Life is a distraction

From what, you ask? From death, of course.

In a recent post on his teaching blog Bruce Charlton tosses out some quotes by Blaise Pascal a 17th century thinker that have really stuck with me for some reason.

the quotes courtesy of Mr. Charlton:
Who does not perceive the vanity of the world? So, who does not see it, apart from young people whose lives are all noise, diversions, and thoughts for the future?

But take away their diversion and you will see them bored to extinction.

Them they feel their nullity without recognizing it, for nothing could be more wretched than to be intolerably depressed as soon as one is reduced to introspection with no means of diversion.

Not that I've been thinking about death so much as I have been thinking about life. I suppose its because I recently reached a milestone age-wise and that my children are grown and will soon be off living their own lives. Pascal is saying that if we removed all the noise and distraction from our lives all that would be left is quiet introspection. Left with only this we would see the futility of life itself.

We are born, we live, we die.

Unless we are actively engaged in working to put food on the table or directly caring for children everything else is a distraction. Distractions that without we would become insane with boredom.

Professor Charlton takes it a step further and delves into how this is manifested in the current culture. Youth, he says, is incapable of seeing the futility of this life because they live in constant noise and diversion and lack the ability for introspection. These are the traits that make being young so much fun. When you scold a child and say, "how would that make you feel" you are forcing them to examine themselves. Children almost always become sad when forced to do that.

In this new culture, the one that has been championed since the 1960's, the culture I grew up in, we are not allowed to grow up, says Prof Charlton. I believe he is right. Everything outside of work is positioned around having fun and being youthful. Seriousness is frowned on.

Those who look at the world in a larger sense are sometimes criticized for being too serious and being no fun at all. Why drag people down with your bitterness and negativity. If you're introspective about your country and your culture you run the risk of coming off as a grownup. Not good. Look at everything being sold from night cream to Viagra, it's all about being youthful.

What's wrong with that? What is the alternative? Surely if we didn't surround ourselves - especially as we get older - with TV, sports and hobbies and any number of busy-body activities we would soon be bored with our own company and likely fall into depression. The question is are some of these activities even worthwhile? Are some destructive? Wasteful? Of course. Vanity is usually destructive, wasteful.

We could lose ourselves in the glory of God too... But no, this culture clearly frowns on that. Our culture is drifting into destruction by our own unserious hand. While we culturally worship youth we are financially transferring the wealth to the old - in the most wasteful and inefficient manner, potentially destroying both. The one thing that could bring things together is the one thing the new cultural overlords hate the most - that would be God Himself.


CW

Doing my part

The economy is still in the tank, no news there. I remember way back in the early 80's America faced similar economic doldrums. Reagan was elected President in 1980 and after a few years things started to pick up. They started calling it the Reagan Revolution. It wasn't that the economy was great by 1983-84, but it was because the mood, the outlook and the prospects looked so much better than they had just a few years earlier.

I was married in '83 and we bought a house in October of that year. We spent money like crazy back then. We needed everything. We used to joke that we were the Reagan Revolution! Well I'm here to say this year I'm doing my part to jumpstart this morbid economy despite all the evidence that I'm spitting in the wind.

This year alone I bought a new refrigerator, a new lawnmower, a new dehumidifier, a new gas grill, 2 new cell phones, a new 18-speed bike, building materials for deck project, paid thousand$ in medical bills and I'm sure much, much more. I will need a new car soon as well.

So, I am doing my part to create an Obama Revolution. I just wish he would.

CW

A gun to the head...

I don't want to turn this forum, meager as it may be, into a routine tirade against President Obama, but this latest one can't go unnoticed.

During the aftermath of the Tuscon shootings last winter where Rep. Gabrielle Gifford was severely injured by a crazed gunman we were all treated to an excoriation of Sarah"gun toting"Palin and all conservative talkers. We were to understand that it was incendiary violent language that had caused marginally sane people to go on shooting rampages. The debate that followed became all about Sarah Palin who had absolutely nothing to do with any of it.

Palin had "targeted" Gifford's re-election race as winnable for the Republicans and therefore she and she alone was responsible for this tragedy. We all know that war analogy's are rarely ever used in political campaigns (pun intended).

When I was listening to coverage of President Obama's electronic town hall and heard him utter the phrase - - "the debt ceiling should not be used as a gun against the heads of Americans to retain breaks for corporate jet owners or oil and gas companies"- - I was a little stunned.

