A big reason for American Unemployment - China

The Chinese are artificially keeping their currency at an unrealistically low level by using their revenue from exports to purchase government bonds (U.S. and Japanese especially) instead of buying goods and services from other countries.

Yeah? So What?

Here's Paul Krugman:

China is taxing imports while subsidizing exports, feeding a huge trade surplus. You may see claims that China’s trade surplus has nothing to do with its currency policy; if so, that would be a first in world economic history. An undervalued currency always promotes trade surpluses, and China is no different.

And in a depressed world economy, any country running an artificial trade surplus is depriving other nations of much-needed sales and jobs. Again, anyone who asserts otherwise is claiming that China is somehow exempt from the economic logic that has always applied to everyone else.

So what should we be doing? U.S. officials have tried to reason with their Chinese counterparts, arguing that a stronger currency would be in China’s own interest. They’re right about that: an undervalued currency promotes inflation, erodes the real wages of Chinese workers and squanders Chinese resources. But while currency manipulation is bad for China as a whole, it’s good for politically influential Chinese companies — many of them state-owned. And so the currency manipulation goes on.

[...]

Clearly, nothing will happen until or unless the United States shows that it’s willing to do what it normally does when another country subsidizes its exports: impose a temporary tariff that offsets the subsidy. So why has such action never been on the table?

One answer, as I’ve already suggested, is fear of what would happen if the Chinese stopped buying American bonds. But this fear is completely misplaced: in a world awash with excess savings, we don’t need China’s money — especially because the Federal Reserve could and should buy up any bonds the Chinese sell.

It’s true that the dollar would fall if China decided to dump some American holdings. But this would actually help the U.S. economy, making our exports more competitive.

So what would happen of the U.S,. Government got serious about stopping the Chinese from illegally subsidizing its exports or threatened to stop selling bonds to them?

It’s true that the dollar would fall if China decided to dump some American holdings. But this would actually help the U.S. economy, making our exports more competitive. Ask the Japanese, who want China to stop buying their bonds because those purchases are driving up the yen.

Aside from unjustified financial fears, there’s a more sinister cause of U.S. passivity: business fear of Chinese retaliation.

Consider a related issue: the clearly illegal subsidies China provides to its clean-energy industry. These subsidies should have led to a formal complaint from American businesses; in fact, the only organization willing to file a complaint was the steelworkers union. Why? As The Times reported, “multinational companies and trade associations in the clean energy business, as in many other industries, have been wary of filing trade cases, fearing Chinese officials’ reputation for retaliating against joint ventures in their country and potentially denying market access to any company that takes sides against China.”

Similar intimidation has surely helped discourage action on the currency front. So this is a good time to remember that what’s good for multinational companies is often bad for America, especially its workers.

This is the source of a lot of the American jobs which have been exported to other countries. The U.S. is letting China get away with this crap not because of U.S. power but because of U.S. weakness.

Yet as long as it goes on, America gets weaker and our unemployment rate stays high.

As long as our unemployment rate remains high, our government is under threat of being replaced. You'd think the White House would see that it was in their interest to export the unemployment from the U.S. back to China and to make their government deal with local unemployment.

Maybe after the November elections?

Not likely, though. The Obama Treasury is filled with Wall Street Bankers and their banks would be threatened by aggressive moves against China. Wall Street still runs the American government financial policy, doesn't it?

====================

I'm going to speculate further. This problem started at least as early as the early Bush administration. Bush dared not pick a fight because he had to finance his idiotic war in Iraq without raising taxes. Then Obama entered office.

Of course, the Bush economy collapsed four months before Obama took office. The Second Great Depression was clearly coming. So Obama built on the plans Henry Paulson put into place (while Bush took his vacation until the inauguration) and was able to limit the damage to no more that the Great Recession - the most extreme Recession since the 1930's. But that was just the first and surprising part of Obama's problems.

He was elected on the promise of getting a national health care plan passed and in spite of immediate financial problems, America's long-term financial problems all centered on the failed health care system. The anticipated financial problems could not be fixed without starting with health care. To top it all off the Republicans made it clear that they were going to block every significant action the Democrats and Obama took. China was a problem, but it had to wait. There's really room in the Presidency for only one, perhaps two, major problems at a time. Everything else that needs his attention has to wait its turn.

Health care dragged on too long. But part of that was Obama getting his Presidential legs under him after taking office. That happens to every President. And this year has been an election year with fangs. Also, the economic fixes were not big enough (as predicted by Krugman and others.)

But now the central problem really is the unemployment rate, and China's currency manipulations are central to that. So if nothing immediate (like another massive Oil Gusher a mile down in the Gulf of Mexico or a hurricane or an earthquake) doesn't appear in the near future and the election gets finished soon, then China's currency manipulation may get its well-deserved turn.

The Repubs are weak so the angry anarchists - populists are going after them.

Wonder why the teabaggers are going after the Republicans and not the Democrats right now? It's simple. The Repubs are a discredited party coming off a massive series of losses since 2006. The election of 2008 so completely flummoxed them that they could not agree on an acceptable candidate for President so their nomination devolved to McCain, who was and is hated by the Christian right which provides half their votes. After the debacle of 2008 they had so little to run on in 2010 that they famously put up a website asking for suggestions.

But the economy has changed the political calculus this year. Wall Street and the Republicans in partnership gave us the Great Recession, and the low-balled unemployment statistics sit at 9.5%. Foreclosures remain at record levels. So two years ago the voters voted for Hope and elected Barack Obama as President. And what's happened?

Nothing. Nada. Jackshit. the Democrats have Congress and the Presidency and they haven't done anything significant. In fact, the largest trend in the White House is to continue to Bush policies. Have they quit torture and rendition, or have they just quit announcing them?

So look at the Teabaggers. Essentially they are anarchists who refuse to assign a leadership. Their economics is largely the discredited Austrian school Libertarianism. Remembering the failure of the Ross Perot third Party movement, they looked at the two major parties and saw the Democrats in control of the two political branches and they saw the hapless Republicans who could not even decide on what platform to run on this year. So they are going after the Republicans in the primaries with a surprising level of success. So where will they go after this November's election?

The Democrats are not immune to the disaffection the teabaggers display. But they are also not a discredited minority party coming off of a Presidential election in which they were totally discredited as a party the way the Republicans currently are, either. The Republican Party leadership want to keep their jobs, so they are absolutely desperate to find issues they can compete for power on. Without the teabaggers and conservative big business domination of the media this would not be much of an election.

The Dems, however, gained national power in 2008 and so the leadership feels they are in the catbird seat. But I for one think they are as out of touch as the Republicans are. Right now the Dems are not weak enough to attack so that the teabaggers are focusing on the Republicans which is the party in disarray.

The Dems have way too many "leaders" like Rham Emmanuel who know that they are god's gift to the party and to the nation and refuse to accept questioning. They know how elections and politics really work and the Progressives are just fringe piss-ants who need to go away. They know best. Obama fits in the crowd, I think.

This is just the election where the Republicans are so weak they are facing the populists. The turn for the Dems is coming.

What make humans able to control the world? Culture.

The human species is unique. Humans are a predator par excellence. No other species existing can match humans. So what makes humans special? It's human culture. Human culture is something no other species known possesses.

So compare Humanity the most successful predators in existence. Compare humanity to the most successful land predator ever - Cats:

Saturday, January 07, 2006
Where did cats come from?
The NYTimes has a fascinating science article that describes the family tree and prehistoric migrations of cats.

January 6, 2006
DNA Offers New Insight Concerning Cat Evolution
By NICHOLAS WADE

Researchers have gained a major insight into the evolution of cats by showing how they migrated to new continents and developed new species as sea levels rose and fell.

About nine million years ago - two million years after the cat family first appeared in Asia - these successful predators invaded North America by crossing the Beringian land bridge connecting Siberia and Alaska, a team of geneticists writes in the journal Science today.

Later, several American cat lineages returned to Asia. With each migration, evolutionary forces morphed the pantherlike patriarch of all cats into a rainbow of species, from ocelots and lynxes to leopards, lions and the lineage that led to the most successful cat of all, even though it has mostly forsaken its predatory heritage: the cat that has induced people to pay for its board and lodging in return for frugal displays of affection.

This new history of the family, known as Felidae, is based on DNA analyses of the 37 living species performed by Warren E. Johnson and Stephen J. O'Brien of the National Cancer Institute and colleagues elsewhere.

