10/31/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

1. We're Governed by Callous Children - Americans are beginning to doubt their problems can be solved (hardcopy subhead) - Americans feel increasingly disheartened, and our leaders don't even notice (webcopy subhead) - Declarations, by Peggy Noonan, WSJ, A19.
   [Americans' problems CAN be solved, but only by sharing the vanishing work, which our 'leaders' are ignoring or spinning as a failure (never mind the first 170 years of American history when we cut the workweek in half).]
   The new economic statistics put growth at a healthy 3.5% for the third quarter. We should be dancing in the streets. No one is, because no one has any faith in these numbers. Waves of money are sloshing through the system, creating a false rising tide that lifts all boats for the moment. The tide will recede. The boats aren't rising, they're bobbing, and will settle. No one believes the bad time is over. No one thinks we're entering a new age of abundance. No one thinks it will ever be the same as before 2008. Economists, statisticians, forecasters and market specialists will argue about what the new numbers mean, but no one believes them, either. Among the things swept away in 2008 was public confidence in the experts. The experts missed the crash. They'll miss the meaning of this moment, too.
   The biggest threat to America right now is not government spending, huge deficits, foreign ownership of our debt, world terrorism, two wars, potential epidemics or nuts with nukes. The biggest long-term threat is that people are becoming and have become disheartened, that this condition is reaching critical mass, and that it afflicts most broadly and deeply those members of the American leadership class who are not in Washington, most especially those in business.
   It is a story in two parts. The first: "They do not think they can make it better."
   I talked this week with a guy from Big Pharma, which we used to call "the drug companies" until we decided that didn't sound menacing enough. He is middle-aged, works in a significant position, and our conversation turned to the last great recession, in the late mid- to late 1970s and early '80s. We talked about how, in terms of numbers, that recession was in some ways worse than the one we're experiencing now. Interest rates were over 20%, and inflation and unemployment hit double digits. America was in what might be called a functional depression, yet there was still a prevalent feeling of hope. Here's why. Everyone thought they could figure a way through. We knew we could find a path through the mess. In 1982 there were people saying, "If only we get rid of this guy Reagan, we can make it better!" Others said, "If we follow Reagan, he'll squeeze out inflation and lower taxes and we'll be America again, we'll be acting like Americans again." Everyone had a path through.
   Now they don't. The most sophisticated Americans, experienced in how the country works on the ground, can't figure a way out. Have you heard, "If only we follow Obama and the Democrats, it will all get better"? Or, "If only we follow the Republicans, they'll make it all work again"? I bet you haven't, or not much.
   This is historic. This is something new in modern political history, and I'm not sure we're fully noticing it. Americans are starting to think the problems we are facing cannot be solved.
   Part of the reason is that the problems—debt, spending, war—seem too big. But a larger part is that our government, from the White House through Congress and so many state and local governments, seems to be demonstrating every day that they cannot make things better. They are not offering a new path, they are only offering old paths—spend more, regulate more, tax more in an attempt to make us more healthy locally and nationally. And in the long term everyone—well, not those in government, but most everyone else—seems to know that won't work. It's not a way out. It's not a path through.
   And so the disheartenedness of the leadership class, of those in business, of those who have something. This week the New York Post carried a report that 1.5 million people had left high-tax New York state between 2000 and 2008, more than a million of them from even higher-tax New York City. They took their tax dollars with them—in 2006 alone more than $4 billion.
   You know what New York, both state and city, will do to make up for the lost money. They'll raise taxes.
   I talked with an executive this week with what we still call "the insurance companies" and will no doubt soon be calling Big Insura. (Take it away, Democratic National Committee.) He was thoughtful, reflective about the big picture. He talked about all the new proposed regulations on the industry. Rep. Barney Frank had just said on some cable show that the Democrats of the White House and Congress "are trying on every front to increase the role of government in the regulatory area." The executive said of Washington: "They don't understand that people can just stop, get out. I have friends and colleagues who've said to me 'I'm done.' " He spoke of his own increasing tax burden and said, "They don't understand that if they start to tax me so that I'm paying 60%, 55%, I'll stop."
   He felt government doesn't understand that business in America is run by people, by human beings. Mr. Frank must believe America is populated by high-achieving robots who will obey whatever command he and his friends issue. But of course they're human, and they can become disheartened. They can pack it in, go elsewhere, quit what used to be called the rat race and might as well be called that again since the government seems to think they're all rats. (That would be you, Chamber of Commerce.)
   ***
   And here is the second part of the story. While Americans feel increasingly disheartened, their leaders evince a mindless . . . one almost calls it optimism, but it is not that.
   It is a curious thing that those who feel most mistily affectionate toward America, and most protective toward it, are the most aware of its vulnerabilities, the most aware that it can be harmed. They don't see it as all-powerful, impregnable, unharmable. The loving have a sense of its limits.
   When I see those in government, both locally and in Washington, spend and tax and come up each day with new ways to spend and tax—health care, cap and trade, etc.—I think: Why aren't they worried about the impact of what they're doing? Why do they think America is so strong it can take endless abuse?
   I think I know part of the answer. It is that they've never seen things go dark. They came of age during the great abundance, circa 1980-2008 (or 1950-2008, take your pick), and they don't have the habit of worry. They talk about their "concerns"—they're big on that word. But they're not really concerned. They think America is the goose that lays the golden egg. Why not? She laid it in their laps. She laid it in grandpa's lap.
   They don't feel anxious, because they never had anything to be anxious about. They grew up in an America surrounded by phrases—"strongest nation in the world," "indispensable nation," "unipolar power," "highest standard of living"—and are not bright enough, or serious enough, to imagine that they can damage that, hurt it, even fatally.
   We are governed at all levels by America's luckiest children, sons and daughters of the abundance, and they call themselves optimists but they're not optimists—they're unimaginative. They don't have faith, they've just never been foreclosed on. They are stupid and they are callous, and they don't mind it when people become disheartened. They don't even notice.
   [You allow a huge labor surplus to develop by downsizing in response to worksavings instead of timesizing (adjusting your definition of "full time" work), and you screw up EVERYthing - the national income funnels up to the top brackets and they gradually grab all the decision-making power and drift off on their own planet of insulation and isolation - and resistance to any and all adaptation to changing circumstances because, hey, the system seems to be working for them and "if it works, don't fix it" - regardless of the "noise" from all the riffraff outside "our people." Capitalism only works well with a perceived labor shortage to raise wages and centrifuge the money supply out to the hundreds of millions who actually want and need to SPEND it. It does not work well when falling wages due to a labor surplus allow The Great Leak Upward = money beyond limit coagulating in a Black Hole among the top 300,000 or even 30,000 Americans, who were already spending all they cared to before they got the last $20 million (usually didn't even realize they got it!) and can't even find sustainable investment targets on that scale to maintain its value now they've effectively cannibalized their own consumer base (via their employment basement).]

2. State death taxes are the latest worry, by Laura Saunders, WSJ, B1.
   [These people don't know what worry is.]
   With the federal estate tax disappearing for most people, state death taxes have emerged as a surprise new worry.
   This year, the federal exemption rose to $3.5 million per individual, or as much as $7 million per married couple. At the current level, only 5,500 estates a year are federally taxable.
   That is down from the 17,500 estates that would have faced death taxes under the previous $2 million limit, the Urban-Brookings Tax Policy Center estimates.
   The problem is that most states with estate or inheritance taxes haven't raised exemptions to match the federal limits. That means thousands of taxpayers who now escape the federal levy could still get hit with a state death tax.
   As a result, tax advisers are tweaking bypass trusts that allow married couples to maximize exemptions from state taxes. They are advising taxpayers where to retire in order to pare or eliminate estate taxes. And they are counseling out-of-state taxpayers so that they don't get dinged for property they own in a state with a tough death tax.
   "In the past, many people hardly gave state death taxes a thought," says veteran estate attorney Sidney Kess in New York. "Now they are shocked at how expensive mistakes can be."
   Adding insult to injury, Congress is talking about eliminating the federal deduction for state estate taxes. That would affect only wealthy taxpayers whose estates still exceed $3.5 million per individual.
   Keeping track of the constantly changing landscape in state death taxes can be tricky. Delaware just added an estate tax this year, while the estate taxes in Kansas and Illinois are scheduled to disappear at the end of 2009.
   Connecticut, meanwhile, will raise its exemption to $3.5 million from $2 million in January. There are only three states that have same exemption as the federal estate tax.
   "States are in such dire straits that most without these taxes would like to have one, and nobody who has one will let it go," says David Brunori, a state tax expert with Tax Analysts in Falls Church, Va.
   He believes that both Illinois and Kansas will end up retaining their taxes, even though they are supposed to go away at the end of the year. "They need the money."
   Seventeen states and the District of Columbia currently impose estate taxes, according to CCH Wolters Kluwer. Eight states have inheritance taxes, which are levied on heirs, not estates. Maryland and New Jersey have both.
   Compared to the uniform federal tax, state taxes are a crazy quilt. In many states with inheritance taxes, rates are tied to how closely the heir is related to the late donor. Iowa and Kentucky exempt both spouses and children who inherit property, while Nebraska treats only transfers to spouses as tax-free.
   Rates and exemptions vary widely. Washington state's top tax rate is 19%, but it applies only to estates over $2 million. Pennsylvania, by contrast, taxes children and grandchildren of an heir at an almost-flat rate of 4.5%. More-distant heirs pay up to 15%.
   Advisers say taxpayers are most likely to be tripped up by states that used to conform to the federal exemption but haven't raised it at the same rate.
   As a result, married couples in states with lower exemptions -- such as New York, Oregon, Minnesota and Massachusetts (all $1 million) or Illinois ($2 million) -- are setting up "bypass" trusts in wills even if they no longer need them for federal taxes.
   Here's how bypass trusts work: At the death of the first spouse, assets go into a trust that the survivor can draw on if necessary. When the second spouse dies, the remaining assets in the bypass trust pass tax-free to heirs, preserving the value of both individual exemptions.
   Put another way, if a married couple lives in a state with a $1 million individual exemption, a bypass trust would let them to pass as much as $2 million tax-free to heirs.
   "Without the proper trusts," says Eric Hager, an attorney at Davidson, Dawson & Clark in New York, "a couple in New York with $2 million in assets might pay an unnecessary $100,000."
   Others warn that even taxpayers who live in states without estate taxes, such as Florida or California, risk unpleasant surprises if they also own property in a state that does have one.
   The issue is figuring out the "domicile" of a taxpayer. Domicile is a much broader idea than the mere residency test that often determines where someone pays income tax.
   Although one determinant of domicile is the amount of time spent in a state, it also may look at where a taxpayer votes, has church and club memberships, registers a car or even has a burial plot.
   This means that a taxpayer could live in estate-tax-free Florida, California or Texas and even spend most of his time there. But if he keeps an apartment in New York or a summer home on Cape Cod and has other ties to the area, he might be considered to be domiciled there.
   "The issue of domicile used to come up only once in a blue moon," says Daniel Daniels, an attorney at Wiggin & Dana in Stamford, Conn. "Now we have to think about it all the time."
   In the worst case, a taxpayer could be domiciled in more than one state and owe taxes to each. There is a famous precedent: After the 1930 death of Campbell Soup magnate John Dorrance, both New Jersey and Pennsylvania claimed he was domiciled there. Each billed his estate about $15 million.
   Twice, the U.S. Supreme Court refused to break the deadlock. After a six-year battle, the Dorrance estate paid tax to both states.
   Write to Laura Saunders at laura.saunders@wsj.com
   

10/30/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

• To rein in pay, rein in Wall Street - Once, buckets of profit were the norm, not truckloads, by Floyd Norris, NYT, B1.
  [Yeah, but the blood buckets of the late 20s were a big push toward depression. So how does Norris propose we rein in Wall St.?]
  Why are financial industry paychecks so big?
  The answer is simple, and it is the one Willie Sutton is supposed to have offered when asked why he robbed banks: "Because that's where the money is."
  Those who want to do something about bringing that pay down ought to focus on why there has been so much money in the financial sector in recent years.
  [We predict he's not really going to answer this, so we will. Money can either flow primarily to (A) employers and their owners/investors or to (B) employees and their dependents. If to A, it funnels 'up' to a smaller and smaller population with more and more money already, slows its circulation since they can't possibly spend it - the decline in spending and currency circulation leaves a greater amount of productivity unmarketable, which in turn leaves a greater amount of investments not only unprofitable but unsustainable. Everyone loses, including the wealthy. But if to B, it spreads out to a larger and larger population with less and less money already, accelerates its circulation since these are the people who want and need to spend it, and their spending induces a greater amount of marketable productivity (productivity that isn't marketable is a waste of time and effort) and that in turn provides a greater amount of at least sustainable and often profitable investment targets - so everyone benefits, including the rich. Is there one single factor above all others that determines which way money will go? We'd say yes, based on clues from history like wartime prosperity and plaguetime prosperity. If there is an economywide labor surplus where employers are swamped with resumes for every job opening, wages fall and money flows to A. If there is a perceived economywide labor shortage, market forces get employers bidding against one another for good help, wages rise and money flows to B.
  [Is there a way to create this magic, perceived labor shortage without war or plague? Again history gives the clue. For most of American history, we were engaged in a more or less continuous if jerky effort to reduce the workweek. Things stayed in rough balance except when we didn't do it fast enough to keep up with technological advance, worksavings and employee displacement. In 1940, that process stopped, and the workweek has been downwardly frozen, upwardly ratcheted, ever since. Money has been funneling to A, especially since the postwar babyboomers grew up, entered the job market around 1970, and replaced the labor surplus of the Great Depression. We must now resume the secular reduction of the workweek that we stopped in 1940, or continue our race to the bottom. More and more workaholism with less and less pay - if you still have a "full-time" job at all. In short, the 80% of China that we never hear about.]
  It should be no surprise that people in that business wanted to be paid a lot; the surprise should be that there was so much money to go around.
  For whatever reason, the money was there in recent years as never before.
  The government estimates total financial industry profits each year, and it is easy to compare them to the size of the economy. In the six decades from 1929 through 1988, those profits averaged 1.2 percent of gross domestic product - and never went above 1.7 percent.
  Then they shot up in the 1990s and went up further in the current decade, peaking at 3.3 percent in 2005. Even now, the figure is higher than it ever was before 1990.
  Why were those profits so high?
  [Our general response to technology was downsizing the workforce instead of the workweek (timesizing) and the resulting labor surplus pummeled wages and allowed money to funnel to the top.]
  And did society get its money's worth out of them?
  [He's joking, right? How can a brain cancer that sucks up half the body's blood supply possibly be justifiable?]
  If those surging profits reflected the financial industry's success in helping the real economy, we might be jealous but not contemptuous. You don't hear a lot of carping about how Bill Gates and Steve Jobs became so wealthy.
  There is no doubt that the allocation of credit - a primary function of the financial industry - is a crucial function, particularly in an economy undergoing change. If the finance business has done a great job of that, of directing money to where the new opportunities are, then there is no reason to begrudge them their wealth.
  Unfortunately, there is little evidence that the financial industry's success has done much for the rest of us. Capital was not well allocated during the recent bubbles, to say the least. The fact we had bubbles testifies to that.
  Moreover, Robert Barbera, the chief economist of ITG, points out that in the middle of this decade there was a surge in borrowing by the rest of us - households and nonfinancial businesses - that was much larger than the simultaneous growth in the economy.
  The last time that happened, he points out, was in the late 1980s, just before the previous banking crisis. Perhaps he has found an indicator that a systemic risk regulator could use in a coming cycle.
  But saying the success of the financial sector has not been a godsend to society does nothing to explain why it occurred.
  Let me suggest a few contributors to that success:
  HIGHER CHARGES
  It is not just all those fees you have noticed on your credit cards and checking accounts. Much more important is the growth of the hedge fund industry.
  The people who managed money for institutions a generation ago charged fees that seem tiny by today's standards. Now hedge funds normally charge a management fee of 1 percent of total assets, plus 20 percent of profits. Those fees swell financial industry profits. To generate investment returns high enough to justify those fees, hedge funds use a lot of leverage. That borrowed money creates financial industry revenue.
  CONCENTRATION
  "In 1990, the 10 largest financial institutions had 10 percent of financial assets in the United States," says Henry Kaufman, an economist and author of a new book, "The Road to Financial Reformation." "Last year, the figure went over 60 percent." He points out that bid-asked spreads are rising in some markets, which will raise profits for the market makers, and that fees for underwriting securities are also rising.
  DERIVATIVES AND COMPLEXITIES
  Richard Bookstaber, a former hedge fund manager and risk manager whose 2007 book "A Demon of Our Own Design" warned of the crisis that soon erupted, suggested in his blog last week that banks profited from "constructing informational asymmetries between themselves and their clients. This gets into those pages of small print that you see in various investment and loan contracts. What we might call gotcha clauses and what the banks call revenue enhancers. And it also gets into the use of complex derivatives and other innovative products that are hard for the clients to understand, much less price."
  EVADING TAXES AND RULES
  Many of the financial innovations of recent years were not designed to increase operating profits for customers. Instead, they sought to avoid taxes, or make accounting statements look prettier, or get around regulations seeking financial safety. At their worst, they boiled down to an offer to charge a customer a dime for letting him evade 20 cents in taxes. Such transfers do nothing for the larger society.
  EXCESSIVE RISK-TAKING
  The banks took more and more risks in recent years. Some they pushed out to others via derivatives that often were badly priced. But others were kept. When things went well, the profits rolled in. When they went badly, we got to bail them out.
  (The profit numbers the government uses, by the way, are a version of operating profits. They don't count big write-offs, which would seem quite unreasonable if it did not turn out that bankers did not need to count them either. Bailed out, they could return to collecting big paychecks.)
  ooo ooo ooo
  If those are the reasons for the profits, then perhaps regulatory attention should focus on the causes, not the effect. Rather than have a pay czar try to determine fair compensation for bailed-out banks while others can do as they please, Congress could look at changing the environment that produced this mess.
  One way to do that is to encourage more competition. The impulse last year to have bigger banks take over failing big banks now looks exactly wrong, even before remembering that the regulators thought Citigroup and Bank of America were good acquirers with solid balance sheets.
  The new regulatory system also needs to force banks to hold a lot more capital, and it needs to keep them from using tricks to take the same risks while appearing to need less capital. If the regulators can do that, it would reduce bank profits by tying up capital. One Wall Street executive I know suggests that would, in turn, bring down compensation by stimulating shareholders to demand more of the profits for themselves.
  Mr. Kaufman argues that to prevent further socialization of the financial system, there simply have to be fewer banks that are too big to fail. He thinks such institutions should face more stringent regulation, and be barred from certain activities. If they want to do those things, they can find ways to split up or shrink.
  Customers can also be empowered. Forcing most derivatives onto exchanges would increase the number of people who would be in a position to trade them, and probably bring better pricing for customers. One reason there are so many custom derivatives is that banks have persuaded customers they are cheaper, which is absurd. They can argue that because the banks do not force companies to put up cash when the value of a position declines. That should change. The banks could still lend the needed margin, or course, but by separating the credit and pricing functions customers would know more, and possibly get better deals.
  Some such ideas were in the Obama proposals, but they are being watered down by intense bank lobbying. Some legislators who loudly denounce bank pay seem unwilling to do anything about the actual causes.
  If policy makers want to bring down bank pay, they should do something to make the industry more competitive, and to assure that no one expects the taxpayer to again pay all the costs if the industry blows up again.
  Floyd Norris comments on finance and economics in his blog at nytimes.com/norris.

