be prosecuted for not being honest with her everyone when she found out.
Peter Davis 19 Sep 2015 11:04
Reagan was a failed president who nonetheless managed to convince people that he was great. He was a professional actor, after all. And he acted his way into the White House. Most importantly, he changed American politics forever by demonstrating that style was more important than substance. In fact, he showed that style was everything and substance utterly unimportant. He was the figurehead while his handlers did the dirty work of Iran-Contra, ballooning deficits, and tanking unemployment.
nishville 19 Sep 2015 11:03
For me, he was a pioneer. He was the first sock-puppet president, starting a noble tradition that reached its climax with W.
mbidding -> hackerkat 19 Sep 2015 11:03
In addition to:
Treasonous traitor when, as a presidential candidate, he negotiated with Khomeini to hold the hostages till after the election.
Subverter of the Constitution via the Iran-Contra scandal.
Destroyer of social cohesion by turning JFK's famous admonishment of "ask not what your country can do for you, ask what you can do for your country" on its head with his meme that all evil emanates from the government and taxation represents stealing rather than a social obligation for any civilized society that wishes to continue to develop in a sound fashion that lifts all boats.
Incarcerator in Chief through his tough on crime and war on drugs policies, not to mention defunding mental health care.
Pisser in Chief through his successful efforts to imbed trickle down economics as the economic thought du jour which even its original architects, notably Stockman, now confirm is a failed theory that we nonetheless cling to to this day.
Ignoramus in Chief by gutting real federal financial aid for higher education leading to the obscene amounts of student debt our college students now incur.
Terrorist creator extraordinaire not only with the creation of the Latin American death squads you note, but the creation, support, trading, and funding of the mujahedin and Bin Laden himself, now known as the Taliban, Al Qa'ida, and ISIS, only the most notable among others.
namora -> trholland1 19 Sep 2015 10:59
That is not taking into account his greatest role for which he was ignored for a much deserved Oscar, Golden Globe or any of the other awards passed out by the entertainment industry, President of The United States of America. He absolutely nailed that one.
William J Rood 19 Sep 2015 10:58
Conservatives used "bracket creep" to convince the middle class that reducing marginal rates on the top tax brackets along with their own would be a good idea, then with the assistance of Democrats replaced the revenue with a huge increase in FICA so that the Social Security Trust Fund could finance the deficit in the rest of the budget. The result was a huge boon to the richest, little difference for the middle class, and a far greater burden for the working poor.
Tax brackets could have been indexed to inflation, but that wouldn't have been so great for Reagans real supporters.
Doueman 19 Sep 2015 10:55
What sad comments by these armchair experts.
They don't gel with my experiences in North America during this period at all. When Reagan ran for the presidency he was generally ridiculed by much of the press in the US and just about all of the press in the UK for being a right wing fanatic, a lightweight, too old, uninformed and even worse an actor. I found this rather curious and watched him specifically on TV in unscripted scenarios to form my own impression as to how such a person, with supposedly limited abilities, could possibly run for President of the US. I get a bit suspicious when organisations and individuals protest and ridicule too much.
My reaction was that he handled himself well and gradually concluded that the mainly Eastern liberal press in the US couldn't really stomach a California actor since they themselves were meant to know everything. He actually was pretty well read ( visitors were later astonished to read his multiple annotations in heavy weight books in his library). He was a clever and astute union negotiator dealing with some of the toughest Hollywood moguls who would eat most negotiators for dinner. He had become Governor of California and had done a fine job. I thought it was unlikely he was the simpleton many portrayed. He couldn't be easily categorised as he embraced many good aspects of the Democrats and the Republicans. Life wasn't so polarised then.
The US had left leaning Republicans and right wing Democrats. A political party as Churchill noted was simply a charger to ride into action.
In my view, his presidential record was pretty remarkable. A charming, fair minded charismatic man without the advantage of a wealthy background or influential family. The world was lucky to have him.
raffine -> particle 19 Sep 2015 10:50
Reagan's second term was a disaster. But as someone below mentioned, conservative pundits and their financers engaged in a campaign to make Reagan into a right-wing FDR. The most effective, albeit bogus, claim on Reagan's behalf was that he had ended the Cold War.
jpsartreny 19 Sep 2015 14:22
Reagan is the shadow governments greatest triumph. After the adolescent Kennedy, egomaniacs Johnson and Nixon , they needed front guys who followed orders instead .
The experiment with the peanut farmer from Georgia provided disastrous to Zebrew Brzezinski and the liberals. The conservatives had better luck with a B- movie actor with an great talent to read of the teleprompter.
RealSoothsayer -> semper12 19 Sep 2015 14:19
How? By talking? Gobachev brought down the USSR with his 'Glasnost' and 'Perestroika' policies. His vision was what communist China later on achieved: mixed economy that flies a red flag. Reagan was just an observer, absolutely nothing more. Tito of Yugoslavia was even more instrumental.
Marc Herlands 19 Sep 2015 14:17
IMHO Reagan was the second most successful president, behind FDR and ahead of LBJ. Not that I liked anything about him, but he moved this country to the right and set the play book. He lowered taxes on the wealthy, the corporations, capital gains, and estate taxes. He reduced growth in programs for the poor, and made it impossible to increase their funding after his presidency because of he left huge federal deficits caused by lowering taxes and increasing outlays on the military. This Republican playbook still is their way of making sure that the Democrats can't give the poor more money after they lose power. Also, he enlarged the program for deregulating industries, doing away with antitrust laws, hindering labor laws, encouraged anti-union behavior, and did nothing for AIDS research. He was a scoundrel who did a deal with Iran to prevent Carter from being re-elected. He directly disobeyed Congressional laws not to intervene in Nicaragua. He set the tone for US interventions after him.
bloggod 19 Sep 2015 14:17Obama, Clinton, and the Bushes all hope to be forgiven for their unpardonable crimes.
Popularity is created. It is not populism, or informed consent of the pubic as approval for more of the same collusion.
It is a One Party hoe down.
bloggod -> SigmetSue 19 Sep 2015 14:12
"they"
the indicted Sec of Defense Weinberger; the indicted head of the CIA Casey who "died" as he was due to testify: Mcfarlane, Abrams, Clair George, Oilyver North, Richard Secord, Albert Hakim
Reagan had no genius, he had Bush-CIA and the Jerry Falwell, Billy Graham, and the "immoral majority" of anti-abortion war profiteers.
Marios Antoniou Lattimore 19 Sep 2015 13:52I agree with everything you mentioned, and I intensely dislike Reagan YET the point of the article wasn't that Reagan was good, it rather points to the fact that Republicans have shifted so far to the right that Reagan would appear moderate compared to the current batch.
Rainer Jansohn pretzelattack 19 Sep 2015 13:52
Interesting had been his speeches during the Cold War.Scientists have subsumed it under "Social Religion",a special form of political theology.Simple dialectical:UDSSR the incarnation of the evil/hell on the other side USA :the country of God himself.A tradition in USA working until now.There is no separation between government and church as in good old centuries sincetwo centuries resulting from enlightening per Philosophie/Voltaire/Kant/Hume/Descartes and so on.Look at Obamas speeches/God is always mixed in!
talenttruth 19 Sep 2015 13:49
Any conversation about who the fantasy-projection "Reagan" was, misses an important reality: He was a hologram, fabricated by a kaleidoscope of various sorts of so-called "conservative" handlers and puppeteers. It was those "puppeteers" who ranged from heartlessly, stunningly "conservative" (destroya-tive), all the way further right to the kind of militaristic, macho, crackpots who have finally emerged from under their rocks at this year's "candidates."
The fact that Reagan was going ga-ga – definitely in his second term, and likely for part of the first – was entirely convenient for his Non-Human-Based-Crackpot-Right-Holographers, since he had was not actually "driven" to vacuousness by a tragic mental condition (dementia) – THAT change was merely a "short putt" – from his entire previous life.
Regarding his Great Achievement, the collapse of the Soviet Union? After decades of monstrous over-spending by the USA's Military-Industrial-Complex, the bogus and equally insane USSR finally bankrupted itself trying to "compete" and fell. Reagan (and his puppeteer handlers), always excellent at Taking Credit for anything, showed up with exquisite cynical timing, and indeed Took Credit.
Lest anyone forget, Reagan got elected in 1980, via a totally illegal and stunningly immoral "side deal" with the Iranians, in which they agreed to not release our hostages to make Carter look like a feeble old man. Then we got Reagan who WAS a "feeble old man" (ESPECIALLY intellectually and morally). Reagan "won," the hostages were "released" and he of course took credit for that too.
So all these so-called "candidates" ARE the heirs of all the very worst of Ronald Reagan: they are all simpleminded, they are totally beholden to Hidden Sociopathic Billionaires hiding behind various curtains, and they all have NO CLUE what the word "ethics" means. Vacuous, anti-intellectual, scheming, appealing only to morons, and puppets all. Perfect "Reaganites."
Bill Ehrhorn -> semper12 19 Sep 2015 13:32
It seems that the teabaggers and their ilk give only Reagan credit.
SigmetSue 19 Sep 2015 13:16
They called him the Teflon President because nothing ever stuck. It still doesn't. That was his genius -- and I'm no fan.
Lattimore 19 Sep 2015 13:13The article seems to present Reagan as an theatrical figure. I disagree. Reagan, President of the United States, was a criminal; as such, he was among the most corrupt and anti democratic person to hold the office POTUS. The fact that he tripled the national debt, raised taxes and skewed the tax schedules to benifit the wealthy, are comparitively minor.
,,,
Reagan's crimes and anti democratic acts:
1. POTUS: CIA smuggling cocaine into the U.S., passing the drug to wholesalers, who then processed the drug and distributed crack to Black communities. At the same time Reagan's "War on Crime" insured that the Black youth who bought "Central Intelligenc Agencie's" cocaine were criminalized and handed lengthy prison sentences.
2. POTUS supported SOUTH AMERICAN terrorist, and the genocidal atrocities commited by terrorist in Chili, Guatamala, El Mazote, etc.
3. POTUS supported SOUTH AFRICAN apartheid, and the imprisonment of Nelson Mandela as well. Vetoing a bill that would express condemnation of South Africa.
4. POTUS sold Arms to Iran.
5. POTUS used taxpayer dollars to influence election outcomes.
6. POTUS rigged government grants to enrich his cronies.
7. POTUS thew mental patients onto the streets.
8. POTUS supported McCarthyism, witch hunts, etc.
9. POTUS created and supported Islamic terrorist--fore runners of al Queada, ISIS, etc.Niko2 LostintheUS 19 Sep 2015 13:12
I don't have much love for Nancy, but she did not break up this marriage, to be fair. And she actually got rid off the extreme right wingers in Reagan's administration, like Haig and Regan, whom she called "extra chromosome republicans". Surely she was a vain and greedy flotus with no empathy whatsoever for people not in her Bel Air circles (I can easily imagine her, "Do I really have to go and see these Aids-Babies, I'd rather shop at Rodeo Drive, lose the scheduler") but she realized at an early stage that hubbies shtick-it-to-the-commies policies would do him no favour. Maybe she's the unsung heroine of his presidency.
tommydog -> MtnClimber 19 Sep 2015 13:04
The principle subsidies to big oil are probably the strategic oil reserve and subsidies to low income people for winter heating oil. You can choose which of those you'd like to cut. After that you're arguing about whether exploration costs should be expensed in the year incurred or capitalized and amortized over time.
WilliamK 19 Sep 2015 13:03
He was one of J Edgar Hoover's red baiting fascist admiring boys along with Richard Nixon and Walt Disney used to destroy the labor unions, control the propaganda machine of Hollywood and used to knuckle under the television networks and undermine as much as possible the New Deal polices of Franklin Roosevelt. An actor groomed by the General Electric Corporation and their fellow travelers. "Living better through electricity" was his mantra and he played the role of President to push forward their right wing agenda. Now we are in new stage in our "political development" in America. The era of the "reality television star" with Hollywood in bed with the military industrial complex, selling guns, violence and sex to the fool hardy and their children and prime time television ads push pharmaceutical drugs, children hear warnings of four hour erections, pop-stars flash their tits and asses and a billionaire takes center stage as the media cashes in and goes along for the ride. Yeah Ronnie was a second tier film star and with his little starlet Nancy by his side become one of America's greatest salesman.
Backbutton 19 Sep 2015 12:57LOL! Reagan was a walking script renderer, with lines written by others, and a phony because he was just acting the part of POTUS. His speeches were all crafted, and he had good writers.
He was no Abraham Lincoln.
And now these morons running for office all want to rub off his "great communicator" fix.
Good help America!
Milwaukee Broad 19 Sep 2015 12:49
Ronald Reagan was an actor whom the depressingly overwhelming majority of American voters thought was a messiah. They so believed in him that they re-elected him to a second term. Nothing positive whatsoever became of his administration, yet he is still worshiped by millions of lost souls (conservatives).
Have a nice day.
Michael Williams 19 Sep 2015 12:48The US was the world's leading creditor when Reagan took office. The US was the world's leading debtor by the time Bush 1 was tossed out of office.
This is what Republicans cannot seem to remember.
All of the other scandals pale in comparison, even as we deal with the blowback from most of these original, idiotic policies.
Reagan was an actor, mouthing words he barely understood, especially as his dementia progressed.
This is the exact reason the history is so poorly taught in the US.
People might make connections....Jessica Roth 19 Sep 2015 12:46
Oh, he had holes in his brain long before the dementia. "Facts are stupid things", trees cause pollution, and so on.
A pathetic turncoat who sold out his original party (the one that kept his dad in work throughout the Great Depression via a series of WPA jobs) because Nancy allegedly "gave the best head in Hollywood" and who believed that only 144,000 people were going to Heaven, presumably accounting for his uncaring treatment of the less-well-off.
His administration was full of corruption, from Richard Allen's $1000 in an envelope (and three wristwatches) that he claimed was an inappropriate gift for Mrs. Reagan he had "intercepted" and then "forgotten" to report to William Casey trading over $3,000,000 worth of stocks while CIA director. (Knowing about changes in the oil market ahead of time sure came in handy.) You had an attorney general who took a $50,000 "severance payment" (never done before) from the board of a corporation he resigned from to avoid conflict of interest charges and this was William French Smith; his successor, Edwin Meese, was the one with real scandals (about the sale of his home).
