Saturday, February 27, 2010

Parallels Between 1930s Great Depression and Today's Great Recession

Jesse's Cafe Americain' has an interesting article about the parallels between now and the great depression. He writes that during the 1930s policy makers (e.g., Pres. Hoover) and everyday people alike had a difficult time acknowledging the anomalous nature of the situation until symptoms became extreme.

Today during my reading group, we talked about the difficulty policy makers have in recognizing the degree of problems in the system because of their convictions that "markets" work. The undergirding assumption is that if we simply free up the market, or if we simply implement market friendly reforms more completely, the recession will ease.

However, as one participant in my group said, what people fail to realize is that the crisis IS markets working. Freed markets do precisely this--leverage in order to accumulate until a bubble begins to inflate.

Capitalism is simply an unsustainable system. It operates through accumulations, leverage, exploitation. and crisis.
The question is how to allow "enterprise" without the mindless consumption/accumulation/exploitation of a capitalist system that is exhausting resources and dispossessing the majority of the world's population?

Friday, February 26, 2010

Chart on Unprecedented Income Inequality (post 1930s)

A consumption based economy cannot thrive with this level of inequality. Additionally, inequality results in money being wasted on "policing" the dispossessed.

It appears that worsening inequality is contributing to the collapse of "recovery."
Cumulative railroad carloads to date in 2010 are down 17.2 percent from 2008.

Wednesday, February 24, 2010

If You Had Any Doubts About the Potential for Fascism in America

In 1943 the U.S. Supreme Court ruled that students cannot be forced to salute the flag. Recognizing this mandate, states across the U.S. have laws that stipulate that saluting the flag is a voluntary act.


Fascism is marked by enforced fealty to the arbitrary power of a state.

That's why.

So, why is that teachers across the union feel that they have the right to force students to salute the flag?

This was a problem for my oldest son, who was uncomfortable saluting the flag. His teachers tried to force him to do it until I intervened.

Now, some fascist teacher in Montgomery County yelled at a student and then had police escort the student out of the class because she refused to salute the flag. State law and the school's own regulations prohibited enforced flag fealty.

Yet some fascist teacher used the force of the law to punish a 13 year old for her resistance of a questionable practice.

I will salute the U.S. Constitution and Bill of Rights but I too refuse to pledge allegiance to a flag.

The Burning Platform

This website has a provocative article about "great turnings" and the imminent crisis facing America.

I don't believe in the idea of inevitable historical cycles so I disagree with many of the assumptions made in this article.

That said, the article offers an interesting and provocative narrative about where America finds itself and is full of interesting data points.

On the cover of the WSJ today two articles dominate the headlines: "Lending Falls at Epic Pace" and "Jittery Shoppers Dim Stores' Hopes."

At the data crunching web page Calculated Risk today there are similar dismal headlines "Mortgage Purchase Applications at Lowest Level since May 1997," "Architecture Billing Index Shows Contraction in January," and "11.3 Million Properties with Negative Equity"

It is clear that the pre-recession world cannot be resurrected.

This is not really a bad thing when one considers the environmental problems of that period and the gross global inequities fostered by that regime.

The problem is that leaders are not seeking to create a better and more sustainable world. Rather, the world's leaders are standing passively by while the oligarchs rape global populations (or the leaders participate actively in that rape)....

see also

Tuesday, February 23, 2010


Charles Munger, Buffet's partner, offers a parable for the US economy. I don't agree with all of his assumptions or implicit values, but the analysis offers food for thought..

Rockefeller Institute of Government's latest report on 4th Quarter State Revenue. It ain't pretty

Did Goldman Use Credit Default Swaps Against Greece, as it Did with AIG?

Jeff Nielson believes Goldman and other banking oligarchs are deliberaely destroying Greece, as they did with AIG:

"Destroying entire nations for profit is a human abomination for which we lack even a proper term. It goes well beyond “greed”. It can't be described as “immoral”, since like all psychopaths, the Oligarchs are completely amoral. These are “crimes against humanity” but on a scale which goes well-beyond Hiroshima and Nagasaki..."

