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Panic of 2008 
Sat Feb 13, 2010 at 12:48:19 PST
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(11 am. - promoted by ek hornbeck)
 Rachel Maddow tells us that "filibuster" is a boring word, even if it originally meant private adventurers going off risking life and limb trying to make themselves President of some Central American country.
So I will use the other common English language phrase for it, "Talking a Bill to Death".
The ability to Talk a Bill to Death was introduced by mistake when Aaron Burr in 1806 argued for removal of the motion to "move the previous question". This is a motion that can be used to postpone debate, when a measure does not yet have a majority, and can of course also be used to bring a measure to a vote, if it has a majority. Aaron Burr appealed to the fact that it had only passed once in the previous four years - but then again, the Senate did not at that time have a filibuster tradition.
So, restoration of the original rule is one fix to the filibuster problem. However, that is not what I am focusing on today. Rather, I am focusing on the Unconstitutionality of filibustering one type of bill, which was the real flaw in Aaron Burr's Blunder.
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Mon May 25, 2009 at 12:23:56 PDT
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( - promoted by buhdydharma )
 ... or perhaps that should be, so we no longer need a memorial day for the US economy.
In It need not be a calamity, I wrote: But ... well, we know this. We have known since the 1970's that we would become increasingly dependent under the Old Energy Economy. We have known since the 1970's that our four centuries of energy self-sufficiency since European Settlement of the eastern seaboard of North America would be coming to an end unless we made substantial changes.
And then our ruling elites collectively decided to pretend that social division of national product is a more fundamental question than the ability to continue producing it, and we descended into the last thirty years of the wealthy focusing in grabbing a bigger share of the pie, while assuming that the baking of the pie would magically take care of itself.
Crossposted from Burning the Midnight Oil for a Brawny Recovery and The Economic Populist
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Wed May 20, 2009 at 11:57:28 PDT
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(10 am. - promoted by ek hornbeck)
 Betwixt and Between, I find myself. I observe the validity of D00m.P0rn shrill warnings about the future ... when seen as possible outcomes rather than when seen as certainties. Yet I also see the potential for better outcomes.
And with respect to the strategy of sitting on the sidelines, weighing the likelihood of one versus the other ... I'm against it. Simply the decision to sit on the sidelines makes the calamity more likely as a result. So I am for getting into the fray and trying to make the calamity less likely and the hopeful outcome more likely.
The Calamity Cavalcade
As far as potential calamities, we do not have to look far for those.
We are on track to have a higher concentration of CO2 in the atmosphere than at any other time in the Holocene. We are engaged in this experiments with absolutely no serious evidence to suggest that it is known to be safe. Indeed, those benefiting in the short term from the reckless experiment will even try to reverse the sane burden of proof and place it on those who do not approve of undertaking the reckless experiment.
The argument being, in essence, that if you are driving through a thick fog, then as long as you don't see any cars coming, its OK to speed.
And of course, before the peril of climate chaos came to our attention, there was already the risk of ecosystem collapse hanging over our head, as more and more populations on the planet rely on an industrial technology that is quite clearly ecologically unsustainable and therefore certain to collapse sooner or later, unless we restructure our technological base to approach sustainability faster than we approach ecosystem collapse.
And then of course, even before the risk of ecosystem collapse was widely understood, the threat of nuclear holocaust.
Flood, Nuclear fire followed by Nuclear Winter, Famine and Plague ... and all three involved in or certainly leading to War ... surely rather than Four Horsemen of the Apocalypse, there is a whole Cavalry Unit.
Against that backdrop, it may seem provincial to worry about a mere collapse of a single national economy from first world to banana republic status, but that is the specific calamity that I am focusing on here.
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Sun May 10, 2009 at 13:22:42 PDT
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( - promoted by buhdydharma )
 The April employment numbers are out. The Broad Based (U6) unemployment figures ... the best measure of the "total people available to take on more work" ... give, on the one hand, bad news, and on the other hand, worse news. This is, of course, treated as "good news", because the expectation was that it would be on the one hand worse news and on the other hand catastrophic news.
