brainiac conspiracy

What, No Dow 36,000,000?

Got a funny feeling we're gonna look back on this quote one day in the future and say, Bingo:

Most of the rally in the stock market since 2009 can be chalked up to the Federal Reserve’s attempt to create a ‘wealth effect’ through higher stock market prices. This only exacerbates the downside risk. Why? The stock market is no longer a lead indicator for the economy. It is instead reflecting Fed manipulation. Pushing the stock market higher while the real economy languishes has resulted in another bubble. (Emphasis added.)

This was something that first crossed my mind not longer after the 1987 stock crash: Namely, that the stock market---and probably the equities markets in general---has become almost completely uncoupled from the regular productive economy since it's now dominated not by individual investors who hold onto their stocks for months or years in search of steady long-term growth, but by institutional rent-seekers who buy and flip stocks in a matter of nanoseconds in the pursuit of billions of pennies and nickels per day. And most of the money that our central bank has pumped back into the financial system via various QE twists has only served to recapitalize the rent-seekers, not the rent-payers (i.e., you and me, and the enterprises we work for and patronize), so that the valuation of stocks/equities nowadays only reflects only how much play money our speculator class has to plow into them, and little else. It's also (among other things) a reason why we can be seeing all these awesome increases in productivity and profits while so many of the underlying fundamentals (real wages and household net worth, for example) still suck. Regardless, this presentation confirms what many of us have feared all along---that the systemic origins of the banking meltdown have only been addressed indirectly, and even then in small part, and that it will take an even bigger disaster before our political leadership decides it's time to get serious about breaking up and rebuilding our unsalvageable financial system. Would love to be proved wrong here, but I am guessing, well, not.

---Baron V

Unentitled

Revisiting a post from yesterday, I fear I might have gotten things a bit bassackwards: That is, that the dishonest debate over "entitlement reform" as it pertains to Social Security et al can be extended to minority voting rights when perhaps the inverse is true. Because when you think about it, the definition of an "entitlement" in conservative argot can be extended to just about anything that we gave black people for free: Not only welfare and food stamps and a ballot on election day, but also free mail delivery and a public education and immunization shots for their kids. I'm sure there are plenty of Cato/Reason types who've really bought into the Markets-Solve-Everything bullshit on purely academic grounds, but if you scratch beneath the surface, I am willing to guess that a lot of the ideological energy that drives the pro-reform/privatization crowd is unconsciously rooted in, and fueled by, a decades-long politics of white resentment, of "us" having to pay taxes to support "those" people. This is just a hunch, mind you . . .

Naturally, when the black people accuse us of picking on them when we want to stop giving them free stuff like a ballot and an education, we accuse them of waging "identity politics." Awesome how that works out!

---Baron V

Good Reason to Go on Living

Highly anticipating that bright sunny day when contrarian bloggers report to their workplace, only to be told by their superiors that their jobs have been eliminated.

---Baron V

Narcissists II

Besides being vain and self-absorbed, they tend to have an overinflated sense of their own self-worth, to the point where anything and everything that ever happens to them is the single most important thing that's ever happened to anyone. And it's probably this delusion that the world revolves around them, more than their preening and self-flattery, that makes them, at heart, such insufferable bores.

---Baron V

Fiscal Responsibility

Deficit reduction? Not a problem:

Spain's recession worsened dramatically at the end of last year as the government made a final austerity push in order to meet deficit targets imposed by Brussels.

GDP fell by 0.8% over the final quarter of 2012, as state spending was reduced and the public sector continued to shed jobs. The figure contrasted with good news on the deficit, which dropped to 6.7% of GDP from last year's 8.9% [...]

Jobs? Also not a problem. Because there aren't any:

According to analysts, Spain's spending plans for this year are based on optimistic growth predictions. Forecasters also believe that Spain's 26% unemployment rate looks set to increase: earlier this week the European commission predicted 27% unemployment for 2013.

Granted, our economy is much stronger, and Austerity American Style™ won't yield the same disastrous outcomes as what's happening in the Eurozone. But it will be harmful, not helpful, to the economy in the short term, and it's maddening to see how virtually everyone in our national political and media establishment have convinced themselves that there is only one sensible policy solution to the deficit problem when ample evidence exists to prove that the problem is largely a fiction and that the policy is needlessly destructive. Then again, consider the fictional problem that these same people where rending their garments over ten years ago, and perhaps their behavior this time around was utterly predictable.

---Baron V

Herd Mentality

It's easy to understand how tribal or political affiliation plays a part in its formation, but you would still think that there would be enough members of our Washington political establishment with reasoning skills that are superior to those of cattle, who would be perceptive enough to see that the serious persons' argumentum ad populum on austerity is bogus, and that what needs to be done to grow the economy, and eventually shrink the deficit, is the exact diametric opposite of what's being recommended. But apparently, you would be wrong because everyone, and I mean everyone, seems to have bought into the tough love bullshit---even the people who we would normally suspect are smart enough to know better.