The imagery was simple - Republicans were threatening to put a bullet in the head of Americans by not capitulating to Obama. A rather violent picture.

So I waited for the storm of outrage over a politician using such violent and incendiary language. Crickets. Doing a Google search - maybe it was Bing- I found a few odd mentions and no outrage at all. Here and here.

Yeah, you're not going hear any feigned outrage. Why didn't the conservative punditry make hay with this? Because it would be stupid, disingenuous tripe. I mention it only to prove that the media in general, so bent on destroying Sarah Palin was unrestrained and gleeful to have such a grenade to throw at her. Calling out Mr. Obama would be counterproductive to their goals.

So here goes: Shame on you President Obama, I'm outraged that you would use such violent and incendiary imagery.



CW

To Fetch a Pail of Money...

According to George Will a new book called “Reckless Endangerment” is a study of contemporary Washington, where showing “compassion” with other people’s money pays off in the currency of political power, and currency.

It's worth noting that despite all the things written about the financial crisis that still grips America and the world it does have an embryo and a focal point. I have not yet read the book, but it appears that names and faces will finally be applied to the culprits.

We've known for quite some time that "Wall Street" was to blame for the implosion of 2008, right? In reality Wall Street's part in all this was a reaction, a devastating reaction to the rules laid down by Washington. The slime merchants of credit default swaps and collateralized debt obligations should not go unscathed, however the gleeful manipulation of lenders, borrowers, investors and insurers was almost an inevitable result.

It started in the Carter years with the 1977 Community Reinvestment Act which pressured banks to relax lending standards. As a way to spread the American Dream to folks whose incomes, assets, or abilities to own a home would never pass muster in the home loan department of a bank the CRA was the epitome of liberal compassion. The embryo if you will.

President Clinton stepped upped the ante by putting teeth behind the compulsory lending standards but then offering banks a way to protect themselves. In comes Fannie Mae, a “government-sponsored enterprise” or GSE. The focal point emerges.

This set in motion the events that eventually (inevitably) led to the housing market meltdown that still grips us today. Fannie Mae and Freddie Mac became perhaps the most powerful financial institutions in the world. While the stage was being set to bring down the most powerful economy in the world James Johnson, the head of Fannie Mae at the time and his - mostly Democrat - friends and associates walked away with millions in bonuses. The money flowing out of Fannie and Freddie for campaign contributions went mostly to Democrats and it was mostly Democrats who defended and then obstructed any attempt to stop the speeding locomotive.

The rest is history. Wall Street did what they always do by creating complicated financial vehicles to maximize their profit. Losing grip on reality and sinking of major "too big to fail" firms was ultimately a bump in the road as we watched the Federal government ride to the rescue with TARP and other bailouts.

Average homeowners, the real losers in all this were thrown a bone with new Financial Industry Reform legislation. Intended to assure us that the banks will never do this again, incidentally written by the same men (Democrats) who brought us reform in the 1990's. They missed one little thing in all the fine print. The reform didn't address Fannie Mae or Freddie Mac at all. Hmmm, were the Democrats behind the legislation still angling for cash for next years campaign?

You may have noticed that I mention "Democrats" once or twice in this story. I'm just trying to set the stage for the inevitable fall guy... It was all George Bush's fault!!!



CW

Perception vs Reality : Paul Ryan vs MMT

Continuing on from my last post where we looked at Warren Mosler's MMT (Modern Monetary Theory) and pondered its legitimacy. I find that I struggle reconciling what MMT says with the current debate over the debt, the deficit and Paul Ryan's budget. Paul Ryan is a hero and some circles, frightening in others. To some he is just plain wrong.

Ryan, (R-WI) the Chairman of the House Budget Committee, produced what some would say was a radical budget for 2012. The bill passed in the House and it failed in the Senate. Some praised Ryan for being a grownup by facing the debt problem with a solution instead of more rhetoric. It called for drastic cuts in Federal spending, restructuring some entitlement programs - Medicare in particular - and streamlining tax policy. Ryan along with many conservatives and centrists believes government spending is out of control and is absolutely dangerous to America's future. Yet according to MMT deficits don't matter at the Federal level, that the U.S. government cannot run out of money. Well, which is it? Is debt and deficits the death of us or are they no big thing?

