Links 6/23/12




Aljazeera (Joe Costello)

Cryptome (Lambert)

The Age

Fukushima Diary

George Washington

New York Times



Gavyn Davies, Financial Times




Rebecca Wilder, Angry Bear

n Bloomberg (Ed Harrison)

Dave Dayen, Firedoglake

Financial Times


Guardian (p78)

5 ducats. Setup is a bit of a straw man (a lot of people advocate debt restructuring, as opposed to forgiveness) but the discussion is still interesting.

Mark Thoma

Adam Levitin, Credit Slips

* * *

Lambert here:

D – 77 and counting*

“When wrongs are pressed because it is believed they will be borne, resistance becomes morality.” –Thomas Jefferson

Montreal. ! Corruption, Charbonneau Commission: “The [Tony Accurso] chart included his links to the Quebec Federation of Labour Solidarity fund, which invested in his real estate developments. The Solidarity Fund was founded by Claude Blanchet, .” One big happy! June 22 (like 17) manifestation: “In Montreal, , waving flags, signs and calling for lower tuition costs for post-secondary education tuition.” Coverage notably light, but Gazette had a fine (youthful) . Andrew Katz: “No shortage of cameras or French music. #manifencours” Gazette: “I asked around if this manif is more subdued than before and why. Answers: .” From the numbers are quite respectable, especially for a hot summer Friday in Festival season when all the students are out of town. Gazette: “I just saw the scale of this crowd. .” (with pic) “Perhaps not as big a crowd as May 22, but to make a point.” And see twitpics , , , and . (Note presence of blue Quebec flag, not prevalent earlier. Flip side of Charest polarization?) Rumors of 100,000 seem happy talk — I’m seeing one retweeted photo from some hotel room — but the movement is very much alive, and an initial estimate of 5,000 was much, much too low.

FL. Mailer: “This district is primarily .” Oopsie.

MI. Voting: “Romney has a strong ally: legislation being pushed this month by his fellow Rs aimed at it has sponsored for nearly a century.” Referendum shenanigains: “R member of Jeff Timmer resigned this week without giving a reason.” “Without a quorum, .” Including “the petitions to repeal Public Act 4 — the Emergency Manager Law — and the ‘Protect Our Jobs’ petitions to place collective bargaining protections in the state constitution.” Media shift: “The timing of the rise of The Craig Fahle Show may be no coincidence. …[I]n 2009, about the same time that The Craig Fahle Show relaunched under its new name, . In July of that same year, The Ann Arbor News ended its 174-year run.”

MN. Foreclosure: “Since 2008, banks have foreclosed on 3,900 homes in Coon Rapids, Minnesota. A group of concerned citizens appeared at the Open Mic session of the Coon Rapids City Council to [to support] of the vacant properties.” Incentives! Union busting: “In what appears to be one of those ‘Do what I say, not what I do’ moves, that has been negotiating contracts with the church for nearly half a century.” (CL)

MT. Tinpot tyrants: “Members of the Occupy Helena group are .”

NJ. “Bayonne city officials confirmed yesterday that the city intends to borrow nearly $84,000 from the Bayonne City Employees Credit Union to help purchase a ‘weapons of mass destruction rescue vessel’ that costs roughly $305,000.”

NV. RNC “is financially supporting to the Nevada presidential election ballot. By clarity, the RNC operative means minimizing [that someone who] doesn’t feel committed to Romney can register a protest vote.”

PA. Susie: “I’m sure you’re very nice to your wife and family, and I’m sure your dog loves you. But , and that’s really all I need to know about you.” Ouch! Convicted abusers I: “A jury on Friday . … Sandusky was widely expected to testify in his own defense until Wednesday when his attorneys abruptly rested their case. NBC News reported Thursday Matthew Sandusky’s willingness to testify [trial that Sandusky had abused him ] was pivotal in Jerry Sandusky’s decision not to take the stand.” Convicted abusers II: “Monsignor William Lynn of Philadelphia has been found guilty of one count of endangering children in the archdiocese for which he served as secretary of clergy from 1992 to 2004. The jury was shown evidence that Lynn had concealed reports of alleged sexual abuse by priests and had not acted strongly to keep molesters away from children, nor did he report suspected abusers to criminal authorities. … Lynn is now the first senior church official to be convicted of a cover-up in the priest sexual abuse scandals.”