Hell, Reagan himself put his ranch hand (Dennis LeBlanc) on the federal payroll as an "advisor" to the Commerce Department. I didn't know the Commerce Dept needed "advice" on clearing wood from St. Ronnie's ranch, but LeBlanc got a $58,500 salary out of the deal. (Roughly £98,000 at today's prices.) Nice work if you can get it.
Meanwhile, RR "talked tough" at the Soviets (resulting in the world nearly ending in 1983 due to a false alarm about a US nuclear attack) while propping up any rightwing dictator they could find, from the South African racists to Ferdinand and Imelda Marcos (after they had Aquino assassinated at the airport) to Roberto "Death Squad" D'Aubuisson in El Salvador (the man who masterminded the assassination of Archbishop Romero while he was performing Mass).
Oh, and while Carter did a nice job of shooting himself in the foot, Reagan benefited in the election not only from his treasonous dealings with the Iranian hostage-takers (shades of Nixon making a deal with North Viet Nam to stall the peace talks until after the 1968 elections, promising them better terms) but through more pedestrian means such as his campaign's stealing of Carter's briefing book for the campaign's only debate, Reagan being coached for the debate by a supposedly neutral journalist (George Will, of ABC and The Washington Post), who then went on television afterwards (in the days when there were only three commercial channels) and "analysed" how successful Reagan had been in executing his "game plan" and seeming "Presidential" without either Will or ABC bothering to mention that Will had coached Reagan and designed the "game plan" in question. The "liberal bias" in the media, no doubt.
Always a joke, only looking slightly better by the dross that has followed him. (Including Bill "Third Way" Clinton and his over-£50,000,000 in post-Presidential "speaking fees" graft, and Barack Obama, drone-murderer of children in over a dozen countries and serial-summary-executioner of U.S. citizens. When Gordon-effing-Brown is the best that's held office on either side of the Atlantic since 1979, you can see how this planet is in the state it's in.)
pretzelattack DukeofMelbourne 19 Sep 2015 12:45
his stand on russia was inconsistent, and he didn't cause it to collapse. his economic programs were a failure. his foreign policy generally a disaster. he set the blueprint for the current mess.
pretzelattack semper12 19 Sep 2015 12:38a total crock. reagan let murdering thugs run rampant as long as they paid lip service to democracy, the world over from africa to central america. the ussr watched this coward put 240 marines to die in lebanon, and then cut and run, exactly the pattern he was so ready to condemn as treason in others, and was so ready to portray as showing weakness, and you think the ussr was terrified of him. he was a hollywood actor playing a role, and you bought it.
Tycho1961 19 Sep 2015 12:13No President exists in a political vacuum. While he was in office, Reagan had a large Democrat majority in the House of Representatives and a small Republican majority in the Senate. The Supreme Court was firmly liberal. Whatever his political agenda Reagan knew he had to constructively engage with people of both parties that were in opposition to him. If he didn't he would suffer the same fate as Carter, marginalized by even his own party. His greatest strength was as a negotiator. Reagan's greatest failures were when he tried to be clever and he and his advisors were found to be rather ham handed about it.
RichardNYC 19 Sep 2015 11:57The principal legacy of Ronald Reagan is the still prevalent view that corporate interests supersede individual interests.
Harry Haff 19 Sep 2015 11:45Reagan did many horrible things while in office, committed felonies and supported murderous regimes in Central America that murdered tens of thousands of people with the blessing of the US chief executive. he sold arms to Iran and despoiled the natural environment whenever possible. But given those horrendous accomplishments, he could not now get a seat at the table with the current GOP. He would be considered a RINO, that most stupid and inaccurate term, at best, and a closet liberal somewhere down the line. The current GOP is more to the right than the politicians in the South after the Civil War.
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Jul 23, 2015 | Telegraph
Russia is already in dire straits. The economy has contracted by 4.9pc over the past year and the downturn is certain to drag on as oil prices crumble after a tentative rally. Half of Russia's tax income comes from oil and gas.
Core inflation is running at 16.7pc and real incomes have fallen by 8.4pc over the past year, a far deeper cut to living standards than occurred following the Lehman crisis. This time there is no recovery in sight as Western sanctions remain in place and US shale production limits any rebound in global oil prices.
"We've seen the full impact of the crisis in the second quarter. It is now hitting light industry and manufacturing," said Dmitri Petrov from Nomura.
"Russia is going to be in a very difficult fiscal situation by 2017," said Lubomir Mitov from Unicredit. "By the end of next year there won't be any money left in the oil reserve fund and there is a humongous deficit in the pension fund. They are running a budget deficit of 3.7pc of GDP but without developed capital markets Russia can't really afford to run a deficit at all."
A report by the Higher School of Economics in Moscow warned that a quarter of Russia's 83 regions are effectively in default as they struggle to cope with salary increases and welfare costs dumped on them by President Vladimir Putin before his election in 2012. "The regions in the far east are basically bankrupt," said Mr Mitov.
Russian companies have to refinance $86bn in foreign currency debt in the second half of this year. They cannot easily roll this over since the country is still cut off from global capital markets, so they must rely on swap funding from the central bank.
Dave Hanson
For once, Flimflambrose paints a fairly accurate picture. His formula is to take a few facts and stretch them to their illogical conclusion to create a story that sells subscriptions to the Telegraph. Sort of like the National Enquirer. He does that well. He only mentions the other side of the story in a sentence or two, usually at the end of his column. The scary headline at the top comes true perhaps one in a thousand times, just enough to keep readers from totally dismissing him as a fruitcake. Not yellow journalism. Clever journalism.
steph borne •
jezzam steph borne •a day ago
''Under Putin Russia has progressed from a respectable rank 60 on the transparency international corruption index to an appalling rank 140. It is now one of the most corrupt countries in the world, entirely due to Putin.'' http://www.theguardian.com/wor...
.
jezzam is using the Corruption Perceptions Index as fact?
but it is ''Perceptions''???
''The CPI measures perception of corruption due to the difficulty of measuring absolute levels of corruption.[8]'' Wiki
Just more nonsense from Jezzamsoton
my wife is russian, she speak's to her mother on the phone every day, from what she tell's me nothing has changed economically for the "average joe" no doubt some of the abramovich types have seen the value of their properties plunge
Rosbif2
So if Russia is financially sinking below the waves, how come AEP in other articles claimed that Russia could buy themselves into Greece and menace Europe?
It seems like Greece & Russia are two drowning men who would grab onto each other & drown even faster
AEP seems to lack "joined up thinking" in his articlesgiltedged
This man "forecasted" Russia's demise last year. He has to show that that forecast is still liable to happen
What Colby said is palpably true. That is why we don't hear real news and instead we are bombarded with news about their "celebs"
Real news to show that a new world economy is being built totally outside the control of US Neocons and Globalists, that the world is now multi-polar, that for example this journalist's capital city, London, now has officially a majority of the population not merely non-British in origin, but non-European, that his own country survives because of London property sales
Richard N
And isn't AEP rubbing his hands with glee at this supposedly desperate situation of Russia!
Colby, the ex-boss of the CIA, said in retirement that there is no journalist of consequence or influence in the Western media that the CIA 'does not own'.
I often find myself remembering that, when I read Ambrose pumping out the US neocon / CIA propaganda standard lines about 'Russian aggression' in Ukraine, and so on - choosing to ignore the fact that Russia's action in Crimea was in direct response and reaction to the US Neocons' coup in Ukraine, which overthrew an elected government in a sovereign state, to replace it with the current US puppet regime in Kiev.
Of course, this collapse of oil and gas prices are no accident at all - but are part of America's full-scale economic war against Russia, aiming to get Putin overthrown, and replaced by someone controlled by the US Globalists, leaving then
China as the only major power centre in the world outside the Globalists' control.Richard N > jezzam • a day ago
If you bothered to read what I wrote carefully, you would see that, with reference to journalists, I was simply repeating what ex-head of the CIA Mr. Colby said.
He should know. And certainly, Western media coverage of the Ukraine crisis demonstrated to many millions of people in the West that major Western media is almost all controlled by the US neocons. Anyone with half a brain can see that - but clearly not you.
steph borne
''Russian bear will roar once more, says World Bank''
01 Jun 2015
''Russia economy forecast to grow by 0.7pc next year, reversing negative growth
forecast''steph borne > TheBoggart
Do you understand what a trade surplus is?
Russia recorded a trade surplus of 15309 USD Million in May of 2015 http://www.tradingeconomics.co...
Halou > steph borne
Carried on to the absurd extreme at which all the dollars are held outside of America, the US simply prints more money thus devaluing it's currency and favoring exports (which are then cheaper to produce and cheaper buy) people giving their currency to the US in return for goods and services and restoring economic balance.
I can understand that Russia doesn't have much experience with the 'boom and bust' cycles of market economies. They've had less than 20 years experience at it.
Did you know that in the 19th century China's trade surplus with Europe was so vast that Europe almost went bankrupt and ran out of precious metals buying Chinese goods, surely by your thinking it was truly a golden age of eastern supremacy, western failure. Ask any Chinese person what the 19th century means to them, you might be surprised.
steph borne > Halou
Shame you can't provide a link or two to back up your thoughts on trade surpluses.. altho I know amongst bankrupt countries they tell you that money/assets leaving the country is a good thing....
Strange that the Germans don't agree --
''Germany recorded a trade surplus of 19600 EUR Million in May of 2015. Balance ...reaching an all time high of 23468.80 EUR Million in July of 2014...'' http://www.tradingeconomics.co...
Obviously another country heading for financial self-destruction
steph borne
02 Oct 2014 http://www.telegraph.co.uk/new... 02 Oct 2014
Russias-economy-is-being-hit-hard-by-sanctions.html01 Sept 2014 http://www.telegraph.co.uk/new... 01 Sept 2014 Cameron-we-will-permanently-damage-Russias-economy.html
cameron says.??? Aha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha
ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha
ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha
ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha29 Dec 2014 http://www.telegraph.co.uk/fin... 29 Dec 2014 /Recession-looms-for-Russia-as-economy-shrinks-for-first-time-since-2009.html
24 Nov 2014 http://www.telegraph.co.uk/fin... 24 Nov 2014 Russia-faces-recession-as-oil-crash-and-sanctions-cost-economy-90bn.html
22 Dec 2014 http://www.telegraph.co.uk/fin... 22 Dec 2014 Russia-starts-bailing-out-banks-as-economy-faces-full-blown-economic-crisis.html
http://www.telegraph.co.uk/fin... 29 Apr 2015
Ukraines-conflict-with-Russia-leaves-economy-in-ruins.htm
.
Still going!!!Graham Milne
Russia has physical assets (oil, minerals and so on); we don't. It is the UK which is toast, not Russia.
billsimpson > Graham Milne
Russia is way too big & resource rich to ever be total toast. And the people are educated, even if they do drink a lot. But they could get a bit hungry in another economic collapse. All the nukes they have is the real problem. Those need to be kept secure, should another revolution occur, or the country break apart after an economic collapse.
The US & Canada would never sit back and watch the UK melt down. Witness the Five Eyes communal global spying system.
Electrify all the rail system that you can, so people can still get around on less oil. Some oil is essential for growing and transporting food.Sal20111
Russia can't just blame it on sanctions, or price wars in oil and gas. They have not reinvested the proceeds of their prodigous fossil fuel sales smartly and neither have they diversified quickly enough - the gas sales to China was an afterthought after Ukraine.
Putin cracked down on some of the oligarchs but not all - national wealth has clearly been sucked out by a few. Nepotism and favouritism seem to be rife. They should have learnt the lesson from their communist history not to concentrate power in state contriolled organisations. Not sure whether there is much of a small to medium business culture.
With the amount of natural resources it has, and a well educated public, particularly in math and technical skills, Russia should be doing much better.
rob22
Russia is not interested in invading anyone. The US has tried to force Russia to invade Ukraine in an iraq style trap but it didn't work. So they had to invent an invasion, the first in living memory without a single satellite, video or photo image of any air campaign, heavy armour, uniformed soldiers, testimony from friends & family of servicemen they could pay to get a statement, not even a mobile photo of a Russian sitting on a tank.
Russia is too busy building up an independent agriculture and import substitution, not to mention creating economic and trade links with its Eurasian neighbours like China & India via the silk road, BRICS, Eurasian Ecconomic Union and the Shanghai Cooperation Organisation.
A total nightmare for the US which once hoped to divide & dominate the region (see new American century doc)
Putin enjoys about 85% approval ratings (independent foreign stats) because it knows to surrender to the US means a return to the 90`s where the nations oil revenue went to wall st and everything else
If things get bad they`ll just devalue the ruble, get paid in dollars and spend in rubles.
This is why most Russians are willing to dig in and play the long game.
Londonmaxwell
Over the top with Ambrose, as usual. Words like "depression", "crisis", "plummet", and "shrivels"; and these only in the first two paragraphs! Moscow looks absolutely normal to me: traffic jams, packed malls and restaurants, crowded airports and train stations. Unemployment is low, inflation is tolerable.
Ambrose misses some key points.
- First, if Gazprom's revenues fell from $146bn to $106bn, then this implies (drumroll) a revenue increase from RUB 5.1 trillion to RUB 5.8 trillion. Since Gazprom/Lukoil/Rosneft et al have USD revenues but RUB expenses, they are all doing quite nicely, as is the Russian treasury.
- Second, while Russian companies do have foreign debt to pay back, I suspect much of this "debt" is owed to (drumroll) Russian-controlled companies in BVI, Cyprus, Luxie, Swissie, and the other usual suspects. Third, if the oil price declines more in 2015, the Kremlin will simply let the ruble slide, and the biggest losers will again be (drumroll) European exporters.
Russia's present situation is not glorious, but it is not as precarious as Ambrose portrays it to be. Be wary of writing off Russia. The great game is just beginning.
energman58 > Londonmaxwell
Except that the slack has to be taken up by inflation and declining living standards - Russia isn't unique; in Zimbabwe dollar terms almost every company there did splendidly but the place is still bust. The problem is that most of the debt is USD denominated and without the investment blocked by sanctions they are looking at a declining production, low oil prices and an increasing debt service burden. Presumably they could revert to the traditional model of starving the peasants that has served them so well in the past but I am not sure if the people with the real stroke will be quite so happy to see their assets wither away...