The average person sees the U.S. government "spending money it doesn't have" and tries to relate it to their own lives. Obviously if we average Joes and Janes kept spending and spending well beyond our ability to even pay the interest let alone the loans themselves then we would soon be bankrupt and in the poorhouse. Can the U. S. government become bankrupt? MMT says no, Paul Ryan says it already is. Most of us see Paul Ryan's point of view because it's something we can related to. This is the perception we all live under right now.

What if MMT is right and theoretically the Feds can't really run out of money. In fact the Federal government doesn't have to actually borrow cash, sell bonds or even collect taxes to get the money they need to run the country? Well, consider for a moment that the value of our currency is confidence based. If every one is losing confidence because the Federal Reserve pumps billions of dollars into the system which devalues the dollar and in turn causes inflation (in the cost of energy and food in particular). Is this some kind of false reality?

How many times do you have to hear the old phrase that perception IS reality? Whether MMT is technically right doesn't matter if the wheels that turn the world economy are based on the perception that the U.S. government is broke. When American citizens and foreign governments lose confidence in the U.S. dollar all the theory in the world isn't going to change that.

Why are there no brave politicians espousing the "truth" of MMT? An oxymoron, there are no brave politicians. Or are there? Is Paul Ryan brave for proposing a massive restructuring of venerable government programs because even though in reality the government will always pay for Social Security and Medicare the perception is that they will bankrupt the country.

Perception vs Reality.

Is Warren Mosler right?

I've been following the proclamations of Warren Mosler for some time now. I always come away thinking that what he says is just too good to be true. What he says in a nutshell is that deficits don't matter. With everyone in Washington, Wall Street and Main Street decrying Federal budget deficits as the concrete around the ankles of this economy it seems impossible that everyone is dead wrong and Warren Mosler and merry band of MMTers are right. Mosler has a nice explanatory article on the Huffington Post that appeals to progressives not to follow the conservatives down the deficit doom and gloom road. It's short, and worth reading.

MMT stands for Modern Monetary Theory. MMT was born when President Nixon removed the U.S. currency from the Gold Standard creating a free floating fiat currency tied to absolutely nothing. It works by plying simple accounting methods. So, as Mosler points out:

...when the government spends or lends, it does so by adding numbers to private bank accounts. When it taxes, it marks those same accounts down. When it borrows, it simply shifts funds from a demand deposit (called a reserve account) at the Fed to a savings account (called a securities account) at the Fed. The money government spends doesn’t come from anywhere, and it doesn’t cost anything to produce. The government therefore cannot run out of money, nor does it need to borrow from the likes of China to finance anything.

It seems the value of our money is the value we give it. Our confidence in the almighty dollar is what gives it power, oh yeah, and demand too... Currently demand for goods and services is down, way down. Aggregate demand which combines government demand and private sector demand is what drives the value of the dollar. All this deficit talk and wringing of the hands is what is driving down aggregate demand and that is not good for anyone.

Mosler's main point is since there is no shortage of goods, labor or materials to drive the economy to full employment and full funding of our entitlement obligations, the only restraints are self-imposed by a deficit reduction mentality. Conservatives, he says, are wrong headed (as opposed to evil) about deficits and debt, and liberals are equally wrong headed about taxes.

Convincing conservatives that deficits (at the Federal level) don't matter and convincing liberals that high taxes only serve to put the brakes on demand (and real economic growth) is an awfully large mountain to climb. If he is right then we are wasting so much time and so much human potential with self imposed and painful austerity.

The most interesting idea is his call to suspend FICA taxes:

...many MMT progressives today favor the immediate suspension of all FICA taxes, which are highly regressive, punishing taxes on people working for a living that no progressive should tolerate. Eliminating FICA fixes the economy the progressive way, from the bottom up versus the highly regressive top down trickle-down economics practiced by the current administration that would have made even President Reagan blush. Yes, the last two years have seen positive real growth, but with employment remaining near post depression lows, and wages under continuous downward pressure, executive compensation just hit new highs and stocks more than doubled, as this administration presided over the largest transfer of wealth from the least to the most wealthy in the history of the world.

I can see the wisdom in this if one believes that deficits don't matter and that taxes stunt private sector demand. Frankly, there is no "lock box" for Social Security, there never has been, so we wouldn't be robbing from grandma. This will be a tough sell, but it has an appeal that can't be dismissed easily. FICA taxes are the most punitive taxes we have. A FICA holiday would add billions to the economy every week. If you believe, as MMTers do, that taxes don’t really serve to collect revenue, but are more like a gas pedal that controls the speed of the economy. When the economy is going too fast, raising taxes is like taking your foot off the gas slowing it down. Right now a very large tax cut is called for and a FICA holiday would be the simplest to enact and the most fair.