Read his account of how this happened!

Monday, February 22, 2010

New Technology and Distracted Minds

I rarely post material concerning my day to day experiences. However, when attempting to introduce my students to the basic economic ideas that inform current debates about the recession, deficits, and poverty, I was struck by student apathy.

One student boldly said the material was boring.

How sad and pathetic. The media are already labeling this cohort of students "the lost generation" because they are likely to experience depressed wages, compared to those who graduate in more prosperous times, over the course of their work life.

Yet these students were not interested in learning about the assumptions and values underpinning public debate about how to stimulate the economy, create jobs, and redress inequalities that haven't been experienced since the 1930s.

Sometimes I think it would be so much easier to teach students if I really didn't care what happened to them.

I could teach them all sorts of fluffy, touchy-feely concepts and microscopic theories and do lots of hands-on group activities that allowed them to go on and on, "all about them"--how important they are, how valuable their (ignorant and myopic opinions) are, etc.

They would give me high teaching evaluations and I would not care that they were graduating totally unequipped to be productive and informed citizens....

Sunday, February 21, 2010


Washington's blog today has an interesting post arguing that eugenics was an American idea. I have researched eugenics during the course of writing my 3 books. Eugenics was indeed popularized in the US. However, my readings of old nineteenth century journals found examples of eugenic discourses--although they were not labeled as such--in English academic journals from at least the 1840s forward.

Why should we look back in time to see how eugenics emerged and was popularized?

I believe there is a new eugenic discourse emerging in behavioral genetics and psychopharmacology as researchers attempt to link gene alleles with behaviors, traits, and dispositions. This research is problematic for ignoring the synergy across environment and biology and it is dangerous because it introduces the idea that some people carry "risky," "dangerous," or "bad" genes.

This argument is most thoroughly developed in my book on governmentality and biopower. I am hardly alone in making this argument. There is an entire literature of excellent critiques of genetic reductionism....

As the U.S. culture is menaced by creeping fascism we must vigilantly scan for and debunk eugenic discourses and practices...

Friday, February 19, 2010

Interesting, Provocative Video Links

Chris Hedges on "Inverted Totalitarianism"

Max Keiser Interview with Samue Bowles, an academic who has studied inequality across all of human history. See the Feb 20 2010 On the Edge windows with Samuel Bowles featured

When is a Terrorist Not a Terrorist?

Today's front page Wall Street Journal article on the plane attack in Austin illustrates the fundamental hypocrisy with which terrorism is treated in the media.

The headline reads: "Tax Protester Crashes Plane into IRS Office."

What the headline should read is "Domestic Terrorist Crashes Plane Into IRS Office."

By definition, Joseph Stack's attack against civilians is a terrorist attack.

However, in the American media imagination, only brown skinned, black haired foreigners are terrorists. Therefore, Joseph Stack must be something else.

By labeling him a "tax protester," the WSJ is re-casting his act of terrorism within a symbolic field that elicits public sympathy for the act.

Moreover, it is not until the 3rd paragraph in the article that the WSJ reports that 18 peole were injured, 2 of whom are in critical condition.

Terrorism against civilians is reprehensible. No cause, however noble, can justify wanton attacks against civilians.

Thursday, February 18, 2010


Calculated Risk, the best web page I think of for data analysis, reports the following:

Weekly Unemployment Claims Up

Delinquencies Up

Hotel Revenue Down

Isn't it nice that the recession has ended?

Regarding today's intentional attack against IRS workers in Austin Texas. Read about it at Naked Capitalism

I worry. Mob violence rarely, across history, confronts and redresses the real sources of inequity and injustice. Too often, as with today's case, innocent individuals are harmed as the mob seeks victims against which to exercise its rage, while the responsible elites escape unharmed.