TX. Corruption: “[The El Paso Times] published a rare front-page editorial calling for the resignation of five school board members. This comes after former El Paso ISD superintendent Lorenzo Garcia pled guilty to federal conspiracy charges on Sunday. … Garcia was accused of giving out a $450,000 no-bid contract to someone with whom he had a personal relationship.the Texas Education Agency and the U.S. Department of Education.” Laboratories of democracy: “Texas appeared to get a head start on other states by buying the [lethal injection] drugs when supplies were still available. By the summer of 2011, the domestic supplies had mostly dried up — and in places such as England and Pakistan.”

VA. UVA Putsch, student: Gov. McDonnell: “I want . If you fail to do so, I will ask for the resignation of the entire Board on Wednesday. Regardless of your decision, I expect you to make a clear, detailed and unified statement on the future leadership of the University.” Dragas answers: “Governor McDonnell is right that three [sic] meetings on this issue are enough, and we must get final resolution on this matter on Tuesday so the UVA family can move forward. … .” Why, what could be more “respectful and dignified” than a secret firing for no cause? But: Is Dragas doubling down, or is this kabuki? “. Cue spit takes. #uva.” A long-time VA observer comments: “That means there’s serious money behind Dragas, otherwise McDonnell would throw her under the bus.” So, once again, on the MOOC: Who’s the vendor, who does the financing, and who does the marketing? Larry Sabato: “Obvious that even though almost everyone opposes her on Sullivan. Hubris, not humility.” John Dickerson: “Perhaps the board can regain its footing by embracing another piece of business jargon: They should admit their mistake and bring back Sullivan.” WaPo editorial: “U-Va. .” Real estate: “. Human settlement patterns hit a major inflection point during the 2007-2008 [sic] recession.”

WI. Fracking supply chain, sand mining: “That [citizen’s] monitoring effort found that on 51 percent of the 57 sampling days, [frac sand mining] facility (which is located within city limits and less than one-half mile from a child care center and near a hospital) exceeded EPA’s PM 2.5 standard.” Not tuned out: “Voters remain highly engaged in political activity, with 54% saying they had tried to convince someone how to vote, and 26% displaying a yard sign or bumper sticker. As in previous polls, about a third, 34%, said they had over the recall.” Pre-recall, still true.

Outside Baseball. It can’t happen here: “Disclaimer: Adding your name to the ‘Do Not Kill’ Registry before you are labeled an enemy militant and added to the national kill list.” Clay Shirkey: “My bet is that the group pattern — — is an overlooked pattern that someone is going to reinvent.” Media shift: HuffPo’s first story as an iPad app (and . Shoppers always have lousy working conditions). Voting: “Thanks to used by the GOP for their own caucuses across the entire state, a Ron Paul supporter was able to come forward to point out that the GOP had reported inaccurate Caucus Night tallies on their website.” Publicly counted hand-marked paper ballots are the gold standard. A paper trail is not the primary record and is thus insufficient. You’re gonna have to learn your clichés: “[Chris] Hayes . [It] comes from bankers talking about competing with other bankers to avoid regulation. Go figure” (). “Liberal-leaning chefs have ” (e.g., foie gras). That’s silly. I don’t embrace foie gras; I inhale it.

Policy. HCR: “The Obama administration said Thursday that insurers will hand out to consumers this summer as part of the health overhaul.” One billion is 1/350 of on CEO salaries, profit, and administration.

Immigration. Bloom off the rose in one day, Miami Herald headline: “Obama speaks to Latino group, on immigration.” Tampa Bay Times: “ how to address the more than 11 million people living illegally in the U.S.” “Honey, I’ve changed!” watch, immigration: “This time, President Barack Obama insisted Friday to an audience of Latino elected officials who’d heard a similar promise four years ago, : He’s going to fight to overhaul the nation’s badly broken immigration system” (sober mainstream McClatchy).

The economy. “We’ve never had a situation of over the ensuing four years. In other words, the traditional relationships between the economy and a presidential re-election effort might not hold.” I wonder if leaving the labor force correlates with tuning out? Serious question.

