Have a listen at this, because you won't get that all too often.
Financial journalists asking themselves, did we fail?
In America the organizations who are helping us getting our human heads around the unprecedented, astronomical figures involving the various economic stimuli, are the Tea Party Movement (sites here and here) and Stop Spending our Future.
The latter has published following information in helping us reducing it all to a more or less human scale: fasten seat belts for this one!
The Spectator: "Can the Internet turn Dan Hannan's skewering of Brown into a story?"
Dan Hannan’s speech yesterday was magnificent, in three and a half minutes he absolutely eviscerated Gordon Brown. Unsurprisingly, the speech received little attention on the broadcast news (...) But the speech has already has more than twenty-five thousand views on YouTube (...) >>>
This needs further maturing, but it's been quite a revelation! With hindsight it would have been a surprise had some Postmodern lunacy not been at the bottom of the financial crisis!
The Big Picture (hat tip: 12010 AM The Big Talker Radio) just published the full text of a speech recently delivered in Toronto by Paul Volcker, former US Federal Reserve Board chairman, and now a member of the Obama team advisory board on the economy. A digest of the main points is available on Articles and the full text is here.
The bursting of the sub prime mortgage bubble is evidently the direct cause, but there's a not so obvious, even more profound explanation underlying it.
This is attributable to the deviation from Aristotelian principles on the academic level. Anthony Rizzi of the Institute of Advanced Physics in his ground breaking book "Science Before Science" has been explaining why it is so vital for science to return to the level of the real world. In this interview Rizzi explains part of the hiatus physics has in explaining reality:
"Technically, modern physics is focused on physical beings (that is, changeable beings), and then only insofar as they are quantitative. Hence, modern physics by its very methods leaves much of reality behind."
Another part of the problem can be summed up in the Postmodern habit of not properly identifying. On the humanities level it's a world that thrives on false analogy. In science theories remain stuck on the level of ideas; the hypothetical is never reduced to the sensory level. Because of it, any number of silly fallacies and blatant misunderstandings occur.
One such is the belief in amateur cosmology circles that reality consists in twelve parallel universes resting on a membrane, just because theoretical physicists' calculations have said so.
Apparently such enormities are not limited to the nebulous confines of the ivory tower: they have now spilled over into the real world of haute finance and bread and butter economics where they have been wreaking havoc on the global economy.
To list a few other common fallacies:
- The notion that an object only exists if it can be measured;
- The extraordinary error of ascribing matters occurring on the macro level (including philosophy), in terms of the erratic behavior of particles in quantum mechanics;
- That historical events are a natural phenomenon, dependent on the course of human evolution (otherwise known as 'progress');
- The old wives tale that moral relativism is infallible, because Albert Einstein's genius as a physicist is beyond question.
But here's the thing. You cannot use chemistry to do algebra; you cannot use biology to do politics; you cannot use genetics to do cosmology; you cannot use theoretical physics to do philosophy; and you cannot use French to do English!
The law of identity is not negotiable: A=A, always! A is not sometimes B, depending on your vantage point, as relativist Postmodernists are fond to argue.
What are we talking about, relative to the financial crisis? Let's borrow a direct quote from the Volcker speech:
There was so much opaqueness, so many complications and misunderstandings involved in very complex financial engineering by people who, in my opinion, did not know financial markets. They knew mathematics. They thought financial markets obeyed mathematical laws. They have found out differently now.Consider the neologism: financial engineering. I wonder where that stems from? Sounds to me very much like a sociologist had been moonlighting as a mathematician and got himself outsourced to work as a banker (or something) ...
You know, they all said these events only happen once every hundred years. But we have “once every hundred years” events happening every year or two, which tells me something is the matter with the analysis. So I think we have a problem which is not an ordinary business cycle problem. It is much more difficult to get out of and it has shaken the foundations of our financial institutions. The system is broken (...)