Yes the middle class is becoming enraged. One can only hope that a constructive movement emerges to channel their rage before all hell breaks lose....

Here is an interesting article to read on the decline of the middle cass at mybudget 360

Wednesday, February 17, 2010

Holding My Breath

I feel like I'm holding my break. This period feels like a recess. The kids are out playing pretending that everything is ok in the classroom even though they know the building is in danger of collapsing,

Media attention, that fickle phenomenon, has turned to Greece and the Eurozone, ignoring the near bankruptcy of much bigger economies such as those of California, New York, New Jersey.

Meanwhile, more people default on their debt, lose their homes, lose their jobs, or have their hours cut.

Public employees across the nation are losing their jobs. Phoenix proposes a 2% tax on food to pay for firefighters and police officers. I think we need the former. Yet, regressive taxes such as food taxes hurt those barely making it on reduced incomes.

Today's articles posted at Global Research focus on the entrenchment of elites who are robbing the populace through bailouts and extortionary interest rates.

Where is Obama, that supposed Shining Knight?

Will events continue as they are--this slow deterioration of living standards for ever more of the populace through unemployment and structural adjustment (i.e., austerity) or can we expect events to reach a crescendo, resulting in a period of disorder and panic once again?

I read and read and find no answers. I am holding my breath...

Tuesday, February 16, 2010

New Report Out on Deteriorating Labor Conditions

A recent report on labor utilization by Andrew Sum, Ishwar Khatiwada, and Sheila Palma of the Center for Labor Market Studies at Northeastern University describes the current labor conditions:

"Since the onset of the Great Recession of 2007-2009, labor market conditions have deteriorated dramatically for U.S. workers in the aggregate. . .The number of employed civilians (16+) in December 2009 was more than 9 million below its estimated level in November 2007, the month before the recession got underway. Total unemployment has more than doubled over the past two years, with double digit unemployment rates prevailing between October and December. At the same time, the number of underemployed; i.e., those persons working part time for economic reasons, has also more than doubled, reaching a new record high of 6.4% of all of the employed in the fourth quarter of 2009.1 In addition, the nation’s civilian labor force has actually shrunk by nearly one million over the past year rather than rising by 1.5 million as earlier projected by the U.S. Bureau of Labor Statistics."
Additionally, the report argues that young workers, minority workers, and blue-collar workers--in manufacturing, construction, service sector--have been disproportionately affected.

I personally believe that professional workers have also been impacted significantly--based on my anecdotal experiences with people in IT who have been very impacted--but these workers usually get substantial packages when they are laid off and therefore are not eligible for unemployment until their severance is gone. This masks educated and professional workers' unemployment.

The Atlantic also has a good article on this subject:

Greece, the Eurozone, and the Dollar

Is Greece under an attack designed to weaken the Eurozone, while boosting the dollar?

A number of commentators have speculated that is exactly what is going on.

Greece under deliberate attack to weaken Eurozone:

Friday, February 12, 2010

Hedge Funds Attack Greece?

Zerohedge reports on suspicions that hedge funds deliberately attacked Greece, forcing the nation to pay higher interest rates and precipitating its (near) default:

"In the pre-math of the Greek collapse, conspiracy theories are swirling about who keeps blowing Greek CDS spreads wider. The answer, so far completely unconfirmed, is that a large US investment bank (we "wonder" just which US investment bank dominates the sovereign CDS market), and two major hedge funds are behind the CDS "attacks" on Greece, Portugal and Spain. According to Jean Quatremer, and his Coulisses de Bruxelles, UE blog, the plan involves blowing spreads to record levels, and is prompted by the hedge funds' anger at not having been allocated substantial amount of the recent €8 billion GGB issue, in order to lock in profits from their CDS long exposure."

This is not the first time I've read of orchestrated attacks. Bear Stearns was supposedly attacked in a similar manner.

William Buiter warned last year that credit default swaps held on a nation's debt (insurance on bonds issued by a nation) might make it profitable to deliberately sabotage the nation if the credit default swaps paid out more than the interest on the bonds.

