The solar cell that builds itself BBC (hat tip reader Tim C)
Why Obama must take on Wall Street Financial Times
Researchers Create Subatomic Digital Switch h+ (hat tip reader Sugar Hush)
China, where is your conscience? The tragic curtain call of substitute teachers China Hush (hat tip reader Michael T)
Did Low Interest Rates or Regulatory Failures Cause the Bubble? Mark Thoma. Um, this isn’t an either-or. False dichotomy. Which Thoma thankfully addresses.
Google’s puzzling logic Robert Peston
Links on inequality and the macroeconomy Steve Waldman
Europe needs educated Roma George Soros, Guardian
What causes mass unemployment? and Financial markets are mostly unproductive Billy Blog. This is a relatively new blog by Bill Mitchell at the University of Newcastle, NSW, Australia.
The Financial Crisis Inquiry Commission hearings will be televised on CSPAN and live streamed at the FDIC (hat tip reader Ann)
The People vs. Cap-and-Tax Jim Hansen. Wish I had time to do a proper post on this….another example of how programs believed to have better optics (because they have been touted aggressively by interested parties) are trumping better solutions. Big clue: a stable price for carbon, which is most assuredly NOT what you will get from cap and trade, is necessary for businesses to plan and make investments. And this is not just my view; the FT had a very good editorial on this two years ago.
Questions for the Big Bankers New York Times. Your humble blogger sticks nose into Times op-ed tent. Took quite a bit of back and forth with the op-ed editor (who was very nice and patient) to convert my question into something “that Times readers would understand” (and I had run it by several readers in advance, but I clearly had not “laified” it sufficiently). I hope it looks OK relative to other questions. I’m a little afraid to look.
Antidote du jour:
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the only solar cell that truely builds itself is a leaf…
How about single celled cyanobacteria that form stromatolites?
Leaf 1.0 beta test
maybe you should replace willem buiter’s now defunct maverecon blog with robert peston’s blog on your links?
I give his new employer 6 mos max….
corrected link: http://www.chinahush.com/2010/01/07/china-where-is-your-conscience-the-tragic-curtain-call-of-substitute-teachers/
Yves; I know that this is old news but Goldman says it has traded against their clients, but that they told them they were doing it, so that makes it OK, I guess.
http://news.yahoo.com/s/nm/20100113/bs_nm/us_goldmansachs_trades
On “Questions for the Big Bankers:” These are all very good questions by the participants, including of course our host here Yves Smith. I wish the Congress had the guts to ask these questions and demand answers to all of them, but they probably won’t. After all, an election is coming and they all need to rely on the generosity of the immoral charlatans sitting in front of them.
Agreed.
Yves — I thought your questions were excellent, precisely because they were pointed and direct while at the same time getting at what I believe is the root issue — the mismatching of “true” performance and compensation.
Well, some of those questions were pretty good – and Yves of course without question – but that Grant dude strikes me as a bit of a jerk-off. I didn’t get to watch any of the Circus, have had too much catch-up reading to do ….
Yves,
Glad to see that you have picked up Bill Mitchell’s blog as he is the best of those exploring Modern Monetary Theory(MMT) and the essence of how money works.
Folks reading those two links will have a whole lot to think about. Especially the Krugmans, the Galbraiths and the Kleins of the world.
I read Billy’s Blog. Seems he shares a common difficulty with virtually all modern economists. This is an inability to believe that general price levels could ever fall faster than wages during deflationary periods. Yet this is precisely what happened in England during the 1930s. AJP Taylor documented this extensively in his Oxford University Press History of England, 1914-1945. Very amusing because while Keynes was “winning” academically events were proving him wrong in the real world.
Taylor’s book is a superb read. Among other datum he highlights the structural aspect of English unemployment in the 1930s and points out it couldn’t respond to any amount of government pump priming.
Bill Mitchell made one statement in his article on mass unemployment to which I responded (awaiting moderation at his blog):
Mitchell:“the idea of a government that is not revenue-constrained is hard to grasp at the emotional level.”
Charcad:“Such a government is very easy to grasp. Think USSR.”
Think men of Sherwood Forest, men in tights, those robbing hoodlums…their government of brotherhood was not revenue constrainted when they did their job right.
He did not say one could not grasp it; HE SAID IT WAS HARD FOR SOME PEOPLE TO DO WITHOUT BEING EMOTIONAL ABOUT….