Before DNA, taxonomists had considerable difficulty in classifying the cat family. The fossil record was sparse and many of the skulls lacked distinctiveness. One scheme divided the family into Big Cats and Little Cats. Then, in 1997, Dr. Johnson and Dr. O'Brien said they thought most living cats fell into one of eight lineages, based on the genetic element known as mitochondrial DNA.

Having made further DNA analyses, the researchers have drawn a full family tree that assigns every cat species to one of the lineages. They have also integrated their tree, which is based solely on changes in DNA, with the fossil record. The fossils, which are securely dated, allow dates to be assigned to each fork in the genetic family tree.

Knowing when each species came into existence, the Johnson-O'Brien team has been able to reconstruct a series of at least 10 intercontinental migrations by which cats colonized the world. The cheetah, for instance, now found in Africa, belongs to a lineage that originated in North America and some three million years ago migrated back across the Bering land bridge to Asia and then Africa.

Dr. O'Brien said the cats were very successful predators, second only to humans, and quickly explored new territories as opportunity arose. Sea levels were low from 11 million to 6 million years ago, enabling the first modern cats, in paleontologists' perspective (saber-tooth tigers are ancient cats), to spread from Asia west into Africa, creating the caracal lineage, and east into North America, generating the ocelot, lynx and puma lineages.

The leopard lineage appeared around 6.5 million years ago in Asia. The youngest of the eight lineages, which led eventually to the domestic cat, emerged some 6.2 million years ago in Asia and Africa, either from ancestors that had never left Asia or more probably from North American cats that had trekked back across the Bering land bridge.

Sea levels then rose, confining each cat species to its own continent, but sank again some three million years ago, allowing a second round of cat migrations. It was at this time that the ancestors of the cheetah and the Eurasian lynxes colonized the Old World from the New.

Chris Wozencraft, an authority on the classification of carnivorous mammals, said the new cat family tree generally agreed with one that he had just published in Mammal Species of the World, a standard reference. Dr. Wozencraft, a taxonomist at Bethel College in Indiana, based his classification on fossil and zoological information, as well as on DNA data already published by Dr. O'Brien's laboratory.

Cat fossils are very hard to tell apart, because they differ mostly just in size, and the DNA data emerging over the last decade has helped bring the field from confusion to consensus, Dr. Wozencraft said.

Despite their evolutionary success, most of the large cats are in peril because their broad hunting ranges have brought them into collision with people. "With the exception of the house cat and a few other small cat species, nearly every one of the 37 species is considered endangered or threatened," Dr. Johnson and Dr. O'Brien write in the current Annual Review of Genomics and Human Genetics.

Fewer than 15,000 tigers, cheetahs and snow leopards remain in the wild, they estimate, and pumas and jaguar populations have been reduced to about 50,000 each.

It is especially interesting that the DNA evidence ties back very closely to the limited fossil evidence, and corresponds to the history of the rise and fall of oceans that geologists have determined.

This is a story which could never be told by the anti-evolutionists. Of course, it also confirms my suspicion that house cats are the dominant species on earth. They just let us humans THINK we dominate the world, as we work to provide food and shelter for the cats.

Labels: Cats, DNA, Evolution, Wade
posted by Richard @ 5:25 PM
2 Comments:

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At 9/11/2010 9:45 PM, Blogger Richard said…

Cats are perhaps the most successful land predator that exist today. They may rank up with sharks. But they still fill a single evolutionary niche. Humans are also very highly successful predators, but there is a qualitative difference between cats or sharks as predators and humans as predators.

The difference between cats and humans is that humans are not just superb predators in their evolutionary niche. Humans have developed the tool of culture which allows them to take control of the environment in which they exist and change it to suit themselves. Cats exist in their niche where it exists. Humans change the environment to create a niche for themselves when they want to. No other species exists in as many diverse environments as humans do.

It is this ability to change the environment to suit humans that makes humans so responsible for their own effects on the environment. That godlike power that humans wield demands a similarly godlike level of responsibility that is demanded of no other species. No other species can create as much damage to the environment as humans can, and no other species can be aware of the damage they are doing.

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At 9/11/2010 10:15 PM, Blogger Richard said…

I guess I was wrong when I wrote "They just let us humans THINK we dominate the world." What has happened is that cats are the most successful predator when considering the rules of the game of land based predation. Humans, however, are the first species which ever developed the capability of changing the rules of the game.

The key to that ability to change the rules of the game is culture. Culture is based on complex abstract language (something which is inherited genetically by humans) and the resulting social creativity. So does culture dominate humans? No it doesn't.

Individuals are the decision-making units, but the tool of culture and shared knowledge is something no other species has. Humans, however, have a genetic ability to acquire the kinds of language that permit access to human culture.

Individual humans are, as a result, the creation of the culture. They make the decisions, but they are individual personalities created by the cultures they are embedded inside. (See the book "Mind, Self and Society" by George Herbert Mead.)

Cats and sharks do not have the benefits provided by a culture. No other species existing does. Nor does any other species have the ability to "plug into" the tool of culture and thus change the environment around them in controllable ways. (Red tides do not have the ability to stop destroying the environment in which they exist.)

Among other things, it should be quite clear that libertarian economics totally fails to consider this aspect of the environment or of human existence.

Voting Republican this fall is voting against America

9.5% unemployment. That's in an economy in which the total Gross Domestic Product is 70% Consumption and about 20% more is in investment. Investment does not occur if there is no predicted market to sell the goods or services the money is invested in. So expenditures of investment money which would put workers back to work are not going to happen as long as unemployment remains high and the markets for products and services is reduced.

The Republicans are suggesting (demanding) tax cuts to increase investment as the solution to unemployment. But where are the markets that the investors will invest in? If they exist they are outside the United States. Any additional employment that results from tax cuts that give the wealthy more money to invest will occur outside the U.S. Where the returns are predictable and sizable. They won't happen here in the U.S.

Here is what the New York Times has to say.

By DAVID KOCIENIEWSKI
Published: September 10, 2010

With Congressional midterm elections looming, the financial debate in Washington this fall will probably be consumed by one incendiary and expensive issue: whether, and how, to extend the multitrillion-dollar Bush tax cuts.

President Obama is advocating a mixed bag of tax proposals. He wants to extend the cuts for all but the wealthiest 2 percent of Americans and offer businesses hundreds of billions in breaks and write-offs intended to encourage investment and hiring.

Republicans, and a few Democrats, assert that the Bush tax cuts should be extended for everyone, warning that a tax increase right now, even if limited to the highest income bracket, would hurt small businesses and choke off an economic recovery that is already gasping.

Given the economy’s persistent weakness and an unemployment rate hovering above 9.5 percent, those arguments have gained traction. And because another round of government stimulus spending is considered politically unviable even if it were warranted, the debate over the tax cuts will be laced with promises to spur economic activity and reduce unemployment. The concept of lower taxes is so appealing to voters that many embrace them as an economic cure-all.

But economic research suggests that tax cuts, though difficult for politicians to resist in election season, have limited ability to bolster the flagging economy because they are essentially a supply-side remedy for a problem caused by lack of demand.

The nonpartisan Congressional Budget Office this year analyzed the short-term effects of 11 policy options and found that extending the tax cuts would be the least effective way to spur the economy and reduce unemployment. The report added that tax cuts for high earners would have the smallest “bang for the buck,” because wealthy Americans were more likely to save their money than spend it.

The office gave higher marks to the proposal, now embraced by President Obama, to allow small businesses to write off 100 percent of their investment costs.

Neither of those options, though, would do as much to stimulate the economy as offering direct payments to the unemployed and Social Security recipients or reducing the payroll taxes of workers, the study found. But those proposals — as well as aid to states and municipalities — are considered politically untenable with many elected officials reluctant to even utter the word “stimulus” after the $787 billion stimulus.

So while the decision on whether to extend the tax cuts will have a lasting impact on the deficit and on how the nation’s tax burden is distributed, economists and tax experts say it is unlikely to offer much immediate relief for high unemployment and sluggish growth.

“It may have some small impact along the margins, but firms don’t hire based on tax breaks; they hire based on demand,” said Roberton Williams, a senior fellow at the nonpartisan Tax Policy Center. “So a lot of the tax breaks are likely to be rewarding people and companies for that they were going to do anyway.”