10/17/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

• Wealth Matters -
  [No it doesn't matter in terms of stopping people from worrying about money (see comment below starting with bolded "Their concern about money"). Note Jesus' "It is easier for a camel to go through a needle's eye...." And wealth doesn't matter in terms of economic functionality, since beyond the functional range of money-supply concentration in a given economy (for funding of large collective projects), most wealthy people are using their wealth and the further acquisition thereof primarily for pecking-order placement and maintenance. In the upper brackets, wealth becomes mere "social goods," regardless of the negative consequences for everyone else and the system itself.]
  - All This Anger Against the Rich May Be Unhealthy, by *Paul Sullivan, NYT, B6.
  [For whom?]
  Robert Clarfeld, a financial adviser, bought a Jaguar XKR before the financial collapse, a point he makes on its vanity plate. (photo caption)
  BEATING up on the wealthy seems to be the order of day. I suspected that.
  [Or maybe your recent column sorta kinda quietly encouraged that? The one moderating influence here should be that any of us in their position would behave exactly the same. This is a long-term system-design problem, and it's about to take a big step toward solution, because our primitive WOW GEE! approach to it as a goal and not as our most serious problem is really starting to get dangerous, for us all, including the wealthy. And "necessity is the mother of invention." The concentration and relative de-activation of the money supply in the topmost brackets is undermining the foundations of our economic system itself and its basic sustainability and survivability, and desecuritizing all within it, far beyond historic levels in the age of (in order of appearance) nuclear weapons, ecological constraints, and robotics.]
  But a recent Wealth Matters column [see 10/03/2009 below] touched a particularly raw nerve. It looked at how even people with sizable fortunes were concerned about money in this recession and the impact that could have on the rest of us.
  [Their concern about money is a big part of the dysfunctionality of unlimited money-supply concentration. There is no generally accepted wealth level, however huge, above which people stop worrying about money. In fact, the more we have, the more we tend to worry, irrational as that sounds to the other 99% of the population, and it is a big factor in the smaller percentage of their income and wealth that they donate to charity relative to the lower income and wealth brackets.]
  Readers rejected the attempt to understand the concerns [ie: paranoia?, tight-clenching insecurity?] of the rich.
  “That’s so stupid that you ought to be slapped for it,” one woman wrote. My favorite began: “Bowties and Reaganomics are for losers. You can cry for the rich all you want, the rest of us will be happy to see them get taxed.”
  The vehemence in these e-mail messages made me wonder why so many people were furious at those who had more than they did. And why are the rich shouldering the blame for a collective run of bad decision-making? After all, many of the rich got there through hard work. [And many got there through fraud and abuse of power.] And plenty of not-so-rich people bought homes, cars and electronics they could not afford [because they were tricked by the small print of the rich?] and then defaulted on the debt, contributing to the crash last year.
  But in this recession, anger flows one way. Eric Dammann, a Manhattan psychoanalyst, theorizes that a lot of people are angry that the rules of the game seem to have changed.
  “There’s always been envy and hatred toward the rich, but there was also a strong undercurrent of admiration that was holding these people up as a goal,” Mr. Dammann said. “This time it’s different because it feels like it’s a closed club and the rich have an unfair advantage.”
  What is troubling is that the anger has hardened for some into a suspicion that all wealthy people are motivated purely by self-interest, said Brad Klontz, a financial psychologist in Hawaii and a co-author of the forthcoming book, “Mind Over Money: Overcoming the Money Disorders That Threaten Our Financial Health” (Random House).
  “The script goes like this: Money is bad, rich people are shallow and greedy, and people become rich by taking advantage of others,” Mr. Klontz said. “But the same people who say money is bad say money is connected to their self-worth — they wished they had it and you didn’t.”
  In boom or bust, envy is natural, and the desire for a level playing field is understandable. But so too is the desire to do better financially, to the point where it seems at times to be hardwired into our national psyche. “To revile the rich is to revile the American dream,” said Robert Clarfeld, president of the wealth management firm Clarfeld Financial Advisors.
  This resentment was so palpable, I started to wonder if it was having any effect — were the wealthy aware of it, and if they were, did they care?
  TAX AND GIVE
  A big concern among the wealthy right now, their advisers say, is not populist anger but how it might translate into tax-the-rich legislation on the federal and state levels. Their concern is twofold.
  The first is that any tax increase has a direct impact on the income they withdraw from their portfolios. More money going to the government means less to live on. [But since both their portfolios and the income they withdraw to live on are both on another planet...] "They’re very concerned about taxes going up,” said William Woodson, managing director at the Family Wealth Management group at Credit Suisse. “The percent that goes to taxes is significant if it’s a 15 percent capital gains vs. 25 percent capital gains. It makes a big difference.”
  [No it doesn't, relative to the percentage difference of lower brackets. And if they had any intelligence, they would appreciate what an important part steeply graduated income taxes played in the "wartime prosperity" of world wars I and II in getting that wasted coagulation of money back into circulation. Taxes are not the best way, timesizing is the best way in our lifetime, but taxes are a lot better than the system corroding scale of concentration and waste of spending power that we've developed today. It is THE cause of recession-depression. It's so extreme it can't even find sustainable investments in marketable productivity, let alone time or need (ha!) to be spent.]
  The second concern may be disheartening for those who are angry at the rich but like the museum exhibition or scholarship they pay for: increased taxes could cut into donations. [HA! every survey shows that the wealthy contribute smaller percentages of their wealth than lower brackets, and moreover, any system that relies on capricious charity for vital system functions, such as centrifugation of value, is lethally flawed - as we're seeing as our economic system cascades from one bubble down to another bubble, at levels of greater and greater deterioration.] While there is not a direct correlation between tax deductibility and personal donations, there is a correlation between increased taxes in a continued weak economy and charitable giving.
  “I’ve not heard anything from anybody about the economy impacting the desire to do it,” said Lyle LaMothe, head of wealth management in the United States at Merrill Lynch Wealth Management. “It’s the ability to do it.”
  Mr. Woodson noted that in the last year foundations reduced their giving in line with the economic downturn, yet individuals tended to give the same or more, if they could.
  THE ANGRY RICH
  For the wealthy, their public image is a secondary concern since so many of them seek to live anonymously.
  [It's more likely that they are so anxious or insecure about their public image that they seek to live anonymously.]
  “They feel mischaracterized,” Mr. LaMothe said. “They know the time and effort they contribute. They fund scholarships and all the things they do routinely, and then to be characterized as not doing their fair share begins to wear on them.”
  [Invalid - some of them have sooo much that it dwarfs to invisibility any concept of "fair share." And who has (A) defined the appropriate dimension for a determination of "fair share" anyway, let alone (B) determined it, let alone (C) secured any kind of public consensus on it? (Actually, we have done A and B - find & link our webpage with the discussion of "fair share per person" and its easiest future evolution.]
  From the outside, the wealthy seem to be one big money-minting group. [They don't mint it, they use it to modify laws to redirect it to themselves, and they downright defraud it.] But how they came upon their wealth differs greatly. [No kidding!] And those who did not make their fortunes in finance seem just as angry as everyone else about what Wall Street has wrought. [For many, the "anger" is just a defensive pose.]
  “They want the problem to be fixed for their own personal benefit [bingo] but also for the broader benefit of the community [well, yeah, they gotta put that in as a defensive after-thought],” Mr. Woodson said. “They tie their wealth interests to the broader health of the economy.”
  [No, they somewhat desperately believe that their wealth interests are the base and foundation of the broader health of the economy, as we saw when the banksters extorted a $700 billion "bailout" from taxpayers by threatening an economic collapse. Actually, they are a third derivative: the foundation is the employment basement; the first derivative is the consumer base; the second derivative is the business/industry markets (b2b), and thirdly, derived from the marketable producitivity packaged up in businesses and industries is...the financial markets. And right now they have diverted sooo much of the nation's income and wealth, sooo much of the money supply, to their own tiny population (Krugman estimates 0.01%) that they can't find nearly enough marketable productivity to invest in to even maintain the value of their portfolios let alone gain returns from them.]
  Mr. Clarfeld, who manages $3 billion largely for financial services executives, takes exception to lumping all of Wall Street together. He said his clients felt that they had worked hard and honestly for their money and were now being unjustly judged alongside those who did not.
  He is counseling clients to live their lives largely as they’ve done in the past, though in a slightly toned-down form. Mr. Clarfeld said he had taken his own advice to heart. He bought his dream car, a Jaguar XKR, before the market crash but then felt uncomfortable about it. “I didn’t like the way it made me feel but not enough that I was going to get rid of the car,” he said. So he made light of it with a vanity plate to recall better times: “PRE LEHM.”
  WIDER IMPACT
  The line from my last column that prompted the most responses was about how the wealthy weren’t sleeping well either. The vitriol in the e-mail showed just how deep the anger against the rich is.
  Yet put simply, this is not healthy. After all, if you’re wealthy and no one likes you, you still have lots of money. But if you spend your free time obsessing about the rich, you could end up in worse shape emotionally, personally and financially.
  “People who get caught up in this paranoia spend all night reading these blogs, and six months later they haven’t done anything to better themselves,” Dr. Dammann said. “Even if they’re right, there is a lot of wasted energy put into this. They need to look at the mistakes they’ve made in their life.”
  Mr. Klontz is even more concerned that this obsession with money and blame will affect children. He said the risk is creating a generation that distrusts investing and associates wealth with greed.
  “People in their 20s have watched their parents lose their money and now they think, ‘You can’t trust banks, you can’t trust anyone,’ ” he said. “We need to do work around that. That association between money and being bad can be extremely intense.”
  The trouble, Mr. Klontz said, is the people we surround ourselves with often reinforce our beliefs, even when they are unhealthy. “What we don’t see are the wealthy families with modest lifestyles who are raising responsible kids,” he said.
  [Oh please. Totally unlimited concentration of the money supply among a tiny percentage of the population is not necessary to support "modest lifestyles" and "raise responsible kids". In fact, it is system-destructive since the wealthy are surrounded by people who reinforce their beliefs, and the result is that virtually no negative feedback - the important kind that indicates necessary adaptation and change - reaches them. As negative feedback approaches them, it gets less and less negative, until finally it often looks positive. Hence, Bush: "Stay the course!" and "Helluva good job, Brownie!" The system appears to be working fine for them, so "if it works,, why change it?" They exist in a bubble, on a different planet, that is drifting further and further away. And at the same time they have all the decision-making power, now that democracy has been drowned in money via lobbyists, campaign contributions, and now, rigged-voting-machine manufacturers and conveniently inauditable paperless elections. Plus the concentration of the money supply is now so gargantuan, we've reached a "black hole" economy, where "trickle down" is negligible and laughable.
  The wealthy have become, in biological terms, "dumb parasites" that kill their host. And nobody is asking the critical questions: is there a point in the concentration of a nation's money supply, of a nation's income and wealth, where the concentration itself becomes self-undermining? How do we determine that point? How do we reverse that concentration and return the economy to balance and sustainability - and escape from a death spiral of downward cascading bubbles?
  Answer: discipline management - though all they talk about is "the discipline of labor."
  And the only method of disciplining management that sticks is,
  the engineering/creation and fostering of a perceived, general system-wide, labor shortage (actually a balance since it works so well).
  How engineer this magic labor shortage?
  not by war (or plague) - though this "helps" temporarily - if it doesn't destroy everything...
  not by artificial public or private sector job creation or makework - which is either too little too late or too military (public sector) or too eco-hostile (private sector)...
  not by doing nothing and trusting to "market forces" to take care of it - the market alone cannot reframe or redesign itself, ie: level its own playing field - market forces can simply operate on the slope that exists, and trend over time to exaggerate the existing slope. The "invisible hand" of economics was actually the very visible hand, in politics, of extending suffrage, leading its balance over into the economic sphere.]

10/10/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or ... - missing earlier and later dates are handled entirely on recent archive page(s) -

• Schumpeter [column] - Hating what you do - Disenchantment with work is growing. What can be done about it? (10/08) The Economist, p.70.
  SUICIDE, proclaimed Albert Camus in “The Myth of Sisyphus”, is the only serious philosophical problem. In France at the moment it is also a serious management problem. A spate of attempted and successful suicides at France Telecom—many of them explicitly prompted by troubles at work—has sparked a national debate about life in the modern corporation. One man stabbed himself in the middle of a meeting (he survived). A woman leapt from a fourth-floor office window after sending a suicidal e-mail to her father: “I have decided to kill myself tonight…I can’t take the new reorganisation.” In all, 24 of the firm’s employees have taken their own lives since early 2008—and this grisly tally follows similar episodes at other pillars of French industry including Renault, Peugeot and EDF (see article).
  There are some parochial reasons for this melancholy trend. France Telecom is making the difficult transition from state monopoly to multinational company. It has shed 22,000 jobs since 2006, but two-thirds of the remaining workers enjoy civil-service-like job-security. This is forcing it to pursue a toxic strategy: teaching old civil servants new tricks while at the same time putting new hires on short-term contracts. Yet the problem is not confined to France. America’s Bureau of Labour Statistics calculates that work-related suicides increased by 28% between 2007 and 2008, although the rate is lower than in Europe. And suicide is only the tip of an iceberg of work-related unhappiness.
  A survey by the Centre for Work-Life Policy, an American consultancy, found that between June 2007 and December 2008 the proportion of employees who professed loyalty to their employers slumped from 95% to 39%; the number voicing trust in them fell from 79% to 22%. A more recent survey by DDI, another American consultancy, found that more than half of respondents described their job as “stagnant”, meaning that they had nothing interesting to do and little hope of promotion. Half of these “stagnators” planned to look for another job as soon as the economy improved. People are both clinging on to their current jobs, however much they dislike them, and dreaming of moving when the economy improves. This is taking a toll on both short-term productivity and long-term competitiveness: the people most likely to move when things look up are high-flyers who feel that their talents are being ignored.
  The most obvious reason for the rise in unhappiness is the recession, which is destroying jobs at a startling rate and spreading anxiety throughout the workforce. But the recession is also highlighting longer-term problems. Unhappiness seems to be particularly common in car companies, which suffer from global overcapacity, and telecoms companies, which are being buffeted by a technological revolution. In a survey of its workers in 2008, France Telecom found that two-thirds of them reported being “stressed out” and a sixth reported being in “distress”.
  A second source of misery is the drive to improve productivity, which is typically accompanied by an obsession with measuring performance. Giant retailers use “workforce management” software to monitor how many seconds it takes to scan the goods in a grocery cart, and then reward the most diligent workers with prime working hours. The public sector, particularly in Britain, is awash with inspectorates and performance targets. Taylorism, which Charlie Chaplin lampooned so memorably in “Modern Times”, has spread from the industrial to the post-industrial economy. In Japan some firms even monitor whether their employees smile frequently enough at customers.
  A more subtle problem lies in the mixed messages that companies send about loyalty and commitment. Many firms—particularly successful ones—demand extraordinary dedication from their employees. (Microsoft, according to an old joke, offers flexitime: “You can work any 18-hour shift that you want.”) Some provide perks that are intended to make the office feel like a second home. But companies also reserve the right to trim their workforce at the first sign of trouble. Most employees understand that their firms do not feel much responsibility to protect jobs. But they nevertheless find it wrenching to leave a post that has consumed so much of their lives.
  Engineering joy
  [Unnecessary - just engineer job options = a shortage of labor instead of a shortage of employment - and let employees find their own 'joy'.]
  Can anything be done about this epidemic of unhappiness?
  [Sure - thaw out the 70-year rigidly regulated and frozen 40-hour workweek, and resume our 160-year history of workweek reduction and the proliferation of job options.]
  There are some people, particularly in Europe, who think that it strengthens the case for expanding workers’ rights.
  [Rhetoric. Meaningless while workers are a surplus, redundant commodity.]
  But doing so will not end the upheaval wrought by technological innovation in the telecoms sector or overcapacity in the car industry. And the situation in France Telecom was exacerbated by the fact that so many workers were unsackable. The solution to the problem, in so far as there is one, lies in the hands of managers and workers rather than governments.
  Companies need to do more than pay lip service to the human side of management. They also need to learn from the well-documented mistakes of others (France Telecom has belatedly hired Technologia, a consultancy which helped Renault with its suicide problem). Bob Sutton of Stanford University argues that companies need to do as much as possible to come clean with workers, even if that means confirming bad news. He also warns that bosses need to be careful about the signals they send: in times of great stress ill thought-out turns of phrase can lead to a frenzy of anxiety and speculation.
  As for the workers, the habit of battening down the hatches, which so irritates many companies, may be a sensible response to economic turmoil. In the longer term workers can take comfort from the fact that history may be on their side: in the rich world, low birth rates, an impending surge in retirements and caps on immigration could reduce the number of people of working age by 20-40%. Today’s unhappy workers may one day be able to exercise the ultimate revenge, by taking their services elsewhere.
  [Not without job options to provide "elsewhere" to take their services!]

10/03/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

• Wealth Matters - Too Rich to Worry? Not in This Downturn, by Paul Sullivan, NYT, B6.
  [So why does Paul Sullivan care and empathize so strongly with the wealthy (aside from all the usual 'dream on' syndrome)? -]
  *Paul Sullivan writes about strategies that the wealthy use to manage their money and their overall well-being. (intro squib) [i.e., it's his job, stupid!]
  IT turns out the other half — or at least the tiny slice who live at the top of the wealth pyramid — are not sleeping any better than the rest of America.
  At a closed-door meeting of advisers to family offices — which serve families who typically are worth more than $500 million — I learned that the super-rich are just as concerned about the future as everyone else.
  Even though the stock market has rebounded from its March 9 low, the family office advisers said many of their wealthiest clients were bracing for more bad news and wondering how it would affect their family unity.
  “They are now looking at financial planning and things middle-class families live by,” Kathryn McCarthy, a leading adviser to wealthy families, including the Rockefellers, said at the gathering this week convened by Bessemer Trust.
  Before you start laughing up your sleeve, be advised that this is not a good thing. When the super-rich get cold feet, the rest of America gets swine flu. They are, after all, the people who might finance new companies that create jobs, make big investments to support existing companies and spread their wealth throughout the economy.
  According to a study the Family Office Exchange plans to release this month, the super-rich are most worried about what they do not know. Some 45 percent of the 108 ultrahigh-net-worth families surveyed in August ranked the economy and financial markets as their No. 1 concern. They were most concerned about government intervention in the financial markets and a commercial real estate bust.
  Historically, the super-rich have focused mostly on family dynamics, since so much of their wealth is linked together and could be endangered by a rift. But the sudden decline in wealth — even if they still have hundreds of millions of dollars — has prompted soul-searching. The bad news is they are not confident about the American economy. The better news is they are looking at their families in a way that the average American could learn from.
  MORE THAN MONEY
  What is most interesting is that many of the super-rich are looking at the risks of their relatives.
  One of the big problems is how differently people within a family spend, save and invest money that has been managed as a pool for many generations. When the credit markets froze and the stock market tumbled, not every cousin agreed to tighten his alligator-skin belt. That caused friction.
  Some family members with money in individual trusts are opting to go off on their own. The bigger issue is when families have to cooperate to run the business the patriarch set up.
  In the past, family businesses and family wealth were commingled. If the business was struggling, the patriarch would often finance shortfalls. “Now the kids are upset about where the money is going,” said Holly Isdale, managing director at Bessemer. “Intrafamily dynamics are playing a bigger part in decisions.”
  If the family put in place a strict estate plan, the children may legally own a good portion of what the patriarch made. And now they have choices to make that may go against his wishes. “These families have recognized that autopilot is not a good strategy,” said Amelia Renkert-Thomas, a lawyer with Withers Bergman.
  The other risk to super-rich families is government action and increased regulation. They suspect it is coming but do not know how it will affect them. The result is that they are increasingly anxious about the future while still shell-shocked from the past year.
  “We are telling them not to make changes for the sake of making changes,” said Theodore Beringer, managing director of the Beringer Group, a family office adviser. “First, they need to find out what needs to be changed.”
  RETURN TO BASICS
  Figuring out what they need to do differently has prompted many super-rich families to ponder the same question as the rest of us: How did the boom years change us?
  The basic issue for them is deciding what they want to do as a family now that they realize they cannot do everything. “You’re worth $500 million one day and wake up the next and it’s $350 million and you’ve pledged $100 million to the Met,” said Rob Elliott, senior managing director at Bessemer. “What are the family’s goals? Is it philanthropy or bringing along the next generation?”
  Coming up with an answer has been complicated by second-guessing: should they, or could they, have done something differently? “They’re human — they sell too soon and they buy too high,” Mr. Beringer said. “It used to be, ‘I’m going to buy A and B.’ Now it’s, ‘I’ll buy A or B.’”
  The bigger choice is what they do as a family when members are against both A and B. If that is left unresolved, tensions can fester.
  NO MORE EASY MONEY
  One reason for the subprime mortgage collapse was that banks gave mortgages to homebuyers without verifying their ability to repay. The super-rich had their own version of this: the signature loan.
  In this case, a person’s net worth would be verified but not, say, the value of the building she was buying. The feeling was if someone was worth $1 billion, she would have no problem paying back a loan for a $100 million office tower.
  This gave the super-rich access to quick financing, for both hard assets like real estate and assets like securities. “There’s a realization that we can’t borrow any more to goose our returns,” Ms. McCarthy said.
  Now banks want loans secured by a verifiable asset, and the super-rich are not borrowing as much. This has translated into a more conservative approach over all.
  One thing the group convened by Bessemer agreed on is that their clients were hesitant to buy commercial real estate. They fear that the value of it could collapse with greater ferocity than the housing market.
  The logic behind this is that with everyone cutting back — companies laying off workers, consumers watching what they buy — there is less demand for office and retail space. If leases expire and are not renewed, building owners will have trouble making their loan payments. That, in turn, will affect the investors who bought the bonds secured by this debt.
  Even those real estate owners who are doing well could be hurt. “A lot of this debt is short term and it needs to be refinanced, but there is no market for that,” Ms. Isdale said. Next year and 2011 are expected to be the worst, Ms. McCarthy said.
  So while the super-rich bought properties on the cheap in previous real estate downturns, they now may be struggling with the financing on the ones they own and wary to add more, even at discount prices.
  Instead, super-rich families are focused on having cash on hand. One of the other uses of signature loans had been to pay for a lifestyle. Until a few years ago, many banks advised wealthy families to have 100 percent of their wealth invested to take advantage of the high returns across asset classes. If they needed cash, they could borrow at a low rate. It was easy, until it was not.
  “They’ve realized they can’t have everything,” Ms. McCarthy said. “Now they’re asking, Is it worth it? That’s a question everyone should be asking.”
  [Answer: No, especially for the economic system, which unlimited concentration of value in the topmost tiny portion of the population renders unsustainable. This is the biggest long-term problem of humanity, and it has so far been solved, one component at a time, by the largely unconscious collective invention/evolution of vast sharing technologies; namely, language, counting (specifically the agricultural calendar), writing, negotiation, and quantification (specifically, seniority). Now we need to transfer to conscious invention; the first step is to identify the great economic dimensions of currently and potentially dangerous disparity, such as worktime, income, wealth, credit. and then to prioritize them semantically and strategically (which hopefully concur), and then, one at a time and in strict order of priority, use them to define, and repeatedly refine the definition of, "fair share." That involves balancing the per-person shares within safe ranges (not the per-job shares! - which are much more useful as their ranges diverge, rationalized and made safe by the increasingly narrowed and multiply dimensioned per-person ranges), dynamically and heuristically and homeostatically determined, in the great economic per-person variables that provide an increasingly functional and useful definition of the concept of "person" itself.]