The shocking severity and magnitude of the credit crisis - or perhaps a better word would be the Politically Correct Crisis - has caused the traditional Left and the Pragmatists, including the Center-Right statist guard, to once again grab for the wrong, long-bankrupt tools to "fix the economy".
While the conclusion seems justified that political correctness is no longer an innocent toy for social make-ability in the hands of progressivism, they're calling - as by knee-jerk reaction - for more regulation, state control and objectively false remedies, blaming the perfidity of capitalism for its failure. Here's why Keynesian methods don't work:
The reactions are coming in, fast and furious ...
Medvedev rounded on the United States for ills ranging from the global financial crisis to the recent war in Georgia, in a state-of-the-nation speech that was watched intently by his mentor Vladimir Putin, and omitted mentioning Obama by name. (...) >>>
Over the last few weeks we've asked a number of our correspondents tongue in cheek, how do you spell Soros backwards, and would he be able to trigger a financial crisis all by himself?
Surprisingly, the intrepid investigator Cliff Kincaid of Accuracy in Media now seems to be answering that question in the affirmative: Yes, he can!
In other words, this may after all look like a conspiracy to get candidate Obama elected on a platform of "the Dems own this economy, stupid"?
With Joe "the Mouth" Biden making headlines with his "generated crisis" for a President Obama, is the financial collapse a coincidence, only six weeks before the election, when John McCain was leading in the polls, and appearing to be on his way to a election victory?
"The crisis was man-made", states Kincaid boldly.
Let's start at the bottom and then read "Who’s Behind the Economic Collapse?" top down, keeping in mind the very personal vow taken by the Anti Christ of Haute Finance, to defeat Bush in 2004 — with every penny if necessary ... (Malkin pulls a number of threads in the tarantula's web) ...
(...) A hedge fund operator such as George Soros, who was convicted of insider trading in France, is known to make money from the collapse of national economies and currencies. Labeled “The Man who broke the Bank of England” because of his financial activities against the British currency, he is said to be on a witness list of hedge fund operators that will be called to testify before Congress next month―probably after the election. (...)
Soros insists that one contributing factor to the crisis was the lack of financial regulation. But he takes advantage of the lack of those regulations. Indeed, as I reported back in 2005, one Soros company was a member of the Managed Funds Association, which describes itself as “the global voice for the hedge fund industry” and was actively fighting an SEC proposal to impose more regulation on hedge-fund managers.
The ranking of top hedge fund earners for 2007 shows John Paulson of Paulson & Co. at $3.7 billion and George Soros of Soros Fund Management at $2.9 billion.
Is there anybody in the media willing to question Soros about how he made that money? And whether it came at the expense of the American people? (...)
Read it all >>>
- Filed on Articles in "The Economics and Monetary Dossier" -
"Government is not the answer to our problems; government is the problem."
--Ronald Reagan
________________________________________________________________
An article on Yahoo!News, "On crisis, Europe to US: 'I told you so'" chronicles the European statists' Schadenfreude over the Obama talking point that American laissez-faire deregulation is to blame for the current financial crisis. German en French subjectivists are falling all over each other to get to the mic first and point the finger. Really?
Could it perhaps be Bill Clinton's third way mixed economy, that forced banks to behave like 'social security outlets' by compelling them to act in a way that is alien to their nature, i.e. eyes firmly fixed on the bottom-line, that is the architect of this fiasco? Another Social Democrats success story, Jimmy Carter laid the groundwork. John McCain warned early for the collapse, Obama now says "he wrote a letter ..." while he was up to his eyeballs involved in ACORN, a main contributor to the Fanny Mae and Freddie Mac scam (study the "Just Say No Deal" flow chart and weep). Or watch this short vid, "What Just Happened?"
Now that the system is blowing up, the statists (see them scramble for default position) point the finger at Capitalism, which is to blame. It is a darned gotzpah!