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| U6 seasonally adjusted | JAN | FEB | MAR | APR | MAY | JUN | JUL | AUG | SEP | OCT | NOV | DEC |
| 2008 | 9.0% | 8.9% | 9.1% | 9.2% | 9.7% | 9.9% | 10.3% | 10.9% | 11.2% | 12.0% | 12.6% | 13.5% |
| 2009 | 13.9% | 14.8% | 15.6% | 15.8% | | | | | | | | |
This is not the "headline" rate, or U3, which takes everyone working any hours at all as "employed", even if they want more work, and anyone who has not actively sought work in the last four weeks is dropped out altogether.
Instead, its the "broad" or "U6" rate, where those who express an interest in working who have looked for work in the past year are included, as well as those who are "involuntary part-time" employees. So the U6 series is the best measure of the "total people available to take on more work".
Also note that BLS unemployment statistics are not determined by the numbers of people drawing unemployment ... it includes a broad range of data sources, including an ongoing telephone survey.
In terms of changes in the "U6" unemployment rate, this is:
| Change in U6 | JAN | FEB | MAR | APR | MAY | JUN | JUL | AUG | SEP | OCT | NOV | DEC |
| 2008 | | -0.1% | +0.2% | +0.1% | +0.5% | +0.2% | +0.4% | +0.6% | +0.3% | +0.8% | +0.6% | +0.9% |
| 2009 | +0.4% | +0.9% | +0.8% | +0.2% | | | | | | | | |
The bad news is, of course broad based unemployment is still rising. The worse news is that it is more than halfway to the "depths of the Great Depression" benchmark of around 1 in 4 out of work.
Even more, the populace has been trained to accept as "normal" unemployment rates what would have been considered an economic emergency back in the 1960's.
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Fri Mar 20, 2009 at 18:48:28 PDT
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(11 am. - promoted by ek hornbeck)
Burning the Midnight Oil for the Beauty Platform
Johnny Venom, in an extended comment on a Robert Oak post at The Economic Populist, says (note ... much good stuff snipped, so click through): My take on all this madness
What's happening here is the collision of several realities:
1. You had institutions, who years if not decades, believing the hype they built themselves to sell to their clients. ...
2. That you can't simply create your own damn financial instrument to meet a client's needs. ...
3. Derivatives products work when they are designed well and implemented on a regulated environment. ...
4. Many of these items will never be liquid. This brings us to today. The reality of the situation is that we now have to be discriminating between those derivatives that are somewhat liquid and those that aren't. The former can have mark to market, but there needs to be a proper exchange for these things. Both the CME and ICE are going to have such a thing, and these banks should be made to trade them on it to get these things off their books. As for the iliquid ones, well unless our goal is to bankrupt these banks in some attempt to punish them, we will have to facilitate either a suspension of FASB 157 for these or some hybrid. ...
5. Banks holding on to these illiquid derivative step children, that must be re-engineered, will have to realize they won't get all their money back. ...
6. Lastly, new accounting rules and financial regulations must be in place to keep in check the establishment of new positions. ...
My response and thoughts after the fold.
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Tue Mar 17, 2009 at 11:56:29 PDT
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(9 am. - promoted by ek hornbeck)
Burning the Midnight Oil for the Beauty Platform and Economic Populism
 The problem with the "Good Bank / Bad Bank" (see also Dr. Seuss version) plan is, of course, ... {drum roll}
... in order to "rescue" banks that distributed a massive amount of contingency reserves as if it was income ... by pretending that massive downsides did not exist ...
... we "have to" reward the people who proved to be grossly incompetent in the core competency for senior executive management of a bank.
Except, as Joe Stiglitz points out, we don't have to at all.
In other words, there is good and bad in the Good Bank / Bad Bank plan. And if we reverse who ends up with the Good Assets and who ends up with the Bad Assets, we can have all of the Good, and avoid most of the Bad.
UPDATE
Keith Olbermann cites "my" plan on the Tonight show ... posted at the Big Orange
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Sat Feb 14, 2009 at 16:01:45 PST
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(1 pm. - promoted by ek hornbeck)
Burning the Midnight Oil for a Brawny Recovery
"Tell me how spending $8 billion," asked House Minority Leader John Boehner (R-OH) on the floor,"in this bill to have a high-speed rail line between Los Angeles and Las Vegas is going to help the construction worker in my district."
(h/t Matthew Yglesias)
Now, lets look at the Federally Designated Corridors -- and you have to have a designated corridor to get any of the $8b.
Yup, no corridor to Vegas. Oh, and what's that we see ... two, count 'em TWO corridors through Ohio ... Cleveland to Chicago and Cleveland / Columbus / Dayton / Cincinnati.