When they were signed into law in 2001 and 2003, the huge package of income and capital gains tax reductions that became known as the Bush tax cuts were hailed as a way distribute the government surplus and promote long-term economic growth. Mr. Bush was so confident in their power to generate business growth and revenue that he predicted they would enable the government to pay down $1 trillion in debt in just four years.

Those surpluses have now become crushing deficits because of a combination of factors, including the recession, the cost of the wars in Iraq and Afghanistan, the Medicare prescription drug benefit, and the $1.7 trillion in forgone revenue from the tax cuts themselves.

The specter of a ballooning national debt has led even some of the early supporters of the cuts, including the former Federal Reserve chairman Alan Greenspan, to advocate letting them expire.

The Republicans are being paid off by the wealthy to push for tax cuts because that benefits the wealthy. But the Obama administration is pushing for aid to small businesses. Small businesses are where all new employment occurs. The Republicans are fighting against that proposal because it will succeed in improving the economy and that will make Obama harder to defeat in 2012.

Anyone who votes for Republicans This November is voting against America's economic success and for the Republican Party regaining power. It's really that simple.

Mirror Neurons and empathy - the science that shows Libertrianism is a lie

The premises on which Libertarianism are based are a crock. This talk shows why.



The invisible hand that makes economies, nations, families and busineses work is not self-interest. It is empathy based on mirror Neurons that makes all these groups work.

[H\T to Daniel De Groot at OpenLeft.

Original source http://www.cognitivemedia.co.uk/ (Cognitivemedia]

The American wealthy class is mostly parasitic on the people who actually create value

The current Great Recession is exactly the same kind of economic disaster as was the Great Depression. The ultra-wealthy reached a position of power from which they were able to change the rules regarding who got the benefit of value created by working people. Why is this wrong? Because wealth does not create wealth. It creates power.

From that position of power the wealthy have become able to skim wealth from those who are creative and who actually work to create more wealth. The problem is what anthropologist Eric Wolf called Structural power. Structural power is the kind of power that is used to predetermine what markets can possibly allocate before the buyer and seller ever meet. It is the power that is ignored by the people who claim that free markets properly allocate everything. As an example, no CEO is worth hundreds of times the value of the workers who actually create goods and services. Nor does wealth perform the entrepreneurial function. Instead, the wealthy question entrepreneurs and decide how they can extract the largest amount of vigorish from entrepreneurs in order to lend them money.

Which is not to say that there are not special skills needed to manage large organizations, and especially to do strategic management (something most practicing strategic managers don't do well.) It's just to say that such skills are highly over-rewarded because the people at those levels of the organization have enough power to control how much they get paid and to avoid responsibility for the errors they make.

what we have in America today is a society that rewards the guys at the top based on the power they have and ignores most of the people who actually create the value of the economy. Dean Baker describes what we need to do about that problem.

We have enormous ground to cover to restore an economy that works for the vast majority, but the first step is to know where we are. The upward redistribution of the last three decades has nothing to do with the market and a belief in "market fundamentalism." This is about a process where the rich and powerful have rewritten the rules to make themselves richer and more powerful.

For example, they wrote trade rules that were designed to put downward pressure on the wages of the bulk of the U.S. workforce by placing manufacturing workers in direct competition with low-paid workers in China and other developing countries. This had nothing to do with a belief in "free trade." They did not try to subject lawyers, doctors or other highly paid workers to the same sort of international competition. They only wanted international competition to put downward pressure on the wages of workers in the middle and bottom, not those at the top.

This elite has instituted a system of corporate governance that allows top executives to pilfer companies at the expense of their shareholders and its workers. Top executives are overseen only by a board of directors who owe their hugely overpaid sinecures to the executives they supervise. And of course the Wall Street barons themselves are given a license to gamble with the implicit promise that government picks up their tab when they lose.

No progressive movement will make any progress until we understand the battle we are fighting. Our income is a cost to the rich. They will look to cut it wherever they can, whether this is wages for private sector workers, pensions for public employees, or Social Security for retirees. That is their target.

We have to fight back using the same logic. Their income is our cost -- the multimillion dollar bonuses for the Wall Street wizards is a direct drain on the economy. So are the bloated paychecks of top executives and their lackey boards. Progressives must be prepared to use all the same tactics to bring down the income of the rich and powerful that they have used to reduce the income of everyone else.

This means restructuring the rules of corporate governance to put serious downward pressure on the pay of top executives. The highest paid workers (doctors, lawyers, and economists) must be subjected to international competition in the same way as manufacturing workers have been subjected to international competition. And, we should sharply limit the extent of the patent or copyright protections that are exploited by the drug industry and the entertainment and software industries.

We have to put the focus on the ways the rich have rigged the rules and place this at the center of political debate. The three decade-long battle over tax cuts for the rich is important, but at the end of the day it is a side show. If we let them steal all the money at the onset, it really doesn't make much difference if they end up letting us tax a little of it back.

It's not that people who create new businesses should not get rewarded for it. It's that their descendants do little more than defend their wealth. Inheritance is not a great value to society because it does not reward those who actually created the value they inherit. The thing is that with the power that wealth gives them, they have been able to become dangerous parasites on the American economy. Their efforts to defend their inherited wealthy from the inheritance tax explains why the conservative Republicans are so dead set on removing the inheritance tax.

The economy runs better when the middle class gets a larger portion of the rewards of their work. So look back at Dean Baker's prescriptions for the progressive movement.

The Corporation: A Legal Person

a corporation, which is

* Legal Person (with no moral conscience)
* accountable to stock holders
* not to stakeholders
* relatively recent (after the 14th amendment ... between 1890-1910 there were 307 cases brought to the court ... 288 on behalf of corporations, just 19 for people.)

Source: KSU Introduction to Anthropology

The Onion clarifies the abortion debate

This news item from the Onion News Network tells us everything that we need to know about the anti-abortion laws currently being proposed in several states.


New Law Requires Women To Name Baby, Paint Nursery Before Getting Abortion

See? See how simple and rational the whole thing is? It's obvious what needs to be done.

[H/T to Digby at Hullabaloo]

Weisberg explains Palin

Sarah Palin has been a rhetorical train-wreck since she was foisted on the American public by the desperate John McCain two years ago. If she were a comedy act she would fail, but most of us are convinced that rather than her shtick being an act for an audience, she seems frighteningly real. So the question is - how can she be explained? Jacob Weisberg of Slate Magazine takes a pretty good shot at it.

So far as I can tell, Sarah Palin has four core beliefs:

1. Things go better with God.
2. Yay, Alaska!
3. Let's drill that sucker.
4. Curse you, political establishment

[...]

Tina Fey's caricature of Palin as an unprepared high-school student trying to bluff her way through an oral exam by mugging and flirting hit its mark not merely because of the genius of the mimicry, but because of its fundamentally accurate diagnosis of Palin as bullshit artist. Palin's exuberant incoherence testifies to an unusually wide gulf between confidence and ability. She is proud of what she doesn't know and contemptuous of those "experts" and "elitists" who are too knowledgeable to be trusted. This curious self-regard echoes through her book, Going Rogue, described by the critic Jonathan Raban as "a four-hundred-page paean to virtuous ignorance."

The issue is not that Palin, thrust upon the national stage with little warning, still doesn't know all the details. That's understandable. The issue is that she rarely appears to have the slightest grasp of what she's talking about even when she's supposed to know what she's talking about. For instance, in one of the 2008 campaign's most surreal examples of rhetorical excess, John McCain said Palin "knows more about energy than probably anyone else in the United States of America." A few days later, she offered a sample of her expertise in a town hall meeting: "Oil and coal? Of course, it's a fungible commodity and they don't flag, you know, the molecules, where it's going and where it's not. ... So, I believe that what Congress is going to do, also, is not to allow the export bans to such a degree that it's Americans that get stuck to holding the bag without the energy source that is produced here, pumped here."

[...]

The non-Sarah Dittoheads among us have to decide whether to regard this babble—favoring creation science, aerial wolf-shooting, and freedom of the press, so long as the press is "accurate"—as scary or funny. During the 2008 campaign, when there was a real chance that Palin could become the automatic successor to an impulsive, elderly cancer survivor, I found it more scary than funny. After McCain lost, and after Palin terminated her governorship in the effusion of furious gibberish known as her resignation speech, I have found it mostly funny.

