- “Nationalization In a Time of Monopoly” – a piece for Lew Rockwell
http://www.lewrockwell.com/rajiva/rajiva14.html #
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Category Archives: Media
Propaganda Nation: Swedish Model Wasn’t Nationalization
“OK…more confusion….turns out the Swedish model that’s been touted (supposedly, this was nationalization) was not the way it’s been described in the media.
Here’s Anders Aslund at the Peterson Institute:
“Sweden did not nationalize its banks. It was Norway that did so, which is an alternative model. In Sweden, a temporary emergency bank authority was set up on the model of the US Federal Deposit Insurance Corporation. It had outside, mainly foreign, consultants to scrutinize all bank debts and establish objectively which were nonperforming. The banks were forced to write off their bad debts and transfer them to bad banks.
Sweden had no aggregator bad bank and the bad banks were not nationalized. Each big bank set up its own bad bank. They were given illustrious names such as Securum, Retriva, Nackebro and Diligentia. Securum was the biggest bad bank belonging to the already state-owned bank, Nordbanken, and it became a separate state company. The private bad banks, however, remained the property of the private banks from which they were removed.
Nobody traded toxic waste at the height of the crisis in Sweden. Such trade is an unnecessary complication. A bad bank is not a bank but a private equity fund, which does not need much capital or recapitalization. Its task is to isolate the rotten apples so that they do not contaminate the good loans in the cleansed banks.
The bad banks sold off their assets at a leisurely pace over several years to maximize their value, avoiding excessive depreciation of assets through fire sales. Any gain was to the benefit of its owners. In this way, Sweden avoided the problem of trading undervalued assets. In the end, even Securum made a small profit.
There is no reason to merge bad banks, because asset sales require plenty of management capacity. A major concentration of assets in an aggregator bank would only aggravate the functioning of asset markets.
The Swedish emergency bank authority divided the banks into three groups. One group consisted of two obviously bankrupt banks, the private Gota Banken and the state Nordbanken. They were merged into state-owned Nordbanken, eventually becoming Nordea, a thriving bank that has been gradually privatized. A second group of private banks, Swedbank and SEB, had too little capital but could be revived. After long negotiations with the state, their shareholders decided to recapitalize them at their own expense, and these farsighted shareholders gained handsomely, although their old capital had been consumed. A third group consisted of private banks in rude health, primarily Handelsbanken, which continued to thrive, but it also set up a bad bank, Nackebro.
Thus, the common American idea that the Swedish bank resolution involved major nationalization is a sheer misunderstanding. Only one failing private bank, Gota Banken, was merged with an equally bankrupt state bank. Sweden avoided private-public partnerships, of which Fannie Mae and Freddie Mac are the most telling and repulsive example, because, as Larry Summers so memorably has stated, public-private partnerships usually means that profits are privatized and losses nationalized.
In sum, in Sweden bad debts were not taken over by the state or transferred to any aggregator state bank; but each bank, private or state-owned, established its own bad bank. The Swedish model avoided the trading of depressed assets in the midst of the crisis, while they were internally valued at their low market value. If nobody can assess the value of an asset, it is probably not worth much. Only one bankrupt bank was nationalized.”
Comment:
So tell me why did Nouriel Rubini and Krugman both claim nationalization was necessary and as evidence cite Sweden? Just a mistake? Notice the line I emphasized in Aslund’s remarks – the centralization of the assets in one aggregator bank would actually cause trouble to the markets. Now, if so, why is that precisely what’s being pushed here….and why is that being palmed off as the Swedish model when Sweden did no such thing?
Is Krugman (as well as Rubini) selling a plan intended mainly (perhaps only) to create more central control, not because it’s necessary for the financial markets...
Is he using the “Swedish model” meme because it’s great PR? It’s the sort of thing that goes down well with the influential Huffington Post and the moderate liberal intelligentsia. For them Sweden is the way things ought to be. (Remember the saw – America is a nation of Indians ruled by a bunch of Swedes – which suggests that regular folk in American are religious like East Indians, but the people who govern them are humanistic and atheistic like the Swedes.
On the opposite side, supporting the anti-nationalization position, there are at least a few disinterested and persuasive voices, like Robert Barro of Hoover. I don’t call either Summers or Geithner disinterested, obviously, even though they are right on this, for whatever reason. I suspect they may just be playing good cop to Krugman’s bad cop for political play.
