Monthly Archives: November 2011

$7.77 Trillion of Your Money

Bloomberg has obtained documents under the Freedom of Information Act that show guys like the Bank of America executive lying through their teeth. The banks were telling customers and investors that they were sound and solvent and doing just fine while they were, collectively, desperately borrowing trillions to cling to life. And, you guessed it, the execs kept their bonuses coming with those dollars.

The Federal Reserve is supposed to help provide liquidity in distressed financial markets. I get that. But these documents show that the Fed was picking winners and losers as they made their loans. They kept some firms solvent just long enough to complete buyouts – Wachovia and Bear Stearns were two such Fed-sustained comatose corporations. The Fed and the banks kept the loans a secret during the crisis and only released their information under a FOIA request.

The question is if these revelations will result in real regulation for the branch of organized crime we euphemistically refer to as “the banking industry.” Given the fact that the banks still have loads of cash to pay armies of lobbyists and you don’t, I’m not very optimistic about this leading to changes.

Little Ivory Lies

The New York Fed posted an apology for not predicting the economic catastrophe that began in 2007-2008. Better late than never, right? Except this apology dodges responsibility…

The article describes how nobody could have foreseen the catastrophic events of 2007 and on. To be sure, nobody in the rational behavior, efficient market ivory towers could foresee them because their own ideology required that they be blind to market failures. They were weather forecasters that denied the existence of tornadoes and hurricanes; geologists that refused to admit that earthquakes can happen; doctors that could not imagine the possibility of an epidemic. They were useless, in a word.

No, they were worse than useless. They got politicians and academics alike to deny reality and to strip away protections that were necessary to keep disaster from happening. They encouraged a host of policies – subprime lending, home equity loans, no regulation for credit default swaps, et cetera, et cetera – that people not in power said would lead to disaster. Those who were in power became the biggest gang of criminals the world has seen by using their money and influence to have legislatures make their actions legal.

Many of us outside the government and outside the ivory towers saw the reality and knew we were in for a disaster. The double bubble in housing and government debt would lead to a major economic collapse. We called it. We couldn’t say precisely when, but it was obvious it was going to happen, and it did. We also made the call that Europe was coming apart economically and, well… see for yourself.

We live in an age of irresponsibility. People that hold power deny their mistakes with an arrogance that transcends logic. Heads do not roll. The intelligence failure of 9/11 cost more lives than jobs. The same can be said for the terrible destruction of New Orleans in the 2005 Hurricane. In this latest, economic disaster, the perpetrators of the crimes were, for the most part, rewarded. Madoff is doing time. Who else?

So the New York Fed issues its non-apology at 6PM on Black Friday… it’s even dodging the attention it should be enduring for shutting its eyes to the greatest financial disaster in 70 years. Worse, as an Economics teacher, I’m supposed to teach the stuff that got us into this mess like it’s accurate and useful. The establishment’s refusal to recant is particularly galling.

Irving Fisher was the biggest bull market booster in 1929. When he realized he was dead wrong, he abandoned his wrong ideas and developed a workable model for analyzing economic depressions. I can appreciate that. The current crowd has no such ability or desire to recant. It’s as mentally paralyzed as the Chinese Communist Party in the midst of the Great Leap Forward: ideology is more important than reality. We see this in the Fed and we see this in Congress. They tell us their little ivory lies, and even if we don’t believe them, we are bound by their vision.

Happy Thanksgiving, Wherever You Are

Not everyone is with family on this day we here in the USA take stock of our blessings and things to give thanks for. Take some time today to say hello and share a message of hope and gratitude. I know I’m thankful for the joys I’ve had this year and the obstacles I’ve overcome. Happy Thanksgiving, everyone.

Pelosi and Boehner: Speakers That Fall Silent

While they’re ready to blather on about their policy agenda, as soon as they’re asked about getting rich with actions that constitute insider trading for the rest of us, they lose their silver tongues. It’s legal for Congressmen to trade shares based on information they’re privy to through hearings. Why is it legal for them? Look at who makes the laws. Yeah.

While it’s legal, it looks sleazy. Neither Pelosi nor Boehner don’t want to own up to it, but their bank accounts and asset portfolios tell a different story. It’s both sides of the aisle, too. If anyone tries to turn this into some kind of partisan debate, I’m going to respond with a blast of his or her favorite Congressmen and all of their peccadilloes. ALL of them are crooks until proven innocent.

The fact is that this is only one aspect of the corruption that is endemic in all of Congress. Lobbyists, pork barrel spending, iron triangles, and revolving doors make a more complete picture. The real kick in the head is that I have to call corruption “other contributuions” or “other services” when coaching my students on how to write for the AP exam. Our curriculum is essentially blind to the fact that there is a gravy train that starts at Capitol Hill and extends clear across the Washington Mall and intervening streets to the White House.

A Three Stooges Guide to the Republican Presidential Candidates

If you’re not familiar with the Three Stooges, this whole article will go right over your head. If you’re a fan, this will make everything about the 2012 crop of GOP candidates make total sense.

