Paul Hunt performs as Paulette Huntenova in 1988. I suspect some will call this sexist, but I see this guy as poking fun at himself. It's really quite good.
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Monday, July 09, 2012
Roubini: 2013 may be worse than 2008 economic crisis
Paul Krugman has already been saying we're in a depression and Nouriel Roubini is not sounding very confident in the future either. What was too-big-to-fail in 2008 is now even bigger and the banking problems remain. Because the bankers could not control themselves and have continued to shower themselves with riches, it won't be possible politically to bail them out the next time.
While pessimistic, this is an interview that you want to watch. The problems that we're facing are not pretty and any answers that we have had in 2008 are no longer possible now. Read the rest of this post...
Why the U.S. Justice Dept is investigating the LIBOR scandal
This LIBOR scandal is both deep and wide. Wide enough to reach both sides of the Atlantic.
Why both sides, you ask? Good question, since LIBOR stands for the London Interbank Offered Rate. We're still digging to understand, we at La Maison, but the two bits below may help.
(By the way, you may find our earlier piece — "LIBOR for Laymen" — helpful to get you started. It explains the basics.)
■ Robert Reich says this in The Guardian (my emphasis and some reparagraphing throughout):
One involves self-dealing — the banks were rigging LIBOR so derivatives deals they were involved in would be profitable. This amounts to being the both the pitcher and the umpire in a baseball game.
The other involves LIBOR as a benchmark for hundreds of trillions in other deals — loans, mortgages and contracts. If the rates are wrong, people who should have been paid a higher interest were cheated. As I said earlier, this is fraud, and the victims are world-wide, including in the U.S.
One more piece of information from Reich:
GP
To follow or send links: @Gaius_Publius
Read the rest of this post...
Why both sides, you ask? Good question, since LIBOR stands for the London Interbank Offered Rate. We're still digging to understand, we at La Maison, but the two bits below may help.
(By the way, you may find our earlier piece — "LIBOR for Laymen" — helpful to get you started. It explains the basics.)
■ Robert Reich says this in The Guardian (my emphasis and some reparagraphing throughout):
There are really two different Libor scandals, and both are about to hit America's shores. The first has to do with a period just before the financial crisis, around 2007, when Barclays and, presumably, other major banks submitted fake Libor rates lower than the banks' actual borrowing costs in order to disguise how much trouble they were in. This was bad enough. Had American regulators known then, they might have taken action earlier to diminish the impact of the near financial meltdown of 2008.Note: Two scandals.
But the other scandal is worse, and is likely to get the blood moving even among Americans who assume they've already seen all the damage Wall Street can do. It involves a more general practice – starting around 2005 and continuing until … who knows, it might still be going on – to rig the Libor in whatever way necessary to assure the banks' bets on derivatives would be profitable. This is insider trading on a gigantic scale. It makes the bankers winners and the rest of us – whose money they've used to make their bets – losers and chumps.
Obviously, Libor is not limited to the UK. As the benchmark for trillions of dollars of loans worldwide – mortgage loans, small-business loans, personal loans – it affects the most basic service banks provide: borrowing money and lending it out. People put their savings in a bank to hold in trust, and the bank agrees to pay interest on those. And people borrow money from the bank and agree to pay the bank interest.
One involves self-dealing — the banks were rigging LIBOR so derivatives deals they were involved in would be profitable. This amounts to being the both the pitcher and the umpire in a baseball game.
The other involves LIBOR as a benchmark for hundreds of trillions in other deals — loans, mortgages and contracts. If the rates are wrong, people who should have been paid a higher interest were cheated. As I said earlier, this is fraud, and the victims are world-wide, including in the U.S.
One more piece of information from Reich:
Wall Street will almost surely be implicated in the scandal. The biggest Wall Street banks – including the giants JP Morgan Chase, Citigroup and Bank of America – are likely to have been involved in similar manoeuvres. Barclay's couldn't have rigged the Libor without their witting involvement.■ I'll have more on this scandal, including a list of which banks are LIBOR banks. These three are among them:
The reason they'd participate in the scheme is the same reason Barclay's did – to make more money.In fact, Barclays' defence has been that every major bank was fixing Libor in the same way, and for the same reason.
