Daily Digest

Daily Digest - June 27

Sunday, June 27, 2010, 11:21 AM
  • Orszag Exit Reveals Deficit Policy Split
  • Illegitimacy Of Wall Street Profits Exposed By Financial Reform Bill
  • Provisions Of The Negotiated Financial Reform Bill
  • As 1.3 Million Americans Are About To Lose Their Jobless Benefits This Week, The Unemployment Rate Will Surge To 10.5%
  • Public Sector Pension Figures 'Were Fiddled Under Brown'
  • Lumber Prices Indicate Next Wave Down Underway
  • Cleanup Hiring Feeds Frustration in Fishing Town

Economy

Orszag Exit Reveals Deficit Policy Split (SolidSwede)

Other members of Mr Obama’s economic team, notably Lawrence Summers, the head of the National Economic Council, have placed more emphasis on the need for continued short-term spending increases to counteract what increasingly looks like an anaemic economic recovery in the US.

Illegitimacy Of Wall Street Profits Exposed By Financial Reform Bill (Truthsavvy)

The emerging bank reform legislation might be viewed in a singularly positive light if the reforms were not the byproduct of a skewed capital system that made several million Americans undeservedly powerful and rich while Congress slept. One could feel downright hopeful about the future of American banking if moral hazard had not contaminated the land. But too much polluted water has gone under the bridge. The good in the reforms is counteracted by the poisons that produced the need for remedial interventions.

Provisions Of The Negotiated Financial Reform Bill (pinecarr)

If such a Too-Big-Too-Fail company teetered or posed a threat, the council could close it using taxes on the banking industry to cover the costs of doing so. Reaction: This is another example of punishing (relatively more) solvent banks for the insolvent ones.

As 1.3 Million Americans Are About To Lose Their Jobless Benefits This Week, The Unemployment Rate Will Surge To 10.5% (pinecarr)

In our view, what will happen is that the 1.3 million who had gotten used to receiving benefits (and for whom we certainly feel sorry, as once again expectations and reality under the current administration diverge in a dramatic fashion) and had no desire to look for work, will immediately flood back into the labor force to find some job, any job, that pays even remotely as well as what the government did.

Public Sector Pension Figures 'Were Fiddled Under Brown' (pinecarr)

John Ralfe, one of the UK's leading pension experts, claims there is £150bn black hole in government accounts.

Lumber Prices Indicate Next Wave Down Underway (pinecarr)

As I’ve been saying all along, nothing is solved until the DEBT SATURATION is resolved. Depressions move in 3 waves, A down, B up, C down. The psychology of each wave is different – wave A equals “oh no!” Wave B equals “we’re saved.” And wave C equals real change is forced to occur – no fooling around this time. You can clearly see how the psychology is different now than it was during the plunge in 2008. Instead of “stimulus” the buzz word is “austerity.”

Environment

Cleanup Hiring Feeds Frustration in Fishing Town (jdargis)

From a hamlet of independent fishermen and seafood handlers, many second or third generation, Bayou La Batre has become something close to a one-employer town, with BP acting as both the destroyer of livelihoods and the main source of income, through cleanup programs and compensation for lost business.

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16 Comments

pinecarr's picture
pinecarr
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Re: Daily Digest - June 27

Here's one more article I found too late to make the DD presses.  It is "Toronto in lockdown as G20 protesters clash with police", at:  http://rawstory.com/rs/2010/0626/g20-protesters-clash-police/ .  Here's a clip:

Numerous reports suggest that Canada's border guards have been refusing entry to reporters covering the G8 and G20 summits for non-mainstream news sources.

Two reporters from Chicago Indymedia were reportedly accused of being protesters and denied entry. Reporters from WeAreChange were detained for at least four hours by border officials before being denied entry. A reporter from the InfoWars news site was also denied entry. Two activists from CodePink were also barred from entering Canada.

Hat tip to www.nakedcapitalism.com for posting the link to this article!

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Re: Daily Digest - June 27

Amen!

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Re: Daily Digest - June 27

This is simply a filthy, old Republican rant.  I think we have too much debt, yes!  But to claim there there should be smaller government and no regulation is rediculous.