It's always the same tired trick and it keeps on giving. When will we learn?! Force your ideology on a self-sustaining system and when it breaks down because of it, blame the system and shout 'I told you so, it needs more revision and supervision! That will prevent me interfering in the future!'
Deontology does the rest for a clear conscience: our intentions are so ethical because for the common good, that we are a priori absolved for adverse consequences ... the perpetual 'get out of jail card'.
Blaming the' fallibility' of markets is like blaming the weather for storms. We will see much more of that: the Left are always prepared to establish the Socialist Utopia on the smoldering ruins of whatever crisis (induced or otherwise) - the reason why revolutions were incited in the first place. Entire tribes of community organizers, eh ... agitators were insinuated to bring them about.
The statist is so focussed on the evil of free markets and the benevolence of the state that he cannot see what's in front of his nose: that he and his cures are the problem. But that very thought is so alien, that it simply doesn't occur to him.
So now he goes on pumping public money into the system in order to send a message of stability and confidence. What he is actually signaling is that the system is so broke that it needs more and more medicine.
As usual THEY and their quack remedies are the problem, not the weather! For Heaven's sake, stop burning our money!
Believers of free people in a politeia which they own, had better be on red, hot alert the coming months. If we know our statists, they wouldn't be half the collective they are, if they didn't try to pull a fast one.
... oh, and for the record ...
Boston Globe: "Frank's fingerprints are all over the financial fiasco"
Take that!
Related:
- Morning Bell: "Here they go again"
- The Lighthouse: "The Lightness of Being Socialist"
- Filed on Articles in "The Economics and Monetary Dossier" and "The Ethics of Capitalism" -
It's about time we know the real Obama before he's put in The White House.
Do we know all there is to know about his college years? Here's the answer in part 1 of "Obama & Friends Sean Hannity Special 1/6". We will publish the rest shortly in one pod.
Do we know Obama has worked against the Second Amendment at the Joyce Foundation despite claims that he believes in the Second Amendment and is a friend to gun owners (what was that about clinging to God and guns?). "Change" is a good way to describe an Obama tenure: it now transpires he sought the judicial obliteration of the Second Amendment. (Do they never learn the downfall is about lying and hardly ever about the matter itself?)
NRO: "Obama’s Efforts to Fund the Self-Described ‘Most Aggressive Group in the Gun Control Movement’"
Trust the Left not to get the problem of hobnobbing with terrorists. Now let's talk Woods and ACORN!
"Obama's 'Terrorist' Connection Targeted by Palin"
"What Just Happened?"
Update:
Well, that was fast .... the opinion police is pulling one adverse vid after another - go ahead! More proof about the nature of this campaign is hardly necessary. There's more (looks like the veil is also dropping on the Pali connex):
Minority Report: "RNC Filing FEC Complaint Against Obama"
The Washington Post is reporting that the RNC is set to file a complaint with the SEC over Senator Obama’s fundraising practices:
A lawyer for the Republican National Committee today said the party will ask the Federal Election Commission to look into the source of thousands of small-dollar contributions to the presidential campaign of Sen. Barack Obama.
The RNC is alleging that the Obama campaign was so hungry for donations it “looked the other way” as contributions piled up from suspicious, and possibly even illegal foreign donors.
“We believe that the American people should know first and foremost if foreign money is pouring into a presidential election,” said RNC Chief Counsel Sean Cairncross.
At issue is the millions of dollars that Senator Obama has collected under the reporting limit and many donations above the limit that lack necessary documentation. The complaint is necessary now, because without one Senator Obama would not be subject to a post-election audit after rejecting public financing. (...) >>>
Update: Pamela at "Atlas Shrugs" claims the scoop and has something to add - read the fine print! Great job!
- Filed on Articles -
Why does this credit crunch and its bailout plan (which just passed the Senate) get so many mental red lights flashing - Red Alert?! Is it a legalized heist? Is it a cynical, political ploy?