- The Bank of America
- JP Morgan Chase
- Citibank, NA
GP
To follow or send links: @Gaius_Publius
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Verizon says it can edit your access to Web sites like the newspaper edits content
So, basically, Verizon is saying that it can pick and choose which Web sites Verizon broadband customers can access and which it can't, just like a newspaper picks and chooses which articles, or letters to the editor, it publishes.
Which is an interesting argument since, as Jeff Jarvis notes, that means Verizon is saying that it owns the content of every Web site a Verizon customer accesses just as a newspaper owns the copyright on everything it publishes in the paper.
Huh?
What's next? Does Verizon Wireless have the right to edit my phone conversations in the same way a newspaper edits itself? Or does that only apply to VOIP phone calls done over a Verizon Internet connection? And does Verizon own the content of my phone calls?
Americans pay an oscene price for their broadband connections as compared to Europe. As Chris has noted before, in France you can get a much faster connection than we have here in the US, and get cable TV and phone service (with free calls at home and to dozens of countries), for about 30 euros a month (or $36). And on top of it, we have to deal with telecom companies that think they own us.
It is interesting that Verizon is so interested in controlling my Internet access when it can't even control my cell phone. Verizon says it has no way to block the telemarketer who calls my iPhone several times a day from an unknown number and then hangs up as soon as I answer. Interesting that there's "no way" to block the person, but I can simply jailbreak my phone and then get an app that can - what? - block "unknown" callers. Read the rest of this post...
Which is an interesting argument since, as Jeff Jarvis notes, that means Verizon is saying that it owns the content of every Web site a Verizon customer accesses just as a newspaper owns the copyright on everything it publishes in the paper.
Huh?
What's next? Does Verizon Wireless have the right to edit my phone conversations in the same way a newspaper edits itself? Or does that only apply to VOIP phone calls done over a Verizon Internet connection? And does Verizon own the content of my phone calls?
Americans pay an oscene price for their broadband connections as compared to Europe. As Chris has noted before, in France you can get a much faster connection than we have here in the US, and get cable TV and phone service (with free calls at home and to dozens of countries), for about 30 euros a month (or $36). And on top of it, we have to deal with telecom companies that think they own us.
It is interesting that Verizon is so interested in controlling my Internet access when it can't even control my cell phone. Verizon says it has no way to block the telemarketer who calls my iPhone several times a day from an unknown number and then hangs up as soon as I answer. Interesting that there's "no way" to block the person, but I can simply jailbreak my phone and then get an app that can - what? - block "unknown" callers. Read the rest of this post...
Nice to see the FDA whoring for Big Pharma
There really is no other way to describe this outright lie on the federal Food and Drug Administration Web site that a reader just found:
These aren't crazy knock-off drugs from Timbuktu. They aren't stolen formulas being reproduced in the developing world. They're drugs made by the same companies, often sold under the same names, and those same companies agree to sell the same drugs for significantly less in Europe because they know they can make up the difference, and then some, by gouging Americans at home (I have been told this by numerous sources on the inside).
We are subsidizing low drug prices in Europe in order to pad the profits of American drug companies. You are paying what amounts to a tax on your prescription drug purchases in order to help Europeans buy cheaper drugs. How do you like them apples?
The FDA doesn't tell you any of that. They don't tell you that one of the main reasons you can't buy cheaper drugs in Europe and Canada and bring them home is because the FDA is in cahoots with Big Pharma in order to line the pockets of Big Pharma at the expense of every day Americans. Funny how that never made it into their cute little "explanation" as to why they don't want you buying cheaper drugs abroad.
It's is beyond offensive - I'd dare say criminal - that the FDA of a Democratic administration is spouting GOP pro-Pharma propaganda. Read the rest of this post...
Is it legal for me to personally import drugs?Excuse me, but I've been traveling to France for years and they have THE SAME EXACT DRUGS MADE BY THE SAME EXACT PHARMACEUTICAL COMPANIES SELLING FOR 1/3 TO 1/5 THE COST THEY CHARGE AMERICANS FOR THE EXACT SAME THING. Period. Advair, sold in both countries by same company, is 1/5 the cost in France. Singulair, 1/4 the price. Pulmicort, 1/3.