The implications are that financial institutions or entities may find it profitable to deliberately sabotage nations or corporations, causing them to default on their debt or simply cause them to pay out much more in interest on their bonds and insurance.

This is a kind of robbery and extortion that should be stopped. These financial institutions are wrecking havoc around the globe!

Thursday, February 11, 2010

Food Inc

Laura Sevier interviews Robert Kenner, who produced Food Inc.

Kenner describes being sued by food producers who do not want the public to think about the conditions involved in producing food.

When asked what was the most shocking aspect of making the film, Kenner responds:

"There were two things. One was early on when we went to a hearing about whether to label cloned meat. A representative from the meat industry said it would be 'too confusing for the consumer'. I realised I had entered an Orwellian world where people are being 'protected' by not being told.

Then when I asked food safety advocate Barbara Kowalcyck what food she eats and she couldn't answer me or she'd be sued. I realised it was not a film about food: it was a film about rights. Seeing how food products now have more rights than individuals -that was more frightening than seeing how the food was produced...."

Kenner's interview and film raise serious questions about food safety. Dangerous food additives, such as arsenic, and heavy use of antibiotics are contaminating our food supply. Nearly all US corn has been contaminated by genetically modified corn and our food labeling laws do not require notification of genetically modified products, including meat!

Wednesday, February 10, 2010

Chris Hedges' "Wake Up!" Call

Chris Hedges, a well-respected journalist who has chronicled the rise of the religious right, has an article that is, well, rather astounding. Here is an excerpt of what he has to say:

"We stand on the cusp of one of the bleakest periods in human history when the bright lights of a civilization blink out and we will descend for decades, if not centuries, into barbarity. The elites have successfully convinced us that we no longer have the capacity to understand the revealed truths presented before us or to fight back against the chaos caused by economic and environmental catastrophe. As long as the mass of bewildered and frightened people, fed images that permit them to perpetually hallucinate, exist in this state of barbarism, they may periodically strike out with a blind fury against increased state repression, widespread poverty and food shortages. But they will lack the ability and self-confidence to challenge in big and small ways the structures of control. The fantasy of widespread popular revolts and mass movements breaking the hegemony of the corporate state is just that – a fantasy...."

Hedges argues that the coming environmental catastrophe is being masked by a corporate-enclave elite who have usurped democratic institutions.

Pretty heavy argument.

However, I am seeing more and more of this type of peak-oil, resource limits, environmental collapse type of argument. These arguments are not simply coming from the left. They are coming from a wide variety of political perspectives.

I feel that there is some truth in the arguments. Peak oil, resource depletion, and water contamination are real problems that are going to have severe consequences. Will they destroy what is called "civilization"? I don't know.

One thing is clear. We are doing a very poor job having honest discussion about the types of challenges facing us as a nation and us as a global population sharing the planet....

Tuesday, February 9, 2010

Phoenix City Tax Receipts Down and Expected to Decline 30% This Fiscal Year

Enough Said.

Racial Gap Widening

Feb 8: The Arizona Republic reports that the racial gap is widening with the rise of charter schools in states like Arizona because of lack of regulation and enforcement of civil-rights legislation.

New Orleans in the aftermath of Hurricane Katrina provided the nation with a laboratory example of what happens with the semi-privatization of education through charter schools in the absence of a vigorous regulatory framework.

Charter schools will select among eligible students to pick the most academically accomplished. Struggling kids and kids with disabilities will not be admitted. This pattern has been well documented in New Orleans' post-hurricane experimentation with charter schools.

Although charter schools offer innovation, they also can become propaganda devices for religious fanatics who instrumentalize education for the purpose of religious indoctrination.

Charter schools must be more carefully monitored and regulated or the U.S. public education system will become much more segregrated and ideological than it already is.