From Billy Blog: “The important point is that real wages (both measures) were rising from the outset of the recession not because of nominal wage push but because the general depressed nature of the economy was deflating prices faster than wages.”
are those running horses the people chasing bankers out of the country or bankers running away from fcic?
yves;
I would most appreciate if you could weigh in on this:
http://www.realclearmarkets.com/articles/2010/01/13/goldman_sachs-aig_its_likely_worse_than_you_think_97587.html
basically, it states that Goldman got MORE than 100% back on it’s AIG trade because it had material information about the AIG bailout that all other counterparties did not have, which may have allowed it to make up to an ADDITIONAL 1.5 billion bucks on its investment.
Thanks in advance.
YTL.
Just turned on the hearings for a few minutes.
Its over, they won.
Lloyd is yelling at the panel, telling everyone they should be grateful.
He should be in jail.
I can’t bear to watch it. It just makes my blood boil. It defies common sense.
These guys should be drug into a courtroom, dressed in bright orange, sporting handcuffs and leg irons, and facing a jury of twelve rank and file Americans.
Instead, they’re given a platform to spew thier lies and sophistry before a bunch of bought and paid for lackeys.
Talk about a kangaroo court, this one takes the cake.
Dimon contributed a key insight. He said one major mistake made by the Big Banks was not realizing that housing prices couldn’t keep going up forever.
iow, nothing seen in the late 80s – early 90s suggested to these experienced bank officers and Boards of Directors (or to their government regulators and the “professional” economists advising everyone) that:
— An oil price spike could ever induce a recession as happened previously in 1990-1991.
— Any real estate market anywhere on Earth could ever experience a price decline.
— Rising numbers of r.e. mortgage defaults during a recession could threaten the solvency of financial institutions. iow the S&L Crisis and RTC clean-up lasting into this decade.
“No one in this world has ever lost money by underestimating the intelligence of the great masses of the plain people. Nor has anyone ever lost public office thereby.” — H. L. Mencken
I don’t see how the Mencken quote you give matches the testimony you cite.
Blankfield, Dimon, Mack and Moynihan are all 24-carat frauds. They offer themselves up as being elite exemplars of the human race—intelligent, exceptional and talented—just the antithesis of the “great masses” Mencken speaks of. But in reality they are nothing more than pantywaist weaklings, maybe twenty IQ points to the right of the top of the bell curve. They take their risk with other peoples’ money. They send other peoples’ kids to fight and die to defend their rape and plunder in foreign lands.
I almost puked when commissioner John Thompson asked what harm it did to society to have finance with its high salaries attract so much “talent” away from the fields of engineering and science. What talent? The talent to lie, cheat, steal, dissimulate, trick, deceive and buy off politicians?
No, it was Nietzsche, writing in an era very much like our own, who got it right:
The great man is an end; the great age, for example, the Renaissance, is an end. The genius—in work, in deed—is necessarily a prodigal; that he spends himself is his greatness… The instinct of self-preservation is unhinged as it were…. They call it “sacrifice”; they extol…his indifference to personal welfare, his devotion to his idea…all misconceptions… He gushes forth, he gushes over, he uses himself up, he does not spare himself—with fatality, disastrously, involuntarily as a river’s overflowing its banks is involuntary.
[…]
Species do not grow in perfection; the weak always master the strong again—that is because they are the large number, also they are more clever… Darwin forgot the mind: the weak have more ingenuity… One must need ingenuity to get ingenuity… By ingenuity I understand…wariness, patience, cunning, disguise….
Downsouth your comments remind me of a time in California, where a young man working night shifts at a parking lot on the beach meets wealthy middle age man in his financial prime.
This parking lot, down by Redondo Beach Pier was a focal point for intel on the going-ons at night. As I made a stop by and engaged my friend in conversation a gentleman drove up to the gate in a beautifully appointed 911 SC (many high end extras). The gentleman beamed with pride, cuffed with him self for his accomplishments recognized by a young lad with aspirations to emulate.
After commiserations died down and was about to leave he said “Well work hard and never fear for you could own one some day too” to whit my friend said ohh I already have one right over there (not 20ft away), which was a few bars above his ride lololol!
See we had a small group of friends working the gray market in European prestige cars, with every one having some skill set to contribute. We would buy cars from movie sets, insurance company’s, financially depressed individuals etc. On any given day I could drive a Alfa spider, Porsche 911, 944, 356, 65 safari VW van, BMW’s, Benzs and Ferrari Dino or 308. This all came to an end when primary dealers lobbied the state legislature to enact laws requiring dealer ship licenses for over a few cars sold with in a year.
Entrepreneurial spirit gets trodden on again eh, we sold what they did not want to touch, but when our numbers got big enough we became tasty. Downsouth the clever must not become tasty or they become plated and severed up for tea.