Londonmaxwell > energman58
Comparing Russia with Mugabeland is a stretch, but I see your point. If the sanctions stay and the oil price goes south permanently, then Moscow has problems. But I question both assumptions. Merkel/Hollande/Renzi already face huge pressure from their business leaders to resume normal relations with Russia; i.e., drop the sanctions. As for oil prices, the USA's shale sector is already in trouble. Russia's debt burden (both public and private) is manageable and can scarcely worsen since it is cut off from the credit markets. While the oil price slump certainly hurts Russia's economy, I don't see the wheels falling off anytime soon.
AEP writes well and is always thought-provoking, but his view that Russia is facing Armageddon because of oil prices and sanctions is way off the mark.
steph borne
Here come the Ukrainian Nazis.. You lot must be very happy
http://www.bbc.co.uk/iplayer/e... 18 minutes in..
Maidan number 3 on the way as I predicted a year ago.midnightrambler
Amazing how the narrative for military action is being fostered by articles such as this one.
So many people eager for something they have no intention of getting involved in themselves
snotcricket
It is rather odd the posts on this thread accusing any & all who question the obvious US gov line in such articles.
Could it be that some have better memories ie the Ukrainian crisis was in fact created by the support of the US & EU for but a few thousand sat in Independence Sq just two years after the country had voted in the target with a majority the likes of Cameron, Obama could only dream of.
Only an idiot could not have seen the Russki response to a situation that could in but a very short timescale see NATO troops & kit but a literal footstep from Russki soil....while the ports used by the Russki fleets would be lost overnight usurped no doubt by a 'NATO' fleet of US proportions.....plainly the US knew the likely outcome to the deposing of the elected leader & replaced by the EU puppets....the Russki's had little option.....Putin or no Putin this would have been the outcome.
With regard to the US led attack on the Russki economy with sanctions....well those sanctions hurt the UK too...but of course not the US (they have lobbyist for such matters) our farmers were hurting afore the sanctions....that became a damn sight worse after the imposition.
The US attempts to turn off the oil/gas taps of Putin has done damage to the Russkis, similarly its done damage to W. Europe thus ourselves as oil prices are now held at a level by the sanctions reducing world supplies (the US have lobbyists for such matters) thus the god of the US, the market is skewed & forecourt prices too sighed Osborne as the overall taxation gathers 67% of what goes through the retailers till.
This has been rumbling for over 3 years since the BRICS held their meeting to create a currency that would challenge the $ in terms of the general w.w economy but specifically oil. They did mistime the threat & should have kept their powder dry as the US economy like our own lives on borrowed time & money.....but they made the mistake the US was in such decline they couldn't respond....of course the US have the biggest of all responses to any threat....its armed forces & their technology that advances far more rapidly than any economy.
Incidentally I write this sat at my laptop in the North of England in between running my own business & contacting clients etc..........I suspect my politics would make Putin wince.....however the chronology, actions/outcomes & the general logic of the situation has now't to do with supporting one or t'other.......& do remember the US grudgingly acknowledge without the Russkis the er, er agreement with Iran & non-proliferation would still be a can yet to be kicked down the road.
Personally I'd be more worried that Putin has made fools of the US/EU leaders so many times thus wonder just what is the intent in assisting the brokering of any deal? With the West & Iran.
steph borne
If Russia was worried about the oil price they would not have been so helpful in getting the usa & Iran together on a deal which will put more downward pressure on the oil price! http://www.telegraph.co.uk/new... Barack Obama praises Putin for help clinching Iran deal
oleteo
Reading this article I saw only one message to be sent to the Russians:"Russians,surrender!" The rumours about the desease and the ongoing decease of the Russian economy are greatly exaggerated.
steph borne
June 17, 2015 at 1:44 pm Boeing said it struck a $7.4 billion deal to sell 20 of its 747-8 freighters to Russia's Volga-Dnepr Group, providing a much-needed boost to the jumbo-jet program amid flagging demand for four-engine aircraft. http://www.seattletimes.com/bu...
MOSCOW, Russia (May 26, 2015) – Bell Helicopter,
a Textron Inc. (NYSE: TXT) company, announced today an agreement with
JSC Ural Works of Civil Aviation (UWCA) for the development of final
assembly capabilities by UWCA for the Bell 407GXP in order to support
UWCA in obtaining Russian registry to facilitate their operations. http://www.bellhelicopter.com/...
.
Oh business as normal at Bell looks like sanctions only to be paid heed by the useful idiots in the EUsnotcricket > steph borne
Yes the sanctions do seem to TTIP more in the US favour than their Western, er, er partners
Sonduh
Just like Brown Osborne is reducing borrowing but encouraging consumer debt which is close to 120% GDP. By the end of next year household debt will be 172% of earnings.Once household debt reaches saturation point and they start defaulting on their debt as they did in 2008 -- Game over. I hear the Black Sea is nice this time of year.
steph borne
A report by Sberbank warned that Gazprom's revenues are likely to drop by almost a third to $106bn this year from $146bn in 2014, seriously eroding Russia's economic base.''
Last year $146 billion bought 4672 billion pybs this year $106 billion will buy 6148 Billion pybs
Gazprom alone generates a tenth of Russian GDP and a fifth of all budget revenues. the Pyb devaluation vs. $ has led to a 31% increase in revenues..Something Salmond should take notice of should the SNP want to go for independence again. Inflation at 16% may well be but its the price of imported stuff pushing up the prices.. mainly EU goods for sale .. that won't be bought!
As the merkins tell us a devalued dollar is your problem.. the devalued rouble is the EUs problem!
Nikki Santoro
What is happening is the Anglo-Muricuns are actively provoking the Chinese and Russkies into a war. However once it is all said and done, they are going to need a cover story. People are going to ask why the Russkies attacked. And then the Anglo-Muricuns are going to say that Putin put all his eggs in one basket. Yeah that is what happened but really if Putin does attack, it will be because of the endless Anglo-Muricun provocations. Just as they provoked Hilter to no end and Imperial Japan as well.
steph borne
Russian companies have to refinance $86bn....''
So what are you going to do if they default.. go in and repossess..You and who's army? They are struggling trying to get Greece to comply..
Russia's trade surplus is still in the Billions of Dollars while the usa's & UKs is mired in deficit.. Russia recorded a trade surplus of 17.142 USD Billion in May of 2015 http://www.tradingeconomics.co....
Debt public/ external debt ratios
U. K..................92%........317%
usa...................74%......... 98%
And
Russia...............8%..........40%''And while UK growth could reach 3pc this year, our expansion is far too reliant on rising personal and government debt. ''
''The UK, with an external deficit now equal to 6pc of GDP, the second-largest in half a century,''
http://www.telegraph.co.uk/fin...
As ever the west points to Russia and says Look over there (for God's sake don't look here!)Sonduh > steph borne
And don't forget all their gold reserves. And all their natural resources.
Skalla
Prosperous countries are usually benevolent (the US being the exception to the rule). Hungry countries get to be greedy and aggressive. The US with its economic and financial manipulations will turn a sleepy bear into a very awake and ravenous one, and after hibernation, the first thing bears do is FEED --
vandieman
A cynic could say that the US is driving the oil prices down to push Russia into a war.
Anth2305 > vandieman
Wait until Iranian oil comes fully on stream, which I heard some pundit on TV say could drive the cost down to < $30 a barrel, forcing the Saudis into having to eat massively into their foreign reserves.
gardiner
When the old USSR 'collapsed', what we call the 'Oligarchs' ( a collection of the most highly influential State officials who pocketed practically all the old State assets) corruption was at the very highest level, and society was at its weakest.
The economy became dependant on resource exports.
Because the country's capital was so concentrated, there was practically no 'middle class' of entrepreneurs who could invest capital in job creating, internationally competitive industry.
Although a lot further down this road than the UK - the warning is stark!beatonthedonis > gardiner
Abramovich wasn't a state official, he was a rubber-duck salesman. Berezovsky wasn't a state official, he was an academic. Khodorkovsky wasn't a state official, he was a PC importer. Gusinsky wasn't a state official, he was an unlicensed cab driver. Smolensky wasn't a state official, he was a blackmarketeer. Fridman wasn't a state official, he was a ticket tout.
daddyseanicus
So the political sanctions are bankrupting Russia because they dared to challenge EU expansion. Result millions of poor Russians will start to flow West and the UK will have another flood of Eastern Europeans.
But at least we showed them our politicians are tough.
Busufi > Jonathan
In the East there is a saying: Why use poison when sugar delivers the same result. Or say as Deng said, It doesn't matter whether the Cat is black or white, so long it catches the mice.
Spelling it out for Russia (or Britain) that would mean giving up Byzantine based ambitions and prospering through alliances with the Muslim Nation or Countries, including Turkey. In the short term such a move would quell internal dissent of the 11m immigrants in Russia, reduce unsustainable security expenditure with its central Asian neighbours, open and expand market for Russian goods in the Middle East, Far East and North Africa, and eventually form and provide a military-commercial -political alliance (like NATO) for the Muslim nations with Russia (with partner strength based upon what is mostly commercial placed on the table (see the gist in the Vienna Agreement between P5+1 and Iran).
The formation of such an alliance would trump Russia's (or Britain's) opponents ambitions and bring prosperity.
Sonduh" They are running a budget deficit of 3.7pc of GDP but without developed capital markets Russia can't really afford to run a deficit at all."
We are able to have a budget deficit of 4.8% and 90% national debt, 115% non financial corporate debt , 200% financial corporate debt and 120% household debt due to voodoo economics ie. countries can print money to buy your debt.PS we also have unfunded liabilities like pensions which amounts to many hundred pc of GDP.
The results showed the extraordinary sums that Britain has committed to pay its future retirees. In total, the UK is committed to paying £7.1 trillion in pensions to people who are currently either already retired or still in the workforce.This is equivalent to nearly five times the UK's total economic output. Such a figure may be hard to put into proportion, as a trillion – a thousand billion – is obviously a huge number.
And we think Russia is in a bad state.
georgesilver
Propaganda. Laughable coming from the UK hack when the UK has un-payable debt and Russia has little external debt plus we have no Gold and Russia has probably 20,000 tonnes. NATO surrounds Russia yet they are the aggressors.
Laughable but idiots still believe the propaganda.
tarentius > georgesilver
The entire world combined has 32,000 tonnes of gold reserves. Russia has 1,200 tonnes.
Russia has government debt of 18% to GDP, a contracting GDP. It is forced to pay interest of 15% on any newly issued bonds, and that's rising. And it has a refinancing crisis on existing debt on the horizon.
Russia's regions are heavily in debt and about 25% of them are already bankrupt. The number is rising.
And we haven't even gotten into the problem with Russian business loans.
Turn out the lights, the party's over for Russia.
Bendu Be Praised > mrsgkhan •
The issue is the medias portrayal of Putin .. If the UK media was straight up with the people and just said .. "our friends in the US hate the Russians .. The Russians are growing too big and scary therefore we are going to join in destroying the Russian economy before they become uncatchable " the people would back them ..
Lets be honest .. The Russians don't do anything that we don't .. Apart from stand up to the US that is
Jim0341
Yesterday, AEP spread the gloom about China, today it is Russia. As ever, he uses quotes from leading figures in banks and finance houses, which are generally bemoaning low returns on investments, rather than the wellbeing, or otherwise, of the national economy..
Whose turn is it tomorrow, AEP? My bet is Taiwan.Bendu Be Praised > FreddieTCapitalist
I think you will find that the UK are just pretending the sanctions and wars are not hurting us ..
Just look at the budget .. 40% cuts to public services .. America tried to destroy the Russian economy by flooding the market with cheap oil but it will come back to bite them ..
The UK should just back off .. lift sanctions against Russia and let the US squabble with them by themselves ..
I sick of paying taxes for the US governments "War on the terror and the rest of the world"
alec bell
This article makes no sense. First of all, there is no way that Gazprom is responsible for 1/10th of Russia's GDP. That is mathematically impossible. 1/20th is more like it. Second, if push comes to shove, Russians are perfectly capable of developing their own vitally-important technologies. Drilling holes in the ground cannot be more complicated than conquering space.
Whatever problems Russia has, engineering impotence is not one of them.
And third, if Russians' reliance on resourses' exports has led to "the atrophy of their industry" as AEP rightly points out, then it must logically follow that disappearance of that revenue will inevitably result in their industrial and agricultural renaissance.
In the end, Ambrose is too ideological to be credible on the issue. Sure, Russia has couple lean years ahead, but it will come out of this ordeal stronger, not weaker. There are already reports of mini boomlets gathering steam under the surface.
alec bell > vlad
vlad, JFYI: According to research conducted by the World Economic Forum (which excludes China and India due to lack of data), Russia leads the way, producing an annual total of 454,000 graduates in engineering, manufacturing and construction. The United States is in second position with 237,826 while Iran rounds off the top three with 233,695. Developing economies including Indonesia and Vietnam have also made it into the top 10, producing 140,000 and 100,000 engineering graduates each year respectively.
Nikki Santoro
Don't mess with the Anglo-Muricuns. They will jack you up bad. Unless you are thousands of miles away and posting anonymously. But even still they can lens you out and cleanse you out should you take it too far. However their dominance is not some much because of their brilliance. They don't have any despite their propaganda. But rather the depths they are willing to stoop to in order to secure victory. Like blowing up an airliner and then pinning it on you for instance. Or poisoning their own farmland.
steve_from_virginia
Futures' traders got burned earlier this year betting that oil prices would rise right back to where they were a year previously. Now they have 'gotten smart'. They know now the problem isn't Saudi Arabia but billions of bankrupt consumers the world around.
Customers are bankrupt b/c of QE and other easing which shifts purchasing power claims from customers to drillers -- and to the banks. As the customers go broke so do the banks: instead of gas lines there are ATM lines.
At the same time, ongoing 'success' at resource stripping is cannibalizing the purchasing power faster than ever before. Soon enough, the claims will be worthless! When the resource capital is inaccessible, so is the purchasing power -- which is the ability to obtain that resource capital.
Business has caught itself in the net of its own propaganda; that there is such a thing as material progress out of waste ... that a better future will arrive the day after tomorrow.
Turns out tomorrow arrives and things get worse. Who could have thunk it?
Brabantian
If AEP is as right about Russia as he was about the Yank shale gas 'boom' - now collapsing into a pile of toxic bad debt -
Then our Russian friends have nothing to worry about
midnightrambler > Guest
The largest military spend - the US - bigger than the next 20 countries combined
The most bases - the US with 800, including many in Germany
Nobody wants war - but the US needs it as their largest industry is defence - apart from manipulative banking.