Sunday, February 7, 2010

Understanding How Neoliberalism Works Through the WTO

Critics of neoliberalism often point to the World Trade Organization when explaining how neoliberal principles actually impact domestic economies. Washington's Blog (featured on Naked Capitalism) offers a very interesting discussion of how the World Trade Organization's Financial Services Agreement actually operated to de-regulate financial services in the US.

Here is a list of what was stipulated by the agreement according to Washington's Blog:

"No new regulation: The United States agreed to a “standstill provision” that requires that we not create new regulations (or reverse liberalization) for the list of financial services bound to comply with WTO rules...

• Removal of regulation: The United States even agreed to try to even eliminate domestic financial service regulatory policies that meet GATS [i.e. General Agreement on Trade in Services] rules, but that may still “adversely affect the ability of financial service suppliers of any other (WTO) Member to operate, compete, or enter” the market...

• No bans on new financial service “products”....

• Certain forms of regulation banned outright: The United States agreed that it would not set limits on the size, corporate form or other characteristics of foreign firms in the broad array of financial services it signed up to WTO strictures …...

• Treating foreign and domestic firms alike is not sufficient..."

You can read the terms of the agreement yourself at this link to the World Trade Organization

Neoliberalism is not simply a philosophy. It is also a set of institutions, authorities, policies, and tactical strategies aimed at transforming the world to make it available for capital accummulation without regard to any concerns for people, labor, environment, or quality of life.

The Death of the Middle Class

Mybudget 360 provides interesting analyses of factors shaping US households' budgets. Their current post argues that 1 in 10 Americans is now dependent upon food stamps. The link above is well worth reading.

I read in the Arizona Republic yesterday (Saturday Feb 6) that over 52% of the states babies are born under the state's Medicaid program!

The federal government's broadest figure for unemployment, the U6 figure, is over 17%!

The WSJ reported on 2/3/2010 that 1 in 8 Americans used food banks in 2009.

The WSJ also reported on 2/3/2010 that consumer bankruptcies rose 15% in January, year over year.

Friday, February 5, 2010

Today's Links

I don't have much to write today. I do recommend that readers check out the following 2 links.

The first link is to a Max Keiser interview with the author of Confessions of an Economic Hitman, John Perkins.
The interview is listed as occurring on Feb 4th and is noted as KR14. It is a very, very provocative interview. Before the interview, Max offers interpretations of news headlines. He and Stacy offer interesting geopolitical analysis.

The second link is to Washington's Blog. I enjoy his analyses. Today's article argues that counter-terrorism authorities in the US insisted that the "crotch bomber" be allowed into the country after State Department officials tried to block his entrance. This article is also a very provocative read:

Thursday, February 4, 2010


Edward Harrison at Credit Writedowns offers insightful analysis of the economy. I follow his blog. Here is what he has to say about the current inventory cycyle and anemic hiring:
"...I believe the U.S. economy is more fragile than policy makers would have us believe. In particular, I see rising jobless claims, anaemic hiring trends and looming state budget cuts as headwinds which will have a lot of implications by mid-year.

Moreover, just as the Federal Reserve has signalled an end to its purchases of mortgage backed securities, we are now beginning to see the signs of a second but larger wave of Alt-A and Prime mortgage defaults, many of them strategic...

...consumer spending will remain weak...

...The long and short is that – come Summer – the inventory cycle’s thrust will have dissipated. And if companies are not hiring by this time and consumer spending is not increasing more robustly, then the state budgets, the strategic defaults and all of the rest of that becomes a serious obstacle. In my view, more likely than not, this will lead to another recession late in 2010 or in 2011. And nothing in the President’s budget changes this outlook."

Inequality and Repression

The site, Economists View, discusses how inequality leads to the waste of labor on policing resistance.

Likewise, Althusser described "repressive state apparatuses" that that are used to repress dissent in unequal societies.

The growing use of repressive policing domestically (see the ACLU for examples) points to societal ruptures and contradictions because overt repression is actually the least effective, and therefore last resort, for control.