Barro writes:
“Periods without stock-market crashes are very safe, in the sense that depressions are extremely unlikely. However, periods experiencing stock-market crashes, such as 2008-09 in the U.S., represent a serious threat. The odds are roughly one-in-five that the current recession will snowball into the macroeconomic decline of 10% or more that is the hallmark of a depression.The bright side of a 20% depression probability is the 80% chance of avoiding a depression. The U.S. had stock-market crashes in 2000-02 (by 42%) and 1973-74 (49%) and, in each case, experienced only mild recessions. Hence, if we are lucky, the current downturn will also be moderate, though likely worse than the other U.S. post-World War II recessions, including 1982.
In this relatively favorable scenario, we may follow the path recently sketched by Federal Reserve Chairman Ben Bernanke, with the economy recovering by 2010. On the other hand, the 59 nonwar depressions in our sample have an average duration of nearly four years, which, if we have one here, means that it is likely recovery would not be substantial until 2012.
Given our situation, it is right that radical government policies should be considered if they promise to lower the probability and likely size of a depression. However, many governmental actions — including several pursued by Franklin Roosevelt during the Great Depression — can make things worse.
I wish I could be confident that the array of U.S. policies already in place and those likely forthcoming will be helpful. But I think it more likely that the economy will eventually recover despite these policies, rather than because of them.”
Obama Tanks the Dow
- The Dow has fallen about 11% since Election Day.
- The Dow’s fall on Obama’s Inauguration Day was the worst Inauguration Day decline in history.
- The Dow fell 384 points on Feb. 10, the day Treasury Secretary Geithner unveiled his financial stability plan.
- The Dow fell 298 points on Feb. 17, the day Obama signed the Stimulus Bill.
- The Dow fell to an 11-year low on Monday, following weekend reports about the government’s potential new plan to bail out Citigroup.
- The Dow fell nearly 200 points intraday Wednesday following Obama’s generally well received speech Tuesday evening. (The index did recover some lost ground, even briefly trading positive in the afternoon, before closing down 80 points as Treasury announced yet more bailout options for banks.)
Comment:
Going further, the Deal Journal gives the President some tips on how to make nice to the market and stop being Obummer.
The budget numbers are out, and they aren’t pretty, projecting a $1.75 million deficit for the year and including a provision to auction off permits to exceed carbon emission caps (frankly, this sounds like the sale of indulgences by popes during the Middle Ages – only now, we’re all so much more enlightened...). This might tank the Dow even more,…
Especially if it also takes a look at GM’s horrible numbers (a $9.6 bn Q4 loss and a decline in its cash position from the previous quarter of $2.2 bn ($16.2 bn to $14 bn). And let’s see what London’s FTSE will do now that Royal Bank of Scotland has announced the biggest annual corporate loss in UK history ($34.2bn/24.1 bn BP)
Obama Declares Day of Reckoning…
“Bluntly declaring that the “day of reckoning has arrived” after years of financial irresponsibility, President Barack Obama told Americans on Tuesday night that “we will rebuild, we will recover and the United States of America will emerge stronger than before.”
Comment:
Hmm……some of that reckoning talk sounds suspiciously like the language that Nina Totenberg as well as some NY Times writers were using a while back….shortly after NPR cited “Mobs, Messiahs, and Markets”…..shortly after we sent them the book……..
(Coauthor of said opus is the principle writer and creator of the Daily Reckoning....a newsletter very familiar to Beltway and non Beltway critics of empire as well as libertarians of all stripes, left and right….)
Meanwhile, here’s another headline that caught my eye for a different reason:
“Can Obama Save the Planet?” asks Robert Roy Britt at MSN.
Quite a mandate. Not only is the president going to “fix the economy” (as though the economy were some wretched stray in need of neutering), heal racial tensions, win the “war on terror,” – now he’s going to save the planet too. Last time I looked a certain rabbi had that job…
Erk. How do journalists come up with this stuff?
Murdoch Apologizes for NY Post Cartoon
“NEW YORK – New York Post Chairman Rupert Murdoch apologized Tuesday for a cartoon that critics said likened a violent chimpanzee shot dead by police to President Barack Obama.
In a statement published in the newspaper, Murdoch said he wanted to “personally apologize to any reader who felt offended, and even insulted.” He said the Post will work to be more sensitive.