9/11/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

Last year's poverty rate was highest in 12 years - Median income fell, by Erik Eckholm, NYT, target article, A12.
In the recession last year, the nation’s poverty rate climbed to 13.2 percent, up from 12.5 percent in 2007, according to an annual report released Thursday by the Census Bureau. The report also documented a decline in employer-provided health insurance and in coverage for adults.
The rise in the poverty rate, to the highest level since 1997, portends even larger increases this year, which has registered far higher unemployment than in 2008, economists said.
The Census Bureau said 39.8 million residents last year lived below the poverty line, defined as an income of $22,025 for a family of four.
In another sign of both the recession and the long-term stagnation of middle-class wages, median family incomes in 2008 fell to $50,300, compared with $52,200 the year before. This wiped out the incomes gains of the previous three years, the report said.
Adjusted for inflation, in fact, median family incomes were lower in 2008 than they had been a decade earlier.
“This is the largest decline in the first year of a recession we’ve seen since the Census Bureau started collecting data after World War II,” said Lawrence Katz, an economist at Harvard University, referring to household incomes. “We’ve seen a lost decade for the typical American family.”
The share of American residents who said they lacked health insurance throughout the entire year remained steady, at 15.4 percent, or 46.3 million people. But the total masked some more worrisome trends that are helping to drive the debate over national health care reform.
Continuing an eight-year trend, the number of people with private or employer-sponsored insurance declined, while the number of people relying on government insurance programs including Medicare, Medicaid, the children’s insurance program and military insurance rose.
The share of children who were uninsured declined, to 9.9 percent from 11 percent in 2007, apparently because of the federal government’s special efforts to insure low-income children. But at the same time, the share of adults aged 18 to 64 without health insurance rose, to 20.3 percent in 2008 from 19.6 percent in 2007.
In a speech Thursday to promote his health reform plan, President Obama referred to the census survey and said that things had grown worse since September 2008. “Over the last 12 months, it’s estimated that the ranks of the uninsured have swelled by nearly 6 million people,” he said.

9/10/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

• Built on Belief - Crisis rattled belief in financial system, audio segment by Kai Ryssdal, NPR's Marketplace via marketplace.publicradio.org
  Lehman Brothers' collapse a year ago shattered the blind faith that Americans at all levels of society had placed in the financial system. Kai Ryssdal examines how trust was abused and what it will take to rebuild it.
  KAI RYSSDAL: If you take a look around Wall Street today, it doesn't seem all that different from a year ago. Bankers and traders, and the stock and bond markets still dominate the lower end of Manhattan. Capitalism, fundamentally, still works.
  But last fall, incredible things happened. The government spent hundreds of billions of dollars bailing out the financial industry. But even though Washington had rescued Bear Stearns and Fannie Mae and Freddie Mac, a year ago this coming Tuesday it drew the line at Lehman Brothers. How Lehman went broke was -- and is -- a big and important story. Why it happened is more important.
  GILLIAN TETT: At the end of the day, finance is all about faith. Money does not exist unless you believe in it. Otherwise, it's just a bit of paper.
  Gillian Tett covered the credit crisis for The Financial Times. She turned that work into a book called "Fool's Gold," about the idea that as strong and secure as our financial system appears, it's really only as safe as our belief in it.
  For years, most of us did believe -- until last fall, when we couldn't anymore.
  Kids: Hey, Mama Hill. Hey, Mama Hill.
  Millicent Hill, Mama Hill to the kids and almost everybody else, runs an after-school program out of her house in south Los Angeles. She's a small woman. But she's a commanding presence.
  She sits in the middle of a room crowded with books and school papers, greeting each of the kids as they come in.
  Kids: Hi Mama Hill.
  Mama Hill: Hi.
  Most afternoons you can find a child or 10 working on their lessons spread out all over that house.
  Mama Hill: This is their house. And this is my bedroom right there. That's all I have. I don't have any other place to live.
  Mama is serious about her kids. That's how the trouble started. Four years ago, the city of Los Angeles cut her program out of the budget. So she did the only thing she could think of. She looked into a home-equity loan to keep the program alive.
  Mama Hill: The advertisement said 4.2 interest rate. Easy Funding. Two-week funding. Call us.
  So, she called.
  Kids figure pretty big in John Chrin's life now, too. College kids. Chrin left Wall Street this past June. At the end he was running mergers and acquisitions for JPMorgan Chase, an interesting place to be last year about this time. Now he's out of bankers' pinstripes and into khakis and a button down. Teaching at the business school at Lehigh University.
  JOHN CHRIN: I'll be teaching an introduction to business class one section, and then an upper level finance elective, an M&A, which is what I practiced for 20 years on Wall Street.
  About the same time that Mama Hill was taking out that home-equity loan, Chrin was watching Wall Street do its version of the same thing. Bankers were taking on more and more risk, bundling and selling off mortgages, like Mama Hill's. Although Chrin couldn't really figure out how those deals made any sense.
  CHRIN: When you go back and look in the 2006-2007 time period and think about the large number of mortgage transactions that took place in specifically sub-prime mortgage companies that were bought and sold predominately by Wall Street firms, I just, you couldn't understand where the valuations were coming from.
  Chrin and a lot of other people figured the bankers making those deals knew what they were doing. By the end of 2006, though, there were signs of trouble down deep in the mortgage industry. Down where homeowners couldn't make their payments anymore.
  For Mama Hill, the interest rate on her loan had more than doubled. So she made another call.
  MAMA HILL: I called them back, maybe, just about, maybe three weeks because they said they were gonna call me. They didn't call me. I called them back, and the number was disconnected. That's number one, and I said, Uh oh.
  That got her worried, a little suspicious, maybe. But she still had faith everything was going to work out. Her loan was eventually sold to New Century Financial, at the time the biggest subprime lender in the country. In April of 2007 though, New Century went into Chapter 11, a passing noted by John Chrin, in the thick of it at JPMorgan.
  CHRIN: New Century, to me, that was the light switch in terms of, OK, things are not good in the system.
  After New Century went bankrupt, Mama Hill's mortgage changed hands two more times. She barely knew who to pay.
  MAMA HILL: Suddenly Avelo Mortgage had me. And I got a phone call from a Mr. James White. And he said you know, you're six months in arrears on your loan, and we're going to put your house up for sale.
  What happened to Mama Hill was happening to people all over the country. Families were losing their homes, the number of foreclosures was going up, and yet people weren't really paying attention. The Dow was still over 12,000, and everybody -- even Ben Bernanke -- thought the problems were only in real estate anyway. Until the Federal Reserve had to help rescue Bear Stearns. JPMorgan bought Bear at a fire sale price with some help from the Fed. And John Chrin was in the room when it happened.
  CHRIN: Honestly at that point, I didn't believe, and I think anybody tells you that they did predict what was going to happen over the next six months, really was full of it. No idea that was going to take place.
  But it did happen. Lehman collapsed. AIG, Washington Mutual, Merrill Lynch -- the list goes on. All of 'em got into trouble. And it caught almost everybody unaware. Everybody who for years had had a deep, but basically irrational, belief in the financial system. A belief that house prices and stocks and retirement accounts would keep going up. That a 25 percent annual gain in the value of your home was normal.
  Columbia University psychologist Elke Weber specializes in financial decision making. What's going on inside our minds when we think about money.
  ELKE WEBER: Even experts are very much driven by their emotions and by sort of recent experiences. And if investors who in their 30s, or even 20s, have never seen times when markets do tank, it's somewhat human nature to just assume that these trends will continue. It's not rational. But it's understandable.
  MAMA HILL: We're so comfortable, we have no reason not to believe. Think about it. We haven't had anything too devastating within the few years to make us not believe that it would work out OK.
  A lot of people who worked on Wall Street trading those mortgage-backed securities felt just as comfortable as Mama Hill did. Most of them had never seen a real bear market, much less an outright collapse. So they had no reason to believe everything wouldn't turn out all right.
  And even when the cracks did start to show, author Gillian Tett points out that their belief only became stronger. Because their jobs depended on it.
  [This is a situation that is corrected by the kind of full employment and lots of job options that a permanent, self-adjusting worksharing system like Timesizing easily accomplishes (and runaway inflation is blocked by the cap on hours from which unaccountable spending power is derivable and the proliferation of job options that enables hundreds of millions of employees to gravitate to jobs that are have more and more inherent, qualitative, deflationary incentive, thus unburdening the overused money motive which is exogenous, quantitative and inflationary).]
  TETT: If you are a salesman working at a bank, every single instinct you have is to try and convince people that the future will be bright. You have to be optimistic for a living.
  Optimistic not just for a living, says Elke Weber, but for survival.
  WEBER: Too much worry can be dysfunctional, and so I think there is something quite adaptive about being too confident and sometimes over-confident in the success of our ventures.
  Confident is good, blind faith is bad. And that, in very large measure, is what got us to Bear Stearns and then Lehman Brothers. Once we realized what a house of cards we had built, we all wanted out. In a hurry.
  At the University of Chicago's Booth School of Business, economist Luigi Zingales runs a survey. It's called the Financial Trust Index. It's a measurement of how much faith we have in the banking system.
  LUIGI ZINGALES: Clearly banks are fragile institutions because they rely heavily on the trust of the public. We know, and I think that even the large public knows if they've seen "It's a Wonderful Life," that if everybody run on the bank, the bank cannot pay back everybody at the same time.
  Even though most of us have federal deposit insurance, after Lehman we just didn't trust it anymore. People actually pulled their money out of banks, and stuffed the cash under their mattresses. Our retirement savings were cut in half. We didn't trust banks, Congress, the president, or the bailouts. We didn't trust anything. For Mama Hill, what had happened was pretty simple.
  MAMA HILL: It was like somebody just came and knocked all those dominoes, which would be little people like us, out from under there. And then everybody crashed. Because we're the fiber. And then we were gone.
  Luigi Zingales did another survey a couple of months ago. Faith in the financial system is rising again.
  ZINGALES: The banking sector is a crucial engine of our system.
  Provided we keep our eyes open.
  ZINGALES: When you invest in a bond, or when you invest in the stock market, you are taking some risk, or investing in a house for that matter. And you should be well aware that prices can go up or can go down.
  And you have to believe that the whole financial system is going to work. Gillian Tett from the Financial Times:
  TETT: To rebuild trust in finance, you need to start rebuilding a sense that consumers of finance know what they are getting and can believe in both the products and the people peddling those products. That will require a demonstration that some of the financiers actually understood what went wrong last time and are trying to put things right now.
  John Chrin gets that. And if his students in that Introduction to Business class he's teaching this semester want to work on Wall Street, he'll help 'em get there. But he hopes things will be different by the time they do.
  CHRIN: Shame on us as a country, if we don't walk out of this with a 21st century infrastructure to manage the financial institutions going forward. And to me, if we walk away with that, then as painful as this was, it would have been worth it.
  Mama Hill eventually got her house back. In a way. Two members of a local church bought that house. She rents it now. And even though her faith in banks and banking is pretty much gone, she knows she's going to jump back in eventually
  MAMA HILL: I am really learning a lot of things about the finances. I'm learning how to manipulate it, because that has to be done. You know that, we have to manipulate it. I am learning all the terms. So I want to do some things, I want to do some corporate things. I need to have some businesses to start in the community so the children can have jobs. So I'm going to have to be a business lady. I'm going to have to get back into the quote "financial system."
  That's a knowing laugh, from a 69-year-old woman who's figured out the answer to a question a lot of us probably have after the fear and losses of last fall: Should we get back into the financial system? Should we start trusting it again. We will, if only because we have to. Because otherwise a dollar really is just a piece of paper.
  [But the pieces of paper are like little rechargeable faith-batteries, that get recharged fastest and fullest in the job market, because on payday we are giving up parts of our lives in return for these pieces of paper.]

7/18/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

• What went wrong with economics - And how the discipline should change to avoid the mistakes of the past, Economist magazine of London, 11.
  [This is The Big Question writ large but inarticulately, like the drawing of the empty chair surrounded by famous economists of history that showed up on the cover of Psychology Today magazine in Sept? 12?, 1974]
  Of all the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself.
  [- and economists themselves, including the Economist magazine.]
  A few years ago, the dismal science was being acclaimed as a way of explaining ever more forms of human behaviour, from drug-dealing to sumo-wrestling.
  [In short, as a way of explaining everything = a kind of omnipotence. Our description of this as linguists specializing in job dialectology (the way truckers and lawyers can say exactly the same thing in totally different words) and power dialectology (which job dialect is the power dialect of the age? = which has the ear of power?) is that economese is the power dialect of our social science era, which may in fact be called the Economic Age (see our booklet, The Football of Time). Economese has replaced politicese as the power dialect, and is all too slowly being replaced by ecologese. It was Thomas Carlysle who first called economics "the dismal science" in response to parson Robert Malthus' observation that population increases geometrically while food supplies increase only arithmetically, so there will always be a shortage of food - and other important stuff, such as money (= access to other people's products and services) - but this dismal view overlooks the fact that economics is the most recent of the major social (or "soft") sciences, which go from the earliest-focused and therefore hardest of the soft sciences (compared to the natural sciences), anthropology which is focused on the language-speaking species, through the later- and later-focused and less- and less-hard soft sciences, to the recentest-focused and therefore softest of the soft sciences, economics which is focused on the subset of the language-speaking species that uses mathematics as a second language and views the world quantitatively, as in "numbers don't lie" (never mind, "Lies, Damn Lies, and Statistics." In short, economics was only 50% science when Joan Robinson wrote her "Economic Philosophy" in 1962, and it is more like 70-80% philosophy-religion-theology today. The problem is, of course, that it's getting closer and closer to our retinas, and it's always hard to operate on your own retinas, as pointed out by the Whorf-Sapir Hypothesis and by Martin Joos ("Old Black Joos"), a linguist who specialized in unswept corners and BGOs (blinding glimpses of the obvious) as in his "Five Clocks." So although each of the four major earlier-focused social sciences have used economics' hallmark invention, quantification, to improve their particular sharing technology and harden up their soft science (ie: to get better generalizations and make easier agreement on them), economics, economics itself began highly compromised blend with its predecessor, "political economy," constantly suppressed its natural focus on the Great Quantifier, time, and its logical priority sub-discipline, worktime economics (despite its headstart in Sismondi's 1819 "Nouveau Principes", and evolved into a massive effort to rationalize and "scientize" the status quo, however dysfunctional, cuz after all, most of the economists were paid, one way or another, by the rich ("any amount of investing power in an economy is fine, the more the better") and the system was working fine for the rich, and they had by far the most decision-making power, and "if it works, don't fix it!" - ergo, no change, no negative feedback, kill the (negative) messenger, no indications of change or adaptibility or real competitiveness or system survivability.]
  Wall Street ransacked the best universities for game theorists and options modellers.
  [Poor ignorant 21st-century humans - pick the latest fads in academe and never let them loose anywhere close to the important questions.]
  And on the public stage, economists were seen as far more trustworthy than politicians.
  [Not difficult when the topmost brackets had completely taken control of politics. The top brackets are always having this discussion with themselves = 'how much of Robbie Burns do we want ...can we stand?' (the gift o'God...tae see airselz as ithers see us). Generally they get more and more cowardly and self-cushioning as a function of the mechanism of rising expectations = solve the big problem in front and the smaller one behind, now with nothing to compare it with, looms just as large. Plus economists took more and more trouble to mathematize their illusions, rendering them more intimidating because you had to learn a second language (mathematese) to understand their underpinnings.]
  John McCain joked that Alan Greenspan, then chairman of the Federal Reserve, was so indispensable that if he died, the president should “prop him up and put a pair of dark glasses on him.”
  [Yes, there was actually a time in the 1980s when Greenspan strengthened the centrifugal forces on the nation's income and wealth by raising Social Security taxes and getting that program on a really sound financial basis. Fifteen years later he joined the alarmist hue and cry that 30-40 years from now - omigawd - Social Security would be BANKRUPT! - so we should turn it over to Wall Street immediately. This cave-in to the overwhelming and suicidal centripetal forces on money more than made up for his previous temporary attack of sanity.]

  In the wake of the biggest economic calamity in 80 years, that reputation has taken a beating.
  [Thank God!]
  In the public mind, an arrogant profession has been humbled.
  [Unfortunately, it's the profession's mind, if any, that counts.]
  Though economists are still at the centre of the policy debate—think of Ben Bernanke or Larry Summers in America or Mervyn King in Britain—their pronouncements are viewed with more scepticism than before.
  [Good, good...]
  The profession itself is suffering from guilt and rancour.
  [Ah, now we're honing in...]
  In a recent lecture, Paul Krugman, winner of the Nobel prize in economics in 2008, argued that much of the past 30 years of macroeconomics was “spectacularly useless at best, and positively harmful at worst.” Barry Eichengreen, a prominent American economic historian, says the crisis has “cast into doubt much of what we thought we knew about economics.”
  [Gee, didn't know there were any economic historians left in the U.S. once Charly Kindleberger ("those damned autodidacts!") died. (And an economic historian is the kind of economist you'd most expect to appreciate autodidacts! So the profession is sooo tied up in its own rhetoric that not even an historian can gain sufficient perspective. So let's hear it once again for worktime economics' historian, Ben Hunnicutt, of the University of Iowa and his masterpiece, Work Without End. How the heck did he ever get the perspective to write that baby? Hafta askim. Maybe cuz he's more a sociological historian?)]

  [Caveat One?]
  In its crudest form—the idea that economics as a whole is discredited—the current backlash has gone far too far....
  [So what. It's the radicals who lend cover to the progressives and get them taken seriously enough for a hearing.]
  Economics is less a slavish creed than a prism through which to understand the world.
  [- the prism of quantification and mathematics as a second language. Got a problem? Don't give me your politics or religion. What's your bottom line? - Maybe we can agree. (But maybe arrogant economists also true-believe it into a slavish creed. Like The Economist itself that keeps trotting out the Lump-of-Labour-Fallacy smear-sneer, a garbled disservice to real progress if there ever was one.]
  It is a broad canon, stretching from theories to explain how prices are determined to how economies grow. Much of that body of knowledge has no link to the financial crisis and remains as useful as ever.
  [Error - this is not just a financial crisis. In fact, the Economist's persistent neglect of the employment base and the consumer base and the b2b markets is a major symptom of the major problem, and an indication that nothing they say in these three articles is going to come close - just some more red herrings to hope no one gets too close to the truth.]

  [Caveat Two?]
  And if economics as a broad discipline deserves a robust defence,
  [De-inflammatizing and numb(er)ing problems with quantification to facilitate sharing partial agreement is currently our best sharing technology (though it's lacking in extended self-interest and long-term perspective).]
  ...so does the free-market paradigm.
  [Amen, except the free-market fanatics think market forces can do everything, include reslope the playing field and reframe the market itself - but the closest we can come to a market decision there is a referendum of all market players - as in Phase One of the Timesizing Program where referendums are used to define our top-priority problem, un(der)employment, and central-bank variables which could otherwise be used to sabotage the whole solution.]
  Too many people, especially in Europe, equate mistakes made by economists with a failure of economic liberalism.
  ["Economic liberalism"? That's a laugh!]
  Their logic seems to be that if economists got things wrong, then politicians will do better. That is a false—and dangerous—conclusion.
  [Agreed.]

  Rational fools
  These important caveats, however, should not obscure the fact
  that two central parts of the discipline [ie: two subdisciplines]— [I] macroeconomics and [II] financial economics—are now, rightly, being severely re-examined (see 2 articles below) [ie: criticized]. There are three main critiques:
  [1] that macro and financial economists helped cause the crisis,
  [2] that they failed to spot it, and
  [3] that they have no idea how to fix it.