I think Weisberg gets it rather well. My own conclusion on the Palin has been similar. She seems to have been an athlete in high school who was driven by the desire for celebrity hard enough to become a noticeable basketball player and a runner-up in some beauty contest, but her record of cramming a four year college degree into four or five schools in a variety of locations demonstrates the limitation of her efforts to bluff her way through life.

She seems to have found her ecological niche as a blatherer with chutzpa in the nearly unpopulated state of Alaska and in the evangelical fundamentalist church which puts no demand on her nearly non-existent intellectual and practical side. Her ability to say what the fundamentalists want to hear gave her the entry she needed into politics, where she promptly failed. But her base of support does not see her inability to govern as failure so they have not abandoned her. She has instead taken her personal need for celebrity and made herself into the liaison between the desperate Republican Party and the social Republicans.

She arrived at the perfect time for McCain and the Republicans when, after the Republican Presidential Primary of 2008 was over, found that there was no candidate who could appeal to both the conservative Republicans and the Social Republicans the way George W. Bush had been able to. When everyone else self-destructed in the Presidential Primary, John McCain was left as the closest to a viable candidate. But he was going to lead the Republicans into a disaster on the level of the Goldwater candidacy in 1964 if he didn't do something to get the social Republicans to turn out to vote. Sarah Palin appeared positioned to help him there to an extent no one else could.

I'd bet the McCain handlers thought that with her being so unprepared that they could handle her, but she promptly demonstrated that she would not be handled. No matter. She at least saved many down-ballot Republican candidates by giving the social Republicans a reason to go to the polls and vote. But then her mavericky anti-establishment image matched the disaffection of so many with the collapse of the economy and the loss of the Presidency by the Republicans. Many of those individuals drifted to the astro-turf operation of the teabaggers, with Sarah Palin as their standard bearer.

What's Sarah getting out of the deal? Several years of national celebrity and tons of money as she rolls along. But she is still a bullshit artist who is working to play her audiences as long as they will show up for her shows and buy tickets - And the Republicans have no one else who can match her as a steady reliable draw for the social Republican audiences and for the disaffected tea partiers.

That's my best guess about the Palin phenomenon, riffing off of Jacob Weisberg's excellent explanation. But it really is a snapshot of a train-wreck in progress.

Kudos to Tina Fey and Jacob Weisberg who so far have provided the best explanations of the Sarah Palin phenomenon that I have seen.

Where is the Republican outrage with federal judge's blocking of California's effort to outlaw gay marriage?

The right-wing reaction to the California Supreme Court's decision that blocking a ban on gay marriage caused massive counter reactions and led to the passage of California Proposition 8 making gay marriage unconstitutional under the California constitution. You'd expect the Republican party to have a similar massive and angry reaction to federal Judge Vaughn Walker's decision announced Wednesday that a ban on gay marriage was a violation of the Constitution.

But what do we get? Well, not quite crickets, but the reaction is certainly quite muted. Where is it?

Patrik Jonsson, Staff writer for the Christian Science Monitor offers an explanation for the lack of reaction on the right. Apparently the Republicans are depending on the bad economy to get them reelected and to make gains in Congress.

Republican leaders today are focused intently on the economy – and on blaming Democratic policies for its still-sluggish state – as they try to rally independents, libertarians, and "tea party" adherents around conservative economic ideals in advance of midterm elections.

"Every indicator that I have ... generally speaking, is that economic growth and job creation are the tandem issues that will be the principal drivers of voter decision at polls,” Republican National Committee political director Gentry Collins told reporters Thursday. "What I’m encouraging candidates to do is go out and run on an economic platform, a jobs platform."

That's not to say passions no longer run high on gay marriage. Atlanta on Saturday is host to dueling protests over the Proposition 8 ruling from California, as will be the case for other US communities in coming days. Indeed, the ruling in California, if validated on appeal, could affect some or all of the 45 states with similar gay-marriage bans on their books or embedded in their constitutions.

But Rep. Peter King, a New York Republican and a staunch opponent of gay marriage, Senate minority leader Mitch McConnell, and a several other top Republicans have offered muted responses so far to Wednesday's ruling from federal Judge Vaughn Walker

What it boils down to is that the leaders of the Republican Party will happily throw anyone - including the American nation and the American Constitution - under the bus as long as it gets them back into power.

What happened on the stock market during the May 6 "flash crash?"

Why did the Wall Street stock market suddenly go crazy and drop out of bed very suddenly on May 6th? That's still a question that has no clear answer. Tom Lauricells and Scott Patterson provide an update in the Wall Street Journal. This article is a progress report telling us the current status of the investigation into the flash crash. What isn't known is a lot more than what is known, and a lot of investors are quite leery of investing in stocks at present as a result. But what is known? The clearest thing is that all of a sudden the Dow Jones Industrial Average went into a sudden decline which was more rapid than ever before. Hundreds of stocks suddenly lost nearly all their value for no apparent reason.

It's not that there were no warnings at all. Fund managers were cutting back on buying stocks even before the crash because the market was acting strange. But there was no indication what the strange happenings meant.

Some new details include:

Stock-price data from the New York Stock Exchange's electronic-trading arm, Arca, were so slow that at least three other exchanges simply cut it off from trading. Pricing information became so erratic that at one point shares of Apple Inc. traded at nearly $100,000 apiece. And computer-driven trading models used by many big investors, apparently responding to the same market signals, rushed for the exits at the same time.

[...]

Todd Sandoz, co-head of equities in the Americas at Credit Suisse in New York, kept track as clients reduced risk in their portfolios. One way they did it was through trades that would profit if the Standard & Poor's 500-stock index fell: They sold short, or bet against, futures contracts linked to that index. They did the same with exchange-traded funds, which track baskets of stocks.

Those kinds of trades can send waves through the market. Brokers on the other side of the trades often hedge their own positions by selling the stocks contained in the index. That morning, Mr. Sandoz heard from his traders that there were relatively few buyers and sellers for some individual stocks—a sign that the market might not be able to smoothly handle big index trades.

The market was especially vulnerable because of the trading pullback identified by his colleague Mr. Vasan. The hedge funds that had been pulling back for several days—specialists in a strategy called statistical arbitrage—normally trade so much stock that they are a key source of market liquidity.

At about 2 p.m., as protests in Athens over the Greek debt crisis turned violent, the euro fell sharply, especially against the yen. The euro-yen exchange rate is watched widely by traders, with the yen seen as a safe-haven currency, the euro a proxy for riskier investments.

The euro's fall triggered concerns that a rush out of stocks was in the works. At Chicago hedge fund Sharmac Capital Management LLC, trader Jason Roney noticed the drop. "Something is wrong, look out!" he recalls shouting to his trading desk. He started shorting S&P 500 futures.

Traders across Wall Street were making similar moves, many driven by computer models that have become standard tools at banks, hedge funds and mutual funds.

Fund managers at Waddell & Reed Financial Inc. in Overland Park, Kan., moved to hedge their U.S. stock holdings, which total more than $7 billion, by betting that the S&P 500 would fall. Waddell decided on a large short sale of futures contracts known as E-minis, which mimic movement of the S&P 500. As Waddell's computers began parceling out the trade, other investors also were trying to hedge their portfolios, so trading volume in E-minis shot up to six times the usual volume.

But liquidity, the ability to buy or sell easily, was drying up. Between about 2:35 and 2:45, the six "market-making" firms that were most active that afternoon in E-mini trading—they step in as buyers or sellers on many trades—cut back their trading. Some pulled out altogether.

As a result, traders say, the big Waddell trade accelerated the sell-off. Waddell says it did not intend to "disrupt" the market.

Computers started to groan under the weight of the orders and slow by fractions of a second. It became difficult for exchanges and investors to keep track of prices.

In recent years, due in part to rules instituted by the Securities and Exchange Commission in 2007, the stock market has been opened to numerous trading venues and has evolved into a high-speed network. The rules stipulate that when an investor trades a stock, the order is routed to the venue with the best price.

On the afternoon of May 6, it was difficult for traders to trust the information they were getting, and for buyers and sellers to find each other. Nasdaq OMX Group Inc. operations personnel noticed problems with orders it had routed to Arca, the electronic trading platform of the NYSE, which handles about 12% of U.S. stock-trading volume. It was taking Arca longer to acknowledge receiving some orders. Orders for Nasdaq-listed stocks such as Apple and Amazon.com Inc. were hitting lags of two seconds or more on Arca—an eternity in today's markets.

