“Mobs” won the GetAbstract Book Award for 2008.
My coauthor and I attended the award at Frankfurt, hosted by the gracious and brilliant novelist-entrepreneur Rolf Dobelli:
I then flew to Morocco where I notice gold has been beaten down even further.
Since I am traveling in some rather remote areas, I will not be able to blog for a while…
Do Statistics Back Claims of Complete Credit Freeze?
“Many commentators claim, however, that virtually no transactions are occurring in this market. These claims are completely false. For the week that ended October 1, which is the most recent week currently reported, total commercial paper outstanding amounted to $1,607 billion. Yes, this amount was down from the $1,702 billion reported for the previous week, but is a 5.6 percent drop a good reason to panic? If we go back to March 2008, when nobody was talking excitedly about the commercial market’s “freezing up,” we find that the total amount outstanding, on average, was $1,822 billion, or only 13 percent more than last week. In March, the market was working fine; now it’s “locked up.” This sort of hyperbole, with which we are being bombarded hourly around the clock, is totally without a basis in the facts…..”
Robert Higgs, suggesting that some people are fomenting panic. He asks why.
Comment:
The answer lies in asking yourself:
Who has benefited so far? How? What do they want to happen?
Paulson Plan Premeditated?
Here’s Bill Engdahl tying up the loose ends of my piece on Paulson on how Paulson’s plan benefits the three new super banks, Goldman, JPMorgan Chase, and Citi and how they would be used to dominate global, especially European, banking.
Interbank Wars – Latest
The latest in Citi’s fight with Wells Fargo is that Citi has terminated negotiations and is planning to pursue breach of contract against Wells, so Wells is going ahead with its deal. Citi has Goldman Sachs connections: Rubin, Clinton’s Treasury Secretary and a former Goldman chief is a director. Meanwhile, with regard to Bear’s demise, here is a piece arguing that JPMorgan was involved in gold price manipulation under cover of their bail out of Bear this spring. JPMorgan chief Jamie Dimon sits on the Board of the NY Federal Reserve and as such was privy to the NY Fed’s actions re Bear Stearns.
Media Trix
Bill O’Reilly, not usually my favorite person, has been pretty good on standing up to the bail-out. This evening, he had a clip from an NBC skit on the sale of subprime mortgages to Wachovia by a couple, the Sandlers. It mocks Barney Frank’s role in eliminating oversight of Fannie and Freddie. Apparently the video was edited to remove the reference to Frank. The Sandlers had a long list of progressive groups they donated to (including Move On.org).
O’Reilly’s tack seems to be that the positions of those groups is undermined by the funding. That part is far-fetched, but it is time someone pointed out that not everyone affected by the decline in housing prices is an innocent. Many people made fortunes during the boom and are making more money from the bust.
Update – Market Moves Or CyberWars?
Another amazing day. I walked out of the house for 2 hours to buy a laptop for traveling, since my old one had mysteriously lost its internet connectivity. When I came back, the market was closing with a sell off, down 7% (679 points).
It began in the morning when
Paulson announced that insurance companies were in for trouble. That set off the selling in the bank and insurance stocks, including regional bank funds.
The whole thing was compounded by the fact that today was the day the ban on short-selling around 1000 financial and finance related stocks was lifted, so short-sellers were pouncing.
[Companies on the SEC’s list slid 18 percent on average during the ban, compared with 24 percent drop for all financial companies in the Standard & Poor’s 500 Index].
Then, General Motors had a bad day: Standard &Poor threatened to downgrade it (as well as Ford) to junk. GM shares got beaten down under $5; Ford was down over 20% too.
You had to wonder at the timing.
1) It’s the Jewish holiday, Yom Kippur, today. Recall that the selling began the evening of Rosh Hashanah. Remember that old saw – sell Rosh Hashanah, buy Yom Kippur? Markets are weaker at the time…
2) The declines came on the one-year anniversary of the closing highs of the Dow and the S&P. The Dow has lost 5,585 points, or 39.4 percent, since closing at 14,164.53 on Oct. 9, 2007. It’s the worst run for the Dow since the nearly two-year bear market that ended in December 1974 when the Dow lost 45 percent.
3) The decline is 7 years from 9/11
Anyway, when I got back the damage had been done.
