Thursday, June 26, 2014

WW I and other Idiocies

It is the 100th anniversary of WW I, one of the bloodiest and unnecessary wars in human history.  The excuse for the war was the assassination of the Austrian Archduke by a crazy man.  The Austrians demanded compensation (as if there is compensation for murder).  When it was refused, countries began to take sides based on historical and cultural ties—not unlike kids choosing sides on a playground.  The tragedy was compounded by the generals who did not understand machine guns.  Wave after wave of soldiers were sent to slaughter on both sides.  The eventually “victorious” Allies demanded huge reparations from the Germans. The consequence was bitter resentment that provided the base for Hitler’s rise.  We ignored the push-back of human emotions.
      Among the other idiotic moves was the drawing of uninformed boundaries in Africa.  We are still living with the consequences such as ethnic wars. Another result was a revulsion against war that resulted in Western delayed response to the armed invasions by Hitler.

Inequity and Hierarchy

“When we feel a lack of personal control, we compensate by looking for order or predictability in our environment.  So we desire and perceive governments and gods to be particularly powerful.  Those who suffer inequity often even defend the social system responsible, rather than accept that life has been unjust.” 
Based on Friesen and Kay as reported in NYT 22 June 2013
Case in point, the popularity of Putin in Russia and popular working class support for the Republicans who are anti-labor in US.

Thursday, June 19, 2014

Financing Terror

How do terrorist groups finance the purchase of arms?  With drug profits of course.  Will the US wise up and treat addicts rather than build fences and hire guards?  Our refusal to do so is ruining a lot of countries including Afghanistan and Mexico. It's bloody nonsense. 
    The NY Times reports that along old African trade routes "Smugglers made deals with militants to protect their trafficking routes and their product.  Thirteen percent of the European cocaine trade flows through Africa. That's about $4.2 billion a year."  That would build a lot of shelter for the homeless.
   And perhaps the greatest irony is that many US voters support radical politicians who advocate a large military budget and irrelevant social policies on abortion. 

Boko Haram

Along the Nigerian border, the militant group Boko Haram is targeting children in its bid to establish an Islamic state.  NYT June 15, 2014. 
    Civilization is in a death struggle. And, of course that new Islamic state will subjugate women. And of course we will continue to invest in sophisticated jets, etc. that are useless against a determined foe willing to die and risk all.

Sunday, June 1, 2014

Financial Crisis Redux

A new book says the government should have focused more on homeowner debt and less on banks.  But, what would you expect of a former banker like former Treasury Secretary Timothy Geithner?  Sure, the banks were frozen and their balance sheets needed to be restored so they could loan or the economy would have been frozen.  Even now, the banks have more loan capacity than they know what to do with.  Even corporations have more cash than they know what to do with.  So instead of making productive investments that would employ people, they buy their own stock making their own managers richer.  And if that were not enough, capital gains are taxed less than ordinary income that the rest of us earn.  Go figure!
Mian and Sufi in their book, House of Debt, say they cannot understand why the government encourages borrowing through tax deductions for mortgage interest payments.  When consumers accumulate debt loads that can only be sustained with continual price increases, it can endanger the whole economy when asset deflation finally occurs.   “When there is an activity that is dangerous, you should tax it in one way or another.  And instead we have a system that actively subsidizes debt.”  Go figure!
Banks enjoyed the ride and paid nothing for it.  Most were propped up and made whole, even foreign banks.  Some were saved by making them consolidate with weaker banks, making the remainder—too big to fail for sure. 
With the salve of Mr. Geithner’s own book, there is a certain resignation that little more could have been done. They did not even try.  The bankers complain of the peanuts reserve requirements in the Financial Reform Act.  But, no plausible reserve requirement can cope with a drop in housing values of more that 25 percent.  We are now beholden to a colossal failure of imagination.  Readers of this blog can imagine better.