The trail. Clay Shirkey: “This election feels to me, right now, because television has become the tool of choice for the source of unlimited fundraising. Politicians like television better; nobody gets to yell back to you if you’re yelling on TV.” Nooners: “Politicians give . … What does it say of a crisis presidency at a dramatic moment that a president can’t make the case for his own re-election, can’t find his own meaning? It says the other guy can win—if he has meaning. And isn’t just a handsome stranger who says, ‘I’m not the last guy, I’m not the guy you don’t like.'” 538: .

Green Party. PA, fracking: “The Green Party of Pennsylvania on the banks of the Ohio River near Monaca in Beaver County. The proposed Shell Oil Co. plant would [process] Marcellus Shale [gas].” TX: “Jill Stein, presidential candidate of the Green Party, in the state of TX.”

Elizabeth Warren. “Since September, officially running for Congress on the March deadline.” 2016!

Robama vs Obomney watch. The past: “Mitt Romney’s financial company, Bain Capital, to new facilities in low-wage countries like China and India.” The future: “The newly leaked document is one of the most controversial of the Trans-Pacific Partnership [TPP] trade pact. It addresses a broad sweep of regulations governing international investment and for eroding key protections currently in domestic laws.” Thought for the day: Things can always get worse!

Romney. Veepstakes: “, the Budget Committee chairman, has submitted paperwork to the Romney campaign. Sources confirm that he is being vetted for the vice-presidential nomination.” So long, Marco: “If I had gone to [Romney’s fundraiser in] Utah, .” Spending more time with the family! Advancing, the narrative: “The sunshine was his teleprompters” ().

Obama. Jobs: “We do not need in the Oval Office,” Obama told some 3,000 cheering supporters at a rally at Hillsborough Community College’s Dale Mabry Campus in Tampa, FL.” Or a TPP pioneer, either (see above). Changing the subject: “Discussion of immigration hovered around 1% in the past month until his announcement, in the middle of June. ” Just like gay marriage. What next? WPA? Proof Platinum Coin Seignorage? Fuhgeddaboudit. . Oh, Lordie. What next? Funerals? “In lieu of flowers…”

* 77 days ’til the Democratic National Convention has ’em “shaken, not stirred” on the floor of the Bank of America Stadium, Charlotte, NC. 77? “Don’t Worry About the Government”!

* * *

Antidote du jour (hat tip Richard Smith, so direct any queries to him):

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  1. The representative from Credit Suisse

    That’s how we fish for cats in WI too. They look way to small to eat, but mexican’s are smaller people. It stands to reason that they need less food.

    Free market thumbs up- Teach a man to fish…

      1. Not so much jealousy as the nagging suspicion that a society run by cats might be a tad more equitable than the one we have now.
        If cats ruled, Jamie Dimon and a drug-addled street person would be on the same socio-economic level, that of can openers with life in them.

        1. Cap'n Magic

          Remember that back in the days where Egypt was the sine qua non of power, cats were venerated as Gods-and they have not forgotten that.

    1. Vinz Klortho

      Kittens! Good eatin’

      Always thought eating cats was kind of “out these” since seeing “The Bird with the Crystal Plumage” as a kid.

      But Denzel Washington seemed to enjoy cat in “The Book of Eli”. It looked just like chicken!

      Plus, you get the cat oil, good as chapstick, works the same, if it’s fresh.


  2. sadness

    possible a tad obscure for you lot up there but dear Gina scores a small comment in the last para of this link –

  3. andrew

    With a certain amount of toil, I got through the “Why devaluation isn’t a viable option for Greece” article by the Governor of Barbados’ central bank. I was interested to see this, because IRL this is what I keep asking people with a TINA bias to illustrate for me: why should Euro exit, debt default and return to currency sovereignty be a worse option for Greece than perseverance under current austerity prescriptions?

    Reading the article, I kept waiting for a translation of the author’s preoccupations into practical terms that I could weigh (hey, there was a cricket analogy! and I am pretty sure I understood it! but that wasn’t quite what I was looking for). Is he saying that Greece will not be able to itself? That Greece will not be able to afford medicines for its hospitals? Because as far as I can tell, that is, for many, the level of concern actually faced under the austerian status quo. I don’t automatically discount what the author says just because he is a central banker. But seriously, am I supposed to be convinced by this?

