still more and bigger crises

Martin Wolf:

The most important point is that where we are now is intolerable. Today’s concentrations of state-insured private wealth and power must surely go.

At present, the official sector believes tighter regulation, particularly higher capital requirements, can contain these risks. But this is likely to fail. If it does, we will need to be radical. Yet narrow banking would still not be enough. We would need to rule out quasi-banking. Otherwise, we would soon return to the world of fragility and bail-outs. Funds that replace banks would have to pass the risks directly on to the outside investors.

The authorities will not entertain such radical ideas right now. But the financial system is so inherently fragile that radical reform cannot be pronounced dead. It is only dormant.

let 'em go bust

Wired Science regularly runs informative articles telling us what’s in products, what’s safe, what’s harmful, what’s silly profiteering. For example, analyzing superfoods.

Salon’s The Good Life by Bill Bunn adds to our knowledge:

What’s really in your shampoo?
Sure, a couple ingredients clean your hair.
But the rest are a veritable toxic dump on your head.

Do you recall mainstream media taking the trouble to protect us? Phooey on them.

blame no hoard but shopping

A child born in the U.S. or Europe will contribute thousands of times more CO2 emissions than a poor child in Africa.

Population growth and CO2 emissions from 1980 to 2005:

Rising populations in sub-Saharan Africa and other poor regions have had a negligible impact on global warming.

fixing junk equipment

two and a half cents per kilowatt-hour

We pay five times that for electricity.

For instance, in 2008 coal costs between 7 and 14 cents per kWh; natural gas between 7 and 10 cents per kWh; and wind between 4 and 9 cents per kWh. In terms of new nuclear, some estimates put its price at 15 cents per kWh or more.

the video void

A whopping 25 billion online videos were watched during the month of August — in the United States alone.

laugh out loud: You have the power to change history. But first, check out this really cute baby video!

In any given week, the most-watched videos are nearly always void of meaningful information.

Nearly 82 per cent of all U.S. Internet users watched videos online in August, with an average viewing time amounting to 9.7 hours, according to industry tracker comScore. The duration of a typical video was slightly less than four minutes.

our junk theology of us

  1. Behavioral economics, a hybrid of psychology, is in. The efficient market hypothesis is widely viewed as an embarrassing example of primitive fundamentalism.
  2. To state the bloomin’ obvious, unless the private sector expands to create jobs and generate tax revenues, we’re going to be considerably poorer for years.
  3. But how on earth can that happen if the state has to employ a growing army of officials to prevent the private sector ripping us off?

This essay asks a British-bent but critical question: “If markets don’t work, what will?

UK’s Robert Peston is asking us all if we want to revive an intrusive government we knew years ago as we try to repair the hands-off and weak government that George Bush and Schwarzenegger and Palin, for example, with decades of free-market pundits were proud to starve and destroy.

In an earlier post, toward reasonably optimal behavior, I pointed out that our belief in so-called free markets and embedded game theory is both unfounded and lazy. I’ve resented this jingoism since Reagan and I’m sad for its effects.

The foist of laissez-faire arrived in the stagflating late 1970s and grew through the 80s while we first shrunk under multinational globalism, the still unsolved specter of exponential human demand, and the great challenge of hoping to invigorate both leadership and ourselves.

But as Greenspan apologizes for over reliance on the false magic of self-interest and we see that few if any had tested Milton Friedman’s assertions that trial and error is our best government, we’re proving what we’ve known, that nests of fools and thieves are entrenched in business and politics, too many of whom we’ve elected.

What’s next? We’ve seen tremendous innovation and growth. I believe more the result of the generations than witty policies – increased knowledge and ease of relations, building out finance and services, checking incessant and arrogant pathology, pushing ourselves forward in myriad projects that we encourage each other to fruit, and as well, due to Volker perhaps, firm monetization of economies without a staid oligarchy or cruel presidium.

Giving credit where it’s due, agencies and officials told to back off have been more agreeable over the years than post-war, except the local armies dressed as police or those roping unkempt poverty. Did we know smiles and handshakes were hiding ineffectual oversight and backroom alliances?

We must re-purpose.

We must repair sectors we’ve neglected to oversee. We know for certain we will restrain trickery and massive exploitation. Stop the rude lie that the weak will not hurt us if we ignore them. It’s not only government that can do that. A better tolerance is needed and much better intolerance too.

Robert Peston wants a revivalist turn, I think, criticizing one bench while sitting too close to its sister. I’d want vital change instead, where we realize we can steer government, we own it, to execute important duties without daring in any way to harm its people or waste the nation’s holding.

I think we’ll continue to purge unpublic representatives coddling libertine and vicious contributors, including the tiny fiefdoms nearby. Second we will at least re-set broad rule making and grant civil power to intervene. But this time, with immediate transparency easily obtained by the public. We want to bite fraud and crime but watch our watchdogs.Current media truly failed here.

It’s not just Wall Street on my mind. Food safety is an example of weakened agents overdue for a lift. Favors and habits in our military budget? The list is too long, but there’s our prize.