Perhaps it's the irrationality of a panic over a bill which is hoped will stop the panic ... No guarantees either - this is all psychology - perception - emotion - subjectivity, get that? Sounds familiar? Any takers?
The Corner: "Standing Athwart History, Yelling ... Sure, Go Right Ahead"
For the life of me I cannot understand the Corner these days. I keep wondering where the call to “Stand up and Yell Stop” that Mr. Buckley spoke of has gone. I keep reading about the irresponsibility of House Republicans, but how is it irresponsible to stand up and say that you think a bill is bad for America? It is the height of irresponsibility for the Bush administration – and all those doing their bidding – to be screaming “crisis” and scaring the hell out of the American people, holding a shotgun to Congress’ head and then saying “there are NO other options.”
Here's another one for the ages:
WSJ: "Welcome to 'Moral Hazard'"
(...) "Moral hazard" is an odd phrase. Its meaning isn't obvious though it does sound like something one ought to avoid. "Moral hazard" dates back hundreds of years in obscurity, but its use eventually settled inside the insurance business in the 19th century. The French call it risque moral. (...) Back then, it really was taken to mean that reducing risk too much exposed people to the hazard of poor moral judgments. If an insurer charged too little for a policy to replace farms in the English countryside, Farmer Brown might be less careful about cows knocking over oil lamps in the barn. (...) Barack Obama's core proposals on health insurance, trade policy and tax credits all seek to reduce an array of economic risks. John McCain's ideas on health, education and the tax code tilt toward "choice," or letting individuals make judgments about economic risk-taking. Most of the time, moral hazard is simply academic. Not after this week. (...) >>>
Not many people realize that morality is all about choices ... how can one make a moral choice (for the good, or the bad), if one doesn't have a choice, for example * if one lives in a dictatorship * if man is taken to be a slave of his bodily functions * or if life is predetermined by God or fate * or ... if one lives in a risk-free environment (like in a nanny state, or a mixed economy) ...
Two more 'explaining the Bailout Bill' articles have surfaced:
- The Place to Stop for Liberty: "Bailout Explained"
- The Heritage Foundation: "Action on Financial Rescue Plan Urgently Needed"
- Will eventually be filed on Articles in "The Economic and Monetary Dossier" and/or "The Ethics of Capitalism" -
The text of the Bailout Bill in PDF format by Fox News.
World is shocked, shocked ... House Reps throw out corporate social security act!
Video archive material on hearings: Democrats blocking Republican calls for regulation of Fannie Mae and Freddie Mac.
The video shows what no one wants to learn: the way to hell is paved with good intentions; but the effect of selfish capitalism means prosperity for all! Point being, a system that works, in tandem with the right philosophy based on the real reality (as opposed to a perceived, or wished one) takes courage - isn't for the meek or the feeble of spirit ...
Dr Sanity: "CAPITALISM IS GOOD FOR THE SOUL-- IF YOU HAVE ONE
Until we get that (Barack), engineering and regulating will lead to more failures, crisis and mayhem!
(For your own good and) for morality read fifty times "The Fable of the Bees:"
The Grumbling Hive: or, Knaves Turn'd Honest
A spacious Hive well stock'd with Bees,
That lived in Luxury and Ease;
And yet as fam'd for Laws and Arms,
As yielding large and early Swarms;
Was counted the great Nursery
Of Sciences and Industry.
No Bees had better Government,
More Fickleness, or less Content.
They were not Slaves to Tyranny,
Nor ruled by wild Democracy;
But Kings, that could not wrong, because
Their Power was circumscrib'd by Laws. >>>
Here's the best explanation yet.