All the banking and wall street fraudulent practices weren't put out of business by our wonderful capitalist system?  Republicans didn't much care about fraud as long as the system was paying out handsomely, for a few lazy bums who got rich by doing nothing, producing nothing.  I just have a lot of trouble with this all-to-simple and stupefying battle cry that the Rebublicans sound, regularly now.

I don't think that Democrats have the answers, either, and I know Democrats have done their damage too  But Republicans and Demecrats have both spent way too much and have looked the other way, let's not forget. And somehow the old party arguments for what as gone wrong and what we need to do next, ring hollow.  I think the solutions that we need are much more complex...

idoctor's picture
idoctor
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Re: Daily Digest - June 27

I think the solutions that we need are much more complex...

They sure get FAR more complex with more & more Government which I deal with everyday. This is why everybody is starting to have to wait..& wait. Wait until you see how Govt healthcare works out & you will see something far worse than what we had. People will have to experience the real pain to get it IMHO but then it is too late. Too many people just want FREE stuff but lose their freedom with that little trick.

A real close friend of mine that went thru Korea & Nam just called to get with a VA Doc & was told it would be December LOL......hum welcome to reality!

If Govt remained small & did its job we would have a much better situation IMO. They pass anti monopolization and antitrust legislation but look what has happened as they allowed lobbyist to corrupt everything.

Who said anything about party lines anyway? I just like ideas that made this country work at one time.....we are failing in a big way at this moment. I have traveled to many countries & believe me if I was to start a business to make something the last place I would look is where I live......way to much Govt BS!! No place is perfect but many factories have left & are not coming back. That speaks volumes for itself.

Now we are in the process of running off the off shore drilling rigs that will not be back either once gone. Way to go LOL....who needs oil anyway??? Whats next? Oh I forgot Cap & TAX.....depression guaranteed!

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Re: Daily Digest - June 27
cleo0801 wrote:

All the banking and wall street fraudulent practices weren't put out of business by our wonderful capitalist system?

No, it took government intervention to allow them to occur.  Without the favors of goverment and the FED, the fraudulent practices we have seen would never have occured.  This is not a republican vs. democrat issues, this a a people versus both parties pushing for more and more government to benefit those connected individuals.  Perhaps you need to stop the "Democrat vs Republican" rant, and start trusting in the individual and not the state.

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Re: Daily Digest - June 27

I just submitted another article to Financial Sense for consideration. It touches on government. I advocate in the write that our basic problem is that we DON'T have capitalism we have corporatocracy.

Corporatocracy: A government that serves the interest of, and may de facto be run by corporations. According to the documentary, "The Corporation" if a shrink analyzed a corporation the way a shrink would analyze a patient then a corporation would be classified as sociopathic. If this is correct then it basically implies that we have a government run by sociopaths. If the good of corporation isn't the same as the good of the people --- then we are scr#wed. 

One thing is certain: We can NOT afford a big government. Also, we had the biggest government when things went south, Greenspan muzzled Brooksley Born (google please Frontline "The Warning") when she wanted to regulate derivatives years before this mess blew up.

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Re: Daily Digest - June 27

rhare wrote:

No, it took government intervention to allow them to occur.  Without the favors of goverment and the FED, the fraudulent practices we have seen would never have occured.  This is not a republican vs. democrat issues, this a a people versus both parties pushing for more and more government to benefit those connected individuals.  Perhaps you need to stop the "Democrat vs Republican" rant, and start trusting in the individual and not the state.

Well said!

Davos wrote: I advocate in the write that our basic problem is that we DON'T have capitalism we have corporatocracy.

Davos this is our big problem IMO also. It is so big how can people not see this?? So many people seem to want some BIG thing to take care of them to replace their mommy or daddy....I don't get it. I have always liked being self sufficient. Any thing that gets Too BIG is going to control you Gov or Too big to fail Corps (which will not be too BIG too fail as gravity takes hold). When the too BIG to fail fail imagine how hard they will hit the ground.

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Re: Daily Digest - June 27
idoctor wrote:

It is so big how can people not see this?? So many people seem to want some BIG thing to take care of them to replace their mommy or daddy....I don't get it. I have always liked being self sufficient. Any thing that gets Too BIG is going to control you Gov or Too big to fail Corps (which will not be too BIG too fail as gravity takes hold). When the too BIG to fail fail imagine how hard they will hit the ground.