  [1] The first charge [they helped cause the crisis] is half right. Macroeconomists, especially within central banks, were too fixated on taming inflation and too cavalier about asset bubbles.
  [And too completely unconcerned about unemployment (asset bubbles are far secondary - OK, specifically, a fourth derivative of the employment base). The U.S. central bank, the Federal Reserve, was given the responsibility when it was set up to solve both unemployment and runaway inflation - and in the last 30-40 years it has come to completely ignore the first and most important part of its responsibility. Inflation is a compound-complex thing whose parts we need to peel off and stabilize one by one, and counter to prevailing economic 'wisdom,' we posit that un(der)employment can actually, and helpfully, be regarded as the most actionable component of potentially runaway inflation and therefore a higher priority than runaway inflation itself, which, like poverty in Jesus' view, is always with us. In short, some people will always have more, and some less, of SOMEthing, and the resulting envy and striving will always pose the danger of runaway inflation in some value-dimension 'currency' or other. Non-runaway inflation is actually a healthy thing and nature's none-too-efficient but virtually unstoppable way of deconcentrating value - and the first-up value dimension to stabilize, sportsfans, is the hyperconcentration of skills and natural, market-demanded employment in the form of working hours, dba workaholism, overwork, busyness, crisis-orientation, etc.]
  Financial economists, meanwhile, formalised theories of the efficiency of markets,
  [ignoring the all-important question of "efficient for whom?" - "from whose limited perspective?" "Efficiency" that downsizes consumption via employment and thereby gradually shuts down the whole system is a pretty weird kind of efficiency, and "lean and mean," "competitive," "more efficient," downsizing of one's workforce without connecting the dots and accounting for the impact on one's customers' customers, was, is and always will be Suicide, Everyone Else First.] ...fuelling the notion that markets would regulate themselves
  [markets only regulate the details within themselves, not their entire framework or 'playing field' - which during peacetime (and now also wartime cuz wars no longer kill enough Americans to create the magic labor shortage at home that yields higher wages, a deconcentrated money supply, higher spending and faster currency circulation and daa dada daaaa, "wartime prosperity") tends to get more and more steeply sloped in favor of employers and against employees; that is, toward the concentration and "saving" of the money supply and against its scattering/spreading/centrifugation and spending.]
  ...and financial innovation [and concentration of the money supply for unlimited investing power] was always beneficial.
  Wall Street’s most esoteric instruments were built on these ideas.

  But economists were hardly naive believers in market efficiency. [oh no?] Financial academics have spent much of the past 30 years poking holes in the “efficient market hypothesis”.
  [Just 'holes' when we needed a bodyslam?]
  A recent ranking of academic economists was topped by Joseph Stiglitz and Andrei Shleifer, two prominent hole-pokers. A newly prominent field, behavioural economics, concentrates on the consequences of irrational actions.
  [A cloud of no-see-ums when all we need is a single rattler.]

  So there were [ineffective] caveats aplenty. But as insights from academia arrived in the rough and tumble of Wall Street, such delicacies were put aside.
  [Or rather, as these conspiracy-theoried Cassandra's arrived on the precious and delicate and busybusybusy and Very Important and insulated and isolated Planet of Wall Street, such gnats, pickypickies, distractions were ignored...]
  And absurd assumptions ['absurd' from viewpoint of off-Planet Wall Street only] were added. No economic theory suggests you should value mortgage derivatives on the basis that house prices would always rise. Finance professors are not to blame for this, but they might have shouted more loudly that their insights were being misused. Instead many cheered the party along (often from within banks). Put that together with the complacency of the macroeconomists and there were too few voices shouting stop.

  [2] Blindsided and divided
  The charge that most economists failed to see the crisis coming also has merit. To be sure, some warned of trouble. The likes of Robert Shiller of Yale, Nouriel Roubini of New York University and the team at the Bank for International Settlements are now famous for their prescience. But most were blindsided. And even worrywarts who felt something was amiss had no idea of how bad the consequences would be.

  That was partly to do with professional silos, which limited both the tools available and the imaginations of the practitioners.
  [Hmm, it seems "silo" has become a new metaphor for insulation and isolation, like "what planet are they on?"]
  Few financial economists thought much about illiquidity or counterparty risk [an unnecessary buzzword apparently for the pre-existent stability/honesty or lack thereof of the other party to a loan, from either the lender's or borrower's viewpoint], for instance, because their standard models ignore it; and few worried about the effect on the overall economy of the markets for all asset classes seizing up simultaneously, since few believed that was possible.

  Macroeconomists also had a blindspot [just one?]: their standard models assumed that capital markets work perfectly.
  [Phew -what a leap - an assumption of perfection!]
  Their framework reflected an uneasy truce between the intellectual heirs of Keynes [erstwhile "demand-siders"?], who accept that economies can fall short of their potential, and purists [erstwhile "supply-siders"?] who hold that supply must always equal demand.
  [Notice how their skewed labels bias the case for supply-siders, who should have been totally routed by the Great Depression. Depressions are failures of demand to match supply; hence, Keynes' solution of demand-side economics arose, though it has more recently been overwhelmed since Reagan by supply-side economics (if we build it, they will come, oops, it will sell = Say's "Law" = "markets always clear" (never mind under what disastrous conditions) - and never mind "balance-side economics" such as the worktime economics embodied in the Timesizing Program where the balance is actively and automatically pursued by the guarantee of full employment - no matter how diminished a workshare of natural market-demanded employment that may require. In other words, the workweek is decremented until the goal of full employment ( referendum-defined) is reached, and the workweek is further, automatically fluctuated, incremented or decremented, around that target - no government interference, and especially no hyperinflation control by diluting full employment and impeding growth - a new natural hyperinflation control is employed.]
  The models that epitomise this synthesis—the sort used in many central banks—incorporate imperfections in labour markets (“sticky” wages, for instance, which allow unemployment to rise [but no complaints about CEOs' compensation! - or the consumption strength that those horrible "sticky wages" provide]), but make no room for such blemishes in finance. By assuming that capital markets worked perfectly, macroeconomists were largely able to ignore the economy’s financial plumbing [all biased toward the top 0.01%]. But models that ignored finance had little chance of spotting a calamity that stemmed from it.
  [And the wealthy are hardly likely to realize The Problem is ... themselves ... and the whole unlimited concentration of the money supply in the first place.]

  [3] What about trying to fix it?
  [Hmm, funny how the Economist has not made this a separate section = less confidence/arrogance?]
  Here the financial crisis has blown apart the fragile [macroeconomic] consensus between purists ["supply-siders"?] and Keynesians ["demand-siders"?] that monetary policy was the best way to smooth the business cycle.
  [So Keynesian demand-siders gradually sold out to monetarists (Friedmanians) who seemed to go to bed more easily - maybe were already in bed with - the so-called "purist" (ha!) supply-siders.]
  In many countries, short-term interest rates are near zero and in a banking crisis monetary policy works less well.
  [that is to say, does not work at all.]
  With their compromise tool useless, both sides have retreated to their [superficial] roots, ignoring the other camp’s ideas.
  [No loss to either.]
  Keynesians, such as Mr Krugman, have become uncritical supporters of fiscal stimulus.
  [And "stimulating" the rich is just making things worse since the whole idea that "the more investment money/savings in an economy, the better" is lethally flawed; that is, unlimited concentration of the money supply is good.]
  Purists are vocal opponents.
  [But have nothing positive to say??]
  To outsiders, the cacophony underlines the profession’s uselessness.
  [Amen to that.]

  Add these criticisms together and there is a clear case for reinvention, especially in macroeconomics.
  [Or more specifically, a re-identification/affirmation of The foundation market = the employment base. Watch the Economist economists totally miss this now - - -]
  Just as the Depression spawned Keynesianism [note biassed, disrespectful verb], and the 1970s stagflation fuelled a backlash [against Keynesianism],
  [indicating that the Keynesian makework was always too little, too late except in wartime, and kinda beside the point, which was, there was this huge labor surplus in the Depression due to worksaving equipment and downward workweek inflexibility - the labor surplus led to downward pressure on wages (except CEOs') and the strengthening of the centripetal, concentrating forces on the money supply that caused the Great Depression, and the 44-42-40-hour workweek of 1938-39-40 and the killing and maiming of a large part of the workforce in World War 2 reduced the labor surplus sufficiently to raise wage levels enough (quick to centrifuge the money supply enough to get it out to the hundreds of millions who actually want and need to spend it - but by the early 1970s when stagflation reared its head (standard in the Third World), the babyboomers had grown up and entered the job market and restored the labor surplus of the Great Depression - there were no jobs [high unemployment] but there lots of income supports = lotsa dough chasing limited output [inflation] - ergo, stagnation+inflation=stagflation.]
  ...creative destruction is already under way.
  [Ever notice how these geniuses of conventional, lethally flawed economics get to a point of hopelessness where, to salvage their pathetic ideas, they have to invoke Schumpeter's Phrase for the Supreme Cop-out, "creative destruction."]
  Central banks are busy bolting crude analyses of financial markets onto their workhorse [hobbyhorse] models. Financial economists are studying the way that incentives can skew market efficiency. And today’s dilemmas are prompting new research: which form of fiscal stimulus is most effective?
  [None - make the private sector clean up its own mess of discarded employees and re-activate its own deactivated consumers by hiring its own markets - impossible while geniuses like The Economist's economists are still sneering at the supposed true believers in the Lump of Labor Fallacy = anyone so silly and stupid as to want to quit the strain to fill a frozen pre-technology workweek of 40 hours, and just share - and spread - the yet-unautomated human employment, in order to achieve full employment and maximum consumer markets and growth regardless of short a "full time" workweek that may take.]
  How do you best loosen monetary policy when interest rates are at zero?
  [Obviously you don't, since zero is the lowest the conventional brains of monetarists can go. But what would negative interest look like? You have to loosen and centrifuge the huge overproportion of the money supply that is crushed together and thereby deactivated among the relatively tiny population (Krugman speaks of the top 0.01% of the population) at the top of the income-wealth continuum, and you can do that sustainably by engineering a perceived labor shortage by downward redefinition of "full time workweek," now downwardly inflexible since 1940 despite previous downward flexibility for 100-150 years, or quick short-term tide-me-over = restoring wartime levels of graduated income taxes and of estate taxes, currently being smeared as 'death taxes' that Terribly Hurt small businesspersons (ha!).]
  And so on.
  [So far, they've come up empty. Now watch their pathetic rhetoric fly forth in impotent glory -]
  But a broader change in mindset is still needed.
  [But "Don't anyone dare to threaten our habit of sneering that worksharing (despite reinvention by necessity thousands of times a day all over the world in this recession) is advocated only by suckers who buy The Lump of Labor Fallacy!"]
  Economists need to reach out from their specialised silos:
  [So far only "broaden" and "reach out" - advice for everyone except themselves.]
  macroeconomists must understand finance,
  [how would that help when as this article has just explained, both macro and financial are idea-bankrupt?]
  and finance professors need to think harder about the context within which markets work.
  [Oh here we go. Where "broad" and wide ("reach out") fail, we go back to that old standby, "hard" - and note that the essence of the current crisis can be seen as unwillingness to give up the "work hard to get ahead" litany in the age of robotics despite the waiting "work smart, not hard."]
  And everybody needs to work harder on understanding asset bubbles and what happens when they burst.
  [Yeah yeah, all these putzes know in their narrowness is "work harder." But they can't compete with robots in that arena - and as Reuther pointed out to Henry Ford ("Let's see you unionize these robots!"), robots don't buy stuff ("Let's see YOU sell them cars.") The Economists' economists are completely circumscribed by Economics 101, however flawed, and despite their weak calls for broadening and reaching out, they are completely incapable of it themselves.]
  For in the end economists are social scientists, trying to understand the real world.
  [Whoa, what a slice of humilty = identification with the other, supposedly softer social sciences, and possibly even with sociology, whither they have driven a number of shorter worktime advocates such as Juliet Schor.]
  And the financial crisis has changed that world.
  [But not their world, yet. There it is. The Economist economists have completely missed the boat, and come up empty. Let's see what they say about macroeconomics in their next article - probably too little to quote the whole thing -]

  
  

  [I - macroeconomics] The other-worldly philosophers - Although the crisis has exposed bitter divisions among economists, it could still be good for economics. Our first article looks at the turmoil among macroeconomists. Our second (beloe) examines the foundations of financial economics, Economist, 65.

  ROBERT LUCAS, one of the greatest macroeconomists of his generation, and his followers are “making ancient and basic analytical errors all over the place” [DeLong, UCBerkeley - see below].
  [Hmm, repeating errors? Isn't that a symptom of ignoring history?! But then, US economists are not big on history, so they're doomed to repeat it, and the once-great USA falls behind.]
  Harvard’s Robert Barro, another towering figure in the discipline, is “making truly boneheaded arguments” [NYT's Krugman]. The past 30 years of macroeconomics training at American and British universities were a “costly waste of time” [LSE's Buiter].
  [And Quebec universities, since you expect them to have the sense to explore the ideas of the Jospinists in France, but oooh nooo, they blindly follow the anglo Canadian economists who are blindly following the lethally flawed US economists.]

  To the uninitiated [or those too close to the truth that we wish to discredit], economics has always been a dismal science.
  [Hey, they've already given up the ship if they've been tricked into pre-admitting that it's a science.]
  But all these attacks [above?] come from within the guild: from Brad DeLong of the University of California, Berkeley; Paul Krugman of Princeton and the New York Times; and Willem Buiter of the London School of Economics (LSE), respectively. The macroeconomic crisis of the past two years is also provoking a crisis of confidence in macroeconomics. In the last of his Lionel Robbins lectures at the LSE on June 10th, Mr Krugman feared that most macroeconomics of the past 30 years was “spectacularly useless at best, and positively harmful at worst”.
  [But he has nothing to replace/repair it with.]

  These internal critics argue that economists
  [1 = cause] missed the origins of the crisis;
  [2 = diagnose] failed to appreciate its worst symptoms; and
  [3 = cure] cannot now agree about the cure.
  In other words, economists [1] misread the economy on the way up, [2] misread it on the way down and now [3] mistake the right way out.

  [1] On the way up, macroeconomists were not wholly complacent [rationalizing...]. Many of them thought the housing bubble would pop or the dollar would fall. But they did not expect the financial system to break [and it didn't break so it's still deteriorating - they merely duct-taped it over with trillions of taxpayers' dollars without ousting the guys that caused it].
  [2] Even after the seizure in interbank markets in August 2007 [that event got missed in the four-year gap in our daily updates], macroeconomists misread the danger. Most were quite sanguine [here meaning stoical or even cheerful] about the prospect of Lehman Brothers going bust in September 2008.

  [3] Nor can economists now agree on the best way to resolve the crisis. They mostly overestimated the [curative] power of routine monetary policy (ie, central-bank purchases of government bills) to restore prosperity. Some now dismiss the power of fiscal policy (ie, government sales of its securities) to do the same. Others advocate it with passionate intensity.
  [So, "The 'best' lack all conviction (policy ideas), while the 'worst'
  Are full of passionate intensity." - quoting the end of the first stanza of Yeats' 1921 masterpiece, The Second Coming.]

  Among the passionate are Mr DeLong and Mr Krugman. They turn for inspiration to Depression-era texts, especially the writings of John Maynard Keynes, and forgotten mavericks, such as Hyman Minsky.
  [Unfortunately, they still haven't gone below the surface structure to the writings of Arthur Dahlberg (Jobs, Machines and Capitalism, 1932) or Lord Leverhulme (The Six-Hour Day and Other Industrial Questions, 1919) or the later masterpieces of historian Ben Hunnicutt (Work Without End, 1988, and Kellogg's Six-Hour Day, 1996), let alone Phil Hyde (Timesizing, Not Downsizing, 1998.]
  In the humanities this would count as routine scholarship.
  [Keynes? All too routine, alas.]
  But to many high-tech economists it is a bit undignified. Real scientists, after all, do not leaf through Newton’s “Principia Mathematica” to solve contemporary problems in physics.
  [God forbid! - they might discover from Newton's Definition I right at the beginning that the real, non-optional fourth dimension is not time, but quantity of matter ("mass" in today's quaint terminology) and from his Definition II that the logically hard-wired, non-arbitrary, non-woowoo fifth dimension is the quantity of motion ("momentum" in today's quaint terminology), of which a special case is time.]

  They [high-tech economists] accuse economists like Mr DeLong and Mr Krugman of falling back on antiquated Keynesian doctrines—as if nothing had been learned in the past 70 years.
  [Nothing 'deep-structure' has!]
  Messrs DeLong and Krugman, in turn, accuse economists like Mr Lucas of not falling back on Keynesian economics—as if everything had been forgotten over the past 70 years.
  [Everything 'deep-structure' has been forgotten, even by DeLong and Krugman - for example, the critical role of general labor surplus or shortage relative to general employment supply (or v.v.) in the long Kondratieff Wave.]
  For Mr Krugman, we are living through a “Dark Age of macroeconomics”, in which the wisdom of the ancients has been lost.
  [But alas, Mr Krugman has not found it either.]

  What was this wisdom, and how was it forgotten?
  [Aha, a version of The Big Question. But watch us immediately go offtrack -]
  The history of macroeconomics begins in intellectual struggle.
  [Conventional macroeconomics is the key to nothing. We should be looking at worktime economics as initiated by Sismondi in his 1819 oeuvre, New Principles, 'Book' 7 and developed by Sydney Chapman in 1909 and Arthur Dahlberg in 1932.]
  Keynes wrote the “General Theory of Employment, Interest and Money”, which was published in 1936, in an “unnecessarily controversial tone”, according to some readers.
  [Dahlberg wrote "Jobs, Machines and Capitalism" in an unnecessarily sci-fi tone according to this reader.]
  But it was a controversy the author had waged in his own mind. He saw the book as a “struggle of escape from habitual modes of thought” he had inherited from his classical predecessors.
  [But he failed to escape their time blindness, their habitual neglect of the deep structure of the economy in the time dimension = the great quantifier of all activity and inactivity on the surface of this planet, and by extension, above and below that surface - and so he failed to escape their habitual neglect of worktime economics, and their exclusive focus on the surface structure in terms of symptom-level diagnoses and cures.]

  That classical mode of thought held that full employment would prevail, because supply created its own demand [Jean Baptiste Say's Fallacy, still spun as Say's Law]. In a classical economy, whatever people earn is either spent or saved; and whatever is saved is invested in capital projects. Nothing is hoarded, nothing lies idle.
  [Ri-i-ight - not.]

  Keynes appreciated the classical model’s elegance and consistency, virtues economists still crave [and can still find...in worktime economics]. But that did not stop him demolishing it.
  [Not really - he maintained its time-blindness and de-facto superficiality that preserved the fundamentally skewed and self-eroding status quo no matter what.]
  In his scheme, investment was governed by the animal spirits of entrepreneurs, facing an imponderable future.
  [Most entrepreneurs would regard this idea as an impossible dream.]
  The same uncertainty gave savers a reason to hoard their wealth in liquid assets, like money, rather than committing it to new capital projects. This liquidity-preference, as Keynes called it, governed the price of financial securities and hence the rate of interest. If animal spirits flagged or liquidity-preference surged, the pace of investment would falter, with no obvious market force to restore it.
  [- unless there was a labor shortage, real or perceived, natural or artificial, that got employers bidding against one another for good help.]
  Demand would fall short of supply, leaving willing workers on the shelf. It fell to governments to revive demand, by cutting interest rates if possible or by public works if necessary.
  [Both are artificial and distorting interventions by government into free markets (which place government in the invalid roles of employer and charity of last resort, roles that now account for maybe 70-80% of most governments, all unnecessary under worktime economics and " timesizing, not downsizing"), when all government has to do is rebalance the steeply sloping power gradient between employers and employees (in favor of employers of course) by engineering a perceived shortage of labor by reducing the fulltime workweek - a third way that actually passed the US Senate on Apr.6, 1933, by a vote of 53-30 in the form of the rigid but much lower Black-Perkins alias Black-Connery Thirty Hour Work Week Bill - defeated in the House, but revived and implemented five years later as a 44-hour workweek in the overtime section of the Fair Labor Standards Act. The subsequent 2-hour/year reduction resulted in the famed 40-hour workweek in 1940 and a one percent reduction in unemployment for each hour cut from the workweek (1938,39,40 = 19.0, 17.2, 14.6%) same as France's 4-hour reduction from 39 to 35 hours between 1997 (12.6%) and 2001 (8.6%) before the US-led recession hit.]

  The Keynesian task of “demand management” outlived the Depression, becoming a routine duty of governments. They were aided by economic advisers, who built working models of the economy, quantifying the key relationships. For almost three decades after the second world war these advisers seemed to know what they were doing [because the postwar babyboomers had still not entered the workforce and replaced the labor kill-off of WW2 and the labor surplus of the Great Depression], guided by an apparent trade-off between inflation and unemployment [only in 'advanced' economies with good social safety nets dba income supports]. But their [these advisers'] credibility did not survive the oil-price shocks of the 1970s. These condemned Western economies to “stagflation”, a baffling [but common in third-world economies with no social safety nets] combination of unemployment and inflation, which the Keynesian consensus grasped poorly and failed to prevent.