---Baron V

Our Creators of Wealth

They're having such a difficult time of it these days:

Five years after the crisis, the report’s authors say, it remained unclear whether world financial markets would recover the depth and strength they exhibited in the decades before 2007, a historic year when $11.8 trillion in investments and loans traded hands across borders, and total financial assets in the world equaled 355 percent of world economic output.

For 2012, annual cross-border investments remained below $5 trillion and the total value of financial assets had fallen to 312 percent of global gross domestic product.

Maybe it's just because I'm not an economist, but someone will need to explain to me how you can have assets with a valuation of 300 times the sum of global economic output without having a lot of those assets being, well, worthless. I'm sure there's an easy explanation for this, but for some reason, I don't recall ever having seen one. And yes, I understand how assets can be literally created out of thin air, e.g., when central banks print more money to re-capitalize the banking system, but 300 times? That's a heckuva spread!

But reading the between the lines, it seems that the McKinsey people are bemoaning the fact that their clients don't have as much money to set on fire as they once did, and while that might put a dent in their consulting fees, it's probably a net positive for everyone else. Even more of a net positive would be if we could get back some of the money that their clients stole from us.

Meanwhile, cross-border investments:

Regulators have escalated an investigation into suspicious trades placed ahead of the $23 billion takeover of H. J. Heinz, focusing on a complex derivative bet routed through London, according to two people briefed on the matter [...]

The suspicious options trades were routed through a Goldman Sachs account in Zurich, where laws prevent the firm from sharing details of the account holder’s identity. In a complaint filed two weeks ago, the S.E.C. froze the account of “one or more unknown traders.” A federal judge upheld that freeze last week, a move that will prevent the traders from spending their winnings or moving the money.

The series of well-timed options trades, bets that produced $1.7 million in potential profits, came just a day before Berkshire Hathaway and the investment firm 3G Capital announced that they had agreed to buy the ketchup maker. News of the deal sent the company’s shares, and the value of the options contracts, soaring.

----Baron V

Narcissists

In classical mythology, the original one was some guy who spent his whole life gazing at his image in a reflecting pool, marveling at his magnificence. Nowadays you can find them gazing at each other and marveling each other's magnificence in our national media pool. The times are different, but their degree of self-absorption, and their general lack of purpose, are essentially the same. Too bad because there are some other things in the world that are more deserving of their attention, doncha think?

---Baron V

Hump Night Music Blogging

In classical music, so-called "definitive" recordings of a given work are generally good for maybe 25 years or so, by which time they're replaced in the canon by newer "definitive" versions recorded by the next generation of gifted artistes. This performance, however, fifty years later, is still considered to be pretty much the gold standard for this particular opus, and quite possibly, it always will be. Plus, at the time it gave people a good excuse to bark and bray about American Exceptionalism™, though thankfully, foam fingers hadn't been invented yet.

---Baron V

I Thought The Devil Wore Prada

But apparently, I was mistaken. Not that there's anything wrong with that.

---Baron V

Silver Linings

If the Roberts Court, as everyone seems to expect, strikes down the pre-approval clause of the Voting Rights Act, it might not be the end of the world. Personally, I think the Act needs to be rewritten, anyway, to cover every single state. Let's face it---the Southern states haven't been any worse in their attempts to disenfrachise minority voters than many Northern states have in recent years, and a revised and more expansive Voting Rights Act could resolve a lot of the legal disputes over bogus "voter fraud" challenges that have clogged up court dockets and wrought havoc at polling places nationwide on Election Day. Among other things, a new Act could replace the patchwork of 50 state voter-registration laws with one overarching federal standard, to include (perhaps?) motor-voter and same-day registration. A revised Act could streamline the mishmash of voting-machines and tabulation methods the states use---and which have often been so frequently problematic---by imposing, again, a single standard (like, say, open-source software) to be enforced across all 50 states. A new Voting Rights Act could resolve conflicting state eligibility requirements, and set up uniform standards for recounts and appeals. Frankly, it's hard to think of a single snafu that's occurred on Election Day somewhere in this country that couldn't be remedied by a new Voting Rights Act.

If this all sounds like some nefarious federal power-grab, it really isn't. The Constitution empowers Congress to set pretty much any voting standards it pleases to ensure ballot access for all; it's only delegated much of that authority to the states over the years as matter of courtesy, not as a matter of law. Don't expect to see any movement anytime soon on this, but it wouldn't be a bad idea for Team Democrat to run on sometime.