In most circumstances, it is illegal for individuals to import drugs into the United States for personal use. This is because drugs from other countries that are available for purchase by individuals often have not been approved by FDA for use and sale in the United States. For example, if a drug is approved by Health Canada (FDA’s counterpart in Canada) but has not been approved by FDA, it is an unapproved drug in the United States and, therefore, illegal to import. FDA cannot ensure the safety and effectiveness of drugs that it has not approved.
FDA, however, has a policy explaining that it typically does not object to personal imports of drugs that FDA has not approved under certain circumstances, including the following situation:
The drug is for use for a serious condition for which effective treatment is not available in the United States;
There is no commercialization or promotion of the drug to U.S. residents;
The drug is considered not to represent an unreasonable risk;
The individual importing the drug verifies in writing that it is for his or her own use, and provides contact information for the doctor providing treatment or shows the product is for the continuation of treatment begun in a foreign country; and
Generally, not more than a 3-month supply of the drug is imported.
These aren't crazy knock-off drugs from Timbuktu. They aren't stolen formulas being reproduced in the developing world. They're drugs made by the same companies, often sold under the same names, and those same companies agree to sell the same drugs for significantly less in Europe because they know they can make up the difference, and then some, by gouging Americans at home (I have been told this by numerous sources on the inside).
We are subsidizing low drug prices in Europe in order to pad the profits of American drug companies. You are paying what amounts to a tax on your prescription drug purchases in order to help Europeans buy cheaper drugs. How do you like them apples?
The FDA doesn't tell you any of that. They don't tell you that one of the main reasons you can't buy cheaper drugs in Europe and Canada and bring them home is because the FDA is in cahoots with Big Pharma in order to line the pockets of Big Pharma at the expense of every day Americans. Funny how that never made it into their cute little "explanation" as to why they don't want you buying cheaper drugs abroad.
It's is beyond offensive - I'd dare say criminal - that the FDA of a Democratic administration is spouting GOP pro-Pharma propaganda. Read the rest of this post...
Scary photo of great white following guy on kayak
This story is my nightmare. From the Boston Globe, which has the chilling photo.
Walter Szulc Jr. was kayaking about 50 yards off Nauset Beach in Orleans on Saturday when he noticed a man on a standup paddleboard pointing at something just behind him.Read the rest of this post...
When he turned to look, it was every swimmer’s worst nightmare: a great white shark.
He said he could see the fin coming out of the water and the long shadow, but not the head. That’s because, he said, the head was underneath him.
I've cut my asthma Rx dose in half until I get to France because it's just too expensive
What does it say about our country when I have to cut my asthma meds in half - I'm rationing them against the advice of my doctor - because they're just too expensive?
You see, as I've written before, my CareFirst Blue Cross Blue Shield self employed health insurance has an annual limit on prescription meds - they only cover $1500 a year (which isn't all that much if you have any kind of chronic illness like asthma - my monthly asthma meds are about $500).
And as I've mentioned before, Blue Cross came up with the neat idea of never increasing the amount of coverage that I have for prescription meds - they covered $1500 a year back in 1999 when my premiums were around $150 a year, and they still only cover $1500 a year now that my premiums have tripled 13 years later. And in twenty years, Blue Cross will still only cover $1500 a year, even though that amount of money will be next to worthless because of inflation.
And because of my asthma combined with my cataract surgery (where the eye drops alone cost over $100 a pop, and I needed at least four to six of them), I'm perilously close to my $1500 limit, if I haven't passed it already.
So, rather than take the asthma med dosage that my doctor told me to take, I've cut my one lead medicine in half until I get to France - otherwise I'd have run out of it a week or two ago. Why cut it in half? Because it costs around $200 a month here in the US, and in France I should be able to buy the same medicine, made and sold by the same pharmaceutical firm, for 1/3 to 1/5 the price.
Why are medicines so cheap in France? Not because the government subsidizes the drug - rather, because the pharmaceutical firms agree to charge the French 1/3 to 1/5 of what they charge Americans.