We are heading for a point of rupture between those who are peaceful and those whose main aim is control and conflict.
Take your pick
A few leaders choose war - most people (who will fight those wars) choose peace.
And of course all wars are bankers' wars - it is only they who profitTimothy D. Naegele
Both Putin and Russia are in a spiral, from which they will not recover.
See https://naegeleblog.wordpress.... ("Putin Meets Economic Collapse With Purges, Broken Promises")
Tony Cocks > Timothy D. Naegele
"Both Putin and Russia are in a spiral, from which they will not recover."
This from someone whose former President and gang of criminal henchmen lied to the world on a monumental scale about WMD in Iraq , and waged an illegal war on that country killing hundreds of thousands in the process . Following that it was Libyas turn , then Syrias . Now its Russia the US neo con warmongers are hounding, the difference being that Russia holds the worlds biggest nuclear arsenal.
The US forces had their kicked out of Vietnam and were thoroughly beaten despite throwing everything they had at the conflict save the nuclear option.
Imagine what will happen if it eventually comes to armed conflict with Russia.midnightrambler > Timothy D. Naegele
A yank lawyer advocating killing.
From the land of citizen killers
What a surprise
Stay awaystephenmarchant
Instead of demonising Putin and banging on about the problems of the Russian economy the MSM should be worried about indebted Western economies including the UK and US. Russian Govt finances are not burdened with nearly £2trn of debt that has funded unsustainable nominal growth. Here in the UK the real GDP growth per capita is declining at over 3% per anum so as a nation the UK is continuing its decline:-
Govt deficit at 5% per anum
Govt debt at about 80% GDP
Private debt and corporate debt each of a similar order
Record current account deficit of about 5% per anum
A deteriorating NIIP (Net International Investment Position)
Uncontrolled immigrationOur whole debt based fiat system is on the brink but few can see it whilst they party with asset and property bubbles. A few of us foresaw the first crash of 2007/8 but we now face a systemic collapse of our fiat system because of the resulting 'extend and pretend' policy of Govts and central bankers.
In the final analysis the true prosperity of a nation will depend upon its natural resources, infrastructure, skills of its workforce and social cohesion.
Graham Milne > JabbaTheCat
The scale of Russian kleptocracy pales into vanishing insignificance beside the criminality of western banks (and the government who 'regulate' them). Europe and the USA are regimes run by criminals; worse than that, they are run by traitors. At least Putin isn't a traitor to his country.
Busufi
The best way for Russia to beat the downturn in it's oil and gas is to invest in down-stream strategic production of petroleum products that would give Russia a competitive advantage on a global scale.
Selling raw natural resources is the Third World way of exports. Not smart.
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Dec 30, 2015 | Economist's View
Sandwichman, December 30, 2015 at 10:06 AM"Graduate students of economics learn, early in their careers, that markets allocations are Pareto Optimal."What they don't learn is that
1. the ideal markets that would produce Pareto Optimal allocations don't actually exist and
2. moving from actually existing non-ideal markets to ideal markets WOULD NOT BE Pareto Optimal even if it was possible to do so, which it isn't.
In short, Pareto Optimality is a just so story that has absolutely no bearing on the real world other than as an ideological justification for tons of bullshit.
The next step in graduate students' indoctrination is to teach them that although Pareto Optimal reallocations are implausible, you can get around that with a "principle of compensation." The principle, too is based on a same yardstick fallacy. But never mind the Pareto Optimality smokescreen and the compensation smokescreen have constrained economists to think in terms of doing what is best for the wealthiest. Funny how that happens.
anne said in reply to Sandwichman
Pareto Optimality is a just so story that has absolutely no bearing on the real world other than as an ideological justification for tons of bull----.[ Agreed completely and I think this an important conclusion. ]
Paine said in reply to anne
YesSandy gets the guts of it
Though
The compensation principle is precisely what Pareto rule is all about
Yes we can scramble the goods all we want so long as in the end everyone is at least as well off as before the scramble
In a pure exchange model this is less exciting then in a one period production model
Going on to an inter temporal model with an infinite horizon gets into real juicy Wonderlands
The academy makes it's living as much by distracting fine minds as training them
anne said in reply to Sandwichman
The next step in graduate students' indoctrination is to teach them that although Pareto Optimal reallocations are implausible, you can get around that with a "principle of compensation." The principle, too is based on a same yardstick fallacy. But never mind the Pareto Optimality smokescreen and the compensation smokescreen have constrained economists to think in terms of doing what is best for the wealthiest....anne said in reply to Sandwichman...December 29, 2015
Richest in U.S. Shape Private Tax System to Save Billions
By NOAM SCHEIBER and PATRICIA COHENThe very wealthiest families are able to quietly shape tax policy that will allow them to shield millions, if not billions, of their income using maneuvers available only to several thousand Americans.
Supposing I understand the essay, Roger Farmer is just writing the logical justification to Herbert Spencer's (never Charles Darwin's) "survival of the fittest" rationale that Spencer made wildly popular after Darwin published "On the Origin of Species."
Spencer was the successful ultimate justifier of British "sun-never-setting-on-the-Empire" capitalism. Spencer sold a biological justification, Farmer is selling a logical justification of Empire.
Sandwichman said in reply to anne
No, I think Farmer is dissing Pareto Optimality and using "sunspots" as sarcasm. He seems to do it in a way that opens up space for countless side arguments that leave Pareto Optimality unscathed.The bottom line is that NO ONE would have ever paid any attention to the not just "weak" but nonsensical concept if it didn't serve the function of justifying and ultimately glorifying great inequalities of wealth and income.
;anne said in reply to Sandwichman
I understand the argument and I am entirely right:Roger Farmer is just writing the logical justification to Herbert Spencer's (never Charles Darwin's) "survival of the fittest" rationale that Spencer made wildly popular after Darwin published "On the Origin of Species."
Spencer was the successful ultimate justifier of British "sun-never-setting-on-the-Empire" capitalism. Spencer sold a biological justification, Farmer is selling a logical justification of Empire capitalism.
anne said in reply to Sandwichman
I needed to be sure the argument was as empty morally as I supposed initially, but I supposed correctly. The Roger Farmer essay is an amoral logical justification of imperial capitalism. Plato's "Republic" conceived amorally. ;anne said in reply to Sandwichman
A mean little essay, carefully subtle and mean.Paine said in reply to anne
But Anne as sandy points out Roger blows up the use of Pareto by his future generations argumentThose unable to establish their preferences are unaccounted for in the scrum
He uses this to draw a bold distinction between securities markets and fish catch of the day markets
Paine said in reply to Paine
It's not the way I'd make his pointBut his distinction is important
Some are impacted that are not participating
Third party effects that can not be resolved even with repeated " games "
Because the players are not yet presentanne said in reply to Sandwichman
Farmer is dissing Pareto Optimality and using "sunspots" as sarcasm. He seems to do it in a way that opens up space for countless side arguments that leave Pareto Optimality unscathed.The bottom line is that NO ONE would have ever paid any attention to the not just "weak" but nonsensical concept if it didn't serve the function of justifying and ultimately glorifying great inequalities of wealth and income.
[ Agreed completely, but this argument runs with mine. ]
anne said in reply to Sandwichman
Farmer is dissing Pareto Optimality and using "sunspots" as sarcasm. He seems to do it in a way that opens up space for countless side arguments that leave Pareto Optimality unscathed....[ The issue is that Roger Farmer leaves Pareto Optimality unscathed, and this is an essential point. The essay is beyond the morality of now, but there is no beyond. ]
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Dec 30, 2015 | Economist's View
Sandwichman, December 30, 2015 at 10:06 AM"Graduate students of economics learn, early in their careers, that markets allocations are Pareto Optimal."What they don't learn is that
1. the ideal markets that would produce Pareto Optimal allocations don't actually exist and
2. moving from actually existing non-ideal markets to ideal markets WOULD NOT BE Pareto Optimal even if it was possible to do so, which it isn't.
In short, Pareto Optimality is a just so story that has absolutely no bearing on the real world other than as an ideological justification for tons of bullshit.
The next step in graduate students' indoctrination is to teach them that although Pareto Optimal reallocations are implausible, you can get around that with a "principle of compensation." The principle, too is based on a same yardstick fallacy. But never mind the Pareto Optimality smokescreen and the compensation smokescreen have constrained economists to think in terms of doing what is best for the wealthiest. Funny how that happens.
anne said in reply to Sandwichman
Pareto Optimality is a just so story that has absolutely no bearing on the real world other than as an ideological justification for tons of bull----.[ Agreed completely and I think this an important conclusion. ]
Paine said in reply to anne
YesSandy gets the guts of it
Though
The compensation principle is precisely what Pareto rule is all about
Yes we can scramble the goods all we want so long as in the end everyone is at least as well off as before the scramble
In a pure exchange model this is less exciting then in a one period production model
Going on to an inter temporal model with an infinite horizon gets into real juicy Wonderlands
The academy makes it's living as much by distracting fine minds as training them
anne said in reply to Sandwichman
The next step in graduate students' indoctrination is to teach them that although Pareto Optimal reallocations are implausible, you can get around that with a "principle of compensation." The principle, too is based on a same yardstick fallacy. But never mind the Pareto Optimality smokescreen and the compensation smokescreen have constrained economists to think in terms of doing what is best for the wealthiest....anne said in reply to Sandwichman...December 29, 2015
Richest in U.S. Shape Private Tax System to Save Billions
By NOAM SCHEIBER and PATRICIA COHENThe very wealthiest families are able to quietly shape tax policy that will allow them to shield millions, if not billions, of their income using maneuvers available only to several thousand Americans.
Supposing I understand the essay, Roger Farmer is just writing the logical justification to Herbert Spencer's (never Charles Darwin's) "survival of the fittest" rationale that Spencer made wildly popular after Darwin published "On the Origin of Species."
Spencer was the successful ultimate justifier of British "sun-never-setting-on-the-Empire" capitalism. Spencer sold a biological justification, Farmer is selling a logical justification of Empire.
Sandwichman said in reply to anne
No, I think Farmer is dissing Pareto Optimality and using "sunspots" as sarcasm. He seems to do it in a way that opens up space for countless side arguments that leave Pareto Optimality unscathed.The bottom line is that NO ONE would have ever paid any attention to the not just "weak" but nonsensical concept if it didn't serve the function of justifying and ultimately glorifying great inequalities of wealth and income.
;anne said in reply to Sandwichman
I understand the argument and I am entirely right:Roger Farmer is just writing the logical justification to Herbert Spencer's (never Charles Darwin's) "survival of the fittest" rationale that Spencer made wildly popular after Darwin published "On the Origin of Species."
Spencer was the successful ultimate justifier of British "sun-never-setting-on-the-Empire" capitalism. Spencer sold a biological justification, Farmer is selling a logical justification of Empire capitalism.
anne said in reply to Sandwichman
I needed to be sure the argument was as empty morally as I supposed initially, but I supposed correctly. The Roger Farmer essay is an amoral logical justification of imperial capitalism. Plato's "Republic" conceived amorally. ;anne said in reply to Sandwichman
A mean little essay, carefully subtle and mean.Paine said in reply to anne
But Anne as sandy points out Roger blows up the use of Pareto by his future generations argumentThose unable to establish their preferences are unaccounted for in the scrum
He uses this to draw a bold distinction between securities markets and fish catch of the day markets
Paine said in reply to Paine
It's not the way I'd make his pointBut his distinction is important
Some are impacted that are not participating
Third party effects that can not be resolved even with repeated " games "
Because the players are not yet presentanne said in reply to Sandwichman
Farmer is dissing Pareto Optimality and using "sunspots" as sarcasm. He seems to do it in a way that opens up space for countless side arguments that leave Pareto Optimality unscathed.The bottom line is that NO ONE would have ever paid any attention to the not just "weak" but nonsensical concept if it didn't serve the function of justifying and ultimately glorifying great inequalities of wealth and income.
[ Agreed completely, but this argument runs with mine. ]
anne said in reply to Sandwichman
Farmer is dissing Pareto Optimality and using "sunspots" as sarcasm. He seems to do it in a way that opens up space for countless side arguments that leave Pareto Optimality unscathed....[ The issue is that Roger Farmer leaves Pareto Optimality unscathed, and this is an essential point. The essay is beyond the morality of now, but there is no beyond. ]
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www.theguardian.com
The IMF managing director, Christine Lagarde, said the prospect of rising interest rates in the US and an economic slowdown in China were feeding uncertainty and a higher risk of economic vulnerability worldwide.
Added to that, growth in global trade has slowed considerably and a decline in raw material prices was posing problems for economies reliant on commodities, while many countries still had weak financial sectors as the financial risks increase in emerging markets, she said.
"All of that means global growth will be disappointing and uneven in 2016," Lagarde said, noting that mid-term prospects had also weakened as low productivity, ageing populations and the effects of the global financial crisis dampened growth. In October, the IMF forecast that the world economy would grow by 3.6% in 2016.
... ... ....
Emerging market companies with debt in dollars and revenue in sinking local currencies could struggle as the Fed begins what is expected to be a series of interest rate increases.
Lagarde warned that rising US interest rates and a stronger dollar could lead to companies defaulting on their payments and that this could "infect" banks and states.
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Dec 29, 2015 | Economist's View
'The Fed and Financial Reform – Reflections on Sen. Sanders op-Ed'
This is the beginning of a long response from Larry Summers to an op-ed by Bernie Sanders:JohnH said...The Fed and Financial Reform – Reflections on Sen. Sanders op-Ed : Bernie Sanders had an op Ed in the New York Times on Fed reform last week that provides an opportunity to reflect on the Fed and financial reform more generally. I think that Sanders is right in his central point that financial policy is overly influenced by financial interests to its detriment and that it is essential that this be repaired.At the same time, reform requires careful reflection if it is not to be counterproductive. And it is important in approaching issues of reform not to give ammunition to right wing critics of the Fed who would deny it the capacity to engage in the kind of crisis responses that have judged in their totality been successful in responding to the financial crisis.
The most important policy priority with respect to the Fed is protecting it from stone age monetary ideas like a return to the gold standard, or turning policymaking over to a formula, or removing the dual mandate commanding the Fed to worry about unemployment as well as inflation. ...