Growing use of force means that the dominant narratives used to explain the status quo no longer have legitimacy for ever larger sectors of the population.

Societies experiencing crises of legitimacy are headed for social/political upheaval.

I believe the U.S. is experience a legitimacy crisis. More and more of the population have lost the capacity to experience pieces of the "American dream," the dominant legitimacy narrative.

Angry and dispossessed populations resist. Resistance breeds force. Force confirms the societal ruptures and contradictions, therefore leading to greater resistance.

What is concerning is uncertainty about the forms resistance takes. Powerful, undemocratic forces within society are eager to orchestrate and channel popular resistance. Think of Hitler. Think of Mussolini.

I am concerned that the societal dislocations will produce fascist forms of resistance rather than more democratic ones....

Wednesday, February 3, 2010

Must Watch Video: "The Enemy is at Home"

States Unemployment Funds and Rising Unemployment

I recently came across a chart at Propublica showing how many states' unemployment funds are now insolvent. These states, of which CA is one, are borrowing money from the federal government to pay the unemployed their benefits.

Zero Hedge has posted an analysis wherein they argue that federal outlays to states for unemployment insurance suggest that the unemployment rate is actually well above the purported 10% headline number.

I do not agree with Zero Hedge that deficit spending on unemployment must be financed by selling treasuries. I've already posted an article on my agreement with Randall Wray that the sovereign does not have to finance debt by selling IOUs (i.e., treasuries).

What is more significant for me in zero hedge's article is the idea that real unemployment is actually much higher than stated. I have seen charts at shadow stats that argue that real unemployment is over 20%.

I feel that the government needs to be honest about what is happening with unemployment. Honesty will lead to a bigger push for job creation. The Obama proposal articulated in his state of the union address simply does not do enough to solve this pressing problem. The health of the nation depends upon it, however.

Tuesday, February 2, 2010

Untapped Haitian Oil Reserves

In my opinion, F. William Engdahl offers the most insightful analysis of geopolitics. He currently has an article up at Global Research that unpacks the oil geopolitics of Haiti and also Cuba.

His article cites evidence that oil is produced deep in the earth's crust and is pushed up in cracks in the earth. Cuba recently discovered vast oil resources offshore. Apparently geologists believe that Haiti also has vast untapped offshore resources.

The current military occupation of Haiti by the US makes a lot more sense when you link it to oil politics...

Monday, February 1, 2010

Do Deficits Matter?

Conventional wisdom hold that deficits create future liabilities, which will hamper future growth.

Marshall Auerback disagrees. It is very interesting to read his account of deficts because it so clearly diverges from conventional wisdom. The logic informing his analysis is the idea that government finances (at the level of the nation) do not equate with household finances. He spells it out clearly in this post

I highly recommend reading Auerback's post. The upshot is this: "In basic national accounting terms, government deficits equal non-government savings surpluses"

The implication is that deficit spending is now necessary in order to compensate for a debt deflation trap. If you think about the argument it makes sense. If the US does not shore up the tattered budgets of cities, counties, and states in the US, then these same entities will begin purging employees.

The loss of demand posed by these newly unemployed reinforcs the debt deflation trap as tax earnings collapse, posing even more challenges for cities, counties, and states.

I really wonder whether conservatives are secretly aware of this trap and are encouraging it deliberately to "kill" government. Tragically, killing government will expedite the US path toward third world conditions....

Afghan "Geological Reserves Worth a Trillion Dollars"

Resource wars? In addition to being strategically located for a Unocal gas pipeline, Afghanistan is strategically located near the US's two biggest global competitors, China and Russia.

As an added bonus it appears Afghanistan is very rich in resources.

What happens if those resources lie in private lands?

No problem! As NPR reported today, there has been a practice of government land grabs going on in Afghanistan under the Karzai government. What happens is that stategically useful land is simply seized by the government. That makes exploiting the nation's resources even easier! How convenient...