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Mon Feb 09, 2009 at 11:55:12 PST
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( - promoted by buhdydharma )
Burning the Midnight Oil for the Next American Revolution
 Jerome a Paris at the European Tribune focuses in on the central problem of the Financial crisis, and therefore the central problem of the Bail-Out:
But, pontificating aside, the reality is that we had a large scale grand robbery of the past few years. To make it simple: the Fed printed money, gave it for free to rich people, who lent it to poor people at at nice profit instead of paying them wages; reimbursement was possible only if house prices went up, and that lasted for a while. The rich made out like bandits on their assets, financial or otherwise, and the poor thought they were more or less keeping up with the Joneses (the reality was a large-scale transfer of wealth from one group to the other, no bonus points for guessing which was which). Now that it's no longer the case, the poor lose their house, stop paying their debt at some point, put the banks in a pickles, and the economy unravels. Except that the banks are being bailed out, which means, fundamentally, saving the owners of financial assets (bank bondholders specifically, and bond holders in general) at the expense of taxpayers, thus having the goverment validate and consolidate the past transfer of wealth.
 So leverage is the central problem ... or rather, the central problems:
- For those looking to hold onto their ill-gotten gains, how to maintain the maximum amount of wealth while they deleverage, which means how to convert what was always in a large part fantasy wealth into actual claims on actual productive capacity
- For the other 99% of us, how to prevent those who obtained fantasy wealth from converting it into real wealth at our expense
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Mon Jan 26, 2009 at 08:43:27 PST
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(11 am. - promoted by ek hornbeck)
Adapted from an entry at Burning the Midnight Oil for Living Energy Independence ... links to crossposts may be found there.
 OK, so, to make an egregiously long story merely excessively long, a very strange thing happened on the road to the Stimulus Package. As Rep. Oberstar told the U.S. Conference of Mayors:
That is why we set forth this $85-billion initiative from our committee. It's been reduced in the final going. We expect that it'll come out somewhere around $63 billion, but $30 billion for highways.
The reason for the reduction in overall funding ... was the tax cut initiative that had to be paid for in some way by keeping the entire package in the range of $850 billion.
As I described in Transport Stimulus: You're Doing It Wrong, actual effective stimulus spending was shortchanged -- and in particular spending with substantial long term economic and strategic benefits -- to "pay for" tax cuts.
In reality, if we want to be able to "afford" tax cuts, what we need first and foremost is growth, and economic growth requires effective government investment in the infrastructure of a New Energy Economy.
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Sat Jan 17, 2009 at 17:35:28 PST
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(11 am. - promoted by ek hornbeck)
Burning the Midnight Oil for Energy Independence (crosspost links at the blog)
There is this big emphasis on "shovel ready projects" in the Stimulus Bill ... but now that the details are coming out, we can see that in transport, its just a load of horseshit used as an excuse for supporting business as usual.
The headline numbers are $30b highway spending, $10b for public transport and rail:
- Transit Capital Assistance, $15.9b in shovel ready projects, $6b in funding
- Amtrak, more than $10b in capital backlog, $0.8b in funding
- Fixed Guideway Infrastructure Investment, $50b capital backlog, $2b in funding
- Capital Investment Grants, $2.4b in already approved projects, $1b in funding
I got a "shovel-ready" project for you ... shoveling out the bullshit from the Bush Administration Department of Transport and replacing the pandering to the oil companies with a concern for America's Economic Future.
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Sun Jan 04, 2009 at 06:13:10 PST
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( - promoted by buhdydharma )
Burning the Midnight Oil to Drag Economics into the Real World
 As Jerome a Paris has noted, among others, Paulson and others of his ilk have started blaming the Chinese and Germans for our economic woes:
The US Treasury Secretary said that in the years leading up to the crisis, super-abundant savings from fast-growing emerging nations such as China and oil exporters - at a time of low inflation and booming trade and capital flows - put downward pressure on yields and risk spreads everywhere.
This, he said, laid the seeds of a global credit bubble that extended far beyond the US sub-prime mortgage market and has now burst with devastating consequences worldwide.
What a sorry load of ... well, let me go for a better analogy than that ... and then dig more deeply into the whys and wherefores of its load of ...
... uh, after the fold.