But here's the thing:
Real Clear Politics: "In Times of Crisis, Trust Capitalism", by Joseph Calhoun
The US government (...) claim this intervention is urgently needed and if we don’t act, the consequences are dire. Dire, as in New Depression dire. Have these supposed experts on capitalism forgotten how it really works?(...) There is not a shortage of capital for well run financial companies. There is, however, a shortage of capital for companies that have acted irresponsibly with investor capital in the recent past. For some reason, our political leaders believe this is a failure of the market, but isn’t this what should be expected from rational investors? (...) The biggest bank failure in the history of the United States happened last Thursday night and by Friday morning, it was business as usual. (...) The taxpayers didn’t lose anything and depositors didn’t lose anything, only investors. That is how capitalism works in case everyone has forgotten. The “crisis” we face today is not a creation of the market. (...)
There has been much commentary recently about the role of Fannie Mae and Freddie Mac in the creation and expansion of the sub-prime mortgage market which many believe to be the cause of this mess. That criticism is certainly warranted, but little attention has been paid to the real culprit – the Federal Reserve.
There has always been a stigma attached to borrowing directly from the Fed and for good reason. If a bank can’t get other banks to lend it money, that tells the market something about the condition of the bank in question. Last August, Bernanke convinced three large banks to borrow at the discount window in an effort to remove that stigma. When that didn’t work, he concocted a scheme to allow banks to borrow from the Fed in anonymity via a mechanism he called the Term Auction Facility. (...) Banks will not lend to each other because they don’t know which ones are really in trouble. The rise in inter-bank lending rates is a rational market response to a lack of information.
Furthermore, why pay those inter-bank rates when the Fed or ECB is offering easier terms? These opaque lending facilities are just part of the problem created by the Fed and Treasury. (...) Now markets are waiting on pins and needles as the politicians haggle over the details of the latest bailout attempt by the Fed and Treasury. This has introduced another roadblock to the re-capitalization and reorganization of the financial industry. Companies that are in need of capital are waiting to see if the plan will bail them out of their difficulties. If Hank Paulson is willing to pay an above market price for their bad loans, why should they dilute their equity now? (...) Why take Tony Soprano terms when Uncle Sam is willing to let the taxpayer take the hit for you?
(...) This plan short circuits the capitalist model which would allow the stronger, well-run institutions to gain market share and/or expand profit margins. The long-term effect will be to lower the overall return on capital in the financial services industry. The government apparently believes that the key to economic recovery is to allocate limited resources in an inefficient manner. Does that make sense? (...) The Fed is the one keeping the market from functioning. The Treasury does not need to enter the market for it to start functioning; the Fed needs to leave the market.
Paulson has said that the cause of the current problems is the housing deflation, but that ignores the elephant in the living room. The housing bubble, which was concentrated in a relatively small number of states, was caused by the reckless actions of the Greenspan Fed. The consequences of that bubble have been exacerbated by the Bernanke Fed. (...) We got into this mess because we tried to avoid the consequences of the Internet bubble. We will only make things worse by trying to avoid the consequences of the housing bubble. We are not on the verge of a new depression. (...)
Investors who made mistakes in these markets should be held responsible and those who navigated the Fed-distorted market should be rewarded for their wisdom and prudence. Enacting the Paulson plan will not allow that to happen and our economy will suffer for it in the long run.
The Japanese tried to prop up failed banks in the aftermath of the bursting of their twin bubbles and the result was 15 years of stagnation. Why are we emulating a strategy that is a demonstrable failure? A better alternative would be to allow capitalism to work as it should and stop the interventions of the Fed in the money market. Trust capitalism. It works. >>>
The British press (Yahoo!News UK & Ireland) was the first early this morning to announce what has been negotiated behind closed doors all weekend without so much as a by your leave: the Belgian, Dutch and Luxemburg governments pumping 11.2 billion Euros worth of tax payers' money into an over greedy and over prestigious bank, for years high in overdrive on testosterone: Belgium 4.7 billion Euros, the Netherlands 4.0 billion and Luxembourg 2.5 billion.