Another Franklin Roosevelt stuck in this 21st Century crash might hire millions of us to fix our ragged institutions, photographers and artists coming along to offices and halls. We’ll sweep away what’s crooked in our generation as the prairie was planted. No new Hoover Dam, but we’ll vacuum away nonsense. We’ll swat those taking comfort from the weary. We’ll audit the execs at the golf course.

Our trust will return. With or without that, it’s our future and we make it.

The Animal Spirits EconomyThe global financial crisis has made it painfully clear that powerful psychological forces are imperiling the wealth of nations today. From blind faith in ever-rising housing prices to plummeting confidence in capital markets, “animal spirits” are driving financial events worldwide. In this book, acclaimed economists George Akerlof and Robert Shiller challenge the economic wisdom that got us into this mess, and put forward a bold new vision that will transform economics and restore prosperity.

Akerlof and Shiller reassert the necessity of an active government role in economic policymaking by recovering the idea of animal spirits, a term John Maynard Keynes used to describe the gloom and despondence that led to the Great Depression and the changing psychology that accompanied recovery.

Like Keynes, Akerlof and Shiller know that managing these animal spirits requires the steady hand of government–simply allowing markets to work won’t do it. In rebuilding the case for a more robust, behaviorally informed Keynesianism, they detail the most pervasive effects of animal spirits in contemporary economic life–such as confidence, fear, bad faith, corruption, a concern for fairness, and the stories we tell ourselves about our economic fortunes–and show how Reaganomics, Thatcherism, and the rational expectations revolution failed to account for them.

man seeks deportation

Man can’t afford USA: An illegal immigrant entered a police station and asked to be deported because he could no longer make ends meet in America.

New Income Inequality Data: Surprising and Frightening

Experts had anticipated that the declines in income of the rich would lead to a reversal in this group’s ever–widening share of our national income. Instead, the Census reported that the 2008 income losses by the top 10% of Americans were offset by larger losses among middle class and poorer Americans.

to interpret a plight

Not all the unemployed found careers in literature, music, and film, of course, but, even for those who didn’t, the idea of choosing to do something other than make money—the idea of being like Cary Grant—was more than a rationalization or a fantasy.

Jeff McMahon at Scorched Earth:

…and hope that it truly is the case that the mass of men no longer live lives of quiet desperation.

I feel united in work and art myself, but I worry about generalizing that feeling for two reasons: 1) I feel I’ve gotten there by veering left whenever the traditional career path indicated a right turn ahead, sometimes at great financial cost (turning down editing jobs, for example, in order to keep writing), and 2) It might be a trick of capitalism.

I recall seeing some very smart person lecture on the Bourgeois Bohemian phenomenon, suggesting that people were buying drafting tables or desks called “The Walden” at Pottery Barn or Crate & Barrel because the capitalism of the information age wants us to believe our work is our art so that we work happily all day and night.

So, let’s hope but be wary.

applying payments

Robert Oak:

Now, if only the Federal Reserve and Congress would ban the new big brother game of behavioral profiling.

Literally, credit card companies are lowering credit limits, raising your rates based on if you shop at Wal-Mart or go to a bar too much. Now, not only is this a massive invasion of privacy, we’re sorry but credit scores should be limited to…..uh, how well you pay your bills and that’s it!

Datamining 1984

the neo-conservative firmament

The side he picked in economics was an odd one. A 1975 issue featured a pair of articles: “The Social Pork Barrel” launched the career of a young Michigan Congressman, David Stockman, who would become budget director for Ronald Reagan; and “The Mundell-Laffer Hypothesis – a New View of the World Economy,” by Wall Street Journal editorial writer Jude Wanniski, introduced the world to economists Arthur Laffer and Robert Mundell, and their newly-invented brand of ‘supply side economics’.

Widely known as ‘the Godfather’ of neo-conservatism, Irving Kristol explained:

Among the core social scientists around The Public Interest there were no economists…. This explains my own rather cavalier attitude toward the budget deficit and other monetary or fiscal problems.

The task, as I saw it, was to create a new majority, which evidently would mean a conservative majority, which came to mean, in turn, a Republican majority – so political effectiveness was the priority, not the accounting deficiencies of government

For power, stump lies.

busy being stupid

Professor John Schellnhuber of the Potsdam Institute for Climate Impact Research, one of the key advisors to the German government, suggested that North Americans know less about climate change than just about anyone else in the world.

Scientific illiteracy is not a badge of honor.

Yet there’s already a great shift occurring. Recent market analysis show that biomass-sourced fuels are expected to take 25% of the US gasoline market by 2030.

FYI, the White House policy:

The science is increasingly clear that holding the global average temperature increase to no more than 2 degrees Celsius is likely to be essential for keeping climate change to a manageable level. It is likewise clear that having a good chance of meeting this goal requires that global emissions of carbon dioxide and other heat-trapping pollutants should level off by about 2020 and shrink thereafter to something like 50 percent of the current levels by 2050, with continuing declines after that. Economic and political realities, including recognition that emissions from the industrialized countries have caused the largest part of the problem up until now, suggest that the United States and other industrial nations should take the lead in this effort, reducing our emissions to well below current levels by 2020.