    I would be grateful if folks here could lend some meaningful color to the question — I really do want to understand what Greece’s options are, and if there are in fact impracticalities to the devaluation route, I’d like to get a concrete sense of what those are. I freely admit it could be a case of the devil I don’t know, but then I’d like to stand him up next to the one I do, and get a careful look at both.

    1. j.grmwd

      A more than slightly deceptive article, I think. It’s one thing to say that you can’t just devalue your currency every time you hit an economic slowdown and your unemployment rate ticks up a point or two. It’s another thing entirely to say that devaluation won’t help when your currency has become overvalued after being pegged to a stronger currency and you’re already going through a depression.

    2. Pat

      I think what the author is saying is, small countries can’t boost their economies by devaluating (and thus making their production more competitive) because of the economy-of-scale problem. In other words, it is difficult to increase internal production of a whole range of goods, because they don’t have the infrastructure capacity. Greece or Barbados cannot make their own tractors or toasters.

      This may be true to a certain extent, but small countries should be able to compensate by concentrating on the export industries they do have, and by careful monetary planning (i.e. efficient taxation, Central Bank control and support of currency rate, capital contols etc.) You take the money you earn through exports and force it to stay within the country. This what they have done in Iceland – money from its exports is forced to stay in the country, and the Central Bank uses it for the budget and to maintain the currency.

      Of course this would prove difficult for a country like Greece since its main exports are tourism and shipping (where it’s hard to “recapture” the income), its borders are porous and there is a long tradition of tax avoidance. But it is possible.

      Right now the Greek budget is almost balanced – 21 billion income, 17 billion government expenditure. The big problem is servicing debt, which realistically they cannot pay off in 200-300 years at 4 billion per year. The only solution is to completely renounce all foreign debt. Iceland essentially renounced most of its foreign bank debt by dumping it into two bad, worthless banks that went bankrupt. Greece could do the same.

      For a description of what Greece should do, see James Petras “Greece: What can be done?”

      “Greece should suspend debt payments, impose tight capital controls and freeze bank deposits to avoid capital flight…. [They] should convoke a series of emergency commissions to (1) secure alternative sources of emergency financing from several reserve funds with Euro holdings… (2) make an inventory of available and potential productive enterprises … and convert them into state sponsored worker-employee operated co-operatives (3) investigate public debt to determine what can be classified as ‘legitimate’(loans channeled into productive employment) or illegitimate (loans that enriched speculators, corrupt contractors, political leaders) (4) investigate and attach overseas holdings of wealthy Greeks who were engaged in multi-year multi-million tax evasion and who accumulated illicit income via unpaid loans and money laundering. Greek auditors should proceed to demand that Eurozone creditors should collect debt payments from the bank accounts of wealth Greeks who laundered and deposited in London, Zurich, Frankfurt, New York and elsewhere.”

  4. CB

    Q: I wonder if leaving the labor force correlates with tuning out?

    A: No.

    Nooners. of all people, gets it. Points for Peggy! Glance over George Romney’s social and political agenda. What’s with the son? Still affecting adolescent rebellion?

      1. F. Beard

        Been meaning to ask you about that. My last opinion of her was she was a Republican shill.

        1. ctct

          absurdist performance art was my take… though it’s really just early onset Ron Rayguns dementia

          1. F. Beard

            Hopefully, Mittens the Mormon will make clear to the Religious Right that the Republicans are more interested in money than them.

        2. Lambert Strether

          Well, of course she’s a shill. But some shills have better style than others; she makes a bad case well. And the Reagan generation are more old-brandy than the newer ones. Not to say they aren’t all equally vicious under the skin.

          1. F. Beard

            I used to like her till I suddenly didn’t – when I finally realized that Republicans are hypocrites.

            Of course Lefties are almost terminally lame – some choice!