In other words, Americans are subsidizing "socialist" health care in Europe.
So, I'm risking my asthma (which my doctor would tell you is risking my life) because I'm too cheap to keep paying usury prices for drugs in this country. I'll simply go to France on Wednesday, visit my local doctor (who agreed to squeeze me in hours after I land even though she didn't have an opening - "rationing," my ass) and I'll buy the same drug for a fraction of what we pay here.
Health Care Reform changes all of this. It outlaws annual and lifetime limits, like my offensive $1500 annual limit from Blue Cross. If the Republicans get their way, Health Care Reform will be repealed, and my annual limit - and my health care rationing - will continue until I don't.
Talk about your death panels. We already have them, and they're self-imposed. Best health care in the world, my ass. Read the rest of this post...
You see, as I've written before, my CareFirst Blue Cross Blue Shield self employed health insurance has an annual limit on prescription meds - they only cover $1500 a year (which isn't all that much if you have any kind of chronic illness like asthma - my monthly asthma meds are about $500).
And as I've mentioned before, Blue Cross came up with the neat idea of never increasing the amount of coverage that I have for prescription meds - they covered $1500 a year back in 1999 when my premiums were around $150 a year, and they still only cover $1500 a year now that my premiums have tripled 13 years later. And in twenty years, Blue Cross will still only cover $1500 a year, even though that amount of money will be next to worthless because of inflation.
And because of my asthma combined with my cataract surgery (where the eye drops alone cost over $100 a pop, and I needed at least four to six of them), I'm perilously close to my $1500 limit, if I haven't passed it already.
So, rather than take the asthma med dosage that my doctor told me to take, I've cut my one lead medicine in half until I get to France - otherwise I'd have run out of it a week or two ago. Why cut it in half? Because it costs around $200 a month here in the US, and in France I should be able to buy the same medicine, made and sold by the same pharmaceutical firm, for 1/3 to 1/5 the price.
Why are medicines so cheap in France? Not because the government subsidizes the drug - rather, because the pharmaceutical firms agree to charge the French 1/3 to 1/5 of what they charge Americans.
In other words, Americans are subsidizing "socialist" health care in Europe.
So, I'm risking my asthma (which my doctor would tell you is risking my life) because I'm too cheap to keep paying usury prices for drugs in this country. I'll simply go to France on Wednesday, visit my local doctor (who agreed to squeeze me in hours after I land even though she didn't have an opening - "rationing," my ass) and I'll buy the same drug for a fraction of what we pay here.
Health Care Reform changes all of this. It outlaws annual and lifetime limits, like my offensive $1500 annual limit from Blue Cross. If the Republicans get their way, Health Care Reform will be repealed, and my annual limit - and my health care rationing - will continue until I don't.
Talk about your death panels. We already have them, and they're self-imposed. Best health care in the world, my ass. Read the rest of this post...
Global warming, health care reform, GOP lies, and American ignorance
I guess it's good news that an increasing number of Americans believe in global warming. But come on. It takes some foul weather for Americans to start believing in science again? It really shouldn't matter what the weather is like. Either science and facts exist or they don't - we respect them or we don't.
Check out the second paragraph that I quote below. Only one third of Americans believe that “most scientists think global warming is happening,” even though that statement is true.
This reminds me of the Newsweek story we posted in 2010 that most Americans oppose health care reform until you tell them what's in it, then they love it. Sometimes we really are a decidedly un-intelligent, un-factually-based, people. And interestingly enough, in both circumstances it's GOP lies, and public ignorance, that give the Republicans the edge in beating (down) science.
It's a larger problem our nation faces, that the Republican party has chosen to delegitimize science in the public's eye. The GOP has done a bang up job destroying the credibility of the media (and the left, sadly, helped) - sadly, because the media was one of the few gatekeepers of truth that we had left. Another key gatekeeper that seems to often contradict the GOP is "science." How do you impose an evangelical agenda in schools when teachers keep teaching the fact of evolution?
The GOP survives by negating facts with lies (death panels comes to mind - it was the GOP's most effective argument against health care reform, a proven lie). It's why the GOP started Fox News. Not just to usurp the mainstream media's fact-checking authority, but also to create their own facts based on lies.