Trading in Apple became especially volatile. At 2:40, its stock began falling swiftly, losing 16% in six minutes. Because Apple is a component of several indexes, weakness in the stock helped drag down the broader market.

Concerned about the impact of the delay on orders routed to Arca, Nasdaq officials used a tool called "self help," designed to prevent problems at one exchange from spreading to others. At 2:36:59, Nasdaq stopped routing orders to Arca. Other exchanges, including Chicago Board Options Exchange and BATS Global Markets, an electronic exchange near Kansas City, Mo., did the same.

The NYSE says Arca had "minor delays" on a computer server during the period, but says the problems were not significant and didn't add to the market's broader problems.

Computer systems at big brokerage firms were straining to keep up with the volume. Dark pools, trading venues that match buyers and sellers away from the major exchanges, had trouble getting accurate information. Some temporarily shut down.

2:40 p.m., Dow down 415 points

High-frequency-trading firms, which account for some two-thirds of U.S. stock-trading volume, were having their own problems. Their strategies often involve buying and selling stocks within microseconds—or one-millionth of a second. The market's plunge, along with discrepancies in data feeds from exchanges, scrambled their computer-trading systems.

With the Dow industrials down about 500 points, Tradebot Systems Inc., a Kansas City high-speed trading firm that says it can account for up to 5% of daily volume, pulled out. Other such firms did the same.

The roar on the floor of the Chicago Mercantile Exchange was deafening as the sell-off accelerated. The E-mini contract suddenly fell a massive 12.75 points in half a second, triggering a CME circuit-breaker that stopped trading for five seconds. The pause gave computerized futures-trading systems time to stabilize.

On the floor of the NYSE, the fast declines in some stocks were triggering brief slowdowns in trading, known as "liquidity replenishment points," to allow floor traders to step in and restore order. Other exchanges, such as the Nasdaq, didn't slow trading.

Among the problems this caused were "crossed" markets, where offers to buy were at prices higher than orders to sell. Around 2:46, for example, an investor offered to buy Apple for about $218, while another was willing to sell it for about $202. Such nonsensical quotes sent warning signals to computer systems and gave traders yet another reason to pull back.

Stocks everywhere started to collapse. Apple lost more than $23 a share, or 10%, between 2:44 and 2:46. Procter & Gamble Co., which had been trading around $61.50, saw huge sell orders hit the NYSE, and the exchange briefly slowed trading in the stock. By 2:47, the market for P&G was in chaos, with orders to buy from NYSE, Nasdaq and the BATS scattered from $39.89 to $44.24. The basic function of the stock market— bringing together buyers and sellers in an orderly fashion—had broken down.

Trades flickered across computer screens that made no sense. Shortly after 2:47, shares of Accenture PLC dropped in seconds from about $40 to one penny, then rebounded just as quickly. The explanation surfaced later: Market-making firms—regular buyers and sellers of certain stocks—have to maintain quotes at all times. To fulfill the requirement, they use "stub quotes," dummy quotes they never expect to be executed. But in the absence of buyers on May 6, computers matched automated sell orders with the dummy quotes.

Rumors swirled about of an erroneous "fat-finger" order by a trader at Citigroup Inc.—that the trader mistakenly entered extra zeros, turning millions into billions. Citigroup and regulators later said such an errant trade did not appear to have taken place.

But the rumor helped stabilize the market. If the massive decline was the result of a mistake and not some terrible news, that meant there were bargains to be had.

At 2:47, the Dow reached its nadir, down 998.50 points. As trading resumed in the futures market, buyers flooded in and prices started to rebound.

Within one minute, the Dow reclaimed 300 points.

But the problems weren't over. Exchange-traded funds, or ETFs, are baskets of securities that trade like a stock. NYSE's Arca is usually home to 30% of ETF trading. When other exchanges stopped routing orders to Arca, the normal flow of ETF buyers and sellers was disrupted.

Two big hedge-fund and trading firms, D.E. Shaw Group and Citadel Investment Group, detected problems in Arca's ETF computer feed. Citadel asked customers to route orders elsewhere. NYSE officials say they found no problems with Arca's ETF platform on May 6.

Some of the biggest ETF traders are firms that try to profit from discrepancies between prices of ETFs and the stocks that they track. But as questions mounted about pricing of individual stocks, these firms pulled back from trading. This hurt small investors who had placed "stop-loss orders," aimed at protecting against big losses by automatically selling once prices fell below a certain level. Those orders hit the market when there were virtually no buyers to be found.

At 3:01, Nasdaq once again began routing orders to NYSE's Arca.

Executives from several major exchanges joined a conference call to discuss, among other things, whether to declare some trades erroneous. After considerable debate, they decided to cancel trades in stocks and ETFs that had fallen or risen 60% or more.

In the final hour, trading remained erratic. At one point, Apple traded for nearly $100,000 a share on Arca, according to NYSE officials, after a buy order for 5,000 shares entered the market and only 4,105 shares were available. When Arca's computers saw that no more shares were available to sell, the system automatically assigned a default price of $99,999 to the remaining 895 shares. Those trades later were cancelled.

4 p.m., Dow closes down 342 points

This looks like a system that has grown too large for anyone to oversee, understand or in times of trouble, react to. It requires the high speed arbitrage traders to operate to create liquidity, but with the various markets getting out of synch with each other the possibility that one market would sell at a price lower than another was buying at can cause investors to back off and do nothing. The result can be a lack of stocks to buy or sell in specific markets and price reports that are delayed from one market can completely disrupt the functioning of the market.

This set of problems will be compounded by computerized trading when the trading data goes gives signals the computer is not programmed to react to. Since much of this is arbitrage trading which no human being looks at except in retrospect, the only thing the program can be programmed to do is just get out of the market. This is going to give other people in the market unpredictable signals. So everyone is going to hedge their investments all at once. Such hedge trading will then slow down and again provide signals that are fed back into the market causing more unpredictable behavior.

Regulators are already doing a few things to change the system, but since the details of what happened are not yet known the efficacy of the new regulations is not known.

New circuit breakers, now in pilot mode, require a five-minute trading halt on S&P 500 stocks that move more than 10% within five minutes. These "collars" could help keep prices from suddenly cascading.

But some forces behind the flash crash seem beyond the reach of regulators. Exchanges are unlikely to be able to prevent high-frequency trading firms or statistical-arbitrage firms from bailing out of the market en masse.

So there is not any real reason to think that there might be another flash crash any day.

That's the kind of uncertainty the markets hate.

============
Addendum 08/07/2010 3:08 pm
Well, well. I am going to thank Paul Hinds for sending me this link to an explanation of the flash crash by Nanex. This link is the text and back the main page at this link are the graphs. Here is the key part of Nanex's analysis:

There are 9 exchanges that route orders to NYSE listed stocks: NYSE, Nasdaq, ISE, BATS, Boston, Cincinnati (National Stock Exchange), CBOE, ARCA and Chicago. Each exchange submits a bid and/or offer price for each stock they wish to make a market in. The highest bid price becomes the National Best Bid and the lowest offer price becomes the National Best Ask. Exchanges compete, fiercely at times, to become the best bid or offer because that is where orders will be sent for execution. Exchanges also go to great lengths to ensure they avoid crossing other exchanges (bidding higher than others are offering, or offering lower than others are bidding), because if they do, many High Frequency Trading (HFT) systems will immediately execute a buy/offer and capture an immediate profit equal to the difference. Today, it is very rare to see markets crossed in stocks for longer than a few milliseconds.

Beginning at 14:42:46, bids from the NYSE started crossing above the National Best Ask prices in about 100 NYSE listed stocks, expanding to over 250 stocks within 2 minutes (See Part 1, Chart 1-b). Detailed inspection indicates NYSE quote prices started lagging quotes from other markets; their bid prices were not dropping fast enough to keep below the other exchange's falling offer prices. The time stamp on NYSE quotes matched that of other exchange quotes, indicating they were valid and fresh.

With NYSE's bid above the offer price at other exchanges, HFT systems would attempt to profit from this difference by sending buy orders to other exchanges and sell orders to the NYSE. Hence the NYSE would bear the brunt of the selling pressure for those stocks that were crossed.

Minutes later, trade executions from the NYSE started coming through in many stocks at prices slightly below the National Best Bid, setting new lows for the day. (See Part 1, Chart 2). This is unexpected, the execution prices from the NYSE should have been higher -- matching NYSE's higher bid price, unless the time stamps are not reflecting when quotes and trades actually occurred.