          2. CB

            I know Nooners is a Republican shill, but my reading of the article didn’t get the impression she was shilling for anyone. I took her to be making a sound argument that nobody is saying anything worth the office. It could be taken as a kick in the shins to Romney for being so vacuous. And unworthy. I think she was at least fair, and perhaps too kind, to Obama. I mean, somewhat less than eloquent? The man’s a pseudo intellectual gasbag. Windy City. He’s the guy holding the middle of the floor in the faculty lounge bull sessions.

            I said to my cancer doc, “If this man is what passes for an intellectual in politics………..” She replied, “Yeah, but look what came before him.” The Republic, what’s left of it, is truly sunk. Neither of these two even rise to mediocrity.

          3. F. Beard

            It could be taken as a kick in the shins to Romney for being so vacuous. CB

            Agree but what she was basically saying was that Romney needed to lie more convincingly, being an expert at that herself?

          4. CB

            Must take exception. Nowhere did Peggy so much as suggest Romney lie. She said candidates need to be substantive, meaningful, instead of maundering on trying to figure out what to say that might mean something and hoping it appears like a cartoon ballon hovering above the teleprompter. I know, I added that last part. I usually avoid Nooners because she’s usually so mindlessly partisan, but I really liked the piece. Kathleen Parker hits the mark every once in awhile, too. Did a great peice on McCain’s selection of Palin.

          5. F. Beard

            Neither Mr. Romney nor Mr. Obama has caught hold of the overall meaning of his candidacy, Mr. Romney because so far he’s chosen not to, and Mr. Obama because he’s tried and failed. Peggy Noonan [emphsais added]

            Because he thinks he can’t afford to be honest? Or doesn’t have the courage of his convictions? Or he really is an empty suit, contrary to Peggy’s assertion?

            With just more than 130 days to go, Mr. Romney has to start pulling from his brain and soul a coherent and graspable sense of the meaning of his run. “I will be president for this reason and this. I will move for this and this. The philosophy that impels me consists of these things.” Peggy Noonan

            I believe Reagan had the courage of his convictions but Romney is likely to be afraid to voice his, if his predatory behavior in business is a guide to what he really believes. So he needs, of course, Peggy to write his speeches and maybe coach him.

          6. Lambert Strether

            @CB Yes, a shill — and an excellent speechwriter, far more than Favreau — making a sound argument was the attraction of the piece, for me. It’s a complex world!

          7. CB

            I can’t make out whether we’re in agreement or disagreement. Mitt’s a liar. I’m shocked, shocked!, that’s there’s gambling……… Obama is as big and as bad a liar. Where does that leave us? I’m going third party or write-in. I can’t vote for either of these hagfish, Myxine glutinosa, if that sounds better to you.

            Try this:

          8. F. Beard

            I won’t vote for either either (How’s that for using two identical words in a row? :) ).

            I don’t have to vote for the lessor of two evils cause:

            The king’s heart is like channels of water in the hand of the LORD; He turns it wherever He wishes. Proverbs 21:1

          9. CB

            I believe there should be a comma between the eithers. And me, either. Vote for the lesser of, that is. Besides which, I’m not sure there is a lesser evil between Obama and Romney. Kind of along the lines of Dan Meredith’s comment that if there were a popularity contest between Bud Grant and Tom Landry, there wouldn’t be a winner. Party labels don’t betoken, or confer, integrity.

  5. Ray Duray

    News of the dry…

    After a reprise from the drought in 2011, the Colorado River is flowing at about 15% of normal into Lake Powell. Rivers upstream are running even lower…

  6. dp

    Homeless camp (Snyderville?) evicted in Ann Arbor

    “If it keeps them out of there, I’m actually kind of happy,” [Scio Township resident Joe DaSilva] said. “They obviously wanted to be there even when they were told they can’t, so hopefully that’s going to keep them out. I guess every other option hasn’t worked, so this is what has to be done.”

    1. F. Beard

      Poll from the above article (pick one):

      1) It’s going to be unsightly. Bad move.
      2) If it keeps the homeless out, so be it.
      3) It’s not necessary at all.
      4) I’m all for it.

      Some choices! NOT!

  7. michael hudson

    Re Andrew’s question of depreciation.
    The point that the Barbados central banker made was that devaluation made domestic populations pay more for imports, and also for debts denominated in foreign currency.
    As a sovereign country, Greece could redenominate all debts in drachmae BEFORE devaluing. that would reduce debt service proportionally to depreciation. This is what lawyers believed that Latvia could do under international law.