  The Federal Reserve, led by Paul Volcker, eventually defeated American inflation in the early 1980s, albeit at a grievous cost to employment.
  [In short, he cured the disease by killing the patient.]
  But victory [Pyrrhic] did not restore the intellectual peace. Macroeconomists split into two camps, drawing opposite lessons from the episode.
  [Both lessons superficial and irrelevant at best, destructive at worst.]

  The purists, known as “freshwater” economists because of the lakeside universities where they happened to congregate, blamed stagflation on restless central bankers trying to do too much. They started from the classical assumption that markets cleared [Say's Law, exposed as fallacy by the Great Depression but, how soon we forget!], leaving no unsold goods or unemployed workers. Efforts by policymakers to smooth the economy’s natural ups and downs did more harm than good.
  [These so-called purists or conservatives were funded by wealthy alumni, and hey, the system was workin' for them, so why fix it?]

  America’s coastal universities housed most of the other lot, “saltwater” pragmatists [oh right, how pragmatic to make government the employer and charity of last/first resort]. To them, the double-digit unemployment that accompanied Mr Volcker’s assault on inflation was proof enough that markets could malfunction. Wages might fail to adjust, and prices might stick. This grit in the economic machine justified some meddling by policymakers.
  And basically both sides substituted makework for sharework, the only difference being that saltwater demand-siders favored civilian makework while freshwater supply-siders favored military makework as the only makework that could really get the rich to unclench from their millions, and meanwhile both sides helped the rich to divert more and more of the national income and wealth, which helped the economy careen ever farther past the point where the concentration of the money supply began to undermine itself - after all, the top bracket$ were already spending all they cared to before they got the last $20-30 million so they couldn't spend it, and it got past the point where they could even invest it sustainably, because their fostering of worksaving technology and freezing of a 1940 pre-technology workweek yielded a labor surplus that market forces punished with wage stagnation and diminishment, and the national income began funneling up to the top 30,000 Americans instead of spreading out to the other 270,000,000 who had much more time, desire and need to spend it. So this effectively vacuumed the spending power OUT of the markets for the productivity that the top brackets NEEDED to invest in, so ordinary investments began to spiral up in price since there were insufficient alternatives (P/E ratios went off the charts in the early 90s), brokers started inventing ever more complicated "investment instruments" such as derivatives and single-stock futures etc.m, and we started the series of bubbles (dot-com, housing, bailout...). Brilliant.]

  Mr Volcker’s recession bottomed out in 1982. Nothing like it was seen again [except in 1987 (stock crash) - 1992 "it's the economy, stupid" - how soon we forget] until last year. In the intervening quarter-century of tranquillity [ha], macroeconomics also recovered its composure. The opposing schools of thought converged. The freshwater economists accepted a saltier view of policymaking. Their opponents adopted a more freshwater style of modelmaking.
  [so both sides compromised and got co-opted by the No Problemo top brackets - who owned the media and the universities and the foundations and and and ... ultimately the playing field and the voting machines.]
  You might call the new synthesis brackish macroeconomics.
  [or, the sabotage of 'science' by source-of-income = wealthy alumni ( = "follow the money").]

  Pinches of salt
  Brackish macroeconomics flowed from universities into central banks. It underlay the doctrine of inflation-targeting embraced in New Zealand, Canada, Britain, Sweden [Iceland?] and several emerging markets, such as Turkey. Ben Bernanke, chairman of the Fed since 2006, is a renowned contributor to brackish economics.
  [And he's still in power instead of in penitentiary.]

  For about a decade before the crisis, macroeconomists once again appeared to know what they were doing. Their thinking was embodied in a new genre of working models of the economy, called “dynamic stochastic general equilibrium” (DSGE) models. These helped guide deliberations at several central banks.
  [- and followed Keynes' practice of making it difficult and obscure to make it seem brilliant or at least intimidating.]

  Mr Buiter, who helped set interest rates at the Bank of England from 1997 to 2000, believes the latest academic theories had a profound influence there. He now thinks this influence was baleful. On his blog, Mr Buiter argues that a training in modern macroeconomics was a “severe handicap” at the onset of the financial crisis, when the central bank had to “switch gears” from preserving price stability to safeguarding financial stability.
  [- "had to" just because of the latest academic theories?]

  Modern macroeconomists worried about the prices of goods and services, but neglected the prices of assets.
  [Is this what Marshall meant by 'partial analysis'?]
  This was partly because they had too much faith in financial markets.
  [Compare Chomsky's preference for the Wall Street Journal over the New York Times because the Journal "has to have some reality for investors." - Not any more!]
  If asset prices reflect economic fundamentals [never mind the takeoff of stocks' P/E ratios in the early 90s], why not just model the fundamentals, ignoring the shadow they cast on Wall Street?
  [Why not? Probably because by now, the experts were so immersed in superficialities that they had no idea what the fundamentals were - after all, the Fed had by now been ignoring unemployment for decades.]

  It was also because they had too little interest in the inner workings of the financial system.
  [Yeah, inner workings like "you raise my salary and I'll raise yours" is not something you want to spread around.]
  “Philosophically speaking,” writes Perry Mehrling of Barnard College, Columbia University, economists are “materialists” for whom “bags of wheat are more important than stacks of bonds.”
  [Not any more - that's a big part of the problem!]
  Finance is a veil, obscuring what really matters.
  [True, but economists and decision-makers act as if finance is the foundation of the economy instead of the employment base (or the consumer base that derives from it).]
  As a poet once said, “promises of payment/Are neither food nor raiment”.
  [Well, they are between those in the top brackets (except between Madoff and others) but not between the top brackets and everyone else, where the sanctity of contract has been violated more and more.]

  In many macroeconomic models, therefore, insolvencies cannot occur. Financial intermediaries, like banks, often don’t exist.
  [Oh brother = vaporware!]
  And whether firms finance themselves with equity or debt is a matter of indifference. The Bank of England’s DSGE model, for example, does not even try to incorporate financial middlemen, such as banks. “The model is not, therefore, directly useful for issues where financial intermediation is of first-order importance,” its designers admit. The present crisis is, unfortunately, one of those issues.

  The bank’s modellers go on to say that they prefer to study finance with specialised models designed for that purpose. One of the most prominent was, in fact, pioneered by Mr Bernanke, with Mark Gertler of New York University. Unfortunately, models that include such financial-market complications “can be very difficult to handle,” according to Markus Brunnermeier of Princeton, who has handled more of these difficulties than most. Convenience, not conviction, often dictates the choices economists make.

  Convenience, however, is addictive. Economists can become seduced by their models, fooling themselves that what the model leaves out does not matter. It is, for example, often convenient to assume that markets are “complete”—that a price exists today, for every good, at every date, in every contingency. In this world, you can always borrow as much as you want at the going rate, and you can always sell as much as you want at the going rate.

  Before the crisis, many banks and shadow banks [= institutions not subject to all the banking regulations that were designed to 'complete' markets by spinning specific types of risk off regular banks' accounts (regulators who should have had the sense to raise red flags thought these might be great = bored regulators)] made similar assumptions. They believed they could always roll over their short-term debts or sell their mortgage-backed securities, if the need arose. The financial crisis made a mockery of both assumptions. Funds dried up, and markets thinned out. In his anatomy of the crisis, Mr Brunnermeier shows how both of these constraints [ie: disasters] fed on each other, producing a [downward] “liquidity spiral”.
  [Ah, isn't this getting away from macro and into the turf of the next article on financial?!]

  What followed was a furious dash for cash, as investment banks sold whatever they could, commercial banks hoarded reserves and firms drew on lines of credit. Keynes would have interpreted this as an extreme outbreak of liquidity-preference, says Paul Davidson, whose biography of the master has just been republished with a new afterword. But contemporary economics had all but forgotten the term.

  Fiscal fisticuffs
  The mainstream macroeconomics embodied in DSGE models was a poor guide to the origins of the financial crisis, and left its followers unprepared for the symptoms. Does it offer any insight into the best means of recovery?
  [Stupid to even bother asking.]

  In the first months of the crisis, macroeconomists reposed great faith in the powers of the Fed and other central banks. In the summer of 2007, a few weeks after the August liquidity crisis began, Frederic Mishkin, a distinguished academic economist and then a governor of the Fed, gave a reassuring talk at the Federal Reserve Bank of Kansas City’s annual symposium in Jackson Hole, Wyoming [prophetically named location!]. He presented the results of simulations from the Fed’s FRB/US model [are we supposed to assume it is similar to DSGE?]. Even if house prices fell by a fifth in the next two years, the slump would knock only 0.25% off GDP, according to his benchmark model, and add only a tenth of a percentage point to the unemployment rate [hey, at least unemployment was in there]. The reason was that the Fed would respond “aggressively”, by which he meant a cut in the federal funds rate of just one percentage point. He concluded that the central bank had the tools to contain the damage at a “manageable level”.

  Since his presentation, the Fed has cut its key rate by five percentage points to a mere 0-0.25%. Its conventional weapons have proved insufficient to the task [ah, wouldn't that be "weapon" singular?!]. This has shaken economists’ faith in monetary policy [and rightly so]. Unfortunately, they are also horribly divided about what comes next [no wonder, they're still ignoring the deep structure, the employment base].

  Mr Krugman and others advocate a bold fiscal expansion, borrowing their logic from Keynes and his contemporary, Richard Kahn.
  [They've already mortgaged taxpayers in the trillions - does Krugman want quadrillions? quintillions? a hyperinflation that would make 1920s Germany look tame and starve hundreds of millions as we're plunged back to barter?]
  Kahn pointed out that a dollar spent on public works might generate more than a dollar of output if the spending circulated repeatedly through the economy, stimulating resources that might otherwise have lain idle.
  [You don't need artificial, eco-hostile, job-creation-just-for-the-sake-of-jobs 'public works' straining to fill a frozen, prehistoric 40-hour workweek. You just need to cut the full-time workweek till everybody has a piece of the vanishing still-unrobotized employment, and the reduced labor surplus will raise wages by flexible market forces and centrifuge the black hole of money in the topmost brackets.]

  Today’s economists disagree over the size of this multiplier. Mr Barro thinks the estimates of Barack Obama’s Council of Economic Advisors are absurdly large. Mr Lucas calls them “schlock economics”, contrived to justify Mr Obama’s projections for the budget deficit. But economists are not exactly drowning in research on this question. Mr Krugman calculates that of the 7,000 or so papers published by the National Bureau of Economic Research between 1985 and 2000, only five mentioned fiscal policy in their title or abstract.

  Do these public spats damage macroeconomics? Greg Mankiw, of Harvard, recalls the angry exchanges in the 1980s between Robert Solow and Mr Lucas—both eminent economists who could not take each other seriously. This vitriol, he writes, attracted attention, much like a bar-room fist-fight. But he thinks it also dismayed younger scholars, who gave these macroeconomic disputes a wide berth.

  By this account, the period of intellectual peace that followed in the 1990s should have been a golden age for macroeconomics. But the brackish consensus also seems to leave students cold. According to David Colander, who has twice surveyed the opinions of economists in the best American PhD programmes, macroeconomics is often the least popular class. “What did you learn in macro?” Mr Colander asked a group of Chicago students. “Did you do the dynamic stochastic general equilibrium model?” “We learned a lot of junk like that,” one replied.

  It takes a model to beat a model
  The benchmark macroeconomic model, though not junk, suffers from some obvious flaws, such as the assumption of complete markets or frictionless finance.
  [We'd say that such fundamental flaws do make it junk.]
  Indeed, because these flaws are obvious, economists are well aware of them.
  [Awareness without correction? Dumba dumbdumb.]
  Critics like Mr Buiter are not telling them anything new.
  [= a standard remark to excuse doing nothing.]
  Economists can and do depart from the benchmark. That, indeed, is how they get published. Thus a growing number of cutting-edge models incorporate one or two financial frictions.
  [Whoopeedoo.]
  And economists like Mr Brunnermeier are trying to fit their small, “blackboard” models of the crisis into a larger macroeconomic frame.
  [All this is just trivial rearrangement of deckchairs on the surface of the Titanic without looking deeper at the ongoing gash below the waterline. The diminishing downsizing of the employment base is still going on, instead of the sustaining timesizing of the employment base. Until that is addressed, all these little tweaks to "cutting edge" and small "blackboard" models are whistling in the wind.]

  But the benchmark still matters.
  [No it doesn't.]
  | It formalises economists’ gut instincts about where the best analytical cuts lie.
  [Their gut instincts are totally offbase and irrelevant to the worsening problem of the still-further-concentration and deactivation of the money supply.]
  It is the starting point to which the theorist returns after every ingenious excursion.
  [A totally nowhere starting point. The real starting point is the employment base.]
  Few economists really believe all its assumptions, but few would rather start anywhere else.
  [And it is to those few we must look for a real solution because the others are totally irrelevant.]

  Unfortunately, it is these primitive models, rather than their sophisticated descendants, that often exert the most influence over the world of policy and practice.
  [If you build sophistication on crap, you just get a 'silk' purse made out of sow's ear.]
  This is partly because these first principles endure long enough to find their way from academia into policymaking circles.
  [And how long does it take to register that these first principles are wrong?]
  As Keynes pointed out, the economists who most influence practical men of action are the defunct ones whose scribblings have had time to percolate from the seminar room to wider conversations.
  [Then the once-great USA is going down, and so is anyone who follows its "practical men of action" and its "wider conversations."]

  These "basic" models [our quotes] are also influential because of their simplicity [ie: simplistic irrelevance]. Faced with the “blooming, buzzing confusion” of the real world, policymakers often fall back on the highest-order principles [high is surface structure, not deep structure] and the broadest [ie; vaguest?] presumptions. More specific, nuanced theories are often less versatile. They shed light on whatever they were designed to explain, but little beyond.
  [And again, nuances built on a fundamentally irrelevant theory are also irrelevant.]

  Would economists be better off starting from somewhere else? Some think so.
  [Ah, isn't that obvious?]
  They draw inspiration from neglected prophets, like Minsky, who recognised that the “real” economy was inseparable from the financial.
  [Then he "recognized" a fallacy, because when hyperinflation takes off and a barter economy is borne, the financial economy separates off, languishes and dies.]
  Such prophets were neglected not for what they said, but for the way they said it. Today’s economists tend to be open-minded about content, but doctrinaire about form. They are more wedded to their techniques than to their theories. They will believe something when they can model it.
  [- which brings us back to the irrelevance and impotence of today's economists and today's economics.]

  Mr Colander, therefore, thinks economics requires a revolution in technique.
  [What an idiot! Still talking about form rather than content.]
  Instead of solving models “by hand” [unhelpful metaphor] using economists’ powers of deduction, he proposes simulating economies on the computer.
  [Oh, rad!]
  In this line of research, the economist specifies simple rules of thumb by which agents interact with each other, and then lets the computer go to work, grinding out repeated simulations to reveal what kind of unforeseen patterns might emerge.
  [Aren't they already doing this, and if not, what the heck are they doing??]
  If he is right, then macroeconomists, like zombie banks, must write off many of their past intellectual investments before they can make progress again.
  [That should already be a 'given' too.]

  Mr Krugman, by contrast, thinks reform is more likely to come from within [ha!]. Keynes, he observes, was a “consummate insider”, who understood the theory he was demolishing precisely because he was once convinced by it.
  [He didn't demolish it - he actually propped it up for another 50 years, substituting makework for sharework. just like McCain said about "indispensable" Greenspan = if he dies, prop up his corpse and put a pair of glasses on it.]
  In the meantime, he says, macroeconomists should turn to patient empirical spadework, documenting crises past and present, in the hope that a fresh theory might later make sense of it all.
  [You're looking at it = worktime economics - but can you imagine any pathway that will induce these entrenched, intellectually arthritic, conventional thinkers to notice it and even just explore it let alone adopt it? It will take decades = decades of unnecessary suffering but mostly not affecting them.]

  Macroeconomics began with Keynes, but the word did not appear in the journals until 1945, in an article by Jacob Marschak. He reviewed the profession’s growing understanding of the business cycle, making an analogy with other sciences. Seismology, for example, makes progress through better instruments, improved theories or more frequent earthquakes [ah, no... better-studied earthquakes - frequency is irrelevant]. In the case of economics, Marschak concluded, “the earthquakes did most of the job.”

  Economists were deprived of earthquakes for a quarter of a century.
  [Not worktime economists - it was a period of increasing mergers and acquisitions, increasing downsizing of the employment base (and, proportionally, the consumer base!), increasing of the actual workweek and workyear despite ever more injections of ever more worksaving technology, increasing labor surplus, decreasing real wages, increasing hidden un- and under-employment, and ever more diluted definitions of unemployment. Not to mention ever more shouting of ever tinier good news and ever more whispering or ignoring of ever huger bad news. And let's face it - ever more blindness to the obvious and ever more total irrelevance of mainstream economics and economists.]
  The Great Moderation, as this period was called, was not conducive to great macroeconomics.
  [- whose whole foundations are so flawed and irrelevant that "great macroeconomics" is an oxymoron.]
  Thanks to the seismic events of the past two years, the prestige of macroeconomists is low, but the potential of their subject is much greater.
  [Only if they veer over to worktime economics.]
  The furious rows that divide them are a blow to their credibility, but may prove to be a spur to creativity.
  [Dubious, like the furious rows of the impoverished and starving - over crumbs.]

7/17/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

• The Joy of Sachs - What's good for Goldman is bad for America, op ed by Paul Krugman, NYT.
  The American economy remains in dire straits, with one worker in six unemployed or underemployed. Yet Goldman Sachs just reported record quarterly profits — and it’s preparing to hand out huge bonuses, comparable to what it was paying before the crisis. What does this contrast tell us?
  [And note also today: J.P. Morgan posts $2.7 billion in profit, WSJ, C1.]
  First, it tells us that Goldman is very good at what it does. Unfortunately, what it does is bad for America.
  [AND for its own foundations - in short, what it does is "Suicide - everyone else first." Krugman should be making this point.]
  Second, it shows that Wall Street’s bad habits — above all, the system of compensation that helped cause the financial crisis — have not gone away.
  Third, it shows that by rescuing the financial system without reforming it, Washington has done nothing to protect us from a new crisis, and, in fact, has made another crisis more likely.
  Let’s start by talking about how Goldman makes money.
  Over the past generation — ever since the banking deregulation of the Reagan years — the U.S. economy has been “financialized.” The business of moving money around, of slicing, dicing and repackaging financial claims, has soared in importance compared with the actual production of useful stuff. The sector officially labeled “securities, commodity contracts and investments” has grown especially fast, from only 0.3 percent of G.D.P. in the late 1970s to 1.7 percent of G.D.P. in 2007.
  Such growth would be fine if financialization really delivered on its promises — if financial firms made money by directing capital to its most productive uses, by developing innovative ways to spread and reduce risk. But can anyone, at this point, make those claims with a straight face? Financial firms, we now know, directed vast quantities of capital into the construction of unsellable houses and empty shopping malls. They increased risk rather than reducing it, and concentrated risk rather than spreading it. In effect, the industry was selling dangerous patent medicine to gullible consumers.
  Goldman’s role in the financialization of America was similar to that of other players, except for one thing: Goldman didn’t believe its own hype. Other banks invested heavily in the same toxic waste they were selling to the public at large. Goldman, famously, made a lot of money selling securities backed by subprime mortgages — then made a lot more money by selling mortgage-backed securities short, just before their value crashed. All of this was perfectly legal, but the net effect was that Goldman made profits by playing the rest of us for suckers.
  And Wall Streeters have every incentive to keep playing that kind of game.
  The huge bonuses Goldman will soon hand out show that financial-industry highfliers are still operating under a system of heads they win, tails other people lose. If you’re a banker, and you generate big short-term profits, you get lavishly rewarded — and you don’t have to give the money back if and when those profits turn out to have been a mirage. You have every reason, then, to steer investors into taking risks they don’t understand.
  And the events of the past year have skewed those incentives even more, by putting taxpayers as well as investors on the hook if things go wrong.
  I won’t try to parse the competing claims about how much direct benefit Goldman received from recent financial bailouts, especially the government’s assumption of A.I.G.’s liabilities. What’s clear is that Wall Street in general, Goldman very much included, benefited hugely from the government’s provision of a financial backstop — an assurance that it will rescue major financial players whenever things go wrong.
  You can argue that such rescues are necessary if we’re to avoid a replay of the Great Depression. In fact, I agree. But the result is that the financial system’s liabilities are now backed by an implicit government guarantee.
  Now the last time there was a comparable expansion of the financial safety net, the creation of federal deposit insurance in the 1930s, it was accompanied by much tighter regulation, to ensure that banks didn’t abuse their privileges. This time, new regulations are still in the drawing-board stage — and the finance lobby is already fighting against even the most basic protections for consumers.
  If these lobbying efforts succeed, we’ll have set the stage for an even bigger financial disaster a few years down the road. The next crisis could look something like the savings-and-loan mess of the 1980s, in which deregulated banks gambled with, or in some cases stole, taxpayers’ money — except that it would involve the financial industry as a whole.
  The bottom line is that Goldman’s blowout quarter is good news for Goldman and the people who work there. It’s good news for financial superstars in general, whose paychecks are rapidly climbing back to precrisis levels. But it’s bad news for almost everyone else.