---Baron V

Entitlement Reform

One element of the various reform initiatives that the "reformers" don't often mention is the fact that most of them see these programs as simply another extension of welfare, which means lazy blah people taking from the makers, and since no civil society can long endure its lesser orders mooching off their betters, they must be administered some tough love, shown their bootstraps, taught lessons in fiscal probity, etc. It may be bullshit, but it's been a pretty effective argument for them!

Better yet, the argument can be extended to just about any policy item where de colored folks be demandin' ta git free stuff from whitey:

There were audible gasps in the Supreme Court’s lawyer’s lounge, where audio of the oral argument is pumped in for members of the Supreme Court bar, when Justice Antonin Scalia offered his assessment of a key provision of the Voting Rights Act. He called it a “perpetuation of racial entitlement.”

The comment came as part of a larger riff on a comment Scalia made the last time the landmark voting law was before the justices. Noting the fact that the Voting Rights Act reauthorization passed 98-0 when it was before the Senate in 2006, Scalia claimed four years ago that this unopposed vote actually undermines the law: “The Israeli supreme court, the Sanhedrin, used to have a rule that if the death penalty was pronounced unanimously, it was invalid, because there must be something wrong there.”

Now that's a strict constructionist argument! Of course, he's citing 7th Century B.C. Mosaic Law instead of founding legal documents of more recent provenance, but hey, he's just following it to the letter--and by the time he and his friends get done trashing the court system, we will probably need to sacrifice sheep and make burnt offerings on the courthouse steps before we're allowed to argue our cases before the Supreme bar of nine robed priest-kings. At least we'll be able to own slaves, though!

---Baron V

Today's Worst Person

Is he stupid? Evil? Both? You decide:

I’m no fan of the way President Obama has handled the fiscal crisis. As I’ve written often, he needs to provide the presidential leadership that guides Congress and the country toward fiscal stability. In my analogy, he should take the steering wheel firmly in hand and drive the car toward the destination where most maps show we need to be heading: namely, a balanced program of cuts in Social Security and Medicare and modest increases in revenue.

Because impoverishing, sickening, and shortening the lifespans of old people is the smart and sensible way to implement an embezzlement scheme posing as a fiscal problem that isn't even a problem.

Why are so many of our serious persons such wretched human beings?

---Baron V

Our Aging Population

It's Exhibit A that the serious persons introduce when arguing that we can't afford our unsustainable entitlements because if we leave them alone and don't do anything to cut them, Social Security and Medicare will consume bigger and bigger chunks of the federal budget and then we won't have money for anything else and then we're all gonna die. It's all bullshit, of course, and it's actually a good reason to lower, not raise, the retirement age to create more openings in the labor pool for younger workers---who, also too, will have much greater earnings potential over their working lives than old-timers living on fixed incomes. Another way to increase that earnings potential even further would be---yes---to raise the minimum wage, which should happen on its own anyway, because if the labor pool is really going to shrink a lot, then the value of labor should increase by a lot: Classical economics, right? Finally, if workplace trends continue, and America's job creators keep delegating increasing units of work to robots, computers, call-center workers in Bangalore, and all the other things that give the Aspen Ideas crowd perpetual wood, productivity gains alone will more than keep up with the demands of the aging population. So, what's to worry over? Short answer: Nothing.

But of course, the serious persons aren't really worried over the solvency of our entitlement programs. They want Medicare/Medicaid to go away because they'll never need it so they don't feel they should have to pay for it, and they want to privatize Social Security so they can have another taxpayer-funded ATM machine to raid for their latest wealth-creation initiatives. Which is to say, they're not so much a group of right-thinking patriots as they're just greedy dishonest bastards. So why are they taken seriously?

---Baron V

Natural Law

It may seem inscrutable to us laymen, but biologists and physicists know that it operates under a series of rationally derived theories---like gravity, for instance, or motion and inertia---and that while it may be fluid and elastic from era to era, it's inevitably orderly, universal, and free from manipulation:

Wall Street junk-bond underwriters, selling debt at a record pace after the securities returned 19 percent last year, say it’s obvious that prices will drop when interest rates rise. So don’t blame the banks.

“Our job first and foremost is to properly structure deals for companies that can support their debt and perform well,” said Craig Packer, the New York-based head of Americas leveraged finance for Goldman Sachs Group Inc. “The interest-rate risk is just a law of nature.”

Riiiiiiiiight.

Meanwhile, laws of nature:

Banks have underwritten $89.6 billion of high-yield debt so far this year, up 36 percent from the same period in 2012, according to data compiled by Bloomberg. Last year’s $433 billion of sales was an all-time high for the asset class and produced about $6 billion in fees, the data show.