Disagree!!! There is more to this than just interest rates. There is the matter of how the policy gets implemented--who gets low rates. Currently the low rates serve mostly the 1%, who profit enormously from them. Case in point: Mort Zuckerberg's 1% mortgage!JohnH said in reply to JohnH..."The obvious candidate for this dark force [correlation between (rising) inequality and (low) growth] is crony capitalism. When a country succumbs to cronyism, friends of the rulers are able to appropriate large amounts of wealth for themselves -- for example, by being awarded government-protected monopolies over certain markets, as in Russia after the fall of communism. That will obviously lead to inequality of income and wealth. It will also make the economy inefficient, since money is flowing to unproductive cronies. Cronyism may also reduce growth by allowing the wealthy to exert greater influence on political policy, creating inefficient subsidies for themselves and unfair penalties for their rivals."
http://www.bloombergview.com/articles/2015-12-24/cronyism-causes-the-worst-kind-of-inequality
As we know (although most here steadfastly ignore it) the Fed is rife with crony capitalism. As Bernie pointed out, 4 of the regional governors are from Goldman Sachs. Other examples are abundant. Quite simply, the system is rigged to benefit the few, minimizing any potential trickle down.
If a broad economic recovery is the goal, ending cronyism at the Fed is likely to be far more effective that low interest rates channeled only to the 1%.
Stiglitz:Peter K. said in reply to JohnH...The real problem is that money does not go to where it should go, as we see for example in the United States. The money does not flow into the real economy, because the transmission mechanism is broken. That is why we have a bubble in the financial system. The answer is not to tighten monetary policy, but to reform monetary policy so as to ensure that the money gets to the right place...
Small and medium enterprises cannot borrow money at zero interest rates - not even a private person, I wish I could do that (laughs). I'm more worried about the loan interest rates, which are still too high. Access for small and medium enterprises to credit is too expensive. That's why it is so important that the transmission mechanism work..."
http://www.cash.ch/news/alle/stiglitz-billiggeld-lost-kein-problem-3393853-448And let's not forget consumer credit rates, which barely dropped during the Great Recession and are still well above 10%. Even mortgage lending, which primarily benefits the affluent, have been stagnant for years despite historically low rates.
As Stiglitz notes, the transmission mechanisms are broken. Economists' trickle down monetary policy might work in theory, but not in practice, as we have seen for the last seven years, when low rates don't trickle down and were wasted instead on asset speculation by the 1%.
Reform of the Fed, and the end of cronyism are essential to making sure that the stimulus of low rates gets to Main Street, to ordinary people, and not primarily to asset speculators.
EMichael said in reply to Peter K....Bernie Sanders:
"The recent decision by the Fed to raise interest rates is the latest example of the rigged economic system. Big bankers and their supporters in Congress have been telling us for years that runaway inflation is just around the corner. They have been dead wrong each time. Raising interest rates now is a disaster for small business owners who need loans to hire more workers and Americans who need more jobs and higher wages. As a rule, the Fed should not raise interest rates until unemployment is lower than 4 percent. Raising rates must be done only as a last resort - not to fight phantom inflation. "
http://www.nytimes.com/2015/12/23/opinion/bernie-sanders-to-rein-in-wall-street-fix-the-fed.html
JF said...It is hilarious.
"He's right! But his policies are wrong!"
You couldn't make this up......
The financial system reform legislation in 2017 will also need to include these matters:BillB said...1. Licensure fees and higher and more differential income taxation rates based on the type of financial trading ratios the entities have (in order to direct more emphasis to real-economy lending and away from speculative and leveraged positions used in the financial asset trading marketplaces, so hedge funds probably would face the highest rates in income taxation). For a certain period after enactment these added taxes would be payable by the banks using their excess reserves, which will simply be eliminated until the reserve accounts return to the historically normal period when excess reserves were very small (there would no longer be a need for IOER, as the excess would be eliminated by operation of the taxation statutes). Attaching added ways & means statutes to all the financial service entities also serves to 'cover' some more of huge financial risk held by society and produced by them while the success of this huge sector actually contributes to the financing of self-government - which is also an indirect way to attach high Net Worth being used).
2. New statutory provisions need to reach any and all entities in the financial community regardless of definitions based on the functions they serve or provide (or the way they are named - so yes, the prior separation for deposit-management banking from investing activities can still happen, but this only helps to define which of the differential provisions apply, not help the entity escape them). Perhaps as a result Bank Holding Companies and other large entities won't use a complex network of hundreds of subsidiaries as these would not then serve as a way to avoid taxation, regulatory standards on what are prudent expectations, or supervision; or be used simply to obfuscate -- so investors and regulators can't see the truth of matters.
3. The newly named central bank needs to hold the discretion to buy Treasury bonds directly from the Treasury. This would discipline these fundamental asset-trading marketplaces and the huge primary dealer group of entities, and weaken the fox-and-hen-house influence on public finance.
4. New accounting approaches for the central bank would clarify what happens should the Congress direct redemption amounts or asset sales for the public's purposes. A good portion of the current FRB's book of owned assets can be redeemed or sold without affecting the 'power' of the central bank, and the proceeds used then, for example, to lower payroll taxes via a direct transfer to the social security trust fund's set of accounts).
Senator Sanders, good stuff. Bring out the vote, let us get others in Congress with whom you can work.
Summers: "The most important policy priority with respect to the Fed is protecting it from stone age monetary ideas like a return to the gold standard, or turning policymaking over to a formula, or removing the dual mandate commanding the Fed to worry about unemployment as well as inflation."pgl said in reply to pgl...And in one sentence Summers illustrates exactly why we dodged a bullet in not appointing Summers to be Fed Chair. Preserving the power of the Fed is not the most important policy. Changing the Fed composition so that it is more consumer friendly and not dominated by Wall Street interests is the most important policy change needed.
Summers argument is the same we always hear from so-called "centrists." "You hippies should shut up because you are helping the opposition."
You hear the same sort of argument with respect to Black Lives Matter.
On financial regulation - Summers is spot on here:
"the Balkanized character of US banking regulation is indefensible and would be ended. The worst regulatory idea of the 20th century-the dual banking system-persists into the 21st. The idea is that we have two systems one regulated by the States and the Fed and the other regulated by the OCC so banks have choice. With ambitious regulators eager to expand their reach, the inevitable result is a race to the bottom."
It is called regulatory capture.
Summers is also calling for higher capital requirements. Excellent stuff!
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Dec 27, 2015 | The Guardian
marketingexpert -> HorseCart 27 Dec 2015 14:38
lingyai -> SrdeAth 27 Dec 2015 14:25If the big borrower nations like GB and USA were honest, it would be electoral suicide because all they could promise is massive reduction in living standards back to a level we can afford
And that will happen either by progressive erosion or catastrophic bubble burst and economiccollapse.
But It is so much easier Lefty fashion to promise jam today for everyone, and invent bogus bogeymen to pay for it all, or pretend you can borrow or print to prosperity. Anyone north of a five year old can see through such nonsense from the day they trade mars bars for marbles,
Buy gold, or farmland.
KillerMarmot -> Lafcadio1944 27 Dec 2015 14:25that's what the US has all those military bases around the world for.. can't have the world reserve currency being threatened...
Marjallche -> gilesjuk 27 Dec 2015 13:02Neoliberalism is going to provide prosperity when clear-eyed analysis shows Neoliberalism to be little more than subjugation to oligarch rule and the most egregious inequity the world has ever known.
Actually the world is more prosperous than it has ever been. Over the last few decades, billions of people have been lifted out of abject poverty into something resembling a modern lifestyle. Infant mortality has been falling steadily. Life expectancy has been raising steadily. It is resounding triumph, but one that is little recognized,
Marjallche -> JudiHoskyn885 27 Dec 2015 12:57Yes I actually think it is, as dependencies breed fear of being exploited, breeds distrust as to whether the other side does or does not threaten with blackmail etc. I got the idea from Keynes, who saw stability in self-reliance of nations and instability in population import, which threw the balance in favour of big capital.
Iconoclastick 27 Dec 2015 12:54WW I happened after 20 yrs during which the the superpower Britain had been blatantly replacing their dwindling economic influence by demonstrations of military powers. Now which nation today is siphoning off by ever more military means the products and raw materials of others, while not even caring a bit about welfare for the majority of their own citizens?
But it's so much easier to make propaganda against Mr Putin's public appearances than seriously address the point that this guy is genuinely popular at home precisely because he refuses his country to be a sellout to USA's 1O %. Another pre WWI parallel. PS it seems to be a very anglo-saxon notion that the upper 10% belong to a better and preferable breed of humans. The rest being granted the "freedom" to crawl in the dirt and die in the name of "freedom" for the preservation of their "democratic" 1%ers privilege.
Sammy Johnston -> gilesjuk 27 Dec 2015 12:41It was bad in 2012, it's got far worse.
as the chart below shows, if there is anything the global financial system needs, is for the rating agencies, bond vigilantes, and lastly, general public itself, to realize that the UK's consolidated debt (non-financial, financial, government and household) to GDP is... just under 1000%. That's right: the UK debt, when one adds to its more tenable sovereign debt tranche all the other debt carried on UK books (and thus making the transfer of private debt to the public balance sheet impossible), is nearly ten times greater than the country's GDP. To call that "game over" is an insult to game overs everywhere.
MancuMan -> eveofchange 27 Dec 2015 12:50All political parties follow the will of the banking families and corporate elites. The economy is in it's intended state, gearing up for the third world war, the formation of world government and the eventual digitalization of currency world wide.
To state that cameron has any control is naive. To say corbyn can be effective to oppose it is naive. We need to eliminate our current elite and start a new paradigm to have any sense of freedom again.
Aye, a few million people got murdered by the Communists but apart from that and the lack of joy in life for the survivors it all went very well indeed and we should give it another go.
ldopas -> eveofchange 27 Dec 2015 12:37
eveofchange -> jonsnow92 27 Dec 2015 12:25I see you have been studying the socialist comics again.
Evidence tells us, evidence, that capitalism has problems. Lots of them. But it does work for the most part, and the model of capitalism also when there is a disruption mostly recovers like a cut in the skin that heals. Socialism wherever tried ALWAYS has produced poor if not catastrophic results, and once a downward spiral is established there is nothing to stop it, no mechanism in place to heal it like capitalism.
So my money, pun intended, is with capitalism.
Look if you are fed up of our capitalist first world services, infrastructure and healthcare there are still a few deluded places where some sort of socialism exists; Cuba for example where everyone is equal in poverty and their infrastructure is non existent, perhaps N Korea?
Ask yourself this. when a country that is poor and gets the chance for democracy, why do they always go more capitalistic?
jonsnow92 -> eveofchange 27 Dec 2015 12:17I have told you what would happen if capitalism continues.
I opposed Stalin and his ilk, and his corruption of socialism. But under even he, Russia escaped the economic collapse of the thirties, and was invaded by a country that had been ravaged by capitalism's collapse . Russia even emerged stronger.
The nationalised economy worked perfectly, and defeated capitalist Germany (although Hitler himself,introduced aspects of socialism--as did the UK and US). But without a workers and working class democracy, nationalisation will not work for any length of time .
eveofchange 27 Dec 2015 12:02unless consciously overthrown by a working class takeover for socialism, would still carry on. What do you want?
It didn't work in USSR did it? The working class took over and it didn't end up in milk and honey on the streets. Same for East Germany - apart from the genius of Trabant not much else going on until the people started voting with their feet jumping walls and going to capitalism. And I didn't mention Albania, Cuba, North Korea and other great success stories from socialism.
BTW - in socialist countries you couldn't have a strike as the working class was in power and as Stalin said: "why would the working class strike if they are in power?"
> newsfreak 27 Dec 2015 13:33The problem is capitalism, as Marx correctly pointed out and analysed. One "solution" always leads to a worse problem---and it cannot be resolved,or solved Eventually there is either a major war, between desperate capitalist states fighting over shrinking markets, or there is a gigantic crash.--or both.This literally wipes out productive capacity, and thus the problem of "overproduction" is temporarily "solved". The same cycle is then repeated, to it's inevitable conclusion--again.
Millions, throughout the world, even in the UK, are made destitute by this, or even die--but capitalism, unless consciously overthrown by a working class takeover for socialism, would still carry on. What do you want?ID7829806 27 Dec 2015 11:58The ambiguity of economic and financial forecasters tend to reach proverbial limits. They make a living out of ambiguity and what later end up being frustrated expectations: "2016 will be a year of living dangerously for the global economy" yet "there will be no explosion in 2016, but a fuse will be lit." How dangerous is a lit fuse? The whole financial world system is a sham based on printing currencies with no backing standard. At some point there will be a wake up call, a reality check, and a devastating free fall.
Dan_de_Macy 27 Dec 2015 11:58Economic forecasting is a mug's game.
But a lot of people get paid a lot of money to do it. Forecasting is of course, at best, an inexact and purely speculative effort (I nearly wrote 'an inexact science', but there is nothing scientific about it, at all).
Those who have the confidence/cheek/arrogance to predict, tend to stick close to the average of an (emerging) consensus, if there is one. Commentators keep looking around and over their shoulders - no one wants to look silly - and so feed-on and affirm each other. Few stick their necks out - but then, if they do, they are likely unknown or a maverick, and does anyone therefore notice, or care?
A broken clock is right twice a day, but who wants to predict that the clock will fall off the wall (unless they have inside knowledge)?
Larry, you may be right. Or you may be wrong. 2016 is an Election Year in the US, which suggests 'nothing to see here' for the next 12 months. But then again, it didn't stop the last crash happening.
But the feeling in your water could be right, precisely because we are in unknown and unprecedented territory. The historic economic 'rule-book' hasn't so much been torn-up in recent years, rather - quietly - put back on the shelve, and self-consciously ignored.
These are unprecedented times. So: who knows what might happen? An unprecedented economic implosion round about 2017 is possible. Or not. But on a balance of probabilities: something without precedent is likely to happen (for good or ill): and none of us will have predicted it.
Iconoclastick 27 Dec 2015 11:50Prediction:
Going South: Why Britain will have a Third World Economy by 2014 Paperback – 14 Jun 2012
http://www.amazon.co.uk/Going-South-Britain-Third-Economy/dp/0230392547
Reality:
Other stuff building up a storm on the horizon...
Forget About Junk Bonds, This Is the New Credit-Equity Disconnect Investors Should Be Watching
Can contagion spread to stocks?This Junk Bond Derivative Index Is Saying Something Scary About Defaults. Markit's CDX index is pricing in a 2008-like selloff.