Skippy…the gentleman’s look on his face, upon realization, that my friends car was better…priceless!
I don’t know if I made myself completely clear or not, but here’s a link to some passages written by Cornel West in The Future of the Race:
http://74.125.155.132/search?q=cache:MHNUzDe4x3YJ:malalatete.typepad.com/mal_a_la_tete/2008/01/cornel-west-tak.html+cornel+west+w.e.b.+dubois&cd=1&hl=es&ct=clnk&gl=mx
The crux of the matter is this:
Du Bois’s principal intellectual response to the limits of his Enlightenment worldview was to incorporate certain insights of Marx and Freud. Yet Marx’s powerful critique of the unequal relations of power between capitalists and the proletariat in the workplace and Freud’s penetrating attempt to exercise rational control over the irrational forces at work in self and society only deepened Du Bois’s commitment to the Enlightenment ethos…The tragic plight and absurd predicament of Africans here and abroad requires a more profound interpretation of the human condition- one that goes far beyond the false dichotomies of expert knowledge vs. mass ignorance, individual autonomy vs. dogmatic authority, and self-mastery vs. intolerant tradition….
“we went through an evolution of our regulators” Lloyd.
Re: “Why Obama must take on Wall Street”
The bill that has already emerged from the house is called the “Wall Street Reform and Consumer Protection Act”
Wouldn’t a much more appropriate name be the “Fuck the Consumer but Protect Wall Street under Any and All Circumstances Act”???
During the French Revolution they developed an instrument that is extremely efficient at taking care of enemies of the people like Dodd, Frank, Obama, Geithner, Paulson, Bernanke, Greenspan, Bean, Emanuel, etc. It’s called the guillotine.
How about the “Wall Street Perform a Consumer Destruction Act”?
On “Questions for the Big Bankers”, I notice you share space with David Stockman, reagan’s OMB trickle-down supply-side guru and a major culprit in the destruction of America’s middle class. Interesting.
Your setup on swaps, that “this insurance was likely to fail, as your risk managers surely knew”, stopped short of what I’ve read elsewhere—that GS was simultaneously shorting the same MBSs that they had insured through AIG. Aside from immorally ill-gotten double-booked profits, the implication of fraud in that seems unavoidable. Did I misread this earlier, or did you leave your whip at home?
Your two questions were pithy, short, and sweet—likely to elicit a slight hint of a squirm perhaps. That’s what these hearings really are, right, where the banksters’ troupe of paid actors stage a bit of theater for the unwashed (speaking for myself)?
Your questions of course expose an even more glaring failure of Obama’s governance, once again. These masters of the universe didn’t even bother to show up for Obama’s ‘woodshed’ meeting. Do you think they’ll show up this time or phone in their performance again?
Doug,
The selling CDOs while shorting has gotten a lot of press. It was one of Angelides’ questions this AM. So not a lot of value added in asking about something pretty well recognized and likely to come up.
What has been missing is a more direct connection between particular bad practices. bonuses, and bailouts. We all know they are connected at some level of abstraction, but no one can connected the dots. The practice I described was a major contributor to the crisis and has gotten very little attention.
But it got really watered down. The Times reader apparently cannot tolerate any complexity. I was told it needed to be written so my grandmother could understand it. Help me.
It’s all just a big sham.
First, there obviously is going to be zero discovery. In that way these assholes can make all the exculpatory statements they want, and nobody’s there ready with the facts to nail them for their lies. Where are the forensics? Obviously, if the hearings today are any indication, they are MIA.
Second, the tone of these meetings should be adversarial. What ever happened to champions of the people who weren’t afraid to stand up and say:
I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master.
These articles may help
http://www.defaultrisk.com/pp_other_14.htm
or this from Risk magazine 10/09.This one is more useful, I think
http://www.risk.net/risk-magazine/advertisement/1557468/wrong-risk
On the hearings themselves-
Why are they starting at the top? This must have been decided by the lobby.
Why are they allowed to bring their peers? All of the CEO’s today are appearing together. Again, this reeks of lobby.
Also of note, all of the CEO’s are appearing at least a week before the end of their years, before compensation for the years has been finalized. Again, decided by lobby.
I agree, it was nuts to start with the top guys unless the plan to call them again.
I see them horsies gallop with all four legs in the air. I guess that’s the end of that little controversy.
re: Gypsies. Sorros knows what he is writing about and yet he paints a very one sided picture, where he is the only savior to the gypsies. Yes, the gypsies are on average probably the poorest people in southeastern Europe. But still, there is differentiation. Many of them have jobs or an education that was not Sorros foundation provided. Some gypsies live in deplorable conditions, others stick to their donkeys. Others yet work abroad and build amazing villas in their home village (I just saw some over Xmas). He also does not write that the EU keeps sending funds to the Balkan gypsies, which (unsurprisingly) do not arrive with the poor gypsies. Could be corrupt leadership in the Balkan countries in general. But I think the Economist suggested that it is the gypsy elites that are stealing from their fellows. So, maybe Sorros is training his gypsy elite too much in finance?