Putting aside for a moment what it says about a political party that the best way it can win is by lying, what does it say about a country that the lies actually work?
Via Slate:
Check out the second paragraph that I quote below. Only one third of Americans believe that “most scientists think global warming is happening,” even though that statement is true.
This reminds me of the Newsweek story we posted in 2010 that most Americans oppose health care reform until you tell them what's in it, then they love it. Sometimes we really are a decidedly un-intelligent, un-factually-based, people. And interestingly enough, in both circumstances it's GOP lies, and public ignorance, that give the Republicans the edge in beating (down) science.
It's a larger problem our nation faces, that the Republican party has chosen to delegitimize science in the public's eye. The GOP has done a bang up job destroying the credibility of the media (and the left, sadly, helped) - sadly, because the media was one of the few gatekeepers of truth that we had left. Another key gatekeeper that seems to often contradict the GOP is "science." How do you impose an evangelical agenda in schools when teachers keep teaching the fact of evolution?
The GOP survives by negating facts with lies (death panels comes to mind - it was the GOP's most effective argument against health care reform, a proven lie). It's why the GOP started Fox News. Not just to usurp the mainstream media's fact-checking authority, but also to create their own facts based on lies.
Putting aside for a moment what it says about a political party that the best way it can win is by lying, what does it say about a country that the lies actually work?
Via Slate:
These generalizations are based on a series of Yale University studies over the last few years. According to Yale, Americans’ belief in global warming fell from 71 percent in November 2008 to just 57 percent in January 2010 but rebounded to 66 percent by this spring. The findings mirrored those of the National Survey of American Public Opinion on Climate Change, which showed belief in global warming bouncing from 65 percent in 2009 to 52 percent in 2010 and back up to 62 percent this year.Read the rest of this post...
What accounts for the rebound? It isn’t the economy, which has thawed only a little. And it doesn’t seem to be science: The percentage of respondents to the Yale survey who believe “most scientists think global warming is happening” is stuck at 35 percent, still way down from 48 percent four years ago. (The statement remains just as true now as it was then—it’s the public, not the scientists, that keeps changing its mind.)
The Roberts health care reform ruling is no precedent
Not only did the Roberts ruling save healthcare, it has provided endless employment for journalists and legal scholars as they speculate on the 'precedent' set. In the week since, we have been told that the Roberts ruling will stop defunding of planned parenthood, enable states to lower the drinking age and many other projects. And of course we have been told that this is really a victory for the right.
But all this analysis overlooks the rather obvious fact that the far right of the Supreme Court is only going to consider something precedent when it suits their politics. As with 'original intent' (remember that?) the new 'precedent' on the Commerce clause and attaching strings to federal grants is going to prove remarkably flexible. Corporations are people my friend, but not unions.
In their moments of supreme hackery, even the right wing partisan judges recognize what they are. The ruling in Bush vs Gore even has a disclaimer to state that no precedent is set, just in case they might want to reverse the ruling to let a Republican get a recount in the future. Read the rest of this post...
But all this analysis overlooks the rather obvious fact that the far right of the Supreme Court is only going to consider something precedent when it suits their politics. As with 'original intent' (remember that?) the new 'precedent' on the Commerce clause and attaching strings to federal grants is going to prove remarkably flexible. Corporations are people my friend, but not unions.
In their moments of supreme hackery, even the right wing partisan judges recognize what they are. The ruling in Bush vs Gore even has a disclaimer to state that no precedent is set, just in case they might want to reverse the ruling to let a Republican get a recount in the future. Read the rest of this post...
Stiglitz: Much of the financial sector involves "rent-seeking" not production—An essay on rentiers
I put "rent-seeking" in quotes in the headline because it's a special term. The fancy term is "being a rentier" — a renter.
I've written about rent-seeking before, in several places in fact. But this is a place to collect those thoughts in essay form.
What is rent-seeking?
Rent-seeking is one way to make money.
■ If you own land, mine copper (say) from that land, and sell it, you're what is technically called ... "productive." (I know, strange word; take your time learning it.)