7/12/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

• The next conservative thinkers - Many Republicans fret that the party of ideas [well, for their first 75 years anyway] has gotten stuck - Here are four who might help unstick it, BSG, C1.
  [Don't think so. One has nothing but Democrats' ideas -]
  ..Reihan Salam..is one of a few 'conservative' thinkers [our quotes] outlining what a new big-government conservatism might look like.\.
  [It "might" look just like Bush's big bankrupt America = nightmare! Two comments: (a) big-government "conservatism" isn't new - it's what we've been seeing for the last 8 years thanks to the radical corruption of the Bush regime; and (b) big-government is the Democrats - and till Obama's massive charity for the rich, Democrats big government (for example, Bill Clinton's) was tiny by comparison to the Homeland "Security" bureaucracy, the unbid contracts and privatization and the plain disappearing billions of the military-industrial monster created by the Bush-Cheney regime. If Salam had half a brain, he'd be looking for the holy grail of economic designers, the Single All-Sufficient Control, so well-designed and centrally positioned in the body economic that it could safely supercede all the other regulations and programs. (We've got it down to two: fluctuating adjustment of the workweek against unemployment and automatic overtime-to-training&hiring conversion.)]
  Luigi Zingales says it's time for conservatives to fall our of love with businesses and..back in love with the free market. [He] believes rescue funds should have focused on workers rather than firms, and wants stimulus funds disbursed according to dispassionate algorithms, to minimize favoritism...
  [This guy claims to favor free markets, but he's still talking about taking billions in "rescue funds" from taxpayers to bail out the private sector. He should be looking at where the private sector's money has all gone (the top 0.01% according to Paul Krugman) and how to reverse that hyperconcentration of the nation's money supply in a more basic dimension than money; namely, time, worktime. Injecting worksaving technology against a functionally frozen 1940 workweek has created a huge wage-depressing surplus of labor hours on offer in the "free" job market. How do we reframe the market to work better for the long term, which is a redefining function that it cannot do for itself? We could do it with wars that kill more Americans - as we did in World Wars 1 and 2, yielding "wartime prosperity." We could do it with plagues, like the Black Death of 1348 and the Flu Epidemic of 1919, all of which brought fabulous economic prosperity and because employers had to bid against one another for good help and wages went up by irresistable, management-disciplining free-market forces moving the money out to the people who actually need and want to spend it instead of just looking for more safe investments to stash it in. Or we could continue the two-hour-a-year workweek reduction of 1938-1940 that was solving the Great Depression (unemployment dropped 1% for every hour cut from the workweek) until it was eclipsed by WW2 and carefully buried by management that just wanted labor discipline, not management discipline.]
  Bradford Wilcox..has pressed the case [for] traditional family structures [and values]...
  ["Family values" with less and less family time??! - this genius is completely blind to what's been happening to Americans' free time for family, friends, spiritual values and civic duties over the last 40 years. As real wages stagnated and sank the last 40 years, it's started taking two wage-earners to support the family instead of just one. Strangers ("childcare") are bringing up our kids. What's this guy want to do? -]
  He suggests creating tax and welfare incentives to make marriage more financially attractive than mere cohabitation...
  [Sounds like a pretty non-conservative government interventionist to us. Big government sticking its nose into people's private lives? No way! And subsidizing reproduction (marriage) during the Age of Global Overpopulation? Not too smart. Looking ahead, it's probably more important to fix the bitter rankling of divorce, the mandatory return to one's mistakes in terms of visiting 'rights' etc. that needs redesign in the more distant future - for example, each child could be assigned at birth to one or the other parent - alternating - and if the marriage crashes, each child goes with its assigned parent and THAT'S IT!]
  Megan McArdle..is a good bridge between..conservatism and libertarianism...
  [And that's about all we find out about the ideas of the only woman in this quartet.]

  
  

• Does stock market data really go back 200 years?, by Jason Zweig, WSJ, B1.
  As of June 30, U.S. stocks have underperformed long-term Treasury bonds for the past five, 10, 15, 20 and 25 years.
  Still, brokers and financial planners keep reminding us, there's almost never been a 30-year period since 1802 when stocks have underperformed bonds.
  These true believers rely on the gospel of "Stocks for the Long Run," the book by finance professor Jeremy Siegel of the Wharton School at the University of Pennsylvania that was first published in 1994.
  Using data assembled by other scholars, Prof. Siegel extended the history of U.S. stock returns all the way back to 1802. He came to two conclusions that became articles of faith to millions of investors: Ever since Thomas Jefferson was in the White House, stocks have generated a "remarkably constant" average return of nearly 7% a year after inflation. (Adding inflation at 3% yields the commonly cited 10% annual stock return.) And, declared Prof. Siegel, "the risks of holding stocks decrease over time."
  There is just one problem with tracing stock performance all the way back to 1802: It isn't really valid.
  Prof. Siegel based his early numbers on data first gathered decades ago by two economists, Walter Buckingham Smith and Arthur Harrison Cole.
  For the years 1802 through 1820, Profs. Smith and Cole collected prices on three dozen banking, insurance, transportation and other stocks -- but ended up including only seven, all banks, in their stock-market index. Through 1845, they tracked 19 insurance stocks, but rejected 95% of them, adding only one to their index. For 1834 onward, they added a maximum of 27 railroad stocks.
  To be a good measure of stock returns, an index should be comprehensive (by including many stocks) and representative (by including the stocks commonly held by investors). The Smith and Cole indexes are neither, as the professors signaled in their 1935 book, "Fluctuations in American Business." They cherry-picked their indexes by throwing out any stock that didn't survive for the whole period, whose share prices were too hard to find or whose returns seemed "inflexible," "erratic," or "non-typical."
  The database of early U.S. securities at EH.net has so far identified more than 1,000 stocks that were listed on 10 different exchanges -- including Charleston, S.C., New Orleans, and Norfolk, Va. -- between 1790 and 1860. Thus the indexes relied on by Prof. Siegel exclude 97% of all the stocks that existed in the earliest years of the U.S. market, and include only the bluest of the blue-chip survivors. Never mind all of the canals, wooden turnpikes, rubber-hat companies and the other doomed stocks that investors lost millions on -- and whose returns may never be reconstructed.
  There is a second problem with Prof. Siegel's data.
  In an article published in 1992, he estimated the average annual dividend yield from 1802-1870 at 5.0%. Two years later in his book, it had grown to 6.4% -- raising the average annual return in the early years from 5.7% to 7.0% after inflation.
  Why does that matter? By using the higher number for the earlier period, Prof. Siegel appears to have raised his estimate of the rate of return for the entire period by about half a percentage point annually.
  Prof. Siegel calculated in his 1992 article that $1 invested in stocks in 1802 would have grown, after inflation, to $86,100 by 1990. In his book just two years later, however, he estimated that $1 in 1802 would have mushroomed into $260,000 by 1992. But in 1991 and 1992, stocks gained 30.5% and 7.6%, respectively, which should have taken the cumulative return up to only about $121,000. Nearly all of that huge difference seems to have come from Prof. Siegel's revised number for early dividends.
  "I made an estimate of the dividend yield," Prof. Siegel told me, "through looking at a smaller set of securities and projecting it out." Money manager Robert Arnott of Research Affiliates LLC has recently estimated the early dividend yield at 5.2%. "Arnott has a much lower estimate, and that's a big difference," said Prof. Siegel. "I mean, I don't know what more to say."
  I later called Prof. Siegel to ask him again about the difference between his original research and his book, but he didn't get back to me by press time.
  What, then, are the odds that stocks will continue to lag behind bonds for the long run? The sad truth is that history can't tell us the answer. The 1802-to-1870 stock indexes are rotten with methodological flaws. So we have only the period since then, or four distinct and complete 30-year stretches of stock returns, to base our long-term investment decisions on.
  Another emperor of the late bull market, it seems, has turned out to have no clothes.
  Write to Jason Zweig at intelligentinvestor@wsj.com
  [So investors have long been, and are still being, tricked, fooled and suckered by the financial professionals - this corrupt crew of happytalkin' cheerleaders that shout the tiniest good news, and whisper or ignore the hugest bad news.]

6/19/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

• CIBC overtime class-action case dismissed, by Craig Wong, THE CANADIAN PRESS via TheStar.com.
  The Ontario Superior Court has dismissed a class-action lawsuit filed against CIBC that alleged the bank failed to pay overtime to its customer service staff.
  Justice Joan Lax ruled the case didn't meet the test to be a class-action lawsuit.
  "While some of the certification requirements could be satisfied, the action lacks the essential element of commonality," Lax wrote in the decision released today.
  "In my opinion, there is no asserted common issue capable of being determined on a class-wide basis that would sufficiently advance this litigation to justify certification."
  [The time dimension is the commonest issue there is, and so is unpaid worktime = slavery. This contemptible and unimaginative "judge" has set Canadian economic progress back to the 19th century, and particularly betrayed her gender.]
  The case was filed two years ago by Dara Fresco, a teller in one of the bank's Toronto branches.
  Had the case gone ahead as a class action it would have included thousands of current and former non-management and non-unionized employees at the bank.
  Lax came to the view that the individual claims would have to be resolved on a case-by-case basis.
  "Therefore, proceeding as a class action will not avoid duplication of fact-finding and legal analysis."
  CIBC (TSX: CM) was pleased with the decision.
  [Nooo kidding.]
  "We believe it shows CIBC has a clear overtime policy that exceeds legislative requirements in Canada," bank spokesman Rob McLeod said.
  "Under our policy, where overtime is requested or required of eligible employees, it is paid."
  "CIBC has a process to resolve employees' concerns about overtime that includes escalation to senior management. As well, there is a separate external process through the government," McLeod said.
  Louis Sokolov, one of the lawyers involved in filing the lawsuit, said he was reviewing the decision to see if there would be grounds for an appeal.
  He noted that Lax did not make a finding regarding the merits of the claim by Fresco.
  "Her opinion was that the claims of the individuals were more individual in nature," Sokolov said of Lax's decision.
  However, Sokolov said the decision was still important it was difficult to pursue each case individually.
  "The only real basis for non-unionized employees to go forward with claims like this is in the context of a class action," Sokolov said.
  "If the ruling stands, then it will continue to be disappointing not just to Ms. Fresco, but to other employees at CIBC and other employees across the country."
  Fresco had claimed that she was owed some $50,000 for the two-and-a-half to 15 hours a week of additional work she says she's been required to perform as a teller and personal banker since 1998.
  The case alleged CIBC non-management employees are assigned heavy workloads that cannot be completed within standard working hours, and that, at least in Fresco's case, she was told not to claim any of it as overtime.
  The case was one of the first of its kind in Canada.
  Since the lawsuit was filed in 2007, at least two others have been launched against Canadian companies alleging workers were not paid overtime.
  A case against Canadian National Railway Co. (TSX: CNR) alleged Canada's largest railway misclassified operational supervisors as management to avoid paying them overtime required under the Canada Labour Code.
  Scotiabank (TSX: BNS) has also been accused of years of unpaid overtime.
  The statement of claim for the Scotiabank case alleges that the bank's workers are assigned heavier workloads than can be completed within standard working hours and are forced to work unpaid overtime.

6/13/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

1. Stocks in the black on gusher of cash, by E.S. Browning, Wall St Journal, A1.
   [Stocks in the black - but what their value is based on, the employment and consumer bases, are in the mega-red thanks to the theft of megataxpayer money in favor of the super-super-rich - this is human stupidity, cluelessness and irresponsibility on a colossal scale.]
   With a 34% rebound in 3 months, the Dow..has pushed into positive territory for 2009, and one of the main reasons is disarmingly simple: Financial markets once again[?] are awash in government cash.
   ...Governments around the world are pumping money into "the economy" [our quotes] at a frenetic pace.
   [Actually by redistributing their money supply into the topmost income brackets, they are pumping money OUT of their economies since these millions cannot possibly be spent by their overloaded recipients and the baseless stock runup shows it cannot possibly be invested sustainably either.]
   Because businesses can't put trillions of new dollars to work in such a short time, the money is finding its way [ha, POURING would be more accurate] into financial markets. Some investors have begun speaking of a "bailout bubble" being created in certain markets [make that generally in financial markets], and about a "melt-up" in demand fueled by the growing supply of "money." [our quotes on money cuz it's just really just air]
   [A melt-down is deflation. A melt-up is hyper-inflation. This is going to be hyper-hyper-hyper-inflation. Soup kitchens all over America - reserve your place in line - if these total morons at the top can even get that right, instead of grab-grab-grabbing. It seems they're sooo detached from reality, they couldn't organize a two-car funeral.]
   "All that money that was printed had to go somewhere," says Joachim Fels, co-head of global economics at Morgan Stanley.
   [If it had gone to the bottom instead of the top, it would have created the circulation, trust and faith that would have solidified and substantiated it, but as it is, it has worsened the underlying problem that it was supposed to correct (except the underlying problem was never admitted or described in solvable terms) = insufficient circulating money to support the gigantic concentration of the money supply in the top brackets.]
   "It has been pushing up commodity prices and stock prices, starting in emerging markets [not really, unless he means China] and then pushing over into developed markets.
   The U.S. government alone has allocated $11.4 trillion to direct and indirect stimulus in the past two years, of which about $2.4 trillion has been spent, according to an estimate by Daniel Clifton, head of policy research at NY's Strategas Research Partners.
   Most of the money has been pushed out in the past year. [Meaning unclear. Bad writing. Does this mean that most of the money has been printed in the last year (and distributed to the topmost brackets)?]
   The money is gushing from direct grants, central-bank lending, tax breaks, guarantees and other items. China has announced plans for $600 billion in direct stimulus spending [direct to the top or the bottom? - cuz the top's gonna worsen things, the bottom's gonna improve things); Russia, $290 billion; Britain, $147 billion; and Japan, $155 billion, according to Strategas. Those countries and others are spending trillions more indirectly. [meaning??]
   "It is quite easily the biggest combined fiscal stimulus the world has ever seen in modern [or any] times," says Jim O'Neill, chief economist at Goldman Sachs. "That liquidity will impact anything that is sensitive to it, ranging from short-term fixed-income securities through stock prices through property prices and into people's personal wealth."
   Some of the market gains, of course, reflect a bet by investors that the worst of the global recession is over, and that investments tied to global growth will be big beneficiaries. The heavy influx of money into the financial system has fueled those bets.
   (surging liquidity chart)
   If the recession proves more lasting than the optimists believe, liquidity alone may not be enough to keep financial markets rising. American consumers, whose outlays account for more than two-thirds of U.S. economic output, have only begun to rein in spending and reduce debt, a process many economists expect to continue for years.
   The growing liquidity also is creating serious policy challenges. Senior economists, including Federal Reserve Chairman Ben Bernanke in congressional testimony on June 3, have begun warning that the government can't keep piling up debt at current rates without creating severe financial problems.
   In coming years, officials will need to raise taxes, cut spending, or both to mop up the ocean of liquidity they have created. That process could weigh on growth and stifle the market boom.
   Meanwhile, yields of government bonds are rising in anticipation of heavy federal borrowing, and higher yields also hamper growth. On Friday, the yield on 10-year Treasury notes eased a bit to 3.783%, still well up from 2.203% in mid-January.
   If the government fails to mop up the money, the consequence could be even worse: inflation and a collapsing dollar.
   Past liquidity-driven booms haven't ended well. In 1998, the Federal Reserve injected cash into the economy to rescue teetering bond markets. The unintended outcome: Technology stocks soared and then cratered. After the government turned on the spigot in 2001 to stave off deflation, residential real estate surged and then collapsed.
   Now, although almost all markets still are far from past highs, bubbles may be starting to inflate again in speculative foreign markets and other investments linked to global economic growth.
   For the seventh time this month, the Dow traded above its closing level from last year and finally closed in a new high for 2009. Not all news was good, however, with commodities closing lower. Dave Kansas reports after the bell.
   Silver is up 59% from December lows on futures markets; copper is up 90%; corn, 45%; and crude oil, 113%. Ukraine's stock market is up 125%, Vietnam's 116%, Indonesia's 76% and India's 87% from winter lows.
   In Shanghai, crowds are back on weekends on Guangdong Road, where locals gather to chat stocks. Tan Viet Securities Co. in Hanoi says it is opening or reactivating 50 accounts a day, up from five to seven in March. Optima Securities, a brokerage firm in Indonesia, says the number of new accounts has doubled in the last three months.
   The oil-price rebound is boosting costly projects such as western Canada's oil-sands fields. Imperial Oil Ltd., majority-owned by Exxon Mobil Corp., said May 25 that it is moving ahead with a delayed $8 billion project near Kearl Lake. Canada's stock index is up 41% since March 9.
   U.S. markets have been among the tamer ones, although some stocks demolished in the downturn have surged, such as banks and home builders. So have companies linked to foreign growth, including Freeport-McMoRan Copper & Gold Inc. and Caterpillar Inc.
   U.S. companies have reacted to the easier money by issuing new stocks and bonds. In May, Dealogic reported, more new stock was issued by existing companies in U.S. markets than at any time since 1995, when it began keeping records. May issuance of new dollar-denominated junk bonds was the heaviest since June 2007, and the fifth-highest monthly level on record.
   Worries are spreading that, like previous liquidity-driven market surges, this one could end badly, though many investors believe that won't happen soon.
   Money supply in major countries, as measured by cash and checking accounts, has been rising sharply relative to gross domestic product, or total value of goods and services, Morgan Stanley reports. Money supply relative to GDP is at the highest level of any period covered by Morgan Stanley's data, which go back to the 1970s.
   That measure of money supply has tended to move in line with bull and bear markets. It was declining in the late 1980s, ahead of the 1987 crash and the 1990 bear market. It started expanding in 1995, as a major bull market began. It started pulling back in March 2000, as the stock market fell. It then began expanding at the start of 2001, ahead of the next bull, only to top out again at the end of 2006, ahead of the next bear. Now it is surging again.
   A growing number of money managers are jumping back into stocks, some fearing they will fall behind the surging indexes or believing the world economy finally is poised to recover, led by developing countries.
   "We're past the crisis," says Jeff Schappe, chief investment officer at BB&T Asset Management in Raleigh, N.C. "The most attractive opportunities are probably going to be in emerging markets and commodities over time."
   Brett Gallagher, deputy chief investment officer at Artio Global Investors, a money-management arm of Zurich financial group Julius Baer Holdings, says that at some point, the stock market "probably has to correct. But right now, a lot of it is a reflection of the policies that global central banks and politicians have pursued, which are: Reflate at any cost. My guess is that it probably will run longer than fundamentals will dictate it should," just as the tech-stock and the real-estate bubbles did before they finally popped.
   —Mark Gongloff and James T. Areddy contributed to this article.