Mind, unlike Fannie Mae and Freddie Mac this was not a bank force-fed by politically correct government policies (and their community organizing enforcers) on quotas of toxic loans! The bank went down because its eyes were not on the bottom line, but indulged in irrational behavior, notably in buying the unaffordable Netherlands major bank - ABN AMRO - out of old world prestige. Investor confidence simply collapsed, shedding three quarters of the value.
The contrast with the US could not be greater. Whereas swathes of the Republican Party as well as a number of Democrats had qualms about handing over vast amounts of tax payers money to market parties, the silence in Europe is deafening. While the bailout bill is hugely unpopular in the US, the Netherlands only Libertarian magazine today sings the praises of the Fortis deal, calling it "a good move" (link in Dutch).
Benelux financial group Fortis underwent a shotgun nationalisation on Sunday after emergency talks with European Central Bank President Jean-Claude Trichet to prevent U.S.-style financial contagion engulfing one of Europe's top 20 banks. The Belgian, Dutch and Luxembourg governments agreed to inject 11.2 billion euros (8.9 billion pounds) into the banking and insurance company, which will sell the parts of Dutch bank ABN AMRO that it bought last year, precipitating its troubles. (...)
Trichet, who as ECB head is responsible for safeguarding financial stability in the euro zone, joined Belgian PM Leterme and Dutch Finance Minister Wouter Bos in Brussels in a frantic drive to secure the future of the cross-border group. The presence of the ECB chief -- unprecedented in a commercial bank rescue -- underlined the seriousness of concern for the integrity of the euro zone's financial system. (...)
Fortis' size, with 85,000 staff worldwide, and its cross-border structure made it too big to be allowed to fail. Its nationalisation dwarfs Britain's state takeover of fallen mortgage lender Northern Rock last year. Fortis Chairman Maurice Lippens, accused by shareholders of concealing the bank's troubles for too long, resigned.
Fortis' precursors traded with Catherine the Great and financed the U.S. purchase of Louisiana from Napoleon. Its main constituent bank, Societe Generale, was the chief financier of the industrialisation of Belgium and the Netherlands. BNP Paribas and ING Group declined comment on reports that they had bid for all or part of Fortis. (...)
New Fortis CEO Filip Dierckx joined the Belgian and Dutch finance ministers and central bankers meeting with Trichet at the Belgian parliament. Dierckx inadvertently gave an insight into rescue plans when a document he took into the meeting was photographed by Reuters. It listed a range of options including "Fortis sells its stake in ABN AMRO for x billion euros to xx" and "governments of Belgium and Luxembourg to invest xx billion euros in Fortis". Fortis' portfolio of structured credit would be written down by an unspecified number of billions of euros, it said. There was no confirmation of any write-off in the official statement.
(...) The problems at Fortis, whose shares dropped by a third last week on investor concerns about its liquidity and funding, stem from last year's 70 billion euro purchase of ABN with partners Royal Bank of Scotland and Spain's Santander. Fortis has been weighed down by its 24 billion euro outlay for ABN in a market that is neither conducive to more capital increases nor willing to pay for the assets it wants to sell.
Its shares plummeted more than 20 percent to 15-year lows on Friday despite a statement that its position was strong and a pledge to expand asset sales to as much as 10 billion euros. The group's market capitalisation slumped from 50 billion euros after the ABN purchase to just 12 billion euros on Friday. The stakes were high in Belgium, where Fortis is the biggest private sector employer and more than 1.5 million households, roughly half the country, bank with the group.
(...) Financial players around the world were hoping that U.S. lawmakers would finally sign off on a deal to create a $700 billion (381.4 billion pound) government fund to buy bad debt from ailing banks in a bid to stem a credit crisis threatening the global economy. (...) >>>Yesterday in "Credit Cruch Critical for Survival Capitalism" we remarked that under pressure, politicians would resume the default positions of their natural philosophical alignment ... enjoy David Cameron ...
Yahoo/ITN: "Cameron slams 'banker bashers'"
- Filed on Articles in "The Ethics of Capitalism" -
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