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Dec 27, 2015 | naked capitalism
An excellent column by Martin Wolf in the Financial Times, where he is the lead economics editor. Starting with principles put forward by Ben Bernanke in his recent speech on income inequality, Wolf concludes that America cannot do without some form of a welfare state, specifically improved training, education, and universal health care.
James Levy, December 26, 2015 at 4:32 pm
I have no idea if Marx was right, in the long run, or wrong–the verdict is still out on the long-term viability of industrial capitalism, which is less than 250 years old and creaking mightily as I write this. It may be that when Rosa Luxemburg said that the choice was between Socialism and Barbarism, she underestimated how likely barbarism was. What I do know is that capitalism today isn't just too ugly to tolerate, it is downright murderous. Its imperatives are driving the despoliation of the planet. It's love of profit over all else is cutting corners and creating externalities that are lethal. But it has made a few percent of the global population comfortable and powerful, and they are holding onto that comfort and that power come hell or high water (and, ironically, if things continue apace both are on the menu).
Our problem is that we are asking for concessions that are beyond the acceptable limit for elites in any historical epoch. We're asking the powerful and the rich to give up their money and power for the greater good of all mankind. This is not likely to happen unless a powerful enough segment of the elite comes to the inescapable conclusion that they're literally dead meat if they don't and therefore opts for survival over position. I am not enthusiastic that this will happen before it is way too late to save more than a fraction of the current world population, and send those people back to the lifestyles and thought patterns of 30 Year's War Europe.
Its a generational thing. Right after WW2, many of the elite had just that epiphany that unless they have the common people behind them, they are toast. But now they are dead or dying, and their grandkids are basically once more thinking that they can go it alone. This because they have not had the required experiences that help develop the wisdom.
What Marx saw long ago, we can see today, and without relegating ourselves to his analysis, come to our own conclusions. Contradictions, summed up well by Lincoln as a house divided against itself cannot stand is just as true today. Millions of guns to protect the citizenry from tyranny have only resulted in a 1/4 million murders and 5 times as many shootings since Jan 1, 2000, some placing people in wheel chairs and other crippling gunshot afflictions, and more and more institutionalized state oppression, economic exploitation and miserable lives propped up in an alcoholic haze until the liver or brain gives out. We have more food than we know what to do with so we throw away almost as much as we eat. And we have eaten ourselves into morbid obesity, diabetes and heart disease. The contradictions abound from the kitchen table to the kitchen cabinet of the White House where there seems to be nothing passed so freely as bad advice.
The Welfare State arose from the sacrifices of the population in giving their sweat, blood and tears to defend their nation during war, to be rewarded for their sacrifices, rewards which were demands for power sharing and more in the paycheck, more benefits and more time to enjoy the life spent in a more prosperous world. It seems to me that Obamacare is not simply in death spiral all of its own making, but even more so, because it is the best attempt capitalism can produce in an America that is the most capitalist of societies down to the marrow its bones. Little competition from the Church or the social relations between nobles and subjects set for in the laws that were disestablished to free markets for commodification and money making. Money making enterprises structured the laws from slavery, to the voting franchise with little from the state to cushion any of the hardships of life in America.
Health care is the largest industry we have. It is approaching 20% of the GNP. I remember the great national freak out in the late 1970s when congress realized it was approaching 10%. Nothing seems to be stopping the costs from spiraling upward and onward. No risk of deflation here where nothing is spared to save a life, operate on some poor little afflicted child, or buy a piece of equipment the size of an office building that shoots a proton beam at cancer, one cancer cell at a time.
When Obama Care becomes a clear burden to even the democrats who can point to it now as some sort of accomplishment, and it is an accomplishment for the people who finally get to see a doctor, get into a hospital, get that operation or diagnosis that saves their lives, when even those accomplishments number in the millions, it will be part of a health care industry for which $Trillions of dollars can no longer be justified or even funded. As that financial collapse approaches, it would be better for politicians to declare the defeat of a program better rolled into one universal single payer system currently operating as Medicare, than try to reform, shore up or the old tried and true public lie, get rid of its waste and corruption.
Declare victory with Medicare as the solution and put everyone into it. The only paper work left should be each person's medical history with diagnosis and healing as the happy ending to the story.
There is a fundamental error in perception in the Western world that is so pervasive that people can't even see it. As a most basic component of a healthy society people need to be able to survive at a local community level without outside support. Only after that is taken care of should people concern themselves with luxuries, inter-community and international relations.
Welfare–not to mention other government services–can appear to have positive impacts if one only looks at their effects in isolation, however I think there is a devastating and pernicious impact on people's ability to form community bonds and have local resilience with things like welfare.
Also, let's also not forget that Americans consume far more of the earth's precious resources than any other group in the world. Welfare etc are social services that can only be funded through the world-wide looting operation of the American empire. Do these recipients of empire benefits have a moral right to share in the loot of empire? Perhaps instead of domestic welfare it would be more ethical for the American empire to provide social benefits for the indigenous peoples who are forced from their lands to work like slaves for the empire's benefit. Although admittedly if the American empire used it's loot for the benefit of the foreign peoples whose lives it destroyed then there'd probably be nothing left to spread around to the military, or to pacify and police the domestic population. So I suppose that's not a serious proposal.
Welfare etc are social services that can only be funded through the world-wide looting operation of the American empire
This is obviously not true. Unless every social democratic country in the world is considered as a piece of the American empire. And even then, I would argue that we can easily afford a generous welfare state with a small shift in priorities away from (globally destabilizing) defense spending to social productive spending on human development.
Obvious to who? America lavishes so much money on its military not only because of corruption, but also because it has the world reserve currency and is a guarantor of the safety of international shipping. These facts are inextricably linked to the America's status as the world hegemon. The empire provides order and structure, and enforces the extraction of resources from the periphery to the center. The bread and circuses are inextricably linked to the empire's military activities and trying to tease them apart will only lead to collapse of the entire system sooner than it will otherwise happen.
"Social Democratic"–now that's an interesting phrase. Did you know that Syria is a democracy, and was an extremely prosperous and well-education nation prior to 2011?
Here's a telling paragraph from the Wikipedia article about Syria:
[Dec 27, 2015] The Sneaky Way Austerity Got Sold to the Public Like Snake Oil
Notable quotes:
"... When children don't get good educations, the production of knowledge falls into private control. Power gets consolidated. The official theoretical frameworks that benefit the most powerful get locked in. ..."
"... Not only were the politicians worried about votes but also the welfare state was a way to head off a left wing revolution. ..."
"... the change began in 1976 with the election of Rockefeller-funded Jimmy Carter, who immediately launched an austerity program. Support for Keynesian economics was further eroded by the 70's stagflation which we now know was caused by Mid East oil but at the time the "left" were like deer in the headlights, with no clue what to do. ..."
"... The final nail in the coffin was the fall of the Berlin Wall and the collapse of the USSR, discrediting communism. After that, "there was no alternative" to corporate capitalism. Or more accurately, the left was slow to formulate an alternative and to this day is still struggling with an alternative as we have observed with Syriza. It's not enough to oppose austerity, you have to have a constructive plan to fix things. ..."
[Dec 27, 2015] This Junk Bond Derivative Index Is Saying Something Scary About Defaults
[Dec 24, 2015] In 2012, Greek pension funds, which were obliged under Greek law to own government bonds were hit by debt write-down and lost about 10 billion euros or roughly 60 percent of their reserves
[Dec 24, 2015] An Aging Society Is No Problem When Wages Rise
Notable quotes:
"... Hey, if the plutocrats won't raise wages then they will need to raise the payroll tax cap on Social Security. They should have thought of that before starting so many wars. The Bonus Army will not be denied. ..."
"... Raise it my foot, they need to eliminate it. The cap has always been more welfare for the rich. ..."
"... Why not eliminate the income cap ($118k) entirely and start taxing capital gains and dividends for Social Security too? Members of Congress pay this tax on 65% of the salaries ($174k), while 95% of all wage earners pay this tax on 100% of their earnings. ..."
[Dec 24, 2015] The Fed Has Created A Monster And Just Made A Dangerous Mistake, Stephen Roach Warns
[Dec 23, 2015] The neocon's abiding faith in the so-called revolution in military affairs (RMA) has proved to be a colossal failure
[Dec 23, 2015] The Texas unempolyment rate is up 12% since the cyclical low in July-Aug
[Dec 23, 2015] The Big Short Every American Should See This Movie
Notable quotes:
"... Enjoyed the movie, but in typical Hollywood fashion, the role of the Federal Reserve and government in pushing housing down to those unable to afford it was not even mentioned once. ..."
[Dec 22, 2015] A Milestone For Vanguard: New Fund Could Include Junk Bonds
[Dec 21, 2015] Weak president, neoliberal Obama and housing bubble
Notable quotes:
"... The relationship between low interest rates and bubbles has nothing to do with the above. Low interest rates RAISE asset prices. Through the magic of low discount rates, the future earnings and cash flows are worth a lot higher today. This is why Bernanke cut rates and kept them low. Raising asset prices and the resultant higher net worth was supposed to lead to higher spending today. But outsized returns also attracts speculation. what is so difficult to understand? John Williams of SF Fed has shown how positive returns in asset markets raises the speculators expected returns. when this dynamic gets out of control, it is a bubble. ..."
"... That is exactly the point. Expected returns in stocks have nothing to do with earnings growth. http://www.frbsf.org/our-district/press/presidents-speeches/williams-speeches/2013/september/asset-price-bubbles-tomorrow-yesterday-never-today/ ..."
"... You think a rise in stock prices created by a fall in the cost of capital is a bubble. ..."
"... keeping the risk free rate at zero for 7 years is not a change in fundamentals. and if it is and it rises leading to a large fall in equity prices, you will be the first one crying uncle. so why put the economy through this? ..."
"... Rising stock prices allow corporations to raise debt, because the stock is put up as collateral. This makes funding easier, but it doesnt favor any particular purpose of the funding. It could be to buy back stock, for example. Said buy back can raise the stock price even more, which in turn can pay off the borrowing. Didnt cost a dime. ..."
"... It always seem to me that right wing economists credit businessmen with superhuman foresight and sophistication, except when it comes to the actions of the Fed and then something addles their brains and they become completely stupid. As I once put, it seems investors cant understand what the Fed is doing, even though they tell you. ..."
"... Thats it exactly. Markets are efficient, unless the government does anything, and then markets lose their minds and its the governments fault. ..."
"... Here is how they evaluate models: Good model; one that reaches the right good conclusions. Bad model; one that ends up saying stuff nobody should believe in. ..."
"... Obama could have at least made the investigations a high priority...but he let Holder, a Wall Street attorney, consign them to the lowest. ..."
"... Democrats filibuster-proof majority consisted of 58 Democrats and two independents who caucused with them. Only an inept President and Senate majority leader could have failed to take advantage of such a majority to implement significant parts of the party platform. ..."
"... Gullible folks like pgl and his coterie believe what these Democrats say and waste our time defending their neoliberal behavior. ..."
[Dec 21, 2015] Monetalism is dead but remains of monetarist thinking are still lingering
Notable quotes:
"... Summers is right that bubbles are usually accompanied by some kind of financial euphoria. ..."
"... There will be massive pushback because so many have wasted many years and resources building mathematically elegant but fatally flawed models that do not make accurate predictions on even represent the fundamentals of any economy. ..."
[Dec 20, 2015] Paul Krugman: The Big Short, Housing Bubbles and Retold Lies
Notable quotes:
"... I get the feeling that if doing a film review of The Force Awakens , most economists would be rooting for the Empire to win - after all the empire will bring free trade within its borders, like the EU. ..."
"... In market fundamentalist world, markets dont fail. They can only be failed. Though its still not clear how they think a little bit of government incentive for loans to low income borrowers caused the entire financial sector to lose its mind wrt CDOs. ..."
"... The distribution of the use of credit between pure financial speculation and productive investment is not a function of interest rates, but of things like bank culture, bank regulation and macro-economic and technological prospects. ..."
"... ....Supervising regulators need to look carefully at the ratio of credit used for financial trading compared to credit used for what weve called real-economy matters. They should adjust the level of monitoring based on this view while they also inform policy makers including those in the legislature. ..."
"... except that a significant chunk of institutional investors have sticky nominal targets for return thanks to the politics of return expectation setting (true for pension fund and endowments) -- low interest rates do encourage chasing phantoms or looking to extract some rents, for those subject to that kind of pressure ..."
"... The relationship between low interest rates and bubbles has nothing to do with the above. Low interest rates RAISE asset prices. Through the magic of low discount rates, the future earnings and cash flows are worth a lot higher today. This is why Bernanke cut rates and kept them low. Raising asset prices and the resultant higher net worth was supposed to lead to higher spending today. But outsized returns also attracts speculation. what is so difficult to understand? John Williams of SF Fed has shown how positive returns in asset markets raises the speculators expected returns. when this dynamic gets out of control, it is a bubble. ..."
"... Yes, indeed. And who do we have to blame for that? Obama and Holder, of course. They made the investigation of mortgage securities fraud DOJs lowest priority. Krugmans Democratic proclivities prevent him from stating the obvious. ..."
"... Fact is, Obama has intentionally been a lame duck ever since he took office. He was even clueless on how to capitalize on a filibuster-proof majority in the midst of an economic crisis...which brings us to Trump. Many are so desperate for leadership after Obamas hollow presidency that theyll even support a racist demagogue to avoid another empty White House. ..."
"... Yes you are correct. From 2001 into 2008 when all of the liar and ninja loans were being made, not one government official stepped forward to investigate the possibility of fraud, the predatory lending, the misrepresentation of loans taking place, the loans with teaser rates which later ballooned, the packing of loans with deceptive fees, the illegal kick backs, etc. Not one. To make matters worst, the administration from 2001-2008 aligned itself with the banks along with the maestro hisself Greenspan. ..."
"... When state AGs took on the burden of investigating the flagrant violations, the administration moves to block them saying they had no jurisdiction to do so. It did this through the OCC issuing rules preventing the states from prosecuting the banks. Besides blocking any investigation, the OCC failed in its mission to audit the banks for which it was by law to do. ..."
[Dec 19, 2015] The Enduring Relevance of "Manias, Panics, and Crashes"
Notable quotes:
"... Manias, Panics, and Crashes ..."
"... The New International Money Game ..."
"... Manias, Panics and Crashes ..."
"... Why Minsky Matters ..."
"... Manias, Panics and Crashes ..."
