03 Economy – Page 218 – Public Intelligence Blog

Phi Beta Iota: We first displayed a post on the US cheating others with gold wrapped around tungsten on 18 November 2009, at Journal: Fake Gold Bars from China to India, Made in the USA–Federal Reserve and Bank of NY Accused–Meanwhile, Prison Planet and Bullion Vault Say No. The story is now resurfacing, and in the course of looking it over (with some skepticism, but confident that the matter has not been properly investigated by the US Government which is evidently culpable on multiple fronts.

Is the Dollar “Good as Tungsten”? (FOFAO,November 15, 2009)

This is the best overall summary we have found, with devastating looks at Larry Summers' past published speculation on how manipulating the gold price downwards could improve the value of Treasury issues, the connections with Alan Greenspan, Robert Rubin–it all hangs together and is elegantly brought together.

2010/02/102010/02/11

Journal: Your car computer may kill you

03 Economy, IO Sense-Making

By John C. Dvorak

BERKELEY, Calif. (MarketWatch) — As more research is done into the recall of certain vehicles made by Toyota Motor Corp., the more likely it is that the sudden-acceleration phenomenon due to supposedly faulty gas pedals may actually be a software glitch.

Phi Beta Iota: The US Government has never taken electronics as seriously as the Soviet Union or more recently China and India (and probably Russia and Brazil). Soviet emission standards were known in the 1980's to be ten times tougher than ours. Our lack of code documentation was known to be a major problem in the 1980's, and in the 1990's the USAF and CIA both knew that our drone communications could be hacked easily. Now we find out that car computers (not just Toyota, all car computers–in fact all computers that are not subject to open source software safeguards)–can kill us. Why is this not a surprise?

2010/02/10

Journal: Approaching Economic Disaster on Epic Scale

03 Economy, 08 Wild Cards, 10 Transnational Crime

Testimony submitted to the Senate Banking Committee, hearing on

“Implications of the ‘Volcker Rules’ for Financial Stability”

Thursday, February 4, 2010

Submitted by Simon Johnson, Ronald Kurtz Professor of Entrepreneurship, MIT Sloan School of Management;Senior Fellow, Peterson Institute for International Economics; and co-founder of http://www.BaselineScenario.com

Phi Beta Iota: The bottom line is discussed in more digestible form at Revised Baseline Scenario: February 9, 2010 which ends as follows:

22) We are steadily becoming more vulnerable to economic disaster on an epic scale.

By Peter Boone, Simon Johnson, and James Kwak

2010/02/08

Journal: European Economic Risk Round II

03 Economy

The author of this article, Simon Johnson, is a highly regarded economics professor at MIT and former chief economist of the IMF. He has long argued persuasively, at least to my thinking, that the bailout of the “to-big-fail” banks in the US (and UK) did not work to solve the toxic asset problem, but merely kicked the can down the road.

In the two essays linked below Johnson argues that the political rigidities and peculiarities of the eurozone are impeding a rational adjustment to a major part of the worldwide debt problem. This is increasing the probability of a concatenation of mutually destructive policy actions and reactions like those that precipitated the global depression in the 1930s.

Euro Falling, US Recovery Under Threat

Simon Johnson, Baseline Scenario, 7 February 2010

The euro depreciates, the dollar strengthens, and our path to recovery starts to run more uphill.

Europe Risks Another Global Depression

Simon Johnson, Baseline Scenario, 7 February 2010

The entirely pointless G7 meeting this weekend only served to underline the fact that Europe is again entering a serious economic crisis.

At the end of the meeting yesterday, Treasury Secretary Tim Geithner told reporters, “I just want to underscore they made it clear to us, they the European authorities, that they will manage this [the Greek debt crisis] with great care.”

But the Europeans are not being careful – and it’s not just about Greece any more. Worries about government debt and associated public sector liabilities (e.g., because banking systems are in deep trouble) have spread through the eurozone to Spain and Portugal. Ireland and Italy are next up for hostile reconsideration by the markets, and the UK may not be far behind.

2010/02/072010/02/07

Journal: Lockheed Mark to Market Pentagon Style

03 Economy, 10 Security

“Mark to Market” is (or was?) an accounting standard that required financial institutions to value their assets at their current market value. Thus a stock portfolio would be valued at an amount determined by the stock market, if the stock holder sold all his assets in that market.