[I ended up buying my computer at a shop that sold refurbished electronics in a rather shady side of town. A cop car was pulling away just as I walked in. But having just been a spectator to one of the biggest bank heists in history, I suddenly found the grungy looking characters hanging around rather harmless].
James Altucher, a trader, has this to say at The Street:
“The single biggest reason the stock market has fallen in the past five days is hedge fund liquidations. Of the top 20 hedge funds in the world, something like 18 are down 20% or more this year. They are getting redemptions, they are liquidating, they are selling stocks with reckless abandon to raise cash. Our job as good investors is to give them liquidity and take their bargain-basement merchandise off of their hands. Let’s get their selling over with so we can make money.”
Well, that’s evident. There was big selling, especially at the end, the kind from sell signals going off in program trading.
Morton Kondracke on FOX News in the evening was telling us sagely that it’s not a liquidity issue, it’s a confidence issue, and (get this) the answer is to create a global central bank. Right. The solution to a confidence problem is to give the markets to the confidence-men.
A note on cyberwarfare might be apposite hear. I dig it up from an old article I wrote that references Laurent Murawiec’s now notorious power-point presentation in 2002 advocating seizing Saudi oil fields. Murawiec is connected to Donald Rumsfeld’s Revolution in Military Affairs (RMA) which makes InfoWars central to the battle ground.
“In all these cases, IW involves creating phantom cyber-images, which can include phantasms of nonexistent trains, airplanes, stock market orders, and bank transfers; false impressions of the enemy’s troop strength and one’s own, of supplies and movements, of fake attacks and all-too-real defenses; and phantom images of the enemy’s leaders doing evil things on screen because one has video-morphed images of them doing them so.
“Information warfare is not about machines or even electrons. It is about people’s minds, society’s functions, and armies’ strategies. Cyberspace endows us — and our enemies — with new and extraordinary means with which to achieve our respective aims. “We have only begun to cyber-fight….”
More at “Tom Tancredo Takes Out Mecca: The Cyber Wars Playing Near You.”
” At the three-tiered Dragon Gate, where the waves are high,
fish become dragons,
Yet fools still go on scooping out the evening pond water.“
Commentary from Zen Mountain Monastery:
There is a Chinese legend about a great dragon gate though which the mighty Yellow River flows, where the waves at the gate are high and the three tiers of the gate are treacherous. On the third day of the third month when the peach blossoms bloom and heaven and earth are ready, if there’s a fish that can get through the dragon gate then horns sprout on its head, it raises its bristling tail, catches hold of a cloud, and flies away becoming a dragon.
But you see, the conditions have to be right. How are the conditions made ready for us to pass through the gate? No one can predict. Yet they don’t become correct by creation, by will, or intent. When the wind of our mind ceases to blow, when the god of fire truly comes looking for fire, then “the sky can’t cover it; the earth can’t support it.”
Yet fools still go on scooping out the evening pond water.
Somebody watches as a fish leaps free of the dragon gate, is zapped by a lightning bolt, and is transformed into a dragon. Then they hurriedly run down to scoop out some of the water to drink, thinking that will make them into a dragon. It must come from deep within. We can’t live another’s life, practice another’s barriers, realize another’s true nature.
Where do you find yourself? What do you need to do before you can live and die completely, unreservedly? Who is asking? How much does it matter? What are you willing to let go of? These are the conditions. They are real and they come to life when we bring them to life. What is Buddha? Please, find out for yourself…”
“The argument that the two parties should represent opposed ideals and policies, one, perhaps, of the Right and the other of the Left, is a foolish idea acceptable only to the doctrinaire and academic thinkers. Instead, the two parties should be almost identical, so that the American people can “throw the rascals out” at any election without leading to any profound or extreme shifts in policy. “{p. 1247-1248}
Carroll Quigley, Tragedy and Hope, 1966
And this note for conspiracy aficionados from an admirer:
“Many people interested in Carroll Quigley take entirely out of context the references he made in his book Tragedy and Hope: A History of the World in Our Time about a high-level Anglophile conspiracy that, he said, flourished before World War II. It seems that many people believe Quigley thought this vast conspiracy somehow continues to operate right up to our own day.
But as Dr. Quigley once told me, the reality is much scarier. Instead of a secret cabal now being in charge, there’s no one in charge….”