"... Manias, Panics and Crashes ..."
[Dec 19, 2015] The Washington Post's Non-Political Fed Looks a Lot Like Wall Street's Fed
Notable quotes:
"... Any serious discussion of Fed policy would note that the banking industry appears to have a grossly disproportionate say in the country's monetary policy. ..."
[Dec 18, 2015] The Upward Redistribution of Income: Are Rents the Story?
Looks like growth of financial sector represents direct threat to the society
Notable quotes:
"... Perhaps the financialization of the economy and rising inequality leads to a corruption of the political process which leads to monetary, currency and fiscal policy such that labor markets are loose and inflation is low. ..."
"... Growth of the non-financial-sector == growth in productivity ..."
"... In complex subject matters, even the most competent person joining a company has to become familiar with the details of the products, the industry niche, the processes and professional/personal relationships in the company or industry, etc. All these are not really teachable and require between months and years in the job. This represents a significant sunk cost. Sometimes (actually rather often) experience within the niche/industry is in a degree portable between companies, but some company still had to employ enough people to build this experience, and it cannot be readily bought by bringing in however competent freshers. ..."
[Dec 18, 2015] How low can oil prices go? Opec and El Niño take a bite out of crudes cost
Oil is a valuable chemical resource that is now wasted because of low prices... "The obvious follow-up question is, how long will the sane people of the world continue to allow so much fossil-fuel combustion to continue? An exercise for readers."
Notable quotes:
"... Iran wont flood the market in 2016. Right now Iran is losing production. It takes time to reverse decline and make a difference. ..."
"... Those who predict very low prices dont understand the industry (I do). The low price environment reduces capital investment, which has to be there just to keep production flat (the decline is 3 to 5 million barrels of oil per day per year). At this time capacity is dropping everywhere except for a few select countries. The USA is losing capacity, and will never again reach this years peak unless prices double. Other countries are hopeless. From Norway to Indonesia to Colombia to Nigeria and Azerbaijan, peak oil has already taken place. ..."
"... If oil prices remain very low until 2025 itll either be because you are right or because the world went to hell. ..."
"... But Im with Carambaman - prices will go up again. Demand is and will still be there. The excess output will eventually end, and the prices stabilises. And then move up again. ..."
"... Time to examine the real question: how long can the Saudis maintain their current production rates? Theyre currently producing more than 10 Mbarrels/day, but lets take the latter figure as a lower bound. They apparently have (per US consulate via WikiLeaks--time for a followup?) at least 260 Gbarrels (though it seems no one outside Saudi really knows). You do the math: 260 Gbarrels / (10 Mbarrels/day) = 26 kdays ~= 70 years. @ 15 Mbarrels/day - 47.5 years. @ 20 Mbarrels/day - 35 years. ..."
"... The obvious follow-up question is, how long will the sane people of the world continue to allow so much fossil-fuel combustion to continue? An exercise for readers. ..."
"... Saudi Arabia, a US ally, using oil production and pricing to crush US oil shale industry? Did I read that correctly? ..."
"... Yeah, but I suspect it was *written* incorrectly. Im betting the Saudis real target is the Russians. ..."
"... In 1975 dollars, thats $8.31 / bbl (with a cumulative inflation factor of 342% over 40 years), or $.45 / gal for gas (assuming a current price of $2.00 / gal). ..."
"... I spent 30 years in the oil industry and experienced many cycles. When it is up people cannot believe it will go down and when it is down people cannot believe it will go up. It is all a matter of time ..."
[Dec 17, 2015] The Feds decision to raise interest rates today is an unfortunate move in the wrong direction
Notable quotes:
"... The Feds decision to raise interest rates today is an unfortunate move in the wrong direction. In setting interest rate policy the Fed must decide whether the economy is at risk of having too few or too many jobs, with the latter being determined by the extent to which its current rate of job creation may lead to inflation. It is difficult to see how the evidence would lead the Fed to conclude that the greater risk at the moment is too many jobs. ..."
"... While at 5.0 percent, the unemployment rate is not extraordinarily high, most other measures of the labor market are near recession levels. The percentage of the workforce that is involuntarily working part-time is near the highs reached following the 2001 recession. The average and median duration of unemployment spells are also near recession highs. And the percentage of workers who feel confident enough to quit their jobs without another job lined up remains near the low points reached in 2002. ..."
"... While wage growth has edged up somewhat in recent months by some measures, it is still well below a rate that is consistent with the Fed's inflation target. Hourly wages have risen at a 2.7 percent rate over the last year. If there is just 1.5 percent productivity growth, this would be consistent with a rate of inflation of 1.2 percent. ..."
"... One positive point in today's action is the Fed's commitment in its statement to allow future rate hikes to be guided by the data, rather than locking in a path towards "normalization" as was effectively done in 2004. ..."
[Dec 17, 2015] Full employment is important for long-term reduction of inequality
Notable quotes:
"... Full employment is important for long-term reduction of inequality. Periods of high unemployment not only do damage to workers who lose their jobs and see their skills atrophy, but also cause those who keep their jobs to experience weaker wage growth. This is especially hard on those with lower incomes, who see larger cuts in working hours during periods of high unemployment. ..."
"... The elites like Feldman seem to be fine with golden parachutes for the wealthy but want to give the poor a lottery in place of a pension. Social Security is insurance that provides a safety net. Replacing SS with investments that allow people to fall through the cracks is not a good idea. ..."
[Dec 17, 2015] Update of CBOs long term SS projections
[Dec 16, 2015] Donald Trump's Divisiveness Is Bad for the Economy
Notable quotes:
"... A divided society cannot function optimally, especially when the divisions erect walls between groups that are difficult to cross. There are all sorts of attempts to divide us right now, but I want to focus on something other than the bigotry that has been on display in the Republican race for the presidential nomination, the division into winners and losers. ..."
"... To some extent that's correct, but competitive capitalism is not divisive. In fact, it is just the opposite. Competition is a great leveling force. ..."
"... For example, when a firm discovers something new, other firms, if they can, will copy it and duplicate the innovation. If a firm finds a highly profitable strategy, other firms will mimic it and take some of those profits for themselves. A firm might temporarily separate itself from other firms in an industry, but competition will bring them back together. Sometimes there are impediments to this leveling process such as patents, monopoly power, and talent that is difficult to duplicate, but competition is always there, waiting and watching. ..."
"... Competition also drives us forward individually and as a nation. It is a source of new innovation and new technology as people and firms try to find ways to do better than others, to earn higher incomes, gain more popularity, to escape from the pack. People pursue education and other ways to improve themselves not just as a source of knowledge, but also as a way to distinguish themselves. ..."
"... There are differences in talents and abilities, of course, that prevent a full leveling, but to the extent possible people will copy anything that leads to success. ..."
"... Inequality erects those barriers as those who have been fortunate try to protect themselves from capitalism's inherent tendency to erode away their superior position. They feel threatened by competition and do all they can to avoid it once they have found success. ..."
"... When those barriers exist, talent is wasted and we are worse off as a nation. How many great ideas will never be known simply because some people never had the education or opportunity needed to draw the ideas out? ..."
"... Separating the winners from the losers is okay if it is based on merit. If we start equally, and have the same chance to get ahead, then unequal outcomes are less of a concern. The problem is that some people are born "winners" even though they have done nothing to earn it, and others have little chance to win due to our unwillingness to truly embrace what equal opportunity means. ..."
[Dec 15, 2015] FOMC Tomorrow, Cargo Cult Economics
Notable quotes:
"... So let's see how things go this week, keeping in mind that there may be antics aplenty after the Fed announcement and into the quad witch for stocks on Friday. ..."
[Dec 15, 2015] This Is How The Credit Crisis Spreads To Stocks
Notable quotes:
"... Yeah but its junk credit... who cares! I am invested in solid megacaps and even solider FANGs - what can go wrong? ..."
"... The biggest buyer of stocks in 2016, will be, according to Goldman Sachs, the same as it was in 2015 - corporate management teams buying back their own stock in near record quantities. But there is a problem with this thesis... the cost of funding these epic buybacks is surging, making the un-economic actions of the CFO (if very economical for their own bank accounts as they sell record amounts of their own personal stock to their company) even more irrational. ..."
"... Charts: Bloomberg ..."
"... And this is why the contagion to IG matters: the biggest buyer of stocks of the last few years is about to priced away as its (cheap debt) funding dries up, removing the biggest pillar of delusion from current equity valuations. ..."
"... Did nobody tell this stupid asshole that the west funds jihadism in order to conquer Russia? ..."
"... ...After Ukraine and Syria, Russians have no illusions left about how the West intends to treat Russia. Russians are ready for any action Putin may take against the West and any fall out from it for themselves. ..."
"... What is sometimes forgotten, is how the Bush neo-cons gave their "spin" to this narrative for the Middle East by casting Arab national secularists and Ba'athists as the offspring of "Satan": David Wurmser was advocating in 1996, "expediting the chaotic collapse" of secular-Arab nationalism in general, and Baathism in particular. He concurred with King Hussein of Jordan that "the phenomenon of Baathism" was, from the very beginning, "an agent of foreign, namely Soviet policy." ..."
"... Putin knows Erdogan was following Obama's orders when Erdogan let US Air Force pilots in Turkish planes shot down the Russian bomber. ..."
"... if the US were ever to develop the capability to neutralise a Russian nuclear attack, Russia can be guaranteed she will be treated with no greater respect than Iraq under Saddam was. Neither being locked in a weapons race to keep the US vulnerable to Russian attacks nor being prepared to live under Western dictates are options for Russia. ..."
"... Our DC Beltway and NYC elites are wildly delusional about their ability to win a nuclear war. They listen only to the defense contractors. In fact the West's elites are the prime target in a nuclear war, and even though a small and select strata might have time to hide in a deep bunker, the vast substrata that supports them, runs their bureaucracies and mans their deep state will certainly be annihilated. ..."
"... The nuclear war our elites seek to provoke will be the first in nearly a thousand years in which the elites themselves will be on the front lines of the combat. ..."
"... Personally, I think the biggest weakness the USA has is its increasingly diverse and divided population ..."
"... The Pentagon and their masters must expect to resolve any future major conflict by means of technologic jujitsu; if they think that Americans from all walks of life are going to rally in support of a major foreign war of choice, support mass conscription etc., they're making IMHO a big mistake. ..."
"... Still, with enough provocation and manipulation, perhaps the typical Amurican can be goosed into enthusiasm for a fight against Islam ; TPTB certainly seem to be giving this angle their best shot these days. ..."
"... What a shame, such stupidity; the other great power and nation that is at least still Western and Christian. Europe appears to be lost, and yet the U.S. arms Muslim armies and pokes Russia on its borders. Abject insanity. ..."
"... Simple. Kill the Neocons one by one and we have a safer world for your children, your family and you. ..."
[Dec 15, 2015] How to Invest in Bonds as Interest Rates Start Rising
Notable quotes:
"... For investors who hold bonds primarily for the income they generate, the drop in prices doesn't matter as much. That's because if you hold a bond until maturity, you never have to sell it and take a loss. ..."
[Dec 14, 2015] Offshoring and Unskilled Labor Demand Evidence That Trade Matters
Notable quotes:
"... I actually think that the bigger effect is not just offshoring, but a vicious circle relating to increasing inequality. After all, most of the economy today is services, but if normal people cant afford the services anymore, then that will of course stagnate, forcing down wages decreasing the affordability even more (or causing substitution of inferior automated or remote services). ..."
"... That is why the one employment bright spot is medical services which are subsidised (one way or the other) almost everywhere. We really have to investigate more the distribution of the circulation of money, how the concentration of money in a few hands means that money circulates through relatively hands. I dont know of anybody who actually investigates this. You could say, it is the disaggregation-is-important problem. ..."
"... One thing that really annoys with political discussion today is the dominance of money illusion. This is particularly extreme in the Euro area today where Germans keep complaining that so and so will be taking our tax money . No one ever seems to stop and think, where does the money come from in the first place , and yet, in macro-economics, this is absolutely the most important question. Nobody even seems to notice that both deleveraging and bankruptcy actively destroy money and that money needs to be replaced. ..."
"... Foreign companies like Toyota and Honda solidified their dominance in family and economy cars, gained market share in high-margin luxury cars, and, in an ironic twist, soon stormed in with their own sophisticatedly engineered and marketed SUVs, pickups and minivans. Detroit, suffering from a "good enough" syndrome and wedded to ineffective marketing gimmicks like rebates and zero-percent financing, failed to give consumers what they really wanted - reliability, the latest technology and good design at a reasonable cost. ..."
"... Yes, I see offshoring as a transitional stage while foreign workers are cheaper than machines. ..."
"... The plot was about automation, but the moral was about humanity. :) ..."
"... "The main business of humanity is to do a good job of being human beings, said Paul, not to serve as appendages to machines, institutions, and systems." ..."
"... It is not the PRODUCERS who have a huge incentive to make sure it never happens. Au contraire, they want their consumers to have more money. It is the OWNERS who want to make sure it never happens because that would dilute their power. ..."
[Dec 13, 2015] While redemptions are elevated, particularly in high-yield bond funds, there doesn't seem to be a rush to for the exits
For the last several year buying "junkest junk" was a profitable strategy. Now it came to abrupt end.
Notable quotes:
"... The rest of the industry has been quick to say that while redemptions are elevated, particularly in high-yield bond funds, there doesn't seem to be a rush to for the exits. ..."
"... Goldman Sachs, for one, put out a note Friday warning Franklin Resources "is most at risk" given the large high-yield holdings of its funds, poor performance and large outflows. On Friday, its shares fell sharply. Meanwhile, there were unusually large declines Friday in the value of exchange-traded funds that track high-yield debt. ..."
"... The idea of a "run" on mutual funds might sound strange. Typically, runs are associated with highly leveraged banks engaged in maturity transformation, funding long-term loans with short-term debt. Nearly all the programs designed to avoid destabilizing runs-from deposit insurance to the Fed's discount window to liquidity requirements-are built for banks. But unleveraged investors, including mutual funds, can also give rise to runs. That is because there is a liquidity mismatch in mutual funds that hold relatively illiquid assets funded by investors entitled to daily redemptions. ..."
[Dec 13, 2015] Deregulation of exotic financial instruments like derivatives and credit-default swaps and corruption of Congress and government
Notable quotes:
"... Can you list all of the pro- or anti- Wall Street reforms and actions Bill Clinton performed as President including nominating Alan Greenspan as head regulator? Cutting the capital gains tax? Are you aware of Greenspans record? ..."