■ If you own land that contains the only source of water in the county and you sell "your" water to the drought-stricken everyone-else, you are what is called ... a "leech."
My joke — you're living off of "economic rents" — the special position granted by your ownership of something you didn't create, but stumbled across. (See here for my views of "ownership".)
■ If you stole that land by buying lunch for the state legislature, in return for which they gave you the land by decree, you're a "thief and a leech."
My joke again — you're still a "rentier capitalist," though a corrupt one. Some would call that a Bain Capitalist, or a Wall Street Capitalist. You've done nothing illegal; you win by buying the law.
Keep that term "rent-seeking" in mind, and also that use of the law. This perfectly describes what the bulk of current economic activity is about.
Joseph Stiglitz, who is on a book tour, has some thoughts along these lines. This appeared in a Fox Business interview (h/t economist Mark Thoma; my emphasis):
What characterizes a rent-seeking economy?
I want to tie together a couple of concepts:
1. Being a rentier is much easier than being productive. Being productive involves work, actually making things.
To be a rentier, you just send out Big Louie (sorry, your collection agents) to gather the goods. Sometimes Big Louie is your friend the local sheriff.
2. A rent-seeking economy is not productive. We have been converting to a rent-seeking economy since Reagan started sending U.S. manufacturing overseas and rewarding (with money) people who made money by moving money around (rentiers).
As Kevin Phillips points out, one of the three signs of the end of an empire is the financialization of its economy — its conversion from productivity to "financial services" — extracting fees for moving money around. (See here for Spanish, Dutch and British examples; search on "Phillips".)
3. Rent-seekers, like most Big Money types, use their Money to buy the Law. Which means ...
4. Money and Law are fungible — exchangeable for each other. Who knew?
Actually most of us did; we just haven't said it that way. Shakespeare's version from Hamlet: "Oft 'tis seen, the wicked prize itself buys out the law."
Translation: You can often exchange stolen money for laws and rulings you want.
5. Rented money is called "debt" and debt collection is rent-seeking.
Look at the water example above. You have it; everyone else needs it. You thus have a special position, which you can use to collect income (economic rents) by owning the only source of what people need.
Once rent-seekers have, say, almost all the money in the world, they don't have to make anything else. They just rent out their money.
6. The interest of rent-seekers is to make everyone else pay their debts. Since rent-seekers typically use their money to buy the law, they use their money to make debt and bankruptcy laws most favorable to them.
What's wrong with that? This ...
7. When an economic system is clogged with too much personal debt, the whole system stagnates, producing a stagnant economy and often, a demand-driven depression.
Why? Think; what happens when everyone is paying off debt and no one is buying stuff? Answer: At best, nothing happens; the economy stagnates. At worst, a downward spiral of job loss and depressionary price collapse (deflation).
Or don't think: just look out the window. You're watching the milder form of what happens — a debt-clogged system in which little economically is happening. (This is why public debt has to take over for personal debt, by the way, but that's another discussion.)
8. In a system clogged by personal debt, the political Bigs — the Obamas, the Bidens and the Clintons — have to choose between the interests of the rentiers and the interests of, say, everyone else in the country.
Mostly, political Bigs choose the interests of their paymasters.
9. Thus my term — Rentier Rebellion — a political conflict in which rentiers use the political Bigs to put the squeeze on everyone else.
It kills the system, but hey ... fortunes of war, as they say.
How do rentiers win?
Let's summarize. Anyone can win at the rentier game. All it takes is:
Don't lose sight of that last requirement — no conscience. The condition of "no conscience" can be defined as "treating other people as things to be used." (That actually is a good working definition.)
Once you breed a ruling class dominated by Trumpism (my term) — people whose only goal is to bend the world to their will, as exemplified in Trump's first book — you really are ruled by the conscienceless.
What can you do? What one always does before the last battle is lost — resist.
It's the only way to stay here and stay sane.
My rented thoughts,
GP
To follow or send links: @Gaius_Publius
Read the rest of this post...
I've written about rent-seeking before, in several places in fact. But this is a place to collect those thoughts in essay form.
What is rent-seeking?
Rent-seeking is one way to make money.