If the quotes sent from the NYSE were stuck in a queue for transmission and time stamped ONLY when exiting the queue, then all data inconsistencies disappear and things make sense. In fact, this very situation occurred on 2 separate occasions at October 30, 2009, and again on January 28, 2010. (See Part 2, Previous Occurrences).

Charting the bid/ask cross counts for those two days reveals the same pattern as 5/6! Looking at the details of the trade and quote data on those days shows the same time stamp/price inconsistencies. The NYSE stated that during the same intervals, they were experiencing delays in disseminating their quotes!

In summary, quotes from NYSE began to queue, but because they were time stamped after exiting the queue, the delay was undetectable to systems processing those quotes. On 05/06/2010 the delay was enough to cause the NYSE bid to be just slightly higher than the lowest offer price from competing exchanges, but small enough that is was difficult to detect (See Part 3, The Evidence). This caused sell order flow to route to NYSE -- thus removing any buying power that existed on other exchanges. When these sell orders arrived at NYSE, the actual bid price was lower because new lower quotes were still waiting to exit a queue for dissemination.

The key to the problem seems to me to be the various other markets cross-linked to the New York Stock Exchange and the problems caused when there was a delay in some but not all of the linkages. For those of you not familiar with computers, that is what the statement "If the quotes sent from the NYSE were stuck in a queue for transmission " means. Quotes that buyers and sellers depend on to make buy and sell decisions were lined up and not moving (stuck in the queue) making the buy and sell decisions made outside the New York Stock Exchange based on bad (delayed) data.

Computer trading depends on this instant transmission of data to operate. Because the computers supposedly have the very latest quotes sooner than other buyers and sellers in the market they can be programmed to buy or sell sooner than anyone else. That's how the computers perform the arbitrage function between different markets and supposedly keep prices on the different markets in synch within milliseconds.

I have NOT dug into all this data to make sure of its accuracy and guaranteed that each of the analysts or groups I am quoting performed good analysis. All I am saying is that the reports I have posted here make sense to me.

This is very similar to the set of cascading power problems that took down the Northeast power grid in 2003. Both appear to be problems when a massive interconnected system suddenly gets unbalanced demands on part of the system that are fed back into the overall system and causing a cascade failure. The initial cause this time is of course different from that of the power failure, but the problems caused when one part of the system did not reacting promptly created strains on other parts of the system. When an portion of the system failed it then increased the strains thrown onto the rest of the system. The system here is the group of 9 exchanges that route orders to NYSE listed stocks: NYSE, Nasdaq, ISE, BATS, Boston, Cincinnati (National Stock Exchange), CBOE, ARCA and Chicago. In this case, the New York Stock Exchange was the recipient of massive number of buy and sell orders caused by delays in quotes sent to the computers doing computerized trading.

The problem seems to me to be one of unbalanced workloads. If somehow regulations are put into place that prevent delayed quotes from causing outlandish workloads (orders to buy and sell instantly) on a single part of the system, then I suspect that such regulations will only solve the problem for delays in communications between the various markets. That is not to say that there aren't other possible causes of unbalanced loads screaming through the system in the future.

California Prop 8 declared unconstitutional.

This was a good decision. California's Proposition 8 declaring that marriage is limited to those based on one man and one woman is not Constitutional.

The two main reasons are 1. there is no rational basis for the state to deny marriage licenses to two men or two women, and 2. mere moral disapproval of another person's behavior is not, by itself, justification for declaring that behavior illegal.

CNN also reports this decision: Judge rules California's ban on same-sex marriage is unconstitutional.

From the NY Daily News: Federal judge Vaughn Walker overturns California's Prop 8 in win for same-sex marriage.

The Catholic Church reacts to the loss of its status of social arbitrator.

Is the Catholic Church losing its privileged status in the the west? John L Allen Jr. in his blog at the National Catholic Reporter asks that question. Big stories about the Catholic Church this last week include:

• Massive police raids by the Belgian police against the Catholic Church because of the Church's obstruction of investigations into child sex abuse cases.
  
• A public reconciliation between Austrian Cardinal Christoph Schoenborn and Cardinal Angelo Sodano who Schoenborn has publicly accused of blocking action on a sex abuse case that occurred in Austria.
  
• A decision by the U.S. Supreme Court to let a sex abuse lawsuit against the Vatical proceed. Another action by the American courts against the Vatican and the Salesian order was filed in Los Angeles right after the Supreme Court decision.
  
• Personnel moves by the Vatican to appoint internal leaders with Pope Benedict's spiritual and theological outlook rather than diplomatic leaders. It's the Pope consolidating control of the Church bureaucracy.
  
• In a related bureaucratic move the Vatican created a new department, the "Pontifical Council for the New Evangelization," which is intended to try to reawaken the faith in the West. The is clearly a reaction to the decline of secular power of the Church.
  
• The fallout from the financial scandal involving the Congregation for the Evangelical of Peoples continues.
  
• The European Court of Human Rights has held a hearing to decide if the display of crucifixes in Italian public school classroom violates European protections of human rights and of freedom of conscience.
  

John Allen thinks that all of this leads directly from

"the collapse of Catholicism as a culture-shaping majority in the West. When the dust settles, policy-makers in the church, particularly in the Vatican, will be ever more committed to what social theorists call “identity politics,” a traditional defense mechanism relied upon by minorities when facing what they perceive as a hostile cultural majority.

While there are an almost infinite number of ways of defining a “minority,” one widely invoked model says it has four characteristics:

• Suffering discrimination and subordination
• Physical and/or cultural traits that set them apart, and which are disapproved by the dominant group
• A shared sense of collective identity and common burdens
• Socially shared rules about who belongs and who does not

A growing swath of Catholics in the West, particularly in the church’s leadership class, believes that all these markers now apply to the Catholic church, and the events of the past week will strongly reinforce those impressions."

[...]

Some blame a rising tide of neo-paganism in the West for the church’s woes, while others say church leaders, and especially the Vatican, have no one to blame but themselves. Whichever view one adopts, the empirical result is the same: Catholicism no longer calls the cultural tune. Benedict’s decision to launch an entire department in the Vatican dedicated to treating the West as “mission territory” amounts to a clear acknowledgment of the point.

Facing that reality, Catholicism, both at the leadership level and in important circles at the grass roots, is reacting as social theorists would likely predict, with a strategy that other embattled minority groups -- from the Amish to Orthodox Judaism, from the Gay Pride movement to the Nation of Islam -- have often employed: Emphasizing its unique markers of identity, in order to defend itself against assimilation to the majority.

I think Allen is right that this is a reaction by the leaders of the Catholic Church to their perception of the decline in power of the Church. I think, though, that any perceived religious reasons behind the reaction are mistaken. The Church is losing its power to establish and enforce a centrally controlled religious doctrine but much of that is a direct result of the fact that most people are taking personal control over what they believe their spiritual needs are. A centrally controlled religious organization is more of a hindrance to that than a help.

So this is not a religious reformation. This is a decline in the secular power of the Catholic Church caused by several things. First, with the rise of industrial society the functions previously performed by the church have become much less significant to society. The Church used to be the main source of medical care, education, and social welfare for the population. Those functions have been largely displaced by the more efficient governments and by the main sources of wealth, the businesses. They require a healthy well-educated workforce, so the motivations behind public health and education have become primarily economic rather than moral. Another function the Church used to perform was long distance communications between distant communities. Technology and global markets have completely replaced the Church in that function. The Church is no longer the international Intelligence source it used to be. Both governments and multinational corporations have replaced it in that function.

That left the Church as the main contact between the public and the upper classes. The upper classes could trust the religious leaders to advise them about the status and needs of the populace. Generally the upper classes have always tended to be generally blind to the needs of the public, though they have been quick to recognize what they needed from the public. The Church with its network of local churches providing information to the Church hierarchy was a key source of information to the upper classes. The rise of democracies around the world has largely displaced the Church in that function. That has been especially true because the Church has consistently taken the side of the elites and worked primarily to pacify the public. Then, as the Church lost this function to alternatives, it has become more conservative and unwilling to adapt to new social situations. That refusal to adapt is understandable because all the trends are towards marginalizing the Catholic Church in modern society.

The leaders in every organization like their positions and justify what they do as being "for the good of the organization." But they are actually protecting themselves and their status. When the organization declines they will use every lever the organization has access to in order to prevent that decline.