Comment:
That, of course, is a clever disclaimer. Perhaps there is a group in control…perhaps not. But surely there is a system of thought in control. Corporatism (industrial capitalism as we know it) and socialism, apparently at odds but actually knitted together, with control in the hands of small groups of elites in finance and their apologists in the media and in academia….
That’s quite a plausible conspiracy. American history does indeed show an alliance between big business and so-called progressive reform ….certainly from the era of the Progressives onward. The ideology that has driven this is Fabian socialism, out of which developed theories of mass control, useful both for the work place and equally in politics.
Doug Boggs adds to this discussion with a very interesting post on how complex groups function, where he looks at some of the break-down today in terms of evolutionary change (if I understand him right).
“Rabbi Bush exploded in anger. “How dare you be satisfied with such a status quo! First, those foolish virgins were victims, for there is not enough affordable oil, and it is not right that only some have a full supply while others go empty-handed!”
He continued. “Second, the only just solution is for the wise virgins to bail out the foolish ones, or else people will have to live in darkness.”
“Uh,” Jesus replied, “I think that we already have established that if your plan is put into place, everyone will be in darkness.”
Rabbi Dodd interjected, “Rabbi Frank and I have long believed that oil should be affordable for everyone, and that is why we have worked to increase the access of everyone to oil.” “I know,” replied Jesus, dryly, “Your scheme forced up the price of oil so high that only those who had been wise and prudent with their money could afford enough of it at the end. It is harder now to get oil than ever.”
Rabbi Paulson stepped forward with a big grin on his face. “That is why we have a special plan,” he told Jesus. “Foolish virgins can borrow all of the money they want from King Herod, who plans to borrow that money himself from the people.”
“How will the payback work?” asked Jesus, concerned. “It seems that people will be in debt with no hope of repayment. You say you are borrowing from the people to lend to the people? Does not the Book of Proverbs say that the debtor is slave to the lender?”
“Not in our economy,” replied Rabbi Paulson proudly. “We will owe it to ourselves.”
And Jesus wept.”
“The difference between Vegas and Wall Street,” said Wayne Allyn Root, Libertarian candidate Bob Barr’s running mate, on Neil Cavuto, October 4, “In Vegas the drunks gamble with their own money…”
Here’s more from where the quote comes:
“Palin lacks the U.S. Senate pedigree, law degree, or the D.C. Beltway credentials of Biden, but she has Reaganesque-like charm, charisma and middle American values………
McCain sensed in the “Palin style” what I’ve understood for a long time: America is looking for a hero, an ANTI-POLITICIAN. Someone who is not a lawyer; not an elitist; not an intellectual; who understands middle America and small town values; who will govern with common sense; who wants to give the power back to the people- NOT the lobbyists and corporate interests. So I say BRAVO to Governor Palin for a job well done. You “get it” in a way so few politicians do (or ever have).”
The market needs deflation, as the natural end of excess, says Barry Brownstein. If we try to avert it by intervention, we will end with something much worse – hyperinflation.
“If, on the other hand, the reactionary forces prevail, more money will be thrown after bad; foreigners will withdraw from our capital markets; and eventually, a hyperinflation will begin. In that terrible scenario, it is likely that the United States will split apart; and many cities will descend into anarchy. You can see why I prefer the deflationary depression.”
And the Republican hold-outs in the House came up with a few ideas of their own:
*Suspend capital gains for two years (boosting global competitiveness and upping stock prices)
*Denationalize and privatize Fannie and Freddie
*Waive mark-to-market”
*Strengthen the dollar”
That’s from a post by Deroy Murdock at Human Events.
Comment:
We’ll get one of those – mark-to-market will go. And maybe some tax cuts. But don’t hold your breath for a strong dollar or privatizing F&F. My bet’s on hyperinflation…
Comedienne Sandra Bernhadt has this to say about Sarah Palin:
“Now you got Uncle Women, like Sarah Palin, who jumps on the sh*t and points her fingers at other women. Turncoat bitch! Don’t you f*ckin’ reference Old Testament, b*tch! You stay with your new Goyish crappy shiksa funky bullsh*t! Don’t you touch my Old Testament, you b*tch! Because we have left it open for interpre-ta-tion! It is no longer taken literally! You whore in your f*ckin’ cheap New Vision cheap-ass plastic glasses and your [sneering voice] hair up. A Tina Fey-Megan Mullally broke down bullshit moment.” (rest of the comment censored)
Protecting minorities does not mean insulting and hurting majorities. I am not in favor of hate speech laws at all. But this is utterly misogynistic, anti-Christian (especially fundamentalist), racist and very unfunny. Imagine a moment a white Christian male fundamentalist had said this about some one of another religion….say Muslim, or Hindu, or Jewish. Imagine the furore. This is what PC eventually does. It doesn’t clean up public discourse. It switches the role of victim and tormentor to different groups.