■ If you own land, mine copper (say) from that land, and sell it, you're what is technically called ... "productive." (I know, strange word; take your time learning it.)
■ If you own land that contains the only source of water in the county and you sell "your" water to the drought-stricken everyone-else, you are what is called ... a "leech."
My joke — you're living off of "economic rents" — the special position granted by your ownership of something you didn't create, but stumbled across. (See here for my views of "ownership".)
■ If you stole that land by buying lunch for the state legislature, in return for which they gave you the land by decree, you're a "thief and a leech."
My joke again — you're still a "rentier capitalist," though a corrupt one. Some would call that a Bain Capitalist, or a Wall Street Capitalist. You've done nothing illegal; you win by buying the law.
Keep that term "rent-seeking" in mind, and also that use of the law. This perfectly describes what the bulk of current economic activity is about.
Joseph Stiglitz, who is on a book tour, has some thoughts along these lines. This appeared in a Fox Business interview (h/t economist Mark Thoma; my emphasis):
Why does growing inequality matter? ...There's more of Stiglitz and his thoughts at Thoma's site, and in the original interview.
We care about inequality partly because we pay a high price in terms of our economic performance. We care about it also because of the impact that it has in every other aspect of our society -- our democracy, our rule of law, our sense of identity or a land of opportunity -- because we aren't anymore.
The people at the top are not the people who made the most contributions to our society. Some of them are. But a very large proportion (is) simply people I describe as rent-seekers -- people who have been successful in getting a larger share of the pie rather than increasing the size of the pie. ...
[W]e don't understand the extent to which our economy has really become a rent-seeking economy.
How has the financial sector contributed to the growing inequality?
Much of what goes on in the financial sector is this kind of rent-seeking.
The most dramatic example was the predatory lending and the abusive credit card practices, which took money from people on the bottom and the middle often in a very deceptive way, sometimes in a fraudulent way, and moved it to the top....
There is another example where the financial sector has been particularly bad. They pushed for laws like our bankruptcy laws that gave priority to derivatives. In bankruptcy, derivatives got protected and workers and everybody else has to swallow their losses. That encourages more risk-taking.
At the same time, they pushed for laws that made it more difficult for ordinary Americans to discharge their debt and (were) particularly bad for students who can't discharge their debt no matter what happens, no matter how they have been deceived by the schools, even in the event of bankruptcy. ...
What characterizes a rent-seeking economy?
I want to tie together a couple of concepts:
1. Being a rentier is much easier than being productive. Being productive involves work, actually making things.
To be a rentier, you just send out Big Louie (sorry, your collection agents) to gather the goods. Sometimes Big Louie is your friend the local sheriff.
2. A rent-seeking economy is not productive. We have been converting to a rent-seeking economy since Reagan started sending U.S. manufacturing overseas and rewarding (with money) people who made money by moving money around (rentiers).
As Kevin Phillips points out, one of the three signs of the end of an empire is the financialization of its economy — its conversion from productivity to "financial services" — extracting fees for moving money around. (See here for Spanish, Dutch and British examples; search on "Phillips".)
3. Rent-seekers, like most Big Money types, use their Money to buy the Law. Which means ...
4. Money and Law are fungible — exchangeable for each other. Who knew?
Actually most of us did; we just haven't said it that way. Shakespeare's version from Hamlet: "Oft 'tis seen, the wicked prize itself buys out the law."
Translation: You can often exchange stolen money for laws and rulings you want.
5. Rented money is called "debt" and debt collection is rent-seeking.
Look at the water example above. You have it; everyone else needs it. You thus have a special position, which you can use to collect income (economic rents) by owning the only source of what people need.
Once rent-seekers have, say, almost all the money in the world, they don't have to make anything else. They just rent out their money.
6. The interest of rent-seekers is to make everyone else pay their debts. Since rent-seekers typically use their money to buy the law, they use their money to make debt and bankruptcy laws most favorable to them.
What's wrong with that? This ...
7. When an economic system is clogged with too much personal debt, the whole system stagnates, producing a stagnant economy and often, a demand-driven depression.
Why? Think; what happens when everyone is paying off debt and no one is buying stuff? Answer: At best, nothing happens; the economy stagnates. At worst, a downward spiral of job loss and depressionary price collapse (deflation).