Murdoch said the cartoon was intended only to “mock a badly written piece of legislation.”
The cartoon, which was published Wednesday, depicted the body of the bullet-riddled chimp Travis and two police officers. The caption said: “They’ll have to find someone else to write the next stimulus bill.”
Comment:
I didn’t see this until now, and I have to say it seems rather racist, even if the intent were not. Calling George Bush “chimp” is different for the simple reason there’s never been a history of white men being seriously categorized as monkeys, with all the social fall-out attendant. The slur was personal in that case – it had no group overtones. Black men, on the other hand, have had to contend with racial attacks in exactly this vein for more than a century, at the very least. There’s another angle to be considered. There are some people who find it incredibly enraging to have a black man as a president (I’m enraged by Obama too, but only because he’s a shill for the financial industry). Someone just might be incited to violence by inflammatory language and images..
Even if the cartoonist was only thinking of the animal that was shot and even though Obama didn’t write the stimulus bill, any editor with a modicum of sensitivity and knowledge of history, would have spiked it.
Of course, liberals can be just as guilty: these cartoons of Condi Rice seem to go over the line.
And remember the New Yorker cover last year showing Obama in Muslim attire, with Michelle Obama as a Black Panther terrorist and the US flag burning? Editor David Remnick argued that the left-liberal magazine of choice of the literati was obviously satirizing the right’s view of Obama, but pictures are very different from words, especially pictures unqualified by anything else. To even my well-trained artistic and literary eye, the picture was a bit of a shocker, given the context (election year, first African American president).
Why not err on the side of safety? How about shocking us with truthful reports about the financial ties between our pols and pundits and Wall Street? How about shocking us with a close examination of the so-called conspiracy theories (about 9-11, about the FED), that the mainstream media never touch. Maybe that would take a level of bravery, analytical ability, and intellectual honesty that questionable sketches don’t require.
Alan Keyes Denounces Obama As Abomination
Alan Keyes, the conservative who lost to Obama in the 2004 Illinois Senator’s race, is back again with a fiery denunciation of the new President as a “radical communist” and “abomination” who “isn’t even a natural born citizen” and once (presumably when he was young) even supported setting aside babies who escape abortion for killing (?).
Inflammatory stuff….or speaking truth to power…. depending on what you think of Keyes. Obviously, Fox loves him since they’ve been giving him a lot of air time on this, and the video is making a stir.
What is a “natural-born citizen”? It’s a citizen who meets one of the legal criteria to be considered, by right of birth, a US citizen”. It’s not simply where you were born. If you were born on foreign soil, you would still be a natural born citizen if at least one of your parents was a citizen who had lived in America for at least 5 years. Obama Senior was a Kenyan citizen. Obama’s mother was a natural born US citizen, although I’ve seen questions raised about that too.
There are also doubts if the marriage was a valid one under US law. Furthermore, Obama’s mother soon divorced his father and went on to marry another foreign national, with whom she moved to Indonesia.
The L. A. Times has a summary of the birth-certificate controversy, and here’s another at Salon, both of them from a critical point of view. I actually thought the issue had been laid to rest last year, but apparently not. Keyes and other members of the Independent party filed suit on November 13, 2008 (I was out of the country then, so I guess I missed it): Keyes v Bowen, Superior Court, Sacramento, 34-2008-80000096-cu-wm-gds.
Previous suits on this issue have been dismissed because the plaintiffs lacked “standing” – which is the legal requirement that a matter brought to the courts have some specific, concrete effect on the person bringing the suit. You can see why. Otherwise, people would be cluttering up the courts with cases filed on theoretical grounds. Keyes, a former presidential candidate, does have standing, although that might be affected by the fact that the election is now over.
Alan Keyes is a very passionate proponent of the traditional Catholic position on abortion, and from that view point nothing he said was really untoward, although some of his facts are still in question on the birth certificate issue and his “fire and brimstone” delivery will strike many people as either over the top, hilarious, or both. I also do think the word “abomination” was inflammatory and unnecessary. “Abomination” coming from an arch-conservative and statist carries Biblical overtones and will resonate with people who read Revelations (of John of Patmos, at the end of the Gospel) literally. Many of them will think of the “abomination of desolation” and the “false messiah” (Obama is incessantly dubbed a ‘messiah’ both by admirers and detractors) who precedes the Anti-Christ.