2. San Francisco at a crossroads over its immigration policies, By JESSE McKINLEY, NY Times, front page.
   SAN FRANCISCO — In the debate over illegal immigration, San Francisco has proudly played the role of liberal enclave, a so-called sanctuary city where local officials have refused to cooperate with enforcement of federal immigration law and undocumented residents have mostly lived without fear of consequence.
   But over the last year, buffeted by several high-profile crimes by illegal immigrants and revelations of mismanagement of the city’s sanctuary policy, San Francisco has become less like its self-image and more like many other cities in the United States: deeply conflicted over how to cope with the fallout of illegal immigration.
   At the center of the turnaround is a new law enforcement policy focused on under-age offenders who are in this country illegally. Under the policy, minors brought to juvenile hall on felony charges are questioned about their immigration status. And if they are suspected of being here illegally, they are reported to the Immigration and Customs Enforcement agency for deportation, regardless of whether they are eventually convicted of a crime.
   “We went from being one of the more progressive counties in the country to probably one of the least, and the most draconian,” said Abigail Trillin, the managing attorney with Legal Services for Children, a nonprofit legal group. “It’s been a total turnaround.”
   Mayor Gavin Newsom, who ordered the new policy, disputes that characterization and ticks off a list of policies that remain immigrant friendly: the issuing of identification cards to residents regardless of legal status, the promotion of low-cost banking and the city’s longstanding opposition to immigration raids.
   “I’m balancing safety and rights,” Mr. Newsom said. “And I’m taking the arrows.”
   The policy was put in place last summer amid a series of embarrassing revelations about the city’s handling of illegal minors and even as reports arose of several serious crimes committed by illegal residents. The policy has led not only to dozens of juveniles in deportation proceedings, but also to criticism from the city’s public defender and members of its Board of Supervisors, which is threatening to relax it next month.
   “I think the point of sanctuary is that you protect people and treat people the same unless they engage in some felony crime,” said David Campos, a county supervisor who came illegally to the United States from his native Guatemala when he was 14.
   The new approach has pitted a growing coalition of immigrants rights groups against Mr. Newsom, who is running for governor in a state where immigrants, particularly Latinos, can be vital to being elected.
   Mr. Newsom defends the policy as an effort to bring the city’s juvenile protocol in line with that for adult illegal immigrants, who have always been reported to federal authorities if they are accused of a felony.
   But immigration advocates say the policy has too often swept up juveniles who are in this country illegally but who are innocent or held on minor charges, a list that includes young men like Roberto, 14, who has lived in the United States since he was 2.
   Roberto, whose last name is being withheld at the request of his parents who are also in the country illegally, was handed over to immigration authorities last fall after he took a BB gun to school to show off to friends. He spent Christmas at a juvenile facility in Washington State and is now facing deportation to Mexico, where he was born.
   The experience left Roberto shaken. “I was feeling really scared,” he said in an interview here.
   Supporters of the new crackdown say that Roberto’s case is unrepresentative and that the majority of youths turned over to the immigration authorities have engaged in serious crimes, including those associated with the practice by Honduran drug gangs in San Francisco of using minors as dealers.
   “A lot of them have histories; a lot of them are second, third chances,” Mr. Newsom said. “This is not as touchy feely as some people may want to make it.”
   Mr. Newsom says he still supports the sanctuary ordinance, which grew out of worries in the 1980s about the deportation of Central Americans to war-torn regions. Made city law in 1989, the policy forbids city agencies to use resources to assist in the enforcement of federal immigration law or information gathering.
   While proponents say such policies help the police by making immigrant communities — often suspicious of the authorities — more comfortable with reporting crimes, critics say San Francisco’s policy had been stretched to extremes, including the practice of occasionally flying some offenders back to their home countries rather than cooperating with immigration authorities.
   Mr. Newsom says he discovered and stopped that practice in May 2008, and quickly ordered a review. Juvenile referrals began shortly thereafter and were formalized as policy in August.
   In the interim, however, The San Francisco Chronicle reported that a group of teenage Honduran crack dealers who had been sent to a group home simply walked away from confinement.
   A second event was more serious, when a father and two sons driving home from a picnic were killed in a case of mistaken identity in June 2008. The police later charged Edwin Ramos, an illegal immigrant from El Salvador and suspected gang member who had had run-ins with the San Francisco police as a juvenile but had not been turned over to the immigration authorities.
   At the same time, San Francisco found itself under criminal investigation by the United States attorney for the Northern District of California, and city officials were eager to show that their city was not a lawless haven for illegal-immigrant criminals.
   “If we start harboring criminals as a sanctuary city, this entire system is in peril,” Mr. Newsom said.
   For their part, immigration advocates say they are not asking the city to shelter felonious youths from deportation. The problem, they say, is the point of contact: at arrest, rather than after any sort of legal adjudication.
   “Even if you’re undocumented, you have the right to due process,” said Jeff Adachi, the city’s public defender.
   The federal authorities, meanwhile, have been pleasantly surprised that the new policy has resulted in more than 100 referrals.
   “We are now getting routine referrals,” said Virginia Kice, a spokeswoman for the immigration agency.
   The most serious challenge to the policy is likely to come in July, when the Board of Supervisors is expected to take up a proposal that would apply the policy only to illegal juveniles found in court to have committed a felony. The measure’s sponsor, Mr. Campos, said he expected it to pass.
   Such an ordinance would not help Roberto, who is still waiting to plead his case to an immigration judge. He said he had already learned a valuable lesson.
   “I will never bring anything to school again,” he said.
   

5/27/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

• Historian Aviva Chomsky debunks immigration myths, by Meghan Frederico, Somerville News, page 1.
  [Thus pushing even more centrists, shaking their heads and rolling their eyes, toward the political right. Full disclosure: I am an immigrant myself, a legal immigrant, and many many of my fellow immigrants feel as I do = you can't save the world by moving everyone here - you'll just ruin us and plunge us into the Third World, and make us utterly incapable of even setting a sustainable example. For an antidote to this kind of policy-making based on individual sobstories (which are endless) - see the article above = 6/13/2009 #2. And please, please, Aviva, refocus on something worthy and sustainable, like full employment.]
  ...So are immigrants really a drain of the economy? Dr. Chomsky delivered a well-supported[?] argument that the answer is no. She explained it this way: more consumers create more jobs, and an influx of people to a city will create more jobs overall, not less...
  [But what's so great about working full time and still being below the poverty line, as more and more Americans, particularly American minorities, are these days? What's so great about McJobs? What's so great about Bill Clinton's boasted creation of 10 million new jobs in 1996 when one lady stood up and said, "Don't tell ME about your 10m new jobs - I've got three of them myself!"? Aviva is trying to debunk "immigration myths" with "population myths" - such as Population Equals Prosperity (never mind India and China and Mexico City = population without money or good jobs), and Population Influx to a City Equals More Jobs (never mind the mass migration of rural people into China's and India's cities in the last 20 years and the resulting mass unemployment and deepened poverty). Dumb rich people want this because it creates a permanent exploitable underclass. In areas like the US Southwest where there are lots of undocumented entrants, wages are depressed at the bottom - but what do the Chomsky's care? - it doesn't depress their high pay levels in the Northeast.]
  And yet "some people act as if it's a zero sum game"...
  [That's not the issue. The issue is that market forces do not reward a surplus, including a surplus of jobseekers, especially jobseekers made desperate by illegality. Population is nothing without good jobs, and jobs are not good without good pay, and pay is not good in a labor surplus because wages don't vary with hours or productivity or profits or CEO pay, they vary with supply and demand of labor and only an undersupply or shortage of labor means high wages - an oversupply or surplus means low wages. Existing American minority wages have been sinking faster than the average ever since the Democrats jumped immigration quotas to try to get more grateful-voters. The ecological age demands a default position of replacement immigration, eg: 100,000 or whatever leave? = same number can enter. How depressing that the wife of the great Noam Chomsky is disgracing herself with this Politically Correct, ecologically disastrous agenda that is responsible more than any other for progressives' loss of credibility and gains for the political right. She has not thought this through and has no long-term, ecologically sustainable position, eg: what is your population goal, Aviva? Do you have one? Hint: what is the maximum population carrying capacity of the U.S. land mass? And ohmygod, she's supporting the most regressive (poorpeople-taxing) and market-bashing of taxes, sales tax, and btw, supporting illegal immigration, the violation of our immigration laws - brilliant. Noam, can't you talk some sense into her? (Pls. don't tell us that you've contracted this brain virus too!) You can't run immigration policy for anywhere on the basis of heart-wrenching stories or guilt or other people's money, because there are literally hundreds of millions of heart-wrenching stories in a world population currently swelling past seven billion in a hyper-exponential curve. The Timesizing program is the program on the web with population variables built in (see Phase Five). Our survival demands that we learn to draw lines, set limits, and say no. Being incapable of saying No is not a sustainable answer. It is every bit as wrong - and systemically suicidal - as the right's incapability of drawing a line on the concentration of income and wealth - or with more parallels to immigration, the right's unwillingness to to draw a line on "free trade."]

2/19/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or other newsfeeds - missing earlier and later dates are handled entirely on recent archive page(s) -

• Graduates flock to Shenzhen in the vain hope of employment, China Labour Bulletin via http://www.clb.org.hk/en.
  Every day since the Chinese New Year, thousands of new graduates have packed the halls of Shenzhen’s talent markets (rencai shichang) on Bao'an North Road looking for jobs – the vast majority come away empty-handed. Companies are still recruiting but their requirements are getting tougher and the pay is getting lower.
  Six million university students graduated last year and, according to a report by the Chinese Academy of Social Sciences, about 1.5 million are still unemployed [that's 25% unemployment among graduates = the worst Depression level = 1933]. The government is now seriously concerned at the rising level of graduate unemployment and has instigated a wide range of policies designed to ease the situation, including lifting residency requirements to allow freer movement of labour, but these policies are of little benefit to the job hunters in Shenzhen.
  For most companies advertising positions on the talent markets’ bulletin boards, a university degree was the minimum requirement, in addition they wanted applicants with between one and five year’s relevant work experience. This has left fresh graduates out in the cold. Even graduates with several years work experience were having a tough time finding employment.
  “It is very difficult right now. I can’t find a decent job and so I will have to take anything I can get just to pay the rent,” a translator from Hunan with five years work experience in Shenzhen said.
  Company representatives at the talent market recruitment booths said the number of job seekers had greatly increased over the last year but that it was still difficult to find good people. “The number of universities has increased but the quality of education has decreased,” one company manager said, “the level of English is of particular concern, and even if they can speak good English, they have no or very limited skills in other areas.”
  Job seekers said wages have decreased significantly over the last year and work conditions have got tougher. Many had quit their job because conditions were so bad but now could not find alternative employment. Even those who had been working in Shenzhen for several years were now considering returning to their home town. “I will stay here for as long as I can because Shenzhen is the best place to be but if I can’t find work, I will have no choice,” a computer engineer said.
  New graduates are arriving in Shenzhen everyday, usually staying with friends and relatives because without a job they can not afford an apartment. Cramped dormitory rooms are available for 12 yuan a day but rent for one person in small shared apartment downtown can be between 750 yuan and 1,000 yuan a month, while the minimum wage in Shenzhen is 1,000 yuan a month. If they want to stay in Shenzhen, many graduates will be forced to take low-paying, unskilled jobs just to get by but even these positions are increasingly hard to find as Shenzhen strives to upgrade its employment environment and eliminate outdated manufacturing industries.

10/31/2008  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

• When consumers capitulate - The economy's next big problem, by Paul Krugman, NYT A27.
  The long-feared capitulation of American consumers has arrived. According to Thursday's [10/30/2008] GDP report, real consumer spending fell at an annual rate of 3.1% in Q3; real spending on durable goods (stuff like cars and TVs) fell at an annual rate of 14%....
  Also, these numbers are from Q3...before [consumer or investor?] confidence collapsed after the fall of Lehman Brothers in mid-September, not to mention before the Dow plunged below 10,000. Nor do the data show the full effects of the sharp cutback in the availability of consumer credit, which is still under way.
  ..\..American consumers almost never cut spending. Consumer demand kept rising right through the 2001 recession;
  [cuz they could still get home equity loans.]
  the last time [consumer demand] fell even for a single quarter was in 1991, [but] there hasn't been a decline this steep since 1980, when the economy was suffering from a severe recession combined with double-digit inflation.
  [That is, stagflation alias stagnation-inflation alias unemployment-inflation alias simultaneous unemployment and inflation, a situation typical of the third world - and it's even worse today as the once-great USA redistributes more wealth to the most wealthy and sinks ever closer toward the third world.]
  ...American consumers have long been living beyond their means.
  [...pushed into doing so by economists and Wall St. And if consumers hadn't been "living beyond their means," the economy would have tanked much sooner.]
  In the mid-80s [they] saved about 10% of their income.
  [This figure would be much higher for the higher income brackets, much lower for the lower income brackets. Expressed more positively and relevantly to recession, American consumers spent 90% of their income, much lower for the higher brackets, higher for the lower brackets who therefore are disproportionately responsible for growth and prosperity instead of recession despite the mainstream's confusing tut-tutting about spending/consumption and praise for saving.]
  Lately, however, the savings rate has generally been below 2% - sometimes it has even been negative...
  [Judging consumer spending by its supposed (but not really even close) opposite, savings, is crazy and a total nullification of everything we supposedly learned from the Great Depression, e.g: that there's "many a slip twixt cup and lip" in that investment cannot be equated with savings, and jobs cannot be equated with investment. Isn't there some more direct way to gauge consumer spending? They're sooo clever at devising derivatives and other financial instruments to soak up more millions in the obese financial markets.]
  - and consumer debt has risen to 98% of GDP, twice its level a quarter-century ago.
  [Again, a contradictory signal in their own terms - here he's treating high consumer debt as a negative signal, but as we hinted in our first comment above, the only thing maintaining spending the last 10-15 years has been rising consumer debt, making it a positive signal - now Krugman has suddenly got worried that it's unsustainable. Looks like The Economist's Disease = terminal short-termitis, afflicting even our Nobel prizewinner, the best of the best...of lethally flawed, multiply self-contradictory, mainstream economics. Here we go -]
  Some economists [ie: most] told us not to worry because Americans were offsetting their growing debt with the ever-rising values of their homes and stock portfolios. Somehow, though, we're not hearing that argument much lately.
  [including not from Krugman himself - though he still hasn't let go of Free Trade.]
  Sooner or later...consumers were going to have to pull in their belts....
  [No kidding.]
  But the timing of the new sobriety is deeply unfortunate.
  [As if consumers had a choice with the housing collapse.]
  ...Consumers are cutting back just as the U.S. economy has fallen into a liquidity trap [ie: a shortage of credit] - a situation in which the Federal Reserve has lost its grip on the economy.
  [- a pretty tenuous grip at best - it was only based on manipulating loan interest rates, raising to reduce lending, lowering to increase lending - but once interest rates get close to zero, the lowering doesn't work cuz there's insufficient incentive for lenders to risk losing their money.]
  ...If consumers cut their spending, and nothing else take the place of that spending
  [such as government spending?...on artificial job creation to keep people spinning their wheels for a 40-hour workweek that was produced by 100 years of reductions but has been frozen since 1940? - artificial job creation that is too little to maintain economic growth in the absence of the Cold War and is deteriorating the environment anyway? = definitely not worth it]
  the economy will slide into a recession
  ["will slide"? is Krugman still denying reality?]
  reducing everyone's income.
  [More to the point, reducing markets and sales and corporate profits and stock prices and dividends and the income of wealthy - and even the principal of their estates.]
  In fact, consumers' income may actually fall more than their spending...
  [Ah, isn't this the same as spending more than their income - and hasn't this been the case for at least the last 10 years?]
  so that their attempt to save more backfires - a possibility known as the paradox of thrift.
  [Let's be clear - it ain't the middle and lower brackets who are "attempting" to save more because they don't have any extra money. So who could it be? Well, it must be the top brackets who, due to high hidden unemployment and labor surplus are receiving far more than their usual share of the national income and wealth. And "attempting to save more" is an inaccurate description of their situation. They are attempting to invest the much more that they're receiving and to invest it profitably or at least sustainably - and they can't because by fostering a labor surplus they have suctioned the wages and spending power out of the markets for the productivity they need to invest in.]
  

• Holiday spending not good, but not surprising - Robust sales of luxury products could not make up for sluggish sales of jewelry ad women's clothing, by Michael Barbaro, g.D1.
  ...Spending between Thanksgiving and Christmas rose just 3.6% over last year, the weakest performance in at least four years, according to MasterCard Advisors, a division of the credit-card company. By comparison, sales grew 6.6% in 2006, and 8.7% in 2005.
  [Guess consumers have finally maxxed out their credit lines. There goes the Great American Consumer Miracle and Last Hope of the Global Economy - except that the idiot savants have now switched to the "rise" of consumption in China and India. Let's see how long it takes them to find out that two billion people with an extra peanut to spend do not equate to millions of Americans recently pushed below the poverty line. The few imports from us/US that they are, and will be, able to afford will be hugely overpublicized ... but still insignificant. Because, don't forget, their top brackets will be copying us and vacuuming their national incomes without limit into their own few pockets too ... and strangling their consumption as it expands.]
  "There was not a recipe for a pickup in sales growth," said Michael McNamara, VP of research and analysis at MasterCard Advisors, citing higher gas prices, a slowing housing market, and a tight credit market. Strong demand at the start of the season for a handful of must-have electronics, like digital frames and portable GPS navigation systems, trailed off in December....
  What did eventually sell was generally marked down - once, if not twice - which could hurt retailers' last-quarter profits.... Excluding gas purchases, overall holiday sales rose a lackluster 2.4%, the credit card company said....
  [Well, well, the spending of the thousands of new millionaires and billionaires is apparently not making up for spending cuts of the millions recently pushed below the poverty line. We are experiencing first-hand the reverse multiplier effect. The short-sighted and narrowly interested top brackets are vacuuming ever more of the national income and wealth into their own few bulging pockets, with no limit in sight. This is what makes a third-world economy. It's like a black hole in astronomy - after a certain point, the compaction of mass is so intense that nothing leaves the center, not even light waves. In the economy, after a certain threshold of concentrated income and wealth is passed, nothing "trickles down," except possibly the effects of the increasingly stupid decisions made by the increasingly insulated and isolated wealthy decision-makers. Today in the USA, the unlimited concentration of money in the top 0.001% is deep into its self-destructive zone, vacuuming the spending power out of the markets for the productivity in which it would like to invest - and the actual spending activity of the top fraction is insignificant compared to the weakening spending of the other 99.999% of the population. We're well into the economic death spiral, and only timesizing and its successor-programs can ease us out on a market-oriented basis. In the political age we humans learned that if we can tolerate some negativity from one another, we'll make faster progress, because negotiation will replace genocide and ostracism. In the economic age, we learned that we can build partial agreement and progress faster if we negotiate with numbers instead of the gut-churning political and religious slogans, because quantification will replace inflammatory rhetoric. Now as the ecological age begins, we're going to learn that we'll be more likely to survive the pressures we're putting on our ecosystems if we take the guesswork and arbitrary "fixes" out of our economies, identify the natural determinants that should set economic variables like workweek length, interest rates and income and wealth maxima, and design systems that automatically, smoothly and continuously tie the dependent variables to their natural determinants - with no political interventions and no swerves due to changing fashions in economic dogma.]
  Eboni Jones...of Windsor CT epitomized the problem for stores.... "I am on a tighter budget than I've ever been," said Jones..\..a phone company manager.... In the past, she easily spent $100 each on her six nieces and nephews. This year, it was more like $50. "If it's not on sale, I won't buy it," Jones said....
  [And this is evidently a person with no kids. What kind of spending cuts must the parents of her nieces and nephews have been making?! Gee, maybe the consumer base isn't infinite after all! Maybe it can't take any amount of punishment and abuse. If you keep downsizing consumers from their jobs, and downsizing the pay of those who are still working, and upsizing their health costs, and downsizing the pensions and pension funds of those who have retired - and then making consumers pump their own gas, and be their own bankteller and travel agent, and check out their own supermarket purchases, well gee, maybe it all finally starts, just starts, to take a toll.]