"... Its actually pro-neoliberalism crowd vs anti-neoliberalism crowd. In no way anti-neoliberalism commenters here view this is a character melodrama, although psychologically Hillary probably does has certain problems as her reaction to the death of Gadhafi attests. The key problem with anti-neoliberalism crowd is the question What is a realistic alternative? Thats where differences and policy debate starts. ..."
"... Events do not occur in isolation. GLBA increased TBTF in AIG and Citi. TBTF forced TARP. GLBA greased the skids for CFMA. Democrats gained majority, but not filibuster proof, caught between Iraq and a hard place following their votes for TARP and a broader understanding of their participation in the unanimous consent passage of the CFMA, over objection by Senators James Inhofe (R-OK) and Paul Wellstone (D-MN). ..."
"... It certainly fits the kind of herd mentality that I always saw in corporate Amerika until I retired. The William Greider article posted by RGC was very consistent in its account by John Reed with the details of one or two books written about AIG back in 2009 or so. I dont have time to hunt them up now. Besides, no one would read them anyway. ..."
"... GS was one of several actions taken by the New Deal. That it wasnt sufficient by itself doesnt equate to it wasnt beneficial. ..."
"... "Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century," said then-Treasury Secretary Lawrence Summers. "This historic legislation will better enable American companies to compete in the new economy." ..."
"... The repeal of Glass Steagal was a landmark victory in deregulation that greased the skids for the passage of CFMA once Democrats had been further demoralized by the SCOTUS decision on Bush-v-Gore. The first vote on GLBA was split along party lines, but passed because Republicans had majority and Clinton was willing to sign which was clear from the waiver that had been granted to illegal Citi merger with Travelers. Both Citi and AIG mergers contributed to too big to fail. The CFMA was the nail in the coffin that probably would have never gotten off the ground if Democrats had held the line on the GLBA. Glass-Steagal was insufficient as a regulatory system to prevent the 2008 mortgage crisis, but it was giant as an icon of New Deal financial system reform. Its loss institutionalized too big to fail ..."
"... Gramm Leach Biley was a mistake. But it was not the only failure of US regulatory policies towards financial institutions nor the most important. ..."
"... It was more symbolic caving in on financial regulation than a specific technical failure except for making too big to fail worse at Citi and AIG. It marked a sea change of thinking about financial regulation. Nothing mattered any more, including the CFMA just a little over one year later. Deregulation of derivatives trading mandated by the CFMA was a colossal failure and it is not bizarre to believe that GLBA precipitated the consensus on financial deregulation enough that after the demoralizing defeat of Democrats in Bush-v-Gore then there was no New Deal spirit of financial regulation left. Social development is not just a series of unconnected events. It is carried on a tide of change. A falling tide grounds all boats. ..."
"... We had a financial dereg craze back in the late 1970s and early 1980s which led to the S L disaster. One would have thought we would have learned from that. But then came the dereg craziness 20 years later. And this disaster was much worse. ..."
"... This brings us to Lawrence Summers, the former Treasury Secretary of the United States and at the time right hand man to then Treasury Security Robert Rubin. Mr. Summers was widely credited with implementation of the aggressive tactics used to remove Ms. Born from her office, tactics that multiple sources describe as showing an old world bias against women piercing the glass ceiling. ..."
"... According to numerous published reports, Mr. Summers was involved in. silencing those who questioned the opaque derivative product's design. ..."
"... The Tax Policy Center estimated that a 0.1 percent tax on stock trades, scaled with lower taxes on other assets, would raise $50 billion a year in tax revenue. The implied reduction in trading revenue was even larger. Senator Sanders has proposed a tax of 0.5 percent on equities (also with a scaled tax on other assets). This would lead to an even larger reduction in revenue for the financial industry. ..."
"... Great to see Bakers acknowledgement that an updated Glass-Steagall is just one component of the progressive wings plan to rein in Wall Street, not the sum total of it. Besides, if Wall Street types dont think restoring Glass-Steagall will have any meaningful effects, why do they expend so much energy to disparage it? Methinks they doth protest too much. ..."
"... Yes thats a good way to look it. Wall Street gave the Democrats and Clinton a lot of campaign cash so that they would dismantle Glass-Steagall. ..."
"... Slippery slope. Ya gotta find me a business of any type that does not protest any kind of regulation on their business. ..."
"... Yeah, but usually because of all the bad things they say will happen because of the regulation. The question is, what do they think of Clintons plan? Ive heard surprisingly little about that, and what I have heard is along these lines: http://money.cnn.com/2015/10/08/investing/hillary-clinton-wall-street-plan/ ..."
"... Hillary Clinton unveiled her big plan to curb the worst of Wall Streets excesses on Thursday. The reaction from the banking community was a shrug, if not relief. ..."
"... Iceland's government is considering a revolutionary monetary proposal – removing the power of commercial banks to create money and handing it to the central bank. The proposal, which would be a turnaround in the history of modern finance, was part of a report written by a lawmaker from the ruling centrist Progress Party, Frosti Sigurjonsson, entitled "A better monetary system for Iceland". ..."
[Dec 12, 2015] David Dayen Is This The Beginning of the Crackup in High-Yield Corporate Debt
Notable quotes:
"... It cuts two ways. Junk ETFs such as JNK and HYG have badly underperformed their benchmarks, owing to buying and selling in an illiquid market to replicate an index. Whereas actively managed junk mutual funds have the flexibility to deviate from index holdings in ways that can add a couple of hundred basis points a year. ..."
"... Your apology is flawed because it assumes equal access to information among investors as well as assuming all investors have the same objective. Institutional investors have different goals than hedge funds for example. The people you refer to have been fleeced that's just ok with you. As to tea leaves the people have been steeped in recovery stories for years. ..."
"... Wait, so speculators are shorting big bond positions of distressed funds? No way, hope they aren't doing this to ETF's. Jeez, didn't see this coming. I guess having the positions of big ETF's published daily might assist the speculators. ..."
"... What I do remember (and I can't remember whether it was Spring of 2008 or earlier), was that HY spreads had gapped out at least a couple of hundred bps, and equities were still at or near all-time highs. I remember sitting in a meeting with a couple I-bankers, who chuckled ruefully "equities haven't a clue". ..."
"... The received wisdom on the Street is that the bond market is smarter than the equity market. And, at last in my career, it was true, at least as far as downturns went. ..."
[Dec 12, 2015] Robert Reich to the Fed: this is not the time to raise rates
Notable quotes:
"... Within days the Fed will begin hiking interest rates in an effort to prevent inflation. This is nuts. There's no sign of dangerous inflation anywhere. Raising rates will just slow the economy, making it harder for people to find jobs. The share of working-age people in jobs is near a 40-year low. Watch our video to find out what this is all about -- and how it will affect you. ..."
[Dec 12, 2015] The American middle class is now matched in number by those in the economic tiers above and below it
Notable quotes:
"... I would merely point out that the out-of-touch elite is not confined to the Republican Party. There are substantial elements within the Brookings-Third Way wing of the Democratic coalition that would rather cut Social Security than establish a sensible retirement-income system, and that would rather cut Medicare than improve the efficiency of health care finance and delivery, after all. ..."
"... Why a one-percentage-point rise in the GDP share of Social Security is something that calls in any technocratic sense for cuts to the Social Security system is something that eludes me. What cutting Social Security has to do with reducing poverty eludes me. But it is something that all fifteen of the authors thought was so obvious as to require no explanation or justification whatsoever... ..."
[Dec 11, 2015] Dangers of reaching for yield
The quest for yield is pushing investors into risk in a frantic hunt for yield in an environment where risk free assets yield at best an inflation adjusted zero and at worst have a negative carrying cost. Add to this fake earnings and share repurchases that weaken many companies including such stalwart as IBM and you get the message.
Notable quotes:
"... A firm founded by legendary vulture investor Martin Whitman is barring investor withdrawals while it liquidates its high-yield bond fund, an unusual move that highlights the severity of the months long junk-bond plunge that has swept Wall Street. ..."
"... All 30 of the largest high-yield bond funds tracked by Morningstar have lost money this year, reflecting price declines as investors shied away from risk. ..."
"... "Investors have been dazzled that yields on bonds have climbed so high, even while default rates remained low," said Martin Fridson, founder of Lehmann Livian Fridson Advisors and a longtime junk-bond analyst. "Currently, though, the ability to sell a large position is especially poor…. When that tension gets especially high, you can see something snap." ..."
"... Speculation by retail investors in high risk instruments like high yield bonds, oil ETN funds (based off oil futures), gold funds, etc rose tremendously during ZIPR period. Probably several billions were lost by retail investors during this period in search for yield. The same is true about participation of retail investors in regular casino games such as stock funds and indexes like S&P500. ..."
[Dec 11, 2015] Demand, Supply, and what is new after 2008
Notable quotes:
"... Robert Waldmann writes that that the reason Krugman was surprised by the failure of the supply side is that he didn't pay enough attention to the European unemployment problem. The natural unemployment rate hypothesis failed spectacularly in Europe in the 1980s. Extremely high unemployment did not lead to deflation - rather it coexisted with moderate inflation for a long time, then with low inflation. By 2008, the flat Phillips curve was already very clear to anyone who read Italian newspapers. ..."
[Dec 11, 2015] Why Its Tricky for Fed Officials to Talk Politically
"There is no reason for central banks to have the kind of independence that judicial institutions have. Justice may be blind and above politics, but money and banking are not." Economic and politics are like Siamese twins (which actually . If somebody trying to separate them it is a clear sign that the guy is either neoliberal propagandists or outright crook.
Notable quotes:
"... I think FED chairman is the second most powerful political position in the USA after the POTUS. Or may be in some respects it is even the first ;-) So it is quintessentially high-power political position masked with the smokescreen of purely economic (like many other things are camouflaged under neoliberalism.) ..."
"... I think that is a hidden principle behind attacks on FED chair. A neoliberal principle that the state should not intrude into economics and limit itself to the police, security, defense, law enforcement and few other related to this functions. So their point that she overextended her mandate is an objection based on principle. Which can be violated only if it is used to uphold neoliberalism, as Greenspan did during his career many times. ..."
"... This kind of debate seems to be a by-product of the contemporary obsession with having an independent central bank, run according to the fantasy that there is such a thing as a neutral or apolitical way to conduct monetary policy. ..."
"... A number of commenters and authors have recently pointed out that inequality may not just be an unrelated phenomenon to monetary policy, but actually, in part at least, a byproduct of it. ..."
"... The theory is that the Fed in the Great Moderation age has been so keen to stave off even the possibility of inflation that it chokes down the vigor of recoveries before they get to the part where median wages start rising quickly. The result is that wages get ratcheted down with the economic cycle, falling during recessions and never fully recovering during the recoveries. ..."
"... Two Things: (i) The Fed should be open and honest about monetary policy. No one wants to return to the Greenspan days. (ii) Brad Delong is a neoliberal hack. ..."
"... As to why risk a political backlash in the piece, the short answer is: to invoke the debate on whether politics or fact (science) is going to dominate. Because they can't both. See: Romer. Let's have this out once and for all. ..."
[Dec 11, 2015] Demise of the US Middle Class Now Official
Notable quotes:
"... The US is in the midst of transforming itself into a much lower wage environment for all employers. ..."
"... Now the most telling part: Of the households with children in their twenties (a mixture of high school only and graduates in an approximately 50/50 mix of the two) none - absolutely none - can afford to live in the same style as their parents did. ..."
"... Those with no college degree are having, again, to live with their parents until they can afford somewhere to rent. ..."
"... Damn those neo-liberals, damn them to hell! ..."
"... Newsweek ran a story last year, titled "The Hit Men," about executives responsible for massive layoffs. The chief executives of AT T, Nynex, Sears, Philip Morris and Delta Air Lines were high on the list. Of course, international competition plays a role in some downsizings, but as Newsweek's list makes clear, it is hardly the most important cause of the phenomenon. To my knowledge there are no Japanese keiretsu competing to carry my long-distance calls or South Korean conglomerates offering me local service. Nor have many Americans started buying their home appliances at Mexican stores or smoking French cigarettes. I cannot fly Cathay Pacific from Boston to New York. … ..."
"... The ONLY reason these corporate scum downsize is to artificially drive up "productivity" numbers, not real growth in anything, just productivity (because fewer workers NOW have to do the work of 3, and THAT for less pay than before! Instant explosion in productivity!). This only serves to bump up share prices which don't actually reflect anything of value or even approach reality on its own terms. They get to say, "See? Massive increase in productivity, so pay me a bazillion damn dollars in 'bonus". ..."
"... Every pay cut, every job loss should be legally tied to a requirement to lay off a proportionate number of execs AND a proportional cut to top pay and compensation. The income of the top MUST be hard-locked to pay for workers. Worker pay and compensation decreases, then so MUST executive pay and compensation. ..."
"... America was a young country full of opportunity, like China a decade or two ago. As a nation matures the wealth concentrates without strong progressive taxation and high inheritance taxes. Now US social mobility is on a par with the UK, putting it at the second lowest in Europe which is pretty bad. Our privately educated elite are an obvious cause of low social mobility in the UK and perhaps private universities are doing the same job in the US. ..."
"... The 20th Century saw progressive taxation to do away with old money elites and so looking at the playing field now can be rather deceptive. Today's ideal is unregulated, trickledown Capitalism. We had unregulated, trickledown Capitalism in the UK in the 19th Century ..."
"... The Rothschild brothers of London writing to associates in New York, 1863: ..."
"... Our current wealth distribution is more the product of meritocracy than of inheritance. Harvard decided to go meritocratic back in the '50s. The average IQ of the incoming freshman class skyrocketed. There were still legacies, of course, but the whole Ivy League opened up to highly motivated, highly intelligent strivers. The result, in my view, and in the views of 'The Bell Curve' and 'The Revolt of the Elites' was a cognitive elite taking all the best jobs. Ivy league dominance of the most desirable positions in the FIRE sector, government, and the judiciary is far more pronounced today than it was in 1950. ..."
"... You don't seem familiar with the actual data. The US is more unequal than any other major industrialized nation on the planet. By a lot. And it's not a leftist thing. When Americans are surveyed about their desired wealth distribution, the mainstream – not leftist – viewpoint is that the ideal distribution looks roughly like Sweden. ..."