“Two years ago, for example, when the now-beleaguered Morgan Stanley was trumpeting a 61 percent jump in profits, Grant wrote a pessimistic analysis titled “over the cliff with Morgan Stanley.”
Notes the Washington Post.
Comment
Yes, there were lots of people who saw this coming. The Post mentions two of them – Nouriel Rubini from the Stern School of Business and James Grant of Grant’s Interest Rate Observer. I can name dozens: Kevin Phillips, Richard Russell, Bill Fleckenstein (another perma bear, but none the less right), Peter Schiff, Jim Rogers, Marc Faber, The Daily Reckoning crew….
And yours truly way back in 2006, even pointed out that Fanny and Freddie would be at the heart of the problem:
“Why It’s Time to Sell Goldman,” Money Week, July 2006.
Meanwhile, the Chinese government shows a keener understanding of sound money and the free market than our money men:
“According to numerous Chinese state media news sources today, the Federal Reserve’s continued zeal for propping up the market by injecting illusory liquidity is part of an agenda to gain trust and grease the skids for increased government intervention in financial markets. China Finance, China News and Chaobao Financial News, all state owned media outlets, slammed the Fed for taking action that will only make long term economic conditions worse and devalue the dollar by “creating money that does not exist which leads to the inflation of liquidity, ” a policy contrary to China’s position as a holder of vast reserves of US dollars.”
Nice to see that the Chi Coms are more in synch with the best tradition of this country on the need for sound money. Shows you that our worst enemies are right here at home.
And Anatole Kaletsky states the obvious: Paulson was willing to destroy shareholders in Bear and Lehman but he rushed to defend his old firm.
This is an age when huckstering is considered a fine art.
A successful hypester is now a Wagner of marketing, a Van Gogh of persuasion.
This might be vanity or it might be deep-rooted insecurity, it’s hard to tell. It is certainly an inaccurate use of language.
But these days, counting yourself an artist is not a matter of precise definition. It is a kind of self-anointing, the kind typical of the mob mind? We live in an age where there are no priesthoods we can believe in. What could be more democratic than an order into which anyone can be inducted, with a clever turn of phrase, a dab of paint….or a long form sales letter?
You might say, so what? What if salesmen think they are painting the Sistine Chapel? What’s wrong with it?
So many things, it would be hard to know where to start.
In the first place, it reeks of envy…..
Terrific salesmen are not Michelangelos or Leonardos. It would be flattery to call them even hacks.
A salesman does a very necessary and important task. He might do it superbly. That does not make him an artist, let alone an artistic genius.
There may be novelists for whom writing is a business and salesmen for whom selling is a pleasure, but in general there is a difference between activities that have their own reasons for being (the sciences and arts) and activities that are means to those things (selling).
A great artist is not an easy thing to come by. A number of things have to get together – talent so extraordinary as to occur only once in generations… the necessary training…the proper socio-economic soil… enough physical and intellectual vitality…drive…luck…
So many things, in fact, that it isn’t really in anyone’s hands to “decide” to be an artist of that stature. If it is given to you, it will be. If it is not, it will not. Talent does what it can. Genius does what it must, as someone said.
Great art and hype are things that no person of sense, especially a sense of proportion, would confuse or think of comparing. It isn’t just arrogance but arrogant foolishness to think that selling anything, however well, is equivalent to composing the Goldberg Variations.
In fact, a sensible person would laugh at the comparison, if it were not also profoundly sad. It betrays a temperament so shallow it cannot grasp that there are limits to how we shape ourselves. Limits not set by ourselves at all, but by that formless form and ever-changing changelessness that a less self-conscious period in the West called God and the East still calls the Self.