    1. andrew

      Thank you! So if I read your comment correctly, you’re saying that my point is well taken — the central banker’s argument that devaluation won’t work is taking on a strawman of proposed devaluation *without* debt default (which I would have thought was obviously frivolous — the whole point of a return to the drachma was to be able to repudiate the existing debt load and start over as a non-occupied sovereign nation? If devaluation alone would work, then presumably the hairshirt of austerity’s “internal devaluation” — depression of wages etc. — would already be working)?

      Please pardon me if I am blurring technical distinctions here — even as a non-economist, it’s important to me to get those right; it’s just that the first thing is to make sure I understand what is actually recommended, whether it is fair in any meaningful sense, and whether it will work.

      And thank you by the way for your series on Greece last year; it was enormously eye-opening.

  8. kevinearick


    Politics, legacy gravity, employs finance to transform economis into warfare, in which depression to hyperinflation provides Bank with its pry bar of choice.

    History is a time waveform carrying legacy as economic robots, in which it is forever master of the DNA churn pool, until it’s not. It teaches new family formation on the leading edge to remain vigilant in its duty.

    Some surfers are better than others, and empires are built to be destroyed accordingly. Balance, legacy positive back (nonperforming assets) and nff negative back, in all things.

  9. F. Beard

    [excerpt therefrom]:

    (3) Lovelock mocks the idea modern economies can be powered by wind turbines.

    As he puts it, “so-called ‘sustainable development’ … is meaningless drivel … We rushed into renewable energy without any thought. The schemes are largely hopelessly inefficient and unpleasant. I personally can’t stand windmills at any price.”

    (4) Finally, about claims “the science is settled” on global warming: “One thing that being a scientist has taught me is that you can never be certain about anything. You never know the truth. You can only approach it and hope to get a bit nearer to it each time. You iterate towards the truth. You don’t know it.” [emphasis added]

    1. reslez

      This guy is a joke. Windmills are ugly and unpleasant, but he supports fracking? Has he even seen a fracking site?

      The Gaia hypothesis is pure drivel designed to be misinterpreted by the scientifically illiterate as some sort of deity analogue. The Earth is not a self-regulating organism. Any complex system has multiple equilibria. Not all of those equilibria will be favorable to our kind of life, as is obvious from a cursory inspection of the 4 billion year history of Earth.

      As far as climate change goes, every time new data comes in scientists find warming is proceeding faster than even their most pessimistic projections.

      He’s a kook who may have been bought off.

      1. F. Beard

        He’s 92 years old so I doubt he has been bought off.

        While the support for fracking is a bit disconcerting, he also supports nuclear which, btw, can be done safely once we move to thorium.

        1. ctct

          haha /// the west isn’t going to do thorium… though the chinese might get it to work… one of their party chiefs was in oak ridge last year(or maybe two years ago) getting the low-down from the govt engineers/scientists… i think they transferred all the ‘intellectual property’ over to the chinese government… we can’t get shit done in this country anymore… i guess we’ll find out if molten salt throium reactors are viable in about 15-20 years… if the chinese can’t do it no one will(and by this, I don’t mean the chinese are uber engineers… it’s just that the necessity for nuclear is there in china… and they have the capital to tackle all the potential problems…their coal pollution is out of control and it’s only getting worse…) also doesn’t mean it couldn’t turn into an unmitigatable disaster

        2. F. Beard

          I think the Japanese disaster proved that nuclear isn’t all that dangerous to the world even if done stupidly which we certainly don’t have to do. Life goes on.

          But then again, our money system doesn’t have to be stupid either but yet it is.

      2. F. Beard

        Windmills are ugly and unpleasant, reslez

        I don’t think they are ugly but the low-frequency noise they produce is maddening, I’ve read. And they do chop birds.

  10. Thanks for the “the money wasted by the private health insurance system ” link.

    It is a wealth of clear concise information which says as much as Matt and Yves did last night about the looting, corrupt, inhumane nature of our society under both parties. It is a link that should be spread far and wide.