CNBS might be a huge blinder, MSNBS might be another. lol. Yup, I'm all for doing everything myself also. +1 !!! on the TBTF hitting hard, they became really bloated during the extend and pretend baloney. 

r's picture
r
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Re: Daily Digest - June 27
cleo0801 wrote:

This is simply a filthy, old Republican rant.  I think we have too much debt, yes!  But to claim there there should be smaller government and no regulation is rediculous.

.

My view is you can't have a free market unless the stake holders are responsible.  Maybe this is impossible, but therefore so is a free market.  Corporations "could" regulate themselves and if they were thorough and honest then there would be no need for government oversight. And the government would be smaller.  It's similar to the argument that if people were good there would be no need for the police.   I don't understand why corporations have to put profits above customers, the environment, and ultimately the fate of the world.  Is it growth again, driving them?

A suggestion I like is to teach business leaders to think of their profession as doctors think of their after taking the Hippocratic Oath. 

An oath for MBA's to be better business leaders:

http://marketplace.publicradio.org/display/web/2010/06/08/pm-an-oath-for...

http://www.amazon.com/s?ie=UTF8&keywords=1591843359&tag=mktpl-20&index=b...

GM

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Re: Daily Digest - June 27
davos wrote:

I just submitted another article to Financial Sense for consideration. It touches on government. I advocate in the write that our basic problem is that we DON'T have capitalism we have corporatocracy.

Corporatocracy: A government that serves the interest of, and may de facto be run by corporations. According to the documentary, "The Corporation" if a shrink analyzed a corporation the way a shrink would analyze a patient then a corporation would be classified as sociopathic. If this is correct then it basically implies that we have a government run by sociopaths. If the good of corporation isn't the same as the good of the people --- then we are scr#wed. 

I would never have even thought of analyzing a corporation like a person,  the way the documentary "The Corporation" does, Davos.  But when you read their "shrink analysis" for a corporation, it sure seems appropriate in a lot of cases!

Looking forward to your upcoming article in FS!

-pinecarr

 

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Re: Daily Digest - June 27
r wrote:

It's similar to the argument that if people were good there would be no need for the police.

I think if people were well armed there would be less need for police.  The problem is we have trained everyone to depend on the government (police inlcuded) to save them from the bad guy.  Sorry doesn't work.  Even when the police dispatch immediately it is too long.  Police are really only to clean up the mess and potentially catch the criminal.  If you depend on police for your safety, you are screwed!

On top of that, I believe with our current drug policies, the police are actually making the problem worse.  Most of us will go through life with very few life threatening events that would require police.  Governments have used fear to make us believe we have to have police to save us at the same time giving people a false sense of security.

 

r wrote:

I don't understand why corporations have to put profits above customers, the environment, and ultimately the fate of the world.

Most don't.  It's this businesses are evil that is a huge problem.  I ran a business and we were very concientious about how we treated employees, gave good benefits, recycled and generally tried to be environmental good citizens.  In fact most companies are good, it's how you make the customers happy and keep getting business.  If you a really bad and evil company, then you need the government to keep you in power through it's use of force.  Just look at the TBTF banks, GSEs, post office, etc. If you don't like a company or it's policies, don't buy from them.  Don't own stock in them.  Oh, but wait, we are all now forced to support AIG, BofA, JPM, GS, GM, Chevrolet, the airlines (bailouts), ... list goes on and on....

 

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Re: Daily Digest - June 27

Everytime I hear of someone saying less regulation is better and that corporations can regulate themselves, I think of what Goldman Sachs has done and what BP has done.

Regulation can be corrupted by Congress, regulations can be overbearing and stifling. However, regulation also has its place. Regulation can safeguard people in ways that self-interested corporations won't. I'd be more likely to invest in a company that I know isn't cooking the books, isn't storing debts and obligations in off-balance sheet accounts out of fear that the perpetrators will go to jail and the company will be broken up by the government. However, I don't see anyone at Lehman Brothers or Ernst & Young going to jail.