It is that effort at self-protection by the Catholic elites that we see as the Church retreats into isolation, anger at intrusive outsiders and doomed efforts to rearrange the deckchairs on their Titanic.

At last - the Truth about the Republicans is told.

Have you wondered where this ad was for the last ten years? This is the Truth!

Why does the "rational actor" approach to social problem solving fail?

Here is an eleven minute lecture explaining the problem behind the problem behind the problem.



It is posted by Paul Rosenberg at OpenLeft. For those of us who are not academic researchers buried in the literature Jon Hanson lays out how the problem of tobacco sales was dealt with in law and public policy (the rational actor policy) and how the tobacco companies quietly applied psychology and social psychology to subvert the efforts of the government and the legal system to protect the public. It's found right after about the 9:45 mark.

To me this also very clearly shows the utter failure of all libertarian approaches to public policy. He does not use the term in his discussion, but he clearly demonstrates how the rational actor economic and legal model places all the blame for social problems on the individuals who have the problems and provides blinders to be used by those who benefit from those problems.

Which is more important? Jobs or keeping the federal deficit down?

The Media Consortium has posted an excellent post at OpenLeft. Consider this:

...take a look at Friday's jobs report. As Tim Fernholz notes for The American Prospect, this report was the most disappointing piece of economic news in months. While the economy gained 431,000 new jobs during the month, 411,000 of them were temporary hires by the U.S. Census, meaning the private sector is not able to support much new hiring.

There's a critical lesson there: The only serious engine of job growth in the month of May was the federal government. Absent government hiring, the economy is not improving at all. There is an almost bottomless supply of critical social needs that require work right now, but no private-sector momentum to meet those needs.

The BP oil catastrophe should underscore how important new, green energy is to the U.S. economy-yet U.S. efforts to develop green energy solutions have fallen far behind those of China and other industrial powerhouse nations. Major federal investment into the research and implementation of green energy would be good for our environment and good for our economy."

The only strength in the American economy is federal spending. It is maintaining some employment where the private economy simply cannot.

Why does this matter? The Great Depression II was limited to merely the Great Recession in 2009 by this federal deficit spending. Right now is too damned soon to stop deficit spending that maintains jobs!!

Is deficit spending inherently bad?

Should a family ever borrow money to buy a house? If they can't, then available housing drops throughout the economy and so do jobs. but housing itself builds and protects families so that the children can grow up to join and expand the economy. It's investment spending both for the families and for the economy.

That contrasts with families that gamble away their income and have nothing to show for it, or economies that borrow money to go to war and have nothing to show for it. Some deficits are good, some are bad. Spending to protect jobs is inherently good spending, because ultimately the borrowed money can be repaid from the increased work performed by the economy overall.

Can't afford the health care you or a loved one needs? Take a chicken to the doctor.

If you don't want to solve a problem, then the tried and true political system is to drown it in irrelevancies and get the media to focus on your inane irrelevancies instead of discussion of actual solutions. Here is Nevada politician Sue Lowden putting this truth into practice.



Sue Lowden brought the chicken to the debate because she wanted to be involved in discussing health care, but had nothing relevant to say. She has been handed her head for it, and now she can only join the debate by presenting something relevant to the discussion.

Since she is a conservative politician appealing to conservative voters, her ideology automatically blocks her from championing anything useful or relevant, so she is in a real quandary.

Her choice is either (1.) to drop out of the conversation completely and quite wasting the public air space (impossible for a politician when the political environment is skewed towards solving the problem of so many people with no access to health care) or (2.) to present something actually relevant to the discussion instead of attempting to derail it. Her potential electoral base and her funders will abandon her if she chooses option (2.)

For years conservatives have simply chosen to spout the kinds of inanities she is now in trouble over. The result has generally been to fill the political atmosphere with fear, uncertainty and doubt and to drown out any effort to actually solve any of the problems of health care. The election of Obama as President has changed to political atmosphere so that addressing this set of problems has become a national priority and the nay-sayers and conservatives have made themselves irrelevant.

American people are considered more important than growing the wealth of the fat cats. Sue Lowden is on the wrong side of history. It's morning in America for Americans at last!

Sue Lowden is American political conservatism hard at work avoiding solving the many of the real problems America face.

Besides drowning the political discussion in irrelevancies, another conservative tactic is to shift the discussion to one of moral failure and to suggest that the only solution is for people to look into their hearts and become morally pure.

The two tactics are similar in that they (1) have no measurable cause and effect connections between the problem and the proposed solution and (2) they both allow the wealthy to continue to build their wealth without regard to the needs of the workers or the customers who are being exploited to allow them to build up that wealth and the power that goes with it.

Lewis Black takes on Glenn Beck's Nazi Tourette's

Once again Lewis Black is hilarious. Enjoy.

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Back in Black - Glenn Beck's Nazi Tourette's
www.thedailyshow.com
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The delayed investigations into Wall Street are getting started!

At Last! The government is beginning to look at the securities that set off the current Great Recession! This is from the Guardian (London):

The New York attorney general is investigating whether eight Wall Street banks misled ratings agencies to inflate the grades of certain mortgage securities.

The attorney general of New York, Andrew Cuomo, sent subpoenas to eight banks last night, according to the New York Times. The paper named Citigroup, Credit Agricole, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch – now owned by Bank of America – Morgan Stanley and UBS as the banks under scrutiny.

The companies that rated the mortgage deals are Standard & Poor's, Fitch Ratings and Moody's Investors Service. The agencies have come under fire for overstating the quality of mortgage securities that later slumped in the wake of the housing collapse, helping to trigger the financial crisis.

The attorney general's inquiry suggests that he thinks the agencies may have been duped by one or more of the banks under investigation. He is scrutinising the rating agencies' fees arrangements, which allowed banks to shop their deals among the agencies to secure the best rating.

Cuomo is also looking into the practice of bank mortgage desks hiring rating agencies employees to help create mortgage deals that may have secured better ratings than they deserved.
[Highlighting by the WTF-o Editor.]

This is very significant in the effort to find out exactly what happened to nearly throw the U.S. and the world into a second Great Depression. A number of very important points are being addressed in this investigation. First, it has been clear since the Wall Street banks collapsed in September 2008 that a central pillar of the fraud in mortgage securities that set it off was the inflated reports of the rating agencies, http://www.guardian.co.uk/business/2010/may/13/wall-street-banks-investigated-mortgages-ratings. So far it has been eighteen months since the financial collapse in September 2008, and there has been no public investigation of the activities of the rating agencies.

That leads to the second question this report leads to. This investigation is being led by the New York Attorney General, NOT by the federal government. This financial fraud and the resulting disaster was nation- and world-wide. Why is the New York Attorney General, a state officer, the taking the lead in this investigation? The corrective actions, which will include regulation of the rating agencies both for their transparency and the manner in which they are chosen and paid for their services, will have to be primarily federal. Otherwise the banks will simply go state-shopping to find the least regulating state for them to operate in, just as the banks do with choosing the states they issued credit cards from.

This investigation is going to be worth following closely. Expect the Wall Street banks to take every possible action to shut it down or shut it up.

Conservatives will automatically oppose any Obama nominee or legislative initiative. Plan on it.

The cultural clash between American liberals, mostly represented by Democrats these days, and American Conservatives grows clearer every day as the conservatives complain about whatever the Obama administration does. Case in point from Ed Whelan of the NRO (National Review Online.) Ed objects that the current candidate nominated this morning by President Obama for the Supreme Court seat John Paul Steven's retirement will leave is Elena Kagan. The complaint is not that she is not a competent lawyer, a claim that would be laughable in the face of her credentials. Ed complains that since she grew up in New York City, she did not learn to drive until she was into her twenties.

So what's wrong with that? The job is to be Justice of the Supreme Court, not NASCAR driver. Here's Ed's complaint:

3. There is a striking mismatch between the White House’s populist rhetoric about seeking a justice with a “keen understanding of how the law affects the daily lives of the American people” and the reality of the Kagan pick.

This supports my position that the core of the so-called liberal-conservative political split in America today is really a culture clash between America's rural culture and the newer urban culture of the big cities. The farm boys really don't like the more sophisticate city types, and they hate losing power to them. Growing up on a farm on in a small town, the car is a necessary tool to get around. In the city there is almost aways public transportation that makes driving a car a lot less necessary. so Ed's complaint is that Elena Kagan is "out of touch with average Americans" because she has not grown up dependent on the automobile from an early age. For her the driver's license at age 16 was not a rite of passage to life as an adult.