  11. Hugh

    Most people do not leave the labor force. They are defined out of it. Big difference.

    Elizabeth Warren is an Establishment liberal, that is to say she is a neoliberal with a few quirks, like shedding a few tears for the hoi polloi before she sends them to the lions.

    Wasn’t a significant part of the bailout for Spanish banks supposed to come from the ESM? And isn’t funding for the ESM seriously in doubt now in Germany?

    Re ending the investigation into Lehman’s auditor, just another case of nothing to see here move along. Of course, that nothing being a balance sheet that was a multi-billion dollar mass of lies, that sparked the 2008 meltdown, and that the auditing firm signed off on.

    Les belle casseroles > les belles casseroles

  12. Susan the other

    5 Ducats. Debt Solution. I read it quickly. To liquidate or forgive the borrower causes problems to the lender. Both cause problems. Liquidation causes a death spiral in the market; forgiveness makes the insolvent banks impossible to prop up. So some kinda restructuring needs to go vaguely like this: The Fed or the ECB buys up all the mortgages at a discount and then restructures the debt to maybe 1/2 its current value. Everything keeps keepin’ on and everybody is relatively happy. And to the screamers about moral hazard, these comments, “… as far as moral hazard (goes), we’ve already made government bonds subordinate to senior banknotes…” and “”What is the point of a healthy central bank at the expense of a destroyed economy?” I think Wilbur Ross would agree.

    1. F. Beard

      The Fed or the ECB buys up all the mortgages at a discount and then restructures the debt to maybe 1/2 its current value. Sto

      Don’t like it. Credit-creation also cheats non-debtors via price inflation. Steve Keen’s “A Modern Jubilee” fixes EVERYONE from the bottom up.

      1. Susan the other

        I agree on the jubilee. But the tenor of the argument was that debt forgiveness harmed the banks and lenders and future lending beyond repair. If there is a way to forgive debt and still keep lenders happy, well then yes. I know what you will think and say – that debt should be paid for with a disbursement to everyone with the stipulation that debtors pay down their debt first. I think that would work too. It would be just as fiscally sound.

        1. F. Beard

          Steve Keen calls it a “Modern Jubilee” but it is really a universal bailout.

          The great thing about a universal bailout is it could be done without really hurting anyone IF it was combined with a ban on new credit creation and IF it was metered to prevent changes in the size of the total money supply (reserves + credit).

          I see no valid reason for not doing it.

  13. kevinearick

    California and Germany, tax base hit and going down, containment lost, centrifuge coming down, labor reflation coming up.

  14. Susan the other

    i would like to thank Stan Cox for his writeup “How About a Green Recession?” I think the title is confusing but his last point gave me a sentence I have needed for some time: What the (world) economy needs is lots of “low productivity jobs of high social value.” Nobody will say it better.

    1. neo-realist

      More specifically low productivity jobs that pay a living wage that have a high social value

  15. Susan the other

    Adam Levitin. Some just-in-time encouraging news about securitization-fail legal arguments (which failure causes a variety of forged ownership documents, terminally screwed-up property titles, etc.) gaining acceptance in trial and appeal courts. Nice. Take it all the way back to NY security law where it belongs. I wish Bill Moyers would have Yves on to interview about this little snafu.

  16. Claire

    “[For corporations], selection of political parties is merely a special case of rational portfolio choice under uncertainty; one holds politicians more or less as one holds stocks.”

    Thomas Ferguson, Golden Rule

  17. Claire


    Thanks for your thoughtful response to my questions on the Quants, Models,etc.. thread.

    I’ll try to post this comment there, as well, but I seem to be having trouble with WordPress today. (If I reply to a comment, it doesn’t end up where it should.)

  18. ambrit

    I read the Artic Drilling Vessels Get Military Protection piece on Cryptome and then just had to go and read the Coast Guard handout explaining their rationale. Is it me, or am I just out of touch. There an awful lot of “Executive Orders” quoted in that document. We’ve become a notion ruled by decree? That and “Signing Statements” seem to be an end run around democracy.
    The best part about it all is the Coast Guard argument that the 500 yard exclusion zone around the ships is to protect the protesters from the results of their own folly! Oh my, at least the government is good for an occasional laugh.

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