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Fri Nov 21, 2008 at 10:22:01 PST
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(8 am. - promoted by ek hornbeck)
Burning the Midnight Oil for Real World Economics
NB. New Oil links are now located at the Midnight Oil Blog
A while ago, as an off-shoot of the Beauty Platform, I set out a Beautiful Bail-Out plan.
Two key parts were: 50:50 on money going to help regular home buyers to extricate themselves from the mortgage meltdown, and on bailing out the finance sector from the mess they got themselves into ...
... and having the finance sector bail out consisting of both unloading dubious assets and issue of Senior Preferred shares with heavy strings attached.
Now, the Administration did not, in fact, listen to me, but when Senator Dodd was complaining about what banks had done with their bail out money, waddya know ... I got a perfect three out of three on what strings needed to be attached to the money:
- Limits on Mergers and Acquisition
- No payments of any other dividends
- Limits on Executive Compensation
... until the Senior Preferred Dividend had been paid for four quarters straight ... and kicking back in if the firm in the future ran into problems meeting the Senior Preferred Dividend.
But ... does the Beautiful Bail Out model extend to the Big Three?
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Sun Oct 05, 2008 at 13:36:38 PDT
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(9 am. - promoted by ek hornbeck)
Here at Docudharma yesterday's diary on The Magic of Default Swaps: You Too can be an Insurance Company, cassiodorus says:Dollar hegemony, however, can only prevent a general contagion of dollars up to a point. What that point is, however, is a mystery. ... Thus hyperinflation and currency crash.
As I see it, there are two paths ahead.
(1) A crash program of investment in sustainable energy production and energy efficiency in transport, housing and farming, leveraging the exporters-exchange-rate the US$ will be seeing into a central position in the growth industries of the 21st century ... or ...
(2) We try to continue on the same unsustainable course, and have a hyperinflation.
Background, more detail and analysis beyond the fold.
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Sat Oct 04, 2008 at 19:03:30 PDT
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(noon. - promoted by ek hornbeck)
The numbers that are thrown around are so mind-boggling that they are mind-numbing. The total amount of Credit Default Swap (CDS) obligations outstanding, according to the Bank of International Settlement, was 57 trillion US$ in December 2007 (pdf).
That is roughly Four Times the size of the US GDP.
These are the things that Warren Buffet called a "time bomb".
What are they? Well, suppose that we are watching a little old lady crossing a street, and want to take out a life insurance policy that pays if she gets clobbered by traffic. Unless she is close family, or she is a business partner, we can't do that ... we have no insurable interest.
But if we were watching a company, and wanted to buy a contract that pays off if the company can't pay on its bonds, we could. We'd buy a CDS.
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Wed Oct 01, 2008 at 11:42:44 PDT
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(9 am. - promoted by ek hornbeck)
So, Monday a bail-out package described by opponents a excrement on toast went down to defeat because after getting compromises to make it, in my view, worse, the Republican leadership could not then deliver enough Republican votes to get the thing passed "on a bipartisan basis".
Like they are unwilling to take unpopular votes to protect business interests? What was more than a decade of votes against the Minimum Wage about, then?
So, the first step is to see if the non-finance sector business lobby has been on the phone with the Rebel Replicants, cursing them a blue streak for screwing the pooch so badly before the Christmas shopping season. Perhaps they are, and so perhaps they will toe the line.
And if not, then the Democrats can turn to putting together a Beautiful Financial Rescue Package that the caucus can support. So, what would that look like?
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Fri Sep 26, 2008 at 17:20:36 PDT
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(noon. - promoted by ek hornbeck)
OK, now, Wash-Mooooo has been taken to the slaughterhouse and the choicest cuts bought by JP Morgan Chase (full disclosure: I bank at Chase).
Didn't anyone know that this was going on? Well, of course people did. For example, back in May of this year, William C. Dudley, an Executive VP at the New York Federal Reserve Bank said: So what has been driving the recent widening in term funding spreads? In my view, the rise in funding pressures is mainly the consequence of increased balance sheet pressure on banks.
And, obviously, "balance sheet pressure" is a nice way of saying trending toward a risk of insolvency.
Of course, the Fed has been acting for a year now like we are facing a liquidity crisis, when we are actually facing a solvency crisis ... but if you carefully read an analysis by a fairly senior person in the Federal Reserve System, its all there. What's up?
Join me below the fold.
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Reform Immigration -
March for America
Sunday, March 21
March on Washington
Saturday, March 20
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