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Re: Daily Digest - June 27
Poet wrote:

Everytime I hear of someone saying less regulation is better and that corporations can regulate themselves, I think of what Goldman Sachs has done and what BP has done.

Regulation can be corrupted by Congress, regulations can be overbearing and stifling. However, regulation also has its place. Regulation can safeguard people in ways that self-interested corporations won't. I'd be more likely to invest in a company that I know isn't cooking the books, isn't storing debts and obligations in off-balance sheet accounts out of fear that the perpetrators will go to jail and the company will be broken up by the government. However, I don't see anyone at Lehman Brothers or Ernst & Young going to jail.

Based on recent events like Tony Hayward's flaunting his yacht race in the face of this disaster,  I believe very likely we will not see the management from BP going to jail or suffering any consequences (my point yesterday... on DD).  Which is  a horrible outrage.  Perhaps regulation is really just one issue; the desire and ability of the courts to prosecute such powerful entites is for whatever reason lacking. Regulations that are not enforced by rule of law seem to have no teeth.  I think it gets back to Chris' and others' point that the corporations are running the show and really overpower the government. 

Denise

rhare's picture
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Re: Daily Digest - June 27
Poet wrote:

I'd be more likely to invest in a company that I know isn't cooking the books, isn't storing debts and obligations in off-balance sheet accounts out of fear that the perpetrators will go to jail and the company will be broken up by the government. However, I don't see anyone at Lehman Brothers or Ernst & Young going to jail.

This is exactly the problem.  We have lot's of regulation, lot's of regulators and all this crap still happens.  I also want to know how you see the people at Lehman Brothers and Ernst & Young not going to jail as a failure of the corporation?  Last I knew it was government and specifically the courts that generally put people in jail. 

After the whole Enron/Arthur Anderson issue  Sarbanes-Oxley was enacted so that it would ensure this misbehavior wasn't going to happen again, yet it did.  This was an incredibly burdensome regulation.  In fact our company and the major shareholders considered going back private simply because complying with this Act was going to cost almost all profit of the company.  We were having to spend millions on lawyers, specialist, and people to comply. The regulation doesn't stop this behavior but it certainly cripples the small business and benefits the large well connected players.

I don't believe you will ever stop people from being crooks, but most are not.  The problem with regulation is it tends to be an over-reaction to a problem that occurs, causes massive unintended consequences, and still doesn't stop the problem.  The best thing is to make companies responsible to people via providing good services people will buy and investors will want to be part of.  Let the courts and competition be used to punish those that are corrupt and go bad.

This type of government over-reaction is the exact same thing that has us in 2 wars right now.  If you don't like the government reaction and the wars, then you shouldn't be calling for regulation.  They both have the same root cause!

VeganD wrote:

I think it gets back to Chris' and others' point that the corporations are running the show and really overpower the government.

So ask yourself, why has the corporation got such a hold on government?  Is it perhaps because it profitable to do so?  What would happen if you didn't have the government dolling our favors and millions of taxpayers dollars to it's favored corporations?  Would you have corporations spending millions to lobby for special behavior?  I say it's time to take the money out of politics by taking control and taxpayers money out of the government bureaucrat.

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Re: Daily Digest - June 27

There is a kernel of truth in what Peter Schiff says, however I think he misses the bigger picture by a large margin. Our problems are far deeper than just lowering taxes and getting rid of regulation. I think most of us on this site know that the underlying causes are our monetary system/banking in general, the industrial /military complex/corporatocracy, energy & environmental challenges -- and these far overshadow his simplified, trite storyline

Surely he knows better than to follow and fall for the standardized us/them argument of Democrats vs Republicans, left vs right or socialist vs conservative

Jim

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Re: Daily Digest - June 27

As for the role of regulation, it seems to me the key is that good regulation must be small in number, limited in scope, equally applied, and effective.  The thing to understand is that sometimes bad regulation is far worse than no regulation.  At least in a market without regulation, participants are aware that they might be decieved.  In poorly regulated markets, the people think they are safe and therefore exhibit a lack of self restraint that may actually cause bigger problems down the road.

Also on the Provisions of the negotiated financial reform bill I find it amazing that banks can still trade Derivatives on Fixed Income and Fx.  That has got to be 90% of their trading activity so its not much of a limitation.

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