Or don't think: just look out the window. You're watching the milder form of what happens — a debt-clogged system in which little economically is happening. (This is why public debt has to take over for personal debt, by the way, but that's another discussion.)
8. In a system clogged by personal debt, the political Bigs — the Obamas, the Bidens and the Clintons — have to choose between the interests of the rentiers and the interests of, say, everyone else in the country.
Mostly, political Bigs choose the interests of their paymasters.
9. Thus my term — Rentier Rebellion — a political conflict in which rentiers use the political Bigs to put the squeeze on everyone else.
It kills the system, but hey ... fortunes of war, as they say.
How do rentiers win?
Let's summarize. Anyone can win at the rentier game. All it takes is:
- All the money in the world;
- A captured political system;
- A "democracy" filled with the easily (and eagerly) fooled;
- A rentier class with no conscience.
Don't lose sight of that last requirement — no conscience. The condition of "no conscience" can be defined as "treating other people as things to be used." (That actually is a good working definition.)
Once you breed a ruling class dominated by Trumpism (my term) — people whose only goal is to bend the world to their will, as exemplified in Trump's first book — you really are ruled by the conscienceless.
What can you do? What one always does before the last battle is lost — resist.
It's the only way to stay here and stay sane.
My rented thoughts,
GP
To follow or send links: @Gaius_Publius
Read the rest of this post...
Cellphone companies got 1.3m requests for subscriber info from law enforcement in 2011
It sounds like a lot - it is a lot - but the second paragraph I quote, below, raises the point that in every crime you'll probably find a perp or a victim who had a cell phone on them. That could make quite useful evidence. It would be nice to see a larger breakdown of just what kind of requests these are, what they're for, etc. NYT:
In the first public accounting of its kind, cellphone carriers reported that they responded to a startling 1.3 million demands for subscriber information last year from law enforcement agencies seeking text messages, caller locations and other information in the course of investigations.
“At every crime scene, there’s some type of mobile device,” said Peter Modafferi, chief of detectives for the Rockland County district attorney’s office in New York, who also works on investigative policies and operations with the International Association of Chiefs of Police. The need for the police to exploit that technology “has grown tremendously, and it’s absolutely vital,” he said in an interview.Read the rest of this post...
Austerity drags down UK economy, again
We keep hearing from the Republicans that austerity is the answer, despite the fact that it doesn't work in a declining economy. There's plenty of evidence that shows austerity is destructive and fails miserably when implemented in such circumstances. This is why the Republicans talk about the need for austerity and mistakenly relate it to a household budget, because it consistently fails when forced into a tanking economy.
The example that the GOP would rather not talk about (though they loved talking about it in the early days) is the UK. It's the classic assault on the middle class and poor that many on the right want to implement in the US. Cut services, increase school fees, privatize and hand over to friends and slash budgets for proper regulation so that the 1% can continue to abuse the system.
How's it all working out for the UK? If you consider rapidly rising unemployment, Wild West banking and bleak economic outlook good, they things are great. The Guardian with more on the crisis from the notable group of lefties at KPMG.
The example that the GOP would rather not talk about (though they loved talking about it in the early days) is the UK. It's the classic assault on the middle class and poor that many on the right want to implement in the US. Cut services, increase school fees, privatize and hand over to friends and slash budgets for proper regulation so that the 1% can continue to abuse the system.
How's it all working out for the UK? If you consider rapidly rising unemployment, Wild West banking and bleak economic outlook good, they things are great. The Guardian with more on the crisis from the notable group of lefties at KPMG.
KPMG partner Bernard Brown said: "The latest recruitment data comes as a sobering reminder that we're far away from a confident economic situation.Read the rest of this post...
"Indeed, with both permanent and temporary appointments declining at the sharpest rate in nearly three years and overall demand for staff showing the weakest growth since the start of 2012, the outlook would appear bleak … A real worry for me is the acceleration in the pace of decline, which suggests this isn't a mere blip.
"If this trend were to continue, there's a very real chance we could hit a 3 million unemployed figure in the UK in the not too distant future."
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