Matt Gertz at Media Matters points out

Kagan grew up in New York City, which is one of the most walkable cities in the country and has one of the best public transportation systems nationwide. You don't need a license if you live in NYC, and in fact a large percentage of New Yorkers don't have one: New York City has 5.6 million residents over age 25, but only 3.3 million residents have drivers' licenses.

Somehow to Ed Whelan this means that Elena Kagan cannot understand the "average American."

What Ed is really saying, though, is that he is a rural hick who fears anyone who is somehow different from him. People living in urban areas who have adapted to the urban culture have to be much more tolerant of diverse cultures and behavior than people from smaller towns who simply don't meet and interact with as great a variety in a week or more as someone who lives in a large, walkable city will. The Conservative/Liberal dichotomy really means a rural/urban culture clash.

The tea baggers got Bob Bennet's scalp - they are on a roll. Or are they?

Three term Utah Senator Bob Bennet lost his bid for renomination to the Senate seat he has occupied for nearly 18 years, and which his father before him also held for three terms. Does that mean the Tea Baggers are growing in power?

Utah is a bad test. As the Christian Science Monitor points out, yesterday's vote for the Republican nomination for the Senate seat was conducted by 3400 delegates to a Republican convention. These are the purest of the pure hardline Republicans in the most conservative state in the union. Those delegates were chosen specifically because they were the most hardline conservatives in the conservative bastion we call the state of Utah.

That suggests that if there is any state in the union that the purist antics of the tea baggers is unlikely to split or even severely weaken the Republican party, that state is Utah. But they are also going to provide an example to the rest of the nation just how right-wing the tea baggers really are.

Here, from the recently adopted Republican Party Platform of the state of Maine, we get an example of just how far out in la-la land these people really are.

How nutty are they? Here's a few of their proposals.

I. To Form a More perfect Union

• a. All legislation must adhere to the restrictions outlined in the Constitution to protect the individual from intrusive government.
• b. Direct the State of Maine to join with other states in asserting our 10th amendment sovereignty rights which protect us from unconstitutional federal government intrusions.
• c. Insist on strict adherence to our 2nd amendment right to keep and bear arms.
• d. Pass a “Read the Bill” act, to insure clarity, and eliminate the corruption associated with side issues, earmarks, pork or riders.
• e. Oppose “Localism and Diversity”, the Fairness Doctrine or whatever else such attempted restrictions are labeled. Any restriction on speech is by definition NOT free speech.
• f. Reject the Employee free -choice Elimination- act, as an unconscionable affront to the right to a secret vote.
• g. Restore integrity to the electoral process:

• i. Prohibit any public funding of advocacy groups such as ACORN, no matter what it or its affiliate organizations rename themselves; New York Communities for Change, New England United for Justice etc.; Conduct thorough investigation of their activities and voter fraud and prosecute violations.
• ii .Eliminate motor voter and other voter fraud mechanisms; institute secure voter registration and identification systems.
• iii. Reject any effort to give foreign citizens the right to vote in the US in any situation or capacity.

• h.Oppose any and all treaties with the UN or any other organization or country which surrenders US sovereignty. Specifically:
• i. Reject the UN Treaty on Rights of the Child.
• ii. Reject “LOST” the Law Of The Sea Treaty.
• iii. Reject any agreement which seeks to confiscate our firearms.
• i. Restore the process of assimilation of immigrants to preserve the benefits of an advanced educated and prosperous society. Rescind Maine’s sanctuary State status. No amnesty, no benefits, no citizenship -ever- for anyone in the country illegally. Arrest and detain, for a specified period of time, anyone here illegally, and then deport, period.
• j. Pass a Congressional reform act which includes the following provisions:
• i. Term Limits: 12 years only, in any capacity.
• 1.Two Six year Senate terms
• 2.Six Two year House terms
• 3.One Six year Senate term and three Two Year House terms
• ii. No Pension
• iii. Congress participates in Social Security under the same rules as the general public.
• iv. Congress can no longer vote themselves a pay raise.
• v. Congress participates in the same health care plan as the general public. No preferential plans or treatment.
• vi.Congress is subject to and must abide by all the laws they impose on the general public.

II. To Establish Justice:

• a. Restore “Constitutional law” as the basis for the Judiciary.
• b. Reassert the principle that “Freedom of Religion” does not mean “freedom from religion”.

III. To Insure Domestic tranquility:

• a. Promote family values.
• i. Marriage is an institution between a man and a woman.
• ii. Parents, not government, are responsible for making decisions in the best interest of their children, whether disciplinary, educational, or medical.
• iii. We recognize the sanctity of life, which includes the unborn.

IV. To Provide for the Common Defense:

• a. Discard political correctness, make public the declaration of war (Jihad), made against the US on 23 Feb 1998, and fight the war against the United States by radical Islam to win.
• b. Seal the border and protect US citizens along the border and everywhere, as is the prime directive of the Federal Government.

V. To Promote the General Welfare:

• a. Return to the principles of Austrian Economics, and redirect the economy back to one of incentives to save and invest.
• b. Cut spending, balance the budget, and institute a plan for paying down debt. Proclaim that generational debt shifting is immoral and unconscionable and will not be tolerated!
• c. Pass and implement Fed bill #1207 (Introduced by Ron Paul), to Audit the Federal Reserve, as the first step in Ending the Fed.
• d. Return to transparent and honest reporting of economic statistics free of gimmicks and distortions.
• e. Require the government and all its agencies adhere to the same GAAP accounting rules that businesses must follow.
• f. Restore the provisions of welfare reform removed with the stimulus bill.
• g. Defeat Cap and Trade, investigate collusion between government and industry in the global warming myth, and prosecute any illegal collusion.
• h. Freeze current stimulus funds, prohibit any further stimulus bills, and apply all unspent funds towards the debt they created.
• i. Promote energy independence aggressively by removing the obstacles created by government to allow private development of our resources; natural gas, oil, coal, and nuclear power.
• j. Institute Zero based budgeting on all programs.
• k. Espouse and follow the principle: It is immoral to steal the property rightfully earned by one person, and give it to another who has no claim or right to its benefits.
• l. Clarify that healthcare is not a right. It is a service. As a compassionate society we will aid those in need. However, the government takeover of healthcare is not only unconstitutional, but detrimental to the entire healthcare system. Only market based solutions will solve the problems.
• i. In the state of Maine:
• 1. Remove the restrictions on health providers, (as was done in New Hampshire), to increase competition, drive down the costs, and increase the options available.
• a. Bring Maine standards in line with national average.
• b. Allow purchase of insurance across state lines. LD 290
• c. Enact tort reform as exemplified by Texas.
• d. Eliminate Dirigo

VI. To Secure the Blessings of Liberty:

• a. Restore a vigorous grounding in the history and precepts of liberty, freedom, and the constitution to the educational process. As Thomas Jefferson said, “If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be.”
• i. Eliminate the Department of Education and restore schools to local control as specified in the constitution.
• b. Repeal and prohibit any participation in efforts to create a one world government.

The state Republican Party platform in Texas from two years ago matches the current one from Maine in idiocy. Here is a link to the 2008 Texas Republican Party Platform. (In .pdf format.)

I can understand that the conservatives think they should be the government, and if they aren't no one else should be either. This is a combination of the libertarian ideas of no government other than the military and police, with no social or economic regulation at all. That puts the wealthy oligarchs into control since the only effective power in the absence of normal government operations to keep the economy on an even keel and no social regulations at all. That means back to Segregation until some of the wealthy realize that slavery can also be returned with no difficulty under these circumstances. Naturally, women become second-class beings (not citizens, just beings) and homosexuals become an actively despised and oppressed minority.

The end result if these ideas were put into practice and left there for any period of time would be that America would become a non-existent nation just as Somalia has been for the last two decades. Instead of a single nation it would be ruled by a few warlords based in major cities. The economy would of course totally collapse, with the survivors fighting to get accepted into one of the militias that keep the local warlords in power.

Long before the worst of those predictions come to pass there will be another civil war to remove the conservatives from power.

That's not an effort to move back to the better days of the past. That's an effort to create a fantasy land that has never existed and never can.

Liam Clancy - The Band Played Waltzing Matilda

No comment needed for this.

Then we can go back to this:

By the Rising of the Moon.