On second thoughts, though, I’m not sure critics have a right to question the language on this tape, since it was the Obama camp itself that went out of its way to play up the ‘messiah’ angle. They probably figured that if religious rhetoric worked for Bush, why not lure away some of Bush’s religious following by cloaking their establishment front man, Obama, in dressed-up “preacher talk.”
A lot of Obama’s rhetoric is simply PR, as my post “Wake Up and Smell the PR” (over the weekend), alleges, and so what can I say? Live by PR, die by PR……
And, what if Keyes prevails? Then we get President Biden:
20th Amendment, Clause 3:“3. If, at the time fixed for the beginning of the term of the President, the President elect shall have died, the Vice President elect shall become President. If a President shall not have been chosen before the time fixed for the beginning of his term, or if the President elect shall have failed to qualify, then the Vice President elect shall act as President until a President shall have qualified; and the Congress may by law provide for the case wherein neither a President elect nor a Vice President elect shall have qualified, declaring who shall then act as President, or the manner in which one who is to act shall be selected, and such person shall act accordingly until a President or Vice President shall have qualified.”
Here’s more on Obama’s birth certificate and some of the facts surrounding his Kenyan father’s citizenship (Kenya was part of the British empire at the time). Obama Jr.’s Kenyan citizenship would have expired in 1982, in the absence of any renunciation of US citizenship on his part. More from the same website on some of the groups behind the promotion of the citizenship issue. I’m not sure that the website actually gives any evidence that’s incontrovertible, though, beyond a replication of a photocopy of the birth certificate (?).
Most of the debunking seems to be of the order – ‘he says it’s a dirty tactic, so it’s not true’.…or, ‘look who’s behind the issue.’
He says, she says is not evidence. Its doesn’t go to the substance of the charges.
Other thoughts:
1. Wouldn’t a birth certificate be a minimum requirement for a candidate and wouldn’t intelligence have checked that out long before anyone was even under serious consideration for presidency? It would be incredible if it weren’t so, given that even rather lowly jobs these days require quite a bit of a background check.
2. Why is the certificate number blacked out?
3. Are the type and seal authentic?
4. What about the categorization of the child father as African?
5. Why not just release the original and put an end to the issue?
More:
*Philip Berg (no relation to Nicholas Berg who was beheaded in Iraq), a 9-11 truther (not sure which of the many 9-11 groups that is), is one of the people who’d earlier filed suit. Berg also filed a RICO suit against Bush et. al. over 9-11.
*The eligibility issues was previously raised for Mitt Romney’s father George, who ran for president in 1968. The ruling was that he was eligible since his parents were US citizens, even though he (George Romney) was born in Mexico where they were missionaries. In 1964 another challenge was defeated when it was decided that Barry Goldwater, who was born in Arizona before it was a state, was eligible.
Propaganda Nation: Obama As Marketer-in-Chief
Every so often, plain-speaking slips through…. even on the pages of the New York Times. Here’s a quote on the Geithner plan:
“As a whole then, the plan takes important steps in the right direction, but it is unclear in critical aspects. We do not know whether this is because the Treasury cannot afford to be too clear, or whether it is because the Treasury still has little idea about what to do. The coming days will tell.
Finally, the plan will need public and political support to be credible. This means that bankers and existing investors should not be seen as benefiting at the expense of the taxpayer, and that all the government investment should start paying off in the not-too-distant future. While the Treasury has resisted the urge to ceremonially sacrifice the bankers, this makes it even more imperative that President Obama’s political skills be used to sell the plan.”
Diamond, Kashyap and Rajan on the Geithner Plan, Freakonomics blog, NY Times, February 12, 2009
(The emphasis at the end of the excerpt is mine. The blog on which this post appeared is run by Steven D. Levitt, co-author of the best-selling, Freakonomics; the economists who are guest posting are University of Chicago Professors, Douglas Diamond and Anil Kashyap, and IMF economist, Raghuram Rajan)
Climate Czars’ Ultimatum: Clean Energy Or World War
“Jose Endundo, environment minister of Congo, said he recently visited huge Lake Victoria in nearby Uganda, at 80,000 square kilometers (31,000 square miles) a vital source for the Nile River, and learned the lake level had dropped 3 meters (10 feet) in the past six years — a loss blamed in part on warmer temperatures and diminishing rains.
In the face of such threats, “the rich countries have to give us a helping hand,” the African minister said.