They're still peddling boatloads of crap and collecting their fees while hedging against their investors. Worse yet, to an extent the geniuses at our central bank are helping to inflate this bubble by keeping interest rates low, which encourages our overlords to park your money (and it is your money they're playing with since they couldn't afford to be selling more debt if we hadn't recapitalized them) in more highly flammable asset classes. Sure hope that President Rubio is up to the task of putting Humpty Dumpty back together again four years from now---because, obviously, no one in our political leadership class is up to the task at present.

---Baron V

Has it Really Been Ten Years Already?

Sweet Jesus, how time does fly when you're having fun. Seems like only yesterday that the panicked members of our Washington media elite were transmitting utterly baseless claims about yellowcake and uranium tubes and mobile weapons labs, and scolding us who had the temerity to call bullshit on the bullshitters for being no more perceptive than fools and Frenchmen. Good times, no?

Luckily for us, cooler heads prevailed in the intervening years. Americans gradually came to realize that their leaders had lied them into war with an assist from a credulous media corps. Now we have more sober minds in charge of foreign policy, and our once-breathless pundits, now chastened by their failings, have softened up their rhetoric:

The stakes here are enormous. Lebanon teeters, swamped with refugees. Jordan, too, is overwhelmed. The Kurds in Syria’s north may, as they have in nearby Iraq, establish an autonomous zone---and Turkey will not be pleased. The jihadists are on the move, hungry for Syria’s vast store of chemical weapons. Israel watches, nervously. What if Hezbollah gets its hands on chemical weapons?

Well at least he's only peddling hypotheticals now instead of outright falsehoods, which I guess marks some sort of progress. But you would think that people who were so hideously and egregiously wrong on foreign policy ten years ago would think twice about opining on the same subject again. Then again, we've seen, time and again, that there is little if any professional price to be paid for being Wrong About Everything in DC policy circles, so perhaps it's unrealistic to expect him to behave in any other fashion. Still doesn't do much to foster smart policy, though.

---Baron V

Got an Easy Answer For That

Of course not. Because ensuring that poor people stay poor is better for the economy than helping them stay not-so-poor. But because opinions differ, it's time once again to hop on board the hamster wheel and debate more problems that aren't really problems. We Americans are exceptional at that!

---Baron V

Cities Should be For People

Somewhere along the line---the '60s and'70s, generally speaking---some urban planners took a look at their cities' inner cores, which were slowly being depopulated for new developments in the suburbs due to construction of the Interstates, and came up with what seemed like a brilliant fix: make the urban center more car-friendly! Build more parking lots and parking structures! If we do that, the reasoning went, the city would be a much more attractive destination---for work or for play---for all those newly minted suburbanites. Looking back a few decades later at the cities that pursued this land-use strategy most aggressively---Buffalo, Cleveland, Detroit, Hartford---you can guess how well it worked out. I've spent many, many weeks in Detroit, and trust me, you'll never have a problem finding a downtown parking space at any hour of the day. You also won't find many people around, either.

This is all of a piece with a topic previously covered here---namely, that car-centric policies that are aimed at increasing car mobility to relieve congestion generally don't relieve congestion, they only make it worse.

Fortunately, those of us in the Marxist dystopia are slowly weaning ourselves of space-inefficient car hotels and replacing them with more economically vibrant mixed-use developments, and even converting some to pedestrian-friendly open space. Yes, there's always going to be a need for some downtown parking, particularly for high-rises, though funneling cars underground is a more efficient use of capacity since you're not sacrificing developable real estate in the process. But bottom line, huge swathes of land that are set aside for cars are huge swathes of land that people can't live, or work, or recreate in, and which generate poor economic growth while increasing smog and gridlock, and depressing local property values.

---Baron V

All About The Grift

These "battle for the soul of the GOP" missives that our DC commentariat routinely regurgitate never fail to get a rise out of me because of how utterly clueless they are. Because the only thing that Republicans are fighting about now, and have ever fought about, is over spoils. The squabble could be over a fundraising pipeline, or a lobbying job, or a guest slot on Fox, or a think-tank sinecure, or some political appointment with lifetime job security---but whatever form it takes, it's all about the wingnut welfare for these people. That's all they've ever really cared about, and they have been that way, like, forever.

---Baron V

Today's Worst Person

Barack Obama:

None of us will get 100 percent of what we want. Democrats, they've got to make some tough choices too. Democrats like me, we've said we're prepared to make some tough cuts and reforms, including to programs like Medicare.

Please, somebody make it stop. I mean, it's just insane how unanimous the sentiment in Washington is over the wisdom of big spending cuts to solve a deficit problem that isn't even a problem in the first place, and how the only real points of contention between the warring factions are over how massive the cuts will need to be, and whose oxen will get gored the most, when what's really needed is not more cuts and less spending, but more spending. And lots of it, now. How much more? This much at least.

---Baron V