I got this idea after seeing Rick Perry’s “Cornerstone” speech in which he really started to cut up. I thought, “wow, he really looks like Moe with a better haircut…” The similarities did not end there, so that’s where I’ll start.

Rick Perry as MOE

The similarity is uncanny. Both think they’re in charge of things, but the chaos surrounding them says otherwise. They like a firm approach to law and order and Perry’s execution record matches up eerily with Moe’s catchphrase, “Remind me to kill you later.” Both think they’re smarter than they sound.

Herman Cain as CURLY

Both have a lack of hair, both have a charming personality, and both are the most unpredictable members of their ensemble. Cain chants “Nine nine nine!” and Curly goes “Nyuk nyuk nyuk!” Cain was never a trained politician, and Curly was never trained as an actor. Cain has his accusations of impropriety and Curly also has a weakness for the ladies… Both are prone to bouts of rhyme. While Cain has had a few sharp outbursts to the press when they press him on matters he’s not comfortable, it is currently unknown if Cain will spin on the floor and attack bystanders like a berserker if he catches a whiff of Wild Hyacinth perfume or hears “Pop Goes the Weasel,” but if he does, Rick Perry and the Larry-Equivalent Rick Santorum should keep either a tassel or some Limburger cheese on hand to calm him down.

Rick Santorum as LARRY

Like Larry, Santorum has a dazed look, like he’s not completely aware of his surroundings. Yet, he’s there. By no means the most entertaining, it wouldn’t be the same without him. He lingers around, never challenging those around him without incurring massive retaliation… so he keeps quiet most of the time. Of all the candidates, Santorum is the one most likely to accidentally put his paint brush in a sandwich and drink paint like coffee without noticing the difference. That makes him the Larry of this gathering.

Mitt Romney as SHEMP

Of all the Stooges, Shemp had the most professional acting experience, and that seems to be the case with Romney. Shemp’s known as the “thinking man’s Stooge,” and Romney certainly appeals to the intellectual wing of the Republican party. Shemp never really caught on with the rough and tumble slapstick Stooge fans, and Romney definitely hasn’t ignited the imaginations of the rough and tumble base of the GOP. Even so, Shemp was part of the Stooges’ act before they made their short films and, like Shemp, Romney was a GOP candidate for the presidency back in 2008. Yet, when Curly disintegrated and couldn’t perform, Shemp was there. Should Cain fall away, guess who’ll be there… that’s right: Shemp Romney.

John Huntsman as JOE

While there are those that will argue about the merits of Curly vs. Shemp, Joe has few defenders among Stooges fans. He didn’t fit in with the other Stooges and, well, neither has Huntsman. Joe came from a different tradition, like Huntsman, and his style never quite dovetailed with the others. The least popular of all the Stooges, Joe shares a popularity rating in common with Huntsman. He’s a lot funnier on his own. So is Huntsman.

Newt Gingrich as CURLY JOE

Curly Joe came in very late to the Stooges lineup, when they were too old to slap each other around. He appeared in the live-action shorts with the Three Stooges cartoons and in the Stooges feature films. Curly Joe was both an elder statesman of the Stooges and completely irrelevant to what made them successful. That would be Newt Gingrich to a T.

Michele Bachmann as MISS HOPKINS

Incredibly good-looking, but there’s that crazy in the eyes… Both Michele Bachmann and Miss Hopkins (as played by Christine McIntyre, above) could win your heart while breaking your nose. Miss Hopkins is a character in the Stooges short, “Brideless Groom” and first appears around 7:00. But when she opens her mouth and starts talking around 9:57, it’s a massive barrage of crazy, kind of like what we know Bachmann’s capable of. She savages Shemp – kind of like how Bachmann really lets Romney have it – and finally lands a haymaker that sends Shemp reeling. Kind of a metaphor for how Bachmann, darling of many in the GOP base (at one time) acted as the base’s agent to show the door to Mr. Romney. Feisty, attractive, confused, and crazy, our Miss Hopkins is definitely the archetype for Michele Bachmann.

Ron Paul as EMIL SITKA

What’s this? You’ve never heard of Emil Sitka? Well, if you only watched the news, you’d know Ron Paul’s face, but you’d never hear his name. Nevertheless, Sitka appeared with the Stooges in so many shorts, he was known as “The Fourth Stooge.” He never got full credit as a Stooge, however. Paul has been in many political contests and has faithfully supported the Republican party but, guess what… he’s never gotten full credit as a presidential candidate. In the short posted above for Ms. Bachmann, Emil Sitka appears around 11:30 and soon utters his most famous tagline, “Hold hands, you lovebirds!” He repeats it over and over, in fact. Kind of like how Paul repeats “Audit the Fed!” over and over. That’s about all we remember either of these kindly old gents ever saying.

Well, that’s the GOP roundup. In my research for this article, I reviewed the full version of “Brideless Groom” and realized that it’s a powerful, powerful metaphor for the GOP presidential nomination contest. I plan to write a full breakdown of the symbolism and prescience of that short in a follow-up article.

Thank you for your time and nyuk nyuk nyuk,

Dean Webb