To sum it up, yes he has a point, but it is more complicated than he writes.
Everything about the Gypsies is complicated.
Yes the Romas problems are considerable. Canada now requires visas of visitors from the Czech Republic and may begin to require them from Hungarian visitors, since there have been so many Roma refugee claimants in the past few years.
FORMER AOL TIME WARNER CEO GERALD LEVIN calls for apologies from bankster leadership and challenges them to do something:
On too big to manage:
“…A SUPER MARKET, IT WAS NOT A SUPERMARKET IT WAS A MALL. THAT’S THE PROBLEM WITH CITIGROUP, THAT’S THE PROBLEM WITH AIG, THAT’S THE PROBLEM WITH GE, IT’S THE PROBLEM WITH A LOT OF COMPANIES. … SO WHERE IS THE LEADERSHIP IN NOT ONLY THE THREE COMPANIES THAT I JUST MENTIONED BUT LET’S HEAR PUBLICLY FROM LEHMAN BROTHERS, BEAR STEARNS, MERRILL LYNCH, YOU KNOW ON AND ON. I’M NOT TRYING TO BE DEFENSIVE. I JUST THINK IT’S IMPORTANT THE GOVERNMENT IS BASICALLY RUNNING OUR COMPANIES TODAY SO WHERE’S THE STANDUP LEADERSHIP THAT TAKES RESPONSIBILITY FOR WHAT’S HAPPENED AND DO SOMETHING ABOUT IT.” Periods and commas added by me for clarity. Entire transcript: http://www.cnbc.com/id/34632329
Video:
http://kara.allthingsd.com/20100105/steve-case-and-jerry-levin-look-on-our-works-ye-mighty-and-despair-about-the-aol-time-warner-merger-that-is/
Re the NYT OpEd piece, It looks more than OK relative to the other contributors. In fact, I think the lead in also invigorates McLean’s and Cohan’s questions. Their questions are germane to the wrong way risk thesis.
Some pretty weighty and intellectual discourse underway here today. So I’m kinda embarrassed to interrupt with my latest satire:
Building the Pyramid
– The Father of the Pyramid Speaks on Life, Love & U.S. Government Retirement Bonds
http://outsidethe-cardboard-box.tumblr.com/post/332577478/building-the-pyramid
Nothing ventured…..
Hope you enjoy it.
– TOTN
My questions (more than 3, but since this is a comment on a blog I think I’m allowed to indulge):
– In aggregate, and taking the cost to taxpayers from the recent crisis into account, is your company a net creator or destroyer of value?
– If the latter, why should you be permitted to continue operating?
– If the former, is this still true net of bonuses paid to senior management? (If no, same question as above).
– How much of your “value creation” is of the zero-sum variety that must be offset by an equal and opposite loss of value elsewhere in the economy? (i.e., gambling). What’s the answer net of any such gambling activity?
– If you claim to be a net creator of value, on the basis of what pricing and valuation models are you reaching this conclusion?
– If you refuse to release them (e.g. if you say they are proprietary) why should we take your word for it? Does your track record over the life of your company support your claim?
I didn’t include the “too complex to understand” line that’s so commonly used because in my opinion this is a crock. I suspect that if the gory details were laid out in public, people like Yves would understand them all too well.
Here’s my only question for the guys:
If you fellas all merged your firms into one big black hole of a bank, could you suck it into itself and make it dissapear forever?
If so, I’d say, Go for it!
Bowahaha a hahaha aha a ahahahahaha ! !!
I don’t know what “laified” means.
http://www.businessdailyafrica.com/-/539444/835246/-/t151x7/-/
A neat article about Banks and Real Estate from, of all places, Kenya. It is about the Irish economy but could be about California, Spain, Greece, or (you name it).
Re Hansen: Well, of course he’s right. But good luck with this: “Import duties based on standard amounts of fossil fuels used in production could be applied to products from countries that did not have a carbon fee, removing any competitive disadvantage from the fee and providing strong incentive for participation in the carbon fee.”
Just read an amazing global tactical allocation report on zerohedge (2 in facts) http://www.zerohedge.com/article/global-tactical-asset-allocation-equities
Might be of interest for the January 14th links post…
Kind regards,
Petter