I really do want to believe that MMT is right and the Mosler is an oracle, but like I said it seems too good to be true - and when things seem to be too good to be true they usually are.



CW

The Real Welfare Queens

We've all been there, standing in line at the grocery store behind someone using their EBT card or food stamps or whatever you call it. We wonder if her mother before her relied on the government to feed the family and if her daughter, busily playing with the button that moves the conveyor belt, will follow in her footsteps. We look at the kind of food on the conveyor and think, these people eat better than I do and not a dime is coming out of their pocket. We lay seven meager items on the belt and get charged $51.67. It just seems unfair.

On the heals of reading Michael Lewis' "The Big Short" (see review from and earlier post) I have been reading more about the financial crisis of 2008 and becoming more and more sick about it. The waste, fraud and abuse we suspect of welfare Mom's is spittle in the wind compared to fraud practiced on Wall Street and Washington DC. Our anger, our disgust is completely misplaced. The fact is the relationship between Washington DC and Wall Street is criminal. It does not matter who the President is, the revolving door that spins between executive positions in the Treasury and the White House into all the big Wall Street firms is one massive conflict of interest. The corruption is almost unfathomable. That's really all you can call it, corruption.

Whether or not TARP or any of the other government rescue "loans" saved the financial system from total collapse is irrelevant, what's transpired since the fall of 2008 is the biggest financial crime in all of history.

The roots of the problems go back to 80's and especially the 90's, but now that it has come to a head you'd think something would be done about it to prevent such a disaster from happening again. If you thought that you'd be wrong.

Wall Street traditionally made it's money on commissions being brokers, traders and advisers. In the new century the Internet changed the way many investors did their business and Wall Street needed new sources of revenue. Amazingly in the late 90's deregulation fell into their lap paving the way for complex, potentially dangerous financial instruments called derivatives. Many pushed strenuously for their regulation, but some members of Congress and White House appointees (Democrats and Republicans alike) were so entirely opposed that in 2000 a bill was passed specifically prohibiting any such regulation.

These derivatives made it possible for banks and mortgage lenders to minimize their risk if (when) there was a default. This is what fueled the boom in subprime mortgages. Fannie Mae and Freddie Mac, quasi-governmental lending agencies, were front and center of this scheme. Financial institutions on from Wall Street to Berlin combined these risky loans and made them seem as reliable as government securities. All of this is detailed in "The Big Short". Employing the notorious credit default swaps, Wall Street firms blatantly, knowingly, sold fraudulent securities to gullible clients while betting at the same time that they were going to fail.

This ponzi scheme like all ponzi schemes crashed. This time no one went to jail, no one was shamed, no, this time there was a government bail out as a reward. Sickeningly the executives at Fannie and Freddie as well nearly all the big Wall Street firms walked away with millions - millions in government money. The numbers are so staggering and the fraud so complex that most Americans can't or won't even let themselves be upset by it. Worse, many people just smile slyly and say "boys will be boys" as if we should expect no less. But it's the overweight welfare Mom shopping with abandon that should be cut off!

Barack Obama thinks we should pay more taxes, that the government needs more revenue... While it's clear that most of the lefty criticisms of "the rich" are true they fail to see that it's their "guy" who is and has perpetuated this fraud for decades to keep the money flowing into the party and the campaigns. Barack Obama was the #1 recipient of campaign contributions out of Fannie, Freddie and Goldman Sachs. Boys will be boys. Meanwhile he'll try to convince us that a husband wife team that owns a little business generating $250,000 a year are the filthy rich.

The Republicans may be saying no to higher taxes, but they are no pillars of virtue in this whole affair. The incestuous relationship among the Wall Street elites and the executive branch (of any Preisdent) should be severed. The notion that the finances of the nation are just too complicated for someone without a Goldman Sachs background is preposterous. Isn't clear by now that the qualifications for high government posts are how well you can game the system for the benefit of Wall Street. Most of the filthy rich up and down Wall Street were Republicans at one time. No, the Republicans are no better at all.

Americans need to start getting educated about this and learn to direct their anger at the real welfare queens in NY and DC and not the welfare Moms at their local grocery store.


CW