• Firms find ways around [Massachusetts] state health law, by Alice Dembner, g.A1.
  To comply with the new state insurance law, a Burger King franchisee in Boston expanded coverage from just his salaried staff to all full-timers. To control his costs, he halved the share he pays. Only three of the 27 newly eligible employees took the insurance; others say they can't afford it.
  A large human service provider toughened eligibility for coverage in response to the new law, requiring employees to work 30 hours a week to qualify. That took away the option of work-based coverage for nearly 100 low-wage workers, but made them eligible for cheaper, state-subsidized insurance. It could reduce the company's costs while increasing the state's.
  Another employer split his firm into separate corporations, each with fewer than 11 full-time employees, according to his insurance broker. That way he does not have to offer insurance, nor pay a fine.
  Businesses from Boston to the Berkshires are responding to the state's [so-called] landmark health insurance initiative in ways that could help it succeed - or stumble.
  [So far she's only provided examples of the stumble - so why'd she mention succeed? Bad journalism.]
  Policy makers are watching and waiting, but said they will act if many employers dodge their obligations.
  [Policy makers are great at "doing good with other people's money."]
  In the first nine months of this year, according to the latest state figures, about 45,000 workers and their families gained insurance because employers picked up part of the tab. That number represents a small but significant chunk of the 293,000 newly insured state residents, a total that puts Massachusetts between half and three-quarters of the way toward its goal of covering nearly every resident.
  ["Nearly every resident"? How scientific!]
  Yet some employers are taking actions that could shift costs to the state [appropriately, because of this unfunded mandate due to cowardly legislators], or leave more people uninsured, potentially upsetting the delicate balance of responsibility on which the initiative rests [such B.S.!], according to interviews with more than 20 companies, insurance brokers, and trade organizations.... Businesses with 11 or more full-time equivalent workers are now required to offer insurance or pay a fine. The law also bars employers from offering higher-wage workers better health benefits than low-wage employees. In addition, workers with access to employer-subsidized insurance are now barred from getting state-supported coverage, and will be excluded from the state's free care program starting in April.
  [Note this is all negative and punitive, not positive and incentivized - all stick and no carrot.]
  The provisions were designed to ensure that as many workers as possible get coverage through their employers in a state where about 70% of the 200,000 businesses offer insurance benefits.
  [There's the problem. These are not really provisions because they provide nothing - they only try to force others (employers) to provide something. Spineless legislators passing unfunded mandates.]
  For years, Doug Barlow and his business partner had paid 100% of the insurance cost for 11 full-time salaried workers at their three Burger King restaurants in Boston. The new law's antidiscrimination provisions [ie: requirements] led them to offer insurance to 27 hourly employees [in addition]. But the potential cost - nearly $1,100 per month for family coverage - pushed them to cut the firm's contribution to 50%.
  "I was prepared for a lot more people coming into our plan, but it didn't happen," said Barlow. Other employers said they are seeing the same pattern - expanded eligibility that does not lead to many more insured individuals.
  "For most working class people, regardless of whether the company pays part of the premium, it's very expensive," Barlow said. "Some full-time people said they'd done the math and it is cheaper for them to pay the state penalty than pay their half of health insurance."
  [This turns mandated health insurance into just a very stupid and destructive tax on the middle class.]
  The law requires individuals to obtain insurance by Dec. 31, if the state deems it affordable [huh?], or pay a penalty of $219. Next year, the penalty will rise.
  [Brilliant - add to the burdens of the uninsured by penalizing them for being uninsured. This is as viciously stupid as debtors' prison. And how likely are state legislators to "deem insurance affordable" when they each draw over $100,000/year in salary from taxpayers, most of them much poorer?]
  Rebecca Posada works the counter at the busy Burger King in Center Plaza [where's that?]. Although she's been uninsured for the 5 years she's worked there and would like coverage, she is refusing Barlow's offer. "I don't make enough" to pay $46 a week in premiums [she] said...during a morning break. She hopes to continue getting free care at the East Boston Neighborhood Health Center, and may be able to avoid the state penalty because of her low income.
  Vinfen, a 2,000-employee company that runs programs for mentally ill clients statewide, took a different approach.... New employees now have to work 30 hours a week to qualify for insurance, up from 20. ...Said Tim De Arajo, VP of HR, "By denying them eligibility to our plan, we gave them eligibility to the state plan...."
  [How generous.]
  Two thirds of their employees earn less than $24,000 a year, which would qualify them for state-subsidized coverage.
  Separately, Vinfen renewed an offer of coverage, with a 70-75% subsidy, to 650 existing employees who were eligible but not enrolled. Only 72 (11%) signed up.
  Some other firms have similarly tightened eligibility to control costs or try to shift employees to state plans, said Christopher DeLorey, a director of Telamon Insurance & Financial Network....
  Policy makers and analysts are concerned that this pattern could boost enrollment in the state-subsidized plan, which is already far above predicted levels.
  [And rightly so, because the only real universal coverage is single-payer government-provided coverage, not ridiculously mandated coverage, amounting to a destructive attempt to force business toward a particular private industry (the overpriced and inefficient health insurance industry).]
  The bulk of the newly insured so far are covered by state-funded programs....
  Some additional public money is coming from companies required to pay fines of $295 [ie: $300] per employee under the law because they don't offer insurance.
  Northeast Knitting Mills, a small sweater factory in Fall River MA, dropped coverage in February because the 4th-generation family owners could no longer afford it, said Pres. Dan Reitzas.... [This will help] employees get a tax break on privately purchased insurance..\.. He will pay a $13,000 fine [for 44 employees?], which is about 6% of his expenses, he said, but far less than the $50,000 he was paying for insurance....
  But other firms are avoiding fines by designating their employees as independent contractors or using other questionable means, employees and brokers said.
  Paul Pietro, chairman of the Mid-State Insurance Agency, said he helped one of his clients set up separate corporations for each of its Massachusetts locations. Each then had fewer than 11 employees, so the insurance law did not apply..\..
  ..\..When drafting the [would-be] universal insurance law, "we purposely did not raise employer taxes to pay for insurance," said Sen. Richard Moore, cochairman of the Legislature's Committee on Health Care Financing, who plans oversight hearings within a few months....
  [This still amounts to a raise in taxes, on both employers and employees, and a pretty arbitrary one at. Until we research the good, employment-linked Hawaii plan of 1990, our best suggestion is a single-payer government plan paid for by graduated income taxes, if necessary at World War II levels. Remember wartime prosperity? This was one of its ingredients.]

• [Stumbled on this gem when googling David Cay Johnston's "Free Lunch" (Kate heard interview on NPR's Here & Now 1/27/2009) - so backfilled it -]
  Gilded Age Crime:  Poor Go Homeless, Wealthy Get Bailouts (Brent Budowsky), The Hill's Pundits Blog, pundits.thehill.com
  Driving to the Naval Academy at Annapolis, the route goes through poor neighborhoods where house after house have signs: For Sale.
  What this really means is: foreclosed.
  Listening to Jimmy Cramer yell and scream on CNBC about how "there is so much pain out there," he was not referring to underpaid American troops, or homeless American poor, but the banks, hedge funds and private equity deal-makers whose hundreds of millions of dollars have been reduced to hundreds of millions of dollars.
  In fact, the great pain suffered on Wall Street is this: At the market close this past Thursday, the Dow Jones average was up 3 percent, down from an all-time record high only several weeks ago.
  These are tough times for the wealthy.
  What has happened during the Bush years, with the Bush ethic of "grab all you can" greed, is the stench of a new Gilded Age that is morally disgraceful, economically unsustainable and politically deadly for Republicans if the Democrats speak clearly against this.
  Hillary would probably argue that the wealthy, like special-interest lobbyists, are just plan old Americans who never influence government with their money. Some in Congress will have to interrupt their fundraisers and offend their campaign contributors. For most Democrats, this is the issue of a lifetime, the stuff of which landslides are made of.
  Is it right that American troops are told we can't afford to give them body armor and protected vehicles, so they die preventable deaths, while the highest-income 1 percent receive huge tax cuts?
  Is it right that the new racket on Wall Street is that banks make bad loans, sell them to hedge funds and private equity firms, many of whom are virtually unregulated and untaxed, who then complain about their pain after they foreclose on average Americans for falling a little behind their payments?
  It is good that today the Fed cut the prime by 50 points, but it is bad, and terribly wrong and unjust, that in the last week the Fed has essentially used Americans' money to bail out the wealthy who made the profits, while doing zero for the foreclosed and homeless.
  When the banks, hedge funds and private equity firms make bad deals, they keep the personal profits, while the corporate profits are protected by bailouts. Meanwhile, when the average Americans in the middle class, or the poor, fall a little behind, they get the boot, they lose their jobs, they are thrown into the street without homes and often without food.
  Erin Burnett, the new glamor star at CNBC, says with a sneer that Americans are wrong to believe they have any right to a home.
  In Ms. Burnett's world, the people have no right to a home, but the hedge funds have a right to the bailout. When things go bad, the average Americans get the boot, while the upper class gets the loot, paid for by the taxpayer, helping only the few.
  With American troops getting killed because of a lack of armor we can't afford to give them, paying loan shark rates for desperation loans because of fair wages we don't pay them, with middle America feeling the squeeze because of the greed, and poor Americans going hungry and homeless, Jimmy Cramer cries out against the pain at the top. Erin Burnett sneers at the dream of a home, and the Gilded Age stars tell The New York Times they have more money, because they are superior.
  Why are so many of these superior specimens of humankind the first in line for the bailout, paid for by those they believe inferior?
  The Gilded Age ends on Jan. 20, 2009, but until then, the bailouts will flow for the few, while the pain will be felt by the many.
  This is another reason the world will rejoice when the age of Bush ends, and the age of reform begins, after the American people speak in November 2008.

• Judges weigh hedge funds vs. the SEC, by Stephen Labaton, NYT, B1.
  WASHINGTON, Dec.9 - A federal appeals court on Friday sharply questioned the SEC's plan to tighten oversight of hedge funds.... The notable troubles of some hedge funds - most recently the collapse of Bayou, a Connecticut hedge fund - have inspired calls for greater regulation....
  [Ah, hedge funds, and soon, debt swaps and single stock futures and NINJA loans (no income check, no job check, no assets check) and liar's loans and toxic assets... as Wall St gets creative in dreaming up new investment instruments, with much osteoporosis, to absorb the huge coagulation of money funneling up into the top 1% and fewer Americans, since the deepening labor surplus can't hold it down among the 299,000,000 Americans who actually want and need to SPEND it.]

7/05/2004  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on current homepage or archive pages -

• [another huge clue to the downward spiral of America - engineered from within -]
  Translator in eye of storm on retroactive classification, by Anne Kornblut [akornblut(at)globe.com], g.A1, A5.
  [There's an obfuscatory headline for you! It should be "FBI Punishes Translator for Doing Her Job."]
  WASHINGTON - Sifting through old classified materials in the days after the Sept.11, 2001, attacks, FBI translator Sibel Edmonds said, she made an alarming discovery: intercepts relevant to the terrorist plot, including references to skyscrapers, had been overlooked because they were badly translated into English.
  Edmonds...who is fluent in Turkish and Farsi [but not Arabic], said she quickly reported the mistake [or subversion?] to an FBI superior. Five months later, after flagging what she said were several other security lapses in her division [of the FBI], she was fired....
  Edmonds said she was repeatedly warned that she would be opening a "can of worms" if she kept filing security complaints,
  [hey, what the heck is the job of the FBI and the CIA if not to find and open "cans of worms"?!!]
  but she continued reporting lapses to ever-higher levels of [FBI] management until, in March 2002, she wrote a letter to FBI Dir. Robert Mueller III, she said.
  She also contacted the Senate Judiciary Committee.
  In response, the FBI confiscated her home computer, challenged her to take a polygraph test, which she said she passed, and terminated her contract....
  Officials have said Edmonds was fired for 'disruptive behavior on the job.'
  [Sounds like the whole damn FBI is compromised. And what does that say about the CIA, of which Bush Sr. was Director?]
  ..\..Now, after more than 2 years of investigations and congressional inquiries, Edmonds is at the center of an extraordinary storm over US classification rules that sheds new light on the secrecy 'imperative' supported by members of the Bush administration.
  In a rare maneuver, Atty Gen. John Ashcroft has ordered that information about the Edmonds case be retroactively classified [our italics], even basic facts that have been posted on websites and discussed openly in meetings with members of Congress for 2 years.
  [The Bush junta apparently now wants to control even our memory!]
  The Dept. of 'Justice' [our quotes] also invoked the seldom-used "state secrets" privilege to silence Edmonds in court. She has been blocked from testifying in a lawsuit brought by [relatives of] victims of the Sept.11 attacks and was allowed to speak to the panel investigating the Sept.11 attacks only behind closed doors.
  Meanwhile, the FBI has yet to release its internal investigation [if any] into her charges. And the Senate Judiciary Committee, which oversees the Bureau, has been stymied in its attempt to get to the bottom of her allegations. Now that the case has been retroactively classified, [cowards, oops] lawmakers are wary of discussing the details, for fear of overstepping 'legal' bounds.
  [Except for one "Bush administration ally"?? -]
  "I'm alarmed that the FBI is reaching back in time and classifying information it provided 2 years ago," Sen. Charles Grassley, a Republican from Iowa and a leading advocate for Edmonds, said last Friday. [Well, if his loyalty really is to Bush, his "leading advocacy" should guarantee that we never get to the bottom of this.]
  "Frankly, it looks like an attempt to impede legitimate oversight of a serious problem at the FBI." [Or another piece of the careful neo-con plan to set up a "Pearl Harbor incident" to enable taking over a big central chunk of real estate in the Middle East oil fields.]
  ...In a development that legal analysts say is disturbing, a pattern of retroactive classifications has begun to emerge in recent years, all of them [supposedly] pertaining to - but not limited to - national security. For example, Rep. John Tierney (D-Ma.) is locked in an ongoing battle with the 'Defense' Dept. over testing requirements for a national missile 'defense' system ["Star Wars"] that were made pubic in 2000 but have since been declared classified.
  Bush administration officials argue that the 3-year campaign against terrorism has required unprecedented levels of confidentiality, especially inside intelligence and law enforcement agencies.
  [How convenient that would be for a junta.]
  Critics do not dispute the need for heightened secrecy in the current environment. Edmonds is careful not to discuss standard classified information, such as methods the FBI used to obtain the material she translated.
  But she and a growing number of her defenders - who include a government watchdog group [Project on Government Oversight], some Sept.11 families, and Grassley, a Bush administration ally [oh oh - he could be the neo-con's "hedge fund" on this] - maintain that the secrecy imposed on her case has jeopardized national security. One of Edmond's assertions to her superiors included suspicions of espionage within the FBI [or sabotage of intelligence by neo-con loyalists/agents], which she said the Bureau has not addressed..\..
  [The more we find out about 9/11 and our "intelligence" services (recall that Bush Sr. had been head of the CIA for awhile) and the Bush family and the neo-con robopaths, the more the whole thing stinks, and the more America appears in danger - from within and from the top. The Bush regime is doing massive coverup, just like many a corrupt dictatorship - retroactive classification has same legal standing as the spectral 'evidence' at the Salem witch trials. It is entirely arbitary and can be used to gag or kill anybody. The United States of America currently appears to be in the biggest crisis in its history - betrayed from within and from the top. Considering the degree of penetration of the neo-con cabal and their ownership and positioning of the three main brands of voting machines, Congress and Kerry are insane to leave this to the Nov. election. They should proceed immediately with impeachment proceedings. Or, it may already be too late and we should move to Canada ASAP. "Cry, the beloved country!" Here's Sibel Edmonds' own take:]
  Edmonds, a naturalized US citizen who grew up in Turkey and Iran, said in an interview last week that the ordeal has made her grow disillusioned with the "magical system of checks and balances and separation of powers" that had made her so drawn to the United States. "What I came to see is that it exists only in name," Edmonds said. "Where is the oversight? Who is there to stop him [Ashcroft]?"....
  She had a job application at the FBI before Sept.11, and it was accelerated after the attacks so she could start work Sept.20. One of her main assignments, she said, was to expedite requested translations from field agents, including material that a field agent in Arizona submitted for retranslation on a suspicion that it had not been examined thoroughly before Sept.11.
  "After I translated it verbatim, I went to my supervisor to say, 'I need to talk to this agent over a secure line because what we came across in this retranslating is gigantic, it has specific information about certain specific activity related to 9/11,' " Edmunds recalled. "The supervisor blocked this retranslation f rom being sent to the same agent. The reasoning this [supervisor] gave me was, 'How would you like it if another translator did this same thing to you?
  [Edmonds, being on the level, would LIKE it because otherwise she couldn't improve in her work!]
  The orginal translator is going to be help responsible.' "
  [The original translator may have been scared and so screwed up the translation on purpose, to pass the hot potato to someone else with more courage and idealism.]
  In the end, Edmonds said, the field agent who requested a reinterpretation of the intelligence material "knew there were things that were missing, and yet he was reassured by the Washington field office [ah, wouldn't that be the Washington headquarters office?] that the original translation was fine."
  Edmonds said the intercept jumped out at her because it contained references to skyscrapers adn the US visa application process. Such references might have triggered suspicions at Immigration & Naturalization Services before Sept.11 if they had been correctly translated, she said, but they seemed unrelated before the attacks, in part because they were gathered during the course of a criminal investigation [huh?].
  (A Phoenix FBI agent was the source of a memo before the attacks warning about Middle Easterners taking flying lessons. Edmonds does not know whether the same agent is related to her case.)
  Edmonds said she made another troubling discovery. One of her colleagues admitted being a member of an organization with ties to the Middle East that was a target of an FBI investigation. The colleague, also a Turkish translator, invited Edmonds to join the group, assuring her that her FBI credentials would guarantee admission. Edmonds declined to name the organization, because she said it has been under surveillance.
  [How smelly can this get?]
  Two months later, Edmonds said, one of the agents she worked with found hundreds of pages of translation that her Turkish-speaking [suspect-organization-belonging] colleague had stamped "not pertinent" and had therefore gone untranslated.
  [So this is one way the neo-cons ensured they'd get their "Pearl Harbor incident" to enable their takeover and looting of Iraq.]
  The agent asked Edmonds to retranslate her colleague's work. "We came across 17 pieces of extremely specific and important information that was blocked, and at that point, this agent and I went to the FBI security department in the Washington field office, and found out my superior had not reported my original complaints," she said....
  [At this point she starts reporting lapses to ever-higher levels of FBI management, as mentioned above - which eventually gets her fired for "disruptive behavior on the job."
  Over the summer of 2002, the Senate Judiciary Committee requested and received unclassified briefings about her case by FBI officials, in which Senate aides said the FBI confirmed much of what Edmonds had alleged. Sens. Patrick Leahy (D-Vt.) [recently assaulted verbally by Dick Cheney on the Senate floor with a "F*ck you!"] and Grassley, the Republican, wrote letters to Ashcroft, Mueller, adn Glenn Fine, the inspector general at the Dept. of Justice, requesting immediate attention to Edmonds's case. They posted their letters on their websites, and Edmonds went public with her story, which was featured in a segment on "60 Minutes" in October 2002.
  [But was apparently never picked up by the mainstream media because the first we heard of it was on progressive radio a few weeks ago.]
  Edmonds also filed suit against the 'Justice' Dept. on First Amendment grounds. That prompted Ashcroft to invoke the rare "state secrets" privilege, arguing "the litigation creates substantial risks of disclosing classified and sensitive national security information [yeah sure, and giving the coup de grace to the slimeball Bush administration's re-election bid]," a Dept. of 'Justice' news release said.
  Edmonds's lawysuits have since been stalled in court, but other Sept.11-related cases, involving the independent panel's investigation and civil lawsuits involging victims' relatives, have put her saga back in the spotlight. The Senate Judiciary Committee recently emailed staff members informing them the FBI now considers the information related to Edmonds classified and warning them not to disseminate it any more.
  Grassley's and Leahy's offices have removed their letters to 'Justice' officials from their websites, though the letters are still available on the Internet.
  [Phew, the Internet came along JIT = just in time, to possibly counter this unprecedented attempt to take over the world's largest cosmetic democracy and make it much much more cosmetic.]

• [Quick, call Jimmy Tingle - there's a goldmine of comedic material here -]
  The Khan artist, op ed by Maureen Dowd, NYT, A33.
  I think pResident Bush has cleared up everything now.
  
  • The US invaded Iraq, which turned out not to have what our pals in Pakistan did have and were giving out willy-nilly to all the bad guys except Iraq, which wouldn't take it.
  • Bush officials thought they knew what was going on inside our enemy's country: that Iraq had WMDs and might sell them on the black market. But they were wrong.
    Bush officials thought they knew what was going on inside our pal's country: that Pakistanis were trying to sell WMDs on the black market. But they couldn't prove it - until about the time we were invading Iraq.
  • The "grave and gathering threat" turned out to be not Saddam's mushroom cloud but the pResident's mushrooming deficits.
  • The pResident is having just as hard a time finding his National Guard records as Iraqi WMDs - and those pay stubs look as murky as those satellite photos of trucks in Iraq.
  • Mr. Bush said yesterday that smaller, developing countries must stop developing nuclear fuel, even as the US develops a whole new arsenal of smaller nuclear weapons to use against smaller, developing countries that might be [even just] thinking about developing nuclear fuel.
  • After he weakened the UN for telling the truth about Iraq's nonexistent WNDs, Mr. Bush now calls on the UN to be strong in going after WMDs.
  • Gen. Pervez Musharaff pardoned the Pakistani hero and nuclear huckster Abdul Qadeer Khan [any relation to Abdul Abulbul Ameer?] after an embarrassing debacle, praising the scientist's service to his country.
    Mr. Bush pardoned George Tenet after an embarrassing debacle, praising the spook's service to his country. (So much for Mr. Bush's preachy odes to responsibility and accountability.)
  • The pResident warned yesterday that "the greatest threat before humanity" is the possibility of a sudden WMD attack. Not wanting nuclear technology to go to North Korea, Iran or Libya, the White House demanded tighter controls on black-market sales of WMD, even while praising its good buddy Pakistan, whose scientists were running a black market like a Sam's Club for nukes, peddling to North Korea, Iran and Libya.
  Mr. Bush likes to present the world in black and white, as good and evil, even as -
  • he's made a Faustian deal with Gen. Musharaff, perhaps hoping that one day - maybe even on a pre-election October day - the cagey general will decide to cough up Osama.
  • The pResident is spending $1.5B to persuade more Americans to have happy married lives, but plans to keep gay Americans from having happy married lives.
  • Mr. Bush said he wouldn't try to overturn abortion rights. But John Ashcroft is intimidating women who had certain abortions by subpoenaing records in six hospitals in New York, Philadelphia and elsewhere.
  • The pResident set up the intelligence commission (with few intelligence experts) because, he said, the best intelligence is needed to win the war on terror. Yet he doesn't want us to get the panel's crucial report until after he's won the war on Kerry.
  • Mr. Bush said he had balked at giving the 9/11 commission the records of his daily briefings from the CIA until faced with a subpoena threat because it might deter the CIA from giving the pResident "good, honest information." Wasn't it such "good, honest information" that caused him to miss 9/11 and mobilize the greatest war machine in history against Saddam's empty cupboard?
  • Mr. Bush says he's working hard to create new jobs in America, while his top economist [Gregory Mankiw] says it's healthy for jobs to be shipped overseas.
  • The pResident told Tim Russert that if you order a country to disarm and it doesn't and you don't act, you lose face. But how does a country that goes goes to war to disarm a country without arms get back its face?
  • Mr. Bush said he was troubled that the Vietnam War was "a political war," because civilian politicians didn't let the generals decide how to fight it. But when Gen. Eric Shinseki presciently told Congress in February 2003 that postwar Iraq would need several hundred thousand US soldiers to keep it secure and supplied, he was swatted down by the Bush administration's civilian politicians.
  Yes, it all makes perfect sense, through the Bush looking glass.
  [Boy, is this country in deep kimshee.]