Last Spring, when the government was contemplating its plan to rescue the big banks, it settled on the idea of using taxpayer money to purchase or guarantee the so-called toxic assets of the large “investment” banks and their insurers (e.g., collateralized debt obligations and credit default swaps). The banks lobbied furiously against the mark to market rule, because the toxic assets could not be sold in a market that was frozen, and under the rule, they would be valued a fraction (somewhere between 0% and 60%) of their original purchase prices. Under mark to market, the banks would take a bath or even become insolvent. So, they concocted a new concept of “fair value,” which came close to reimbursing them at cost, thus implying the capitalist market was inherently unfair. The Federal Government ended up guaranteeing the debt at taxpayer expense, thus securing an American economic system that guarantees private profits at the expense of public losses for the privileged entities on Wall Street.

But don't blame the banks for this kind of system. They are only doing what is natural when one is working with the best government money can buy. In fact, the American political economy has many ways of guaranteeing private profits with public subsidies of what should be private losses.

Continue reading “Journal: Lockheed Mark to Market Pentagon Style”

2010/02/072010/02/07

Journal: Chuck Spinney Triple on Economic Reality

03 Economy

First Base: The Eurozone worked very well to increase the economic welfare of its poorer members during the economic expansion of 2002-2008, but it is becoming increasingly clear that the interconnected character of the economies of Eurozone, together with the sacrifice of sovereign currencies in favor of the Euro managed by the European Central Bank, creates institutional rigidities and solvency problems that impede the formulation of counter-cyclical policies in these countries when their economic growth stagnates. The attached two articles describe how these rigidities could spillover to feed back on and push the US into a double dip recession or an extended period of stagnation.

Is Tim Geithner Paying Attention To the Global Economy? By Peter Boone and Simon Johnson, Baseline Scenario, 6 Feb 2010

Second Base: Should the Nature of a Sovereign Currency Be Considered When Shaping a Counter Cyclical Economic Policy? A political consensus is emerging in the US to cut back on deficit spending, even though the US economy is at best in the early stage of recovering from a steep recession, or at worst on the cusp of a double dip recession, or even worse, a debt deflation. This is a very dangerous possibility, made more so by a morally bankrupt political decision-making system that runs more in accordance with the rhythms of soundbytes and simplistic slogans.

Continue reading “Journal: Chuck Spinney Triple on Economic Reality”

2010/02/052011/10/22

Journal: Greedy Cultish Goldman Sachs Looting America and Corrupting Democracy

03 Economy, 09 Justice, 11 Society, Commerce, Commercial Intelligence, Ethics, Government

Here are two excellent items on the greedy cultish institutional culture of Goldman Sachs, which has its own revolving door in and out of the Federal government.

Chuck

Background from November 2009

November 8, 2009

I'm doing ‘God's work'. Meet Mr Goldman Sachs

Average pay this recessionary year for the 30,000 staff is expected to be a record $700,000. Top earners will get tens of millions, several hundred thousand times more than a cleaner at the firm. When they have finished getting “filthy rich by 40”, as the company saying goes, these alpha dogs don’t put their feet up. They parachute into some of the most senior political posts in the US and beyond, prompting accusations that they “rule the world”. Number 85 Broad Street is the home of Goldman Sachs.

New focused report:

Goldman Sachs And The Republicans

Simon Johnson, Baseline Scenario, 2 Feb 2010

Goldman and the other big Wall Street firms have already won big on this round. They will plow even more money into defeating political candidates who have opposed them – for example, on credit card legislation. The Republicans see this coming and are rubbing their hands with glee.

With their incentive structure intact – they get the upside and regular folk get the downside – and their closest friends on their way back to power, Big Finance is ready to roll into the next great global boom-bust cycle.

Phi Beta Iota: President Obama still does not get it–he was funded to keep Senator McCain out of the office, now he is going to be unfunded to put the original Republican sell-outs (Senator Phil Gamm R-TX et al) back in. What the President especially does not get is that the only way to put Goldman Sachs back in its box is to let We the People out of ours. Electoral Reform in time for November 2010 (first four elements) and then 2012 does three things: 1) assures him of a second term; 2) buries the two-party tyranny; and 3) restores honest civil reality-based give and take to our democracy.

Category: 03 Economy

Journal: US Rubin-Summers Tungsten Gold Round II