But it was Stern, former chief World Bank economist, who on Saturday laid out a case to his stranded companions in sobering PowerPoint detail.
If the world’s nations act responsibly, Stern said, they will achieve “zero-carbon” electricity production and zero-carbon road transport by 2050 — by replacing coal power plants with wind, solar or other energy sources that emit no carbon dioxide, and fossil fuel-burning vehicles with cars running on electric or other “clean” energy.
Then warming could be contained to a 2-degree-Celsius (3.4-degree-Fahrenheit) rise this century, he said.
But if negotiators falter, if emissions reductions are not made soon and deep, the severe climate shifts and sea-level rises projected by scientists would be “disastrous.”
It would “transform where people can live,” Stern said. “People would move on a massive scale. Hundreds of millions, probably billions of people would have to move if you talk about 4-, 5-, 6-degree increases” — 7 to 10 degrees Fahrenheit. And that would mean extended global conflict, “because there’s no way the world can handle that kind of population move in the time period in which it would take place.”
Melting ice, rising seas, dwindling lakes and war — the stranded ministers had a lot to consider. But many worried, too, that the current global economic crisis will keep governments from transforming carbon-dependent economies just now. For them, Stern offered a vision of working today on energy-efficient economies that would be more “sustainable” in the future.
“The unemployed builders of Europe should be insulating all the houses of Europe,” he said.”
Propaganda Nation: Media Hints at Bank Nationalization
A fine observation on how to predict the future:
“We play close attention to air time given to so-called “Experts” and the way the media spins the information. If you know that our mainstream media is simply a licensed PR firm for the US government, you can get vital information which you can use in trading. Always ask yourself – What opinion are they trying to insert? What are they selling? What’s the underlying agenda?
The government uses the media to float policy before the public so it can digest it. By the time the government takes the action, most people not only anticipate it but are even asking for it.
In the past two weeks there have been countless debates, op-ed’s, and even opinion polls regarding bank nationalization. The popular opinion among the establishments “Experts” is that nationalizing the banks may be the only way. Even Alan Greenspan, a LIBERTARIAN, recently said that it would be a good idea. It’s coming folks! It’s what the establishment wants. (Sidenote: They may not actually use the word nationalization, even if thats exactly what they do)
Below is the long term view of BAC and C. These stocks have made multi decade lows. Other stock charts which looked similar to these were Fannie Mae, Freddie Mac, Lehman, Bear Stearns….”
Thanks to Charting Stocks.
Recall that Nouriel Rubini (whom I consider the “designated doom and gloomer” – has come out suggesting a failure of a government (sovereign bank) in the offing and that recently Goldman Sachs called gold $1000 (and it’s come to pass in the last 24 hours)….we can be doubly certain of a big bank failure to come.
Time Magazine Hits The Kleptocrats….And Misses
If you ever wanted to see propaganda in action, check Time magazine’s list of the 25 people responsible for the financial collapse upon us:
“Twenty Five People To Blame For the Financial Crisis.”
Comment:
Where to begin?
For starters: I’m not a fan of “Top 40s” listings except for the Top Forties, i.e., for popular trends, celeb fashion faux, Red Book girlie advice and such like. At ostensibly news-heavy publications (then again, perhaps that’s rather an ambitious term for a coffee-table glossy like Time) you’d expect at least a pretense at deep thinking. Apparently not….
Second: Why 25? There’s so much blame to go around that you either make a list of hundreds (how about the Misfortune Five Hundred?) or whittle it down to the Big Ten…
Third: We expected Bob Rubin to be given a free pass, since the media has always had a peculiar love affair with this slippery guy, and we expected the knee-jerk over-emphasis on Republicans, but George Bush is more responsible than Alan Greenspan (Fed Chairman under Clinton and Bush) ??
Whatever you think about Bush, there’s one thing quite clear – the man was not an intellectual powerhouse…nor was he a shrewd tactician.
Do you really think he was anything more than a mouthpiece…..and probably a fairly sincere mouthpiece…when it came to economic and financial issues?
Now, before I venture any further analysis, I want some honest reader response here. Since I am being brave and taking the personal and financial hits that go with public bloggery, you dear readers, must do your part as good citizens and raise your hands (and voices) in public. Tell me what you think this list means and how and why it was cooked up.
And here I give you an original rajivanation:
Not with silence and stealth are republics defended – but so they are lost